DIRECTV 2012 Annual Report Download - page 90

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Investments Debt Issuance Costs
We maintain investments in equity securities of unaffiliated companies. We We defer costs we incur to issue debt and amortize these costs to interest
carry non-marketable equity securities at cost. We consider marketable equity expense using the straight-line method over the term of the respective obligation.
securities available-for-sale and they are carried at current fair value based on quoted
market prices with unrealized gains or losses (excluding other-than-temporary Share-Based Payment
losses), net of taxes, reported as part of ‘‘Accumulated other comprehensive loss’’ in We grant restricted stock units and common stock options to certain
the Consolidated Balance Sheets. We regularly review our investments to determine employees and shares of stock to our directors as part of their annual compensation
whether a decline in fair value below the cost basis is ‘‘other-than-temporary.’’ We for Board services.
consider, among other factors: the magnitude and duration of the decline; the
financial health and business outlook of the investee, including industry and sector We record compensation expense equal to the fair value of stock-based awards
performance, changes in technology, and operational and financing cash flow at the grant date on a straight-line basis over the requisite service period of up to
factors; and our intent and ability to hold the investment. If we judge the decline three years, reduced for estimated forfeitures and adjusted for anticipated payout
in fair value to be other-than-temporary, we write-down the cost basis of the percentages related to the achievement of performance targets.
security to fair value and recognize the amount in the Consolidated Statements of
Operations as part of ‘‘Other, net’’ and record it as a reclassification adjustment Sales Taxes
from ‘‘Accumulated other comprehensive loss’’ in the Consolidated Balance Sheets. Sales taxes collected and remitted to state and local authorities are recorded on
We account for investments in which we own at least 20% of the voting a net basis.
securities or have significant influence under the equity method of accounting. We
record equity method investments at cost and adjust for the appropriate share of Income Taxes
the net earnings or losses of the investee. We record investee losses up to the We determine deferred tax assets and liabilities based on the difference
amount of the investment plus advances and loans made to the investee, and between the financial statement and tax basis of assets and liabilities, using enacted
financial guarantees made on behalf of the investee. tax rates in effect for the year in which we expect the differences to reverse. We
must make certain estimates and judgments in determining income tax provisions,
Derivative Financial Instruments assessing the likelihood of recovering our deferred tax assets, and evaluating tax
We have designated our cross-currency swaps as cash flow hedges, and positions.
accordingly, we record the effective portion of the unrealized gains and losses on the We recognize a benefit in ‘‘Income tax expense’’ in the Consolidated
cross-currency swaps in ‘‘Accumulated other comprehensive loss’’ in the Statements of Operations for uncertain tax positions that are more-likely-than-not
Consolidated Balance Sheets and reclassify those amounts to earnings in the same to be sustained upon examination, measured at the largest amount that has a
periods during which the hedged debt affects earnings. We record the ineffective greater than 50% likelihood of being realized upon settlement. Unrecognized tax
portion of the unrealized gains and losses on these cross-currency swaps, if any, benefits represent tax benefits taken or expected to be taken in income tax returns,
immediately in earnings. 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
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