DIRECTV 2008 Annual Report Download - page 90

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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) 2008 2007
(Dollars in Millions)
Satellites .............................................. 10-16 $ 2,956 $ 2,163
Satellites under construction ............................... — 292 474
Total ................................................. 3,248 2,637
Less: Accumulated depreciation ............................. (772) (611)
Satellites, net ......................................... $2,476 $ 2,026
Land and improvements .................................. 9-30 $ 37 $ 34
Buildings and leasehold improvements ........................ 2-40 342 301
Machinery and equipment ................................. 3-23 3,211 2,821
Subscriber leased set-top receivers ........................... 3-7 4,853 3,731
Construction in-progress .................................. — 271 365
Total ................................................. 8,714 7,252
Less: Accumulated depreciation ............................. (4,543) (3,445)
Property and equipment, net .............................. $4,171 $ 3,807
We capitalized interest costs of $18 million in 2008, $51 million in 2007, and $55 million in 2006 as
part of the cost of our property and satellites under construction. Depreciation expense was
$1,907 million in 2008, $1,264 million in 2007, and $664 million in 2006.
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.
The following table sets forth the amount of DIRECTV U.S. set-top receivers we capitalized, and
depreciation expense we recorded, under the lease program for each of the periods presented:
Years ended December 31,
Capitalized subscriber leased equipment: 2008 2007 2006
(Dollars in Millions)
Subscriber leased equipment—subscriber acquisitions ........... $ 599 $ 762 $ 599
Subscriber leased equipment—upgrade and retention ........... 537 774 473
Total subscriber leased equipment capitalized ................ $1,136 $1,536 $1,072
Depreciation expense—subscriber leased equipment ............ $1,100 $ 645 $ 147
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