DIRECTV 2003 Annual Report Download - page 93

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)
payments, including dividends; create or permit to exist certain liens; enter into business combinations and asset
sale transactions; make investments; enter into transactions with affiliates; and enter into new businesses. If
DIRECTV U.S. or PanAmSat fails to comply with their respective covenants, all or a portion of their respective
borrowings could become immediately payable. The terms of the DIRECTV U.S. and PanAmSat debt and credit
facilities restrict DIRECTV U.S. and PanAmSat from transferring funds to the Company in the form of cash
dividends, loans or advances. At December 31, 2003, DIRECTV U.S. and PanAmSat were in compliance with all
such covenants.
As of December 31, 2003, restricted cash of $43.5 million was included as part of “Prepaid expenses and
other” on the Consolidated Balance Sheets. This cash was deposited to secure certain letters of credit and
obligations of the Company and the Company’s majority-owned foreign subsidiaries. Restrictions on the cash
will be removed as the letters of credit expire and the foreign subsidiaries’ obligations are satisfied or terminated.
Note 9: Income Taxes
The income tax benefit is based on the reported “Loss From Continuing Operations Before Income Taxes,
Minority Interests and Cumulative Effect of Accounting Changes.” Deferred income tax assets and liabilities
reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial
reporting purposes and such amounts recognized for tax purposes, as measured by applying currently enacted tax
laws.
Prior to the split-off of the Company from GM on December 22, 2003, the Company and its domestic
subsidiaries joined with GM in filing a consolidated U.S. federal income tax return and combined returns for
certain states. The portion of the consolidated income tax liability or receivable recorded by the Company during
this period was generally equivalent to the amount that would have been recorded on a separate return basis.
The income tax benefit consisted of the following for the years ended December 31:
2003 2002 2001
(Dollars in Millions)
Current tax (benefit) expense:
U.S. federal .................................................. $(68.2) $(174.8) $(371.9)
Foreign ..................................................... 56.5 77.4 54.8
State and local ................................................ 1.1 (7.5) (54.7)
Total ................................................... (10.6) (104.9) (371.8)
Deferred tax (benefit) expense:
U.S. federal .................................................. (55.2) 72.3 89.9
State and local ................................................ (6.1) 5.0 6.0
Total ................................................... (61.3) 77.3 95.9
Total income tax benefit .................................... $(71.9) $ (27.6) $(275.9)
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