DIRECTV Surpasses 38 Million Total Subscribers in the
Quarter.
- Sky Brasil and PanAmericana add 361,000
net new customers in the quarter, bringing the DIRECTV Latin
America and Sky Mexico combined subscriber total to over 18
million.
DIRECTV Adjusted OPBDA Increases 7% to $2.2 Billion; Reported
OPBDA grows 1% to $1.9 Billion.
- DIRECTV U.S. improves OPBDA margin 110
basis points driving a 10% increase in OPBDA.
DIRECTV Free Cash Flow Increases 25% to $886 million.
DIRECTV's Adjusted Diluted EPS Improves 14% to $1.63;
Reported Diluted EPS Decreases to $1.09.
- Adjusted EPS growth in part driven by
stock repurchases of $895M in the first quarter.
DIRECTV (NASDAQ:DTV) today reported that first quarter 2014
revenues increased 4% to $7.86 billion, adjusted operating profit
before depreciation and amortization1 (OPBDA) increased 7% to $2.22
billion, adjusted operating profit increased 7% to $1.51 billion
and adjusted diluted earnings per share improved 14% to $1.63
compared to last year’s first quarter. Adjusted financial results
exclude a pre-tax (and after-tax) charge of $281 million in the
first quarter of 2014 and a pre-tax charge of $166 million ($136
million after tax) in the first quarter of 2013, resulting from the
revaluation of the net monetary assets of the company’s subsidiary
in Venezuela. Reported OPBDA increased 1% to $1.94 billion,
reported operating profit decreased to $1.23 billion and reported
diluted earnings per share declined to $1.09 compared with the same
period last year.
“Our first quarter results continue to demonstrate the strong
execution of our operations,” said Mike White, president and CEO of
DIRECTV. “In the U.S., operating profit before depreciation
and amortization margin expanded year-over-year for the third
consecutive quarter, highlighting our commitment to profitably
grow our businesses through significantly improving the
customer service experience, disciplined expense management and
productivity initiatives. In Latin America, despite
challenging macroeconomic headwinds, we continue to profitably
expand our share of the growing pay TV market while delivering
adjusted OPBDA margin of 30%. In addition, by leveraging the
achievements of both DIRECTV U.S. and DIRECTV Latin America with
the strength and stability of our cash flow, we continue to
return cash to shareholders through stock repurchases at an
industry leading clip.”
DIRECTV'S Operational Review
Three Months Ended
DIRECTV Consolidated March
31,
Dollars in Millions except Earnings per Common Share
2014 2013 Revenues $ 7,855 $
7,580 Adjusted Operating Profit Before Depreciation and
Amortization(1) 2,222 2,086 Adjusted OPBDA Margin(1)
28.3 % 27.5 % Adjusted Operating Profit 1,508
1,408 Adjusted Operating Profit Margin 19.2 %
18.6 % Adjusted Net Income Attributable to DIRECTV
842 826 Adjusted Diluted
Earnings Per Common Share $ 1.63 $ 1.43
Capital Expenditures and Cash Flow
Cash paid for property and equipment 199
152 Cash paid for subscriber leased
equipment - subscriber acquisitions 245
369 Cash paid for subscriber leased equipment -
upgrade and retention 206 227
Cash paid for satellites 54
78 Cash Flow Before Interest and Taxes(2)
1,285 1,107 Free Cash Flow(3)
886 710
Reported
Financial Results Reported
Operating Profit Before Depreciation and Amortization(1) 1,941
1,920 Reported OPBDA Margin(1) 24.7 %
25.3 % Reported Operating Profit 1,227 1,242 Reported Operating
Profit Margin 15.6 % 16.4 % Reported
Net Income Attributable to DIRECTV 561
690 Reported Diluted Earnings Per Common Share
$ 1.09 $ 1.20
Venezuela Currency Update
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 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. This charge is listed as “Venezuelan
currency devaluation charge” in the Consolidated Statements of
Operations.
In the first quarter of 2013, the Venezuelan government
announced an additional currency exchange system, the Sistema
Complementario de Administración de Divisas, or SICAD 1, intended
to function as an auction system for participants to exchange
bolivars for U.S. dollars. Effective January 24, 2014, the
Venezuelan government announced that dividends and royalties would
be subject to the SICAD 1 program. The SICAD 1 exchange rate, which
was 10.7 bolivars per U.S. dollar as of March 31, 2014, is
determined by periodic auctions.
We believe the SICAD 1 rate is the most representative rate to
use for remeasurement, as the official rate of 6.3 bolivars per
U.S. dollar will likely be reserved only for the settlement of U.S.
dollar denominated obligations related to purchases of “essential
goods and services,” and the equity of our Venezuelan subsidiary
would be realized, if at all, through permitted dividends paid at
the SICAD 1 rate. Therefore, as of March 31, 2014, we are
remeasuring our Venezuelan subsidiary’s financial statements in
U.S. dollars using the exchange rate determined by periodic
auctions under SICAD 1, which was 10.7 bolivars per U.S. dollar.
Until that date, we used the official exchange rate of 6.3 bolivars
per U.S. dollar. As a result of the devaluation, we recorded a
pre-tax (and after-tax) charge of $281 million in the first quarter
of 2014 related to the remeasurement of the bolivar denominated net
monetary assets of our Venezuelan subsidiary. This charge is listed
as “Venezuelan currency devaluation charge” in the Consolidated
Statements of Operations. Beginning in the second quarter of 2014,
we expect to remeasure the results of the Venezuelan subsidiary at
the weighted-average rate of SICAD 1 auctions during the reporting
period, and remeasure the net monetary asset balance at the
period-end rate based on the latest auction.
First Quarter Review
DIRECTV’s first quarter revenues of $7.86 billion increased 4%
principally due to strong ARPU growth at DIRECTV U.S. First quarter
2014 adjusted OPBDA and adjusted operating profit increased 7% to
$2.22 billion and $1.51 billion, respectively, while adjusted OPBDA
margin and adjusted operating profit margin increased to 28.3% and
19.2%, respectively. The improvements in margin were primarily due
to lower upgrade and retention costs and general and administrative
expenses, partially offset by higher programming and other expenses
at both DIRECTV U.S. and DTVLA. In addition, adjusted operating
profit margin was negatively impacted by higher depreciation and
amortization mostly at DTVLA primarily related to higher leased
equipment and infrastructure capital expenditures, as well as
higher churn in Brazil. Reported OPBDA increased 1% to $1.94
billion and reported operating profit decreased to $1.23
billion.
First quarter adjusted net income attributable to DIRECTV
increased 2% to $842 million mainly due to the higher adjusted
operating profit, partially offset by the impact of a higher
effective tax rate primarily due to a benefit recorded for
settlements with state taxing authorities in the first quarter of
2013. Adjusted diluted earnings per share grew 14% to $1.63 in the
quarter due to the higher adjusted net income attributable to
DIRECTV and the impact of share repurchases made over the last
twelve months. Reported net income attributable to DIRECTV declined
to $561 million and reported diluted earnings per share decreased
to $1.09 compared to last year’s first quarter.
Cash flow before interest and taxes2 increased 16% to $1.29
billion and free cash flow3 increased 25% to $886 million compared
to the first quarter of 2013 primarily due to a reduction in cash
paid for leased equipment at DIRECTV U.S. and DTVLA related to
declining set-top box costs and lower subscriber gross additions,
along with the higher OPBDA, partially offset by growth in cash
used for working capital at DIRECTV U.S. driven by the timing of
vendor payments. Also during the quarter but not included in free
cash flow was cash paid for share repurchases of $895 million, a
March 2014 debt issuance by DIRECTV U.S. of $1,250 million
principal amount of 4.45% senior notes due in 2024 and a $316
million reduction in DIRECTV’s cash balance resulting from the
remeasurement of the bolivar denominated cash balance in
Venezuela.
SEGMENT FINANCIAL REVIEW DIRECTV U.S. Segment
Three Months Ended
DIRECTV U.S. March 31,
Dollars in Millions except ARPU 2014 2013
Revenues $ 6,087 $ 5,790 Average
Monthly Revenue per Subscriber (ARPU) ($) 100.16
96.05 Operating Profit Before
Depreciation and Amortization(1) 1,669 1,521 OPBDA Margin(1)
27.4 % 26.3 % Operating Profit 1,243
1,115 Operating Profit Margin 20.4 %
19.3 %
Capital Expenditures and Cash Flow
Cash paid for property and equipment
144 111 Cash paid for subscriber leased
equipment - subscriber acquisitions 117
174 Cash paid for subscriber leased equipment -
upgrade and retention 110 111
Cash paid for satellites 11
53 Cash Flow Before Interest and Taxes(2)
1,067 992
Subscriber Data (in
000's except Churn) Gross
Subscriber Additions 891 893
Average Monthly Subscriber Churn 1.45 %
1.45 % Net Subscriber Additions 12
21 Cumulative Subscribers 20,265
20,105
First Quarter Review
In the quarter, DIRECTV U.S. revenues increased 5% to $6.09
billion compared with the first quarter of 2013 primarily due to
strong ARPU growth along with a larger subscriber base. DIRECTV
U.S. net subscriber additions of 12,000 were lower than the prior
year period primarily due to a higher number of subscriber
disconnections associated with the larger subscriber base. Gross
additions of 891,000 and the average monthly churn rate of 1.45%
were relatively unchanged from the prior quarter. ARPU increased
4.3% to $100.16 mostly due to higher advanced receiver service
fees, price increases on programming packages, higher fees for a
new enhanced warranty program, as well as increased ad sales and
commercial business revenues. These improvements were partially
offset by increased promotional offers to new and existing
customers. DIRECTV U.S. ended the quarter with 20.27 million
subscribers.
First quarter OPBDA increased 10% to $1.67 billion and OPBDA
margin improved from 26.3% to 27.4% principally due to the higher
revenues combined with lower upgrade and retention expenses mostly
related to reduced equipment costs, partially offset by higher
programming costs primarily related to programming supplier rate
increases. Operating profit increased 11% to $1,243 million and
operating profit margin increased from 19.3% to 20.4% in the first
quarter mainly due to the higher OPBDA and OPBDA margin.
DIRECTV Latin America
Three Months Ended
DIRECTV Latin America March
31,
Dollars in Millions except ARPU 2014 2013
Revenues $ 1,721 $ 1,728 Average
Monthly Revenue per Subscriber (ARPU) ($) 48.83
54.23 Adjusted Operating Profit Before
Depreciation and Amortization(1) 540 546 Adjusted OPBDA
Margin(1) 31.4 % 31.6 % Adjusted
Operating Profit 255 283 Adjusted Operating Profit Margin
14.8 % 16.4 %
Capital Expenditures and Cash
Flow Cash paid for property and
equipment 56 41 Cash paid
for subscriber leased equipment - subscriber acquisitions
128 195 Cash paid for subscriber
leased equipment - upgrade and retention 96
116 Cash paid for satellites 38
22 Cash Flow Before Interest and
Taxes(2) 204 102
Subscriber Data(4) (in 000's except Churn)
Gross Subscriber Additions
1,111 1,181 Average Monthly
Total Subscriber Churn(5) 2.13 % 1.88 %
Average Monthly Post-paid Subscriber Churn(5) 1.85 %
1.74 % Net Subscriber Additions(5) 361
583 Cumulative Subscribers(5)
11,929 10,911
Reported
Financial Results Reported
Operating Profit Before Depreciation and Amortization(1) 259 380
Reported OPBDA Margin(1) 15.0 % 22.0 %
Reported Operating Profit (Loss) (26 ) 117 Reported Operating
Profit Margin NM* 6.8 %
* Percentage not meaningful
DIRECTV Latin America owns approximately 93% of Sky Brasil, 41%
of Sky Mexico and 100% of PanAmericana, which covers most of the
remaining countries in the region. Sky Mexico, whose results are
accounted for as an equity method investment and therefore are not
consolidated by DTVLA, had approximately 6.15 million subscribers
as of March 31, 2014, bringing the total subscribers in the
region to 18.08 million.
Sky Brasil Segment
Three Months Ended
Sky Brasil March 31,
Dollars in Millions except ARPU 2014 2013
Revenues $ 939 $ 965 Average Monthly
Revenue per Subscriber (ARPU) ($) 57.67
62.56 Operating Profit Before Depreciation and
Amortization(1) 311 311 OPBDA Margin(1) 33.1 %
32.2 % Operating Profit 148 154 Operating Profit
Margin 15.8 % 16.0 %
Other data:
Total Capital Expenditures
161 207 Net Subscriber
Additions(4)(5) (in 000's) 109
208 Cumulative Subscribers(4)(5) (in 000's)
5,480 5,246
First Quarter Review
Excluding changes in foreign exchange rates, Sky Brasil’s first
quarter revenues grew 15% versus prior year driven by a 6% increase
in the average number of subscribers and a 9% increase in local
currency ARPU. The increase in local currency ARPU was principally
due to reduced promotional offers and growth in advanced services.
When factoring in unfavorable changes in foreign exchange rates,
Sky Brasil’s ARPU declined 7.8% to $57.67 and revenues decreased to
$939 million compared to the first quarter of 2013.
First quarter net subscriber additions of 109,000 were lower
than the prior year as slightly higher gross additions were more
than offset by higher churn. The increase in gross additions was
primarily driven by higher advanced product sales. Churn increased
due to a combination of factors including the curtailment of
credits, a higher mix of mass market subscribers and a more
challenging economic and competitive environment.
Also in the first quarter, Sky Brasil OPBDA remained unchanged
at $311 million while OPBDA margin improved from 32.2% to 33.1%.
The margin improvement was primarily due to the increase in local
currency ARPU, partially offset by higher relative growth in
subscriber services expenses primarily driven by customer service
improvement initiatives. Operating profit decreased to $148 million
and operating profit margin was unchanged at 16% as the higher
OPBDA margin was offset by higher depreciation and amortization
resulting from increased leased equipment and infrastructure
capital expenditures, as well as the higher subscriber churn.
PanAmericana and Other Segment
Three Months Ended
PanAmericana and Other
March 31,
Dollars in Millions except ARPU 2014
2013 Revenues $ 782 $ 763 Average
Monthly Revenue per Subscriber (ARPU) ($) 41.23
46.54 Adjusted Operating Profit Before
Depreciation and Amortization(1) 229 235 Adjusted OPBDA
Margin(1) 29.3 % 30.8 % Adjusted
Operating Profit 107 129 Adjusted Operating Profit Margin
13.7 % 16.9 %
Other data:
Total Capital Expenditures 157
167 Net Subscriber Additions (in 000's)
252 375 Cumulative Subscribers
(in 000's) 6,449 5,665
Reported Financial Results
Reported Operating Profit (Loss) Before Depreciation and
Amortization(1) (52 ) 69 Reported OPBDA Margin(1) NM*
9.0 % Reported Operating Loss (174 )
(37 )
* Percentage not meaningful
First Quarter Review
Excluding changes in foreign exchange rates, first quarter
revenues in the PanAmericana and Other segment grew 28% versus
prior year driven by a 15% increase in the average number of
subscribers and an 11% increase in local currency ARPU. The
increase in local currency ARPU was principally due to price
increases and growth in advanced services, partially offset by the
higher penetration of lower ARPU mass market subscribers. When
factoring in changes in foreign exchange rates, most notably in
Argentina and Venezuela, ARPU decreased 11.4% to $41.23 and
revenues increased 2% to $782 million compared to the first quarter
of 2013.
First quarter subscriber net additions of 252,000 were lower
than the prior year period due to a decline in gross additions and
the impact of a higher number of subscriber disconnections
associated with the larger subscriber base. Gross additions
decreased principally due to lower imports of set-top boxes for new
customers in Venezuela, as well as lower subscriber additions in
Argentina and Colombia associated with additional sales filters and
more challenging economic and competitive conditions. Average
monthly total subscriber churn rates remained relatively unchanged
in the quarter.
Also in the first quarter, adjusted OPBDA and adjusted OPBDA
margin in the PanAmericana and Other segment decreased to $229
million and 29.3%, respectively. The declines were primarily due to
the impact of inflation and the timing of price increases in
Venezuela, as well as the settlement of a performance rights fee
dispute in Argentina. In addition, adjusted operating profit
decreased to $107 million and adjusted operating profit margin
declined to 13.7% due to the impact of higher depreciation and
amortization resulting from increased leased equipment and
infrastructure capital expenditures. Reported OPBDA and reported
operating profit decreased to losses of $52 million and $174
million, respectively.
CONFERENCE CALL INFORMATION
A live webcast of DIRECTV’s first quarter 2014 earnings call
will be available on the company’s website at investor.directv.com.
The webcast will begin at 2:00 p.m. ET, today May 6, 2014.
Access to the earnings call is also available in the United States
by dialing 888-601-3869 and internationally by dialing
913-312-1487. The conference ID number is 7987201. A replay of the
call can be accessed by dialing 888-203-1112 in the U.S. and
719-457-0820 internationally. The replay pass code is 7987201. The
replay will be available from 3:00 p.m. PT Tuesday, May 6,
through 3:00 p.m. PT Tuesday, May 13, and will also be
archived on our website at investor.directv.com.
FOOTNOTES
(1) Operating profit before depreciation and amortization, which
is a financial measure that is not determined in accordance with
accounting principles generally accepted in the United States of
America, or GAAP, should be used in conjunction with other GAAP
financial measures and is not presented as an alternative measure
of operating results, as determined in accordance with GAAP. Please
see DIRECTV’s Annual Report on Form 10-K for the year ended
December 31, 2013 for further discussion of operating profit
before depreciation and amortization. Operating profit before
depreciation and amortization margin is calculated by dividing
operating profit before depreciation and amortization by total
revenues.
(2) Cash flow before interest and taxes, which is a financial
measure that is not determined in accordance with GAAP, is
calculated by deducting amounts under the captions “Cash paid for
property and equipment,” “Cash paid for satellites,” “Cash paid for
subscriber leased equipment - subscriber acquisitions” and “Cash
paid for subscriber leased equipment - upgrade and retention” from
“Net cash provided by operating activities” from the Consolidated
Statements of Cash Flows and adding back net interest paid and
“Cash paid for income taxes.” This financial measure should be used
in conjunction with other GAAP financial measures and is not
presented as an alternative measure of cash flows from operating
activities, as determined in accordance with GAAP. DIRECTV
management uses cash flow before interest and taxes to evaluate the
cash generated by our current subscriber base, net of capital
expenditures, and excluding the impact of interest and taxes, for
the purpose of allocating resources to activities such as adding
new subscribers, retaining and upgrading existing subscribers, for
additional capital expenditures and as a measure of performance for
incentive compensation purposes. We believe this measure is useful
to investors, along with other GAAP measures (such as cash flows
from operating and investing activities), to compare our operating
performance to other communications, entertainment and media
companies. We believe that investors also use current and projected
cash flow before interest and taxes to determine the ability of our
current and projected subscriber base to fund required and
discretionary spending and to help determine the financial value of
the company.
(3) Free cash flow, which is a financial measure that is not
determined in accordance with GAAP, is calculated by deducting
amounts under the captions “Cash paid for property and equipment,”
“Cash paid for satellites,” “Cash paid for subscriber leased
equipment - subscriber acquisitions,” and “Cash paid for subscriber
leased equipment - upgrade and retention” from “Net cash provided
by operating activities” from the Consolidated Statements of Cash
Flows. This financial measure should be used in conjunction with
other GAAP financial measures and is not presented as an
alternative measure of cash flows from operating activities, as
determined in accordance with GAAP. DIRECTV management uses free
cash flow to evaluate the cash generated by our current subscriber
base, net of capital expenditures, for the purpose of allocating
resources to activities such as adding new subscribers, retaining
and upgrading existing subscribers, for additional capital
expenditures and as a measure of performance for incentive
compensation purposes. We believe this measure is useful to
investors, along with other GAAP measures (such as cash flows from
operating and investing activities), to compare our operating
performance to other communications, entertainment and media
companies. We believe that investors also use current and projected
free cash flow to determine the ability of our current and
projected subscriber base to fund required and discretionary
spending and to help determine the financial value of the
company.
(4) DIRECTV Latin America subscriber data exclude subscribers of
the Sky Mexico service. In addition, DTVLA gross and net additions
exclude 1,000 video subscribers acquired in transactions in Brazil
during the three months ended March 31, 2013. DTVLA cumulative
subscriber counts include these acquired customers.
(5) Based on the results of an internal investigation, DTVLA
determined that, beginning in 2012, certain employees of Sky Brasil
directed activities which were inconsistent with Sky Brasil’s
authorized policies for subscriber retention and churn management.
These activities had the effect of artificially reducing churn and
increasing the Sky Brasil subscriber base during portions of 2012
and the first quarter of 2013. See DIRECTV’s Current Report on Form
8-K filed with the SEC on June 27, 2013 for further details. Prior
year results for subscribers, churn and ARPU have not been adjusted
for the findings of this investigation.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
NOTE: This presentation may include or incorporate by reference
certain statements that we believe are, or may be considered to be,
“forward-looking statements” within the meaning of various
provisions of the Securities Act of 1933 and the Securities
Exchange Act of 1934. These forward-looking statements generally
can be identified by use of statements that include phrases such as
“believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,”
“project” or other similar words or phrases. Similarly, statements
that describe our objectives, plans or goals also are
forward-looking statements. All of these forward-looking statements
are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or from
those expressed or implied by the relevant forward-looking
statement. Such risks and uncertainties include, but are not
limited to: increased competition; increasing programming costs and
our ability to renew programming contracts under favorable terms;
increased subscriber churn or subscriber upgrade and retention
costs; potential material increase in subscriber acquisition costs;
general economic conditions; risks associated with doing business
internationally, which for DIRECTV Latin America include political
and economic instability and foreign currency exchange rate
volatility and controls; pace of technological development;
potential intellectual property infringement; loss of key
personnel; satellite construction or launch delays; satellite
launch and operational risks; loss of a satellite; theft of
satellite programming signals; U.S. and foreign governmental and
regulatory action; ability to maintain licenses and regulatory
approvals; significant debt; indemnification obligations; reliance
on network and information systems; and the outcome of legal
proceedings. We may face other risks described from time to time in
periodic reports filed by us with the U.S. Securities and Exchange
Commission.
DIRECTV (NASDAQ:DTV) is one of the world’s leading providers of
digital television entertainment services. Through its subsidiaries
and affiliated companies in the United States, Brazil, Mexico and
other countries in Latin America, DIRECTV provides digital
television service to over 20 million customers in the United
States and over 18 million customers in Latin America. DIRECTV
sports and entertainment properties include two regional sports
networks (Rocky Mountain and Pittsburgh) and minority ownership
interests in Root Sports Northwest and Game Show Network. For more
information on DIRECTV, visit directv.com.
DIRECTV CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)
(Unaudited) Three Months Ended March
31, 2014 2013 Revenues $
7,855 $ 7,580
Operating costs and
expenses Costs of revenues, exclusive of depreciation
and amortization expense Broadcast programming and other 3,383
3,196 Subscriber service expenses 551 537 Broadcast operations
expenses 97 110 Selling, general and administrative expenses,
exclusive of depreciation and amortization expense Subscriber
acquisition costs 827 814 Upgrade and retention costs 321 368
General and administrative expenses 454 469 Venezuelan currency
devaluation charge 281 166 Depreciation and amortization expense
714 678
Total
operating costs and expenses 6,628
6,338
Operating profit 1,227 1,242 Interest
income 13 22 Interest expense (232 ) (217 ) Other, net
57 38
Income before income
taxes 1,065 1,085 Income tax expense (496 )
(387 ) Net income 569 698 Less: Net income
attributable to noncontrolling interest (8 )
(8 )
Net income attributable to DIRECTV $ 561
$ 690
Basic earnings attributable to
DIRECTV per common share $ 1.10 $ 1.21
Diluted earnings
attributable to DIRECTV per common share $ 1.09 $ 1.20 Weighted
average number of common shares outstanding (in millions): Basic
511 572 Diluted 515 577
DIRECTV
CONSOLIDATED BALANCE SHEETS (Dollars in Millions)
(Unaudited) ASSETS
March 31, 2014
December 31, 2013
Current assets Cash and cash equivalents $
3,014 $ 2,180 Accounts receivable, net of allowances of $104 and
$95 2,483 2,547 Inventories 319 283 Deferred income taxes 146 140
Prepaid expenses and other 487
803
Total current assets 6,449 5,953
Satellites,
net 2,468 2,467
Property and equipment, net 6,737 6,650
Goodwill 3,982 3,970
Intangible assets, net 911 920
Investments and other assets 1,973
1,945
Total assets $ 22,520
$ 21,905
LIABILITIES AND STOCKHOLDERS'
DEFICIT Current liabilities
Accounts payable and accrued liabilities $ 4,286 $ 4,685 Unearned
subscriber revenues and deferred credits 632 589 Current debt
2,460 1,256
Total
current liabilities 7,378 6,530
Long-term debt 18,338
18,284
Deferred income taxes 1,838 1,804
Other
liabilities and deferred credits 1,478 1,456
Commitments and
contingencies Redeemable noncontrolling interest — 375
Total stockholders' deficit (6,512 )
(6,544 )
Total liabilities and stockholders' deficit
$ 22,520 $ 21,905
DIRECTV CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions) (Unaudited)
Three Months Ended March 31,
2014 2013 Cash Flows From Operating
Activities Net income $ 569 $ 698 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 714 678 Venezuelan currency
devaluation charge 281 166 Amortization of deferred revenues and
deferred credits (12 ) (13 ) Share-based compensation expense 20 34
Equity in earnings from unconsolidated affiliates (44 ) (32 ) Net
foreign currency transaction gain (6 ) (6 ) Net gains from sale of
investments (2 ) (7 ) Deferred income taxes 84 95 Excess tax
benefit from share-based compensation (22 ) (24 ) Other 15 5 Change
in other operating assets and liabilities: Accounts receivable 98
51 Inventories (36 ) (10 ) Prepaid expenses and other 303 43
Accounts payable and accrued liabilities (397 ) (167 ) Unearned
subscriber revenue and deferred credits 43 41 Other, net
(18 ) (16 ) Net cash provided by operating
activities 1,590 1,536
Cash Flows From Investing Activities Cash paid for property
and equipment (650 ) (748 ) Cash paid for satellites (54 ) (78 )
Investment in companies, net of cash acquired (4 ) (3 ) Proceeds
from sale of investments 4 16 Other, net (3 )
(5 ) Net cash used in investing activities
(707 ) (818 )
DIRECTV
CONSOLIDATED STATEMENTS OF CASH FLOWS-(continued)
(Dollars in Millions) (Unaudited)
Three Months Ended March 31,
2014 2013 Cash Flows From Financing
Activities Issuance of commercial paper (maturity 90
days or less), net 105 190 Proceeds from short-term borrowings 90
84 Repayment of short-term borrowings (200 ) (153 ) Proceeds from
long-term debt 1,260 792 Debt issuance costs (6 ) (4 ) Repayment of
long-term debt (11 ) — Repayment of other long-term obligations (15
) (18 ) Common shares repurchased and retired (895 ) (1,378 )
Prepayment of accelerated share repurchase — (230 ) Taxes paid in
lieu of shares issued for share-based compensation (57 ) (61 )
Excess tax benefit from share-based compensation 22 24 Other, net
(26 ) — Net cash provided by
(used in) in financing activities 267
(754 ) Effect of exchange rate changes on Venezuelan cash
and cash equivalents (316 ) (187 ) Net
increase (decrease) in cash and cash equivalents 834 (223 ) Cash
and cash equivalents at beginning of the period 2,180
1,902 Cash and cash equivalents at end
of the period $ 3,014 $ 1,679
Supplemental Cash Flow Information Cash paid for interest $
328 $ 325 Cash paid for income taxes 84 94
DIRECTV SELECTED SEGMENT DATA (Dollars in
Millions) (Unaudited) Three Months
Ended March 31, 2014
2013 DIRECTV U.S. Revenues $ 6,087 $ 5,790
Operating profit before depreciation and amortization (1) 1,669
1,521 Operating profit before depreciation and amortization margin
(1) 27.4 % 26.3 % Operating profit $ 1,243 $ 1,115 Operating profit
margin 20.4 % 19.3 % Depreciation and amortization $ 426
$ 406
SKY BRASIL Revenues $ 939
$ 965 Operating profit before depreciation and amortization (1) 311
311 Operating profit before depreciation and amortization margin
(1) 33.1 % 32.2 % Operating profit $ 148 $ 154 Operating profit
margin 15.8 % 16.0 % Depreciation and amortization $ 163
$ 157
PANAMERICANA AND OTHER
Revenues $ 782 $ 763 Operating profit (loss) before depreciation
and amortization (1) (52 ) 69 Operating profit before depreciation
and amortization margin (1) NM* 9.0 % Operating loss $ (174 ) $ (37
) Depreciation and amortization $ 122 $ 106
SPORTS NETWORKS, ELIMINATIONS AND OTHER
Revenues $ 47 $ 62 Operating profit before depreciation and
amortization (1) 13 19 Operating profit 10 10 Depreciation and
amortization 3 9
TOTAL Revenues $ 7,855 $ 7,580 Operating profit before
depreciation and amortization (1) 1,941 1,920 Operating profit
before depreciation and amortization margin (1) 24.7 % 25.3 %
Operating profit $ 1,227 $ 1,242 Operating profit margin 15.6 %
16.4 % Depreciation and amortization $ 714 $
678 * Percentage not meaningful (1) See footnote 1
above
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in
Millions) (Unaudited) Three Months
Ended March 31, 2014 2013
Revenues $ 6,087 $ 5,790
Operating costs and expenses Costs of revenues,
exclusive of depreciation and amortization expense Broadcast
programming and other 2,768 2,601 Subscriber service expenses 359
351 Broadcast operations expenses 72 81 Selling, general and
administrative expenses, exclusive of depreciation and amortization
expense Subscriber acquisition costs 648 629 Upgrade and retention
costs 281 319 General and administrative expenses 290 288
Depreciation and amortization expense 426
406
Total operating costs and expenses
4,844 4,675
Operating
profit 1,243 1,115 Interest income 1 — Interest expense (223 )
(202 ) Other, net 5 12
Income before income taxes 1,026 925 Income tax expense
(381 ) (335 )
Net income
$ 645 $ 590
DIRECTV HOLDINGS
LLC (DIRECTV U.S.) CONSOLIDATED BALANCE SHEETS
(Dollars in Millions) (Unaudited)
ASSETS March 31, 2014 December 31,
2013 Current assets Cash and cash
equivalents $ 1,767 $ 797 Accounts receivable, net of allowances of
$61 and $59 2,037 2,103 Inventories 283 249 Prepaid expenses and
other 213 494
Total
current assets 4,300 3,643
Satellites, net 1,782 1,810
Property and equipment, net 3,724 3,724
Goodwill
3,191 3,191
Intangible assets, net 521 527
Other
assets 533 551
Total assets $ 14,051 $ 13,446
LIABILITIES AND OWNER'S DEFICIT
Current liabilities Accounts payable and accrued liabilities
$ 3,333 $ 3,695 Unearned subscriber revenues and deferred credits
413 380 Current debt 2,395 1,200
Total current liabilities 6,141 5,275
Long-term
debt 18,263 18,203
Deferred income taxes 1,624 1,641
Other liabilities and deferred credits 627 595
Commitments and contingencies Owner's deficit
(12,604 ) (12,268 )
Total liabilities and
owner's deficit $ 14,051 $ 13,446
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
Millions) (Unaudited) Three Months
Ended March 31, 2014
2013 Cash Flows From Operating Activities Net
income $ 645 $ 590 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
expense 426 406 Amortization of deferred revenues and deferred
credits (12 ) (13 ) Share-based compensation expense 15 25 Deferred
income taxes 29 45 Excess tax benefit from share-based compensation
(18 ) (20 ) Other 2 (8 ) Change in other operating assets and
liabilities: Accounts receivable 111 103 Inventories (34 ) 1
Prepaid expenses and other 279 71 Accounts payable and accrued
liabilities (360 ) (134 ) Unearned subscriber revenue and deferred
credits 33 43 Other, net 13 22
Net cash provided by operating activities
1,129 1,131
Cash Flows From
Investing Activities Cash paid for property and equipment (144
) (111 ) Cash paid for subscriber leased equipment - subscriber
acquisitions (117 ) (174 ) Cash paid for subscriber leased
equipment - upgrade and retention (110 ) (111 ) Cash paid for
satellites (11 ) (53 ) Investment in companies, net of cash
acquired (1 ) — Proceeds from sale of investments 4 12 Other, net
— 2 Net cash used in
investing activities (379 ) (435 )
Cash Flows From Financing Activities Issuance of commercial
paper (maturity 90 days or less), net 105 190 Proceeds from
short-term borrowings 90 84 Repayment of short-term borrowings (200
) (153 ) Proceeds from issuance of long-term debt 1,245 743 Debt
issuance costs (6 ) (4 ) Repayment of other long-term obligations
(6 ) (6 ) Cash dividends paid to Parent (1,000 ) (1,950 ) Excess
tax benefit from share-based compensation 18 20 Other, net
(26 ) — Net cash provided by (used in)
financing activities 220 (1,076
) Net increase (decrease) in cash and cash equivalents 970 (380 )
Cash and cash equivalents at beginning of the period
797 739 Cash and cash equivalents at
end of the period $ 1,767 $ 359
Supplemental Cash Flow Information Cash paid for interest $
320 $ 310 Cash paid for income taxes 1 —
DIRECTV
Consolidated Non-GAAP Financial Measure Reconciliation
Schedules (Dollars in Millions) (Unaudited)
DIRECTV Reconciliation of Cash Flow Before
Interest and Taxes2 and Free Cash Flow3
to
Net Cash Provided by Operating
Activities
Three Months Ended March 31, 2014
2013 Cash Flow Before Interest and Taxes $ 1,285 $
1,107 Adjustments: Cash paid for interest (328 ) (325 ) Interest
income 13 22 Income taxes paid (84 )
(94 ) Subtotal - Free Cash Flow 886 710 Add Cash Paid For: Property
and equipment 650 748 Satellites 54 78
Net Cash Provided by Operating Activities $ 1,590
$ 1,536 (2) and (3) - See footnotes above
Reconciliation of Reported Operating Profit Before
Depreciation and Amortization to Operating Profit*
Three Months Ended March 31, 2014
2013 Operating profit before depreciation and amortization $
1,941 $ 1,920 Subtract: Depreciation and amortization 714
678 Operating profit $ 1,227 $ 1,242 *
For a reconciliation of this non-GAAP financial measure for each of
our segments, please see the Notes to the Consolidated Financial
Statements which will be included in DIRECTV's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2014, which is expected
to be filed with the SEC in May 2014.
DIRECTV
Consolidated Non-GAAP Financial Measure Reconciliation
Schedules (Dollars in Millions, Except Per Share
Amounts) (Unaudited) DIRECTV
Reconciliation of Adjusted Operating Profit Before Depreciation
and Amortization (excluding the Venezuelan currency devaluation
charge) to Operating Profit Three Months Ended
March 31, 2014 2013 Revenues $ 7,855 $
7,580 Operating profit before depreciation and amortization
excluding the Venezuelan currency devaluation charge $ 2,222 $
2,086 OPBDA growth excluding Venezuelan currency devaluation charge
6.5 % Subtract: Venezuelan currency devaluation charge 281
166 Operating profit before
depreciation and amortization 1,941 1,920 Subtract: Depreciation
and amortization 714 678
Operating profit $ 1,227 $ 1,242 Operating
profit before depreciation and amortization margin excluding the
Venezuelan currency devaluation charge 28.3 %
27.5 %
Reconciliation of Adjusted Operating
Profit (excluding the Venezuelan currency devaluation charge) to
Operating Profit Three Months Ended March
31, 2014 2013 Revenues $ 7,855 $ 7,580
Operating profit excluding the Venezuelan currency
devaluation charge $ 1,508 $ 1,408 Operating profit growth
excluding Venezuelan currency devaluation charge 7.1 % Subtract:
Venezuelan currency devaluation charge 281
166 Operating profit $ 1,227 $ 1,242
Operating profit margin excluding the Venezuelan currency
devaluation charge 19.2 % 18.6 %
Reconciliation of Adjusted Net Income (excluding the
Venezuelan currency devaluation charge) to Net Income
Three Months Ended March 31, 2014
2013 Net income attributable to DIRECTV excluding the
Venezuelan currency devaluation charge $ 842 $ 826 Subtract:
Venezuelan after-tax currency devaluation charge 281
136 Net income attributable to DIRECTV $ 561
$ 690 Net Income growth excluding Venezuelan currency
devaluation charge 1.9 % Diluted Weighted Average Shares 515 577
Adjusted Diluted Earnings Per Common Share $ 1.63 $ 1.43 Adjusted
Diluted Earnings Per Common Share growth excluding Venezuelan
currency devaluation charge 14.0 %
DIRECTV Latin America Non-GAAP Financial Measure
Reconciliation Schedules (Dollars in Millions)
(Unaudited) DIRECTV Latin America
Reconciliation of Cash Flow Before Interest and
Taxes2 to
Net Cash Provided by Operating
Activities
Three Months Ended March 31, 2014
2013 Cash Flow Before Interest and Taxes $ 204 $ 102
Adjustments: Cash paid for interest (13 ) (17 ) Interest income 13
15 Income taxes paid (89 ) (90 ) Add Cash Paid For: Property and
equipment 56 41 Subscriber leased equipment - subscriber
acquisitions 128 195 Subscriber leased equipment - upgrade and
retention 96 116 Satellites 38 22
Net Cash Provided by Operating Activities $ 433
$ 384 (2) and (3) - See footnotes above
Reconciliation of Adjusted Operating Profit Before Depreciation
and Amortization (excluding the Venezuelan currency devaluation
charge) to Operating Profit Three Months Ended March
31, 2014 2013 Revenues $ 1,721 $ 1,728
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge $ 540 $ 546 OPBDA growth
excluding Venezuelan currency devaluation charge (1.1 )% Subtract:
Venezuelan currency devaluation charge 281
166 Operating profit before depreciation and
amortization 259 380 Subtract: Depreciation and amortization
285 263 Operating profit (loss) $ (26 )
$ 117 Operating profit before depreciation and
amortization margin excluding the Venezuelan currency devaluation
charge 31.4 % 31.6 %
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge) to Operating Profit
Three Months Ended March 31, 2014
2013 Revenues $ 1,721 $ 1,728 Operating profit
excluding the Venezuelan currency devaluation charge $ 255 $ 283
Operating Profit growth excluding Venezuelan currency devaluation
charge (9.9 )% Subtract: Venezuelan currency devaluation charge
281 166 Operating profit (loss)
$ (26 ) $ 117 Operating profit margin excluding the
Venezuelan currency devaluation charge 14.8 %
16.4 %
PanAmericana and Other Segment
Non-GAAP Financial Measure Reconciliation Schedules (Dollars
in Millions) (Unaudited) PanAmericana
and Other Segment Reconciliation of Adjusted Operating
Profit Before Depreciation and Amortization (excluding the
Venezuelan currency devaluation charge) to Operating Profit
Three Months Ended March 31, 2014
2013 Revenues $ 782 $ 763 Operating profit
before depreciation and amortization excluding the Venezuelan
currency devaluation charge $ 229 $ 235 OPBDA growth excluding
Venezuelan currency devaluation charge (2.6 )% Subtract: Venezuelan
currency devaluation charge 281 166
Operating profit (loss) before depreciation and amortization
(52 ) 69 Subtract: Depreciation and amortization 122
106 Operating loss $ (174 ) $ (37 )
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge
29.3 % 30.8 %
Reconciliation of
Adjusted Operating Profit (excluding the Venezuelan currency
devaluation charge) to Operating Profit Three Months
Ended March 31, 2014 2013 Revenues
$ 782 $ 763 Operating profit excluding the Venezuelan
currency devaluation charge $ 107 $ 129 Operating Profit growth
excluding Venezuelan currency devaluation charge (17.1 )% Subtract:
Venezuelan currency devaluation charge 281
166 Operating loss $ (174 ) $ (37 ) Operating
profit margin excluding the Venezuelan currency devaluation charge
13.7 % 16.9 %
DIRECTV U.S.
Non-GAAP Financial Measure Reconciliation Schedules (Dollars
in Millions) (Unaudited) DIRECTV HOLDINGS LLC
(DIRECTV U.S.) Reconciliation of Pre-SAC Margin*
to Operating Profit Three Months Ended
March 31, 2014 2013 Operating profit $
1,243 $ 1,115 Adjustments: Subscriber acquisition costs (expensed)
648 629 Depreciation and amortization 426 406 Cash paid for
subscriber leased equipment - upgrade and retention (110 )
(111 ) Pre-SAC Margin $ 2,207 $ 2,039
Pre-SAC Margin as a percentage of revenue 36.3
% 35.2 %
Reconciliation of Cash Flow Before
Interest and Taxes2 to
Net Cash Provided by Operating
Activities
Three Months Ended March 31, 2014 2013
Cash Flow Before Interest and Taxes $ 1,067 $ 992 Adjustments: Cash
paid for interest (320 ) (310 ) Interest income 1 — Income taxes
paid (1 ) — Add Cash Paid For: Property and equipment 144 111
Subscriber leased equipment - subscriber acquisitions 117 174
Subscriber leased equipment - upgrade and retention 110 111
Satellites 11 53 Net Cash
Provided by Operating Activities $ 1,129 $ 1,131
(2) and (3) - See footnotes above
* Pre-SAC Margin, which is a financial
measure that is not determined in accordance with accounting
principles generally accepted in the United States of America, or
GAAP, is calculated for DIRECTV U.S. by adding amounts under the
captions “Subscriber acquisition costs” and “Depreciation and
amortization expense” to “Operating Profit” from the Consolidated
Statements of Operations and subtracting “Cash paid for subscriber
leased equipment - upgrade and retention” from the Consolidated
Statements of Cash Flows. This financial measure should be used in
conjunction with GAAP financial measures and is not presented as an
alternative measure of operating results, as determined in
accordance with GAAP. DIRECTV management use Pre-SAC Margin to
evaluate the profitability of DIRECTV U.S.' current subscriber base
for the purpose of allocating resources to discretionary activities
such as adding new subscribers, upgrading and retaining existing
subscribers and for capital expenditures. To compensate for the
exclusion of “Subscriber acquisition costs,” management also uses
operating profit and operating profit before depreciation and
amortization expense to measure profitability.
DIRECTV believes this measure is useful to investors, along
with GAAP measures (such as revenues, operating profit and net
income), to compare DIRECTV U.S.’ operating performance to other
communications, entertainment and media companies. DIRECTV believes
that investors also use current and projected Pre-SAC Margin to
determine the ability of DIRECTV U.S.’ current and projected
subscriber base to fund discretionary spending and to determine the
financial returns for subscriber additions.
DIRECTV U.S. Non-GAAP Financial Measure SAC Calculations
(Dollars in Millions, Except Per Subscriber Amounts)
(Unaudited) DIRECTV HOLDINGS LLC (DIRECTV
U.S.) SAC Calculation Three Months Ended
March 31, 2014 2013 Subscriber
acquisition costs (expensed) $ 648 $ 629 Cash paid for subscriber
leased equipment - subscriber acquisitions 117
174 Total acquisition costs $ 765 $ 803 Gross subscriber
additions (000's) 891 893 Average subscriber acquisition costs -
per subscriber (SAC) $ 859 $ 899
DIRECTVMedia Contact:Darris Gringeri, 212-205-0882orInvestor
Relations: 310-964-0808
DTE Energy (NYSE:DTV)
Historical Stock Chart
From Jun 2024 to Jul 2024
DTE Energy (NYSE:DTV)
Historical Stock Chart
From Jul 2023 to Jul 2024
