DIRECTV 2006 Annual Report Download - page 58

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THE DIRECTV GROUP, INC.
construction. Interest expense was net of capitalized interest of $54.5 million in 2006 and $30.5 million
in 2005.
Other, Net. Other, net increased by $106.8 million during 2006. The significant components of
‘‘Other, net’’ were as follows:
2006 2005 Change
(Dollars in Millions)
Equity in earnings of unconsolidated subsidiaries ..................... $26.6 $ 0.7 $ 25.9
Net gain (loss) from sale of investments ............................ 14.4 (0.6) 15.0
Refinancing transaction expenses ................................. — (64.9) 64.9
Other ..................................................... 0.8 (0.2) 1.0
Total .................................................. $41.8 $(65.0) $106.8
The increase in equity earnings from unconsolidated affiliates was due mostly to $18.1 million of
equity earnings attributable to our investment in Sky Mexico which was acquired on February 16, 2006
and $11.3 million of equity earnings recorded for HNS in 2006, partially offset by equity losses from
other unconsolidated affiliates.
The $14.4 million net pre-tax gain from the sale of investments for 2006 included a $13.5 million
gain recorded on the sale of our remaining 50% interest in HNS LLC to SkyTerra and a $0.9 million
gain related to the sale of other equity investments for $13.7 million in cash.
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 DIRECTV U.S.’ 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.
Income Tax (Expense) Benefit. We recognized income tax expense of $865.5 million in 2006
compared to $173.2 million in 2005. The change in income tax expense was primarily attributable to the
change in income before income taxes and minority interests.
Income (Loss) from Discontinued Operations. We recognized a $31.3 million gain in 2005 in
income (loss) from discontinued operations, net of taxes due to a favorable tax settlement, which we
discuss in Note 20 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this
Annual Report.
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