DIRECTV 2005 Annual Report Download - page 88

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS —(continued)
resulted in the recognition of fair value based compensation cost in the Consolidated Statements of
Operations for stock options and other stock-based awards granted to employees or modified on or
after January 1, 2003.
Other. In December 2004, the FASB issued SFAS No. 153, ‘‘Exchanges of Nonmonetary Assets—
an amendment of APB Opinion No. 29,’’ or SFAS No. 153. SFAS No. 153 eliminates the exception for
nonmonetary exchanges of similar productive assets of APB Opinion No. 29 and replaces it with a
general exception for exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this standard did
not have a significant impact on our consolidated results of operations or financial position.
New Accounting Standards
In May 2005, the FASB issued SFAS No. 154, ‘‘Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20, Accounting Changes, and Statement No. 3, Reporting Accounting
Changes in Interim Financial Statements,’’ or SFAS No. 154. SFAS No. 154 changes the requirements
for the accounting for, and reporting of, a change in accounting principle. Previously, most voluntary
changes in accounting principles were required to be recognized by way of a cumulative effect
adjustment within net income during the period of the change. SFAS No. 154 generally requires
retrospective application to prior periods’ financial statements of voluntary changes in accounting
principles. SFAS No. 154 is effective for accounting changes made in fiscal years beginning after
December 15, 2005; however, SFAS No. 154 does not change the transition provisions of any existing
accounting pronouncements. We do not believe SFAS No. 154 will have a material effect on our
consolidated results of operations or financial position on the date of adoption.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), ‘‘Share-Based Payment,’’ or
SFAS No. 123R. SFAS No. 123R, which replaces SFAS No. 123 and supersedes APB Opinion No. 25,
requires that compensation cost relating to share-based payment transactions be recognized in the
financial statements, based on the fair value of the equity or liability instruments issued. SFAS
No. 123R is effective as of the beginning of the first annual reporting period that begins after June 15,
2005 and applies to all awards granted, modified, repurchased or cancelled after the effective date. We
do not expect the adoption of this standard to have a significant impact on our consolidated results of
operations or financial position.
Note 3: Acquisitions, Divestitures and Other Transactions
Acquisitions
Sky Transactions
On October 8, 2004, we entered into a series of transactions with News Corporation, Televisa,
Globo and Liberty that provide for the Sky Transactions. The Sky Transactions are designed to
strengthen the operating and financial performance of DTVLA by consolidating the DTH platforms of
DTVLA and Sky Latin America into a single platform in each of the major territories served in the
region. Total cash consideration for the equity interests in the Sky Latin America platforms is
approximately $602 million, of which we paid $398 million in October 2004. The remainder is subject to
adjustment and will be paid at the completion of the transactions. These transactions are discussed in
more detail as follows.
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