The DirecTV Group (DTV)

Hughes Software Systems

        In the second quarter of 2004, HNS agreed to sell its approximate 55% ownership interest in HSS for $226.5 million in cash, which we received in June 2004. As a result of this sale, we recognized a $90.7 million gain, net of taxes, during 2004 included in "Income (loss) from discontinued operations, net of taxes" in our Consolidated Statements of Operations.

        Operating results of the discontinued operations of HSS are as follows:

Other Discontinued Operations

        As discussed in more detail in Note 20, during 2005, we recorded a $31.3 million gain in "Income (loss) from discontinued operations, net of taxes" in our Consolidated Statements of Operations that resulted from a favorable tax settlement related to a previously discontinued operation.

        "Income (loss) from discontinued operations, net of taxes," as reported in the Consolidated Statements of Operations, is comprised of the following:

Hughes Software Systems

        In the second quarter of 2004, HNS agreed to sell its approximate 55% ownership interest in HSS for $226.5 million in cash, which we received in June 2004. We recognized an after-tax gain of approximately $90.7 million ($176.1 million pre-tax) during 2004, included in "Income (loss) from discontinued operations, net of taxes" in our Consolidated Statements of Operations.

        Operating results of the discontinued operations of HSS are as follows:

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Other Discontinued Operations

        During 2003, we recorded a gain of $1.6 million to "Income (loss) from discontinued operations, net of taxes" in the Consolidated Statements of Operations as a result of final adjustments to accruals recorded for the shut-down of DIRECTV Broadband. During 2003, we made net payments of $69.5 million to settle obligations of DIRECTV Broadband, which are included in "Cash Flows from Discontinued Operations" in the Consolidated Statements of Cash Flows. These payments primarily represent cash used in operating activities.

        Pursuant to a settlement agreement executed on July 15, 2003 related to the purchase price adjustment dispute arising from the 2000 sale of our satellite systems manufacturing businesses to The Boeing Company, or Boeing, we recorded an after-tax charge of $6.3 million to "Income (loss) from discontinued operations, net of taxes" in the Consolidated Statements of Operations during 2003. On July 18, 2003, we paid the $360.0 million settlement amount to Boeing, which is included in "Cash Flows from Discontinued Operations" in the Consolidated Statements of Cash Flows. This payment represents cash used in investing activities.

        As discussed in more detail in Note 21, during 2005, we recorded a $31.3 million gain in "Income (loss) from discontinued operations, net of taxes" in our Consolidated Statements of Operations that resulted from a favorable tax settlement related to a previously discontinued operation.

        "Income (loss) from discontinued operations, net of taxes," as reported in the Consolidated Statements of Operations, is comprised of the following:

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Hughes Software Systems

        In the second quarter of 2004, HNS agreed to sell its approximate 55% ownership interest in HSS for $226.5 million in cash, which we received in June 2004. The gain on the transaction was deferred until completion of all substantive requirements and the transfer of control in the third quarter of 2004, when we recognized an after-tax gain of approximately $90.7 million ($176.1 million pre-tax), included in "Income (loss) from discontinued operations, net of taxes" in our Consolidated Statements of Operations.

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        The operating results of HSS, which we include in discontinued operations, were as follows:

Hughes Software Systems

        On June 8, 2004, we entered into an agreement to sell our 55% ownership interest in HSS for $226.5 million in cash. We received the $226.5 million of cash proceeds in June 2004 and recognized an after-tax gain of approximately $90.7 million in the third quarter of 2004 upon completion of all substantive requirements and transfer of control.

        The operating results of HSS, which we include in discontinued operations, were as follows:

Hughes Software Systems

        On June 8, 2004, we entered into an agreement to sell HNS' 55% ownership interest in HSS for $226.5 million in cash. We received the $226.5 million of cash proceeds in June 2004 and recognized an after-tax gain of approximately $90.7 million in the third quarter of 2004 upon completion of all substantive requirements and transfer of control.

        The operating results of HSS, which we include in discontinued operations, were as follows:

10

        "Loss from discontinued operations, net of taxes," as reported in the Consolidated Statements of Operations, is comprised of the following:

Hughes Software Systems

During 2004, HNS completed the sale of its approximately 55% ownership interest in HSS to Flextronics for $226.5 million in cash, which we received on June 11, 2004. In the third quarter of 2004, we recognized an after-tax gain of approximately $90.7 million ($176.1 million pre-tax), included in “Income (loss) from discontinued operations, net of taxes” in the Consolidated Statements of Operations.

Operating results of the discontinued operations of HSS are as follows:

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THE DIRECTV GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

The carrying amounts of assets and liabilities for the discontinued operations of HSS are as follows: