DIRECTV 2003 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2003 DIRECTV annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 137

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137

THE DIRECTV GROUP, INC.
for employee severance benefits of $21.3 million and contract termination payments of $18.6 million. During 2003, the
accrual was reduced due to the favorable settlement of certain contractual commitments by recording a gain of $1.6
million, net of taxes, to discontinued operations. As of December 31, 2003, $1.0 million of accruals were remaining.
Revenues, operating costs and expenses, and other non-operating results for the discontinued operations of
DIRECTV Broadband have been excluded from our results from continuing operations for all periods presented herein.
The financial results for DIRECTV Broadband are presented in the Consolidated Statements of Income in a single line
item entitled “Loss from discontinued operations, net of taxes” and the net cash flows are presented in the Consolidated
Statements of Cash Flows as “Net cash used in discontinued operations.”
CONTRACTUAL OBLIGATIONS, OFF-BALANCE SHEET ARRANGEMENTS AND CONTINGENCIES
Contractual Obligations
The following table sets forth our contractual obligations as of December 31, 2003, including the future periods in
which payments are expected. Additional details regarding these obligations are provided in the Notes to the
Consolidated Financial Statements in Item 8 referenced in the table.
Payments Due By Period
Contractual Obligations Total
Less than
1year 1-3 years 3-5 years
More
than
5 years
(Dollars in Millions)
Long-Term Debt Obligations (Note 8)(a) .................. $4,350.4 $ 219.1 $ 309.1 $ 437.2 $3,385.0
PurchaseObligations(Note20)(b) ....................... 3,474.7 844.8 1,166.9 1,344.0 119.0
Operating Lease Obligations (Note 20)(c) ................. 531.5 181.8 213.9 113.8 22.0
Capital Lease Obligations .............................. 3.8 3.3 0.5 — —
Other Long-Term Liabilities Reflected on the Registrant’s
Balance Sheet under GAAP (Note 10)(d) ................ 20.0 17.5 2.5 — —
Total .............................................. $8,380.4 $1,266.5 $1,692.9 $1,895.0 $3,526.0
(a) Long-term debt obligations do not include interest payments or potential prepayments that may be required under
DIRECTV U.S.’ senior secured credit facility after 2004.
(b) Purchase obligations consist of broadcast programming commitments, satellite construction contracts, including
performance incentive obligations payable to the satellite manufacturer, and service contract commitments.
Broadcast programming commitments include guaranteed minimum contractual commitments that are typically
based on a minimum number of required subscribers subscribing to the related programming. Actual payments
typically exceed the minimum payment requirements as the actual number of subscribers subscribing to the
related programming exceeds the minimum amounts. Satellite construction contracts typically exclude the cost to
insure and launch satellites into orbit, which costs can be significant to the overall cost of placing a satellite into
service. In addition, subject to satellite performance exceeding and/or meeting certain minimum requirements, our
satellite construction contracts often include performance incentive obligations payable to the satellite
manufacturer. Estimated incentive obligations based on satellite performance through December 31, 2003 are
included in the table above, however actual commitments can change significantly based on the future
performance of satellites. Service contract commitments include minimum commitments for the purchase of
services that have been outsourced to third parties, such as customer call center operations and billing services. In
most cases, actual payments, which are typically based on volume, usually exceed these minimum amounts.
(c) Certain of the operating leases contain escalation clauses and renewal or purchase options, which are not
considered in the amounts disclosed.
(d) Other long-term liabilities include obligations to make required minimum contributions to qualified pension plans
in accordance with ERISA minimum funding requirements in 2004. After 2004, contributions are dependent on
numerous factors that cannot be reasonably predicted.
49