DIRECTV 2011 Annual Report Download - page 61

DIRECTV
7% interest to us at fair value until January 2014 as discussed in Note 20 of the Financing Transactions
Notes to the Consolidated Financial Statements in Item 8, Part II of this Annual In 2011, DIRECTV U.S. issued $4.0 billion of senior notes resulting in
Report. $3,990 million of proceeds, net of discount. Also in 2011, DIRECTV U.S.
purchased and redeemed its then outstanding $1,002 million of 6.375% senior
Liberty Transaction. On November 19, 2009, The DIRECTV Group, Inc., or
notes, resulting in a pre-tax charge of $25 million, $16 million after tax, primarily
DIRECTV Group, and Liberty Media Corporation, which we refer to as Liberty or
for the premiums paid. The charge was recorded in ‘‘Other, net’’ in our
Liberty Media, obtained stockholder approval of and closed a series of related
Consolidated Statements of Operations.
transactions which we refer to collectively as the Liberty Transaction. As a result of
the Liberty Transaction, DIRECTV Group and LEI became wholly-owned In 2010, DIRECTV U.S. issued $6.0 billion of senior notes resulting in
subsidiaries of DIRECTV. LEI consisted of the following: Liberty’s 57% interest in $5,978 million of proceeds, net of discount, and repaid the $2,205 million of
DIRECTV Group, a 100% interest in three regional sports networks, a 65% remaining principal on the Term Loans of its senior secured credit facility. The
interest in Game Show Network, LLC, approximately $120 million in cash and repayment of the Term Loans resulted in a 2010 pre-tax charge recorded in ‘‘Other,
cash equivalents and approximately $2.1 billion of indebtedness comprised of a net’’ in our Consolidated Statements of Operations of $16 million, $10 million
credit facility with a principal balance of $1,878 million, which we refer to as the after tax, resulting from the write-off of deferred debt issuance and other
Collar Loan, and a series of related equity collars. The assets, liabilities and results transaction costs.
of operations of LEI have been consolidated beginning on the acquisition date,
In 2009, DIRECTV U.S. issued $2.0 billion of senior notes resulting in
November 19, 2009.
$1,990 million of proceeds, net of discount. Also in 2009, DIRECTV U.S.
As a result of the Liberty Transaction we paid $97 million of cash which is net purchased and redeemed its then outstanding $910 million 8.375% senior notes,
of cash acquired at LEI and the regional sports networks. We also recorded a resulting in a 2009 pre-tax charge of $34 million, $21 million after tax, of which
$491 million charge to ‘‘Liberty transaction and related gains (charges)’’ in the $29 million resulted from a premium paid for the redemption and $5 million
Consolidated Statements of Operations for the year ended December 31, 2009 resulted from the write-off of deferred debt issuance costs and other transaction
related to a premium paid to LEI stockholders to complete the merger in the form costs. The charge was recorded in ‘‘Other, net’’ in our Consolidated Statements of
of an equity interest that exceeded the fair value of net assets acquired by Operations.
DIRECTV; general and administrative costs incurred to complete the transaction
and net losses recorded for the partial settlement of the equity collars and stock Venezuela Exchange Controls
options and stock appreciation rights held by Liberty employees subsequent to the
In January 2010, the Venezuelan government announced the creation of a dual
acquisition date, and adjustments of the equity collars and stock options and stock
exchange rate system, including an exchange rate of 4.3 bolivars fuerte per U.S.
appreciation rights. We recorded a $67 million net gain in ‘‘Liberty transaction and
dollar for most of the activities of our Venezuelan operations compared to an
related gains (charges)’’ in the Consolidated Statements of Operations for the final
exchange rate of 2.15 Venezuelan bolivars fuerte prior to the announcement. As a
settlement of the equity collars during 2010.
result of this devaluation, we recorded a $6 million charge to net income in the
During 2010, we repaid $1,537 million, including $1,202 million of year ended December 31, 2010 related to the adjustment of net bolivars fuerte
remaining principal payments and $335 million to settle the equity collars. During denominated monetary assets to the new official exchange rate. We began reporting
2009, we repaid a total of $751 million, including $676 million in principal the operating results of our Venezuelan subsidiary in the first quarter of 2010 using
payments and $75 million in payments to settle a portion of the equity collars. the devalued rate of 4.3 bolivars fuerte per U.S. dollar. In December 2010, the
Venezuelan government announced the elimination of the dual exchange rate
See Note 4 of the Notes to the Consolidated Financial Statements in Part II,
system, eliminating the 2.6 bolivars fuerte per U.S. dollar preferential rate which
Item 8 of this Annual Report, which we incorporate herein by reference.
was available for certain activities.
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