DIRECTV 2007 Annual Report Download - page 82

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
International, which we refer to as the Sky Transactions as further described below. The Sky
Transactions resulted in the combination of the DTH satellite platforms of DIRECTV and SKY in
Latin America into a single platform in each of the major territories in the region.
Brazil. On August 23, 2006, we completed the merger of our Brazil business, Galaxy Brasil Ltda.,
or GLB, with and into Sky Brazil, and completed the purchase of News Corporation’s and Liberty
Media International’s interests in Sky Brazil. As a result of these transactions, we hold a 74% interest
in the combined business. The purchase consideration for the transactions amounted to $670 million,
including $396 million in cash paid, of which we paid $362 million to News Corporation and Liberty
Media International in 2004 and $30 million to News Corporation in August 2006, the $64 million fair
value of the reduction of our interest in GLB resulting from the merger and the assumption of Sky
Brazil’s $210 million bank loan.
We accounted for the Sky Brazil acquisition using the purchase method of accounting, and began
consolidating the results of Sky Brazil from the date of acquisition. We also accounted for the
reduction of our interest in GLB resulting from the merger as a partial sale pursuant to EITF
No. 90-13 ‘‘Accounting for Simultaneous Common Control Mergers,’’ which resulted in us recording a
one-time pre-tax gain during the third quarter of 2006 of $61 million in ‘‘Gain from disposition of
businesses, net’’ in the Consolidated Statements of Operations. In the third quarter of 2007, we
completed the valuation of acquired intangible assets and finalized the purchase accounting, which
resulted in adjustments increasing the preliminary allocation of the purchase price to the acquired
intangible assets by $66 million and deferred tax liabilities by $35 million and decreasing goodwill by
$31 million.
The following table sets forth the final allocation of the purchase price to the Sky Brazil net assets
acquired on August 23, 2006:
Total current assets .................................................. $ 77
Goodwill ......................................................... 432
Intangible assets .................................................... 355
Other long-term assets ............................................... 98
Total assets acquired ................................................. 962
Total current liabilities (excluding $210 million of bank debt assumed) ............. 137
Other liabilities .................................................... 155
Total liabilities assumed .............................................. 292
Net assets acquired .............................................. $670
The assets acquired included approximately $42 million in cash. Intangible assets that are included
in ‘‘Intangible assets, net’’ in our Consolidated Balance Sheets include a subscriber related intangible
asset to be amortized over six years and a trade name intangible asset to be amortized over 20 years.
The following selected unaudited pro forma information is being provided to present a summary of
the combined results of The DIRECTV Group and Sky Brazil for the years ended December 31, 2006
and 2005 as if the acquisition had occurred as of the beginning of the respective periods, giving effect
to purchase accounting adjustments. The pro forma data is presented for informational purposes only
and may not necessarily reflect our results of operations had Sky Brazil operated as part of us for each
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