DIRECTV 2009 Annual Report Download - page 113

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized
tax benefits is as follows:
Unrecognized Tax
Benefits
(Dollars in Millions)
Gross unrecognized tax benefits at January 1, 2007 ........... $159
Increases in tax positions for prior years ................. 102
Increases in tax positions for the current year ............. 34
Settlements ...................................... (4)
Gross unrecognized tax benefits at December 31, 2007 ........ 291
Increases in tax positions for prior years ................. 75
Increases in tax positions for the current year ............. 26
Statute expiration .................................. (38)
Settlements ...................................... 9
Gross unrecognized tax benefits at December 31, 2008 ........ 363
Increases in tax positions for prior years ................. 26
Increases in tax positions for the current year ............. 147
Settlements ...................................... (9)
Gross unrecognized tax benefits at December 31, 2009 ........ $527
As of December 31, 2009, our unrecognized tax benefits totaled $527 million, including
$295 million of tax positions the recognition of which would affect the annual effective income tax rate.
We recognize interest and penalties accrued related to unrecognized tax benefits in ‘‘Income tax
expense’’ in the Consolidated Statements of Operations. As of December 31, 2009, we have accrued
$72 million in interest and penalties as part of our liability 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 2007 through 2009
remain open to examination. The California tax years 1994 through 2009 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 do not anticipate changes to the total unrecognized tax benefits in the next twelve months
which will have a significant effect on our results of operations or financial position.
Note 11: Capital Lease Obligations
Satellite Leases
During the first quarter of 2008, Sky Brazil began broadcasting its service on a new satellite, IS 11,
pursuant to a satellite transponder capacity agreement, which we are accounting for as a capital lease.
The present value of the lease payments at the inception of the 15 year lease term was $247 million.
The capitalized value of the satellite has been included in ‘‘Satellites, net’’ in the Consolidated Balance
Sheets. The capitalized lease obligations are included in ‘‘Accounts payable and accrued liabilities’’ and
‘‘Other liabilities and deferred credits’’ in the Consolidated Balance Sheets.
During the third quarter of 2008, DTVLA amended its satellite transponder capacity agreement
for the GIIIC satellite, which provides broadcast services to PanAmericana, and was previously
101