Business Context and Reporting Period
Science Applications International Corporation (SAIC) filed a Current Report on Form 8-K dated May 4, 2015. The filing reports the completion of the acquisition of Scitor Holdings, Inc. ("Scitor") and the entry into a new credit agreement to finance the transaction.
Key Financial Metrics and Debt Structure
The filing details a new capital structure established to fund the Scitor acquisition. SAIC entered into a Second Amended & Restated Credit Agreement providing $670 million in new secured debt. The credit facilities are structured as follows:
- Revolving Credit Facility: Up to $200 million (unchanged from prior agreement).
- Term Loan A Facility: $581.25 million (increased by $100 million from prior agreement).
- Term Loan B Facility: New facility with an initial principal amount of $570 million.
Interest Rates and Maturities:
- Term Loan A and Revolving Credit Facility mature on September 27, 2018.
- Term Loan B matures on May 4, 2022.
- Term Loan B interest is variable: LIBOR + 3.00% or Base Rate + 2.00%.
Covenants: The agreement requires a Senior Secured Leverage Ratio not greater than 4.00 to 1.00 until July 31, 2016, and 3.75 to 1.00 thereafter. It also includes an annual mandatory prepayment of Excess Cash Flow.
Note: This filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes
The primary material change is the completion of the acquisition of Scitor on May 4, 2015, making Scitor a wholly-owned subsidiary of SAIC. Concurrently, SAIC amended its credit facilities to increase total debt capacity and add Scitor as a guarantor, securing the debt with liens on substantially all assets of SAIC, Scitor, and other subsidiaries.
Outlook, Risks, and Contingencies
Financial Statements: The filing explicitly states that financial statements of the acquired business (Scitor) and pro forma financial information are not included in this report. They are expected to be filed by amendment to this Current Report by the required date.
Risks and Events of Default: The credit agreement contains customary events of default, including bankruptcy, nonpayment, cross-defaults, breach of covenants, ERISA events, and material monetary judgments. If an event of default occurs, lenders may terminate commitments and declare all outstanding amounts immediately payable.
Investor Verification Checklist
- Verify the upcoming amendment to this 8-K for the required financial statements of Scitor and pro forma financial information.
- Review the full text of the Second Amended & Restated Credit Agreement (Exhibit 10.1) for detailed covenant definitions and prepayment terms.
- Monitor SAIC's ability to maintain the Senior Secured Leverage Ratio below 4.00 to 1.00 through July 31, 2016.
- Confirm the integration progress of Scitor into SAIC's operations following the May 4, 2015 closing.