DIRECTV 2008 Annual Report Download - page 71

THE DIRECTV GROUP, INC.
Cash Flows Used in Financing Activities
During 2006, 2007 and 2008 our Board of Directors approved, and we completed, the repurchase
of a total of $8.2 billion of our common stock as follows: $3,174 million during 2008, $2,025 million
during 2007 and $2,977 million during 2006. In January 2009, our Board of Directors authorized an
additional $2 billion of share repurchases.
Additionally, during 2008 we had $2,490 million of net cash proceeds from the issuance of senior
notes and borrowings under our senior secured credit facility which were completed in May 2008 as
described in Note 8 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this
Annual Report, and a $160 million capital contribution received in connection with the Liberty
Transaction described in Note 19 of the Notes to the Consolidated Financial Statements in Part II,
Item 8 of this Annual Report.
Free Cash Flow
Free cash flow increased in 2008 as compared to 2007 due to an increase in net cash provided by
operating activities described above, and the decrease in capital expenditures. The decrease in capital
expenditures resulted from lower set-top receiver costs for set-top receivers capitalized under the
DIRECTV U.S. lease program and lower capital expenditures for satellite and broadcast facilities and
equipment to support HD programming partially offset by increased capital expenditures in Latin
America.
Free cash flow decreased in 2007 compared to 2006 as the increase in net cash provided by
operating activities discussed above was more than offset by an increase in capital expenditures for
leased set-top receivers. Capital expenditures for leased set-top receivers increased as a result of an
increase in the amount of set-top receivers capitalized in 2007 under the DIRECTV U.S. lease
program implemented in March 2006.
During 2009, we expect continued free cash flow growth primarily as a result of the anticipated
increase in operating profit before depreciation and amortization.
Debt
At December 31, 2008, we had $5,833 million in total outstanding borrowings, bearing a weighted
average interest rate of 5.7%. Our outstanding borrowings primarily consist of notes payable and
amounts borrowed under a senior secured credit facility of DIRECTV U.S. as more fully described in
Note 8 of the Notes to the Consolidated Financial Statements in Item 8, Part II of this Annual Report,
which we incorporate herein by reference.
Our notes payable and senior secured credit facility and other borrowings mature as follows:
$108 million in 2009; $308 million in 2010; $108 million in 2011; $20 million in 2012; $2,796 million in
2013; and $2,500 million thereafter. However, these amounts do not reflect potential prepayments that
may be required under DIRECTV U.S.’ senior secured credit facility, which could result from a
computation that we are required to make each year end under the credit agreement. We were not
required to make a prepayment for the years ended December 31, 2008 and 2007.
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 its assets, and (vii) make
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