DIRECTV 2002 Annual Report Download - page 57

HUGHES ELECTRONICS CORPORATION
As a measure of liquidity, the current ratio (ratio of current assets to current liabilities) at
December 31, 2002 and 2001 was 1.14 and 0.76, respectively. Working capital increased by
$1,518.7 million to working capital of $453.3 million at December 31, 2002 from a working capital
deficit of $1,065.4 million at December 31, 2001. The change was principally due to the repayment of
current debt obligations and an increase in cash balances, both of which were funded by the proceeds
received from long-term borrowings that resulted from the refinancing transactions described in more
detail below, the cash receipts of $600 million from the settlement payment related to the terminated
merger agreement with EchoStar and proceeds from the sale of investments.
Hughes expects to have cash requirements for its continuing operations in 2003 of about
$200 million to $300 million. This cash will be used primarily for capital expenditures for satellites and
property, interest expense and investments in affiliated companies, including the Latin America
DIRECTV businesses. The above cash requirements do not include non-operational cash
requirements such as costs related to the shutdown of the DIRECTV Broadband business and a
potential purchase price adjustment payment to Boeing. For further discussion of the Boeing purchase
price adjustment, see “Commitments and Contingencies” below. Hughes’ cash requirements are
expected to be funded from a combination of existing cash balances, cash provided from operations,
amounts available under credit facilities, and additional borrowings or refinancings, as needed. In the
first quarter of 2003, Hughes completed a series of financing transactions designed to provide
sufficient liquidity to fund Hughes’ business plan through cash flow breakeven. See “Notes Payable
and Credit Facilities” below for additional information.
Hughes’ and its subsidiaries’ ability to borrow under the credit facilities is contingent upon meeting
financial and other covenants. The agreements also include certain operational restrictions. These
covenants limit Hughes’ and its subsidiaries’ ability to, among other things: incur or guarantee
additional indebtedness; make restricted payments, including dividends; create or permit to exist
certain liens; enter into business combinations and asset sale transactions; make investments; enter
into transactions with affiliates; and enter into new businesses. In addition, the terms of the PanAmSat
debt and credit facilities restrict PanAmSat from transferring funds to Hughes in the form of cash
dividends, loans or advances. At December 31, 2002, Hughes and its subsidiaries were in compliance
with all such covenants.
Common Stock Dividend Policy. Dividends may be paid on the GM Class H common stock only
when, as, and if declared by GM’s Board in its sole discretion.
The GM Board has not paid, and does not currently intend to pay in the foreseeable future, cash
dividends on its Class H common stock. Similarly, Hughes has not paid dividends on its common stock
to GM. Future Hughes earnings, if any, are expected to be retained for the development of the
businesses of Hughes.
Cash and Cash Equivalents. Cash and cash equivalents were $1,128.6 million at December 31,
2002 compared to $700.1 million at December 31, 2001. Included within cash and cash equivalents at
December 31, 2002 was $784.0 million of cash and cash equivalents at PanAmSat, which are
available to PanAmSat but are generally not available for use by Hughes in its other businesses.
Cash provided by operating activities was $1,126.1 million in 2002 compared to $190.3 million in
2001 and $1,090.7 million in 2000. The change in 2002 compared to 2001 resulted from the settlement
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