Blizzard 2004 Annual Report Download - page 62

13. Long-Term Debt
Mortgage Notes Payable
As of March 31, 2003, long-term debt and the current portion of long-term debt of $2.8 million were comprised of
the mortgage note payable related to the land, office and warehouse facilities of our German subsidiary. The German
mortgage note bore interest at 5.45%, was due in bi-annual installments of Euro (“EUR”) 73,900 ($89,958), was
collateralized by the related assets and was scheduled to mature in December 2018. The German mortgage note was
repaid in full in fiscal 2004.
Credit Facilities
We have revolving credit facilities with our Centresoft subsidiary located in the UK (the “UK Facility”) and our NBG
subsidiary located in Germany (the “German Facility”). The UK Facility provided Centresoft with the ability to borrow
up to Great British Pounds (“GBP”) 8.0 million ($14.6 million) and GBP 8.6 million ($13.5 million), including issuing
letters of credit, on a revolving basis as of March 31, 2004 and 2003, respectively. Furthermore, under the UK
Facility, Centresoft provided a GBP 0.3 million ($0.5 million) and a EUR 1.0 million ($1.1 million) guarantee for
the benefit of our CD Contact subsidiary as of March 31, 2004 and 2003, respectively. The UK Facility bore inter-
est at LIBOR plus 2.0% and LIBOR plus 1.5% as of March 31, 2004 and 2003, respectively, is collateralized by
substantially all of the assets of the subsidiary and expires in November 2004. The UK Facility also contains various
covenants that require the subsidiary to maintain specified financial ratios related to, among others, fixed charges. As of
March 31, 2004 and 2003, we were in compliance with these covenants. No borrowings were outstanding against
the UK Facility as of March 31, 2004 or 2003. The German Facility provided for revolving loans up to EUR 0.5
million ($0.6 million) and EUR 0.8 million ($0.8 million) as of March 31, 2004 and 2003, respectively, bore
interest at a Eurocurrency rate plus 2.5%, is collateralized by certain of the subsidiary’s property and equipment and
has no expiration date. No borrowings were outstanding against the German Facility as of March 31, 2004 or 2003.
Private Placement of Convertible Subordinated Notes
In December 1997, we completed the private placement of $60.0 million principal amount of 63⁄4% convertible
subordinated notes due 2005 (the “Notes”). The Notes were convertible, in whole or in part, at the option of the
holder at any time after December 22, 1997 (the date of original issuance) and prior to the close of business on the
business day immediately preceding the maturity date, unless previously redeemed or repurchased, into our common
stock at a conversion price of $5.593 per share, subject to adjustment in certain circumstances. During the three
months ended June 30, 2001, we called for the redemption of the Notes. In connection with that call, holders
converted to common stock approximately $58.7 million aggregate principal amount of their Notes, net of conversion
costs. The remaining Notes were redeemed for cash.
14. Commitments and Contingencies
Developer and Intellectual Property Contracts
In the normal course of business, we enter into contractual arrangements with third parties for the development of
products, as well as for the rights to intellectual property. Under these agreements, we commit to provide specified
payments to a developer, or intellectual property holder, based upon contractual arrangements. Typically, the payments
to third-party developers are conditioned upon the achievement by the developers of contractually specified develop-
ment milestones. These payments to third-party developers and intellectual property holders typically are deemed to be
Activision, Inc. — 2004 Annual Report
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