DIRECTV 2007 Annual Report Download - page 85

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Note 4: Satellites, Net and Property and Equipment, Net
The following table sets forth the amounts recorded for ‘‘Satellites, net’’ and ‘‘Property and
equipment, net’’ in our Consolidated Balance Sheets at December 31:
Estimated
Useful Lives
(years) 2007 2006
(Dollars in Millions)
Satellites ............................................... 10-16 $2,163 $1,797
Satellites under construction ................................. — 474 665
Total .................................................. 2,637 2,462
Less accumulated depreciation ............................... 611 454
Satellites, net ........................................ $2,026 $2,008
Land and improvements .................................... 9-30 $ 34 $ 31
Buildings and leasehold improvements ......................... 2-40 301 239
Machinery and equipment .................................. 3-23 2,821 2,240
Subscriber leased set-top receivers ............................ 3-7 3,731 2,177
Construction in-progress .................................... — 365 463
Total .................................................. 7,252 5,150
Less accumulated depreciation ............................... 3,445 2,705
Property and equipment, net ............................. $3,807 $2,445
We capitalized interest costs of $51 million in 2007, $55 million in 2006, and $31 million in 2005 as
part of the cost of our property and satellites under construction. Depreciation expense was
$1,264 million in 2007, $664 million in 2006, and $502 million in 2005.
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. Subsequent to the introduction of the lease program, we lease
most set-top receivers provided to new and existing subscribers, and therefore capitalize the set-top
receivers in ‘‘Property and equipment, net’’ in the Consolidated Balance Sheets. We depreciate
capitalized set-top receivers over a three year estimated useful life and include the amount of set-top
receivers capitalized each period in ‘‘Cash paid for property and equipment’’ in the Consolidated
Statements of Cash Flows.
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