Creative 1999 Annual Report Download - page 37

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35
NOTE 10 – CREDIT FACILITIES AND LONG TERM OBLIGATIONS
On March 13, 1996, Creative Technology Centre Pte Ltd (CTC), a Singapore subsidiary of Creative, entered into an agreement with two
banks for an eight year term loan facility for S$60.0 million ($35.3 million) to finance the construction of Creative’s headquarters building
in Singapore. The loan is repayable in nineteen quarterly installments comprising of eighteen installments of S$1.5 million ($0.9 million)
and a final installment for the remaining S$31.0 million ($18.2 million). The repayment commenced on July 5, 1998. The interest on
the outstanding loan balance is payable at the banks’ cost of funds plus 1.25%. The average interest rate charged for fiscal 1999 was 5.33%.
The loan is secured by a first mortgage on the building and by way of a fixed and floating charge over all assets of CTC. At June 30, 1999,
S$51.9 million ($30.5 million) was outstanding.
A portion of the construction of the headquarters building is also being financed in equal parts by Creative and Bukit Frontiers Pte Ltd.,
a company owned by one of Creative’s officers, who is also a director. At June 30, 1999, loans extended and equity contributed by Bukit
Frontiers Pte Ltd. totaled S$12.5 million ($7.4 million) and S$0.5 million ($0.4 million), respectively.
Creative has various other credit facilities relating to overdrafts, letters of credit and bank guarantees with several banks totaling approximately
$109.0 million at June 30, 1999. Within these credit facilities, sub-limits have been set on how Creative may utilize the overall credit facilities.
At June 30, 1999, $12.1 million in letters of credit and $2.3 million in bank guarantees were drawn under these facilities. These facilities
bear interest at approximately the banks’ prime rates.
NOTE 11 – LICENSE AGREEMENTS
Creative has entered into license agreements with certain software developers under which it has the right to include, modify and distribute
software products in support of its sales. Typically, royalties are payable on a per unit basis in relation to sales volume, although certain
agreements may include one time payments or guaranteed minimum commitments. Creative periodically reviews these arrangements in
accordance with its stated accounting policies. At June 30, 1999, Creative has committed to pay $1.4 million in respect of future minimum
royalty obligations over a term of up to 5 years.
NOTE 12 – OTHER CHARGES
Included in the results of operations for fiscal 1998 were other charges of $68.6 million relating to a $60.3 million write-off of acquired
in-process technology (see Note 14 of Notes to Consolidated Financial Statements) and a one-time write off of $8.3 million for cessation
of certain activities.
Notes to Consolidated Financial Statements