DIRECTV 2004 Annual Report Download - page 57

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THE DIRECTV GROUP, INC.
NRTC acquisition transactions discussed above, and obligations to make required minimum contributions to qualified
pension plans in accordance with ERISA minimum funding requirements in 2005. After 2005, contributions are dependent
on numerous factors that cannot be reasonably predicted.
Off-Balance Sheet Arrangements
We are contingently liable under standby letters of credit and bonds in the aggregate amount of $36.1 million which were
undrawn at December 31, 2004.
Contingencies
For a discussion of contingencies, see Note 21 of the Notes to the Consolidated Financial Statements in Item 8, Part II of this
Form 10-K, which we incorporate herein by reference.
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
For a discussion of “Certain Relationships and Related-Party Transactions,” see Note 17 of the Notes to the Consolidated
Financial Statements in Item 8, Part II of this Form 10-K, which we incorporate herein by reference.
USE OF ESTIMATES IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates, judgments and assumptions that affect amounts reported.
Management bases its estimates, judgments and assumptions on historical experience and on various other factors that are
believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results
reported for future periods may be affected by changes in those estimates. The following represent what we believe are the
critical accounting policies that may involve a higher degree of estimation, judgment and complexity. For a summary of our
significant accounting policies, including those discussed below, see Note 2 to the Consolidated Financial Statements in Item 8,
Part II, which we incorporate herein by reference.
Multi-Year Programming Contracts for Live Sporting Events. We charge the cost of multi-year programming contracts for
live sporting events with minimum guarantee payments, such as DIRECTV U.S.’ agreement with the NFL, to expense based on
the ratio of each period’s contract revenues to the estimated total contract revenues to be earned over the contract period.
Management evaluates estimated total contract revenues at least annually. If the minimum guarantee payments on an individual
contract exceed the estimated total contract revenues, we would recognize a loss equal to the amount of such difference
immediately, which could be material to our consolidated results of operations and financial position.
Reserves for Doubtful Accounts. Management estimates the amount of required reserves for the potential non-collectibility of
accounts and notes receivable based upon past experience of collection and consideration of other relevant factors. However,
past experience may not be indicative of future collections and therefore we could incur additional charges in the future to
reflect differences between estimated and actual collections.
Income Taxes. We must make certain estimates and judgments in determining provisions for income taxes. These estimates
and judgments occur in the calculation of tax credits, tax benefits and deductions, and in the calculation of certain tax assets and
liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement
purposes. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent
period.
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