DIRECTV 2006 Annual Report Download - page 119

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(concluded)
of satellite failure. The insurance generally covers the unamortized book value of covered satellites. We
do not insure against lost revenues in the event of a total or partial loss of the capacity of a satellite.
We generally rely on in-orbit spare satellites and excess transponder capacity at key orbital slots to
mitigate the impact a satellite failure could have on our ability to provide service. At December 31,
2006, the net book value of in-orbit satellites was $1,343.6 million of which $947.9 million was
uninsured.
Other
As of December 31, 2006, included in ‘‘Investments and Other Assets’’ in the Consolidated
Balance Sheets is a receivable for $24.7 million of the $57.0 million rebate that we can earn from
Thomson by purchasing at least $4.0 billion of set-top receivers through June 2010. We have accrued
this receivable based on our assessment that achievement of the minimum purchase requirement is
both probable and reasonable estimable. On a quarterly basis, we assess the probability of earning the
rebate over the contract term. If we subsequently determine that it is no longer probable that we will
earn the rebate, we would be required to reverse the amount of the rebate earned to date as a charge
to the Consolidated Statements of Operations at the time such determination is made.
We are contingently liable under standby letters of credit and bonds in the aggregate amount of
$11.3 million at December 31, 2006.
In connection with the Sky Brazil transaction, Globo was granted the right, until January 2014, to
exchange shares in Sky Brazil for cash or common shares of the company. Upon exercising the
exchange rights, the value of Sky Brazil shares will be determined by an outside valuation expert and
we have the option to elect the consideration to be paid in cash, shares of our common stock or a
combination of both.
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