DIRECTV 2002 Annual Report Download - page 95

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HUGHES ELECTRONICS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Note 8: Accrued Liabilities and Other
2002 2001
(Dollars in Millions)
Exit costs and other liabilities related to discontinued businesses ............. $ 255.1 $ 386.3
Payroll and other compensation ......................................... 212.9 216.8
Programming contract liabilities ......................................... 120.6 106.3
Subscriber services expenses .......................................... 75.3 59.0
Interest payable ...................................................... 63.6 27.2
Other .............................................................. 542.4 546.4
Total ........................................................... $1,269.9 $1,342.0
Included in “Other Liabilities and Deferred Credits” is a provision for long-term programming
contracts with above-market rates, established as part of the USSB and PRIMESTAR acquisitions in
1999, which totaled $296.0 million and $430.1 million at December 31, 2002 and December 31, 2001,
respectively.
During the second and third quarters of 2001, Hughes announced a nearly 10% reduction of its
approximately 7,900 employees, excluding DIRECTV customer service representatives, located in the
United States. As a result, 750 employees across all business disciplines were given notification of
termination that resulted in an expense of $22.2 million in the second quarter of 2001 and $65.3 million
in the third quarter of 2001 for a total charge to “Selling, general and administrative expenses” of
$87.5 million. Of that charge, $80.0 million was related to employee severance benefits and
$7.5 million was for other costs primarily related to a remaining lease obligation associated with excess
office space and employee equipment. The remaining accrual amounted to $14.1 million at
December 31, 2002 and related to long-term employee severance benefits.
See Note 18 for additional information on the exit costs and other liabilities related to discontinued
businesses, including the shutdown of the DIRECTV Broadband business.
Note 9: Short-Term Borrowings and Long-Term Debt
Short-Term Borrowings and Current Portion of Long-Term Debt
Interest Rates at
December 31, 2002 2002 2001
(Dollars in Millions)
Revolving credit facilities ................................. $ 450.0
Other short-term borrowings .............................. 4.31%–16.00% $ 21.5 16.4
Current portion of long-term debt .......................... 5.93%–6.00% 706.3 1,192.1
Total short-term borrowings and current portion of long-
term debt ........................................ $727.8 $1,658.5
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