DIRECTV
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Net income
|
|
$
|
572
|
|
$
|
521
|
|
$
|
2,029
|
|
$
|
1,913
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
|
2
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
9
|
|
|
7
|
|
|
9
|
|
|
7
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
|
(31
|
)
|
|
|
|
|
(31
|
)
|
|
|
|
Reclassification adjustments included in net income
|
|
|
(3
|
)
|
|
|
|
|
(3
|
)
|
|
|
|
Foreign currency translation adjustments
|
|
|
(2
|
)
|
|
(140
|
)
|
|
(32
|
)
|
|
(92
|
)
|
Unrealized holding losses on securities
|
|
|
|
|
|
(3
|
)
|
|
(4
|
)
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
(28
|
)
|
|
(134
|
)
|
|
(62
|
)
|
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
544
|
|
|
387
|
|
|
1,967
|
|
|
1,822
|
|
Less: Comprehensive (income) loss attributable to noncontrolling interest
|
|
|
(6
|
)
|
|
10
|
|
|
(7
|
)
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
538
|
|
$
|
397
|
|
$
|
1,960
|
|
$
|
1,810
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
3
Table of Contents
DIRECTV
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
September 30,
2012
|
|
December 31,
2011
|
|
|
|
(Dollars in Millions,
Except Share Data)
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,421
|
|
$
|
873
|
|
Accounts receivable, net of allowances of $91 and $79
|
|
|
2,583
|
|
|
2,474
|
|
Inventories
|
|
|
377
|
|
|
280
|
|
Deferred income taxes
|
|
|
66
|
|
|
62
|
|
Prepaid expenses and other
|
|
|
383
|
|
|
552
|
|
|
|
|
|
|
|
Total current assets
|
|
|
5,830
|
|
|
4,241
|
|
Satellites, net
|
|
|
2,288
|
|
|
2,215
|
|
Property and equipment, net
|
|
|
5,706
|
|
|
5,223
|
|
Goodwill
|
|
|
4,066
|
|
|
4,097
|
|
Intangible assets, net
|
|
|
821
|
|
|
909
|
|
Investments and other assets
|
|
|
1,642
|
|
|
1,738
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
20,353
|
|
$
|
18,423
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
4,203
|
|
$
|
4,210
|
|
Unearned subscriber revenues and deferred credits
|
|
|
674
|
|
|
533
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
4,877
|
|
|
4,743
|
|
Long-term debt
|
|
|
17,162
|
|
|
13,464
|
|
Deferred income taxes
|
|
|
1,672
|
|
|
1,771
|
|
Other liabilities and deferred credits
|
|
|
1,377
|
|
|
1,287
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
265
|
|
|
265
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
Common stock and additional paid-in capital$0.01 par value, 3,950,000,000 and 3,947,000,000 shares authorized, 611,754,897 and 691,306,695 shares
issued and outstanding of common stock at September 30, 2012 and December 31, 2011, respectively
|
|
|
4,291
|
|
|
4,799
|
|
Accumulated deficit
|
|
|
(9,073
|
)
|
|
(7,750
|
)
|
Accumulated other comprehensive loss
|
|
|
(218
|
)
|
|
(156
|
)
|
|
|
|
|
|
|
Total stockholders' deficit
|
|
|
(5,000
|
)
|
|
(3,107
|
)
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
20,353
|
|
$
|
18,423
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
Table of Contents
DIRECTV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2,029
|
|
$
|
1,913
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
1,811
|
|
|
1,781
|
|
Amortization of deferred revenues and deferred credits
|
|
|
(54
|
)
|
|
(27
|
)
|
Share-based compensation expense
|
|
|
77
|
|
|
76
|
|
Equity in earnings from unconsolidated affiliates
|
|
|
(107
|
)
|
|
(83
|
)
|
Net foreign currency transaction loss
|
|
|
32
|
|
|
46
|
|
Dividends received
|
|
|
28
|
|
|
97
|
|
Gain on sale of investments
|
|
|
(11
|
)
|
|
(63
|
)
|
Deferred income taxes
|
|
|
41
|
|
|
179
|
|
Excess tax benefit from share-based compensation
|
|
|
(30
|
)
|
|
(25
|
)
|
Other
|
|
|
76
|
|
|
32
|
|
Change in other operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
15
|
|
|
(104
|
)
|
Inventories
|
|
|
(97
|
)
|
|
(66
|
)
|
Prepaid expenses and other
|
|
|
146
|
|
|
(140
|
)
|
Accounts payable and accrued liabilities
|
|
|
(143
|
)
|
|
(126
|
)
|
Unearned subscriber revenue and deferred credits
|
|
|
139
|
|
|
74
|
|
Other, net
|
|
|
181
|
|
|
47
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
4,133
|
|
|
3,611
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
(2,160
|
)
|
|
(2,160
|
)
|
Cash paid for satellites
|
|
|
(231
|
)
|
|
(156
|
)
|
Investment in companies, net of cash acquired
|
|
|
(4
|
)
|
|
(11
|
)
|
Proceeds from sale of investments
|
|
|
24
|
|
|
116
|
|
Other, net
|
|
|
25
|
|
|
41
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(2,346
|
)
|
|
(2,170
|
)
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
Cash proceeds from debt issuance
|
|
|
5,190
|
|
|
3,990
|
|
Debt issuance costs
|
|
|
(35
|
)
|
|
(30
|
)
|
Repayment of long-term debt
|
|
|
(1,500
|
)
|
|
(1,000
|
)
|
Proceeds from borrowings under revolving credit facility
|
|
|
400
|
|
|
|
|
Repayment of borrowings under revolving credit facility
|
|
|
(400
|
)
|
|
|
|
Repayment of short-term borrowings
|
|
|
|
|
|
(39
|
)
|
Repayment of other long-term obligations
|
|
|
(40
|
)
|
|
(171
|
)
|
Common shares repurchased and retired
|
|
|
(3,828
|
)
|
|
(4,366
|
)
|
Stock options exercised
|
|
|
2
|
|
|
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
(58
|
)
|
|
(55
|
)
|
Excess tax benefit from share-based compensation
|
|
|
30
|
|
|
25
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(239
|
)
|
|
(1,646
|
)
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
1,548
|
|
|
(205
|
)
|
Cash and cash equivalents at beginning of the period
|
|
|
873
|
|
|
1,502
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
2,421
|
|
$
|
1,297
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
710
|
|
$
|
562
|
|
Cash paid for income taxes
|
|
|
881
|
|
|
853
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
5
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Description of Business and Basis of Presentation
DIRECTV, which we sometimes refer to as the company, we, or us, is a leading provider of digital television entertainment in the United
States and Latin America. We operate two direct-to-home, or DTH, business units: DIRECTV U.S. and DIRECTV Latin America, which are differentiated by their geographic locations
and are engaged in acquiring, promoting, selling and distributing digital entertainment programming primarily via satellite to residential and commercial subscribers. In addition, we own and operate
three regional sports networks and own a 60% interest in Game Show Network, LLC, or GSN, a television network dedicated to game-related programming and Internet interactive game
playing. We account for our investment in GSN using the equity method of accounting.
-
-
DIRECTV
U.S.
DIRECTV Holdings LLC and its subsidiaries, which we refer to as DIRECTV U.S., is the largest provider of DTH digital
television services and the second largest provider in the multi-channel video programming distribution industry in the United States.
-
-
DIRECTV Latin
America.
DIRECTV Latin America Holdings, Inc. and its subsidiaries, or DIRECTV Latin America, is a leading provider of DTH
digital television services throughout Latin America. DIRECTV Latin America is comprised of: PanAmericana, which provides services in Argentina, Chile, Colombia, Ecuador, Puerto Rico, Venezuela and
certain other countries in the region, and Sky Brasil Servicos Ltda., or Sky Brasil, which is a 93% owned subsidiary. DIRECTV Latin America also includes our 41% equity method investment in
Innova, S. de R.L. de C.V., or Sky Mexico, which we include in the PanAmericana segment.
-
-
DIRECTV Sports
Networks.
DIRECTV Sports Networks LLC and its subsidiaries, or DSN, is comprised primarily of three regional sports networks
based in Seattle, Washington; Denver, Colorado and Pittsburgh, Pennsylvania, each of which operates under the brand name ROOT Sports. The operating results of DSN are reported as part of the "Sports
Networks, Eliminations and Other" reporting segment.
During
the first quarter of 2012, we revised our reportable segments. As further discussed in Note 11, our DIRECTV Latin America business unit, which was previously reported as a
single segment, is now reported as two segments, Sky Brasil and PanAmericana. We have restated certain prior period amounts to conform to the current year presentation of reporting segments.
We
have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP, for
interim financial reporting. In the opinion of management, all adjustments (consisting only of normal recurring items) that are necessary for a fair presentation have been included. The results for
interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. For further information, refer to the consolidated financial
statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on February 23, 2012, updated by
the Current Report on Form 8-K filed on August 27, 2012, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 filed with the SEC
on May 9, 2012, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 filed with the SEC on August 3, 2012 and all of our other filings,
including Current Reports on Form 8-K, filed with the SEC after such date and through the date of this report.
We
prepare our consolidated financial statements in conformity with GAAP, which requires us to make estimates and assumptions that affect amounts reported herein. We base our estimates
and
6
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
assumptions
on historical experience and on various other factors that we believe to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, our actual
results reported in future periods may be affected by changes in those estimates.
Note 2: Divestitures
Equity Method Investments
In April 2011, we sold an equity method investment for $55 million in cash. As a result of this sale, we recognized a
$37 million gain, or $23 million after tax, on the sale in "Other, net" in the Consolidated Statements of Operations, which represents the difference between the selling price and the
carrying amount of the equity method investment sold.
Investment in GSN.
Due to certain governance arrangements which limit DIRECTV's ability to control GSN, we account for GSN as an equity
method
investment. In March 2011, we sold a 5% ownership interest in GSN to our equity partner for $60 million in cash, reducing our ownership interest to 60%. We recognized a $25 million gain,
$16 million after tax, on the sale in "Other, net" in the Consolidated Statements of Operations, which represents the difference between the selling price and the carrying amount of the portion
of our equity method investment sold. In the third quarter of 2012, we exercised our put right to sell an 18% interest in GSN for $234 million to our equity partner, which will reduce our
ownership interest from 60% to 42%. The close of the transaction is contingent upon regulatory approval, which we expect to occur in the fourth quarter of 2012. Upon the close of this transaction, we
expect to recognize a $113 million gain, $69 million after tax, on the sale in "Other, net" in the Consolidated Statement of Operations, which represents the difference between the
selling price and the carrying amount of the portion of our equity method investment sold. As of September 30, 2012, the book value of our 60% interest in GSN was $403 million.
Note 3: Change in Accounting Estimate
Depreciable Lives of Leased Set-Top Receivers
We currently lease most set-top 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 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 in the third quarter of 2011, including consideration of historical write-offs, improved efficiencies in our refurbishment
program, improved set-top receiver failure rates over time and management's judgment of the risk of technological obsolescence, we determined that the estimated useful life of
high-definition, or HD, set-top receivers used in our DIRECTV U.S. business has increased to four years, from three years as previously estimated. We continue to depreciate
standard-definition set-top receivers at DIRECTV U.S. over a three year estimated useful life. We accounted for this change in the useful 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
7
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
effect
of reducing depreciation and amortization expense and increasing both net income attributable to DIRECTV and earnings per share in our consolidated results of operations as follows:
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions,
Except Per Share Amounts)
|
|
Depreciation and amortization expense
|
|
$
|
(143
|
)
|
$
|
(76
|
)
|
Net income attributable to DIRECTV
|
|
|
88
|
|
|
47
|
|
Basic and diluted earnings attributable to DIRECTV per common share
|
|
$
|
0.13
|
|
$
|
0.06
|
|
Note 4: Goodwill
As discussed in Note 11, during the first quarter of 2012, we revised our reportable segments and now report DIRECTV Latin
America as two reportable segments, Sky Brasil and PanAmericana. Accordingly, goodwill historically assigned to the DIRECTV Latin America segment has been restated to reflect the amounts attributable
to each of these new reporting segments.
The
changes in the carrying amounts of goodwill at each of our reporting segments for the nine months ended September 30, 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
Sports
Networks,
Eliminations
and Other
|
|
|
|
|
|
DIRECTV
U.S.
|
|
Sky
Brasil
|
|
PanAmericana
|
|
Total
|
|
|
|
(Dollars in Millions)
|
|
Balance as of January 1, 2012
|
|
$
|
3,177
|
|
$
|
414
|
|
$
|
211
|
|
$
|
295
|
|
$
|
4,097
|
|
Sky Brasil foreign currency translation adjustment
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2012
|
|
$
|
3,177
|
|
$
|
383
|
|
$
|
211
|
|
$
|
295
|
|
$
|
4,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 5: Debt
In the first quarter of 2012, DIRECTV U.S. borrowed and repaid $400 million under its $2.0 billion revolving credit
facility, which was terminated on September 28, 2012, and replaced with a three and one-half year, $1.0 billion revolving credit facility and a five year, $1.5 billion
revolving credit facility, discussed in further detail below.
On
September 11, 2012, DIRECTV U.S. issued, pursuant to a registration statement, £750 million ($1,208 million) in aggregate principal of 4.375% senior
notes due in 2029 with proceeds, net of an original issue discount, of £742 million ($1,194 million). The U.S. dollar amounts reflect the conversion of the
£750 million aggregate principal and the £742 million proceeds, net of discount, to U.S. dollars based on the exchange rate of £1.00/$1.61 at
September 11, 2012. In connection with the issuance of these senior notes, DIRECTV U.S. entered into cross-currency swaps to effectively convert its fixed-rate British pound
sterling denominated debt, including annual interest payments and the
8
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
payment
of principal at maturity, to fixed-rate U.S. dollar denominated debt, as further discussed in Note 6. We incurred $9 million of debt issuance costs in connection with
this transaction.
On
March 8, 2012, DIRECTV U.S. issued the following senior notes:
|
|
|
|
|
|
|
|
|
|
Principal
|
|
Proceeds, net
of discount
|
|
|
|
(Dollars in Millions)
|
|
2.400% senior notes due 2017
|
|
$
|
1,250
|
|
$
|
1,249
|
|
3.800% senior notes due 2022
|
|
|
1,500
|
|
|
1,499
|
|
5.150% senior notes due 2042
|
|
|
1,250
|
|
|
1,248
|
|
|
|
|
|
|
|
|
|
$
|
4,000
|
|
$
|
3,996
|
|
|
|
|
|
|
|
We
incurred $25 million of debt issuance costs in connection with this transaction.
On
May 15, 2012, DIRECTV U.S. redeemed, pursuant to the terms of its indenture, all of its then outstanding $1,500 million of 7.625% senior notes due in 2016, at a price of
103.813%, plus accrued and unpaid interest, for a total of $1,614 million. We recorded a pre-tax charge of $64 million, $40 million after tax, during the second
quarter of 2012, of which $57 million resulted from the premium paid for the redemption and $7 million resulted from the write-off of deferred debt issuance and other
transaction costs. The charge was recorded in "Other, net" in our Consolidated Statements of Operations.
On March 10, 2011, DIRECTV U.S. issued the following senior notes:
|
|
|
|
|
|
|
|
|
|
Principal
|
|
Proceeds, net
of discount
|
|
|
|
(Dollars in Millions)
|
|
3.500% senior notes due 2016
|
|
$
|
1,500
|
|
$
|
1,497
|
|
5.000% senior notes due 2021
|
|
|
1,500
|
|
|
1,493
|
|
6.375% senior notes due 2041
|
|
|
1,000
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
$
|
4,000
|
|
$
|
3,990
|
|
|
|
|
|
|
|
We
incurred $24 million of debt issuance costs in connection with this transaction.
On
March 17, 2011, DIRECTV U.S. purchased, pursuant to a tender offer, $341 million of its then outstanding $1,002 million of 6.375% senior notes due in 2015 at a
price of 103.313%, plus accrued and unpaid interest, for a total of $358 million. On June 15, 2011, DIRECTV U.S. redeemed, pursuant to the terms of its indenture, the remaining
$659 million of its outstanding 6.375% senior notes due 2015, at a price of 102.125%, plus accrued and unpaid interest, for a total of $694 million. We recorded a pre-tax
charge of $25 million, $16 million after tax, during the nine months ended September 30, 2011, primarily for the premiums paid. The charge was recorded in "Other, net" in our
Consolidated Statements of Operations.
9
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Senior Notes
The following table sets forth our outstanding senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount
|
|
Carrying value, net of
unamortized original
issue discounts
|
|
|
|
September 30,
2012
|
|
September 30,
2012
|
|
December 31,
2011
|
|
|
|
(Dollars in Millions)
|
|
4.750% senior notes due 2014
|
|
$
|
1,000
|
|
$
|
999
|
|
$
|
999
|
|
3.550% senior notes due 2015
|
|
|
1,200
|
|
|
1,200
|
|
|
1,199
|
|
3.125% senior notes due 2016
|
|
|
750
|
|
|
750
|
|
|
750
|
|
3.500% senior notes due 2016
|
|
|
1,500
|
|
|
1,498
|
|
|
1,498
|
|
7.625% senior notes due 2016
|
|
|
|
|
|
|
|
|
1,500
|
|
2.400% senior notes due 2017
|
|
|
1,250
|
|
|
1,249
|
|
|
|
|
5.875% senior notes due 2019
|
|
|
1,000
|
|
|
995
|
|
|
994
|
|
5.200% senior notes due 2020
|
|
|
1,300
|
|
|
1,298
|
|
|
1,298
|
|
4.600% senior notes due 2021
|
|
|
1,000
|
|
|
999
|
|
|
999
|
|
5.000% senior notes due 2021
|
|
|
1,500
|
|
|
1,494
|
|
|
1,494
|
|
3.800% senior notes due 2022
|
|
|
1,500
|
|
|
1,499
|
|
|
|
|
4.375% senior notes due 2029
|
|
|
1,213
|
|
|
1,199
|
|
|
|
|
6.350% senior notes due 2040
|
|
|
500
|
|
|
500
|
|
|
499
|
|
6.000% senior notes due 2040
|
|
|
1,250
|
|
|
1,234
|
|
|
1,234
|
|
6.375% senior notes due 2041
|
|
|
1,000
|
|
|
1,000
|
|
|
1,000
|
|
5.150% senior notes due 2042
|
|
|
1,250
|
|
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
|
Total senior notes
|
|
$
|
17,213
|
|
$
|
17,162
|
|
$
|
13,464
|
|
|
|
|
|
|
|
|
|
The
amounts shown above for the 4.375% senior notes due in 2029 reflect the remeasurement of £750 million aggregate principal and £742 million
carrying value to U.S. dollars based on the exchange rate of £1.00/$1.62 at September 30, 2012.
The
fair value of our senior notes was approximately $18,677 million at September 30, 2012 and $14,512 million at December 31, 2011. We calculated the fair
values based on quoted market prices of our senior notes, which is a Level 1 input under accounting guidance for fair value measurements of assets and liabilities.
All
of our senior notes were issued by DIRECTV Holdings LLC and DIRECTV Financing Co., Inc., or the Co-Issuers, and have been registered under the
Securities Act of 1933, as amended.
Our
senior notes payable mature as follows: $1,000 million in 2014, $1,200 million in 2015, $2,250 million in 2016 and $12,763 million in 2017 and thereafter.
The amount of interest accrued related to our outstanding debt was $102 million at September 30, 2012 and $201 million at December 31, 2011.
Revolving Credit Facilities
On September 28, 2012, DIRECTV U.S.' five year, $2.0 billion revolving credit facility dated February 7, 2011 was
terminated and replaced with a three and one-half year, $1.0 billion revolving
10
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
credit
facility and a five year, $1.5 billion revolving credit facility. We pay a commitment fee of 0.15% per year for the unused commitment under the revolving credit facilities. Borrowings
currently bear interest at a rate equal to the London Interbank Offer Rate (LIBOR) plus 1.25%. Both the commitment fee and the annual interest rate may increase or decrease under certain conditions
due to changes in DIRECTV U.S.' long-term, unsecured debt ratings. Under certain conditions, DIRECTV U.S. may increase the borrowing capacity of the revolving credit facilities by an
aggregate amount of up to $500 million. As of September 30, 2012, there were no borrowings under the new revolving credit facilities.
Borrowings
under the revolving credit facilities are unsecured senior obligations of DIRECTV U.S. and will rank equally in right of payment with all of DIRECTV U.S.' existing and future
senior debt and will rank senior in right of payment to all of DIRECTV U.S.' future subordinated debt, if any.
Covenants and Restrictions
The revolving credit facilities require DIRECTV U.S. to maintain at the end of each fiscal quarter a specified ratio of indebtedness to
earnings before interest, taxes and depreciation and amortization. The revolving credit facilities also include covenants that restrict DIRECTV U.S.' ability to, among other things, (i) incur
additional subsidiary indebtedness, (ii) incur liens, (iii) enter into certain transactions with affiliates, (iv) merge or consolidate with another entity, (v) sell,
assign, lease or otherwise dispose of all or substantially all of its assets, and (vi) change its lines of business. Additionally, the senior notes contain restrictive covenants that are
similar. Should DIRECTV U.S. fail to comply with these covenants, all or a portion of its borrowings under the senior notes could become immediately payable and its revolving credit facilities could
be terminated. At September 30, 2012, management believes DIRECTV U.S. was in compliance with all such covenants. The senior notes and revolving credit facilities also provide that the
borrowings may be required to be prepaid if certain change-in-control events, coupled with a ratings decline, occur.
DIRECTV Guarantors.
On November 14, 2011, we entered into a series of Supplemental Indentures whereby DIRECTV agreed to fully
guarantee all of
the senior notes then outstanding, jointly and severally with substantially all of DIRECTV Holdings LLC's domestic subsidiaries. The Supplemental Indentures provide that DIRECTV unconditionally
guarantees that the principal and interest on the respective senior notes will be paid in full when due and that the obligations of the
Co-Issuers to the holders of the outstanding senior notes will be performed. All of the senior notes issued since November 14, 2011, and the revolving credit facilities are also
similarly fully guaranteed by DIRECTV.
As
a result of the guarantees, holders of the senior notes or the revolving credit debt have the benefit of DIRECTV's interests in the assets and related earnings of our operations that
are not held through DIRECTV Holdings LLC and its subsidiaries. Those operations are primarily our DTH digital television services throughout Latin America which are held by DIRECTV Latin
America Holdings, Inc. and its subsidiaries, and our regional sports networks which are held by DIRECTV Sports Networks LLC and its subsidiaries. However, the subsidiaries that own and
operate the DIRECTV Latin America business and the regional sports networks have not guaranteed the senior notes and the revolving credit facilities.
The
guarantees are unsecured senior obligations of DIRECTV and rank equally in right of payment with all of DIRECTV's existing and future senior debt and rank senior in right of payment
to all of DIRECTV's future subordinated debt, if any. The guarantees are effectively subordinated to all
11
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
existing
and future secured obligations, if any, of DIRECTV to the extent of the value of the assets securing the obligations. DIRECTV will not be subject to the covenants contained in each indenture
of the senior notes and our guarantees will terminate and be released on the terms set forth in each of the indentures.
Restricted Cash.
Restricted cash of $6 million as of September 30, 2012 and $30 million as of December 31, 2011 was
included as part of "Prepaid expenses and other" in our Consolidated Balance Sheets. These amounts secure our letter of credit obligations. The restrictions on the cash will be removed as the letters
of credit expire.
Note 6: Derivative Financial Instruments
In connection with the issuance of the £750 million of 4.375% senior notes due in 2029 discussed in Note 5,
DIRECTV U.S. entered into cross-currency swap agreements to manage the related foreign exchange risk by effectively converting all of the fixed-rate British pound sterling denominated
debt, including annual interest payments and the payment of principal at maturity, to fixed-rate U.S. dollar denominated debt. These cross-currency swaps are designated and qualify as cash
flow hedges. The terms of the cross-currency swap agreements correspond to the related hedged senior notes and the cross-currency swaps have maturities extending through September 2029.
We
record unrealized gains on cross-currency swaps at fair value as assets and unrealized losses on cross-currency swaps at fair value as liabilities. As of September 30, 2012, we
recorded the fair value of unrealized losses on cross-currency swaps in the amount of $50 million in "Other liabilities and deferred credits" in the Consolidated Balance Sheets. We calculated
the fair value of the cross-currency swap contracts using an income-approach model (discounted cash flow analysis), the use of which is considered a Level 2 valuation technique, using
observable inputs, such as foreign currency exchange rates, swap rates, cross-currency basis swap spreads and incorporating counterparty credit risk. These cross-currency swaps have been designated as
cash flow hedges, and accordingly, the effective portion of the unrealized gains and losses on the cross-currency swaps is reported in accumulated other comprehensive income and reclassified to
earnings in the same periods during which the hedged debt affects earnings. The ineffective portion of the unrealized gains and losses on these cross-currency swaps, if any, is recorded immediately in
earnings. During the three months ended September 30, 2012, DIRECTV U.S. reclassified $5 million, $3 million after tax, from "Accumulated other comprehensive loss," into "Other,
net" in the Consolidated Statements of Operations, to offset $5 million of remeasurement loss on the British pound sterling denominated debt. We evaluate the effectiveness of our cross-currency
swaps on a quarterly basis. We measured no ineffectiveness for the three and nine months ended September 30, 2012.
Collateral Arrangements.
We have agreements with our cross-currency swap counterparties that include collateral provisions which
require a party with
an unrealized loss position in excess of certain thresholds to post cash collateral for the amount in excess of the threshold. The threshold levels in our collateral agreements are based on each
party's credit ratings. As of September 30, 2012, neither we nor any of our counterparties were required to post collateral under the terms of the cross-currency swap agreements. We do not
offset the fair value of collateral, whether the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable), against the fair value of the derivative
instruments.
12
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Note 7: Contingencies
In connection with our acquisition of Sky Brasil in 2006, our partner who holds the remaining 7% interest, Globo
Comunicações e Participações S.A., or Globo, was granted the right, until January 2014, to require us to purchase all, but not less
than all, of its shares in Sky Brasil. Upon exercising this right, the fair value of Sky Brasil shares will be determined by mutual agreement or by an outside valuation expert, and we have the option
to elect to pay for the Sky Brasil shares in cash, shares of our common stock or a combination of both. As of September 30, 2012 and December 31, 2011, we estimated that Globo's
remaining 7% equity interest in Sky Brasil had a fair value of approximately $265 million. Adjustments to the carrying amount of the redeemable noncontrolling interest are recorded to
additional paid-in-capital. We determined the fair values using significant unobservable inputs, which are Level 3 inputs under accounting guidance for measuring fair
value.
Companies operating in Venezuela are required to obtain Venezuelan government approval to exchange Venezuelan bolivars into U.S.
dollars at the official rate of 4.3 bolivars per U.S. dollar. Our ability to pay U.S. dollar denominated obligations and repatriate cash generated in Venezuela in excess of local operating
requirements is limited, resulting in an increase in the cash balance at our Venezuelan subsidiary. At such time that exchange controls are eased, accumulated cash balances may ultimately be
repatriated at less than their currently reported value, as the official exchange rate has not changed since January 2010 despite continuing high inflation in Venezuela. In addition, in the event of a
significant devaluation of the bolivar, we may recognize a charge to earnings based on the amount of bolivar denominated net monetary assets (monetary assets
net of monetary liabilities) held at the time of such devaluation and this may affect the growth of our Venezuelan business.
We
use the official 4.3 bolivars per U.S. dollar exchange rate to translate the financial statements of our Venezuelan subsidiary. As of September 30, 2012, our Venezuelan
subsidiary had Venezuelan bolivar denominated net monetary assets of $436 million, including cash of $540 million.
Litigation is subject to uncertainties and the outcome of individual litigated matters is not predictable with assurance. Various legal
actions, claims and proceedings are pending against us arising in the ordinary course of business. We have established loss provisions for matters in which losses are probable and can be reasonably
estimated. Some of the matters may involve compensatory, punitive, or treble damage claims, or demands that, if granted, could require us to pay damages or make other expenditures in amounts that
could not be estimated at September 30, 2012. After discussion with counsel representing us in those actions, it is the opinion of management that such litigation is not expected to have a
material effect on our consolidated financial statements. We expense legal costs as incurred.
Pegasus Development Corporation and Personalized Media Communications L.L.C.
In December, 2000, Pegasus Development Corporation and
Personalized
Media Communications L.L.C. filed suit in the United States District Court for the District of Delaware against DIRECTV, Inc., Hughes Electronics Corporation, Thomson Consumer
Electronics, Inc., and Philips Electronics North America Corporation. The suit alleged infringement of certain claims of seven United States patents and sought
13
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
an
injunction and a monetary award including damages for infringement, interest, costs, and attorneys' fees. Trial is presently scheduled for November 2013. The suit now involves claims of four of the
seven patents originally asserted, all of which have expired, and the validity and infringement of which are disputed by DIRECTV.
Other Intellectual Property Litigation.
We are a defendant in several unrelated lawsuits claiming infringement of various patents
relating to various
aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that at least some potential liability would be the
responsibility of our equipment vendors pursuant to applicable contractual indemnification provisions. To the extent that the allegations in these lawsuits can be analyzed by us at this stage of their
proceedings, we believe the claims are without merit and intend to defend the actions vigorously. We have determined that the likelihood of a material liability in such matters is remote or have made
appropriate accruals. The final disposition of these claims is not expected to have a material effect on our consolidated financial position or results of operations. However, if an adverse ruling is
made in a lawsuit involving key intellectual property, such ruling could result in a loss that would be material to our consolidated results of operations of any one period. No assurance can be given
that any adverse outcome would not be material to our consolidated financial position.
Early Cancellation Fees.
In 2008, a number of plaintiffs filed putative class action lawsuits in state and federal courts challenging
the early
cancellation fees we assess our customers when they do not fulfill their programming commitments. Several of these lawsuits are pending, some in California state court purporting to represent
statewide classes, and some in federal courts purporting to represent nationwide classes. The lawsuits seek both monetary and injunctive relief. While the theories of liability vary, the lawsuits
generally challenge these fees under state consumer protection laws as both unfair and inadequately disclosed to customers. Our motions to compel arbitration have been granted in all of the federal
cases, except as to claims seeking injunctive relief under California statutes. The denial of our motion as to those claims is currently on appeal. We believe that our early cancellation fees are
adequately disclosed, and represent reasonable estimates of the costs we incur when customers cancel service before fulfilling their programming commitments.
ECAD.
Sky Brasil, along with other video distributors in Brazil, is disputing charges assessed by Escritorio Central de Arrecadacao, or
ECAD, the
organization responsible for collecting performance rights fees under Brazilian law. Sky Brasil has been withholding payments to ECAD since 2004, and has accrued amounts both we and Sky Brasil believe
are adequate to satisfy amounts owed to ECAD. In order to continue its opposition to ECAD's claims, in October 2011, Sky Brasil was required to provide a letter of credit in the amount of
approximately $80 million which represents the contested fees plus accrued interest and penalties, for the period from January 2004 to September 2009, plus an additional 30% required by
Brazilian law. Sky Brasil's dispute with ECAD is currently pending in the Superior Justice Tribunal, and there are other claims by the Brazilian pay television association, known as ABTA, against ECAD
before the Brazilian antitrust board, or CADE, which may affect ECAD or the rights fees it is attempting to collect.
Waste Disposal Inquiry.
On August 20, 2012, DIRECTV U.S. received from the State of California subpoenas and interrogatories
related to our
generation, handling, recordkeeping, transportation and disposal of hazardous waste, including universal waste, in the State of California, and the training of
employees regarding the same. The investigation is jointly conducted by the Office of the Attorney General and the District Attorney for Alameda County and appears to be part of a broader effort to
14
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
investigate
waste handling and disposal processes of a number of industries. We are reviewing our policies and procedures applicable to all facilities and cooperating with the investigation. As this
inquiry is in its early stages, we are currently unable to reasonably estimate the outcome of this matter.
From
time to time, we receive investigative inquiries or subpoenas from state and federal authorities with respect to alleged violations of state and federal statutes. These inquiries
may lead to legal proceedings in some cases. DIRECTV U.S. has received a request for information from the Federal Trade Commission, or FTC, on advertising and sales practices similar to those resolved
in 2010 with a multistate group of state attorneys general. We are cooperating with the FTC by providing information about our sales and marketing practices and customer complaints.
We have received tax assessments from certain foreign jurisdictions and have agreed to indemnify previously divested businesses for
certain tax assessments relating to periods prior to their respective divestitures. These assessments are in various stages of the administrative process or litigation. While the outcome of these
assessments and other tax issues cannot be predicted with certainty, we believe that the ultimate outcome will not have a material effect on our consolidated financial position and result of
operations.
We may purchase in-orbit and launch insurance to mitigate the potential financial impact of satellite launch and
in-orbit failures if the premium costs are considered economic relative to the risk of satellite failure. The insurance generally covers the unamortized book value of covered satellites.
We do not insure against lost revenues in the event of a total or partial loss of the capacity of a satellite. We generally rely on in-orbit spare satellites and excess transponder
capacity at key orbital slots to mitigate the impact a satellite failure
could have on our ability to provide service. At September 30, 2012, the net book value of in-orbit satellites was $1,727 million, all of which was uninsured.
We are contingently liable under standby letters of credit and bonds in the aggregate amount of $138 million at
September 30, 2012, primarily related to a judicial deposit in Brazil for the ECAD matter discussed above.
Note 8: Related Party Transactions
In the ordinary course of our operations, we enter into transactions with related parties as discussed below. Related parties include
Globo, which provides programming and advertising to Sky Brasil, and companies in which we hold equity method investments, including Sky Mexico and GSN.
The
majority of payments under contractual arrangements with related parties are pursuant to multi-year programming contracts. Payments under these contracts are typically
subject to annual rate increases and are based on the number of subscribers receiving the related programming.
15
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
The following table summarizes sales and purchase transactions with related parties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Sales
|
|
$
|
1
|
|
$
|
1
|
|
$
|
3
|
|
$
|
5
|
|
Purchases
|
|
|
225
|
|
|
231
|
|
|
696
|
|
|
633
|
|
The
following table sets forth the amount of accounts receivable from and accounts payable to related parties as of:
|
|
|
|
|
|
|
|
|
|
September 30,
2012
|
|
December 31,
2011
|
|
|
|
(Dollars in Millions)
|
|
Accounts receivable
|
|
$
|
50
|
|
$
|
1
|
|
Accounts payable
|
|
|
100
|
|
|
96
|
|
Note 9: Stockholders' Deficit and Redeemable Noncontrolling Interest
Capital Stock and Additional Paid-In Capital
In August 2012, our certificate of incorporation was amended to reclassify all issued and outstanding shares of Class A common
stock, par value $0.01 per share, and Class B common stock, par value $0.01 per share, on a one-for-one basis into a single class of common stock. This common stock, par
value $0.01 per share, has the same voting powers, preferences, rights and qualifications, limitations and restrictions as the prior Class A common stock. Pursuant to this amendment, our
certificate of incorporation authorizes the following capital stock: 3,950,000,000 shares of common stock, par value $0.01 per share, and 50,000,000 shares of preferred stock, par value $0.01 per
share. As of September 30, 2012, there were no outstanding shares of preferred stock.
Share Repurchase Program
Since 2006 our Board of Directors has approved multiple authorizations for the repurchase of our common stock, the most recent of which
was announced in the first quarter of 2012, authorizing share repurchases of up to an additional $6 billion. As of September 30, 2012, we had approximately $2,969 million
remaining under this authorization. The authorizations allow us to repurchase our common stock from time to time through open market purchases and negotiated transactions, or otherwise. The timing,
nature and amount of such transactions will depend on a variety of factors, including market conditions, and the program may be suspended, discontinued or accelerated at any time. The sources of funds
for the purchases under the remaining authorizations are our existing cash on hand, cash from operations and potential additional borrowings. Purchases are made in the open market, through block
trades and other negotiated transactions. Repurchased shares are retired, but remain authorized for registration and issuance in the future.
16
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
The
following table sets forth information regarding shares repurchased and retired during the periods presented:
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
|
|
(Amounts in Millions,
Except Per Share Amounts)
|
|
Total cost of repurchased shares
|
|
$
|
3,897
|
|
$
|
4,368
|
|
Average price per share
|
|
$
|
47.67
|
|
$
|
45.86
|
|
Number of shares repurchased and retired
|
|
|
82
|
|
|
95
|
|
Of
the $3,897 million in repurchases during the nine months ended September 30, 2012, $96 million were paid for in October 2012. Of the $4,368 million in
repurchases during the nine months ended September 30, 2011, $70 million were paid for in October 2011. Amounts repurchased but settled subsequent to the end of such periods are
considered non-cash financing activities and excluded from the Consolidated Statements of Cash Flows.
The
following tables set forth a reconciliation of stockholders' deficit and redeemable noncontrolling interest for each of the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
|
Common
Shares
|
|
Common
Stock and
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders'
Deficit
|
|
Redeemable
Noncontrolling
Interest
|
|
Net
Income
|
|
|
|
(Amounts in Millions, Except Share Data)
|
|
Balance as of January 1, 2012
|
|
|
691,306,695
|
|
$
|
4,799
|
|
$
|
(7,750
|
)
|
$
|
(156
|
)
|
$
|
(3,107
|
)
|
$
|
265
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
2,007
|
|
|
|
|
|
2,007
|
|
|
22
|
|
$
|
2,029
|
|
Stock repurchased and retired
|
|
|
(81,713,828
|
)
|
|
(567
|
)
|
|
(3,330
|
)
|
|
|
|
|
(3,897
|
)
|
|
|
|
|
|
|
Stock options exercised and restricted stock units vested and distributed
|
|
|
2,162,030
|
|
|
(54
|
)
|
|
|
|
|
|
|
|
(54
|
)
|
|
|
|
|
|
|
Share-based compensation expense
|
|
|
|
|
|
77
|
|
|
|
|
|
|
|
|
77
|
|
|
|
|
|
|
|
Tax benefit from share-based compensation
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
Adjustment to the fair value of redeemable noncontrolling interest
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
7
|
|
|
(7
|
)
|
|
|
|
Other
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
(62
|
)
|
|
(62
|
)
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2012
|
|
|
611,754,897
|
|
$
|
4,291
|
|
$
|
(9,073
|
)
|
$
|
(218
|
)
|
$
|
(5,000
|
)
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
|
Common
Shares
|
|
Common
Stock and
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
Total
Stockholders'
Deficit
|
|
Redeemable
Noncontrolling
Interest
|
|
Net
Income
|
|
|
|
(Amounts in Millions, Except Share Data)
|
|
Balance as of January 1, 2011
|
|
|
808,447,044
|
|
$
|
5,563
|
|
$
|
(5,730
|
)
|
$
|
(27
|
)
|
$
|
(194
|
)
|
$
|
224
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
1,891
|
|
|
|
|
|
1,891
|
|
|
22
|
|
$
|
1,913
|
|
Stock repurchased and retired
|
|
|
(95,218,084
|
)
|
|
(661
|
)
|
|
(3,707
|
)
|
|
|
|
|
(4,368
|
)
|
|
|
|
|
|
|
Stock options exercised and restricted stock units vested and distributed
|
|
|
1,987,343
|
|
|
(50
|
)
|
|
|
|
|
|
|
|
(50
|
)
|
|
|
|
|
|
|
Share-based compensation expense
|
|
|
|
|
|
76
|
|
|
|
|
|
|
|
|
76
|
|
|
|
|
|
|
|
Tax benefit from share-based compensation
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
Adjustment to the fair value of redeemable noncontrolling interest
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
12
|
|
|
(12
|
)
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
(91
|
)
|
|
(91
|
)
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2011
|
|
|
715,216,303
|
|
$
|
4,969
|
|
$
|
(7,546
|
)
|
$
|
(118
|
)
|
$
|
(2,695
|
)
|
$
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income (Loss)
The following represents the components of other comprehensive income (loss) for each of the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2012
|
|
2011
|
|
|
|
Pre-Tax
|
|
Tax Benefit
(Expense)
|
|
Net
of Tax
|
|
Pre-Tax
|
|
Tax Benefit
(Expense)
|
|
Net
of Tax
|
|
|
|
(Dollars in Millions)
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) related to changes in plan experience and actuarial assumptions arising during the period
|
|
$
|
(2
|
)
|
$
|
1
|
|
$
|
(1
|
)
|
$
|
3
|
|
$
|
(1
|
)
|
$
|
2
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
15
|
|
|
(6
|
)
|
|
9
|
|
|
11
|
|
|
(4
|
)
|
|
7
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
|
(51
|
)
|
|
20
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
Reclassification adjustments realized in net income
|
|
|
(5
|
)
|
|
2
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(3
|
)
|
|
1
|
|
|
(2
|
)
|
|
(228
|
)
|
|
88
|
|
|
(140
|
)
|
Unrealized holding losses on securities
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
2
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
$
|
(46
|
)
|
$
|
18
|
|
$
|
(28
|
)
|
$
|
(219
|
)
|
$
|
85
|
|
$
|
(134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2012
|
|
2011
|
|
|
|
Pre-Tax
|
|
Tax Benefit
(Expense)
|
|
Net
of Tax
|
|
Pre-Tax
|
|
Tax Benefit
(Expense)
|
|
Net
of Tax
|
|
|
|
(Dollars in Millions)
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) related to changes in plan experience and actuarial assumptions arising during the period
|
|
$
|
(2
|
)
|
$
|
1
|
|
$
|
(1
|
)
|
$
|
3
|
|
$
|
(1
|
)
|
$
|
2
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
15
|
|
|
(6
|
)
|
|
9
|
|
|
11
|
|
|
(4
|
)
|
|
7
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
|
(51
|
)
|
|
20
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
Reclassification adjustments realized in net income
|
|
|
(5
|
)
|
|
2
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(52
|
)
|
|
20
|
|
|
(32
|
)
|
|
(150
|
)
|
|
58
|
|
|
(92
|
)
|
Unrealized holding losses on securities
|
|
|
(7
|
)
|
|
3
|
|
|
(4
|
)
|
|
(13
|
)
|
|
5
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
$
|
(102
|
)
|
$
|
40
|
|
$
|
(62
|
)
|
$
|
(149
|
)
|
$
|
58
|
|
$
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
The following represents the changes in the components of accumulated other comprehensive loss for each of the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
Benefit
Plans
|
|
Cross-
Currency
Swaps
|
|
Foreign
Currency
Items
|
|
Unrealized
Gains (Losses)
on Securities
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
|
(Dollars in Millions)
|
|
Balance as of January 1, 2012
|
|
$
|
(151
|
)
|
$
|
|
|
$
|
(8
|
)
|
$
|
3
|
|
$
|
(156
|
)
|
Other comprehensive income (loss)
|
|
|
8
|
|
|
(34
|
)
|
|
(32
|
)
|
|
(4
|
)
|
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2012
|
|
$
|
(143
|
)
|
$
|
(34
|
)
|
$
|
(40
|
)
|
$
|
(1
|
)
|
$
|
(218
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
Benefit
Plans
|
|
Foreign
Currency
Items
|
|
Unrealized
Gains (Losses)
on Securities
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
|
(Dollars in Millions)
|
|
Balance as of January 1, 2011
|
|
$
|
(122
|
)
|
$
|
86
|
|
$
|
9
|
|
$
|
(27
|
)
|
Other comprehensive income (loss)
|
|
|
9
|
|
|
(92
|
)
|
|
(8
|
)
|
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2011
|
|
$
|
(113
|
)
|
$
|
(6
|
)
|
$
|
1
|
|
$
|
(118
|
)
|
|
|
|
|
|
|
|
|
|
|
19
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Note 10: Earnings Per Common Share
We compute basic earnings per common share, or EPS, by dividing net income attributable to DIRECTV by the weighted average number of
common shares outstanding for the period.
Diluted
EPS considers the effect of common equivalent shares, which consist entirely of common stock options and unvested restricted stock units issued to employees. In the computation
of diluted EPS under the treasury stock method, the amount of assumed proceeds from restricted stock units and common stock options includes the amount of compensation cost attributable to future
services not yet recognized, proceeds from the exercise of the options and the incremental income tax benefit or liability as if the awards were exercised or distributed during the period. We exclude
common equivalent shares from the computation in loss periods as their effect would be antidilutive and we exclude common stock options from the computation of diluted EPS when their exercise price is
greater than the average market price of our common stock. For the three and nine months ended September 30, 2012 and 2011 we excluded no common stock options from the computation of diluted
EPS, because all options' exercise prices were less than the average market price of our common stock during the periods presented.
The
reconciliation of the amounts used in the basic and diluted EPS computation is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
Shares
|
|
Per Share
Amounts
|
|
|
|
(Dollars and Shares
in Millions,
Except Per Share Amounts)
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
565
|
|
|
624
|
|
$
|
0.91
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
5
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
565
|
|
|
629
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
516
|
|
|
732
|
|
$
|
0.70
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
516
|
|
|
737
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
20
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
Shares
|
|
Per Share
Amounts
|
|
|
|
(Dollars and Shares
in Millions,
Except Per Share Amounts)
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,007
|
|
|
651
|
|
$
|
3.08
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
4
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
2,007
|
|
|
655
|
|
$
|
3.06
|
|
|
|
|
|
|
|
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
1,891
|
|
|
762
|
|
$
|
2.48
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
5
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
1,891
|
|
|
767
|
|
$
|
2.47
|
|
|
|
|
|
|
|
|
|
Note 11: Segment Reporting
Our reportable segments, which are differentiated by their products and services as well as geographic location, are DIRECTV U.S., Sky
Brasil and PanAmericana, which are engaged in acquiring, promoting, selling and distributing digital entertainment programming primarily via satellite to residential and commercial subscribers, and
the Sports Networks, Eliminations and Other segment, which includes our three regional sports networks that provide programming devoted to local professional sports teams and college sporting events
and locally produce their own programming. Sports Networks, Eliminations and Other also includes the corporate office, eliminations and other entities.
We
revised our reportable segments in the first quarter of 2012 and now report Sky Brasil and PanAmericana as segments. We previously reported these segments as the DIRECTV Latin America
segment. As discussed in Note 1, the Sky Brasil segment includes our 93% owned subsidiary Sky Brasil Servicos, Ltda. The PanAmericana segment includes the results of our wholly owned
subsidiaries that provide services in Argentina, Chile, Colombia, Ecuador, Puerto Rico, Venezuela and certain other countries in the region. Sky Brasil and PanAmericana are now reported as separate
segments due to Sky Brasil's growing significance to DIRECTV's consolidated results of operations and these segments are reflective of how our Chief Executive Officer currently reviews our operating
results.
21
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Selected
information for our operating segments is reported as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
Revenues
|
|
Intersegment
Revenues
|
|
Total
Revenues
|
|
Operating
Profit
(Loss)
|
|
Depreciation
and
Amortization
Expense
|
|
Operating
Profit
(Loss) Before
Depreciation
and
Amortization(1)
|
|
|
|
(Dollars in Millions)
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
5,767
|
|
$
|
2
|
|
$
|
5,769
|
|
$
|
876
|
|
$
|
375
|
|
$
|
1,251
|
|
Sky Brasil
|
|
|
868
|
|
|
|
|
|
868
|
|
|
122
|
|
|
133
|
|
|
255
|
|
PanAmericana
|
|
|
709
|
|
|
|
|
|
709
|
|
|
99
|
|
|
101
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
1,577
|
|
|
|
|
|
1,577
|
|
|
221
|
|
|
234
|
|
|
455
|
|
Sports Networks, Eliminations and Other
|
|
|
72
|
|
|
(2
|
)
|
|
70
|
|
|
(29
|
)
|
|
9
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,416
|
|
$
|
|
|
$
|
7,416
|
|
$
|
1,068
|
|
$
|
618
|
|
$
|
1,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
5,419
|
|
$
|
2
|
|
$
|
5,421
|
|
$
|
800
|
|
$
|
353
|
|
$
|
1,153
|
|
Sky Brasil
|
|
|
813
|
|
|
|
|
|
813
|
|
|
136
|
|
|
122
|
|
|
258
|
|
PanAmericana
|
|
|
543
|
|
|
|
|
|
543
|
|
|
100
|
|
|
76
|
|
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
1,356
|
|
|
|
|
|
1,356
|
|
|
236
|
|
|
198
|
|
|
434
|
|
Sports Networks, Eliminations and Other
|
|
|
69
|
|
|
(2
|
)
|
|
67
|
|
|
(6
|
)
|
|
3
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,844
|
|
$
|
|
|
$
|
6,844
|
|
$
|
1,030
|
|
$
|
554
|
|
$
|
1,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
Revenues
|
|
Intersegment
Revenues
|
|
Total
Revenues
|
|
Operating
Profit
(Loss)
|
|
Depreciation
and
Amortization
Expense
|
|
Operating
Profit
(Loss) Before
Depreciation
and
Amortization(1)
|
|
|
|
(Dollars in Millions)
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
16,909
|
|
$
|
6
|
|
$
|
16,915
|
|
$
|
3,130
|
|
$
|
1,116
|
|
$
|
4,246
|
|
Sky Brasil
|
|
|
2,587
|
|
|
|
|
|
2,587
|
|
|
399
|
|
|
403
|
|
|
802
|
|
PanAmericana
|
|
|
1,983
|
|
|
|
|
|
1,983
|
|
|
295
|
|
|
271
|
|
|
566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
4,570
|
|
|
|
|
|
4,570
|
|
|
694
|
|
|
674
|
|
|
1,368
|
|
Sports Networks, Eliminations and Other
|
|
|
207
|
|
|
(6
|
)
|
|
201
|
|
|
(37
|
)
|
|
21
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,686
|
|
$
|
|
|
$
|
21,686
|
|
$
|
3,787
|
|
$
|
1,811
|
|
$
|
5,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
15,837
|
|
$
|
6
|
|
$
|
15,843
|
|
$
|
2,737
|
|
$
|
1,225
|
|
$
|
3,962
|
|
Sky Brasil
|
|
|
2,212
|
|
|
|
|
|
2,212
|
|
|
403
|
|
|
328
|
|
|
731
|
|
PanAmericana
|
|
|
1,512
|
|
|
|
|
|
1,512
|
|
|
293
|
|
|
217
|
|
|
510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
3,724
|
|
|
|
|
|
3,724
|
|
|
696
|
|
|
545
|
|
|
1,241
|
|
Sports Networks, Eliminations and Other
|
|
|
202
|
|
|
(6
|
)
|
|
196
|
|
|
(18
|
)
|
|
11
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
19,763
|
|
$
|
|
|
$
|
19,763
|
|
$
|
3,415
|
|
$
|
1,781
|
|
$
|
5,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Operating
profit before depreciation and amortization, which is a financial measure that is not determined in accordance with GAAP can be calculated by
adding amounts under the caption "Depreciation and amortization expense" to "Operating profit." This 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. Our management and Board of Directors use operating profit before depreciation and amortization to evaluate the
operating performance of our company and our business segments and to allocate resources and capital to business segments. This metric is also used as a measure of performance for incentive
compensation purposes and to measure income generated from operations that could be used to fund capital expenditures, service debt or pay taxes. Depreciation and amortization expense primarily
represents an allocation to current expense of the cost of historical capital expenditures and for intangible assets resulting from prior business acquisitions. To compensate for the exclusion of
depreciation and amortization expense from operating profit, our management and Board of Directors separately measure and budget for capital expenditures and business acquisitions.
We
believe this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net income), to compare our operating performance to other communications,
entertainment and media service providers. We believe that investors use current and projected operating profit before depreciation and amortization and similar measures to estimate our current or
prospective enterprise value and make investment decisions. This metric provides investors with a means to compare operating results exclusive of depreciation and amortization. Our management
23
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
believes
this is useful given the significant variation in depreciation and amortization expense that can result from the timing of capital expenditures, the capitalization of intangible assets,
potential variations in expected useful lives when compared to other companies and periodic changes to estimated useful lives.
The
following represents a reconciliation of operating profit before depreciation and amortization to reported net income on the Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Operating profit before depreciation and amortization
|
|
$
|
1,686
|
|
$
|
1,584
|
|
$
|
5,598
|
|
$
|
5,196
|
|
Depreciation and amortization
|
|
|
(618
|
)
|
|
(554
|
)
|
|
(1,811
|
)
|
|
(1,781
|
)
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
1,068
|
|
|
1,030
|
|
|
3,787
|
|
|
3,415
|
|
Interest income
|
|
|
17
|
|
|
9
|
|
|
40
|
|
|
25
|
|
Interest expense
|
|
|
(204
|
)
|
|
(194
|
)
|
|
(622
|
)
|
|
(569
|
)
|
Other, net
|
|
|
39
|
|
|
(38
|
)
|
|
13
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
920
|
|
|
807
|
|
|
3,218
|
|
|
2,945
|
|
Income tax expense
|
|
|
(348
|
)
|
|
(286
|
)
|
|
(1,189
|
)
|
|
(1,032
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
572
|
|
|
521
|
|
|
2,029
|
|
|
1,913
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
(7
|
)
|
|
(5
|
)
|
|
(22
|
)
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
565
|
|
$
|
516
|
|
$
|
2,007
|
|
$
|
1,891
|
|
|
|
|
|
|
|
|
|
|
|
Note 12: Condensed Consolidating Financial Statements
As discussed above in Note 5, on November 14, 2011, DIRECTV provided a guarantee of all the outstanding senior notes of
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc, or the Co-issuers, and is a guarantor for all subsequently issued senior notes.
The
following condensed consolidating financial statements of DIRECTV and subsidiaries have been prepared pursuant to rules regarding the preparation of consolidating financial
statements of Regulation S-X. For the periods prior to November 14, 2011, the condensed consolidating financial statements have been prepared as if the DIRECTV guarantee had
been in place during that period.
These
condensed consolidating financial statements present the condensed consolidating statements of operations and condensed consolidating statements of comprehensive income for the
three and nine months ended September 30, 2012 and 2011, the condensed consolidating statements of cash flows for the nine months ended September 30, 2012 and 2011, and the condensed
consolidating balance sheets as of September 30, 2012 and December 31, 2011.
24
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
The condensed consolidating financial statements are comprised of DIRECTV, or the Parent Guarantor, its indirect wholly owned subsidiaries, DIRECTV Holdings,
DIRECTV Financing and each of DIRECTV Holdings' material subsidiaries (other than DIRECTV Financing), or the Guarantor Subsidiaries, as well as other subsidiaries who are not guarantors of the senior
notes, or the Non-Guarantor Subsidiaries, and the eliminations necessary to present DIRECTV's financial statements on a consolidated basis. The Non-Guarantor Subsidiaries
consist primarily of DIRECTV's direct-to-home digital television services throughout Latin America which are held by DIRECTV Latin America Holdings, Inc. and its
subsidiaries, and DIRECTV Sports Networks LLC and its subsidiaries which are comprised primarily of three regional sports networks.
The
accompanying condensed consolidating financial statements are presented based on the equity method of accounting for all periods presented. Under this method, investments in
subsidiaries are recorded at cost and adjusted for the subsidiaries' cumulative results of operations, capital contributions and distributions, and other changes in equity. Elimination entries include
consolidating and eliminating entries for investments in subsidiaries, intercompany activity and balances, and income taxes.
25
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
|
|
$
|
5,769
|
|
$
|
1,667
|
|
$
|
(20
|
)
|
$
|
7,416
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
2,685
|
|
|
621
|
|
|
(18
|
)
|
|
3,288
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
390
|
|
|
176
|
|
|
|
|
|
566
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
74
|
|
|
31
|
|
|
(2
|
)
|
|
103
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
757
|
|
|
187
|
|
|
|
|
|
944
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
340
|
|
|
42
|
|
|
|
|
|
382
|
|
General and administrative expenses
|
|
|
17
|
|
|
|
|
|
272
|
|
|
158
|
|
|
|
|
|
447
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
375
|
|
|
243
|
|
|
|
|
|
618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
17
|
|
|
|
|
|
4,893
|
|
|
1,458
|
|
|
(20
|
)
|
|
6,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(17
|
)
|
|
|
|
|
876
|
|
|
209
|
|
|
|
|
|
1,068
|
|
Equity in income of consolidated subsidiaries
|
|
|
576
|
|
|
553
|
|
|
|
|
|
|
|
|
(1,129
|
)
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
1
|
|
|
19
|
|
|
(3
|
)
|
|
17
|
|
Interest expense
|
|
|
|
|
|
(188
|
)
|
|
(1
|
)
|
|
(18
|
)
|
|
3
|
|
|
(204
|
)
|
Other, net
|
|
|
(2
|
)
|
|
|
|
|
17
|
|
|
24
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
557
|
|
|
365
|
|
|
893
|
|
|
234
|
|
|
(1,129
|
)
|
|
920
|
|
Income tax benefit (expense)
|
|
|
8
|
|
|
71
|
|
|
(340
|
)
|
|
(87
|
)
|
|
|
|
|
(348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
565
|
|
|
436
|
|
|
553
|
|
|
147
|
|
|
(1,129
|
)
|
|
572
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
565
|
|
$
|
436
|
|
$
|
553
|
|
$
|
140
|
|
$
|
(1,129
|
)
|
$
|
565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
178
|
|
$
|
5,421
|
|
$
|
1,440
|
|
$
|
(195
|
)
|
$
|
6,844
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
2,411
|
|
|
530
|
|
|
(15
|
)
|
|
2,926
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
375
|
|
|
125
|
|
|
|
|
|
500
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
75
|
|
|
25
|
|
|
(1
|
)
|
|
99
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
793
|
|
|
169
|
|
|
|
|
|
962
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
332
|
|
|
33
|
|
|
|
|
|
365
|
|
General and administrative expenses
|
|
|
6
|
|
|
|
|
|
461
|
|
|
120
|
|
|
(179
|
)
|
|
408
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
353
|
|
|
201
|
|
|
|
|
|
554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
6
|
|
|
|
|
|
4,800
|
|
|
1,203
|
|
|
(195
|
)
|
|
5,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(6
|
)
|
|
178
|
|
|
621
|
|
|
237
|
|
|
|
|
|
1,030
|
|
Equity in income of consolidated subsidiaries
|
|
|
517
|
|
|
386
|
|
|
|
|
|
|
|
|
(903
|
)
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
(3
|
)
|
|
9
|
|
Interest expense
|
|
|
|
|
|
(176
|
)
|
|
(1
|
)
|
|
(20
|
)
|
|
3
|
|
|
(194
|
)
|
Other, net
|
|
|
5
|
|
|
(1
|
)
|
|
7
|
|
|
(49
|
)
|
|
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
516
|
|
|
387
|
|
|
627
|
|
|
180
|
|
|
(903
|
)
|
|
807
|
|
Income tax benefit (expense)
|
|
|
|
|
|
(1
|
)
|
|
(241
|
)
|
|
(44
|
)
|
|
|
|
|
(286
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
516
|
|
|
386
|
|
|
386
|
|
|
136
|
|
|
(903
|
)
|
|
521
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
516
|
|
$
|
386
|
|
$
|
386
|
|
$
|
131
|
|
$
|
(903
|
)
|
$
|
516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
59
|
|
$
|
16,915
|
|
$
|
4,831
|
|
$
|
(119
|
)
|
$
|
21,686
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
7,549
|
|
|
1,754
|
|
|
(54
|
)
|
|
9,249
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
1,096
|
|
|
496
|
|
|
|
|
|
1,592
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
229
|
|
|
87
|
|
|
(6
|
)
|
|
310
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
2,017
|
|
|
532
|
|
|
|
|
|
2,549
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
930
|
|
|
126
|
|
|
|
|
|
1,056
|
|
General and administrative expenses
|
|
|
33
|
|
|
|
|
|
907
|
|
|
451
|
|
|
(59
|
)
|
|
1,332
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
1,116
|
|
|
695
|
|
|
|
|
|
1,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
33
|
|
|
|
|
|
13,844
|
|
|
4,141
|
|
|
(119
|
)
|
|
17,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(33
|
)
|
|
59
|
|
|
3,071
|
|
|
690
|
|
|
|
|
|
3,787
|
|
Equity in income of consolidated subsidiaries
|
|
|
2,032
|
|
|
1,926
|
|
|
|
|
|
|
|
|
(3,958
|
)
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
1
|
|
|
48
|
|
|
(9
|
)
|
|
40
|
|
Interest expense
|
|
|
(1
|
)
|
|
(575
|
)
|
|
(2
|
)
|
|
(53
|
)
|
|
9
|
|
|
(622
|
)
|
Other, net
|
|
|
(6
|
)
|
|
(65
|
)
|
|
26
|
|
|
58
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
1,992
|
|
|
1,345
|
|
|
3,096
|
|
|
743
|
|
|
(3,958
|
)
|
|
3,218
|
|
Income tax benefit (expense)
|
|
|
15
|
|
|
219
|
|
|
(1,170
|
)
|
|
(253
|
)
|
|
|
|
|
(1,189
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
2,007
|
|
|
1,564
|
|
|
1,926
|
|
|
490
|
|
|
(3,958
|
)
|
|
2,029
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,007
|
|
$
|
1,564
|
|
$
|
1,926
|
|
$
|
468
|
|
$
|
(3,958
|
)
|
$
|
2,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
505
|
|
$
|
15,843
|
|
$
|
3,969
|
|
$
|
(554
|
)
|
$
|
19,763
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
6,818
|
|
|
1,438
|
|
|
(44
|
)
|
|
8,212
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
1,081
|
|
|
334
|
|
|
|
|
|
1,415
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
224
|
|
|
69
|
|
|
(4
|
)
|
|
289
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
2,101
|
|
|
423
|
|
|
|
|
|
2,524
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
889
|
|
|
84
|
|
|
|
|
|
973
|
|
General and administrative expenses
|
|
|
11
|
|
|
|
|
|
1,274
|
|
|
375
|
|
|
(506
|
)
|
|
1,154
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
1,225
|
|
|
556
|
|
|
|
|
|
1,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
11
|
|
|
|
|
|
13,612
|
|
|
3,279
|
|
|
(554
|
)
|
|
16,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(11
|
)
|
|
505
|
|
|
2,231
|
|
|
690
|
|
|
|
|
|
3,415
|
|
Equity in income of consolidated subsidiaries
|
|
|
1,899
|
|
|
1,411
|
|
|
|
|
|
|
|
|
(3,310
|
)
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
1
|
|
|
32
|
|
|
(8
|
)
|
|
25
|
|
Interest expense
|
|
|
|
|
|
(516
|
)
|
|
(3
|
)
|
|
(58
|
)
|
|
8
|
|
|
(569
|
)
|
Other, net
|
|
|
(1
|
)
|
|
(26
|
)
|
|
55
|
|
|
46
|
|
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
1,887
|
|
|
1,374
|
|
|
2,284
|
|
|
710
|
|
|
(3,310
|
)
|
|
2,945
|
|
Income tax benefit (expense)
|
|
|
4
|
|
|
14
|
|
|
(873
|
)
|
|
(177
|
)
|
|
|
|
|
(1,032
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,891
|
|
|
1,388
|
|
|
1,411
|
|
|
533
|
|
|
(3,310
|
)
|
|
1,913
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
1,891
|
|
$
|
1,388
|
|
$
|
1,411
|
|
$
|
511
|
|
$
|
(3,310
|
)
|
$
|
1,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Comprehensive Income
For the Three Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
Net income
|
|
$
|
565
|
|
$
|
436
|
|
$
|
553
|
|
$
|
147
|
|
$
|
(1,129
|
)
|
$
|
572
|
|
|
Other comprehensive income, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
(31
|
)
|
|
Reclassification adjustments included in net income
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
8
|
|
|
(34
|
)
|
|
|
|
|
(2
|
)
|
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
573
|
|
|
402
|
|
|
553
|
|
|
145
|
|
|
(1,129
|
)
|
|
544
|
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
573
|
|
$
|
402
|
|
$
|
553
|
|
$
|
139
|
|
$
|
(1,129
|
)
|
$
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Comprehensive Income
For the Three Months Ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
Net income
|
|
$
|
516
|
|
$
|
386
|
|
$
|
386
|
|
$
|
136
|
|
$
|
(903
|
)
|
$
|
521
|
|
|
Other comprehensive income, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
(140
|
)
|
|
|
|
|
(140
|
)
|
|
Unrealized holding losses on securities
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
9
|
|
|
|
|
|
|
|
|
(143
|
)
|
|
|
|
|
(134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
525
|
|
|
386
|
|
|
386
|
|
|
(7
|
)
|
|
(903
|
)
|
|
387
|
|
|
Less: Comprehensive loss attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
525
|
|
$
|
386
|
|
$
|
386
|
|
$
|
3
|
|
$
|
(903
|
)
|
$
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Comprehensive Income
For the Nine Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
Net income
|
|
$
|
2,007
|
|
$
|
1,564
|
|
$
|
1,926
|
|
$
|
490
|
|
$
|
(3,958
|
)
|
$
|
2,029
|
|
|
Other comprehensive income, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
(31
|
)
|
|
Reclassification adjustments included in net income
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
(32
|
)
|
|
|
|
|
(32
|
)
|
|
Unrealized holding losses on securities
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
8
|
|
|
(34
|
)
|
|
|
|
|
(36
|
)
|
|
|
|
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
2,015
|
|
|
1,530
|
|
|
1,926
|
|
|
454
|
|
|
(3,958
|
)
|
|
1,967
|
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,015
|
|
$
|
1,530
|
|
$
|
1,926
|
|
$
|
447
|
|
$
|
(3,958
|
)
|
$
|
1,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Comprehensive Income
For the Nine Months Ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
Net income
|
|
$
|
1,891
|
|
$
|
1,388
|
|
$
|
1,411
|
|
$
|
533
|
|
$
|
(3,310
|
)
|
$
|
1,913
|
|
|
Other comprehensive income, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
(92
|
)
|
|
|
|
|
(92
|
)
|
|
Unrealized holding losses on securities
|
|
|
|
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
9
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
|
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
1,900
|
|
|
1,388
|
|
|
1,411
|
|
|
433
|
|
|
(3,310
|
)
|
|
1,822
|
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
1,900
|
|
$
|
1,388
|
|
$
|
1,411
|
|
$
|
421
|
|
$
|
(3,310
|
)
|
$
|
1,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Balance Sheet
As of September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
1,170
|
|
$
|
743
|
|
$
|
2,603
|
|
$
|
1,966
|
|
$
|
(652
|
)
|
$
|
5,830
|
|
|
Satellites, net
|
|
|
|
|
|
|
|
|
1,752
|
|
|
536
|
|
|
|
|
|
2,288
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
|
|
3,185
|
|
|
2,521
|
|
|
|
|
|
5,706
|
|
|
Goodwill
|
|
|
|
|
|
1,828
|
|
|
1,349
|
|
|
889
|
|
|
|
|
|
4,066
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
|
456
|
|
|
365
|
|
|
|
|
|
821
|
|
|
Intercompany receivables
|
|
|
4,279
|
|
|
5,800
|
|
|
15,348
|
|
|
3,716
|
|
|
(29,143
|
)
|
|
|
|
|
Investment in subsidiaries
|
|
|
(8,630
|
)
|
|
14,082
|
|
|
|
|
|
(9,916
|
)
|
|
4,464
|
|
|
|
|
|
Other assets
|
|
|
78
|
|
|
105
|
|
|
182
|
|
|
1,383
|
|
|
(106
|
)
|
|
1,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
(3,103
|
)
|
$
|
22,558
|
|
$
|
24,875
|
|
$
|
1,460
|
|
$
|
(25,437
|
)
|
$
|
20,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
192
|
|
$
|
121
|
|
$
|
3,436
|
|
$
|
1,781
|
|
$
|
(653
|
)
|
$
|
4,877
|
|
|
Long-term debt
|
|
|
|
|
|
17,162
|
|
|
|
|
|
|
|
|
|
|
|
17,162
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
1,359
|
|
|
410
|
|
|
(97
|
)
|
|
1,672
|
|
|
Intercompany liabilities
|
|
|
1,124
|
|
|
15,348
|
|
|
5,800
|
|
|
6,871
|
|
|
(29,143
|
)
|
|
|
|
|
Other liabilities and deferred credits
|
|
|
581
|
|
|
138
|
|
|
198
|
|
|
468
|
|
|
(8
|
)
|
|
1,377
|
|
|
Redeemable noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
265
|
|
|
|
|
|
265
|
|
|
Stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock and additional paid-in capital
|
|
|
4,291
|
|
|
9
|
|
|
4,777
|
|
|
(5,482
|
)
|
|
696
|
|
|
4,291
|
|
|
Retained earnings (accumulated deficit)
|
|
|
(9,073
|
)
|
|
(10,186
|
)
|
|
9,305
|
|
|
(2,787
|
)
|
|
3,668
|
|
|
(9,073
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(218
|
)
|
|
(34
|
)
|
|
|
|
|
(66
|
)
|
|
100
|
|
|
(218
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(5,000
|
)
|
|
(10,211
|
)
|
|
14,082
|
|
|
(8,335
|
)
|
|
4,464
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
(3,103
|
)
|
$
|
22,558
|
|
$
|
24,875
|
|
$
|
1,460
|
|
$
|
(25,437
|
)
|
$
|
20,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Balance Sheet
As of December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
412
|
|
$
|
533
|
|
$
|
2,514
|
|
$
|
1,397
|
|
$
|
(615
|
)
|
$
|
4,241
|
|
|
Satellites, net
|
|
|
|
|
|
|
|
|
1,724
|
|
|
491
|
|
|
|
|
|
2,215
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
|
|
3,084
|
|
|
2,139
|
|
|
|
|
|
5,223
|
|
|
Goodwill
|
|
|
|
|
|
1,828
|
|
|
1,349
|
|
|
920
|
|
|
|
|
|
4,097
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
|
461
|
|
|
448
|
|
|
|
|
|
909
|
|
|
Intercompany receivables
|
|
|
3,746
|
|
|
4,011
|
|
|
11,582
|
|
|
3,442
|
|
|
(22,781
|
)
|
|
|
|
|
Investment in subsidiaries
|
|
|
(5,510
|
)
|
|
12,057
|
|
|
|
|
|
(7,607
|
)
|
|
1,060
|
|
|
|
|
|
Other assets
|
|
|
74
|
|
|
64
|
|
|
256
|
|
|
1,425
|
|
|
(81
|
)
|
|
1,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
(1,278
|
)
|
$
|
18,493
|
|
$
|
20,970
|
|
$
|
2,655
|
|
$
|
(22,417
|
)
|
$
|
18,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
383
|
|
$
|
204
|
|
$
|
3,422
|
|
$
|
1,349
|
|
$
|
(615
|
)
|
$
|
4,743
|
|
|
Long-term debt
|
|
|
|
|
|
13,464
|
|
|
|
|
|
|
|
|
|
|
|
13,464
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
1,321
|
|
|
531
|
|
|
(81
|
)
|
|
1,771
|
|
|
Intercompany liabilities
|
|
|
895
|
|
|
11,582
|
|
|
4,011
|
|
|
6,293
|
|
|
(22,781
|
)
|
|
|
|
|
Other liabilities and deferred credits
|
|
|
551
|
|
|
82
|
|
|
159
|
|
|
495
|
|
|
|
|
|
1,287
|
|
|
Redeemable noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
265
|
|
|
|
|
|
265
|
|
|
Stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock and additional paid-in capital
|
|
|
4,799
|
|
|
11
|
|
|
4,684
|
|
|
(561
|
)
|
|
(4,134
|
)
|
|
4,799
|
|
|
Retained earnings (accumulated deficit)
|
|
|
(7,750
|
)
|
|
(6,850
|
)
|
|
7,373
|
|
|
(5,703
|
)
|
|
5,180
|
|
|
(7,750
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(156
|
)
|
|
|
|
|
|
|
|
(14
|
)
|
|
14
|
|
|
(156
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(3,107
|
)
|
|
(6,839
|
)
|
|
12,057
|
|
|
(6,278
|
)
|
|
1,060
|
|
|
(3,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
(1,278
|
)
|
$
|
18,493
|
|
$
|
20,970
|
|
$
|
2,655
|
|
$
|
(22,417
|
)
|
$
|
18,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,186
|
|
$
|
1,822
|
|
$
|
1,173
|
|
$
|
1,616
|
|
$
|
(1,664
|
)
|
$
|
4,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
|
|
|
|
|
(1,048
|
)
|
|
(1,112
|
)
|
|
|
|
|
(2,160
|
)
|
|
Cash paid for satellites
|
|
|
(6
|
)
|
|
|
|
|
(139
|
)
|
|
(86
|
)
|
|
|
|
|
(231
|
)
|
|
Investment in companies, net of cash acquired
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
(3
|
)
|
|
|
|
|
(4
|
)
|
|
Proceeds from sale of investments
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
24
|
|
|
Return of capital from subsidiary
|
|
|
3,336
|
|
|
|
|
|
|
|
|
|
|
|
(3,336
|
)
|
|
|
|
|
Other, net
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
26
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
3,330
|
|
|
|
|
|
(1,165
|
)
|
|
(1,175
|
)
|
|
(3,336
|
)
|
|
(2,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash proceeds from debt issuance
|
|
|
|
|
|
5,190
|
|
|
|
|
|
|
|
|
|
|
|
5,190
|
|
|
Debt issuance costs
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
(35
|
)
|
|
Repayment of long-term debt
|
|
|
|
|
|
(1,500
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,500
|
)
|
|
Proceeds from borrowings under revolving credit facility
|
|
|
|
|
|
400
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
|
Repayment of borrowings under revolving credit facility
|
|
|
|
|
|
(400
|
)
|
|
|
|
|
|
|
|
|
|
|
(400
|
)
|
|
Repayment of other long-term obligations
|
|
|
|
|
|
|
|
|
(15
|
)
|
|
(25
|
)
|
|
|
|
|
(40
|
)
|
|
Common shares repurchased and retired
|
|
|
(3,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,828
|
)
|
|
Stock options exercised
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
|
|
|
|
|
|
(49
|
)
|
|
(9
|
)
|
|
|
|
|
(58
|
)
|
|
Excess tax benefit from share-based compensation
|
|
|
|
|
|
|
|
|
25
|
|
|
5
|
|
|
|
|
|
30
|
|
|
Intercompany payments (funding)
|
|
|
154
|
|
|
|
|
|
14
|
|
|
(168
|
)
|
|
|
|
|
|
|
|
Cash dividend to Parent
|
|
|
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(3,672
|
)
|
|
(1,345
|
)
|
|
(25
|
)
|
|
(197
|
)
|
|
5,000
|
|
|
(239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
844
|
|
|
477
|
|
|
(17
|
)
|
|
244
|
|
|
|
|
|
1,548
|
|
|
Cash and cash equivalents at beginning of the period
|
|
|
129
|
|
|
228
|
|
|
4
|
|
|
512
|
|
|
|
|
|
873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
973
|
|
$
|
705
|
|
$
|
(13
|
)
|
$
|
756
|
|
$
|
|
|
$
|
2,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,321
|
|
$
|
1,148
|
|
$
|
1,322
|
|
$
|
1,087
|
|
$
|
(1,267
|
)
|
$
|
3,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
|
|
|
|
|
(1,186
|
)
|
|
(974
|
)
|
|
|
|
|
(2,160
|
)
|
|
Cash paid for satellites
|
|
|
|
|
|
|
|
|
(83
|
)
|
|
(73
|
)
|
|
|
|
|
(156
|
)
|
|
Investment in companies, net of cash acquired
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
(11
|
)
|
|
Proceeds from sale of investments
|
|
|
|
|
|
|
|
|
55
|
|
|
61
|
|
|
|
|
|
116
|
|
|
Return of capital from subsidiary
|
|
|
2,733
|
|
|
|
|
|
|
|
|
|
|
|
(2,733
|
)
|
|
|
|
|
Other, net
|
|
|
|
|
|
|
|
|
1
|
|
|
40
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
2,733
|
|
|
|
|
|
(1,224
|
)
|
|
(946
|
)
|
|
(2,733
|
)
|
|
(2,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash proceeds from debt issuance
|
|
|
|
|
|
3,990
|
|
|
|
|
|
|
|
|
|
|
|
3,990
|
|
|
Debt issuance costs
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
(30
|
)
|
|
Repayment of long-term debt
|
|
|
|
|
|
(1,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,000
|
)
|
|
Repayment of short-term borrowings
|
|
|
|
|
|
|
|
|
|
|
|
(39
|
)
|
|
|
|
|
(39
|
)
|
|
Repayment of other long-term obligations
|
|
|
|
|
|
|
|
|
(61
|
)
|
|
(110
|
)
|
|
|
|
|
(171
|
)
|
|
Common shares repurchased and retired
|
|
|
(4,366
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,366
|
)
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
(2
|
)
|
|
|
|
|
(45
|
)
|
|
(8
|
)
|
|
|
|
|
(55
|
)
|
|
Excess tax benefit from share-based compensation
|
|
|
|
|
|
|
|
|
21
|
|
|
4
|
|
|
|
|
|
25
|
|
|
Intercompany payments (funding)
|
|
|
(50
|
)
|
|
|
|
|
(1
|
)
|
|
51
|
|
|
|
|
|
|
|
|
Cash dividend to Parent
|
|
|
|
|
|
(4,000
|
)
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(4,418
|
)
|
|
(1,040
|
)
|
|
(86
|
)
|
|
(102
|
)
|
|
4,000
|
|
|
(1,646
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(364
|
)
|
|
108
|
|
|
12
|
|
|
39
|
|
|
|
|
|
(205
|
)
|
|
Cash and cash equivalents at beginning of the period
|
|
|
447
|
|
|
683
|
|
|
4
|
|
|
368
|
|
|
|
|
|
1,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
83
|
|
$
|
791
|
|
$
|
16
|
|
$
|
407
|
|
$
|
|
|
$
|
1,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Table of Contents
DIRECTV