DIRECTV (NASDAQ:DTV) today reported increases in second quarter
2011 revenues of 13% to $6.60 billion, operating profit before
depreciation and amortization1 (OPBDA) of 13% to $1.85 billion and
operating profit of 22% to $1.23 billion compared to last year’s
second quarter. DIRECTV also reported that second quarter net
income increased 29% to $701 million and diluted earnings per share
grew 52% to $0.91 compared with the same period last year,
excluding the $0.18 per Class A common share impact from the Malone
transaction2 in the second quarter of 2010.
“Consolidated revenue accelerated to 13% exceeding both last
year and first quarter growth rates as DIRECTV Latin America’s
continued record subscriber additions coupled with strong ARPU
growth propelled a 46% increase in DTVLA revenues while DIRECTV
U.S. delivered another solid quarter of industry leading revenue
growth of 7%,” said Mike White, President and CEO of DIRECTV.
“Importantly, the significant subscriber performance in Latin
America did not come at the expense of profitability as DTVLA’s
OPBDA grew 60% fueling our consolidated OPBDA growth to 13%.” White
added, “While a challenging economic and competitive landscape
continues to impact DIRECTV U.S., the substantial and growing
contributions from DTVLA combined with our share repurchase program
drove strong EPS growth of 52% in the quarter.”
DIRECTV’S OPERATIONAL REVIEW
Second Quarter Review
DIRECTV’s second quarter revenues of $6.60 billion increased 13%
over the same period last year principally due to subscriber and
average revenue per subscriber (ARPU) growth at DIRECTV Latin
America (DTVLA) and DIRECTV U.S. Operating profit before
depreciation and amortization increased 13% to $1.85 billion and
operating profit grew 22% to $1.23 billion primarily due to the
gross profit associated with higher revenues partially offset by
higher subscriber acquisition and upgrade and retention costs at
DIRECTV U.S. and DTVLA. Operating profit was also favorably
impacted by lower depreciation and amortization expense at DIRECTV
U.S.
DIRECTV Consolidated Three Months Six
Months
Dollars in Millions except Earnings
Ended June 30,
Ended June 30,
per Class A Common Share 2011
2010 2011 2010 Revenues $ 6,600
$ 5,848 $ 12,919 $ 11,456 Operating Profit Before
Depreciation and Amortization(1) 1,846
1,635 3,612 3,210 Operating Profit
1,230 1,010 2,385
1,966 Net Income Attributable to DIRECTV 701
543 1,375 1,101 Diluted
Earnings Per Class A Common Share 0.91
0.42 1.76 1.02 Adjusted Diluted
Earnings Per Share(2) 0.91 0.60
1.76 1.19
Capital Expenditures and Cash
Flow
Cash Paid for DIRECTV U.S. Subscriber Leased Equipment -
Acquisitions, Upgrade and Retention 226
202 469 398 Cash Paid for Property,
Equipment and Satellites 474 405
875 682 Cash Flow Before Interest and Taxes(3)
998 910 1,897
1,984 Free Cash Flow(4) 395 383
1,060 1,414
Net income attributable to DIRECTV increased 29% to $701 million
compared with the second quarter of last year primarily due to
higher operating profit as well as a $57 million increase in other
income, including a $37 million pre-tax gain resulting from the
sale of an equity investment recorded in “Other, net” on the
Consolidated Statements of Operations. These increases were
partially offset by higher interest expense principally resulting
from an increase in long-term debt as well as higher income tax
expense resulting from the increase in pre-tax income. Diluted
earnings per share improved 52% to $0.91 in the quarter, excluding
the impact from the Malone transaction2 in the second quarter of
2010. The increase was due to the higher net income as well as a
lower average share count resulting from stock repurchases made
over the last twelve months.
Cash flow before interest and taxes3 increased 10% to $998
million and free cash flow4 increased 3% to $395 million compared
to the second quarter of 2010 due to the higher OPBDA and $32
million in dividends received, primarily from Game Show Network,
partially offset by increased capital expenditures mostly driven by
the higher gross additions and demand for advanced set-top boxes at
both DTVLA and DIRECTV U.S. Free cash flow was also negatively
impacted by greater cash tax payments primarily resulting from the
higher pre-tax income and prior-year one-time tax deductions. Also
during the quarter but not included in free cash flow, were cash
paid for share repurchases of $1.51 billion and proceeds from the
sale of an equity investment of $55 million. In addition, in
June 2011 DIRECTV U.S. redeemed the remaining $659 million of its
6.375% Senior Notes due 2015.
Year-to-Date Review
DIRECTV’s first half revenues of $12.92 billion increased 13%
over the same period last year principally due to subscriber and
ARPU growth at both DIRECTV Latin America and DIRECTV U.S.
Operating profit before depreciation and amortization increased 13%
to $3.61 billion and operating profit increased 21% to $2.39
billion primarily due to gross profit associated with higher
revenues partially offset by increased subscriber acquisition costs
associated with the higher gross additions at both DTVLA and
DIRECTV U.S. Operating profit was also favorably impacted by lower
depreciation and amortization expense at DIRECTV U.S.
In the first six months of 2011, net income attributable to
DIRECTV increased 25% to $1.38 billion driven by the higher
operating profit as well as a $93 million increase in other income,
including a $60 million increase in pre-tax gains resulting from
the sale of investments recorded in “Other, net” on the
Consolidated Statements of Operations. These increases were
partially offset by higher interest expense principally resulting
from an increase in long-term debt as well as greater income tax
expense resulting from the higher pre-tax income. Also impacting
the comparison was a $67 million gain from the final settlement of
the equity collars assumed in the Liberty transaction in the first
quarter of 2010. Diluted earnings per share improved to $1.76, a
48% increase excluding the impact of the Malone transaction2 from
the first half results of 2010. The increase was due to the higher
net income as well as a lower average share count resulting from
stock repurchases made over the last twelve months.
Cash flow before interest and taxes and free cash flow declined
4% to $1.90 billion and 25% to $1.06 billion, respectively,
compared to the first six months of 2010 as the higher OPBDA and
$77 million in dividends received, primarily from Sky Mexico and
Game Show Network, were more than offset by higher capital
expenditures primarily associated with increased gross additions
and demand for advanced set-top boxes at both DIRECTV U.S. and
DTVLA. In addition, free cash flow was negatively impacted by
higher cash interest payments related to an increase in long-term
debt, as well as higher cash tax payments primarily resulting from
the increase in pre-tax income and prior-year one-time tax
deductions.
During the first six months of 2011 but not included in free
cash flow, were cash paid for share repurchases of $2.91 billion
and proceeds from the sale of investments of $116 million.
In addition, in March 2011 DIRECTV U.S. completed a $4.0 billion
debt financing and DIRECTV redeemed $1.0 billion of 6.375% Senior
Notes due 2015 during the first half of 2011.
SEGMENT FINANCIAL REVIEW
DIRECTV U.S. Segment
Second Quarter Review
Three Months Six Months
DIRECTV U.S.
Ended June 30, Ended June 30,
Dollars in Millions except
ARPU 2011 2010 2011 2010 Revenue
$ 5,277 $ 4,934 $ 10,422
$ 9,706 Average Monthly Revenue per Subscriber (ARPU)
($) 90.58 87.90
89.75 86.69 Operating Profit
Before Depreciation and Amortization(1) 1,446
1,394 2,809
2,700 Operating Profit 1,016
899 1,937 1,707
Cash Flow Before Interest and Taxes(3) 896
873 1,613
1,857 Free Cash Flow(4) 320
285 888
1,252
Subscriber Data (in 000’s except Churn)
Gross Subscriber
Additions 954 946
2,006 1,871 Average Monthly
Subscriber Churn 1.59 % 1.51 %
1.55 % 1.49 % Net Subscriber Additions
26 100 210
200 Cumulative Subscribers
19,433 18,760 19,433
18,760
In the quarter, DIRECTV U.S. revenues increased 7% to $5.28
billion primarily due to the larger subscriber base and ARPU growth
of 3.0%. The ARPU increase to $90.58 was driven by price increases
on programming packages and leased set-top boxes, as well as higher
advanced service fees partially offset by more promotional offers
to new and existing customers. Net additions declined to 26,000 as
the increase in gross additions was more than offset by a higher
average monthly churn rate of 1.59% principally resulting from a
more competitive environment coupled with ongoing economic
weakness. DIRECTV U.S. ended the quarter with 19.43 million
subscribers, an increase of 4% over the 18.76 million subscribers
reported for the quarter ended June 30, 2010.
Second quarter OPBDA increased 4% to $1.45 billion and operating
profit increased 13% to $1.02 billion primarily due to gross profit
associated with higher revenue partially offset by an increase in
upgrade and retention costs and higher demand for advanced service
equipment. Operating profit was also favorably impacted by the
completion of amortization for a subscriber-related intangible
asset as well as lower depreciation expense associated with a
reduction in set-top box capital expenditures over the last several
years.
DIRECTV Latin America Segment
DIRECTV Latin America owns approximately 93% of Sky Brazil, 41%
of Sky Mexico and 100% of PanAmericana, which covers most of the
remaining countries in the region. Sky Mexico, whose results are
accounted for as an equity method investment and therefore are not
consolidated by DTVLA, had approximately 3.59 million subscribers
as of June 30, 2011 bringing the total subscribers in the region to
10.29 million at the end of the second quarter of 2011.
Second Quarter Review
Three Months Six Months
DIRECTV Latin
America Ended June 30, Ended June 30,
Dollars in
Millions except ARPU 2011 2010 2011
2010 Revenue $ 1,254 $ 857 $
2,368 $ 1,636
Average Monthly Revenue per Subscriber
(ARPU) ($)
64.56 56.98
63.14 55.95 Operating Profit Before
Depreciation and Amortization(1) 423
265 807 509
Operating Profit 241 140
460 266 Cash Flow Before
Interest and Taxes(3) 141 69
297 135 Free Cash
Flow(4) 71 4
147 48
Subscriber
Data(5) (in 000’s except Churn)
Gross Subscriber
Additions 823 660
1,588 1,153 Average Monthly
Total Subscriber Churn 1.81 % 1.63 %
1.84 % 1.77 % Average Monthly Post-paid
Subscriber Churn 1.44 % 1.45 %
1.44 % 1.50 % Net Subscriber Additions
472 415 899
636 Cumulative Subscribers 6,707
5,224 6,707
5,224
DIRECTV Latin America gross additions increased 25% to an
all-time record of 823,000 in the quarter largely due to increased
demand from the middle market segment in Brazil. The increase in
gross additions and a slight decline in post-paid churn to 1.44%
driven by lower churn in Brazil and Venezuela, resulted in record
net additions of 472,000, representing a 14% increase over last
year’s second quarter results which benefited from the 2010 World
Cup soccer tournament. Revenues for DTVLA increased 46% to $1.25
billion in the quarter principally due to the strong subscriber
growth and a 13.3% increase in ARPU. The increase in ARPU to $64.56
was mostly due to price increases, higher sales of HD and DVR
services as well as favorable exchange rates, primarily in Brazil.
Excluding the impact of exchange rates, DTVLA ARPU increased
7.9%.
DIRECTV Latin America’s second quarter 2011 OPBDA increased 60%
to $423 million and operating profit increased 72% to $241 million
primarily due to the gross profit associated with higher revenue.
These increases were partially offset by higher subscriber
acquisition costs associated with the record gross additions as
well as increased upgrade and retention spending driven by demand
for advanced equipment. Also impacting operating profit were higher
depreciation expenses mostly due to the increase in set-top boxes
deployed related to the higher gross subscriber additions attained
over the last year.
CONFERENCE CALL INFORMATION
A live webcast of DIRECTV’s second quarter 2011 earnings call
will be available on the company’s website at
www.directv.com/investor. The webcast will begin at 2:00 p.m. ET,
today August 4, 2011. Access to the earnings call is also available
in the United States by dialing (800) 946-0708 and internationally
by dialing (719) 457-2573. The conference ID number is 2814438. A
replay of the call can be accessed by dialing 888-203-1112 in the
U.S. and 719-457-0820 internationally. The replay pass code is
2814438. The replay will be available from 5:30 p.m. ET Thursday,
August 4 through 12:59 a.m. ET Friday, August 12 and will also be
archived on our website at www.directv.com/investor.
FOOTNOTES
(1) Operating profit before depreciation and amortization, which
is a financial measure that is not determined in accordance with
accounting principles generally accepted in the United States of
America, or GAAP, should be used in conjunction with other GAAP
financial measures and is not presented as an alternative measure
of operating results, as determined in accordance with GAAP. Please
see each of DIRECTV and DIRECTV Holdings LLC’s Annual Reports on
Form 10-K for the year ended December 31, 2010 for further
discussion of operating profit before depreciation and
amortization. Operating profit before depreciation and amortization
margin is calculated by dividing operating profit before
depreciation and amortization by total revenues.
(2) In the second quarter of 2010, DIRECTV resolved an FCC issue
regarding our Puerto Rico operations by consummating a transaction
with Dr. John C. Malone and members of his family. Under the terms
of the agreement, the Malones exchanged 21.8 million shares of
DIRECTV Class B common stock, which was all of the outstanding
Class B shares, for 26.5 million shares of DIRECTV Class A common
stock. The additional 4.7 million shares, valued at approximately
$160 million reduced the diluted earnings per share attributable to
Class A shareholders to $0.42 in the second quarter of 2010. See
reconciliation of adjusted diluted earnings per share to diluted
earnings per share at the end of this release.
(3) Cash flow before interest and taxes, which is a financial
measure that is not determined in accordance with GAAP, is
calculated by deducting amounts under the captions “Cash paid for
property and equipment,” “Cash paid for satellites,” “Cash paid for
subscriber leased equipment – subscriber acquisitions,” and “Cash
paid for subscriber leased equipment – upgrade and retention” from
“Net cash provided by operating activities” from the Consolidated
Statements of Cash Flows and adding back net interest paid and
“Cash paid for income taxes.” This financial measure should be used
in conjunction with other GAAP financial measures and is not
presented as an alternative measure of cash flows from operating
activities, as determined in accordance with GAAP. DIRECTV and
DIRECTV U.S. management use cash flow before interest and taxes to
evaluate the cash generated by our current subscriber base, net of
capital expenditures, and excluding the impact of interest and
taxes, for the purpose of allocating resources to activities such
as adding new subscribers, retaining and upgrading existing
subscribers, for additional capital expenditures and as a measure
of performance for incentive compensation purposes. DIRECTV and
DIRECTV U.S. believe this measure is useful to investors, along
with other GAAP measures (such as cash flows from operating and
investing activities), to compare our operating performance to
other communications, entertainment and media companies. We believe
that investors also use current and projected cash flow before
interest and taxes to determine the ability of our current and
projected subscriber base to fund required and discretionary
spending and to help determine the financial value of the
company.
(4) Free cash flow, which is a financial measure that is not
determined in accordance with GAAP, is calculated by deducting
amounts under the captions “Cash paid for property and equipment,”
“Cash paid for satellites,” “Cash paid for subscriber leased
equipment – subscriber acquisitions,” and “Cash paid for subscriber
leased equipment – upgrade and retention” from “Net cash provided
by operating activities” from the Consolidated Statements of Cash
Flows. This financial measure should be used in conjunction with
other GAAP financial measures and is not presented as an
alternative measure of cash flows from operating activities, as
determined in accordance with GAAP. DIRECTV and DIRECTV U.S.
management use free cash flow to evaluate the cash generated by our
current subscriber base, net of capital expenditures, for the
purpose of allocating resources to activities such as adding new
subscribers, retaining and upgrading existing subscribers, for
additional capital expenditures and as a measure of performance for
incentive compensation purposes. DIRECTV and DIRECTV U.S. believe
this measure is useful to investors, along with other GAAP measures
(such as cash flows from operating and investing activities), to
compare our operating performance to other communications,
entertainment and media companies. We believe that investors also
use current and projected free cash flow to determine the ability
of our current and projected subscriber base to fund required and
discretionary spending and to help determine the financial value of
the company.
(5) DIRECTV Latin America subscriber data exclude subscribers of
the Sky Mexico service.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
NOTE: This release may include or incorporate by reference
certain statements that we believe are, or may be considered to be,
“forward-looking statements” within the meaning of various
provisions of the Securities Act of 1933 and of the Securities
Exchange Act of 1934. These forward-looking statements generally
can be identified by use of statements that include phrases such as
“believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,”
“project” or other similar words or phrases. Similarly, statements
that describe our objectives, plans or goals also are
forward-looking statements. All of these forward-looking statements
are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or from
those expressed or implied by the relevant forward-looking
statement. Such risks and uncertainties include, but are not
limited to: economic conditions; product demand and market
acceptance; ability to simplify aspects of our business model,
improve customer service, create new and desirable programming
content and interactive features, and achieve anticipated economies
of scale; government and regulatory action; local political or
economic developments in or affecting countries where we have
operations, including political, economic and social uncertainties
in many Latin American countries in which DTVLA operates; foreign
currency exchange rates; currency exchange controls; ability to
obtain export licenses; competition; the outcome of legal
proceedings; reliance on key executives and the loss thereof;
indemnification obligations; ability to achieve cost reductions;
increasing subscriber acquisition costs and subscriber churn;
ability of third parties to timely perform material contracts;
ability to renew programming contracts under favorable terms;
technological risk; potential intellectual property infringement;
limitations on access to distribution channels; natural disasters;
the success and timeliness of satellite launches; in-orbit
performance of satellites, including technical anomalies; loss of
uninsured satellites; theft of satellite programming signals;
significant debt; and our ability to access capital to maintain our
financial flexibility. These factors are also described in Item 1A
of DIRECTV’s Form 10-K, quarterly reports filed on Form 10-Q and
other SEC filings. We urge you to consider these factors carefully
in evaluating the forward-looking statements.
DIRECTV (NASDAQ:DTV) is one of the world’s leading providers of
digital television entertainment services. Through its subsidiaries
and affiliated companies in the United States, Brazil, Mexico and
other countries in Latin America, DIRECTV provides digital
television service to more than 19.4 million customers in the
United States and over 10 million customers in Latin America.
DIRECTV sports and entertainment properties include three regional
sports networks (Northwest, Rocky Mountain and Pittsburgh) as well
as a 60 percent ownership interest in Game Show Network. For more
information on DIRECTV, visit directv.com.
DIRECTV CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)
(Unaudited) Three Months Ended Six Months
Ended June 30, June 30, 2011 2010 2011 2010
Revenues $ 6,600
$ 5,848 $ 12,919
$ 11,456 Operating costs and
expenses
Costs of revenues, exclusive of
depreciation and amortization expense
Broadcast programming and other 2,693 2,366 5,286 4,680 Subscriber
service expenses 466 407 915 802 Broadcast operations expenses 96
85 190 173
Selling, general and administrative
expenses, exclusive of depreciation and amortization expense
Subscriber acquisition costs 766 709 1,562 1,381 Upgrade and
retention costs 327 272 608 532 General and administrative expenses
406 374 746 678 Depreciation and amortization expense
616 625 1,227
1,244
Total operating costs and
expenses 5,370
4,838 10,534
9,490 Operating profit
1,230 1,010 2,385 1,966 Interest
income 9 8 16 19 Interest expense (203 ) (134 ) (375 ) (249 )
Liberty transaction and related gains - - - 67 Other, net
70 13 112
19
Income before income taxes
1,106 897 2,138 1,822 Income tax
expense (397 ) (343 )
(746 ) (693 ) Net income 709 554 1,392 1,129
Less: Net income attributable to noncontrolling interest (8
) (11 ) (17 ) (28 )
Net income attributable to DIRECTV
$ 701 $ 543
$ 1,375 $ 1,101
Net income attributable to DIRECTV Class A common
stockholders $ 701 $ 372 $ 1,375 $ 917
Net income attributable to DIRECTV Class B
common stockholders, including $160 million exchange inducement
value for the Malone Transaction
- 171 -
184
Net income attributable to
DIRECTV $ 701 $
543 $ 1,375
$ 1,101
Basic earnings attributable to DIRECTV
Class A stockholders per common share
$ 0.92 $ 0.42 $ 1.77 $ 1.02
Diluted earnings attributable to
DIRECTV Class A stockholders per common share
0.91 0.42 1.76 1.02
Basic and diluted earnings attributable
to DIRECTV Class B stockholders per common share, including $160
million exchange inducement value for the Malone
Transaction
- 7.84 - 8.44 Weighted average number of Class A common
shares outstanding (in millions) Basic 763 883 778 896 Diluted 767
889 782 903
Weighted average number of Class B common
shares outstanding, through June 16, 2010 (in millions)
Basic - 22 - 22 Diluted - 22 - 22 Weighted average number of
total common shares outstanding (in millions) Basic 763 901 778 916
Diluted 767 907 782 923
DIRECTV CONSOLIDATED BALANCE SHEETS (Dollars in
Millions) (Unaudited) June 30,
December 31,
ASSETS 2011 2010
Current
assets Cash and cash equivalents $ 2,528 $ 1,502
Accounts receivable, net of allowances of
$98 and $76
2,003 2,001 Inventories 321 247 Deferred income taxes 61 53 Prepaid
expenses and other 405 450
Total current assets 5,318 4,253
Satellites, net 2,173 2,235
Property and equipment,
net 4,789 4,444
Goodwill 4,181 4,148
Intangible
assets, net 1,014 1,074
Investments and other assets
1,702 1,755
Total assets $ 19,177 $ 17,909
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities Accounts payable and
accrued liabilities $ 3,539 $ 3,926 Unearned subscriber revenues
and deferred credits 509 486 Short-term borrowings -
38
Total current
liabilities 4,048 4,450
Long-term debt 13,462 10,472
Deferred income taxes 1,784 1,670
Other liabilities and
deferred credits 1,282 1,287
Commitments and
contingencies Redeemable noncontrolling interest 224 224
Stockholders' deficit (1,623 )
(194 )
Total liabilities and stockholders' deficit
$ 19,177 $ 17,909
DIRECTV CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions) (Unaudited) Six
Months Ended June 30, 2011 2010
Cash Flows
From Operating Activities Net income $ 1,392 $ 1,129
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,227 1,244 Amortization of deferred
revenues and deferred credits (18 ) (17 ) Share-based compensation
expense 53 38 Equity in earnings from unconsolidated affiliates (55
) (38 ) Net foreign currency transaction (gain) loss (26 ) 11
Dividends received 77 47 Gain from sale of investments (63 ) (3 )
Liberty transaction and related gains - (67 ) Deferred income taxes
180 135 Other 26 30 Change in other operating assets and
liabilities: Accounts receivable 17 (30 ) Inventories (74 ) 29
Prepaid expenses and other 9 61 Accounts payable and accrued
liabilities (259 ) (15 ) Unearned subscriber revenue and deferred
credits 23 (8 ) Other, net (105 ) (52 )
Net cash provided by operating activities 2,404
2,494
Cash Flows From Investing
Activities Cash paid for property and equipment (1,296 ) (1,011
) Cash paid for satellites (48 ) (69 ) Investment in companies, net
of cash acquired (11 ) (1 ) Proceeds from sale of investments 116 5
Other, net 39 (41 ) Net cash
used in investing activities (1,200 )
(1,117 )
Cash Flows From Financing Activities Cash proceeds
from debt issuance 3,990 2,996 Debt issuance costs (30 ) (16 )
Repayment of long-term debt (1,000 ) (1,103 ) Repayment of
short-term borrowings (39 ) - Repayment of collar loan and equity
collars - (1,537 ) Repayment of other long-term obligations (156 )
(62 ) Common shares repurchased and retired (2,913 ) (2,189 ) Stock
options exercised - 2 Taxes paid in lieu of shares issued for
share-based compensation (55 ) (82 ) Excess tax benefit from
share-based compensation 25 9
Net cash used in financing activities (178 )
(1,982 ) Net increase (decrease) in cash and cash
equivalents 1,026 (605 ) Cash and cash equivalents at beginning of
the period 1,502 2,605
Cash and cash equivalents at the end of the period $ 2,528
$ 2,000
Supplemental Cash Flow
Information Cash paid for interest $ 310 $ 207 Cash paid for
income taxes 543 382
DIRECTV SELECTED
SEGMENT DATA (Dollars in Millions) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30,
2011 2010 2011 2010
DIRECTV
U.S. Revenues $ 5,277 $ 4,934 $ 10,422 $ 9,706
Operating profit before depreciation and amortization (1) 1,446
1,394 2,809 2,700 Operating profit before depreciation and
amortization margin (1) 27.4 % 28.3 % 27.0 % 27.8 % Operating
profit $ 1,016 $ 899 $ 1,937 $ 1,707 Operating profit margin 19.3 %
18.2 % 18.6 % 17.6 % Depreciation and amortization $ 430 $ 495 $
872 $ 993 Capital expenditures 386 376 762 689
DIRECTV LATIN
AMERICA Revenues $ 1,254 $ 857 $ 2,368 $ 1,636 Operating profit
before depreciation and amortization (1) 423 265 807 509 Operating
profit before depreciation and amortization margin (1) 33.7 % 30.9
% 34.1 % 31.1 % Operating profit $ 241 $ 140 $ 460 $ 266 Operating
profit margin 19.2 % 16.3 % 19.4 % 16.3 % Depreciation and
amortization $ 182 $ 125 $ 347 $ 243 Capital expenditures 311 231
577 390
SPORTS NETWORKS, ELIMINATIONS and OTHER Revenues $ 69
$ 57 $ 129 $ 114 Operating profit (loss) before depreciation and
amortization (1) (23 ) (24 ) (4 ) 1 Operating loss (27 ) (29 ) (12
) (7 ) Depreciation and amortization 4 5 8 8 Capital expenditures 3
- 5 1
TOTAL Revenues $ 6,600 $ 5,848 $ 12,919 $ 11,456
Operating profit before depreciation and amortization (1) 1,846
1,635 3,612 3,210 Operating profit before depreciation and
amortization margin (1) 28.0 % 28.0 % 28.0 % 28.0 % Operating
profit $ 1,230 $ 1,010 $ 2,385 $ 1,966 Operating profit margin 18.6
% 17.3 % 18.5 % 17.2 % Depreciation and amortization $ 616 $ 625 $
1,227 $ 1,244 Capital expenditures 700 607 1,344 1,080
(1) See footnote 1
DIRECTV HOLDINGS LLC
(DIRECTV U.S.) CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions) (Unaudited) Three
Months Ended Six Months Ended June 30, June 30, 2011
2010 2011 2010
Revenues $
5,277 $ 4,934
$ 10,422 $ 9,706
Operating costs and expenses Costs of revenues,
exclusive of depreciation and amortization expense Broadcast
programming and other 2,207 2,019 4,407 4,033 Subscriber service
expenses 355 325 706 648 Broadcast operations expenses 75 66 149
135
Selling, general and administrative
expenses, exclusive of depreciation and amortization expense
Subscriber acquisition costs 626 610 1,308 1,205 Upgrade and
retention costs 298 259 557 509 General and administrative expenses
270 261 486 476 Depreciation and amortization expense
430 495 872
993
Total operating costs and expenses
4,261 4,035
8,485 7,999
Operating profit 1,016 899 1,937
1,707 Interest income 1 1 1 4 Interest expense (186 )
(116 ) (342 ) (213 ) Other, net 29
5 23 -
Income before income taxes 860 789
1,619 1,498 Income tax expense
(323 ) (307 ) (611 ) (583
)
Net income $ 537
$ 482 $ 1,008
$ 915 DIRECTV HOLDINGS
LLC (DIRECTV U.S.) CONSOLIDATED BALANCE SHEETS
(Dollars in Millions) (Unaudited) June
30, December 31,
ASSETS 2011 2010
Current assets Cash and cash equivalents $ 1,296 $ 687
Accounts receivable, net of allowances of
$66 and $46
1,673 1,735 Inventories 298 227 Prepaid expenses and other
188 187
Total current
assets 3,455 2,836
Satellites, net 1,737 1,794
Property and equipment, net 2,801 2,832
Goodwill
3,177 3,176
Intangible assets, net 466 495
Other
assets 252 267
Total assets $ 11,888 $ 11,400
LIABILITIES AND OWNER’S DEFICIT
Current liabilities Accounts payable and accrued
liabilities $ 2,571 $ 2,977 Unearned subscriber revenues and
deferred credits 372 378
Total current liabilities 2,943 3,355
Long-term
debt 13,462 10,472
Deferred income taxes 1,035 906
Other liabilities and deferred credits 249 288
Commitments and contingencies Owner’s deficit
(5,801 ) (3,621 )
Total liabilities
and owner’s deficit $ 11,888 $ 11,400
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
Millions) (Unaudited) Six Months Ended
June 30, 2011 2010
Cash Flows From
Operating Activities Net income $ 1,008 $ 915
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 872 993 Amortization of
deferred revenues and deferred credits (18 ) (17 ) Share-based
compensation expense 43 31 Deferred income taxes 119 58 Other (31 )
13 Change in other operating assets and liabilities: Accounts
receivable 81 9 Inventories (71 ) 34 Prepaid expenses and other 2 3
Accounts payable and accrued liabilities (337 ) (55 ) Unearned
subscriber revenue and deferred credits (6 ) (6 ) Other, net
(12 ) (37 ) Net cash provided by operating
activities 1,650 1,941
Cash Flows From Investing Activities Cash paid for property
and equipment (245 ) (222 ) Cash paid for subscriber leased
equipment - subscriber acquisitions (324 ) (246 ) Cash paid for
subscriber leased equipment - upgrade and retention (145 ) (152 )
Cash paid for satellites (48 ) (69 ) Investment in companies, net
of cash acquired (11 ) (1 ) Proceeds from sale of investments
55 - Net cash used in
investing activities (718 ) (690 )
Cash Flows From Financing Activities Cash proceeds from debt
issuance 3,990 2,996 Debt issuance costs (30 ) (16 ) Repayment of
long-term debt (1,000 ) (1,103 ) Repayment of other long-term
obligations (54 ) (48 ) Cash dividends to Parent (3,250 ) (4,000 )
Excess tax benefit from share-based compensation 21
8 Net cash used in financing activities
(323 ) (2,163 ) Net increase (decrease)
in cash and cash equivalents 609 (912 ) Cash and cash equivalents
at beginning of the period 687
1,716 Cash and cash equivalents at end of the period
$ 1,296 $ 804
Supplemental Cash Flow
Information Cash paid for interest $ 277 $ 171 Cash paid for
income taxes 449 438
Non-GAAP Financial Measure
Reconciliation Schedules (Unaudited)
DIRECTV Reconciliation of Operating Profit Before
Depreciation and Amortization to Operating Profit*
Three Months Ended Six Months Ended June
30, June 30, 2011 2010 2011
2010 (Dollars in Millions) Operating Profit
Before Depreciation and Amortization $ 1,846 $ 1,635 $ 3,612 $
3,210 Subtract: Depreciation and amortization expense 616
625 1,227
1,244 Operating Profit $ 1,230 $ 1,010
$ 2,385 $ 1,966 *For a
reconciliation of this non-GAAP financial measure for each of our
segments, please see the Notes to the Consolidated Financial
Statements which will be included in DIRECTV's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2011, which is expected to
be filed with the SEC in August 2011.
DIRECTV
Reconciliation of Cash Flow Before
Interest and Taxes3 and Free Cash Flow4
to Net Cash Provided by Operating Activities
Three Months Ended Six Months Ended June 30,
June 30, 2011 2010 2011 2010
(Dollars in Millions) Cash Flow Before Interest and Taxes $
998 $ 910 $ 1,897 $ 1,984 Adjustments: Cash paid for interest (146
) (171 ) (310 ) (207 ) Interest income 9 8 16 19 Income taxes paid
(466 ) (364 ) (543 ) (382
) Subtotal - Free Cash Flow 395 383 1,060 1,414 Add Cash Paid For:
Property and equipment 683 546 1,296 1,011 Satellites 17
61 48 69
Net Cash Provided by Operating Activities $ 1,095
$ 990 $ 2,404 $ 2,494
DIRECTV Reconciliation of Consolidated DIRECTV
Adjusted Diluted EPS to Diluted EPS Three Months Ended
Six Months Ended June 30, June 30, 2011
2010 2011 2010 Adjusted Diluted EPS $
0.91 $ 0.60 $ 1.76 $ 1.19 Impact of Malone Transaction -
(0.18 ) - (0.17 )
Diluted EPS $ 0.91 $ 0.42 $ 1.76
$ 1.02
DIRECTV Latin America
Reconciliation of Cash Flow Before
Interest and Taxes3 and Free Cash Flow4
to Net Cash Provided by Operating Activities
Three Months Ended Six Months Ended June 30,
June 30, 2011 2010 2011 2010
(Dollars in Millions) Cash Flow Before Interest and Taxes $
141 $ 69 $ 297 $ 135 Adjustments: Cash paid for interest (14 ) (15
) (28 ) (30 ) Interest income 7 7 14 14 Income taxes paid
(63 ) (57 ) (136 ) (71 )
Subtotal - Free Cash Flow 71 4 147 48 Add Cash Paid For: Property
and equipment 311 231 577
390 Net Cash Provided by Operating
Activities $ 382 $ 235 $ 724 $
438 (3) and (4) - See footnotes
DIRECTV HOLDINGS LLC (DIRECTV U.S.) Non-GAAP Financial
Measure Reconciliation and SAC Calculation (Unaudited)
Reconciliation of Pre-SAC Margin* to Operating Profit
Three Months Ended Six Months Ended
June 30, June 30, 2011 2010
2011 2010 (Dollars in Millions)
Operating Profit $ 1,016 $ 899 $ 1,937 $ 1,707 Adjustments:
Subscriber acquisition costs (expensed) 626 610 1,308 1,205
Depreciation and amortization expense 430 495 872 993 Cash paid for
subscriber leased equipment - upgrade and retention (76 )
(71 ) (145 ) (152 )
Pre-SAC margin* $ 1,996 $ 1,933 $ 3,972
$ 3,753 Pre-SAC margin as a percentage of
revenue* 37.8 % 39.2 % 38.1 % 38.7 %
Reconciliation of Cash Flow Before
Interest and Taxes3 and Free Cash Flow4
to Net Cash Provided by Operating Activities
Three Months Ended Six Months Ended June 30,
June 30, 2011 2010 2011 2010
(Dollars in Millions) Cash Flow Before Interest and Taxes $
896 $ 873 $ 1,613 $ 1,857 Adjustments: Cash paid for interest (129
) (152 ) (277 ) (171 ) Interest income 1 1 1 4 Income taxes paid
(448 ) (437 ) (449 )
(438 ) Subtotal - Free Cash Flow 320 285 888 1,252 Add Cash
Paid For: Property and equipment 143 113 245 222 Subscriber leased
equipment - subscriber acquisitions 150 131 324 246 Subscriber
leased equipment - upgrade and retention 76 71 145 152 Satellites
17 61 48
69 Net Cash Provided by Operating Activities $ 706
$ 661 $ 1,650 $ 1,941
(3) and (4) - See footnotes on page 5 of this earnings
release.
* Pre-SAC Margin, which is a financial
measure that is not determined in accordance with accounting
principles generally accepted in the United States of America, or
GAAP, is calculated for DIRECTV U.S. by adding amounts under the
captions “Subscriber acquisition costs” and “Depreciation and
amortization expense” to “Operating Profit” from the Consolidated
Statements of Operations and subtracting "Cash paid for subscriber
leased equipment - upgrade and retention" from the Consolidated
Statements of Cash Flows. This financial measure should be used in
conjunction with GAAP financial measures and is not presented as an
alternative measure of operating results, as determined in
accordance with GAAP. DIRECTV and DIRECTV U.S. management use
Pre-SAC Margin to evaluate the profitability of DIRECTV U.S.’
current subscriber base for the purpose of allocating resources to
discretionary activities such as adding new subscribers, upgrading
and retaining existing subscribers and for capital expenditures. To
compensate for the exclusion of “Subscriber acquisition costs,”
management also uses operating profit and operating profit before
depreciation and amortization expense to measure profitability.
DIRECTV and DIRECTV U.S. believe this measure is useful to
investors, along with GAAP measures (such as revenues, operating
profit and net income), to compare DIRECTV U.S.’ operating
performance to other communications, entertainment and media
companies. DIRECTV and DIRECTV U.S. believe that investors also use
current and projected Pre-SAC Margin to determine the ability of
DIRECTV U.S.’ current and projected subscriber base to fund
discretionary spending and to determine the financial returns for
subscriber additions.
SAC Calculation Three Months
Ended Six Months Ended June 30, June 30,
2011 2010 2011 2010 (Dollars in
Millions, Except SAC Amounts) Subscriber acquisition
costs (expensed) $ 626 $ 610 $ 1,308 $ 1,205 Cash paid for
subscriber leased equipment - subscriber acquisitions 150
131 324
246 Total acquisition costs $ 776 $ 741
$ 1,632 $ 1,451 Gross subscriber
additions (000's) 954 946 2,006 1,871 Average subscriber
acquisition costs-per subscriber (SAC) $ 813 $ 783 $ 814 $ 776
DTE Energy (NYSE:DTV)
Historical Stock Chart
From Jun 2024 to Jul 2024
DTE Energy (NYSE:DTV)
Historical Stock Chart
From Jul 2023 to Jul 2024