DIRECTV 2003 Annual Report Download - page 89

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)
On July 31, 2001, the Company sold about 4.1 million shares of Thomson common stock for approximately
$132.7 million in cash, resulting in a pre-tax gain of approximately $108.3 million.
Other Investments
In January 2003, the Company invested $10 million in a convertible note issued by XM Satellite Radio. The
note was convertible to registered shares of XM Satellite Radio common stock. This conversion feature of the
note was considered a derivative financial instrument accounted for at fair value. As of December 31, 2003, the
fair value of the note, including the conversion feature, was $90.5 million and was included in “Prepaid expenses
and other” in the Consolidated Balance Sheets. See Note 21 regarding the sale of this investment in January
2004.
Aggregate investments in companies accounted for under the equity method at December 31, 2003 and 2002
amounted to $4.6 million and $6.8 million, respectively.
Note 7: Accrued Liabilities and Deferred Credits
Accrued Liabilities and Other
2003 2002
(Dollars in Millions)
Exit costs and other liabilities related to discontinued businesses .................. $ 19.6 $ 255.1
Payroll and other compensation ............................................ 344.4 212.9
Programming contract liabilities ............................................ 133.2 120.6
Subscriber services expenses .............................................. 73.1 75.3
Interest payable ......................................................... 87.4 63.6
Other ................................................................. 401.3 542.4
Total ............................................................. $1,059.0 $1,269.9
During 2001, the Company announced a nearly 10% reduction of its approximately 7,900 employees,
excluding DIRECTV customer service representatives, located in the U.S. As a result, about 750 employees
across all business disciplines were given notification of termination that resulted in an expense of $87.5 million
in 2001 to “Selling, general and administrative expenses” in the Consolidated Statements of Income. 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 $3.8 million and $14.1 million at December 31, 2003 and 2002, respectively.
See Note 17 for additional information on the exit costs and other liabilities related to discontinued
businesses, including the shut down of the DIRECTV Broadband business.
Other Liabilities and Deferred Credits
Included in “Other Liabilities and Deferred Credits” in the Consolidated Balance Sheets are obligations
under programming contracts and a provision for long-term programming contracts with above-market rates,
established as part of the USSB and PRIMESTAR acquisitions in 1999, which totaled $291.1 million and $296.0
million at December 31, 2003 and December 31, 2002, respectively.
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