DIRECTV 2002 Annual Report Download - page 99

HUGHES ELECTRONICS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)
The combined income tax benefit was different than the amount computed using the U.S. federal
statutory income tax rate for the reasons set forth in the following table:
2002 2001 2000
(Dollars in Millions)
Expected refund at U.S. federal statutory income tax rate .............. $(99.9) $(346.4) $(285.4)
Research and experimentation tax benefits and resolution of tax
contingencies ................................................ (98.0) (30.0) (80.9)
Extraterritorial income exclusion and foreign sales corporation tax benefit . (34.8) (37.1) (32.8)
U.S. state and local income tax benefit ............................. (6.5) (20.9) (26.6)
Tax basis differences attributable to equity method investees ........... 14.1 (29.6) (81.2)
Discontinuation of DIRECTV Broadband business .................... 27.9 — —
Minority interests in losses of partnership ........................... — 33.9 27.8
Non-deductible goodwill amortization ............................... — 46.3 40.3
Foreign losses and taxes, net of credits ............................ 100.7 56.8 31.6
Other......................................................... 2.1 1.4 1.1
Total income tax benefit ...................................... $(94.4) $(325.6) $(406.1)
Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities at
December 31 were as follows:
2002 2001
Deferred
Tax
Assets
Deferred
Tax
Liabilities
Deferred
Tax
Assets
Deferred
Tax
Liabilities
(Dollars in Millions)
Accruals and advances ............................. $ 295.9 $ 316.5
Customer deposits, rebates and commissions .......... 146.1 $ 158.1 172.3 $ 170.7
State taxes ....................................... — 2.6 23.2 —
GainonPanAmSatmerger .......................... — 171.6 — 176.4
Depreciationandamortization........................ 74.8 1,143.2 — 1,065.1
Net operating loss and tax credit carryforwards .......... 405.3 — 351.6 —
Discontinuation of DIRECTV Broadband business ....... 104.1 — — —
Programming contract liabilities ...................... 168.5 — 227.0 —
Unrealized gains and losses on securities .............. 1.4 — — 130.5
Other ............................................ 72.1 91.0 72.2 135.0
Subtotal .......................................... 1,268.2 1,566.5 1,162.8 1,677.7
Valuation allowance ................................ (185.2) — (112.7) —
Total deferred taxes ............................ $1,083.0 $1,566.5 $1,050.1 $1,677.7
No income tax provision has been made for the portion of undistributed earnings of foreign
subsidiaries deemed permanently reinvested that amounted to approximately $76.9 million and
$62.5 million at December 31, 2002 and 2001, respectively. Repatriation of all accumulated earnings
would have resulted in tax liabilities of $26.9 million in 2002 and $21.9 million in 2001.
At December 31, 2002, Hughes has $126.7 million of deferred tax assets relating to foreign
operating loss carryforwards expiring in varying amounts between 2003 and 2007. A valuation
allowance was provided for all foreign operating loss carryforwards. At December 31, 2002, Hughes
89