DIRECTV 2004 Annual Report Download - page 86

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Note 4: Property and Satellites, Net
The following table sets forth the amounts recorded for property and satellites, net, at December 31:
Estimated
Useful Lives
(years)
2004
2003
(Dollars in Millions)
Land and improvements
9-30
$
25.7
$
41.4
Buildings and leasehold improvements
1-40
174.9
237.3
Machinery and equipment
3-24
1,598.3
1,833.0
Customer leased set-top receivers
4-5
1,018.4
1,172.2
Furniture, fixtures and office machines
3-15
98.6
119.4
Construction in progress
—
178.9
489.5
Total
3,094.8
3,892.8
Less accumulated depreciation
1,959.7
2,101.2
Property, net
$
1,135.1
$
1,791.6
Satellites
12-16
$
1,265.1
$
1,290.3
Satellites under construction
—
714.4
1,545.4
Total
1,979.5
2,835.7
Less accumulated depreciation
419.1
427.5
Satellites, net
$
1,560.4
$
2,408.2
We capitalized interest costs of $101.2 million, $120.0 million and $87.7 million during 2004, 2003 and 2002, respectively, as
part of the cost of our property and satellites under construction.
Note 5. Asset Impairment Charges
SkyTerra Transaction
As part of the SkyTerra transaction discussed above, we recorded a pre-tax charge of $190.6 million in “Asset impairment
charges” in the Consolidated Statements of Operations in the fourth quarter of 2004 to write-down HNS’ long-lived assets to
their fair values based on the agreed upon sales price.
DIRECTV Mexico
As part of the Sky Transactions discussed above, DIRECTV Mexico is in the process of closing its operations and has sold its
subscriber list to Sky Mexico. As a result, we recorded a pre-tax charge of $36.5 million in “Asset impairment charges” in the
Consolidated Statements of Operations in the fourth quarter of 2004 to write-down certain of DIRECTV Mexico’s long-lived
assets to their fair values.
SPACEWAY Assets
In the third quarter of 2004, we determined that an impairment charge related to the assets of the SPACEWAY program was
required. The assets involved include two satellites, SPACEWAY 1 and SPACEWAY 2, nearing completion and scheduled for
launch by mid-2005, a third satellite under construction, ground segment equipment and systems and capitalized interest. The
SPACEWAY system was designed as a next-generation satellite-based broadband data platform intended to upgrade and
expand HNS’ existing broadband data businesses.
77