DIRECTV 2008 Annual Report Download - page 86

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
during the year. We record the resulting translation adjustment as part of accumulated other
comprehensive income (loss), which we refer to as OCI, a separate component of stockholders’ equity.
Investments and Financial Instruments
We maintain investments in equity securities of unaffiliated companies. We carry non-marketable
equity securities at cost. We consider marketable equity securities available-for-sale and they are carried
at current fair value based on quoted market prices with unrealized gains or losses (excluding
other-than-temporary losses), net of taxes, reported as part of OCI. We continually review our
investments to determine whether a decline in fair value below the cost basis is
‘‘other-than-temporary.’’ We consider, among other factors: the magnitude and duration of the decline;
the financial health and business outlook of the investee, including industry and sector performance,
changes in technology, and operational and financing cash flow factors; and our intent and ability to
hold the investment. If we judge the decline in fair value to be other-than-temporary, we write-down
the cost basis of the security to fair value and recognize the amount in the Consolidated Statements of
Operations as part of ‘‘Other, net’’ and record it as a reclassification adjustment from OCI.
We account for investments in which we own at least 20% of the voting securities or have
significant influence under the equity method of accounting. We record equity method investments at
cost and adjust for the appropriate share of the net earnings or losses of the investee. We record
investee losses up to the amount of the investment plus advances and loans made to the investee, and
financial guarantees made on behalf of the investee.
The carrying value of cash and cash equivalents, accounts receivable, investments and other assets,
accounts payable, and amounts included in accrued liabilities and other meeting the definition of a
financial instrument approximated their fair values at December 31, 2008 and 2007.
Debt Issuance Costs
We defer costs we incur to issue debt and amortize these costs to interest expense using the
straight-line method over the term of the respective obligation.
Share-Based Payment
We grant restricted stock units and common stock options to our employees and directors.
We record compensation expense equal to the fair value of stock-based awards at the date
approved on a straight-line basis over the requisite service period of up to three years, reduced for
estimated forfeitures and adjusted for anticipated payout percentages related to the achievement of
performance targets.
Income Taxes
We determine deferred tax assets and liabilities based on the difference between the financial
statement and tax basis of assets and liabilities, using enacted tax rates in effect for the year in which
we expect the differences to reverse. We must make certain estimates and judgments in determining
income tax provisions, assessing the likelihood of recovering our deferred tax assets, and evaluating tax
positions.
With the adoption of the Financial Accounting Standards Board, or FASB, Interpretation No. 48,
‘‘Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,’’ or
FIN 48, on January 1, 2007, we now recognize a benefit in ‘‘Income tax expense’’ in the Consolidated
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