DIRECTV 2007 Annual Report Download - page 93

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized
tax benefits, excluding accrued interest, is as follows (in millions):
Gross unrecognized tax benefits at January 1, 2007 ........................... $159
Increases in tax positions for prior years .................................. 102
Increases in tax positions for current year ................................. 34
Settlements ....................................................... (4)
Gross unrecognized tax benefits at December 31, 2007 ........................ $291
As of December 31, 2007, our unrecognized tax benefits totaled $343 million, including accrued
interest of $52 million. If our tax positions are ultimately sustained by the tax authorities in our favor,
approximately $212 million would reduce the annual effective income tax rate.
We recorded $17 million of interest in ‘‘Income tax expense’’ in the Consolidated Statement of
Operations during the year ended December 31, 2007 for unrecognized tax benefits.
We file numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and
in many state and foreign jurisdictions. For U.S. federal tax purposes, the tax years 2001 through 2007
remain open to examination. The California tax years 1994 through 2007 remain open to examination
and the income tax returns in the other state and foreign tax jurisdictions in which we have operations
are generally subject to examination for a period of 3 to 5 years after filing of the respective return.
We anticipate that the examination of the federal income tax returns for 2001 through 2003 will
conclude in 2008 and the statute of limitations will be closing in a foreign jurisdiction in the next twelve
months resulting in an estimated reduction in our unrecognized tax benefits of approximately
$45 million, $28 million of which relates to discontinued operations. We do not anticipate that other
changes to the total unrecognized tax benefits in the next twelve months will have a significant effect
on our results of operations or financial position.
Note 10: Pension and Other Postretirement Benefit Plans
Most of our employees are eligible to participate in our funded non-contributory defined benefit
pension plan, which provides defined benefits based on either years of service and final average salary,
or eligible compensation while employed by the company. Additionally, we maintain a funded
contributory defined benefit plan for employees who elected to participate prior to 1991, and an
unfunded, nonqualified pension plan for certain eligible employees. For participants in the contributory
pension plan, we also maintain a postretirement benefit plan for those eligible retirees to participate in
health care and life insurance benefits generally until they reach age 65. Participants may become
eligible for these health care and life insurance benefits if they retire from our company between the
ages of 55 and 65. The health care plan is contributory with participants’ contributions subject to
adjustment annually; the life insurance plan is non-contributory.
On December 31, 2007, we adopted the measurement date provision of SFAS No. 158,
‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment
of FASB Statements No. 87, 88, 106, and 132(R).’’ This provision requires the measurement of plan
assets and benefit obligations as of the date of our fiscal year end. This required a change in our
measurement date, which was previously November 30. See Note 2 for additional information.
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