DIRECTV 2008 Annual Report Download - page 87

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Statements of Operations for uncertain tax positions that are more-likely-than-not to be sustained upon
examination, measured at the largest amount that has a greater than 50% likelihood of being realized
upon settlement. Unrecognized tax benefits represent tax benefits taken or expected to be taken in
income tax returns, for which the benefit has not yet been recognized in ‘‘Income tax expense’’ in the
Consolidated Statements of Operations due to the uncertainty of whether such benefits will be
ultimately realized. We recognize interest and penalties accrued related to unrecognized tax benefits in
‘‘Income tax expense’’ in the Consolidated Statements of Operations. Unrecognized tax benefits are
recorded in ‘‘Income tax expense’’ in the Consolidated Statement of Operations at such time that the
benefit is effectively settled.
Advertising Costs
We expense advertising costs primarily in ‘‘Subscriber acquisition costs’’ in the Consolidated
Statements of Operations as incurred. Advertising expenses, net of payments received from
programming content providers for marketing support, were $301 million in 2008, $261 million in 2007,
and $233 million in 2006.
Market Concentrations and Credit Risk
We sell programming services and extend credit, in amounts generally not exceeding $200 each, to
a large number of individual residential subscribers throughout the United States and most of Latin
America. As applicable, we maintain allowances for anticipated losses.
Accounting Changes
On January 1, 2008 we adopted Statement of Financial Accounting Standards, or SFAS, No. 159,
‘‘The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of
FASB Statement No. 115.’’ SFAS No. 159 permits, but does not require, companies to report at fair
value the majority of recognized financial assets, financial liabilities and firm commitments. Under this
standard, unrealized gains and losses on items for which the fair value option is elected are reported in
earnings at each subsequent reporting date. Our adoption of SFAS No. 159 did not have any effect on
our consolidated financial statements, as we have not elected to report subject instruments at fair value.
On January 1, 2008 we adopted SFAS No. 157, ‘‘Fair Value Measurements.’’ SFAS No. 157 defines
fair value, sets out a framework for measuring fair value under accounting principles generally accepted
in the United States of America, or GAAP, and expands disclosures about fair value measurements of
assets and liabilities to include disclosure about inputs used in the determination of fair value using the
following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market
data.
Level 3: Unobservable inputs that are not corroborated by market data.
SFAS No. 157 applies under other accounting pronouncements previously issued by the FASB that
require or permit fair value measurements. Our adoption of SFAS No. 157 did not have any effect on
our consolidated financial statements.
On January 1, 2008 we adopted Emerging Issues Task Force, or EITF, Issue No. 06-1, ‘‘Accounting
for Consideration Given by a Service Provider to a Manufacturer or Reseller of Equipment Necessary
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