DIRECTV 2006 Annual Report Download - page 98

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS —(continued)
required to make at each year end under the credit agreement. We were not required to make a
prepayment for the years ended December 31, 2006, 2005, or 2004. However, we made a prepayment
of $201.0 million on April 15, 2004 under our prior credit facility for the year ended December 31,
2003. The amount of interest accrued related to our outstanding debt was $26.5 million at
December 31, 2006 and $28.4 million at December 31, 2005. The unamortized bond premium included
in other debt was $2.8 million as of December 31, 2006 and $3.1 million as of December 31, 2005.
Sky Brazil Bank Loan. Sky Brazil’s $210.0 million U.S. dollar denominated variable rate bank
loan due in August 2007 was assumed on August 23, 2006 as part of the Sky Brazil transaction
described in Note 3 above. In January 2007, we paid $210.0 million to the lending banks, who in turn
assigned the loan to a wholly-owned subsidiary of The DIRECTV Group. As a result, this loan is no
longer outstanding on a consolidated basis.
Covenants and Restrictions. The senior secured credit facility requires DIRECTV U.S. to comply
with certain financial covenants. The senior notes and the senior secured credit facility also include
covenants that restrict DIRECTV U.S.’ ability to, among other things, (i) incur additional indebtedness,
(ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or
acquisitions, (iv) enter into certain transactions with affiliates, (v) merge or consolidate with another
entity, (vi) sell, assign, lease or otherwise dispose of all or substantially all of our assets, and (vii) make
voluntary prepayments of certain debt, in each case subject to exceptions as provided in the credit
agreement and senior notes indentures. Should we fail to comply with these covenants, all or a portion
of our borrowings under the senior notes and senior secured credit facility could become immediately
payable and the revolving credit facility could be terminated. At December 31, 2006, DIRECTV U.S.
was in compliance with all such covenants.
2005 Refinancing Transactions. In April 2005, we replaced our prior credit facility with the senior
secured credit facility described above. The senior secured credit facility was initially comprised of a
$500.0 million six-year Term Loan A, a $1,500.0 million eight-year Term Loan B, both of which were
fully funded, and a $500.0 million undrawn six-year revolving credit facility. We used a portion of the
$2,000.0 million proceeds from the transaction to repay our prior credit facility that had a then
outstanding balance of $1,001.6 million and to pay related financing costs and accrued interest.
Borrowings under the prior credit facility bore interest at a rate equal to LIBOR plus 1.75%.
On May 19, 2005, we redeemed $490.0 million of our then outstanding $1,400.0 million 8.375%
senior notes at a redemption price of 108.375% plus accrued and unpaid interest, for a total of
$538.3 million.
On June 15, 2005, DIRECTV Holdings and DIRECTV Financing issued $1,000.0 million of
6.375% senior notes. We used a portion of the proceeds from the transaction to repay $500.0 million of
the Term Loan B portion of our senior secured credit facility and to pay related financing costs.
The repayment of our prior senior secured credit facility, the partial repayment of our senior
secured credit facility and the partial redemption of our 8.375% senior notes resulted in a 2005 pre-tax
charge of $64.9 million ($40.0 million after tax) of which $41.0 million was associated with the premium
paid for the redemption of our 8.375% senior notes and $23.9 million with the write-off of a portion of
our deferred debt issuance costs and other transaction costs. The charge was recorded in ‘‘Other, net’’
in the Consolidated Statements of Operations.
Restricted Cash. Restricted cash of $5.6 million as of December 31, 2006 and $19.3 million as of
December 31, 2005 was included as part of ‘‘Prepaid expenses and other’’ in our Consolidated Balance
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