PHST » Topics » 5. Debt

This excerpt taken from the PHST 10-K filed Jun 30, 2008.

5. Debt

The Company has a credit facility with Silicon Valley Bank (the “Bank”), providing for up to $5 million in borrowings, secured by eligible accounts receivable. On June 21, 2007, we entered into the Seventh Amendment to the Loan and Security Agreement (the “Seventh Amendment “) with the Bank. The Seventh Amendment amends in part Section 2.1 of the Loan and Security Agreement to decrease the Quick Ratio from at least 2.00 to 1.00 to at least 1.75 to 1.00 and amends Section 2.2 of the Loan and Security Agreement by increasing the “Committed Revolving Line” from $3 million to $5 million. If our modified quick ratio is equal to 1.75:1 or greater, the Bank may include foreign accounts receivable to determine eligible receivables. However, if the modified quick ratio is less than 1.75:1, all or a portion of foreign accounts may be excluded from eligible account receivables. There was no outstanding borrowing under this facility as of March 31, 2008. See Note 14. Subsequent Events for additional information on the amendment.

The Company had a secured term loan payable over 48 months, with monthly payments that commenced in July 2002. The balance was paid off as of June 30, 2006. In February 2005, the Company secured an additional term loan for the purchase of a new financial system, which was added to the existing term loan. The $300,000 additional term loan was payable over 36 months. In addition, we secured an equipment credit facility through June 2006 for up to $600,000. Each advance was payable over 36 months. On August 9, 2007, we paid off the remaining balances for both loans.

This excerpt taken from the PHST 10-K filed Jun 27, 2007.

5. Debt

The Company has a credit facility with Silicon Valley Bank (the “Bank”), providing for up to $3 million in borrowings, secured by its accounts receivable. If the Company’s modified quick ratio (defined as cash and cash equivalents and investments plus accounts receivable, divided by total current liabilities, including all bank debt but excluding deferred revenue) is equal to 2.5:1 or greater, the Bank may include foreign accounts receivable to determine eligible receivables. However, if the modified quick ratio is less than 2.5:1, all or a portion of foreign accounts may be excluded from eligible account receivables. There was no outstanding balance at March 31, 2007.

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

The Company had a secured term loan payable over 48 months, with monthly payments that commenced in July 2002. The balance was paid off as of June 30, 2006. In February 2005, the Company secured an additional term loan for the purchase of a new financial system, which was added to the existing term loan. The $300,000 additional term loan is payable over 36 months. The balance outstanding on the additional term loan as of March 31, 2007 was $92,000. In addition, we secured an equipment credit facility through June 2006 for up to $600,000. Each advance will be payable over 36 months. As of March 31, 2007, the balance on this equipment credit facility was $300,000. The interest rate was 8.63% for both loans as of March 31, 2007.

On January 2, 2007, the Company and the Bank entered into the Sixth Amendment (the “Loan Amendment”) to the Loan and Security Agreement, effective as of May 24, 2004 by and between Silicon Valley Bank and the Company, as amended (the “Loan and Security Agreement”). The Loan Amendment amends in part Section 2.4 of the Loan and Security Agreement to lower the interest rate payable at a per annum rate of 0.375% above the prime rate on the advances, and amends Section 13.1 of the Loan and Security Agreement by changing the “Revolving Maturity Date” to May 24, 2008. In addition, the Loan Amendment amends in part Section 6.7 of the Loan and Security Agreement by deleting section 6.7(iii), “Tangible Net Worth” in its entirety. Furthermore, the Loan Amendment also provides for additional representation and warranties by the Company.

The Company must maintain a minimum modified quick ratio of 2:1. Certain of our assets, excluding intellectual property, secure both facilities. We were in compliance with all financial covenants as of March 31, 2007.

The amounts representing interest are based on year end rates. Future minimum payments under the Company’s term loans at March 31, 2007 are as follows (in thousands):

 

     March 31,  

2008

   $ 312  

2009

     102  
        

Total minimum payments

     414  

Less amounts representing interest

     (22 )
        

Present value of minimum payments

     392  

Less current portion

     (292 )
        

Long-term portion

   $ 100  
        
This excerpt taken from the PHST 10-K filed Jun 26, 2006.

5. Debt

 

Credit Facilities.

 

We have a secured term loan outstanding, payable over 48 months, with monthly payments having commenced in July 2002. The balance on the term loan as of March 31, 2006 was $219,000 due May 2006. In February 2005, we secured an additional $300,000 term loan for the purchase of a new financial system, which was added to the existing term loan. The $300,000 term loan is payable over 36 months. The balance outstanding on this term loan as of March 31, 2006 was $192,000. In addition, we secured an equipment credit facility

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

through June 2006 for up to $600,000. Each advance will be payable over 36 months. As of March 31, 2006, the current balance on this equipment credit facility was $500,000.

 

In December 2005, we extended our credit facilities with Silicon Valley Bank, providing for up to $3.0 million in borrowings, secured against 80% of eligible domestic accounts receivable. The current balance of this credit facility is $1.0 million as of March 31, 2006.

 

On June 12, 2006, Pharsight Corporation (the “Company”) and Silicon Valley Bank (the “Bank”) entered into the Fifth Amendment to the Loan and Security Agreement (the “Loan Amendment”), effective as of May 24, 2004 by and between Silicon Valley Bank and Pharsight Corporation, as amended (the “Loan and Security Agreement”). The Loan Modification amends in part Section 2.4 of the Loan and Security Agreement to provide that interest due on the Committed Revolving Line is payable on the 25th day of each month and amends Section 13.1 of the Loan and Security Agreement by changing the “Revolving Maturity Date” to May 26, 2007. In addition, the Loan and Security Agreement amends in part Section 6.7 by replacing the profitability/loss financial covenant with a covenant requiring the Company to maintain a minimum tangible net worth in the amount not less than $3,000,000. Furthermore, the Loan Amendment also provides for additional representations and warranties by the Company to induce the Bank to enter into the Loan Amendment.

 

The following financial covenants apply to the extended Silicon Valley Bank loan facilities: net loss no greater than $200,000 in the first quarter of fiscal 2006; net income of at least $1.00 in the remaining three quarters of fiscal 2006; and a minimum modified quick ratio (defined as cash and cash equivalents plus accounts receivable, divided by total current liabilities, including all bank debt and not including deferred revenue) of 2:1 for the months of December 2004 and each month thereafter. As of March 31, 2006, the company was in violation of its quarterly profitability covenant, to which the company received a waiver of compliance from the bank. Interest on our revolving lines of credit is accrued at 0.5% above prime and is payable monthly from the date of borrowing. Interest on our term loans is accrued at 1.25% above prime and is payable monthly from the date of borrowing. Certain of our assets, excluding intellectual property, secure both facilities.

 

Future minimum payments under the Company’s term loans at March 31, 2006 are as follows (in thousands):

 

     Notes
Payable


 

2007

   $ 1,531  

2008

     294  

2009

     100  
    


Total minimum payments

     1,925  

Less amounts representing interest

     (14 )
    


Present value of minimum payments

     1,911  

Less current portion

     (1,519 )
    


Long-term portion

   $ 392  
    


 

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PHARSIGHT CORPORATION

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

This excerpt taken from the PHST 10-K filed Jun 29, 2005.

5. Debt

 

Capital Leases. Pharsight has entered into various noncancelable capital lease agreements for equipment and software. Capital lease obligations represent the present value of future rental payments under these leases. All capital leases were paid off by the end of fiscal 2005.

 

Credit Facilities. In June 2001, the Company extended and enhanced its previously unused credit facilities with Silicon Valley Bank, providing up to $7.5 million available under three different facilities. All had rates which were based on the prime interest rate plus one point or plus 1.25 points. The term loan facility of $3.5 million was fully utilized in fiscal 2002 and was payable, beginning in July 2002, over the succeeding four years, ending June 2006. During fiscal 2005 the Company also utilized an additional term loan of $300,000 which is payable, beginning in March 2005, over the succeeding three years, ending in February 2008. The interest rate on the new loan is 1.25% over Prime (5.75% at March 31, 2005).

 

As of March 31, 2005, the Company had $2.4 million remaining to be paid on its term loan facility, having paid $1.1 million during fiscal 2005 to Silicon Valley Bank. Of the remaining balance, $975,000 is due and payable in the 12 months immediately after March 31, 2005, with the remaining $410,000 due through fiscal 2008. The Company also continued to utilize $1.0 million of its accounts receivable line of credit facilities.

 

In May 2004, the Company renegotiated, extended and expanded its credit facilities with Silicon Valley Bank, providing for up to $3.0 million in borrowings, secured against 80% of eligible domestic accounts receivable. The following financial covenants apply to the extended Silicon Valley Bank loan facilities: net loss no greater than $500,000 in the first quarter of fiscal 2005; net income of at least $1.00 in the remaining three quarters of fiscal 2005; and a minimum modified quick ratio (defined as cash and cash equivalents plus accounts receivable, divided by total current liabilities, including all bank debt and not including deferred revenue) of 1.5:1 for the months of April 2004 through July 2004, 1.75:1 for the months of August 2004 through November 2004, and 2:1 for the months of December 2004 and each month thereafter. The Company was in compliance with each of these covenants as of March 31, 2005. Interest is accrued at 0.05% above prime and is payable monthly from the date of borrowing. In May 2005, the revolving credit facility was extended until July 2005. Certain of the Company’s assets, excluding intellectual property, secure both facilities.

 

Future minimum payments under the Company’s term loans at March 31, 2005 are as follows (in thousands):

 

     Notes
Payable


 

2006

   $ 2,037  

2007

     331  

2008

     94  
    


Total minimum payments

     2,462  

Less amounts representing interest

     (77 )
    


Present value of minimum payments

     2,385  

Less current portion

     (1,975 )
    


Long-term portion

   $ 410  
    


 

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PHARSIGHT CORPORATION

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

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