Financing Arrangements

12 Months Ended

Jun. 30, 2012



6.	Financing Arrangements

Adept has a revolving line of credit with Silicon Valley Bank, or SVB. Adept originally entered into the Loan and Security Agreement and related agreements for the revolving line in May 2009. In March 2011, Adept entered into an additional Loan and Security Agreement (EX-IM Loan Facility) and related agreements with SVB, pursuant to which a portion of the revolving line (the “EX-IM Line”) is guaranteed by the Export-Import Bank of the United States, and Adept is able to borrow against foreign accounts receivable and export-related inventory. In February 2012, Adept entered into amendments to the May 2009 Loan and Security Agreement (as previously amended), the March 2011 Loan and Security Agreement (EX-IM Loan Facility) and related agreements. See “Subsequent Events” for a discussion of further changes to the May 2009 Loan and Security Agreement, including revisions to the financial covenants, pursuant to additional amendments entered into in September 2012. The revolving line of credit and recent amendments are also described in this annual report on Form 10-K under the section entitled “Liquidity and Capital Resources”.

The February 2012 amendments extended the maturity date of the EX-IM Line from March 24, 2012 to March 25, 2013, removed a sublimit under the domestic portion of the revolving line for foreign exchange contracts, cash management services and letters of credit, and modified the financial covenants Adept must meet during the term of the revolving line. As modified, Adept was required to maintain (a) liquidity (domestic cash plus the available domestic borrowing base) of at least $3.5 million, and (b) minimum aggregate quarterly EBITDA (measured at the end of each fiscal quarter and applying a definition set forth in the Loan and Security Agreement) equal to or exceeding specified amounts (which are lower than the amounts applicable prior to the February 2012 amendments) for each fiscal quarter beginning December 2011. The quarterly EBITDA amounts in the Loan and Security Agreement are minimum amounts for financial covenant purposes only, and do not represent projections of Adept's financial results.

The Loan and Security Agreement requires Adept to cause its U.S. customers to transmit payments on accounts receivable to a lockbox account at SVB. During the second quarter of 2012, SVB began applying all qualifying daily domestic cash receipts on either the next or second business day to repay outstanding obligations under the Loan and Security Agreement with any excess transferred to Adept's deposit account with SVB. In February 2012, the loan documents were amended to perpetuate this mechanism for applying cash receipts and remove the threshold that previously triggered it. Adept remained subject to this mechanism for applying cash receipts until September 2012 (see “Subsequent Events”). The maturity date for borrowings under the revolving line is March 25, 2013. Adept is able to re-borrow funds under the revolving line to the extent there is available borrowing base to do so, and Adept meets the other conditions precedent for borrowing set forth in the loan documents.

At June 30, 2012, Adept had an outstanding principal balance of $5.5 million under the revolving line. Adept paid a $50,000 facility fee and certain bank expenses in connection with the February amendments of the loan documents and the renewal of the EX-IM Line. In the third quarter of fiscal 2011, Adept incurred $98,000 in legal and bank fees to amend the line of credit facility. These costs were deferred and are being amortized into interest expense over the life of the facility. Based on operating needs, strategic activities and other factors, the Company may further utilize the line of credit in the future.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details