DIRECTV 2009 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 of the 2009 DIRECTV annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

DIRECTV
Operations in connection with the exchange of accumulated Venezuelan cash balances to U.S. dollars
using the parallel exchange process.
In January 2010, the Venezuelan government announced the creation of a dual exchange rate
system, including an exchange rate of 4.3 bolivars fuerte per U.S. dollar for most of the activities of our
Venezuelan operations. As a result of this devaluation, we estimate an approximate $6 million charge
to net income in the first quarter of 2010 related to the adjustment of net bolivars fuerte denominated
monetary assets to the new official exchange rate. We will also begin reporting the operating results of
our Venezuelan subsidiary in the first quarter of 2010 using the devalued rate, which will result in a
50% reduction in revenues and local currency operating costs. As a result of our policy of repatriating
excess cash balances using the parallel exchange rate beginning in 2009, we do not expect a significant
reduction in operating profits from our Venezuelan operations in 2010 due to the devaluation of the
official exchange rate as the effect of devaluation will be offset by lower charges for the repatriation of
cash.
We currently expect to continue to repatriate cash generated in Venezuela in excess of local
operating requirements, and to the extent we are unable to obtain timely approval to exchange bolivars
fuerte at the official rate, we may use the legal parallel exchange process and we expect to incur
additional charges in the future. Using the official exchange rate as of December 31, 2009, our
Venezuelan subsidiary had Venezuelan bolivar fuerte denominated assets of $15 million in excess of
Venezuelan bolivar fuerte denominated liabilities, including cash of $33 million as of December 31,
2009.
Other. Several factors may affect our ability to fund our operations and commitments that we
discuss in ‘‘Contractual Obligations’’, ‘‘Off-Balance Sheet Arrangements’’ and ‘‘Contingencies’’ below.
In addition, our future cash flows may be reduced if we experience, among other things, significantly
higher subscriber additions than planned, increased subscriber churn or upgrade and retention costs,
higher than planned capital expenditures for satellites and broadcast equipment, satellite anomalies or
signal theft or if we are required to make a prepayment on our term loans under DIRECTV U.S.’
senior secured credit facility. Additionally, DIRECTV U.S.’ ability to borrow under the senior secured
credit facility is contingent upon DIRECTV U.S. meeting financial and other covenants associated with
its facility as more fully described above.
CONTRACTUAL OBLIGATIONS
The following table sets forth our contractual obligations as of December 31, 2009, including the
future periods in which payments are expected. Additional details regarding these obligations are
66