DIRECTV 2006 Annual Report Download - page 94

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS —(continued)
($903.0 million after-tax) in our Consolidated Statements of Operations during the third quarter of
2004.
Note 5: Satellites, Net and Property and Equipment, Net
The following table sets forth the amounts recorded for satellites, net and property and equipment,
net at December 31:
Estimated
Useful Lives
(years) 2006 2005
(Dollars in Millions)
Satellites ............................................ 12-16 $1,796.7 $1,571.7
Satellites under construction .............................. — 664.8 834.2
Total ............................................... 2,461.5 2,405.9
Less accumulated depreciation ............................. 453.1 530.4
Satellites, net ...................................... $2,008.4 $1,875.5
Land and improvements ................................. 9-20 $ 30.7 $ 29.2
Buildings and leasehold improvements ....................... 4-30 238.7 209.7
Machinery and equipment ................................ 3-24 2,239.6 1,899.2
Subscriber leased set-top receivers .......................... 3-7 2,177.2 1,036.4
Construction in-progress ................................. — 463.1 290.9
Total ............................................... 5,149.3 3,465.4
Less accumulated depreciation ............................. 2,704.5 2,266.2
Property and Equipment, net .......................... $2,444.8 $1,199.2
We capitalized interest costs of $54.5 million in 2006, $30.5 million in 2005 and $101.2 million in
2004 as part of the cost of our property and satellites under construction. Depreciation expense was
$664.2 million in 2006, $501.6 million in 2005 and $651.4 million in 2004.
On March 1, 2006, DIRECTV U.S. introduced a new set-top receiver lease program. Prior to
March 1, 2006, most set-top receivers provided to new and existing DIRECTV U.S. subscribers were
immediately expensed upon activation as a subscriber acquisition or upgrade and retention cost in the
Consolidated Statements of Operations. Now, with the introduction of the lease program, most set-top
receivers provided to new and existing subscribers are leased. During the year ended December 31,
2006, DIRECTV U.S. capitalized $598.6 million for set-top receivers leased to new subscribers and
$472.9 million for set-top receivers leased to existing subscribers. Depreciation expense on these
capitalized receivers was $147.3 million for the year ended December 31, 2006.
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