DIRECTV 2004 Annual Report Download - page 128

THE DIRECTV GROUP, INC.
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT — (concluded)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
As discussed in Note 9 of the Notes to the Consolidated Financial Statements, the terms of the DIRECTV Holdings LLC credit
facilities limit DIRECTV Holdings LLC and its respective subsidiaries from transferring funds to us in the form of cash
dividends, loans or advances. In the parent company only financial statements, we state our investment in subsidiaries at cost,
net of equity in earnings (losses) of subsidiaries, since the date of formation/acquisition. As a result, we include our interest in
the net assets of DIRECTV Holdings LLC, which total about $2.4 billion and $2.3 billion at December 31, 2004 and 2003,
respectively, in “Investments in Subsidiaries” in the accompanying Condensed Balance Sheets of the parent company. The
parent company only financial statements and related notes should be read in conjunction with our consolidated financial
statements and notes thereto.
Note 2: Loss on Sale of PanAmSat
On August 20, 2004, we completed the sale of our approximately 80.4% interest in PanAmSat to an affiliate of KKR for $2.64
billion in cash. We recorded a pre-tax loss of $1,078.1 million in “Other, net” in 2004 in the accompanying Condensed
Statements of Operations as a result of this transaction. The $2.64 billion in cash received for this transaction is reflected in
“Net investment in subsidiaries” in the Condensed Statements of Cash Flows. See Note 3 to the Consolidated Financial
Statements for more information.
Note 3: Loans Receivable from Subsidiaries
On August 27, 2004, in connection with the completion of the Pegasus and NRTC transactions described in Note 3 to the
Consolidated Financial Statements, we provided DIRECTV U.S. $875.0 million in the form a unsecured promissory note,
which is payable in full on December 31, 2010. The promissory note, which is included in “Loans Receivable from
Subsidiaries” at December 31, 2004, bears interest, which is payable quarterly, at three month LIBOR. DIRECTV U.S. may
prepay the note in whole or in part at any time without penalty. We may accelerate the outstanding principal balance on the note
if DIRECTV U.S. fails to pay interest when due or in the event of bankruptcy or insolvency. We have the option to convert the
note to capital in whole or in part at any time.
Under the Reorganization Plan and/or Contribution Agreement as discussed in Note 18 to the Consolidated Financial
Statements, we contributed our claims to DLA LLC of approximately $1.4 billion, to the extent not previously discharged in the
Chapter 11 proceedings. Accordingly, such amount has been reclassified in the Condensed Balance Sheets of the parent
company from “Loans Receivable from Subsidiaries” to “Investments in Subsidiaries” as of December 31, 2003.
The $786.2 million of “Loans Receivable from Subsidiaries” at December 31, 2003 represents $104.7 million outstanding under
a $300 million senior secured debtor-in-possession financing facility and $681.5 million of intercompany loans to the extent not
previously discharged in the Chapter 11 proceedings. In connection with the Reorganization Plan and/or Contribution
Agreement, we contributed to DLA LLC our investment in and intercompany loans receivable from SurFin and certain LOCs in
February 2004. In exchange for these contributions, conversion of the debtor-in-possession financing facility to equity and
contribution of equity interests in various LOCs, our equity interest in the restructured DLA LLC increased from 74.7% to
approximately 85.9%.
Note 4: Credit Facilities
See Note 9 of the Notes to the Consolidated Financial Statements.
Note 5: Contingencies
See Note 21 of the Notes to the Consolidated Financial Statements.
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