DIRECTV 2011 Annual Report Download - page 93

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Change in Accounting Estimate testing of indefinite-lived intangibles. We do not expect the adoption of the revised
standard to have an effect on our consolidated results of operations and financial
Depreciable Lives of Leased Set-Top Receivers. We currently lease most set-top position, when adopted, as required, on January 1, 2012.
receivers provided to new and existing subscribers and therefore capitalize the cost
of those set-top receivers. We depreciate capitalized set-top receivers over the Note 4: Acquisitions
estimated useful life of the equipment. As a result of the completion of an extensive
evaluation of the estimated useful life of the set-top receivers, including Globo Transaction
consideration of historical write-offs, improved efficiencies in our refurbishment In connection with our acquisition of Sky Brazil in 2006, Globo was granted
program, improved set-top receiver failure rates over time and management’s the right, until January 2014, to require us to purchase all or a portion (but not
judgment of the risk of technological obsolescence, we determined that the less than half) of its 25.9% interest in Sky Brazil. In June 2010, Globo notified us
estimated useful life of HD set-top receivers used in our DIRECTV U.S. business that it was exercising its right to exchange 178.8 million shares representing
has increased to four years, from three years as previously estimated. We will approximately 19% of the ownership interests in Sky Brazil. In accordance with our
continue to depreciate standard definition set-top receivers at DIRECTV U.S. over agreement, Globo will have the right to exchange all (but not less than all) of its
a three-year estimated useful life. We are accounting for this change in the useful remaining equity interest in Sky Brazil until January 2014.
life of the HD set-top receivers at DIRECTV U.S. as a change in an accounting
estimate beginning July 1, 2011. This change had the effect of reducing As a result of Globo’s notice, the fair value of the approximate 19% interest
depreciation and amortization expense and increasing both net income attributable was determined to be $605 million by an independent investment bank according
to DIRECTV and earnings per share in our consolidated results of operations for to a process specified by Globo and us in the related agreement. During the fourth
the year ended December 31, 2011 as follows: quarter of 2010, we paid the purchase price in cash, which was recorded as a
reduction to ‘‘Redeemable noncontrolling interest’’ in the Consolidated Balance
(Dollars in Millions, Sheets, for their approximate 19% interest in Sky Brazil. In addition, we recorded
Except Per Share Amounts) $79 million of net deferred tax assets related to the acquisition of this interest as an
Depreciation and amortization expense ............. $(141) offset to ‘‘Additional paid in capital’’ in the Consolidated Balance Sheets. We and
Net income attributable to DIRECTV ............. 86 our subsidiaries now own 93% of Sky Brazil and Globo owns the remaining 7%.
Basic earnings attributable to DIRECTV Class A
stockholders per common share ................ $0.12 Liberty Transaction
Diluted earnings attributable to DIRECTV Class A
On November 19, 2009, DIRECTV Group and Liberty Media obtained
stockholders per common share ................ $0.11
stockholder approval of and closed a series of related transactions which we refer to
collectively as the Liberty Transaction. The Liberty Transaction included the
New Accounting Standard split-off of certain of the assets of the Liberty Entertainment group into LEI, which
Goodwill Impairment Testing. In September 2011, the FASB approved a was then split-off from Liberty. Following the split-off, DIRECTV Group and LEI
revised standard that simplifies how entities test goodwill for impairment. The merged with subsidiaries of DIRECTV. As a result of the Liberty Transaction,
revised standard permits an entity to first assess qualitative factors to determine DIRECTV Group, which is comprised of the DIRECTV U.S. and DIRECTV
whether it is more likely than not that the fair value of a reporting unit is less than Latin America businesses, and LEI, which held Liberty’s 57% interest in DIRECTV
its carrying amount as a basis for determining whether it is necessary to perform Group, a 100% interest in three regional sports networks, a 65% interest in Game
the two-step goodwill impairment test. The standard does not address impairment Show Network, LLC, approximately $120 million in cash and cash equivalents and
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