DIRECTV 2011 Annual Report Download - page 79

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DIRECTV
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT fluctuations in foreign currency exchange rates. Our objective in managing our
MARKET RISK exposure to foreign currency changes is to reduce earnings and cash flow volatility
associated with foreign exchange rate fluctuations. Accordingly, we may enter into
The following discussion and the estimated amounts generated from the foreign exchange contracts to mitigate risks associated with foreign currency
sensitivity analyses referred to below include forward-looking statements of market denominated assets, liabilities, commitments and anticipated foreign currency
risk which assume for analytical purposes that certain adverse market conditions transactions. The gains and losses on derivative foreign exchange contracts offset
may occur. Actual future market conditions may differ materially from such changes in value of the related exposures. As of December 31, 2011, we had no
assumptions and the amounts noted below are the result of analyses used for the significant foreign currency exchange contracts outstanding. The impact of a
purpose of assessing possible risks and the mitigation thereof. Accordingly, you hypothetical 10% adverse change in exchange rates on our net assets would be a
should not consider the forward-looking statements as our projections of future loss of $150 million, net of taxes, at December 31, 2011, a significant portion of
events or losses. which would be recorded in ‘‘Foreign currency translation activity during the
period’’ in our Consolidated Statements of Changes in Stockholders’ Equity
General (Deficit) and Redeemable Noncontrolling Interest.
Our cash flows and earnings are subject to fluctuations resulting from changes
in foreign currency exchange rates, interest rates and changes in the market value of Interest Rate Risk
our equity investments. We manage our exposure to these market risks through From time to time, we may be subject to fluctuating interest rates for variable
internally established policies and procedures and, when deemed appropriate, rate borrowings, which may adversely impact our consolidated results of operations
through the use of derivative financial instruments. We enter into derivative and cash flows. We had outstanding debt of $13,464 million at December 31,
instruments only to the extent considered necessary to meet our risk management 2011, which mostly consisted of DIRECTV U.S.’ fixed rate borrowings.
objectives, and do not enter into derivative contracts for speculative purposes.
***
Foreign Currency Risk
We generally conduct our business in U.S. dollars with some business
conducted in a variety of foreign currencies and therefore we are exposed to
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