DIRECTV 2003 Annual Report Download - page 105

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)
On May 5, 1997, PanAmSat adopted a stock option incentive plan with terms similar to the Plan. As of
December 31, 2003, PanAmSat had 6,297,823 options outstanding to purchase its common stock with exercise
prices ranging from $14.12 per share to $63.25 per share. The options vest ratably over three to four years and
have a remaining life ranging from 3.3 to 10 years. At December 31, 2003, 4,115,726 options were exercisable at
a weighted average exercise price of $34.23 per share. During the year ended December 31, 2003, PanAmSat
granted 400,500 restricted stock units to its employees with a weighted average grant-date fair value of
approximately $17.32 per share.
Note 14: Other Income and Expenses
The following table summarizes the components of other income and expenses for the years ended
December 31:
2003 2002 2001
(Dollars in Millions)
Equity losses from unconsolidated affiliates ................................ $(81.5) $ (70.1) $ (61.3)
EchoStar Merger termination payment .................................... — 600.0 —
Net unrealized gain (loss) on investments .................................. 79.4 (180.6) (239.0)
Net gain from sale of investments ........................................ 7.5 84.1 130.6
NetgainonexitofDIRECTVJapanbusiness(Note17) ...................... — 41.1 32.0
Other............................................................... (5.4) (49.0) 45.0
TotalOther,net .................................................. $ — $425.5 $ (92.7)
For the years ended December 31, 2003 and 2002, equity losses from unconsolidated affiliates are primarily
comprised of losses at the DLA LOCs. Also included in 2003 are equity losses from the XM Satellite Radio
investment. For the year ended December 31, 2001, equity losses from unconsolidated affiliates are primarily
comprised of losses at the DLA LOCs and Hughes Tele.com (India) Limited (“HTIL”).
In December 2002, the Company recognized a $600.0 million gain related to a termination agreement
entered into by the Company, GM and EchoStar Communications Corporation (“EchoStar”). As a part of this
agreement, the parties agreed to terminate the merger agreement and certain related agreements due to the
proposed merger’s failure to obtain regulatory approval. Under the terms of the termination agreement, EchoStar
paid the Company $600 million in cash.
Net unrealized gain on investments for 2003 includes a $79.6 million gain resulting from an increase in the
fair market value of an investment in an XM Satellite Radio convertible note. Net unrealized loss on investments
for 2002 is primarily comprised of other-than-temporary declines in fair value of the Company’s investment in
XM Satellite Radio and Crown Media Holdings. Net unrealized loss on investments for 2001 are primarily
comprised of a write-down of $212.0 million related to the Company’s investment in Sky Perfect
Communications, Inc.
Note 15: Related-Party Transactions
In the ordinary course of its operations, the Company enters into transactions with related parties to
purchase and/or sell telecommunication services, advertising, broadcast programming, equipment and inventory.
Transactions entered into with GM and its affiliates prior to December 23, 2003 were considered related party
transactions. Other related parties include DLA’s Puerto Rican, Venezuelan and Argentine LOCs until their
respective dates of consolidation with the Company and HTIL until it was sold on December 6, 2002 (see
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