DIRECTV 2002 Annual Report Download - page 131

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HUGHES ELECTRONICS CORPORATION
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT — (concluded)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 1: Basis of Presentation
As discussed in Note 9 of the Notes to the Consolidated Financial Statements, the terms of the
PanAmSat debt and credit facilities restrict PanAmSat from transferring funds to Hughes Electronics
Corporation (“Hughes”) in the form of cash dividends, loans or advances. In the parent company only
financial statements, Hughes’ investment in subsidiaries is stated at cost, net of equity in earnings
(losses) of subsidiaries, since the date of formation/acquisition. Thus, Hughes’ interest in the net
assets of PanAmSat, which totals about $3.0 billion as of December 31, 2002, is included in
“Investments in Subsidiaries” in the accompanying Condensed Balance Sheets of the parent company.
The parent company only financial statements should be read in conjunction with Hughes’ consolidated
financial statements.
On June 11, 2002, Hughes contributed to its wholly-owned subsidiary, DIRECTV Holdings LLC
(“DIRECTV”), certain programming contracts that it acquired from United States Satellite Broadcasting
Company, Inc. in May 1999. On January 1, 2002, Hughes contributed the net assets of its Hughes
Network Systems division to its wholly-owned subsidiary, Hughes Network Systems, Inc. (“HNS”).
These transactions were accounted for as the transfer of net assets by entities under common control.
Accordingly, the parent company financial statements have been prepared as if the transferred net
assets had been contributed to DIRECTV and HNS, respectively, prior to the earliest period presented.
NOTE 2: Loans Receivable from Subsidiaries
Loans receivable from subsidiaries include $1,913.8 million and $315.5 million receivable from
DIRECTV Latin America, LLC (“DLA”) at December 31, 2002 and 2001, respectively, and $1,721.3
million receivable from PanAmSat at December 31, 2001. The loans receivable from DLA bear interest
at rates ranging from 4.25% to 12.61%. The loan receivable from PanAmSat was repaid in full in
February 2002.
NOTE 3: Credit Facilities
See Note 9 of the Notes to the Consolidated Financial Statements.
NOTE 4: Contingencies
See Note 21 of the Notes to the Consolidated Financial Statements.
NOTE 5: Preferred Stocks
See Note 17 of the Notes to the Consolidated Financial Statements.
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