DIRECTV 2008 Annual Report Download - page 94

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
DIRECTV U.S. also amended its senior secured credit facility to include a new $1,000 million
Term Loan C, which was issued at a 1% discount, resulting in $990 million of proceeds. Initially,
borrowings under Term Loan C bear interest at 5.25%, however the rate is variable based on changes
in the London InterBank Offered Rate, or LIBOR. The interest rate may be increased or decreased
under certain conditions. The Term Loan C has a final maturity of April 13, 2013, and we began
making quarterly principal payments totaling 1% annually on September 30, 2008. The senior secured
credit facility is secured by substantially all of DIRECTV U.S.’ assets and the assets of its current and
certain of its future domestic subsidiaries and is fully and unconditionally guaranteed, jointly and
severally, by substantially all of DIRECTV U.S.’ current and certain of its future domestic subsidiaries.
Notes Payable. All of our 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, 6.375% senior notes and
7.625% 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 senior notes is payable upon
maturity, while interest is payable semi-annually.
The fair value of our 8.375% senior notes was approximately $904 million at December 31, 2008
and approximately $948 million at December 31, 2007. The fair value of our 6.375% senior notes was
approximately $911 million at December 31, 2008 and approximately $962 million at December 31,
2007. The fair value of our 7.625% senior notes was approximately $1,451 million at December 31,
2008. We calculated the fair values based on quoted market prices of our senior notes, which is a
Level 1 input under SFAS No. 157, on those dates.
Credit Facility. At December 31, 2008, DIRECTV U.S.’ senior secured credit facility consisted of
a $463 million six-year Term Loan A, a $972 million eight-year Term Loan B, a $986 million five-year
Term Loan C and a $500 million undrawn six-year revolving credit facility. The Term Loan A, Term
Loan B and Term Loan C 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%, 1.50% and 2.25%,
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: $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. 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, 2008, 2007, or 2006. The amount of interest accrued related to our outstanding
debt was $45 million at December 31, 2008 and $26 million at December 31, 2007.
Sky Brazil Bank Loan. As a result of our acquisition of Sky Brazil, we assumed Sky Brazil’s
$210 million U.S. dollar denominated variable rate bank loan due in August 2007. 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,
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