Senior Notes
The following table sets forth our outstanding senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount
|
|
Carrying value, net of
unamortized original
issue discounts
|
|
|
|
March 31,
2013
|
|
March 31,
2013
|
|
December 31,
2012
|
|
|
|
(Dollars in Millions)
|
|
4.750% senior notes due in 2014
|
|
$
|
1,000
|
|
$
|
999
|
|
$
|
999
|
|
3.550% senior notes due in 2015
|
|
|
1,200
|
|
|
1,200
|
|
|
1,200
|
|
3.125% senior notes due in 2016
|
|
|
750
|
|
|
750
|
|
|
750
|
|
3.500% senior notes due in 2016
|
|
|
1,500
|
|
|
1,498
|
|
|
1,498
|
|
2.400% senior notes due in 2017
|
|
|
1,250
|
|
|
1,249
|
|
|
1,249
|
|
1.750% senior notes due in 2018
|
|
|
750
|
|
|
744
|
|
|
|
|
5.875% senior notes due in 2019
|
|
|
1,000
|
|
|
995
|
|
|
995
|
|
5.200% senior notes due in 2020
|
|
|
1,300
|
|
|
1,298
|
|
|
1,298
|
|
4.600% senior notes due in 2021
|
|
|
1,000
|
|
|
999
|
|
|
999
|
|
5.000% senior notes due in 2021
|
|
|
1,500
|
|
|
1,495
|
|
|
1,495
|
|
3.800% senior notes due in 2022
|
|
|
1,500
|
|
|
1,499
|
|
|
1,499
|
|
4.375% senior notes due in 2029(1)
|
|
|
1,140
|
|
|
1,128
|
|
|
1,206
|
|
6.350% senior notes due in 2040
|
|
|
500
|
|
|
500
|
|
|
500
|
|
6.000% senior notes due in 2040
|
|
|
1,250
|
|
|
1,234
|
|
|
1,234
|
|
6.375% senior notes due in 2041
|
|
|
1,000
|
|
|
1,000
|
|
|
1,000
|
|
5.150% senior notes due in 2042
|
|
|
1,250
|
|
|
1,248
|
|
|
1,248
|
|
|
|
|
|
|
|
|
|
Total senior notes
|
|
$
|
17,890
|
|
$
|
17,836
|
|
$
|
17,170
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts 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/ $1.52 at March 31, 2013.
8
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
The fair value of our senior notes was approximately $19,154 million at March 31, 2013 and $18,598 million at December 31, 2012. 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 mature as follows: $1,000 million in 2014, $1,200 million in 2015, $2,250 million in 2016, $1,250 million in 2017 and $12,190 million
in 2018 and thereafter.
Commercial Paper
On November 27, 2012, DIRECTV U.S. established a commercial paper program backed by its revolving credit facilities, which
provides for the issuance of short-term commercial paper in the United States up to a maximum aggregate principal of $2.5 billion. As of March 31, 2013, we had
$480 million of short-term commercial paper outstanding, with a weighted average remaining maturity of 55 days, at a weighted average yield of 0.42%, which may be refinanced
on a periodic basis as borrowings mature. As of December 31, 2012, we had $358 million of short-term commercial paper outstanding, with a weighted average remaining maturity
of 63 days, at a weighted average yield of 0.54%. Aggregate amounts outstanding under the revolving credit facilities and the commercial paper program are limited to $2.5 billion.
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 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. Aggregate amounts outstanding under the
revolving credit facilities and the commercial paper program are limited to $2.5 billion. As of March 31, 2013, there were no borrowings under the 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 limit
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
9
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
contain
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 March 31, 2013, 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.
DIRECTV entered into a series of Supplemental Indentures whereby DIRECTV agreed to fully guarantee all of the
senior notes
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. The revolving credit facilities and the commercial paper program are also similarly fully guaranteed by DIRECTV.
As
a result of the guarantees, holders of the senior notes, the revolving credit debt and the commercial paper 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, the revolving credit facilities and the commercial paper
program.
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 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.
BNDES Financing Facility
In March 2013, Sky Brasil entered into a financing facility with BNDES, a government owned bank in Brazil, under which Sky Brasil may
borrow funds for the purchase of set-top receivers. Our Board of Directors has approved borrowings of up to R$500 million (or approximately $250 million at the then current
exchange rate) under the facility. As of March 31, 2013, Sky Brasil had borrowings of $49 million outstanding under the BNDES facility bearing interest at a rate of 2.5% per year.
Borrowings under the facility are required to be repaid in 30 monthly installments. The U.S. dollar amounts reflect the conversion of the Brazilian real denominated amounts into U.S. dollars
based on the exchange rate of R$2.01 / $1.00 at March 31, 2013.
Borrowings
under the BNDES facility mature as follows: $14 million in 2013, $20 million in 2014 and $15 million in 2015. The financing facility is collateralized by
the financed set-top receivers with an original purchase price of approximately $55 million based on the exchange rate at the time of purchase.
10
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Restricted Cash
Restricted cash of $7 million as of March 31, 2013 and $6 million as of December 31, 2012 was included as
part of "Prepaid expenses and other" in our Consolidated Balance Sheets. These amounts secure certain of our letter of credit obligations and restrictions on the cash will be removed as the letters of
credit expire.
Note 4: Derivative Financial Instruments
Cross-Currency Swaps
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 resulting in 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 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. The fair value of unrealized losses
on cross-currency swaps recorded in "Other liabilities and deferred credits" in the Consolidated Balance Sheets was $74 million as of March 31, 2013 and $17 million as of
December 31, 2012. 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 loss" in the Consolidated Balance Sheets 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 March 31, 2013, DIRECTV U.S. recorded $78 million of remeasurement
gain on the British pound sterling denominated debt in "Other, net" in the Consolidated Statements of Operations. To offset this remeasurement gain, we reclassified $78 million
($49 million after tax) from "Accumulated other comprehensive loss" in the Consolidated Balance Sheets to "Other, net" in the Consolidated Statements of Operations, thereby eliminating the
impact of the remeasurement from our results of operations. We evaluate the effectiveness of our cross-currency swaps on a quarterly basis. We measured no ineffectiveness for the three months ended
March 31, 2013.
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 March 31, 2013, neither we nor any of our counterparties were required to post collateral under the terms of the cross-currency swap
11
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
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.
Note 5: Contingencies
Redeemable Noncontrolling Interest
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 March 31, 2013 and December 31, 2012, we estimated that Globo's remaining 7%
equity interest in Sky Brasil had a fair value of approximately $400 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.
Venezuela Devaluation and Foreign Currency Exchange Controls
In February 2013, the Venezuelan government announced a devaluation of the bolivar from the official exchange rate of 4.3 bolivars per
U.S. dollar to an official rate of 6.3 bolivars per U.S. dollar. As a result of the devaluation, we recorded a pre-tax charge in "Venezuelan currency devaluation charge" in the
Consolidated Statements of Operations of $166 million ($136 million after tax) in the first quarter of 2013, related to the remeasurement of the bolivar denominated net monetary assets
of our Venezuelan subsidiary as of the date of the devaluation. There will also be ongoing impacts to our results of operations subsequent to the devaluation, primarily
related to the translation of local currency financial statements at the new official exchange rate. In the event of a future devaluation of the bolivar, we will recognize a charge to earnings based
on the amount of bolivar denominated net monetary assets held at the time of such devaluation. Any future devaluation would also result in ongoing impacts to our results of operations.
Companies
operating in Venezuela are required to obtain Venezuelan government approval to exchange Venezuelan bolivars into U.S. dollars at the official exchange rate. 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 of March 31, 2013, our
Venezuelan subsidiary had Venezuelan bolivar denominated net monetary assets of $346 million, including cash of $423 million, based on the official exchange rate of 6.3 bolivars per U.S.
dollar at that time.
Litigation
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
12
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
expenditures
in amounts that could not be estimated at March 31, 2013. 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 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.
State and Federal Inquiries.
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. As reported previously, DIRECTV U.S. received a request for information from the FTC on
issues similar to those resolved in 2011 with a multistate group of state attorneys general. We have been cooperating with the FTC by providing information about our sales and marketing practices and
customer complaints and have engaged in ongoing negotiations with FTC staff concerning these issues. Recently, the FTC staff has advised that they will
13
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
refer
this matter to the Commissioners to obtain authority to file suit if we are unable to agree upon a resolution of these issues.
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 we and Sky Brasil believe are
adequate to satisfy amounts owed to ECAD. In order to continue its opposition to ECAD's claims, Sky Brasil has provided letters of credit in the amount of approximately $110 million. Sky
Brasil's dispute with ECAD is currently pending in the Superior Justice Tribunal. In addition, in March 2013, Conselho Administrativo de Defesa Econômica, or CADE, the Brazilian
antitrust board, ruled on a case brought against ECAD by the Brazilian pay television association, known as ABTA, and declared ECAD to be an illegal cartel and its prices charged to pay television
operators to be abusive. SKY Brasil is assessing the impact of this decision on its litigation with ECAD.
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 investigate waste handling and
disposal processes of a number of industries. We are diligently 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.
Income Tax Matters
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 or results of
operations.
Satellites
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 March 31, 2013, the net book value of in-orbit satellites
was $1,604 million, all of which was uninsured.
Other
We are contingently liable under standby letters of credit and bonds in the aggregate amount of $273 million at March 31,
2013, primarily related to a judicial deposit in Brazil for the ECAD matter discussed above.
14
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Note 6: 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.
The
following table summarizes sales and purchase transactions with related parties:
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Sales
|
|
$
|
2
|
|
$
|
1
|
|
Purchases
|
|
|
236
|
|
|
237
|
|
The
following table sets forth the amount of accounts receivable from and accounts payable to related parties as of:
|
|
|
|
|
|
|
|
|
|
March 31,
2013
|
|
December 31,
2012
|
|
|
|
(Dollars in Millions)
|
|
Accounts receivable
|
|
$
|
26
|
|
$
|
26
|
|
Accounts payable
|
|
|
100
|
|
|
90
|
|
Note 7: Stockholders' Deficit and Redeemable Noncontrolling Interest
Capital Stock and Additional Paid-In Capital
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 March 31, 2013, 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. In February 2013 our
Board of Directors terminated the remaining balance available under the previous authorization and approved a new authorization for up to $4 billion for repurchases of our common stock. As of
March 31, 2013, we had approximately $3,484 million remaining under this authorization. The authorization allows 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.
15
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Accelerated Share Repurchase.
On March 20, 2013, we entered into a variable notional/variable maturity accelerated share
repurchase agreement,
or ASR, with a third-party financial institution to repurchase $300 million to $500 million of our common stock, which was settled during the second quarter of 2013. Under the agreement,
we paid $500 million up-front and received an initial delivery of 4.9 million shares. We retired these shares and recorded a $270 million reduction to stockholders'
equity in the first quarter of 2013. As of March 31, 2013, $30 million of the $500 million up-front payment was included as a reduction to "Common stock and additional
paid-in capital" and $200 million was included in "Prepaid expenses and other" in the Consolidated Balance Sheets. We accounted for the ASR as a repurchase of common stock for purposes of
calculating earnings per share and as a forward contract indexed to our own common stock, which met all of the applicable criteria for equity classification, and, therefore, was not accounted for as a
derivative instrument.
The
ASR agreement was settled on April 19, 2013 for a final notional amount of $337 million. Accordingly, we received an additional 1.2 million shares, which were
retired, and we received a $163 million cash payment from our counterparty equal to the difference between the $500 million up-front payment and the final notional amount. The final
notional amount was determined based upon the volume-weighted average share price of our common stock during the term of the ASR agreement. The number of shares ultimately delivered under the ASR
agreement was based upon the final notional amount and the volume-weighted average share price of our common stock during the term of the ASR agreement, less an agreed discount.
The
following table sets forth information regarding shares repurchased and retired during the periods presented:
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(Amounts in Millions,
Except Per Share Amounts)
|
|
Total cost of repurchased shares(1)
|
|
$
|
1,378
|
|
$
|
1,300
|
|
Average price per share
|
|
$
|
52.09
|
|
$
|
45.65
|
|
Number of shares repurchased and retired
|
|
|
26
|
|
|
28
|
|
-
(1)
-
The
$1,378 million in repurchases for the three months ended March 31, 2013 does not include the $30 million of stock to be received
upon settlement of the ASR in April 2013.
Of
the $1,300 million in repurchases during the three months ended March 31, 2012, $67 million were paid for in April 2012. 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.
16
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
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, 2013
|
|
|
586,839,817
|
|
$
|
4,021
|
|
$
|
(9,210
|
)
|
$
|
(242
|
)
|
$
|
(5,431
|
)
|
$
|
400
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
690
|
|
|
|
|
|
690
|
|
|
8
|
|
$
|
698
|
|
Stock repurchased and retired
|
|
|
(26,452,953
|
)
|
|
(181
|
)
|
|
(1,197
|
)
|
|
|
|
|
(1,378
|
)
|
|
|
|
|
|
|
Stock to be received upon settlement of ASR
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
Stock options exercised and restricted stock units vested and distributed
|
|
|
1,960,643
|
|
|
(61
|
)
|
|
|
|
|
|
|
|
(61
|
)
|
|
|
|
|
|
|
Share-based compensation expense
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
Tax benefit from share-based compensation
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
Adjustment to the fair value of redeemable noncontrolling interest
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
16
|
|
|
(16
|
)
|
|
|
|
Other
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
(11
|
)
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2013
|
|
|
562,347,507
|
|
$
|
3,822
|
|
$
|
(9,717
|
)
|
$
|
(253
|
)
|
$
|
(6,148
|
)
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
731
|
|
|
|
|
|
731
|
|
|
10
|
|
$
|
741
|
|
Stock repurchased and retired
|
|
|
(28,468,900
|
)
|
|
(197
|
)
|
|
(1,103
|
)
|
|
|
|
|
(1,300
|
)
|
|
|
|
|
|
|
Stock options exercised and restricted stock units vested and distributed
|
|
|
1,958,677
|
|
|
(52
|
)
|
|
|
|
|
|
|
|
(52
|
)
|
|
|
|
|
|
|
Share-based compensation expense
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
Tax benefit from share-based compensation
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
Adjustment to the fair value of redeemable noncontrolling interest
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
12
|
|
|
(12
|
)
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
19
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2012
|
|
|
664,796,472
|
|
$
|
4,617
|
|
$
|
(8,122
|
)
|
$
|
(137
|
)
|
$
|
(3,642
|
)
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Other Comprehensive Income (Loss)
The following represents the components of other comprehensive income (loss) for each of the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
Pre-Tax
|
|
Tax Benefit
(Expense)
|
|
Net
of Tax
|
|
Pre-Tax
|
|
Tax Benefit
(Expense)
|
|
Net
of Tax
|
|
|
|
(Dollars in Millions)
|
|
Cash flows hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
$
|
(57
|
)
|
$
|
21
|
|
$
|
(36
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
Less: Reclassification adjustments recognized in net income
|
|
|
78
|
|
|
(29
|
)
|
|
49
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(43
|
)
|
|
17
|
|
|
(26
|
)
|
|
33
|
|
|
(13
|
)
|
|
20
|
|
Unrealized gains (losses) on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses) on securities
|
|
|
5
|
|
|
(2
|
)
|
|
3
|
|
|
(2
|
)
|
|
1
|
|
|
(1
|
)
|
Less: Reclassification adjustment for net gains recognized during the period
|
|
|
(2
|
)
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
$
|
(19
|
)
|
$
|
8
|
|
$
|
(11
|
)
|
$
|
31
|
|
$
|
(12
|
)
|
$
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2013
|
|
$
|
(184
|
)
|
$
|
(17
|
)
|
$
|
(40
|
)
|
$
|
(1
|
)
|
$
|
(242
|
)
|
Other comprehensive income (loss)
|
|
|
|
|
|
13
|
|
|
(26
|
)
|
|
2
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2013
|
|
$
|
(184
|
)
|
$
|
(4
|
)
|
$
|
(66
|
)
|
$
|
1
|
|
$
|
(253
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
Benefit
Plans
|
|
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)
|
|
|
|
|
|
20
|
|
|
(1
|
)
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2012
|
|
$
|
(151
|
)
|
$
|
12
|
|
$
|
2
|
|
$
|
(137
|
)
|
|
|
|
|
|
|
|
|
|
|
18
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Note 8: 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 restricted stock units issued to employees. During the three months ended
March 31, 2013, we excluded 1.7 million common stock awards from the computation of diluted EPS because the inclusion of the potential common shares would have had an antidilutive
effect. We did not exclude any common stock options from the computation of diluted EPS during the three months ended March 31, 2012.
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
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
690
|
|
|
572
|
|
$
|
1.21
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
5
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
690
|
|
|
577
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
731
|
|
|
678
|
|
$
|
1.08
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
3
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
731
|
|
|
681
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
Note 9: 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.
19
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
Before
Depreciation
and
Amortization(1)
|
|
|
|
(Dollars in Millions)
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
5,788
|
|
$
|
2
|
|
$
|
5,790
|
|
$
|
1,115
|
|
$
|
406
|
|
$
|
1,521
|
|
Sky Brasil
|
|
|
965
|
|
|
|
|
|
965
|
|
|
154
|
|
|
157
|
|
|
311
|
|
PanAmericana
|
|
|
763
|
|
|
|
|
|
763
|
|
|
(37
|
)
|
|
106
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
1,728
|
|
|
|
|
|
1,728
|
|
|
117
|
|
|
263
|
|
|
380
|
|
Sports Networks, Eliminations and Other
|
|
|
64
|
|
|
(2
|
)
|
|
62
|
|
|
10
|
|
|
9
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,580
|
|
$
|
|
|
$
|
7,580
|
|
$
|
1,242
|
|
$
|
678
|
|
$
|
1,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
5,497
|
|
$
|
2
|
|
$
|
5,499
|
|
$
|
1,038
|
|
$
|
372
|
|
$
|
1,410
|
|
Sky Brasil
|
|
|
881
|
|
|
|
|
|
881
|
|
|
151
|
|
|
136
|
|
|
287
|
|
PanAmericana
|
|
|
604
|
|
|
|
|
|
604
|
|
|
98
|
|
|
83
|
|
|
181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
1,485
|
|
|
|
|
|
1,485
|
|
|
249
|
|
|
219
|
|
|
468
|
|
Sports Networks, Eliminations and Other
|
|
|
64
|
|
|
(2
|
)
|
|
62
|
|
|
21
|
|
|
4
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,046
|
|
$
|
|
|
$
|
7,046
|
|
$
|
1,308
|
|
$
|
595
|
|
$
|
1,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(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
20
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
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 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
March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Operating profit before depreciation and amortization
|
|
$
|
1,920
|
|
$
|
1,903
|
|
Depreciation and amortization
|
|
|
(678
|
)
|
|
(595
|
)
|
|
|
|
|
|
|
Operating profit
|
|
|
1,242
|
|
|
1,308
|
|
Interest income
|
|
|
22
|
|
|
12
|
|
Interest expense
|
|
|
(217
|
)
|
|
(204
|
)
|
Other, net
|
|
|
38
|
|
|
41
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
1,085
|
|
|
1,157
|
|
Income tax expense
|
|
|
(387
|
)
|
|
(416
|
)
|
|
|
|
|
|
|
Net income
|
|
|
698
|
|
|
741
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
(8
|
)
|
|
(10
|
)
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
690
|
|
$
|
731
|
|
|
|
|
|
|
|
Note 10: Subsequent Event
DSN Northwest Transaction
In the second quarter of 2013, DSN will transfer 100% of its interest in DSN Northwest to NW Sports Net LLC. Upon completion of
the transaction, the Seattle Mariners will have a majority interest in NW Sports LLC and DSN will retain a noncontrolling interest, which will be accounted for using the equity method of
accounting. Additionally, DSN will provide management oversight and programming services to NW Sports Net LLC as part of management service agreements to be entered into as part of this
transaction. As a result of this transaction, we will deconsolidate DSN Northwest in the second quarter of 2013 and will record a non-cash, pre-tax charge of approximately
$60 million in "Other, net" in the Consolidated Statements of Operations. As of March 31, 2013, the assets and liabilities of DSN Northwest are presented as "Assets held for sale" and
"Liabilities held for sale" in the Consolidated Balance Sheets. The operating results of DSN Northwest are included in the consolidated financial statements for the three months ended March 31,
2013.
21
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Note 11: Condensed Consolidating Financial Statements
As discussed above in Note 3, DIRECTV has provided a guarantee of all the outstanding senior notes of DIRECTV
Holdings LLC and DIRECTV Financing Co., Inc, or the Co-issuers.
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.
These
condensed consolidating financial statements present the condensed consolidating statements of operations, condensed consolidating statements of comprehensive income and condensed
consolidating statements of cash flows for the three months ended March 31, 2013 and 2012, and the condensed consolidating balance sheets as of March 31, 2013 and December 31,
2012.
The
condensed consolidating financial statements are comprised of DIRECTV, or the Parent Guarantor, its indirect 100% 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 DTH 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 were 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.
22
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Operations
For the Three Months Ended March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
|
|
$
|
5,790
|
|
$
|
1,811
|
|
$
|
(21
|
)
|
$
|
7,580
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
2,601
|
|
|
613
|
|
|
(18
|
)
|
|
3,196
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
351
|
|
|
186
|
|
|
|
|
|
537
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
81
|
|
|
32
|
|
|
(3
|
)
|
|
110
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
629
|
|
|
185
|
|
|
|
|
|
814
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
319
|
|
|
49
|
|
|
|
|
|
368
|
|
General and administrative expenses
|
|
|
13
|
|
|
|
|
|
288
|
|
|
168
|
|
|
|
|
|
469
|
|
Venezuelan currency devaluation charge
|
|
|
|
|
|
|
|
|
|
|
|
166
|
|
|
|
|
|
166
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
406
|
|
|
272
|
|
|
|
|
|
678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
13
|
|
|
|
|
|
4,675
|
|
|
1,671
|
|
|
(21
|
)
|
|
6,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(13
|
)
|
|
|
|
|
1,115
|
|
|
140
|
|
|
|
|
|
1,242
|
|
Equity in income of consolidated subsidiaries
|
|
|
698
|
|
|
793
|
|
|
|
|
|
|
|
|
(1,491
|
)
|
|
|
|
Interest income
|
|
|
6
|
|
|
|
|
|
|
|
|
19
|
|
|
(3
|
)
|
|
22
|
|
Interest expense
|
|
|
|
|
|
(201
|
)
|
|
(1
|
)
|
|
(18
|
)
|
|
3
|
|
|
(217
|
)
|
Other, net
|
|
|
(4
|
)
|
|
|
|
|
12
|
|
|
30
|
|
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
687
|
|
|
592
|
|
|
1,126
|
|
|
171
|
|
|
(1,491
|
)
|
|
1,085
|
|
Income tax benefit (expense)
|
|
|
3
|
|
|
60
|
|
|
(333
|
)
|
|
(117
|
)
|
|
|
|
|
(387
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
690
|
|
|
652
|
|
|
793
|
|
|
54
|
|
|
(1,491
|
)
|
|
698
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
690
|
|
$
|
652
|
|
$
|
793
|
|
$
|
46
|
|
$
|
(1,491
|
)
|
$
|
690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Operations
For the Three Months Ended March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
59
|
|
$
|
5,499
|
|
$
|
1,568
|
|
$
|
(80
|
)
|
$
|
7,046
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
2,441
|
|
|
542
|
|
|
(19
|
)
|
|
2,964
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
349
|
|
|
150
|
|
|
|
|
|
499
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
78
|
|
|
28
|
|
|
(2
|
)
|
|
104
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
646
|
|
|
170
|
|
|
|
|
|
816
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
305
|
|
|
38
|
|
|
|
|
|
343
|
|
General and administrative expenses
|
|
|
6
|
|
|
|
|
|
329
|
|
|
141
|
|
|
(59
|
)
|
|
417
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
372
|
|
|
223
|
|
|
|
|
|
595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
6
|
|
|
|
|
|
4,520
|
|
|
1,292
|
|
|
(80
|
)
|
|
5,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(6
|
)
|
|
59
|
|
|
979
|
|
|
276
|
|
|
|
|
|
1,308
|
|
Equity in income of consolidated subsidiaries
|
|
|
738
|
|
|
623
|
|
|
|
|
|
|
|
|
(1,361
|
)
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
(3
|
)
|
|
12
|
|
Interest expense
|
|
|
|
|
|
(188
|
)
|
|
|
|
|
(19
|
)
|
|
3
|
|
|
(204
|
)
|
Other, net
|
|
|
(4
|
)
|
|
|
|
|
1
|
|
|
44
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
728
|
|
|
494
|
|
|
980
|
|
|
316
|
|
|
(1,361
|
)
|
|
1,157
|
|
Income tax benefit (expense)
|
|
|
3
|
|
|
47
|
|
|
(357
|
)
|
|
(109
|
)
|
|
|
|
|
(416
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
731
|
|
|
541
|
|
|
623
|
|
|
207
|
|
|
(1,361
|
)
|
|
741
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
731
|
|
$
|
541
|
|
$
|
623
|
|
$
|
197
|
|
$
|
(1,361
|
)
|
$
|
731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Comprehensive Income
For the Three Months Ended March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Net income
|
|
$
|
690
|
|
$
|
652
|
|
$
|
793
|
|
$
|
54
|
|
$
|
(1,491
|
)
|
$
|
698
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
|
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
(36
|
)
|
Reclassification adjustments included in net income
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
49
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
(26
|
)
|
|
|
|
|
(26
|
)
|
Unrealized gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains on securities
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
3
|
|
Reclassification adjustments recognized for net gains during the period
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
13
|
|
|
|
|
|
(24
|
)
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
690
|
|
|
665
|
|
|
793
|
|
|
30
|
|
|
(1,491
|
)
|
|
687
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(16
|
)
|
|
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
690
|
|
$
|
665
|
|
$
|
793
|
|
$
|
14
|
|
$
|
(1,491
|
)
|
$
|
671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Comprehensive Income
For the Three Months Ended March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Net income
|
|
$
|
731
|
|
$
|
541
|
|
$
|
623
|
|
$
|
207
|
|
$
|
(1,361
|
)
|
$
|
741
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
20
|
|
Unrealized holding losses on securities
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
731
|
|
|
541
|
|
|
623
|
|
|
226
|
|
|
(1,361
|
)
|
|
760
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
731
|
|
$
|
541
|
|
$
|
623
|
|
$
|
214
|
|
$
|
(1,361
|
)
|
$
|
748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Balance Sheet
As of March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
1,262
|
|
$
|
407
|
|
$
|
2,613
|
|
$
|
2,402
|
|
$
|
(1,068
|
)
|
$
|
5,616
|
|
|
Satellites, net
|
|
|
|
|
|
|
|
|
1,804
|
|
|
571
|
|
|
|
|
|
2,375
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
|
|
3,337
|
|
|
2,875
|
|
|
|
|
|
6,212
|
|
|
Goodwill
|
|
|
|
|
|
1,827
|
|
|
1,350
|
|
|
820
|
|
|
|
|
|
3,997
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
|
450
|
|
|
317
|
|
|
|
|
|
767
|
|
|
Intercompany receivables
|
|
|
4,590
|
|
|
6,704
|
|
|
17,569
|
|
|
3,807
|
|
|
(32,670
|
)
|
|
|
|
|
Investment in subsidiaries
|
|
|
(9,992
|
)
|
|
15,641
|
|
|
|
|
|
(10,091
|
)
|
|
4,442
|
|
|
|
|
|
Other assets
|
|
|
214
|
|
|
89
|
|
|
211
|
|
|
1,315
|
|
|
(146
|
)
|
|
1,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
(3,926
|
)
|
$
|
24,668
|
|
$
|
27,334
|
|
$
|
2,016
|
|
$
|
(29,442
|
)
|
$
|
20,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
293
|
|
$
|
815
|
|
$
|
3,378
|
|
$
|
2,129
|
|
$
|
(1,068
|
)
|
$
|
5,547
|
|
|
Long-term debt
|
|
|
|
|
|
17,836
|
|
|
|
|
|
30
|
|
|
|
|
|
17,866
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
1,408
|
|
|
409
|
|
|
(138
|
)
|
|
1,679
|
|
|
Intercompany liabilities
|
|
|
1,478
|
|
|
17,569
|
|
|
6,704
|
|
|
6,919
|
|
|
(32,670
|
)
|
|
|
|
|
Other liabilities and deferred credits
|
|
|
451
|
|
|
196
|
|
|
203
|
|
|
464
|
|
|
(8
|
)
|
|
1,306
|
|
|
Redeemable noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
|
|
|
|
400
|
|
|
Stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock and additional paid-in capital
|
|
|
3,822
|
|
|
27
|
|
|
4,848
|
|
|
(8,541
|
)
|
|
3,666
|
|
|
3,822
|
|
|
Retained earnings (accumulated deficit)
|
|
|
(9,717
|
)
|
|
(11,771
|
)
|
|
10,793
|
|
|
286
|
|
|
692
|
|
|
(9,717
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(253
|
)
|
|
(4
|
)
|
|
|
|
|
(80
|
)
|
|
84
|
|
|
(253
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(6,148
|
)
|
|
(11,748
|
)
|
|
15,641
|
|
|
(8,335
|
)
|
|
4,442
|
|
|
(6,148
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
(3,926
|
)
|
$
|
24,668
|
|
$
|
27,334
|
|
$
|
2,016
|
|
$
|
(29,442
|
)
|
$
|
20,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Balance Sheet
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
|
(Dollars in Millions)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
883
|
|
$
|
884
|
|
$
|
2,788
|
|
$
|
2,039
|
|
$
|
(1,040
|
)
|
$
|
5,554
|
|
|
Satellites, net
|
|
|
|
|
|
|
|
|
1,795
|
|
|
562
|
|
|
|
|
|
2,357
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
|
|
3,290
|
|
|
2,748
|
|
|
|
|
|
6,038
|
|
|
Goodwill
|
|
|
|
|
|
1,828
|
|
|
1,349
|
|
|
886
|
|
|
|
|
|
4,063
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
|
453
|
|
|
379
|
|
|
|
|
|
832
|
|
|
Intercompany receivables
|
|
|
4,382
|
|
|
6,152
|
|
|
16,355
|
|
|
3,703
|
|
|
(30,592
|
)
|
|
|
|
|
Investment in subsidiaries
|
|
|
(8,687
|
)
|
|
15,001
|
|
|
|
|
|
(10,915
|
)
|
|
4,601
|
|
|
|
|
|
Other assets
|
|
|
180
|
|
|
91
|
|
|
241
|
|
|
1,294
|
|
|
(95
|
)
|
|
1,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
(3,242
|
)
|
$
|
23,956
|
|
$
|
26,271
|
|
$
|
696
|
|
$
|
(27,126
|
)
|
$
|
20,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
384
|
|
$
|
646
|
|
$
|
3,526
|
|
$
|
2,025
|
|
$
|
(1,040
|
)
|
$
|
5,541
|
|
|
Long-term debt
|
|
|
|
|
|
17,170
|
|
|
|
|
|
|
|
|
|
|
|
17,170
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
1,397
|
|
|
361
|
|
|
(86
|
)
|
|
1,672
|
|
|
Intercompany liabilities
|
|
|
1,401
|
|
|
16,355
|
|
|
6,152
|
|
|
6,684
|
|
|
(30,592
|
)
|
|
|
|
|
Other liabilities and deferred credits
|
|
|
404
|
|
|
131
|
|
|
195
|
|
|
482
|
|
|
(9
|
)
|
|
1,203
|
|
|
Redeemable noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
|
|
|
|
400
|
|
|
Stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock and additional paid-in capital
|
|
|
4,021
|
|
|
12
|
|
|
4,802
|
|
|
(6,632
|
)
|
|
1,818
|
|
|
4,021
|
|
|
Retained earnings (accumulated deficit)
|
|
|
(9,210
|
)
|
|
(10,341
|
)
|
|
10,199
|
|
|
(2,560
|
)
|
|
2,702
|
|
|
(9,210
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(242
|
)
|
|
(17
|
)
|
|
|
|
|
(64
|
)
|
|
81
|
|
|
(242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(5,431
|
)
|
|
(10,346
|
)
|
|
15,001
|
|
|
(9,256
|
)
|
|
4,601
|
|
|
(5,431
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
(3,242
|
)
|
$
|
23,956
|
|
$
|
26,271
|
|
$
|
696
|
|
$
|
(27,126
|
)
|
$
|
20,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
262
|
|
$
|
716
|
|
$
|
461
|
|
$
|
665
|
|
$
|
(568
|
)
|
$
|
1,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
|
|
|
|
|
(396
|
)
|
|
(352
|
)
|
|
|
|
|
(748
|
)
|
|
Cash paid for satellites
|
|
|
|
|
|
|
|
|
(53
|
)
|
|
(25
|
)
|
|
|
|
|
(78
|
)
|
|
Investment in companies, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
(3
|
)
|
|
Proceeds from sale of investments
|
|
|
|
|
|
|
|
|
12
|
|
|
4
|
|
|
|
|
|
16
|
|
|
Return of capital from subsidiary
|
|
|
1,382
|
|
|
|
|
|
|
|
|
|
|
|
(1,382
|
)
|
|
|
|
|
Other, net
|
|
|
|
|
|
|
|
|
2
|
|
|
(7
|
)
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
1,382
|
|
|
|
|
|
(435
|
)
|
|
(383
|
)
|
|
(1,382
|
)
|
|
(818
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of commercial paper (maturity 90 days or less), net
|
|
|
|
|
|
190
|
|
|
|
|
|
|
|
|
|
|
|
190
|
|
|
Proceeds from short-term borrowings
|
|
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
84
|
|
|
Repayment of short-term borrowings
|
|
|
|
|
|
(153
|
)
|
|
|
|
|
|
|
|
|
|
|
(153
|
)
|
|
Proceeds from long-term debt
|
|
|
|
|
|
743
|
|
|
|
|
|
49
|
|
|
|
|
|
792
|
|
|
Debt issuance costs
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
Repayment of other long-term obligations
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
(12
|
)
|
|
|
|
|
(18
|
)
|
|
Common shares repurchased and retired
|
|
|
(1,378
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,378
|
)
|
|
Prepayment of accelerated share repurchase
|
|
|
(230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(230
|
)
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
|
|
|
|
|
|
(51
|
)
|
|
(10
|
)
|
|
|
|
|
(61
|
)
|
|
Excess tax benefit from share-based compensation
|
|
|
|
|
|
|
|
|
20
|
|
|
4
|
|
|
|
|
|
24
|
|
|
Intercompany payments (funding)
|
|
|
133
|
|
|
|
|
|
5
|
|
|
(138
|
)
|
|
|
|
|
|
|
|
Cash dividend to Parent
|
|
|
|
|
|
(1,950
|
)
|
|
|
|
|
|
|
|
1,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(1,475
|
)
|
|
(1,090
|
)
|
|
(32
|
)
|
|
(107
|
)
|
|
1,950
|
|
|
(754
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on Venezuelan cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
(187
|
)
|
|
|
|
|
(187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
169
|
|
|
(374
|
)
|
|
(6
|
)
|
|
(12
|
)
|
|
|
|
|
(223
|
)
|
|
Cash and cash equivalents at beginning of the period
|
|
|
408
|
|
|
728
|
|
|
11
|
|
|
755
|
|
|
|
|
|
1,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
577
|
|
$
|
354
|
|
$
|
5
|
|
$
|
743
|
|
$
|
|
|
$
|
1,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
(Unaudited)
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 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
|
|
$
|
319
|
|
$
|
986
|
|
$
|
429
|
|
$
|
576
|
|
$
|
(547
|
)
|
$
|
1,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
|
|
|
|
|
(354
|
)
|
|
(399
|
)
|
|
|
|
|
(753
|
)
|
|
Cash paid for satellites
|
|
|
(2
|
)
|
|
|
|
|
(34
|
)
|
|
(22
|
)
|
|
|
|
|
(58
|
)
|
|
Return of capital from subsidiary
|
|
|
1,903
|
|
|
|
|
|
|
|
|
|
|
|
(1,903
|
)
|
|
|
|
|
Other, net
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
1,901
|
|
|
|
|
|
(388
|
)
|
|
(396
|
)
|
|
(1,903
|
)
|
|
(786
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under
revolving credit facility
|
|
|
|
|
|
400
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
|
Repayment of borrowings under
revolving credit facility
|
|
|
|
|
|
(400
|
)
|
|
|
|
|
|
|
|
|
|
|
(400
|
)
|
|
Proceeds from long-term debt
|
|
|
|
|
|
3,996
|
|
|
|
|
|
|
|
|
|
|
|
3,996
|
|
|
Debt issuance costs
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
(23
|
)
|
|
Repayment of other long-term obligations
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
(8
|
)
|
|
|
|
|
(13
|
)
|
|
Common shares repurchased and retired
|
|
|
(1,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,260
|
)
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
|
|
|
|
|
|
(43
|
)
|
|
(9
|
)
|
|
|
|
|
(52
|
)
|
|
Excess tax benefit from share-based compensation
|
|
|
|
|
|
|
|
|
23
|
|
|
5
|
|
|
|
|
|
28
|
|
|
Intercompany payments (funding)
|
|
|
158
|
|
|
|
|
|
(13
|
)
|
|
(145
|
)
|
|
|
|
|
|
|
|
Cash dividend to Parent
|
|
|
|
|
|
(2,450
|
)
|
|
|
|
|
|
|
|
2,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(1,102
|
)
|
|
1,523
|
|
|
(38
|
)
|
|
(157
|
)
|
|
2,450
|
|
|
2,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
1,118
|
|
|
2,509
|
|
|
3
|
|
|
23
|
|
|
|
|
|
3,653
|
|
|
Cash and cash equivalents at beginning of the period
|
|
|
129
|
|
|
228
|
|
|
4
|
|
|
512
|
|
|
|
|
|
873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
1,247
|
|
$
|
2,737
|
|
$
|
7
|
|
$
|
535
|
|
$
|
|
|
$
|
4,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
Table of Contents
DIRECTV