DIRECTV 2005 Annual Report Download - page 57

THE DIRECTV GROUP, INC.
and consulting costs and other charges related to the DLA LLC reorganization. See Note 18 to the
Consolidated Financial Statements in Part II, Item 8 of this Annual Report for further information.
Other, Net. Other, net decreased by $462.6 million during 2005. The significant components of
‘‘Other, net’’ were as follows:
2005 2004 Change
(Dollars in Millions)
Net gain (loss) from sale of investments .......................... $ (0.6) $396.5 $(397.1)
Equity in earnings (losses) of unconsolidated subsidiaries .............. 0.7 (0.2) 0.9
Refinancing transaction expenses ................................ (64.9) — (64.9)
Other ................................................... (0.2) 1.3 (1.5)
Total ................................................. $(65.0) $397.6 $(462.6)
During the second quarter of 2005, we completed a series of refinancing transactions that resulted
in a pre-tax charge of $64.9 million ($40.0 million after tax), of which $41.0 million was associated with
the premium that we paid for the redemption of a portion of our 8.375% senior notes and
$23.9 million with our write-off of a portion of our deferred debt issuance costs and other transaction
costs.
During 2004, we sold various equity investments for $510.5 million in cash, which resulted in us
recording a pre-tax gain of $396.5 million.
Income Tax (Expense) Benefit. We recognized income tax expense of $173.2 million in 2005
compared to an income tax benefit of $690.6 million in 2004, which resulted from losses recorded in
2004. The increase in income tax expense is primarily attributable to higher income from continuing
operations before income taxes, minority interests and cumulative effect of accounting change. The
increase was partially offset by an income tax benefit recognized in 2005 due to the utilization of
capital loss carryforwards and a benefit associated with a reduction in the amount of accrued foreign
withholding taxes resulting from a favorable tax ruling in Mexico.
Income (Loss) from Discontinued Operations. Income (loss) from discontinued operations, net of
taxes, which includes the results of operations of discontinued businesses and the loss recorded for the
disposition of those operations, is as follows:
2005 2004 Change
(Dollars in Millions)
Income from discontinued operations, net of taxes .................... $ — $ 50.8 $ (50.8)
Income (loss) on sale of discontinued operations, net of taxes ........... 31.3 (633.1) 664.4
Income (loss) from discontinued operations, net of taxes ............... $31.3 $(582.3) $613.6
The $31.3 million gain in income on sale of discontinued operations resulted from a favorable tax
settlement during the second quarter of 2005, which we discuss in Note 21 of the Notes to the
Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
The $50.8 million in income from discontinued operations relates to the PanAmSat and HSS
businesses sold in 2004. Loss on sale of discontinued operations of $633.1 million in 2004 includes the
loss recorded for the sale of PanAmSat, net of taxes, of $723.7 million, partially offset by the
$90.7 million gain on HNS’ sale of its approximate 55% interest in HSS. The discontinued operations
of PanAmSat and HSS are more fully discussed in ‘‘Strategic Developments’’ above.
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