DIRECTV 2010 Annual Report Download - page 108

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
We maintain 401(k) plans for qualified employees. We match a portion of our Malone Transaction
employee contributions and our match amounted to $23 million in 2010, In connection with approval by the Federal Communications Commission, or
$16 million in 2009 and $12 million in 2008. FCC, of the sale of News Corporation’s interest in DIRECTV Group to Liberty
We have disclosed certain amounts associated with estimated future Media in 2008, the FCC imposed certain conditions related to attributable interests
postretirement benefits other than pensions and characterized such amounts as in two pay television operations: DIRECTV Puerto Rico and Liberty Cablevision of
‘‘other postretirement benefit obligation.’’ Notwithstanding the recording of such Puerto Rico Ltd, or LCPRL. We refer to the FCC’s requirements as the ‘‘Puerto
amounts and the use of these terms, we do not admit or otherwise acknowledge Rico Condition’’.
that such amounts or existing postretirement benefit plans of our company (other Because neither News Corporation nor Liberty Media could satisfy the Puerto
than pensions) represent legally enforceable liabilities of us. Rico Condition, in connection with the close of that transaction a Special
Committee of independent directors of our Board of Directors approved an
Note 13: Stockholders’ Equity agreement with News Corporation and Liberty Media in which we assumed
Capital Stock and Additional Paid-In Capital responsibility for the satisfaction, modification or waiver of the Puerto Rico
Condition within the one year period specified by the FCC. As part of this
Our certificate of incorporation provides for the following capital stock: agreement, during the first quarter of 2008, we received a $160 million cash capital
Class A common stock, par value $0.01 per share, 3,500,000,000 shares authorized; contribution, which we recorded as ‘‘Additional paid-in-capital’’ in the Consolidated
Class B common stock, par value $0.01 per share, 30,000,000 shares authorized; Balance Sheets.
Class C common stock, par value $0.01 per share, 420,000,000 shares authorized;
and preferred stock, par value $0.01 per share, 50,000,000 shares authorized. As of In order to comply with terms of the FCC order, effective February 25, 2009,
December 31, 2010, there were no shares outstanding of the Class B common we placed the shares of DIRECTV Puerto Rico into a trust and appointed an
stock, Class C common stock or preferred stock. independent trustee who, prior to completion of the Malone Transaction, oversaw
the management and operation of DIRECTV Puerto Rico, with the authority,
Following completion of the Liberty Transaction in November 2009, subject to certain conditions, to divest ownership of DIRECTV Puerto Rico. We
DIRECTV had two classes of common stock outstanding: Class A common stock continued to consolidate the results of DIRECTV Puerto Rico while the trust was
and Class B common stock. As discussed in more detail below, in April 2010, we in place.
entered into an agreement with the Dr. John Malone and his family, or the
Malones, under which they exchanged 21.8 million shares of Class B common The FCC staff advised us in early 2010 that the trust arrangement created in
stock, which was all of the outstanding Class B shares, for Class A common stock. 2009 for the purpose of satisfying the FCC order could not remain in place
The DIRECTV Class A common stock is entitled to one vote per share and trades indefinitely and was not alone sufficient to comply with the requirements of its
on the NASDAQ Global Select Market, or NASDAQ, under the ticker ‘‘DTV’’. order.
DIRECTV Group common stock has been delisted and no longer trades on the In order to resolve the Puerto Rico Condition, on April 6, 2010, we entered
NASDAQ. The DIRECTV Class B common stock was entitled to fifteen votes per into an agreement with the Malones which severed all attributable interests between
common share and was not listed on any stock exchange or automated dealer DIRECTV Puerto Rico and LCPRL in satisfaction of the requirements of the FCC
quotation system. order. The agreement achieved these requirements through the exchange of the
DIRECTV stock held by the Malones and the resignation of Dr. Malone and two
other board members affiliated with Liberty Media from our Board of Directors.
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