DIRECTV 2007 Annual Report Download - page 89

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Notes Payable. The 8.375% senior notes and the 6.375% senior notes were issued by DIRECTV
U.S. and have been registered under the Securities Act of 1933, as amended. The 8.375% senior notes
and the 6.375% senior notes are unsecured and have been fully and unconditionally guaranteed, jointly
and severally, by substantially all of DIRECTV U.S.’ assets. Principal on the 8.375% senior notes and
the 6.375% senior notes is payable upon maturity, while interest is payable semi-annually.
The fair value of our 8.375% senior notes was approximately $948 million at December 31, 2007
and December 31, 2006. The fair value of our 6.375% senior notes was approximately $962 million at
December 31, 2007 and December 31, 2006. The fair values were calculated based on quoted market
prices on those dates.
Credit Facility. At December 31, 2007, our senior secured credit facility consisted of a
$500 million six-year Term Loan A, a $983 million eight-year Term Loan B and a $500 million undrawn
six-year revolving credit facility. The Term Loan A and Term Loan B components of the senior secured
credit facility currently bear interest at a rate equal to the London InterBank Offered Rate, or LIBOR,
plus 0.75% and 1.50%, respectively. In addition, we pay a commitment fee of 0.175% per year for the
unused commitment under the revolving credit facility. The interest rate and commitment fee may be
increased or decreased under certain conditions. The senior secured credit facility is secured by
substantially all of DIRECTV U.S.’ assets and is fully and unconditionally guaranteed, jointly and
severally by substantially all of DIRECTV U.S.’ material domestic subsidiaries.
Our notes payable and credit facility mature as follows: $48 million in 2008, $98 million in 2009,
$297 million in 2010, $98 million in 2011, $10 million in 2012 and $2,842 million thereafter. These
amounts do not reflect potential prepayments that may be required under our senior secured credit
facility, which could result from a computation of excess cash flows that we may be 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, 2007, 2006, or 2005. The amount of interest accrued related to our outstanding
debt was $26 million at December 31, 2007 and $27 million at December 31, 2006. The unamortized
bond premium included in other debt was $2 million as of December 31, 2007 and $3 million as of
December 31, 2006.
Sky Brazil Bank Loan. Sky Brazil’s $210 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 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, 2007, DIRECTV U.S.
was in compliance with all such covenants.
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