DIRECTV 2003 Annual Report Download - page 128

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THE DIRECTV GROUP, INC.
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT — (concluded)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
As discussed in Note 8 of the Notes to the Consolidated Financial Statements, the terms of the DIRECTV
Holdings LLC and PanAmSat debt and credit facilities limit DIRECTV Holdings LLC, PanAmSat and their
respective subsidiaries from transferring funds to the Company in the form of cash dividends, loans or advances.
In the parent company only financial statements, the Company’s investment in subsidiaries is stated at cost, net
of equity in earnings (losses) of subsidiaries, since the date of formation/acquisition. As a result, the Company’s
interest in the net assets of DIRECTV Holdings LLC and PanAmSat, which total about $2.3 billion and $3.2
billion at December 31, 2003, respectively, are 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 the Company’s consolidated financial statements.
On June 11, 2002, the Company contributed to its wholly-owned subsidiary, DIRECTV Holdings LLC,
certain programming contracts that it acquired from United States Satellite Broadcasting Company, Inc. in May
1999. On January 1, 2002, the Company contributed the net assets of its Hughes Network Systems division to its
wholly-owned subsidiary, 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
Under the Reorganization Plan and/or Contribution Agreement as discussed in Note 16 to the Consolidated
Financial Statements, the Company contributed its claims against DLA LLC of approximately $1.4 billion, to the
extent not previously discharged in the Chapter 11 proceedings. Accordingly, such amount has been reclassified
in the Condensed Balance Sheets of the Parent Company from “Loans Receivable from Subsidiaries” to
“Investments in Subsidiaries” as of December 31, 2003.
The $786.2 million of “Loans Receivable from Subsidiaries” at December 31, 2003 represents $104.7
million outstanding under a $300 million senior secured debtor-in-possession financing facility and $681.5
million of intercompany loans to the extent not previously discharged in the Chapter 11 proceedings. In
connection with the Reorganization Plan and/or Contribution Agreement, the Company contributed to DLA LLC
its investment in and intercompany loans receivable from SurFin and certain LOCs in February 2004. In
exchange for these contributions, conversion of the debtor-in-possession financing facility to equity and
contribution of equity interests in various LOCs, the Company’s equity interest in the restructured DLA LLC
increased from 74.7% to approximately 85.9%.
Note 3: Credit Facilities
See Note 8 of the Notes to the Consolidated Financial Statements.
Note 4: Contingencies
See Note 20 of the Notes to the Consolidated Financial Statements.
Note 5: Preferred Stocks
See Note 11 of the Notes to the Consolidated Financial Statements.
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