DIRECTV 2006 Annual Report Download - page 112

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS —(continued)
Note 15: Other Income and Expenses
The following table summarizes the components of ‘‘Other, net’’ for the years ended December 31:
2006 2005 2004
(Dollars in Millions)
Equity in earnings (losses) from unconsolidated affiliates ................ $26.6 $ 0.7 $ (0.2)
Net (loss) gain from sale of investments ............................ 14.4 (0.6) 396.5
Refinancing transaction expenses ................................. — (64.9) —
Other ..................................................... 0.8 (0.2) 1.3
Total Other, net .......................................... $41.8 $(65.0) $397.6
During 2005, DIRECTV U.S. 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 paid for the redemption of a portion of our 8.375% senior notes and $23.9 million with the
write-off of a portion of our deferred debt issuance costs and other transaction costs.
See Note 7 regarding equity method investments and net gains (losses) recorded on the sale of
investments.
Note 16: Related-Party Transactions
In the ordinary course of our operations, we enter into transactions with related parties. News
Corporation and its affiliates are considered related parties because, as of December 31, 2006, it owned
approximately 38% of our outstanding common stock. Companies in which we hold equity method
investments are also considered related parties, which include Sky Mexico from the acquisition on
February 16, 2006, and HNS LLC from April 22, 2005 until the investment was sold in January 2006.
We have the following types of contractual arrangements with News Corporation entities: purchase of
programming, products and advertising; license of certain intellectual property, including patents;
purchase of system access products, set-top receiver software and support services; sale of advertising
space; purchase of employee services; and use of facilities. The majority of payments under contractual
arrangements with News Corporation entities relate to multi-year programming contracts. Payments
under these contracts are typically subject to annual rate increases and are based on the number of
subscribers receiving the related programming.
The following table summarizes sales and purchase transactions with related parties:
2006 2005 2004
(Dollars in Millions)
Sales .............................................. $ 31.6 $ 17.9 $ 10.1
Purchases .......................................... 831.7 707.0 476.7
The following table sets forth the amount of assets and liabilities resulting from transactions with
related parties as of December 31:
2006 2005
(Dollars in
Millions)
Accounts receivable .......................................... $ 10.8 $ 8.2
Accounts payable ........................................... 206.2 154.0
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