NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Description of Business
DIRECTV, which we also refer to as the Company, we, or us, is a leading provider of digital television entertainment in the United
States and Latin America. We operate two direct-to-home, or DTH, business units: DIRECTV U.S. and DIRECTV Latin America, which are differentiated by their geographic locations and are engaged in
acquiring, promoting, selling and distributing digital entertainment programming primarily via satellite to residential and commercial subscribers. In addition, we own and operate two regional sports
networks, hold a minority ownership interest in ROOT SPORTS Northwest and own a 42% interest in Game Show Network LLC, or GSN, a television network dedicated to game-related
programming and Internet interactive game playing. We account for our investment in ROOT SPORTS Northwest and GSN using the equity method of accounting.
-
-
DIRECTV U.S.
DIRECTV Holdings LLC and its subsidiaries, which we refer to as DIRECTV U.S., is the largest provider of DTH digital television services and the second largest provider in the
multi-channel video programming distribution industry in the United States.
-
-
DIRECTV Latin
America.
DIRECTV Latin America Holdings Inc. and its subsidiaries, or DIRECTV Latin America, is a leading provider of DTH digital
television services throughout Latin America. DIRECTV Latin America is comprised of: PanAmericana, which provides services in Argentina, Chile, Colombia, Ecuador, Peru, Puerto Rico, Venezuela and
certain other countries in the region, and Sky Brasil Servicos Ltda., or Sky Brasil, which is a 93% owned subsidiary. DIRECTV Latin America also includes our 41% equity method investment in
Innova, S. de R.L. de C.V., or Sky Mexico, which we include in the PanAmericana segment.
-
-
DIRECTV Sports
Networks.
DIRECTV Sports Networks LLC and its subsidiaries, or DSN, is comprised primarily of two wholly owned regional sports
networks based in Denver, Colorado and Pittsburgh, Pennsylvania, and a regional sports network based in Seattle, Washington in which DSN retains a noncontrolling interest, each of which operates under
the brand name ROOT SPORTS. As further discussed in Note 4 below, on April 16, 2013, DSN transferred 100% of its interest in the regional sports network based in Seattle,
Washington, or DSN Northwest, to NW Sports Net LLC. The Seattle Mariners have a majority interest in NW Sports Net LLC and DSN retains a noncontrolling interest, which we account for
using the equity method of accounting. The operating results of DSN are reported as part of the "Sports Networks, Eliminations and Other" reporting segment.
Note 2: Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
We present our accompanying financial statements on a consolidated basis and include our accounts and those of our domestic and foreign
subsidiaries that we control through equity ownership or for which we are deemed to be the primary beneficiary, after elimination of intercompany accounts and transactions.
Use of Estimates in the Preparation of the Consolidated Financial Statements
We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America, which requires us to make estimates and assumptions that affect amounts reported herein. We base our estimates and assumptions on historical experience and on various other factors that we
believe to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, our actual results reported in future periods may be affected by changes in those
estimates.
Revenue Recognition
We enter into multiple deliverable revenue arrangements with our subscribers under which we provide DIRECTV receiving equipment,
services and programming during their contract period, of up to two years. We allocate consideration to each deliverable in the arrangement based on its
relative selling price. We determine the selling price of the DIRECTV receiving equipment using our best estimate. We determine the selling price for services based on prices charged by third parties.
We determine the selling price of the programming using our standard programming rates. The DIRECTV receiving equipment, services and programming are each considered separate units of accounting.
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
We
recognize subscription and pay-per-view revenues when programming is broadcast to subscribers. We recognize subscriber fees for multiple set-top receivers and warranty services as
revenue, as earned. We recognize advertising revenues when the related services are performed. We defer programming payments received from subscribers in advance of the broadcast as "Unearned
subscriber revenues and deferred credits" in the Consolidated Balance Sheets until earned. We recognize revenues to be received under contractual commitments on a straight line basis over the minimum
contractual period. We report revenues net of customer credits and discounted promotions.
Broadcast Programming and Other
We recognize the costs of television programming distribution rights when we distribute the related programming. We recognize the costs
of television programming rights to distribute live sporting events for a season or tournament to expense using the straight-line method over the course of the season or tournament.
We
defer advance payments in the form of cash and equity instruments from programming content providers for carriage of their signal and recognize them as a reduction of "Broadcast
programming and other" in the Consolidated Statements of Operations on a straight-line basis over the related contract term. We record equity instruments at fair value based on quoted market prices or
values determined by management.
Subscriber Acquisition Costs
Subscriber acquisition costs consist of costs we incur to acquire new subscribers. We include the cost of set-top receivers and other
equipment, commissions we pay to national retailers, independent satellite television retailers, dealers and regional telephone companies, which we refer to as telcos, and the cost of installation,
advertising, marketing and customer call center expenses associated with the acquisition of new subscribers in subscriber acquisition costs. We expense these costs as incurred, or when subscribers
activate the DIRECTV® service, as appropriate, except for the cost of set-top receivers leased to new subscribers, which we capitalize in "Property and equipment, net" in the Consolidated
Balance Sheets and depreciate over their estimated useful lives. In certain countries in Latin America, where our customer agreements provide for the lease of the entire DIRECTV or SKY System, we also
capitalize the costs of the other customer premises equipment and related installation costs in "Property and equipment, net" in the Consolidated Balance Sheets. Although paid in advance, the retailer
or dealer earns substantially all commissions paid for customer acquisitions over 12 months from the date of subscriber activation. Should the subscriber cancel our service during such
12 month service period, we are reimbursed for the unearned portion of the commission by the retailer or dealer and record a decrease to subscriber acquisition costs. We include the amount of
our set-top receivers capitalized each period for subscriber acquisition activities in the Consolidated Statements of Cash Flows under the caption "Cash paid for property and equipment." See
Note 6 for additional information.
Upgrade and Retention Costs
Upgrade and retention costs consist primarily of costs we incur for upgrade efforts for existing subscribers. We include the costs of
subscriber equipment upgrade programs for digital video recorder, or DVR, high-definition, or HD, and HD DVR receivers and local channels, our multiple set-top receiver offers and other similar
initiatives. Retention costs also include the costs of installing and providing hardware under our movers program for subscribers relocating to a new residence. We expense these costs as incurred,
except for the cost of set-top receivers leased to existing subscribers, which we capitalize in "Property and equipment, net" in the Consolidated Balance Sheets. We include the amount of our set-top
receivers capitalized each period for upgrade and retention activities in the Consolidated Statements of Cash Flows under the caption "Cash paid for property and equipment." See Note 6 for
additional information.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on deposit and highly liquid investments we purchase with original maturities of three months
or less.
Inventories
We state inventories at the lower of average cost or market. Inventories consist of finished goods for DIRECTV System equipment and
DIRECTV System access cards.
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Property and Equipment, Satellites and Depreciation
We carry property and equipment, and satellites, at cost, net of accumulated depreciation. The amounts we capitalize for satellites
currently being constructed and those that have been successfully launched include the costs of construction, launch, launch insurance, incentive obligations and capitalized interest. We generally
compute depreciation using the straight-line method over the estimated useful lives of the assets. We amortize leasehold improvements over the lesser of the life of the asset or term of the lease.
Capitalized Software Costs
We capitalize certain software costs incurred, either from internal or external sources, as part of "Property and equipment, net" in
the Consolidated Balance Sheets and depreciate these costs on a straight-line basis over the estimated useful life of the software. We recognize planning, training, support and maintenance costs
incurred either prior to or following the implementation phase as expense in the Consolidated Statements of Operations in the period in which they occur. We had unamortized capitalized software costs
of $771 million as of December 31, 2013 and $492 million as of December 31, 2012. We recorded depreciation expense of $331 million in 2013, $292 million in
2012 and $234 million in 2011 in "Depreciation and amortization expense" in the Consolidated Statements of Operations.
Goodwill and Intangible Assets
Goodwill and intangible assets with indefinite lives are carried at historical cost and are subject to write-down, as needed, based
upon an impairment analysis that we must perform at least annually, or sooner if an event occurs or circumstances change that would more likely than not result in an impairment loss. We perform our
annual impairment analysis in the fourth quarter of each year. We use estimates of fair value to determine the amount of impairment, if any, of goodwill and intangible assets with indefinite lives.
The goodwill evaluation requires the estimation of the fair value of reporting units where we record goodwill. We determine fair values primarily using estimated cash flows discounted at a rate
commensurate with the risk involved, when appropriate. If an impairment loss results from the annual impairment test, we would record the loss as a pre-tax charge to operating income.
We
amortize other intangible assets using the straight-line method over their estimated useful lives, which range from 4 to 20 years.
Valuation of Long-Lived Assets
We evaluate the carrying value of long-lived assets to be held and used, other than goodwill and intangible assets with indefinite
lives, when events and circumstances warrant such a review. We consider the carrying value of a long-lived asset impaired when the anticipated undiscounted future cash flow from such asset is
separately identifiable and is less than its carrying value. In that event, we would recognize a loss based on the amount by which the carrying value exceeds the fair value of the long-lived asset. We
determine fair value primarily using estimated future cash flows associated with the asset under review, discounted at a rate commensurate with the risk involved, or other valuation techniques. We
determine losses on long-lived assets to be disposed of in a similar manner, except that we reduce the fair value for the cost of disposal.
Foreign Currency
The U.S. dollar is the functional currency for most of our foreign operations. We recognize gains and losses resulting from
remeasurement of these operations' foreign currency denominated assets, liabilities and transactions into the U.S. dollar in the Consolidated Statements of Operations.
We
also have foreign operations where the local currency is their functional currency. Accordingly, these foreign entities translate assets and liabilities from their local currencies to
U.S. dollars using year-end exchange rates while income and expense accounts are translated at the average rates in effect during the year. We record the resulting translation adjustment as part of
"Accumulated other comprehensive loss," a separate component of stockholders' deficit in the Consolidated Balance Sheets.
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Investments
We maintain investments in equity securities of unaffiliated companies. We carry non-marketable equity securities at cost. We consider
marketable equity securities available-for-sale and they are carried at current fair value based on quoted market prices with unrealized gains or losses (excluding other-than-temporary losses), net of
taxes, reported as part of "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. We regularly review our investments to determine whether a decline in fair value below the cost
basis is "other-than-temporary." We consider, among other factors: the magnitude and duration of the decline; the financial health and business outlook of the investee, including industry and sector
performance, changes in technology, and operational and financing cash flow factors; and our intent and ability to hold the investment. If we judge the decline in fair value to be
other-than-temporary, we write-down the cost basis of the security to fair value and recognize the amount in the Consolidated Statements of Operations as part of "Other, net" and record it as a
reclassification adjustment from "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.
We
account for investments in which we own at least 20% of the voting securities or have significant influence under the equity method of accounting. We record equity method investments
at cost and adjust for the appropriate share of the net earnings or losses of the investee. We record investee losses up to the amount of the investment plus advances and loans made to the investee,
and financial guarantees made on behalf of the investee.
Derivative Financial Instruments
We have designated our cross-currency and interest rate swaps as cash flow hedges, and accordingly, we record the effective portion of
the unrealized gains and losses on the cross-currency swaps in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets and reclassify those amounts to earnings in the same periods
during which the hedged debt affects earnings. We record the ineffective portion of the unrealized gains and losses on these cross-currency swaps, if any, immediately in earnings. We do not offset
assets and liabilities related to our derivative financial instruments.
Debt Issuance Costs
We defer costs we incur to issue debt and amortize these costs to interest expense using the straight-line method over the term of the
respective obligation.
Share-Based Payment
We grant restricted stock units and common stock options to certain employees and shares of stock to our directors as part of their
annual compensation for Board services.
We
record compensation expense equal to the fair value of stock-based awards at the grant date on a straight-line basis over the requisite service period of up to three years, reduced
for estimated forfeitures and adjusted for anticipated payout percentages related to the achievement of performance targets.
Sales Taxes
Sales taxes collected and remitted to state and local authorities are recorded on a net basis.
Income Taxes
We determine deferred tax assets and liabilities based on the difference between the financial statement and tax basis of assets and
liabilities, using enacted tax rates in effect for the year in which we expect the differences to reverse. We must make certain estimates and judgments in determining income tax provisions, assessing
the likelihood of recovering our deferred tax assets, and evaluating tax positions.
We
recognize a benefit in "Income tax expense" in the Consolidated Statements of Operations for uncertain tax positions that are more-likely-than-not to be sustained upon examination,
measured at the largest amount that has a greater than 50% likelihood of being realized upon settlement. Unrecognized tax benefits represent tax benefits taken or expected to be taken in income tax
returns, for which the benefit has not yet been recognized in "Income tax expense" in the Consolidated Statements of Operations due to the uncertainty of whether such benefits will be ultimately
realized. We recognize interest and penalties accrued related to unrecognized tax benefits in "Income tax expense" in the Consolidated
71
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Statements
of Operations. Unrecognized tax benefits are recorded in "Income tax expense" in the Consolidated Statements of Operations at such time that the benefit is effectively settled.
Advertising Costs
We expense advertising costs primarily in "Subscriber acquisition costs" in the Consolidated Statements of Operations as incurred.
Advertising costs for print and media related to national advertising campaigns, net of payments received from programming content providers for marketing support, were $548 million in 2013,
$514 million in 2012 and $464 million in 2011.
Market Concentrations and Credit Risk
We sell programming services and extend credit, in amounts generally not exceeding $200 each, to a large number of individual
residential subscribers throughout the United States and most of Latin America. As applicable, we maintain allowances for anticipated losses.
Fair Value Measurement
We determine the fair value measurements of assets and liabilities based on the three level valuation hierarchy established for
classification of fair value measurements. The valuation hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to
the assumptions that market participants would use in pricing an asset or liability and may be observable or unobservable. The three level hierarchy of inputs is as follows:
Level 1:
Valuation is based on quoted market prices in active markets for identical assets or liabilities.
Level 2:
Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable, for substantially the full term of the asset or
liability.
Level 3:
Valuation is based upon other unobservable inputs that are not corroborated by market data.
The
carrying value of cash and cash equivalents, accounts receivable, investments and other assets, accounts payable, short-term borrowings and amounts included in accrued liabilities
and other meeting the definition of a financial instrument approximated their fair values at December 31, 2013 and 2012.
Note 3: Change in Accounting Estimate and New Accounting Standard
Change in Accounting Estimate
Depreciable Lives of Leased Set-Top Receivers.
We currently lease most set-top receivers provided to new and existing subscribers and
therefore
capitalize the cost of those set-top receivers. We depreciate capitalized set-top receivers over the estimated useful life of the equipment. As a result of the completion of an extensive evaluation of
the estimated useful life of the set-top receivers in the third quarter of 2011, including consideration of historical write-offs, improved efficiencies in our refurbishment program, improved set-top
receiver failure rates over time and management's judgment of the risk of technological obsolescence, we determined that the estimated useful life of certain HD set-top receivers used in our DIRECTV
U.S. business has increased to four years, from three years as previously estimated. We continue to depreciate standard-definition, or SD, set-top receivers at DIRECTV U.S. over a three-year estimated
useful life. We accounted for this change in the useful life of certain HD set-top receivers at DIRECTV U.S. as a change in an accounting estimate beginning July 1, 2011. This change had the
effect of reducing depreciation and amortization expense and increasing both net income attributable to DIRECTV and earnings per share in our consolidated results of operations as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions,
Except Per Share Amounts)
|
|
Depreciation and amortization expense
|
|
$
|
(59
|
)
|
$
|
(176
|
)
|
$
|
(141
|
)
|
Net income attributable to DIRECTV
|
|
|
37
|
|
|
109
|
|
|
86
|
|
Basic earnings attributable to DIRECTV per common share
|
|
$
|
0.07
|
|
$
|
0.17
|
|
$
|
0.12
|
|
Diluted earnings attributable to DIRECTV per common share
|
|
$
|
0.07
|
|
$
|
0.17
|
|
$
|
0.11
|
|
72
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
New Accounting Standard
Income Taxes.
In July 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-11, "Income Taxes (Topic 740),
Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" to eliminate diversity in practice. Under this ASU, an unrecognized tax
benefit, or a portion of an unrecognized tax benefit that exists at the reporting date, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward if certain criteria are met. This guidance is effective for fiscal years and interim periods within those years beginning after
December 15, 2013 with early adoption permitted. We do not believe the adoption of this ASU will have a material impact on our financial statements.
Note 4: Divestiture
DSN Northwest Transaction
On April 16, 2013, DSN transferred 100% of its interest in DSN Northwest to NW Sports Net LLC. Upon completion of the
transaction, the Seattle Mariners have a majority interest in NW Sports Net LLC and DSN retains a noncontrolling interest, which we account for using the equity method of accounting.
Additionally, DSN provides management oversight and programming services to NW Sports Net LLC as part of management service agreements entered into as part of this transaction. As a result of
this transaction, we deconsolidated DSN Northwest and recorded a non-cash, pre-tax charge of approximately $59 million ($56 million after tax) in "Other, net" in the Consolidated
Statements of Operations.
Note 5: Accounts Receivable, Net
The following table sets forth the amounts recorded for "Accounts receivable, net" in our Consolidated Balance Sheets as of
December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Subscriber
|
|
$
|
1,775
|
|
$
|
1,804
|
|
Telco
|
|
|
475
|
|
|
460
|
|
Trade and other
|
|
|
392
|
|
|
513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,642
|
|
|
2,777
|
|
Less: Allowance for doubtful accounts
|
|
|
(95
|
)
|
|
(81
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
$
|
2,547
|
|
$
|
2,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Note 6: Satellites, Net and Property and Equipment, Net
The following table sets forth the amounts recorded for "Satellites, net" and "Property and equipment, net" in our Consolidated Balance
Sheets as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Useful Lives
(years)
|
|
2013
|
|
2012
|
|
|
|
|
|
(Dollars in Millions)
|
|
Satellites
|
|
|
10-16
|
|
$
|
3,164
|
|
$
|
3,188
|
|
Satellites under construction
|
|
|
|
|
|
1,066
|
|
|
693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
4,230
|
|
|
3,881
|
|
Less: Accumulated depreciation
|
|
|
|
|
|
(1,763
|
)
|
|
(1,524
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Satellites, net
|
|
|
|
|
$
|
2,467
|
|
$
|
2,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
|
|
$
|
41
|
|
$
|
36
|
|
Buildings and leasehold improvements
|
|
|
2-40
|
|
|
434
|
|
|
449
|
|
Machinery and equipment
|
|
|
2-23
|
|
|
2,069
|
|
|
1,988
|
|
Capitalized software
|
|
|
3
|
|
|
2,923
|
|
|
2,392
|
|
Subscriber leased set-top equipment
|
|
|
3-7
|
|
|
10,176
|
|
|
9,053
|
|
Construction in-progress
|
|
|
|
|
|
677
|
|
|
750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
16,320
|
|
|
14,668
|
|
Less: Accumulated depreciation
|
|
|
|
|
|
(9,670
|
)
|
|
(8,630
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
|
$
|
6,650
|
|
$
|
6,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We
capitalized interest costs of $41 million in 2013, $24 million in 2012 and $13 million in 2011 as part of the cost of our property and satellites under
construction. Depreciation expense, which includes amortization of property and equipment and satellites held under capital leases, was $2,780 million in 2013, $2,342 million in 2012 and
$2,213 million in 2011.
The
following table sets forth property and equipment leased to our subscribers as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Subscriber leased set-top equipment
|
|
$
|
10,176
|
|
$
|
9,053
|
|
Less: Accumulated depreciation of subscriber leased equipment
|
|
|
(5,778
|
)
|
|
(5,040
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber leased set-top equipment, net
|
|
$
|
4,398
|
|
$
|
4,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 7: Goodwill and Intangible Assets, Net
The following table sets forth the changes in the carrying amounts of "Goodwill" in the Consolidated Balance Sheets by segment for the
years ended December 31, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
Sports
Networks,
Eliminations
and Other
|
|
|
|
|
|
DIRECTV
U.S.
|
|
Sky Brasil
|
|
PanAmericana and Other
|
|
Total
|
|
|
|
(Dollars in Millions)
|
|
Balance as of January 1, 2012
|
|
$
|
3,177
|
|
$
|
414
|
|
$
|
211
|
|
$
|
295
|
|
$
|
4,097
|
|
Sky Brasil foreign currency translation adjustment
|
|
|
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
|
|
3,177
|
|
|
380
|
|
|
211
|
|
|
295
|
|
|
4,063
|
|
Sky Brasil foreign currency translation adjustment
|
|
|
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
(49
|
)
|
DSN Northwest Transaction
|
|
|
|
|
|
|
|
|
|
|
|
(73
|
)
|
|
(73
|
)
|
Acquisitions
|
|
|
14
|
|
|
15
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
3,191
|
|
$
|
346
|
|
$
|
211
|
|
$
|
222
|
|
$
|
3,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
The
following table sets forth the components for "Intangible assets, net" in the Consolidated Balance Sheets as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|
|
|
Estimated
Useful
Lives
(years)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
|
|
|
|
|
(Dollars in Millions)
|
|
Orbital slots
|
|
|
Indefinite
|
|
$
|
432
|
|
$
|
|
|
$
|
432
|
|
$
|
432
|
|
$
|
|
|
$
|
432
|
|
Satellite rights
|
|
|
15
|
|
|
88
|
|
|
22
|
|
|
66
|
|
|
101
|
|
|
19
|
|
|
82
|
|
Subscriber related
|
|
|
5-10
|
|
|
363
|
|
|
336
|
|
|
27
|
|
|
383
|
|
|
371
|
|
|
12
|
|
Dealer network
|
|
|
15
|
|
|
130
|
|
|
127
|
|
|
3
|
|
|
130
|
|
|
117
|
|
|
13
|
|
Trade name, spectrum licenses and other
|
|
|
4-20
|
|
|
350
|
|
|
61
|
|
|
289
|
|
|
174
|
|
|
46
|
|
|
128
|
|
Distribution agreements
|
|
|
6-20
|
|
|
123
|
|
|
20
|
|
|
103
|
|
|
208
|
|
|
43
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
|
|
|
$
|
1,486
|
|
$
|
566
|
|
$
|
920
|
|
$
|
1,428
|
|
$
|
596
|
|
$
|
832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
expense of intangible assets was $48 million in 2013, $95 million in 2012 and $136 million in 2011.
Estimated
amortization expense for intangible assets in each of the next five years and thereafter is as follows: $50 million in 2014, $45 million in 2015,
$44 million in 2016, $44 million in 2017, $41 million in 2018 and $264 million thereafter.
We
performed our annual impairment tests for goodwill and orbital slots in the fourth quarters of 2013, 2012 and 2011. The estimated fair values for each reporting unit and the orbital
slots exceeded our carrying values, and accordingly, no impairment losses were recorded during 2013, 2012 or 2011. Additionally, there are no accumulated impairment losses as of December 31,
2013 and 2012.
Note 8: Investments
Equity Method Investments
Sky Mexico.
DIRECTV accounts for the excess of the carrying value for its investment in Sky Mexico over DIRECTV's share of Sky Mexico's
equity in
memo accounts allocated to goodwill and definite lived intangibles attributable to affiliate and advertising relationships. We recognized $1 million in 2013, $4 million in 2012 and
$25 million in 2011 of amortization on definite lived intangibles in equity earnings of Sky Mexico related to these assets.
Game Show Network.
DIRECTV accounts for the excess of the carrying value for its investment in GSN over DIRECTV's share of GSN's equity
in memo
accounts allocated to goodwill and definite lived intangibles attributable to affiliate and advertising relationships. We recognized $7 million in 2013, $10 million in 2012 and
$10 million in 2011 of amortization on definite lived intangibles in equity earnings of GSN related to these assets.
In
March 2011, we sold a 5% ownership interest in GSN to our equity partner for $60 million in cash, reducing our ownership interest to 60%. We recognized a pre-tax gain of
$25 million ($16 million after tax) on the sale in "Other, net" in the Consolidated Statements of Operations, which represents the difference between the selling price and the carrying
amount of the portion of our equity method investment sold.
In
December 2012, we sold an 18% interest in GSN for $234 million to our equity partner, which reduced our ownership interest from 60% to 42%. We recognized a pre-tax gain of
$111 million ($68 million after tax) on the sale in "Other, net" in the Consolidated Statement of Operations, which represents the difference between the selling price and the carrying
amount of the portion of our equity method investment sold. We received the cash proceeds from the sale of $234 million in 2013 and included the amount as cash flows from investing activities
in the Consolidated Statement of Cash Flows for the year ended December 31, 2013. For the year ended December 31, 2012, the $234 million sale price was a non-cash investing
activity for purposes of the Consolidated Statement of Cash Flows.
Other.
In April 2011, we sold an equity method investment for $55 million in cash. As a result of this sale, we recognized a
pre-tax gain of
$37 million ($23 million after tax) on the sale in "Other, net" in the Consolidated Statements of Operations, which represents the difference between the selling price and the carrying
amount of the equity method investment sold.
75
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
The
following table sets forth the carrying value of our investments which we account for under the equity method of accounting as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Sky Mexico
|
|
$
|
644
|
|
$
|
510
|
|
GSN
|
|
|
324
|
|
|
291
|
|
NW Sports Net LLC
|
|
|
92
|
|
|
|
|
Other equity method investments
|
|
|
179
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments accounted for under the equity method of accounting
|
|
$
|
1,239
|
|
$
|
950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table sets forth equity in earnings and losses of our investments accounted for under the equity method of accounting for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Sky Mexico
|
|
$
|
134
|
|
$
|
62
|
|
$
|
52
|
|
GSN
|
|
|
33
|
|
|
42
|
|
|
29
|
|
Other
|
|
|
31
|
|
|
27
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net equity earnings for investments accounted for under the equity method of accounting
|
|
$
|
198
|
|
$
|
131
|
|
$
|
109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We
received cash dividends of $41 million in 2013, $79 million in 2012 and $104 million in 2011 from companies that we account for under the equity method.
Undistributed earnings from equity method investments were $488 million as of December 31, 2013 and $302 million as of December 31, 2012.
Equity Securities
We had investments in non-marketable equity securities of $73 million as of December 31, 2013 and $68 million as
of December 31, 2012, which were stated at cost. We also had investments in marketable equity securities of $1 million as of December 31, 2013 and $11 million as of
December 31, 2012, which were carried at fair market value.
Note 9: Accounts Payable and Accrued Liabilities
The following table sets forth the significant components of "Accounts payable and accrued liabilities" in our Consolidated Balance
Sheets as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Programming costs
|
|
$
|
2,368
|
|
$
|
2,194
|
|
Accounts payable
|
|
|
1,070
|
|
|
1,035
|
|
Payroll and employee benefits
|
|
|
392
|
|
|
347
|
|
Other
|
|
|
855
|
|
|
1,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accounts payable and accrued liabilities
|
|
$
|
4,685
|
|
$
|
4,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of December 31, 2013, there were $70 million of amounts payable to vendors for property and equipment and no amounts payable for satellites in "Accounts payable and
accrued liabilities" in the Consolidated Balance Sheets, which is considered a non-cash investing activity for purposes of the Consolidated Statements of Cash Flows for the year ended
December 31, 2013. As of December 31, 2012 there were $104 million of amounts payable to vendors for property and equipment and $5 million of amounts payable for satellites
in "Accounts payable and accrued liabilities" in the Consolidated Balance Sheets, which is considered a non-cash investing activity for purposes of the Consolidated Statements of Cash Flows for the
year ended December 31, 2012.
76
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Note 10: Debt
The following table sets forth our outstanding debt as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Current debt
|
|
|
|
|
|
|
|
Commercial paper
|
|
$
|
200
|
|
$
|
358
|
|
Current portion of long-term debt
|
|
|
1,000
|
|
|
|
|
Current portion of borrowings under BNDES financing facility
|
|
|
56
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
Senior notes
|
|
|
18,203
|
|
|
17,170
|
|
Borrowings under BNDES financing facility
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
$
|
19,540
|
|
$
|
17,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Financing Transactions
On January 10, 2013, DIRECTV U.S. issued, pursuant to a registration statement, $750 million in aggregate principal of
1.750% senior notes due in 2018 resulting in proceeds, net of an original issue discount, of $743 million. We incurred $4 million of debt issuance costs in connection with this
transaction.
On
May 13, 2013, DIRECTV U.S. issued, pursuant to a registration statement, €500 million ($650 million) in aggregate principal of 2.750% senior notes
due in 2023 resulting in proceeds, net of an original issue discount, of €497 million ($646 million). The U.S. dollar amounts reflect the conversion of the
€500 million aggregate principal and the €497 million proceeds, net of discount, to U.S. dollars based on the exchange rate of €1.00/
$1.30 at May 13, 2013. In connection with the issuance of these senior notes, DIRECTV U.S. entered into cross-currency swaps to effectively convert its fixed-rate Euro denominated debt,
including annual interest payments and the payment of principal at maturity, to fixed-rate U.S. dollar denominated debt, as further discussed in Note 11. We incurred $4 million of debt
issuance costs in connection with this transaction.
On
November 13, 2013, DIRECTV U.S. issued, pursuant to a registration statement, £350 million ($560 million) in aggregate principal of 5.200% senior
notes due in 2033 resulting in proceeds, net of an original issue discount, of £349 million ($558 million). The U.S. dollar amounts reflect the conversion of the
£350 million aggregate principal and the £349 million proceeds, net of discount, to U.S. dollars based on the exchange rate of £1.00/ $1.60 at
November 13, 2013. In connection with the issuance of these senior notes, DIRECTV U.S. entered into cross-currency swaps to effectively convert its fixed-rate British pound sterling denominated
debt, including annual interest payments and the payment of principal at maturity, to fixed-rate U.S. dollar denominated debt, as further discussed in Note 11. We incurred $4 million of
debt issuance costs in connection with this transaction.
2012 Financing Transactions
In the first quarter of 2012, DIRECTV U.S. borrowed and repaid $400 million under its $2 billion revolving credit
facility, which was terminated on September 28, 2012, and replaced with a three and one-half year, $1 billion revolving credit facility and a five year, $1.5 billion revolving
credit facility.
On
March 8, 2012, DIRECTV U.S. issued the following senior notes in private placement transactions:
|
|
|
|
|
|
|
|
|
|
Principal
|
|
Proceeds, net of discount
|
|
|
|
(Dollars in Millions)
|
|
2.400% senior notes due in 2017
|
|
$
|
1,250
|
|
$
|
1,249
|
|
3.800% senior notes due in 2022
|
|
|
1,500
|
|
|
1,499
|
|
5.150% senior notes due in 2042
|
|
|
1,250
|
|
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,000
|
|
$
|
3,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We
incurred $25 million of debt issuance costs in connection with this transaction.
On
May 15, 2012, DIRECTV U.S. redeemed, pursuant to the terms of its indenture, all of its then outstanding $1,500 million of 7.625% senior notes due in 2016, at a price of
103.813%, plus accrued and unpaid interest, for a total of $1,614 million. We recorded a pre-tax charge of $64 million ($40 million after tax) during the second quarter of 2012,
of which $57 million resulted from the premium paid for the redemption and $7 million resulted from the write-off of
77
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
deferred
debt issuance and other transaction costs. The charge was recorded in "Other, net" in our Consolidated Statements of Operations.
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 swaps to effectively convert its 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, as further discussed in Note 11. We incurred
$9 million of debt issuance costs in connection with this transaction.
On
November 27, 2012, DIRECTV U.S. established a $2.5 billion commercial paper program backed by its revolving credit facilities, as discussed in further detail below. For
the year ended December 31, 2012, borrowings under the commercial paper program, net of repayments, were $358 million.
2011 Financing Transactions
On March 10, 2011, DIRECTV U.S. issued the following senior notes:
|
|
|
|
|
|
|
|
|
|
Principal
|
|
Proceeds, net
of discount
|
|
|
|
(Dollars in Millions)
|
|
3.500% senior notes due in 2016
|
|
$
|
1,500
|
|
$
|
1,497
|
|
5.000% senior notes due in 2021
|
|
|
1,500
|
|
|
1,493
|
|
6.375% senior notes due in 2041
|
|
|
1,000
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,000
|
|
$
|
3,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We
incurred $24 million of debt issuance costs in connection with this transaction.
On
March 17, 2011, DIRECTV U.S. purchased, pursuant to a tender offer, $341 million of its then outstanding $1,002 million of 6.375% senior notes due in 2015 at a
price of 103.313%, plus accrued and unpaid interest, for a total of $358 million. On June 15, 2011, DIRECTV U.S. redeemed, pursuant to the terms of its indenture, the remaining
$659 million of its outstanding 6.375% senior notes due 2015, at a price of 102.125%, plus accrued and unpaid interest, for a total of $694 million. The redemption of the 6.375% senior
notes resulted in a 2011 pre-tax charge of $25 million ($16 million after tax) primarily for the premiums paid. The charge was recorded in "Other, net" in our Consolidated Statements of
Operations.
78
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Senior Notes
The following table sets forth our outstanding senior notes balance as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount
|
|
Carrying value, net of
unamortized original
issue discounts or
including premiums
|
|
|
|
2013
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
4.750% senior notes due in 2014
|
|
$
|
1,000
|
|
$
|
1,000
|
|
$
|
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
|
|
|
1,499
|
|
|
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
|
|
|
996
|
|
|
995
|
|
5.200% senior notes due in 2020
|
|
|
1,300
|
|
|
1,299
|
|
|
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
|
|
2.750% senior notes due in 2023 (1)
|
|
|
687
|
|
|
684
|
|
|
|
|
4.375% senior notes due in 2029 (1)
|
|
|
1,242
|
|
|
1,229
|
|
|
1,206
|
|
5.200% senior notes due in 2033 (1)
|
|
|
579
|
|
|
577
|
|
|
|
|
6.350% senior notes due in 2040
|
|
|
500
|
|
|
500
|
|
|
500
|
|
6.000% senior notes due in 2040
|
|
|
1,250
|
|
|
1,235
|
|
|
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
|
|
$
|
19,258
|
|
$
|
19,203
|
|
$
|
17,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
These
amounts reflect the remeasurement of the aggregate principal and carrying value of our foreign currency denominated senior notes to U.S. dollars based
on the exchange rates in effect at each of the dates presented.
The
fair value of our senior notes was approximately $19,424 million at December 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 the 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.
The
principal amount of 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,
$750 million in 2018 and $12,808 million thereafter. The amount of interest accrued related to our outstanding debt was $271 million at December 31, 2013 and
$246 million at December 31, 2012.
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 December 31, 2013 we had $200 million of
short-term commercial paper outstanding, with a weighted average maturity of 133 days, at a weighted average yield of 0.41%, 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 maturity of 90 days, at a weighted average yield of 0.54%. Aggregate
amounts outstanding under the revolving credit facilities described below 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
79
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
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 December 31, 2013 and December 31, 2012, there were no
borrowings outstanding 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 contain covenants that are similar. If
DIRECTV U.S. fails 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. 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 most 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 and our regional sports networks which are held by DSN. 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 is not 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 Banco Nacional de Desenvolvimento Econômico e Social,
or BNDES, a government owned bank in Brazil, under which Sky Brasil may borrow funds for the purchase of set-top receivers. As of December 31, 2013, Sky Brasil had borrowings of
$137 million outstanding under the BNDES facility bearing interest at a weighted-average rate of 3.07% 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$2.34 / $1.00 at December 31, 2013.
Borrowings
under the BNDES facility mature as follows: $56 million in 2014, $58 million in 2015 and $23 million in 2016. The financing facility is collateralized by
the financed set-top receivers with an original purchase price of approximately $168 million based on the exchange rate at the time of purchase.
80
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Restricted Cash
Restricted cash of $7 million as of December 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 11: Derivative Financial Instruments
We use derivative financial instruments primarily to manage the risks associated with fluctuations in foreign currency exchange rates
and interest rates. We record derivative financial instruments in the Consolidated Balance Sheets as either assets or liabilities at fair value. For derivative financial instruments designated as cash
flow hedges, the effective portion of the unrealized gains or losses on the derivative financial instruments are initially reported in "Accumulated other comprehensive loss" in the Consolidated
Balance Sheets, and subsequently reclassified to earnings in the same periods during which the hedged item affects earnings. The ineffective portion of the unrealized gains and losses on these
derivative financial instruments, if any, is recorded immediately in earnings. We evaluate the effectiveness of our derivative financial instruments at inception
and on a quarterly basis. We measured no ineffectiveness for the years ended December 31, 2013 and December 31, 2012.
The
following table sets forth the fair values of assets and liabilities associated with the derivative financial instruments as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
Liabilities
|
|
|
|
December 31,
2013
|
|
December 31,
2012
|
|
December 31,
2013
|
|
December 31,
2012
|
|
|
|
(Dollars in millions)
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency swaps
|
|
$
|
112
|
|
$
|
|
|
$
|
|
|
$
|
17
|
|
Interest rate swaps
|
|
|
3
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative financial instruments
|
|
$
|
115
|
|
$
|
|
|
$
|
1
|
|
$
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
fair values of the assets associated with derivative financial instruments are recorded in "Investments and other assets" in the Consolidated Balance Sheets and the fair value of the
liabilities associated with derivative financial instruments are recorded in "Other liabilities and deferred credits" in the Consolidated Balance Sheets.
The
following table sets forth the notional amounts of outstanding derivative financial instruments as of:
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|
|
|
(Dollars in millions)
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
Cross-currency swap contracts
|
|
$
|
2,418
|
|
$
|
1,208
|
|
Interest rate swaps
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total notional amount of derivative financial instruments
|
|
$
|
2,918
|
|
$
|
1,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collateral Arrangements.
We have agreements with our derivative instrument 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. We held cash collateral from counterparties of $10 million as of December 31, 2013 and we did not hold any cash collateral from counterparties as of
December 31, 2012. We did not have any cash collateral posted with counterparties as of December 31, 2013 and December 31, 2012. 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.
Cross-Currency Swap Contracts
On September 11, 2012, DIRECTV U.S. issued, pursuant to a U.S. registration statement, £750 million in
aggregate principal of 4.375% senior notes due in 2029. On May 13, 2013, DIRECTV U.S. issued, pursuant to a U.S. registration statement, €500 million in aggregate
principal of 2.750% senior notes due in 2023. On November 13, 2013, DIRECTV U.S. issued, pursuant to a U.S.
81
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
registration
statement, £350 million in aggregate principal of 5.200% senior notes due in 2033. In connection with the issuance of these senior notes, DIRECTV U.S. entered into
cross-currency swap contracts to manage the related foreign exchange risk by effectively converting all of the fixed-rate British pound sterling and fixed-rate Euro 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 contracts correspond to the related hedged senior notes and have maturities ranging from May 2023 to November 2033.
We
calculate 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.
During
2013, DIRECTV U.S. recorded net remeasurement losses of $80 million in "Other, net" in the Consolidated Statements of Operations related to the remeasurement of the hedged
senior notes. To offset these remeasurement losses, we reclassified $80 million ($49 million after tax) from "Accumulated other comprehensive loss" in the Consolidated Balance Sheets to
"Other, net" in the Consolidated Statements of Operations. During 2012, DIRECTV U.S. recorded net remeasurement losses of $11 million in "Other, net" in the Consolidated Statements of
Operations related to the remeasurement of the hedged senior notes. To offset these remeasurement losses, we reclassified $11 million ($7 million after tax) from "Accumulated other
comprehensive loss" in the Consolidated Balance Sheets to "Other, net" in the Consolidated Statements of Operations. These reclassifications eliminate the impact of the remeasurement of the hedged
senior notes from our results of operations.
Interest Rate Swap Contracts
DIRECTV U.S. uses various interest rate derivatives, including forward-starting interest rate swaps, to protect against unfavorable
interest rate changes related to forecasted issuances of debt. The objective of these arrangements is to hedge our exposure to the variability of future cash flows associated with the interest rate on
future debt issuances. These interest rate swaps are designated and qualify as cash flow hedges.
We
calculate the fair value of the interest rate 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 swap rates and incorporating counterparty credit risk.
Note 12: Income Taxes
We base our income tax expense or benefit on reported "Income before income taxes." Deferred income tax assets and liabilities reflect
the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes, as measured by applying
currently enacted tax laws.
"Income
tax expense" in the Consolidated Statements of Operations consisted of the following for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Current tax expense:
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
$
|
911
|
|
$
|
980
|
|
$
|
631
|
|
Foreign
|
|
|
293
|
|
|
309
|
|
|
253
|
|
State and local
|
|
|
176
|
|
|
113
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,380
|
|
|
1,402
|
|
|
991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
|
224
|
|
|
(25
|
)
|
|
284
|
|
Foreign
|
|
|
34
|
|
|
63
|
|
|
59
|
|
State and local
|
|
|
(35
|
)
|
|
25
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
223
|
|
|
63
|
|
|
357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
1,603
|
|
$
|
1,465
|
|
$
|
1,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
"Income
before income taxes" in the Consolidated Statements of Operations included the following components for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
U.S. income
|
|
$
|
3,509
|
|
$
|
3,442
|
|
$
|
3,044
|
|
Foreign income
|
|
|
979
|
|
|
1,000
|
|
|
940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,488
|
|
$
|
4,442
|
|
$
|
3,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our
income tax expense was different than the amount computed using the U.S. federal statutory income tax rate for the reasons set forth in the following table for the years ended
December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Expected expense at U.S. federal statutory income tax rate
|
|
$
|
1,571
|
|
$
|
1,555
|
|
$
|
1,394
|
|
U.S. state and local income tax expense, net of federal benefit
|
|
|
91
|
|
|
87
|
|
|
75
|
|
Change in unrecognized tax benefits and settlements
|
|
|
(28
|
)
|
|
(154
|
)
|
|
40
|
|
Foreign taxes, net of federal tax benefits
|
|
|
(21
|
)
|
|
(3
|
)
|
|
(80
|
)
|
Change in valuation allowance
|
|
|
(16
|
)
|
|
3
|
|
|
(40
|
)
|
Currency devaluation
|
|
|
29
|
|
|
|
|
|
|
|
Tax credits
|
|
|
(44
|
)
|
|
(30
|
)
|
|
(47
|
)
|
Other
|
|
|
21
|
|
|
7
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
1,603
|
|
$
|
1,465
|
|
$
|
1,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary
differences and carryforwards that gave rise to deferred tax assets and liabilities at December 31 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
Deferred
Tax
Assets
|
|
Deferred
Tax
Liabilities
|
|
Deferred
Tax
Assets
|
|
Deferred
Tax
Liabilities
|
|
|
|
(Dollars in Millions)
|
|
Accruals and advances
|
|
$
|
471
|
|
$
|
275
|
|
$
|
466
|
|
$
|
273
|
|
Prepaid expenses
|
|
|
|
|
|
32
|
|
|
|
|
|
32
|
|
State taxes
|
|
|
33
|
|
|
|
|
|
74
|
|
|
|
|
Depreciation, amortization and asset impairment charges
|
|
|
|
|
|
1,745
|
|
|
|
|
|
1,406
|
|
Net operating loss and tax credit carryforwards
|
|
|
847
|
|
|
|
|
|
626
|
|
|
|
|
Programming contract liabilities
|
|
|
18
|
|
|
|
|
|
46
|
|
|
|
|
Unrealized foreign exchange gains or losses
|
|
|
|
|
|
23
|
|
|
|
|
|
79
|
|
Tax basis differences in investments and affiliates
|
|
|
203
|
|
|
853
|
|
|
261
|
|
|
824
|
|
Other
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,572
|
|
|
2,938
|
|
|
1,473
|
|
|
2,614
|
|
Valuation allowance
|
|
|
(367
|
)
|
|
|
|
|
(432
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred taxes
|
|
$
|
1,205
|
|
$
|
2,938
|
|
$
|
1,041
|
|
$
|
2,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in "Prepaid expenses and other" in the Consolidated Balance Sheets are $423 million at December 31, 2013 and $188 million at December 31, 2012 of
prepaid income taxes. Included in "Investments and other assets" in the Consolidated Balance Sheets are $1 million at December 31, 2013 and $116 million at December 31,
2012 of noncurrent deferred tax assets. Included in "Accounts payable and accrued liabilities" in the Consolidated Balance Sheets are $70 million at December 31, 2013 and
$90 million at December 31, 2012 of current deferred tax liabilities.
We
assessed the deferred tax assets for the respective periods for recoverability and, where applicable, we recorded a valuation allowance to reduce the total
83
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
deferred
tax assets to an amount that will, more likely than not, be realized in the future.
The
valuation allowance balances of $367 million at December 31, 2013 and $432 million at December 31, 2012, are primarily attributable to unused foreign net
operating losses which are available for carry forward. For the year ended December 31, 2013, the decrease in the valuation allowance was primarily attributable to a reduction in the deferred
tax asset on capital loss carryforwards and a reduction in foreign net operating losses due to currency fluctuations.
Although
realization is not assured, we have concluded that it is more likely than not that our unreserved deferred tax assets will be realized in the ordinary course of operations based
on available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities. The underlying assumptions we use in forecasting future
taxable income require significant judgment and take into account our recent performance.
As
of December 31, 2013, we have $29 million of federal net operating loss carryforward which expires between 2027 and 2032. The utilization of the federal
net operating loss carryforward is subject to an annual limitation under Section 382 of the Internal Revenue Code, however we believe that we will have sufficient taxable income during the
limitation period to utilize all of the carryforward. We also have foreign tax credit carryovers of $196 million which expire between 2020 and 2023, state net operating loss carryforwards of
$2 million which expire in 2030, and approximately $1.5 billion of foreign net operating losses that are primarily attributable to operations in Brazil with varying expiration dates.
As
a result of the currency exchange process in Venezuela since 2010, exclusive of the payment of some intercompany obligations, we have been unable to repatriate excess cash balances.
As of December 31, 2013, the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $667 million. Should these earnings be distributed in the
form of dividends, the distributions would be subject to U.S. federal income tax at the statutory rate of 35 percent, less foreign tax credits available to offset such distributions. Because
the time or manner of repatriation is uncertain, we cannot determine the impact of local taxes, withholding taxes and foreign tax credits associated with the future repatriation of such earnings and
therefore cannot quantify the potential tax liability.
No
income tax provision has been made for the portion of undistributed earnings of foreign subsidiaries, excluding Venezuela, deemed permanently reinvested that amounted to approximately
$14 million in 2013. It is not practicable to determine the amount of the unrecognized deferred tax liability related to the investments in these foreign subsidiaries.
A
reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
Gross Unrecognized
Tax Benefits
|
|
|
|
(Dollars in Millions)
|
|
Balance as of January 1, 2011
|
|
$
|
362
|
|
Increases in tax positions for prior years
|
|
|
17
|
|
Decreases in tax positions for prior years
|
|
|
(4
|
)
|
Increases in tax positions for the current year
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2011
|
|
|
390
|
|
Increases in tax positions for the current year
|
|
|
35
|
|
Decreases in tax positions for prior years
|
|
|
(6
|
)
|
Expirations of the statute of limitations
|
|
|
(141
|
)
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
|
|
278
|
|
Increases in tax positions for prior years
|
|
|
126
|
|
Decreases in tax positions for prior years
|
|
|
(3
|
)
|
Increases in tax positions for the current year
|
|
|
214
|
|
Settlements with taxing authorities
|
|
|
(25
|
)
|
Expirations of the statute of limitations
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of December 31, 2013, our unrecognized tax benefits totaled $589 million, including $489 million of tax positions the recognition of which would affect the annual
effective income tax rate.
We
recorded interest and penalties accrued related to unrecognized tax benefits of $38 million in 2013, $12 million in 2012 and $16 million in 2011 in "Income tax
expense" in the Consolidated Statements of Operations. We have accrued, as
84
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
part
of our liability for unrecognized tax benefits, interest and penalties of $70 million as of December 31, 2013, and $32 million as of December 31, 2012.
We
file numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. For U.S. federal tax purposes, the tax years
2010 through 2012 remain open for examination. The California tax years 2001 through 2012 remain open to examination and the income tax returns in the other state and foreign tax jurisdictions in
which we have operations are generally subject to examination for a period of three years after filing of the respective return including any amendments.
We
engage in continuous discussions and negotiations with federal, state, and foreign taxing authorities and reevaluate our uncertain tax positions, and, while it is often difficult to
predict the final outcome or the timing of resolution of any particular tax matter or tax position, we believe that our unrecognized tax benefits will not change materially during the next twelve
months.
Note 13: Capital Lease Obligations
We include the current and noncurrent portions of the present value of the net minimum lease payments under capital leases for
satellites and vehicles in "Accounts payable and accrued liabilities" and "Other liabilities and deferred credits" in the Consolidated Balance Sheets. The following table sets forth the present value
of the net minimum lease payments under capital leases for satellites and vehicles as of December 31, 2013, along with total minimum lease payments for each of the years ending
December 31:
|
|
|
|
|
|
|
Minimum Lease Payments
|
|
|
|
(Dollars in Millions)
|
|
2014
|
|
$
|
101
|
|
2015
|
|
|
96
|
|
2016
|
|
|
91
|
|
2017
|
|
|
86
|
|
2018
|
|
|
76
|
|
Thereafter
|
|
|
216
|
|
|
|
|
|
|
|
|
|
|
Total minimum lease payments
|
|
|
666
|
|
Less: Amount representing interest
|
|
|
(171
|
)
|
|
|
|
|
|
|
|
|
|
Present value of net minimum lease payments
|
|
$
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluded
from the table above are future payments under the contract for the lease of the ISDLA-1 and ISDLA-2 satellites currently under construction for DIRECTV Latin America, which we
expect to account for as capital leases at the time the satellites are placed into service. See Note 21 for further discussion.
We
include assets held under capitalized leases in "Satellites, net" and "Property and Equipment, net" in our Consolidated Balance Sheets. The following table sets forth assets held
under capital leases as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Satellites under capital leases
|
|
$
|
484
|
|
$
|
509
|
|
Less: Accumulated amortization
|
|
|
(251
|
)
|
|
(190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Satellites, net under capital leases
|
|
$
|
233
|
|
$
|
319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment under capital leases
|
|
$
|
140
|
|
$
|
129
|
|
Less: Accumulated amortization
|
|
|
(53
|
)
|
|
(47
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net under capital leases
|
|
$
|
87
|
|
$
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We
paid interest for capital leases of $41 million in 2013, $47 million in 2012 and $51 million in 2011.
85
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Note 14: Pension and Other Postretirement Benefit Plans
Most of our employees are eligible to participate in our funded non-contributory defined benefit pension plan, which provides defined
benefits based on either years of service and final average salary, or eligible compensation while employed by us. Additionally, we maintain a funded contributory defined benefit plan for employees
who elected to participate prior to 1991, and an unfunded, nonqualified pension plan for certain eligible employees. For participants in the contributory pension plan, we also maintain a
postretirement benefit plan for those retirees eligible to participate in health care and life insurance benefits generally until they reach age 65. Participants may become eligible for these health
care and life insurance benefits if they retire from our company between the ages of 55 and 65. The health care plan is contributory with participants'
contributions subject to adjustment annually; the life insurance plan is non-contributory.
The
components of the pension benefit obligation and the other postretirement benefit obligation, including amounts recognized in the Consolidated Balance Sheets, are shown below for the
years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Change in Net Benefit Obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit obligation at beginning of year
|
|
$
|
664
|
|
$
|
583
|
|
$
|
21
|
|
$
|
23
|
|
Service cost
|
|
|
38
|
|
|
32
|
|
|
1
|
|
|
1
|
|
Interest cost
|
|
|
27
|
|
|
30
|
|
|
1
|
|
|
1
|
|
Plan participants' contributions
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
Actuarial (gain) loss
|
|
|
(12
|
)
|
|
91
|
|
|
(4
|
)
|
|
(3
|
)
|
Benefits paid
|
|
|
(41
|
)
|
|
(37
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Settlements
|
|
|
(109
|
)
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit obligation at end of year
|
|
|
568
|
|
|
664
|
|
|
18
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Plan Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
|
495
|
|
|
448
|
|
|
|
|
|
|
|
Actual return on plan assets
|
|
|
54
|
|
|
49
|
|
|
|
|
|
|
|
Employer contributions
|
|
|
7
|
|
|
70
|
|
|
1
|
|
|
1
|
|
Plan participants' contributions
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
(41
|
)
|
|
(37
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Settlements
|
|
|
(109
|
)
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
407
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year
|
|
$
|
(161
|
)
|
$
|
(169
|
)
|
$
|
(18
|
)
|
$
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in the consolidated balance sheets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
(9
|
)
|
$
|
(6
|
)
|
$
|
(1
|
)
|
$
|
(2
|
)
|
Other liabilities and deferred credits
|
|
|
(152
|
)
|
|
(163
|
)
|
|
(17
|
)
|
|
(19
|
)
|
Accumulated other comprehensive (gain) loss
|
|
|
126
|
|
|
184
|
|
|
(3
|
)
|
|
|
|
Amounts recognized in the accumulated other comprehensive loss consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized net amount resulting from changes in defined benefit plan experience and actuarial assumptions, net of taxes
|
|
|
125
|
|
|
182
|
|
|
(3
|
)
|
|
|
|
Unamortized amount resulting from changes in defined benefit plan provisions, net of taxes
|
|
|
1
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
126
|
|
$
|
184
|
|
$
|
(3
|
)
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
86
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
We estimate that the following amounts will be amortized from "Accumulated other comprehensive loss" in the Consolidated Balance Sheets into net periodic benefit
cost during the year ending December 31, 2014:
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
|
|
|
(Dollars in Millions)
|
|
Expense resulting from changes in plan experience and actuarial assumptions
|
|
$
|
17
|
|
$
|
|
|
Expense resulting from changes in plan provisions
|
|
|
1
|
|
|
|
|
The
accumulated benefit obligation for all pension plans was $493 million at December 31, 2013 and $583 million as of December 31, 2012.
Information
for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Accumulated benefit obligation
|
|
$
|
97
|
|
$
|
93
|
|
Fair value of plan assets
|
|
|
|
|
|
|
|
Information
for pension plans with a projected benefit obligation in excess of plan assets as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in Millions)
|
|
Projected benefit obligation
|
|
$
|
568
|
|
$
|
664
|
|
Fair value of plan assets
|
|
|
407
|
|
|
495
|
|
Components
of net periodic benefit cost for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits earned during the year
|
|
$
|
38
|
|
$
|
32
|
|
$
|
25
|
|
$
|
1
|
|
$
|
1
|
|
$
|
1
|
|
Interest accrued on benefits earned in prior years
|
|
|
27
|
|
|
30
|
|
|
29
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Expected return on plan assets
|
|
|
(35
|
)
|
|
(34
|
)
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
Amortization components
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount resulting from changes in plan provisions
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Net amount resulting from changes in plan experience and actuarial assumptions
|
|
|
28
|
|
|
19
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
Settlement loss
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
98
|
|
$
|
48
|
|
$
|
35
|
|
$
|
2
|
|
$
|
2
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Discount rateQualified Plans
|
|
|
4.86
|
%
|
|
3.92
|
%
|
|
4.37
|
%
|
|
3.47
|
%
|
Discount rateNon-Qualified Plans
|
|
|
4.75
|
%
|
|
3.91
|
%
|
|
|
%
|
|
|
%
|
Rate of compensation increase
|
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Weighted-average
assumptions used to determine benefit obligations at December 31:Weighted-average assumptions used to determine net periodic benefit cost for the years ended
December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|
Discount rateQualified Plan
|
|
|
3.92
|
%
|
|
4.99
|
%
|
|
5.59
|
%
|
|
3.47
|
%
|
|
4.48
|
%
|
|
4.99
|
%
|
Discount rateNon-Qualified Plans
|
|
|
3.91
|
%
|
|
4.92
|
%
|
|
5.54
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
Expected long-term return on plan assets
|
|
|
7.50
|
%
|
|
7.75
|
%
|
|
8.00
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
Rate of compensation increase
|
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
87
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
We
base our expected long-term return on plan assets assumption on a periodic review and modeling of the plans' asset allocation and liability structure over a long-term horizon.
Expectations of returns for each asset class are the most important of the assumptions used in the review and modeling and are based on the forward looking expectations for asset class returns,
historical data and economic/financial market theory.
The
following table provides assumed health care costs trend rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
Health care cost trend rate
|
|
|
7.50
|
%
|
|
8.00
|
%
|
|
8.00
|
%
|
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
Year that trend rate reaches the ultimate trend rate
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
Plan Assets
Our investment policy includes various guidelines and procedures designed to ensure we invest assets in a manner necessary to meet
expected future benefits earned by participants. The investment guidelines consider a broad range of economic conditions. Central to the policy are target allocation ranges by major asset categories.
The policy range for plan assets are 20% to 60% equity securities, 30% to 50% debt securities, 0% to 40% alternatives and other types of investments.
The
objectives of the target allocations are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed
the plans' actuarial assumptions, and achieve asset returns that are competitive with like institutions employing similar investment strategies.
The
investment policy is periodically reviewed by us and a designated third-party fiduciary for investment matters. We establish and administer the policy in a manner so as to comply at
all times with applicable government regulations.
The
fair value measurements of the plan assets as of December 31, 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2013
|
|
|
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Percentage
of Plan
Assets
as of
December 31,
2013
|
|
|
|
(Dollars in millions)
|
|
Asset Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common collective trusts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
6
|
|
$
|
|
|
$
|
6
|
|
$
|
|
|
|
1
|
%
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large-cap
|
|
|
58
|
|
|
|
|
|
58
|
|
|
|
|
|
14
|
%
|
U.S. mid-cap growth
|
|
|
15
|
|
|
|
|
|
15
|
|
|
|
|
|
4
|
%
|
International large-cap value
|
|
|
69
|
|
|
|
|
|
69
|
|
|
|
|
|
17
|
%
|
Emerging markets growth
|
|
|
5
|
|
|
|
|
|
5
|
|
|
|
|
|
1
|
%
|
Domestic real estate
|
|
|
27
|
|
|
27
|
|
|
|
|
|
|
|
|
7
|
%
|
Fixed income
|
|
|
144
|
|
|
|
|
|
144
|
|
|
|
|
|
35
|
%
|
Partnership and joint venture interests
|
|
|
31
|
|
|
|
|
|
|
|
|
31
|
|
|
8
|
%
|
Insurance contracts at contract value
|
|
|
2
|
|
|
|
|
|
2
|
|
|
|
|
|
|
%
|
Hedge funds
|
|
|
50
|
|
|
|
|
|
|
|
|
50
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
407
|
|
$
|
27
|
|
$
|
299
|
|
$
|
81
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
The
fair value measurements of the plan assets as of December 31, 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2012
|
|
|
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Percentage
of Plan
Assets
as of
December 31,
2012
|
|
|
|
(Dollars in millions)
|
|
Asset Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common collective trusts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4
|
|
$
|
|
|
$
|
4
|
|
$
|
|
|
|
1
|
%
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large-cap
|
|
|
87
|
|
|
|
|
|
87
|
|
|
|
|
|
18
|
%
|
U.S. mid-cap growth
|
|
|
19
|
|
|
|
|
|
19
|
|
|
|
|
|
4
|
%
|
International large-cap value
|
|
|
94
|
|
|
|
|
|
94
|
|
|
|
|
|
19
|
%
|
Emerging markets growth
|
|
|
6
|
|
|
|
|
|
6
|
|
|
|
|
|
1
|
%
|
Domestic real estate
|
|
|
26
|
|
|
|
|
|
26
|
|
|
|
|
|
5
|
%
|
Fixed income
|
|
|
182
|
|
|
|
|
|
182
|
|
|
|
|
|
37
|
%
|
Partnership and joint venture interests
|
|
|
31
|
|
|
|
|
|
|
|
|
31
|
|
|
6
|
%
|
Insurance contracts at contract value
|
|
|
2
|
|
|
|
|
|
2
|
|
|
|
|
|
|
%
|
Hedge funds
|
|
|
44
|
|
|
|
|
|
|
|
|
44
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
495
|
|
$
|
|
|
$
|
420
|
|
$
|
75
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There
were no shares of our common stock included in plan assets as of December 31, 2013 and 2012.
The
fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2012 and 2013 due to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnerships
and Joint
Venture
Interests
|
|
Hedge
Funds
|
|
Total
|
|
|
|
(Dollars in Millions)
|
|
Balance as of January 1, 2012
|
|
$
|
30
|
|
$
|
41
|
|
$
|
71
|
|
Unrealized gains
|
|
|
1
|
|
|
3
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
|
|
31
|
|
|
44
|
|
|
75
|
|
Unrealized gains
|
|
|
2
|
|
|
6
|
|
|
8
|
|
Purchases and sales
|
|
|
(2
|
)
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
31
|
|
$
|
50
|
|
$
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows
We expect to contribute approximately $15 million to our qualified pension plans and make payments of $9 million to our
nonqualified pension plan participants in 2014.
89
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
We expect the following benefit payments, which reflect expected future service, as appropriate, to be paid by the plans during the
years ending December 31:
|
|
|
|
|
|
|
|
|
|
Estimated Future Benefit
Payments
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
|
|
|
(Dollars in Millions)
|
|
2014
|
|
$
|
36
|
|
$
|
1
|
|
2015
|
|
|
37
|
|
|
1
|
|
2016
|
|
|
45
|
|
|
2
|
|
2017
|
|
|
36
|
|
|
2
|
|
2018
|
|
|
40
|
|
|
2
|
|
2019-2023
|
|
|
222
|
|
|
9
|
|
We
maintain 401(k) plans for qualified employees. We match a portion of our employee contributions and our match amounted to $34 million in 2013, $30 million in 2012 and
$28 million in 2011.
We
have disclosed certain amounts associated with estimated future postretirement benefits other than pensions and characterized such amounts as "other postretirement benefit
obligation." Notwithstanding the recording of such amounts and the use of these terms, we do not admit or otherwise acknowledge that such amounts or existing postretirement benefit plans of our
company (other than pensions) represent legally enforceable liabilities of us.
Note 15: Stockholders' Deficit
Capital Stock and Additional Paid-In Capital
Our certificate of incorporation provides for the following capital stock: common stock, par value $0.01 per share, 3,950,000,000
shares authorized, and preferred stock, par value $0.01 per share, 50,000,000 shares
authorized. The DIRECTV common stock is entitled to one vote per share and trades on the NASDAQ, under the ticker "DTV". As of December 31, 2013 and December 31, 2012, there were no
outstanding shares of preferred stock.
Share Repurchase Program
Since 2006 our Board of Directors has approved multiple authorizations for the repurchase of our common stock. In February 2014 our
Board of Directors approved a new authorization for up to $3.5 billion for repurchases of our common stock. As of December 31, 2013, we had approximately $862 million remaining
under the previous authorization. The new 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 and new 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.
The
following table sets forth information regarding shares repurchased and retired for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Amounts in Millions,
Except Per Share Amounts)
|
|
Total cost of repurchased and retired shares
|
|
$
|
4,000
|
|
$
|
5,148
|
|
$
|
5,455
|
|
Average price per share
|
|
$
|
57.54
|
|
$
|
48.24
|
|
$
|
45.78
|
|
Number of shares repurchased and retired
|
|
|
70
|
|
|
107
|
|
|
119
|
|
Of
the $5,455 million in repurchases during the year ended December 31, 2011, $27 million were paid for in January 2012. Amounts repurchased but settled subsequent
to the end of such periods are considered non-cash financing activities and are excluded from the Consolidated Statements of Cash Flows.
90
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Other Comprehensive Income (Loss)
The following table sets forth the components of "Other comprehensive income (loss)" in the Consolidated Statements of Comprehensive
Income for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
Pre-tax
Amount
|
|
Tax
Benefit
(Expense)
|
|
Net
Amount
|
|
Pre-tax
Amount
|
|
Tax
Benefit
(Expense)
|
|
Net
Amount
|
|
Pre-tax
Amount
|
|
Tax
Benefit
(Expense)
|
|
Net
Amount
|
|
|
|
(Dollars in Millions)
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) related to changes in plan experience and actuarial assumptions arising during the
period
|
|
$
|
35
|
|
$
|
(13
|
)
|
$
|
22
|
|
$
|
(73
|
)
|
$
|
28
|
|
$
|
(45
|
)
|
$
|
(64
|
)
|
$
|
25
|
|
$
|
(39
|
)
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost (1)
|
|
|
66
|
|
|
(28
|
)
|
|
38
|
|
|
19
|
|
|
(7
|
)
|
|
12
|
|
|
15
|
|
|
(6
|
)
|
|
9
|
|
Amortization of amounts resulting from changes in plan provisions recognized as periodic benefit cost (1)
|
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) arising during the period
|
|
|
129
|
|
|
(49
|
)
|
|
80
|
|
|
(16
|
)
|
|
6
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
Reclassification adjustments included in "Other, net"
|
|
|
(80
|
)
|
|
31
|
|
|
(49
|
)
|
|
(11
|
)
|
|
4
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(223
|
)
|
|
50
|
|
|
(173
|
)
|
|
(53
|
)
|
|
21
|
|
|
(32
|
)
|
|
(153
|
)
|
|
59
|
|
|
(94
|
)
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding losses on securities
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
3
|
|
|
(4
|
)
|
|
(10
|
)
|
|
4
|
|
|
(6
|
)
|
Reclassification adjustment for net losses recognized during period, included in "Other, net"
|
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
$
|
(69
|
)
|
$
|
(11
|
)
|
$
|
(80
|
)
|
$
|
(141
|
)
|
$
|
55
|
|
$
|
(86
|
)
|
$
|
(210
|
)
|
$
|
81
|
|
$
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Amortization
of accumulated other comprehensive income components related to defined benefit plans are included in the computation of net periodic pension
costs (See Note 14).
91
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Accumulated Other Comprehensive Loss
The following represents the changes in the components of "Accumulated other comprehensive loss" in the Consolidated Balance Sheets for
each of the years presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
Benefit Plan
Items
|
|
Gains (Losses)
on Cash
Flow Hedges
|
|
Foreign
Currency
Items
|
|
Unrealized
Gains
(Losses)
on
Available
for Sale
Securities
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
|
(Dollars in Millions)
|
|
Balance as of January 1, 2011
|
|
$
|
(122
|
)
|
$
|
|
|
$
|
86
|
|
$
|
9
|
|
$
|
(27
|
)
|
Other comprehensive loss
|
|
|
(29
|
)
|
|
|
|
|
(94
|
)
|
|
(6
|
)
|
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2011
|
|
|
(151
|
)
|
|
|
|
|
(8
|
)
|
|
3
|
|
|
(156
|
)
|
Other comprehensive loss
|
|
|
(33
|
)
|
|
(17
|
)
|
|
(32
|
)
|
|
(4
|
)
|
|
(86
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
|
|
(184
|
)
|
|
(17
|
)
|
|
(40
|
)
|
|
(1
|
)
|
|
(242
|
)
|
Other comprehensive income (loss)
|
|
|
61
|
|
|
31
|
|
|
(173
|
)
|
|
1
|
|
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
$
|
(123
|
)
|
$
|
14
|
|
$
|
(213
|
)
|
$
|
|
|
$
|
(322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Note 16: Earnings Per Common Share
We compute basic earnings per common share, or EPS, by dividing net income by the weighted average number of common shares outstanding
for the period.
Diluted
EPS considers the effect of common equivalent shares, which consist entirely of common stock options and unvested restricted stock units issued to employees. During the years
ended December 31, 2013 and December 31, 2012 we excluded 1 million common stock options 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 2011.
The
reconciliation of the amounts used in the basic and diluted EPS computation was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
Shares
|
|
Per Share
Amounts
|
|
|
|
(Dollars and Shares in Millions,
Except Per Share Amounts)
|
|
Year Ended December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,859
|
|
|
548
|
|
$
|
5.22
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
5
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
2,859
|
|
|
553
|
|
$
|
5.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,949
|
|
|
638
|
|
$
|
4.62
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
6
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
2,949
|
|
|
644
|
|
$
|
4.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,609
|
|
|
747
|
|
$
|
3.49
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock units
|
|
|
|
|
|
5
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to DIRECTV
|
|
$
|
2,609
|
|
|
752
|
|
$
|
3.47
|
|
|
|
|
|
|
|
|
|
Note 17: Share-Based Compensation
Under the DIRECTV 2010 Stock Plan, or the DIRECTV Plan, as approved by DIRECTV stockholders on June 3, 2010, and as amended by
the Compensation Committee of the Board of Directors on December 24, 2013, shares, rights or options to acquire up to 40 million shares of common stock plus (i) the number of
shares that are subject to available and outstanding awards as of December 19, 2013, referred to as Outstanding Award Shares, plus (ii) the number of shares of common stock constituting
outstanding award shares but which, after
93
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
December 19,
2013, are forfeited, expire or are canceled without the delivery of shares of common stock or otherwise result in the return of such shares to us, were authorized for grant through
June 2, 2020, subject to the approval of the Compensation Committee of our Board of Directors. Under the DIRECTV Plan, we issue new shares of our common stock when restricted stock units are
distributed and when stock options are exercised.
The
following table presents amounts recorded related to share-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended
December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Share-based compensation expense recognized
|
|
$
|
100
|
|
$
|
109
|
|
$
|
103
|
|
Tax benefits associated with share-based compensation expense
|
|
|
37
|
|
|
41
|
|
|
40
|
|
Actual tax benefits realized for the deduction of share-based compensation expense
|
|
|
66
|
|
|
60
|
|
|
54
|
|
As
of December 31, 2013, there was $108 million of total unrecognized compensation expense related to unvested restricted stock units and stock options that we expect to
recognize as follows: $71 million in 2014, $36 million in 2015 and $1 million in 2016.
Restricted Stock Units
The Compensation Committee has granted restricted stock units under our stock plan to certain of our employees and executives. Annual
awards are mostly performance based, generally vest over three years and provide for final payments in shares of our common stock. Final payment can be increased or decreased from the target award
amounts based on our performance over a three-year performance period in comparison with pre-established targets. We determine the fair value of restricted stock units based on the closing stock price
of our common shares on the date of grant.
Changes
in the status of outstanding restricted stock units were as follows:
|
|
|
|
|
|
|
|
|
|
Stock Units
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
Nonvested at January 1, 2013
|
|
|
7,072,746
|
|
$
|
39.50
|
|
Granted
|
|
|
2,674,088
|
|
|
49.05
|
|
Vested and distributed
|
|
|
(3,679,547
|
)
|
|
32.07
|
|
Forfeited
|
|
|
(253,304
|
)
|
|
47.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2013
|
|
|
5,813,983
|
|
$
|
47.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at December 31, 2013
|
|
|
5,611,465
|
|
$
|
48.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
weighted-average grant-date fair value of restricted stock units granted during the year ended December 31, 2012 was $41.72. The weighted-average grant-date fair value of
restricted stock units granted during the year ended December 31, 2011 was $41.14.
The
total fair value of restricted stock units vested and distributed was $181 million during the year ended December 31, 2013, $139 million during the year ended
December 31, 2012 and $125 million during the year ended December 31, 2011.
Stock Options
The Compensation Committee has also granted stock options to acquire our common stock under the DIRECTV Plan to certain of our
executives. The exercise price of options granted is equal to the per share closing price of the common stock on the date the options were granted. These nonqualified options generally vest over one
to three years, expire ten years from date of grant and are subject to earlier termination under certain conditions.
94
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Changes
in the status of outstanding options were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Under
Option
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
(in years)
|
|
(in millions)
|
|
Outstanding at January 1, 2013
|
|
|
3,095,845
|
|
$
|
28.24
|
|
|
|
|
|
|
|
Granted
|
|
|
322,387
|
|
|
49.19
|
|
|
|
|
|
|
|
Exercised
|
|
|
(25,053
|
)
|
|
24.24
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
(13,970
|
)
|
|
44.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2013
|
|
|
3,379,209
|
|
$
|
30.20
|
|
|
4.1
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at December 31, 2013
|
|
|
3,379,209
|
|
$
|
30.20
|
|
|
4.1
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2013
|
|
|
2,368,019
|
|
$
|
22.16
|
|
|
2.1
|
|
$
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
total intrinsic value of options exercised was $1 million during the year ended December 31, 2013, $26 million during the year ended December 31, 2012 and
$24 million during the year ended December 31, 2011, based on the intrinsic value of individual awards on the date of exercise.
The
following table presents the estimated weighted-average grant-date fair value for the stock options granted during the years ended December 31, 2013 and December 31,
2012 under the DIRECTV Plan using the Black-Scholes valuation model along with the weighted-average assumptions used in the fair value calculations. Expected stock volatility is based primarily on the
historical volatility of our common stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The
expected option life is based on historical exercise behavior and other factors.
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Estimated grant-date fair value
|
|
$
|
16.84
|
|
$15.83
|
|
Expected stock volatility
|
|
|
30.0
|
%
|
29.0%
|
|
Risk-free interest rate
|
|
|
1.38
|
%
|
1.08% - 1.41
|
%
|
Expected option life (in years)
|
|
|
7.0
|
|
7.0
|
|
There
were no stock options granted under the DIRECTV Plan during the year ended December 31, 2011.
As
part of the Liberty Transaction on November 19, 2009, we assumed 16.7 million stock options and stock appreciation rights, and issued 1.1 million shares of common
stock to holders of restricted stock units. The holders of the majority of the equity instruments assumed as a result of the Liberty Transaction did not become DIRECTV employees or directors.
Accordingly, we recognize those equity instruments as a liability that is subject to fair value measurement at each reporting date pursuant to accounting rules for non-employee awards. We include that
liability within "Other liabilities and deferred credits" in our Consolidated Balance Sheets. Of the 16.7 million equity instruments assumed, 8.8 million were held by persons other than
employees or directors. As of December 31, 2013, 0.3 million non-employee awards remained outstanding with a fair value of approximately $18 million. As of December 31,
2012, there were 0.4 million non-employee awards outstanding with a fair value of approximately $12 million. We recorded net losses of $7 million during the year ended
December 31, 2013, $4 million during the year ended December 31, 2012 and $4 million during the year ended December 31, 2011 to "Other, net" in the Consolidated
Statements of Operations for losses recognized for exercised options and the adjustment of the liability to fair value.
The
following table presents the estimated per share weighted-average fair value as of December 31, 2013, 2012 and 2011 for the equity instruments issued to persons other than
employees and directors carried as a liability using the Black-Scholes valuation model along with the weighted-average assumptions used in the fair value calculations. Expected stock volatility is
based primarily on the historical volatility of our common stock. The risk-free rates for periods within the
95
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
contractual
lives of the options are based on the U.S. Treasury yield curve in effect at the measurement date. The expected option life is based on the contractual life of the awards.
|
|
|
|
|
|
|
|
|
|
December 31,
2013
|
|
December 31,
2012
|
|
December 31,
2011
|
|
Estimated fair value
|
|
$53.45
|
|
$34.59
|
|
$26.63
|
|
Expected stock volatility
|
|
20.0
|
%
|
22.8
|
%
|
27.5
|
%
|
Range of risk-free interest rates
|
|
0.07 - 0.78
|
%
|
0.02 - 0.36
|
%
|
0.06 - 0.83
|
%
|
Range of expected option lives (in years)
|
|
0.2 - 3.4
|
|
0.2 - 4.4
|
|
0.5 - 5.4
|
|
The
intrinsic value of awards assumed as part of the Liberty Transaction carried as a liability that were exercised was $1 million during the year ended December 31, 2013,
$3 million during the year ended December 31, 2012 and $8 million during the year ended December 31, 2011, based on the intrinsic value of individual awards on the date of
exercise.
Beginning
in 2009, we implemented a net exercise plan pursuant to which we only issue new shares in connection with employee option exercises equal to the intrinsic value of the
exercised award on the exercise date reduced by the sum of (i) the amount of statutory employee withholding taxes and (ii) the option exercise price, divided by the current market price
of our common stock. As a result, we no longer receive cash in connection with the exercise of most stock options, but rather issue significantly fewer shares. We do receive cash for the exercise of
certain non-employee stock options. We received no cash for the settlement of stock options during the year ended December 31, 2013. We received cash for the settlement of stock options of
$3 million during the year ended December 31, 2012, and did not receive any cash for the settlement of stock options during the year ended December 31, 2011. In addition, the
Company is required to pay the employee withholding taxes to taxing authorities, the cash payments for which are reported in "Taxes paid in lieu of shares issued for share-based compensation" in the
Consolidated Statements of Cash Flows.
Note 18: Other Income and Expenses
The following table sets forth the components of "Other, net" in our Consolidated Statements of Operations for the years ended
December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Equity in earnings from unconsolidated affiliates (1)
|
|
$
|
198
|
|
$
|
131
|
|
$
|
109
|
|
DSN Northwest deconsolidation charge
|
|
|
(59
|
)
|
|
|
|
|
|
|
Net foreign currency transaction loss
|
|
|
(52
|
)
|
|
(34
|
)
|
|
(50
|
)
|
ECAD settlement gain
|
|
|
21
|
|
|
|
|
|
|
|
Net gains from sale of investments
|
|
|
8
|
|
|
122
|
|
|
63
|
|
Fair-value loss on non-employee stock options
|
|
|
(7
|
)
|
|
(4
|
)
|
|
(4
|
)
|
Other
|
|
|
(3
|
)
|
|
(11
|
)
|
|
(9
|
)
|
Loss on early extinguishment of debt
|
|
|
|
|
|
(64
|
)
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
106
|
|
$
|
140
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Includes
an increase in equity earnings from Sky Mexico of approximately $60 million related to the recognition of certain one-time tax benefits in
2013.
See
Note 8 regarding equity method investments and net gains and losses recorded on the sale of investments.
Note 19: 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, GSN and NW Sports Net LLC.
96
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
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 revenues and expenses with related parties for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
9
|
|
$
|
5
|
|
$
|
6
|
|
Expenses
|
|
|
965
|
|
|
874
|
|
|
854
|
|
The
following table sets forth the amount of accounts receivable from and liabilities to related parties as of December 31:
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
(Dollars in
Millions)
|
|
Accounts receivable
|
|
$
|
18
|
|
$
|
26
|
|
Accounts payable
|
|
|
100
|
|
|
90
|
|
Long-term liability
|
|
|
69
|
|
|
|
|
Note 20: 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 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.
97
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
The
following table sets forth selected information for the results of operations for each of our reporting segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
Revenues
|
|
Intersegment
Revenues
|
|
Total
Revenues
|
|
Operating
Profit (Loss)
|
|
Depreciation
and
Amortization
Expense
|
|
Operating Profit
(Loss) Before
Depreciation and
Amortization(1)
|
|
|
|
(Dollars in Millions)
|
|
Year Ended December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
24,668
|
|
$
|
8
|
|
$
|
24,676
|
|
$
|
4,444
|
|
$
|
1,640
|
|
$
|
6,084
|
|
Sky Brasil
|
|
|
3,753
|
|
|
|
|
|
3,753
|
|
|
529
|
|
|
723
|
|
|
1,252
|
|
PanAmericana and Other
|
|
|
3,091
|
|
|
|
|
|
3,091
|
|
|
247
|
|
|
444
|
|
|
691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
6,844
|
|
|
|
|
|
6,844
|
|
|
776
|
|
|
1,167
|
|
|
1,943
|
|
Sports Networks, Eliminations and Other
|
|
|
242
|
|
|
(8
|
)
|
|
234
|
|
|
(70
|
)
|
|
21
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
31,754
|
|
$
|
|
|
$
|
31,754
|
|
$
|
5,150
|
|
$
|
2,828
|
|
$
|
7,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
23,227
|
|
$
|
8
|
|
$
|
23,235
|
|
$
|
4,153
|
|
$
|
1,501
|
|
$
|
5,654
|
|
Sky Brasil
|
|
|
3,501
|
|
|
|
|
|
3,501
|
|
|
555
|
|
|
533
|
|
|
1,088
|
|
PanAmericana and Other
|
|
|
2,743
|
|
|
|
|
|
2,743
|
|
|
400
|
|
|
374
|
|
|
774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
6,244
|
|
|
|
|
|
6,244
|
|
|
955
|
|
|
907
|
|
|
1,862
|
|
Sports Networks, Eliminations and Other
|
|
|
269
|
|
|
(8
|
)
|
|
261
|
|
|
(23
|
)
|
|
29
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
29,740
|
|
$
|
|
|
$
|
29,740
|
|
$
|
5,085
|
|
$
|
2,437
|
|
$
|
7,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S.
|
|
$
|
21,864
|
|
$
|
8
|
|
$
|
21,872
|
|
$
|
3,702
|
|
$
|
1,587
|
|
$
|
5,289
|
|
Sky Brasil
|
|
|
3,020
|
|
|
|
|
|
3,020
|
|
|
542
|
|
|
449
|
|
|
991
|
|
PanAmericana and Other
|
|
|
2,076
|
|
|
|
|
|
2,076
|
|
|
374
|
|
|
298
|
|
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
5,096
|
|
|
|
|
|
5,096
|
|
|
916
|
|
|
747
|
|
|
1,663
|
|
Sports Networks, Eliminations and Other
|
|
|
266
|
|
|
(8
|
)
|
|
258
|
|
|
11
|
|
|
15
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
27,226
|
|
$
|
|
|
$
|
27,226
|
|
$
|
4,629
|
|
$
|
2,349
|
|
$
|
6,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Operating
profit (loss) 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 (loss)." 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 (loss) 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 our Board of Directors separately measure and budget for capital expenditures and business acquisitions.
We
believe this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net income), to compare our operating performance to other communications,
entertainment and media service providers. We believe that investors use current and projected operating profit (loss) 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
(Dollars in Millions)
|
|
Operating profit before depreciation and amortization
|
|
$
|
7,978
|
|
$
|
7,522
|
|
$
|
6,978
|
|
Depreciation and amortization expense
|
|
|
(2,828
|
)
|
|
(2,437
|
)
|
|
(2,349
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
5,150
|
|
|
5,085
|
|
|
4,629
|
|
Interest income
|
|
|
72
|
|
|
59
|
|
|
34
|
|
Interest expense
|
|
|
(840
|
)
|
|
(842
|
)
|
|
(763
|
)
|
Other, net
|
|
|
106
|
|
|
140
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
4,488
|
|
|
4,442
|
|
|
3,984
|
|
Income tax expense
|
|
|
(1,603
|
)
|
|
(1,465
|
)
|
|
(1,348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
2,885
|
|
|
2,977
|
|
|
2,636
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
(26
|
)
|
|
(28
|
)
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,859
|
|
$
|
2,949
|
|
$
|
2,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table sets forth capital expenditures and segment assets for each of our reporting segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended and As of December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
Capital
Expenditures
|
|
Segment
Assets
|
|
Capital
Expenditures
|
|
Segment
Assets
|
|
Capital
Expenditures
|
|
Segment
Assets
|
|
|
|
(Dollars in Millions)
|
|
DIRECTV U.S.
|
|
$
|
2,050
|
|
$
|
13,446
|
|
$
|
1,741
|
|
$
|
12,490
|
|
$
|
1,736
|
|
$
|
11,796
|
|
Sky Brasil
|
|
|
961
|
|
|
2,854
|
|
|
812
|
|
|
2,951
|
|
|
902
|
|
|
2,663
|
|
PanAmericana and Other
|
|
|
759
|
|
|
4,004
|
|
|
786
|
|
|
3,335
|
|
|
526
|
|
|
2,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
1,720
|
|
|
6,858
|
|
|
1,598
|
|
|
6,286
|
|
|
1,428
|
|
|
5,264
|
|
Sports Networks, Eliminations and Other
|
|
|
16
|
|
|
1,601
|
|
|
10
|
|
|
1,779
|
|
|
6
|
|
|
1,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,786
|
|
$
|
21,905
|
|
$
|
3,349
|
|
$
|
20,555
|
|
$
|
3,170
|
|
$
|
18,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
The
following table sets forth revenues earned from subscribers located in different geographic areas. Property is grouped by its physical location.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended and As of December 31,
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
|
|
Revenues
|
|
Net
Property &
Satellites
|
|
Revenues
|
|
Net
Property &
Satellites
|
|
Revenues
|
|
Net
Property &
Satellites
|
|
|
|
(Dollars in Millions)
|
|
United States
|
|
$
|
25,088
|
|
$
|
6,248
|
|
$
|
23,678
|
|
$
|
5,694
|
|
$
|
22,310
|
|
$
|
5,267
|
|
Latin America and the Caribbean
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil
|
|
|
3,753
|
|
|
1,597
|
|
|
3,501
|
|
|
1,626
|
|
|
3,020
|
|
|
1,423
|
|
Other
|
|
|
2,913
|
|
|
1,272
|
|
|
2,561
|
|
|
1,075
|
|
|
1,896
|
|
|
748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Latin America and the Caribbean
|
|
|
6,666
|
|
|
2,869
|
|
|
6,062
|
|
|
2,701
|
|
|
4,916
|
|
|
2,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
31,754
|
|
$
|
9,117
|
|
$
|
29,740
|
|
$
|
8,395
|
|
$
|
27,226
|
|
$
|
7,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 21: Commitments and Contingencies
Commitments
At December 31, 2013, minimum future commitments under noncancelable operating leases having lease terms in excess of one year
were primarily for real property and aggregated to $996 million, payable as follows: $99 million in 2014, $95 million in 2015, $98 million in 2016, $92 million in
2017, $92 million in 2018 and $520 million thereafter. Certain of these leases contain escalation clauses and renewal or purchase options, which we have not considered in the amounts
disclosed. Rental expenses under operating leases were $129 million in 2013, $118 million in 2012 and $99 million in 2011.
At
December 31, 2013, our minimum payments under agreements to purchase broadcast programming, regional professional team rights and the purchase of services that we have
outsourced to third parties, such as billing services, and satellite telemetry, tracking and control, satellite construction and launch contracts and broadcast center services aggregated to $4,793
million, payable as follows: $2,122 million in 2014, $1,210 million in 2015, $414 million in 2016, $329 million in 2017, $147 million in 2018 and $571 million
thereafter.
Satellite Commitments
DIRECTV U.S. has contracted for the construction and launch of two new satellites: D14, which we expect to launch in the fourth quarter
of 2014 and D15, which we expect to launch in the first half of 2015. D14 and D15 are expected to provide additional HD, replacement, and backup capacity for DIRECTV U.S. Additionally, DIRECTV Latin
America has entered into a contract for the lease of two additional satellites for PanAmericana: ISDLA-1, which we expect to launch in the fourth quarter of 2014 and ISDLA-2, which we expect to launch
in the fourth quarter of 2015. ISDLA-1 will become the primary satellite for PanAmericana with a substantial increase in channel capacity from the current satellite, and ISDLA-2 is expected to serve
as an in-orbit spare for ISDLA-1. As a part of the lease agreement for ISDLA-1 and ISDLA-2, which we expect to account for as a capital lease, we are required to make prepayments prior to the launch
of the satellites and commencement of the lease. Prepayments related to this agreement totaled $105 million for the year ended December 31, 2013 and $128 million for the year
ended December 31, 2012, and are included as "Cash paid for satellites" in the Consolidated Statements of Cash Flows.
In
addition, DIRECTV Latin America has contracted for the construction and launch of a new satellite for Sky Brasil, SKY-Brasil 1, which we expect to launch in the second quarter of
2016. SKY-Brasil 1 is expected to provide additional channel and HD capacity for Sky Brasil.
Total
future cash payments under these agreements aggregate to $1,257 million, payable as follows: $279 million in 2014, $202 million in 2015, $91 million in
2016, $77 million in 2017, $50 million in 2018 and $558 million thereafter.
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 would have been determined by mutual agreement or by
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
an
outside valuation expert, and we would have had the option to elect to pay for the Sky Brasil shares in cash, shares of our common stock or a combination of both. We estimated that Globo's
remaining 7% equity interest in Sky Brasil had a fair value of approximately $375 million as of December 31, 2013 and $400 million as of December 31, 2012. 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. Globo did not exercise their right to require us to purchase its shares in Sky Brasil, which has expired.
Venezuela Devaluation and Foreign Currency Exchange Controls
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. If exchange controls are eased in the future, accumulated cash balances may ultimately be repatriated at less than their reported
value, as the official exchange rate has not changed despite high inflation in Venezuela. As of December 31, 2013, our Venezuelan subsidiary had Venezuelan bolivar denominated net monetary
assets of $607 million, including cash of $658 million, based on the 6.3 bolivars per U.S. dollar official exchange rate at that time. In 2013, our Venezuelan subsidiary generated
revenues of approximately $900 million and operating profit before depreciation and amortization of approximately $500 million, excluding the impact of the $166 million Venezuelan
devaluation charge recorded in February 2013.
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 also are ongoing impacts to our results of operations, 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.
Also
in February 2013, the Venezuelan government announced a new currency exchange system, the Sistema Complementario de Administración de Divisas, or SICAD, which is
intended to function as a public bidding system for private entities that import goods. Effective January 24, 2014, the Venezuelan government required that dividends and royalties will be
subject to the SICAD program. The most recent transactions executed through SICAD auctions have been at an exchange rate of 11.4 bolivars per U.S. dollar. Depending on the transparency and liquidity
of the SICAD market, it is possible that in the future we may remeasure our net monetary assets at the SICAD rate. To the extent that the SICAD rate is higher than the official exchange rate at that
time, this could result in an additional devaluation charge. We have not executed any transactions through the SICAD program.
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 expenditures in amounts that
could not be estimated at December 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.
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
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
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 of all claims have been granted in all of
the federal cases, except for a case originally filed in Arkansas state court. The denial of our motion as to that case 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 Federal
Trade Commission, or 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. The FTC staff has advised that they will 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.
As previously reported, Escritório Central de Arrecadação e
Distribuição, or ECAD, the organization responsible for collecting performance rights fees under Brazilian law, had outstanding claims against Sky Brasil, along with
other video distributors in Brazil. In September 2013, Sky Brasil entered into an agreement with ECAD whereby Sky Brasil agreed to settle all claims for the period from 2004 through
December 31, 2013 for a cash payment of $92 million. As a result of this settlement, Sky Brasil recognized a $128 million pre-tax gain from the reversal of amounts previously
accrued during such period, of which $70 million was recorded as a reduction in "Broadcast programming and other," $37 million was recorded as a reduction in "Interest expense" and
$21 million was recorded in "Other, net" in the Consolidated Statements of Operations. Sky Brasil had provided letters of credit related to this dispute in the amount of approximately
$104 million, which have now been released. The settlement does not include any agreement as to royalties that will apply after December 31, 2013.
SAGAI.
In 2009, Sociedad Argentina de Gestion de Actores Interpretes ("SAGAI") sued DIRECTV Argentina over the payment of performance
rights fees.
SAGAI claimed that under applicable laws, we are required to pay them 2% of our programming revenues. In September 2013, the court ruled in SAGAI's favor, awarding damages equal to 2% of DIRECTV
Argentina's programming revenue, approximately $77 million. We have recently entered into discussions with SAGAI to settle the dispute. Additionally, we have engaged outside advisors to review
the judgment against us and we believe we have grounds to appeal the judgment. We have accrued amounts we believe are adequate for such performance rights.
Waste Disposal Inquiry.
On August 20, 2012, DIRECTV U.S. received from the State of California subpoenas and interrogatories
related to our
generation, handling, record keeping, 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.
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
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 result 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 a portion of 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 December 31, 2013, the net book value of in-orbit satellites was $1,401 million all of which was
uninsured.
Other
As of December 31, 2013, we were contingently liable under standby letters of credit and bonds in the aggregate amount of
$236 million primarily related to judicial deposit and payment guarantees in Latin America and insurance deductibles.
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Note 22: Selected Quarterly Data (Unaudited)
The following table presents unaudited selected quarterly data for the years presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
|
|
|
(Dollars in Millions,
Except Per Share Amounts)
|
|
2013 Quarters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
7,580
|
|
$
|
7,700
|
|
$
|
7,880
|
|
$
|
8,594
|
|
Operating profit
|
|
|
1,242
|
|
|
1,350
|
|
|
1,225
|
|
|
1,333
|
|
Net income attributable to DIRECTV
|
|
|
690
|
|
|
660
|
|
|
699
|
|
|
810
|
|
Basic earnings attributable to DIRECTV per common share
|
|
$
|
1.21
|
|
$
|
1.19
|
|
$
|
1.29
|
|
$
|
1.55
|
|
Diluted earnings attributable to DIRECTV per common share
|
|
$
|
1.20
|
|
$
|
1.18
|
|
$
|
1.28
|
|
$
|
1.53
|
|
2012 Quarters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
7,046
|
|
$
|
7,224
|
|
$
|
7,416
|
|
$
|
8,054
|
|
Operating profit
|
|
|
1,308
|
|
|
1,411
|
|
|
1,068
|
|
|
1,298
|
|
Net income attributable to DIRECTV
|
|
|
731
|
|
|
711
|
|
|
565
|
|
|
942
|
|
Basic earnings attributable to DIRECTV per common share
|
|
$
|
1.08
|
|
$
|
1.09
|
|
$
|
0.91
|
|
$
|
1.57
|
|
Diluted earnings attributable to DIRECTV per common share
|
|
$
|
1.07
|
|
$
|
1.09
|
|
$
|
0.90
|
|
$
|
1.55
|
|
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Note 23: Condensed Consolidating Financial Statements
As discussed above in Note 10, on November 14, 2011, 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. Also, restricted net assets of our Venezuelan subsidiary, which is included within Non-Guarantor subsidiaries, exceeded 25% of total consolidated net assets and as
such, the required condensed parent company information is included as part of the condensed consolidating financial statements below. For additional information regarding the Venezuelan restricted
net assets see Note 21. For the periods prior to November 14, 2011, the condensed consolidating financial statements have been prepared as if the guarantee had been in place during that
period.
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
years ended December 31, 2013, 2012 and 2011, and the condensed consolidating balance sheets as of December 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 LLC and DIRECTV
Financing Co., Inc. and each of DIRECTV Holdings LLC's material subsidiaries (other than DIRECTV Financing Co., Inc.), 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 and our regional sports networks which are
held by DSN and its subsidiaries which are comprised primarily of two regional sports networks. In addition, the Non-Guarantor Subsidiaries include the entity that is the parent of DIRECTV Holdings.
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.
Subsequent
to the issuance of our Form 10-K for the year ended December 31, 2013, management identified certain corrections that were needed in the presentation of the
condensed consolidating financial statements and related eliminations. These corrections only impact the condensed consolidating financial statements and do not affect our consolidated results of
operations, balance sheets or cash flows. Management believes these changes are not material.
In
the Condensed Consolidating Statement of Operations, we now present the equity earnings of DIRECTV Holdings, which is a subsidiary of DIRECTV Group, an entity included in
Non-Guarantor Subsidiaries, in "Equity in income of consolidated subsidiaries" for the Non-Guarantor Subsidiaries. We also recorded an adjustment to the tax allocation from the Guarantor Subsidiaries
to the Parent Guarantor, the Co-Issuers and the Non-Guarantor Subsidiaries for the year ended December 31, 2013.
The
following is a reconciliation of the amounts previously reported to the "As Revised" amounts as stated in the following components of the Condensed Consolidating Statement of
Operations for each of the years ended December 31, 2013, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
Parent Guarantor for the year ended December 31, 2013
|
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Equity in income of consolidated subsidiaries
|
|
$
|
2,906
|
|
$
|
(6
|
)
|
$
|
2,900
|
|
Income before income tax
|
|
$
|
2,844
|
|
$
|
(6
|
)
|
$
|
2,838
|
|
Income tax benefit
|
|
$
|
15
|
|
$
|
6
|
|
$
|
21
|
|
Net income
|
|
$
|
2,859
|
|
$
|
|
|
$
|
2,859
|
|
Net income attributable to DIRECTV
|
|
$
|
2,859
|
|
$
|
|
|
$
|
2,859
|
|
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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
|
|
|
|
|
|
|
|
|
|
|
Co-Issuers for the year ended December 31, 2013
|
|
As Previously
Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Equity in income of consolidated subsidiaries
|
|
$
|
3,374
|
|
$
|
(494
|
)
|
$
|
2,880
|
|
Income before income tax
|
|
$
|
2,550
|
|
$
|
(494
|
)
|
$
|
2,056
|
|
Income tax benefit
|
|
$
|
202
|
|
$
|
91
|
|
$
|
293
|
|
Net income
|
|
$
|
2,752
|
|
$
|
(403
|
)
|
$
|
2,349
|
|
Net income attributable to DIRECTV
|
|
$
|
2,752
|
|
$
|
(403
|
)
|
$
|
2,349
|
|
Guarantor Subsidiaries for the year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(1,098
|
)
|
$
|
(494
|
)
|
$
|
(1,592
|
)
|
Net income
|
|
$
|
3,374
|
|
$
|
(494
|
)
|
$
|
2,880
|
|
Net income attributable to DIRECTV
|
|
$
|
3,374
|
|
$
|
(494
|
)
|
$
|
2,880
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Equity in income of consolidated subsidiaries
|
|
$
|
|
|
$
|
2,349
|
|
$
|
2,349
|
|
Income before income tax
|
|
$
|
902
|
|
$
|
2,349
|
|
$
|
3,251
|
|
Income tax expense
|
|
$
|
(722
|
)
|
$
|
397
|
|
$
|
(325
|
)
|
Net income
|
|
$
|
180
|
|
$
|
2,746
|
|
$
|
2,926
|
|
Net income attributable to DIRECTV
|
|
$
|
154
|
|
$
|
2,746
|
|
$
|
2,900
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Equity in income of consolidated subsidiaries
|
|
$
|
|
|
$
|
2,286
|
|
$
|
2,286
|
|
Income before income taxes
|
|
$
|
1,143
|
|
$
|
2,286
|
|
$
|
3,429
|
|
Net income
|
|
$
|
722
|
|
$
|
2,286
|
|
$
|
3,008
|
|
Net income attributable to DIRECTV
|
|
$
|
694
|
|
$
|
2,286
|
|
$
|
2,980
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Equity in income of consolidated subsidiaries
|
|
$
|
|
|
$
|
1,925
|
|
$
|
1,925
|
|
Income before income taxes
|
|
$
|
958
|
|
$
|
1,925
|
|
$
|
2,883
|
|
Net income
|
|
$
|
724
|
|
$
|
1,925
|
|
$
|
2,649
|
|
Net income attributable to DIRECTV
|
|
$
|
697
|
|
$
|
1,925
|
|
$
|
2,622
|
|
In
the Condensed Consolidating Statement of Comprehensive Income, we changed our presentation such that the comprehensive income of a subsidiary is included in the comprehensive income
of its parent. Comprehensive income is also impacted by the adjustments to net income noted above.
The
following is a reconciliation of the amounts previously reported to the "As Revised" amounts as stated in the following components of the Condensed Consolidating Statement of
Comprehensive Income for each of the years ended December 31, 2013, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
Parent Guarantor for the year ended December 31, 2013
|
|
As Previously
Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains arising during the period
|
|
$
|
|
|
$
|
80
|
|
$
|
80
|
|
Reclassification adjustments included in net income
|
|
$
|
|
|
$
|
(49
|
)
|
$
|
(49
|
)
|
Foreign currency translation adjustments
|
|
$
|
|
|
$
|
(167
|
)
|
$
|
(167
|
)
|
Reclassification adjustment for net losses on securities recognized during the period
|
|
$
|
|
|
$
|
1
|
|
$
|
1
|
|
Other comprehensive income (loss)
|
|
$
|
61
|
|
$
|
(135
|
)
|
$
|
(74
|
)
|
Comprehensive income
|
|
$
|
2,920
|
|
$
|
(135
|
)
|
$
|
2,785
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,920
|
|
$
|
(135
|
)
|
$
|
2,785
|
|
Parent Guarantor for the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
$
|
|
|
$
|
(10
|
)
|
$
|
(10
|
)
|
Reclassification adjustments included in net income
|
|
$
|
|
|
$
|
(7
|
)
|
$
|
(7
|
)
|
Foreign currency translation adjustments
|
|
$
|
|
|
$
|
(17
|
)
|
$
|
(17
|
)
|
Unrealized holding losses on securities
|
|
$
|
|
|
$
|
(4
|
)
|
$
|
(4
|
)
|
Other comprehensive loss
|
|
$
|
(33
|
)
|
$
|
(38
|
)
|
$
|
(71
|
)
|
Comprehensive income
|
|
$
|
2,916
|
|
$
|
(38
|
)
|
$
|
2,878
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,916
|
|
$
|
(38
|
)
|
$
|
2,878
|
|
Parent Guarantor for the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
$
|
|
|
$
|
(84
|
)
|
$
|
(84
|
)
|
Unrealized holding losses on securities
|
|
$
|
|
|
$
|
(6
|
)
|
$
|
(6
|
)
|
Other comprehensive loss
|
|
$
|
(29
|
)
|
$
|
(90
|
)
|
$
|
(119
|
)
|
Comprehensive income
|
|
$
|
2,580
|
|
$
|
(90
|
)
|
$
|
2,490
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,580
|
|
$
|
(90
|
)
|
$
|
2,490
|
|
105
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
|
|
|
|
|
|
|
|
|
|
|
Co-Issuers for the year ended December 31, 2013
|
|
As Previously
Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Net income
|
|
$
|
2,752
|
|
$
|
(403
|
)
|
$
|
2,349
|
|
Comprehensive income
|
|
$
|
2,783
|
|
$
|
(403
|
)
|
$
|
2,380
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,783
|
|
$
|
(403
|
)
|
$
|
2,380
|
|
Guarantor Subsidiaries for the year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,374
|
|
$
|
(494
|
)
|
$
|
2,880
|
|
Comprehensive income
|
|
$
|
3,374
|
|
$
|
(494
|
)
|
$
|
2,880
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
3,374
|
|
$
|
(494
|
)
|
$
|
2,880
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
180
|
|
$
|
2,746
|
|
$
|
2,926
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains arising during the period
|
|
$
|
|
|
$
|
80
|
|
$
|
80
|
|
Reclassification adjustments included in net income
|
|
$
|
|
|
$
|
(49
|
)
|
$
|
(49
|
)
|
Other comprehensive loss
|
|
$
|
(172
|
)
|
$
|
31
|
|
$
|
(141
|
)
|
Comprehensive income
|
|
$
|
8
|
|
$
|
2,777
|
|
$
|
2,785
|
|
Comprehensive income (loss) attributable to DIRECTV
|
|
$
|
(12
|
)
|
$
|
2,777
|
|
$
|
2,765
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
722
|
|
$
|
2,286
|
|
$
|
3,008
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
$
|
|
|
$
|
(10
|
)
|
$
|
(10
|
)
|
Reclassification adjustments included in net income
|
|
$
|
|
|
$
|
(7
|
)
|
$
|
(7
|
)
|
Other comprehensive loss
|
|
$
|
(36
|
)
|
$
|
(17
|
)
|
$
|
(53
|
)
|
Comprehensive income
|
|
$
|
686
|
|
$
|
2,269
|
|
$
|
2,955
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
673
|
|
$
|
2,269
|
|
$
|
2,942
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
724
|
|
$
|
1,925
|
|
$
|
2,649
|
|
Comprehensive income
|
|
$
|
624
|
|
$
|
1,925
|
|
$
|
2,549
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
607
|
|
$
|
1,925
|
|
$
|
2,532
|
|
In
the Condensed Consolidating Balance Sheets, with respect to the Non-Guarantor Subsidiaries, we previously presented some of the investments of the parent entity, which is a
Non-Guarantor Subsidiary, that owns DIRECTV Latin America Holdings, Inc., DIRECTV Sports Networks LLC and other subsidiaries in "Investment in subsidiaries" with the corresponding equity
of those subsidiaries in "Stockholders' equity (deficit)." We also previously recorded the elimination of those amounts in the Eliminations column. We now present the elimination of these investment
amounts, including the elimination of all intercompany receivables and payables within the Non-Guarantor Subsidiaries column. We also reclassified amounts for the Non-Guarantor subsidiaries from
"Common stock and additional paid-in-capital" to "Retained earnings (accumulated deficit)" in the Condensed Consolidating Balance Sheets to correctly classify dividends paid to the Parent Guarantor.
We
recorded an adjustment to include the impact of prior year tax allocations in the Condensed Consolidating Balance Sheets. The balances as of December 31, 2013 were also
impacted by the adjustment to the tax allocation as discussed above, which resulted in adjustments to "Total current assets" and "Total current liabilities" with related entries to "Investment in
subsidiaries" and "Stockholders' equity (deficit)" in the Condensed Consolidating Balance Sheet for the Parent Guarantor, Co-Issuers, Guarantor Subsidiaries and Non-Guarantor Subsidiaries.
The
following is a reconciliation of the amounts previously reported to the "As Revised" amounts as stated in the following components of the Condensed Consolidating Balance Sheets as of
December 31, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
Parent Guarantor as of December 31, 2013
|
|
As Previously
Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Total current assets
|
|
$
|
1,521
|
|
$
|
(542
|
)
|
$
|
979
|
|
Intercompany receivables
|
|
$
|
4,750
|
|
$
|
49
|
|
$
|
4,799
|
|
Investment in subsidiaries
|
|
$
|
(10,124
|
)
|
$
|
(53
|
)
|
$
|
(10,177
|
)
|
Total assets
|
|
$
|
(3,761
|
)
|
$
|
(546
|
)
|
$
|
(4,307
|
)
|
Total current liabilities
|
|
$
|
941
|
|
$
|
(493
|
)
|
$
|
448
|
|
Intercompany liabilities
|
|
$
|
1,443
|
|
$
|
(53
|
)
|
$
|
1,390
|
|
Total liabilities and stockholders' deficit
|
|
$
|
(3,761
|
)
|
$
|
(546
|
)
|
$
|
(4,307
|
)
|
106
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
|
|
|
|
|
|
|
|
|
|
|
Parent Guarantor as of December 31, 2012
|
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Total current assets
|
|
$
|
883
|
|
$
|
(24
|
)
|
$
|
859
|
|
Intercompany receivables
|
|
$
|
4,382
|
|
$
|
197
|
|
$
|
4,579
|
|
Investment in subsidiaries
|
|
$
|
(8,687
|
)
|
$
|
(123
|
)
|
$
|
(8,810
|
)
|
Total assets
|
|
$
|
(3,242
|
)
|
$
|
50
|
|
$
|
(3,192
|
)
|
Intercompany liabilities
|
|
$
|
1,401
|
|
$
|
50
|
|
$
|
1,451
|
|
Total liabilities and stockholders' deficit
|
|
$
|
(3,242
|
)
|
$
|
50
|
|
$
|
(3,192
|
)
|
Co-Issuers as of December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
$
|
18,303
|
|
$
|
(491
|
)
|
$
|
17,812
|
|
Total assets
|
|
$
|
29,274
|
|
$
|
(491
|
)
|
$
|
28,783
|
|
Total current liabilities
|
|
$
|
1,567
|
|
$
|
(89
|
)
|
$
|
1,478
|
|
Intercompany liabilities
|
|
$
|
20,985
|
|
$
|
34
|
|
$
|
21,019
|
|
Accumulated deficit
|
|
$
|
(11,850
|
)
|
$
|
(436
|
)
|
$
|
(12,286
|
)
|
Total stockholders' deficit
|
|
$
|
(11,811
|
)
|
$
|
(436
|
)
|
$
|
(12,247
|
)
|
Total liabilities and stockholders' equity
|
|
$
|
29,274
|
|
$
|
(491
|
)
|
$
|
28,783
|
|
Co-Issuers as of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
884
|
|
$
|
(18
|
)
|
$
|
866
|
|
Intercompany receivables
|
|
$
|
6,152
|
|
$
|
3
|
|
$
|
6,155
|
|
Investment in subsidiaries
|
|
$
|
15,001
|
|
$
|
(197
|
)
|
$
|
14,804
|
|
Total assets
|
|
$
|
23,956
|
|
$
|
(212
|
)
|
$
|
23,744
|
|
Total current liabilities
|
|
$
|
646
|
|
$
|
(18
|
)
|
$
|
628
|
|
Accumulated deficit
|
|
$
|
(10,341
|
)
|
$
|
(194
|
)
|
$
|
(10,535
|
)
|
Total stockholders' deficit
|
|
$
|
(10,346
|
)
|
$
|
(194
|
)
|
$
|
(10,540
|
)
|
Total liabilities and stockholders' equity
|
|
$
|
23,956
|
|
$
|
(212
|
)
|
$
|
23,744
|
|
Guarantor Subsidiaries as of December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
3,071
|
|
$
|
(494
|
)
|
$
|
2,577
|
|
Intercompany receivables
|
|
$
|
20,985
|
|
$
|
3
|
|
$
|
20,988
|
|
Total assets
|
|
$
|
31,841
|
|
$
|
(491
|
)
|
$
|
31,350
|
|
Retained earnings
|
|
$
|
13,373
|
|
$
|
(491
|
)
|
$
|
12,882
|
|
Total stockholders' equity
|
|
$
|
18,303
|
|
$
|
(491
|
)
|
$
|
17,812
|
|
Total liabilities and stockholders' equity
|
|
$
|
31,841
|
|
$
|
(491
|
)
|
$
|
31,350
|
|
Guarantor Subsidiaries as of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Intercompany liabilities
|
|
$
|
6,152
|
|
$
|
197
|
|
$
|
6,349
|
|
Retained earnings
|
|
$
|
10,199
|
|
$
|
(197
|
)
|
$
|
10,002
|
|
Total stockholders' equity
|
|
$
|
15,001
|
|
$
|
(197
|
)
|
$
|
14,804
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries as of December 31, 2013
|
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Total current assets
|
|
$
|
2,571
|
|
$
|
(796
|
)
|
$
|
1,775
|
|
Intercompany receivables
|
|
$
|
4,204
|
|
$
|
(2,818
|
)
|
$
|
1,386
|
|
Investment in subsidiaries
|
|
$
|
(12,221
|
)
|
$
|
(26
|
)
|
$
|
(12,247
|
)
|
Total assets
|
|
$
|
733
|
|
$
|
(3,640
|
)
|
$
|
(2,907
|
)
|
Total current liabilities
|
|
$
|
2,553
|
|
$
|
(1,250
|
)
|
$
|
1,303
|
|
Intercompany liabilities
|
|
$
|
7,511
|
|
$
|
(2,747
|
)
|
$
|
4,764
|
|
Capital stock and additional paid-in capital
|
|
$
|
(8,936
|
)
|
$
|
12,607
|
|
$
|
3,671
|
|
Accumulated deficit
|
|
$
|
(1,356
|
)
|
$
|
(12,264
|
)
|
$
|
(13,620
|
)
|
Accumulated other comprehensive loss
|
|
$
|
(242
|
)
|
$
|
14
|
|
$
|
(228
|
)
|
Total stockholders' deficit
|
|
$
|
(10,534
|
)
|
$
|
357
|
|
$
|
(10,177
|
)
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
733
|
|
$
|
(3,640
|
)
|
$
|
(2,907
|
)
|
Non-Guarantor Subsidiaries as of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
2,039
|
|
$
|
(502
|
)
|
$
|
1,537
|
|
Intercompany receivables
|
|
$
|
3,703
|
|
$
|
(2,255
|
)
|
$
|
1,448
|
|
Investment in subsidiaries
|
|
$
|
(10,915
|
)
|
$
|
375
|
|
$
|
(10,540
|
)
|
Total assets
|
|
$
|
696
|
|
$
|
(2,382
|
)
|
$
|
(1,686
|
)
|
Total current liabilities
|
|
$
|
2,025
|
|
$
|
(526
|
)
|
$
|
1,499
|
|
Intercompany liabilities
|
|
$
|
6,684
|
|
$
|
(2,302
|
)
|
$
|
4,382
|
|
Capital stock and additional paid-in capital
|
|
$
|
(6,632
|
)
|
$
|
10,322
|
|
$
|
3,690
|
|
Accumulated deficit
|
|
$
|
(2,560
|
)
|
$
|
(9,858
|
)
|
$
|
(12,418
|
)
|
Accumulated other comprehensive loss
|
|
$
|
(64
|
)
|
$
|
(18
|
)
|
$
|
(82
|
)
|
Total stockholders' deficit
|
|
$
|
(9,256
|
)
|
$
|
446
|
|
$
|
(8,810
|
)
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
696
|
|
$
|
(2,382
|
)
|
$
|
(1,686
|
)
|
In
the Condensed Consolidating Statement of Cash Flows, we present changes in receivable balances of affiliates as investing activities and changes in payable balances of affiliates as
financing activities because these changes are a result of a subsidiary's deposit in or withdrawal from its parent's cash account under a centralized cash management arrangement. We previously
presented all changes from receivable and payable balances of affiliates as operating or financing activities.
The
following is a reconciliation of the amounts previously reported to the "As Revised" amounts as stated in the following components of the Condensed
107
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Consolidating
Statement of Cash Flows for each of the years ended December 31, 2013, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
Parent Guarantor for the year ended December 31, 2013
|
|
As Previously
Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Net cash provided by operating activities
|
|
$
|
1,592
|
|
$
|
708
|
|
$
|
2,300
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of investments
|
|
$
|
234
|
|
$
|
(234
|
)
|
$
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(248
|
)
|
$
|
(248
|
)
|
Net cash provided by investing activities
|
|
$
|
2,131
|
|
$
|
(482
|
)
|
$
|
1,649
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
$
|
|
|
$
|
(61
|
)
|
$
|
(61
|
)
|
Excess tax benefit from share-based compensation
|
|
$
|
|
|
$
|
24
|
|
$
|
24
|
|
Intercompany payments
|
|
$
|
367
|
|
$
|
(189
|
)
|
$
|
178
|
|
Net cash used in financing activities
|
|
$
|
(3,633
|
)
|
$
|
(226
|
)
|
$
|
(3,859
|
)
|
Parent Guarantor for the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,728
|
|
$
|
327
|
|
$
|
2,055
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(369
|
)
|
$
|
(369
|
)
|
Net cash provided by investing activities
|
|
$
|
3,775
|
|
$
|
(369
|
)
|
$
|
3,406
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
$
|
|
|
$
|
(61
|
)
|
$
|
(61
|
)
|
Excess tax benefit from share-based compensation
|
|
$
|
|
|
$
|
30
|
|
$
|
30
|
|
Intercompany payments (funding)
|
|
$
|
(52
|
)
|
$
|
73
|
|
$
|
21
|
|
Net cash used in financing activities
|
|
$
|
(5,224
|
)
|
$
|
42
|
|
$
|
(5,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Parent Guarantor for the year ended December 31, 2011
|
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Net cash provided by operating activities
|
|
$
|
1,831
|
|
$
|
(18
|
)
|
$
|
1,813
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Cash paid for satellites
|
|
$
|
(1
|
)
|
$
|
1
|
|
$
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(223
|
)
|
$
|
(223
|
)
|
Net cash provided by investing activities
|
|
$
|
3,486
|
|
$
|
(222
|
)
|
$
|
3,264
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
$
|
(5
|
)
|
$
|
(53
|
)
|
$
|
(58
|
)
|
Excess tax benefit from share-based compensation
|
|
$
|
|
|
$
|
25
|
|
$
|
25
|
|
Intercompany payments (funding)
|
|
$
|
(134
|
)
|
$
|
268
|
|
$
|
134
|
|
Net cash used in financing activities
|
|
$
|
(5,635
|
)
|
$
|
240
|
|
$
|
(5,395
|
)
|
Co-Issuers for the year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
2,476
|
|
$
|
(4,378
|
)
|
$
|
(1,902
|
)
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(1,157
|
)
|
$
|
(1,157
|
)
|
Net cash used in investing activities
|
|
$
|
|
|
$
|
(1,157
|
)
|
$
|
(1,157
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments
|
|
$
|
|
|
$
|
5,535
|
|
$
|
5,535
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(2,413
|
)
|
$
|
5,535
|
|
$
|
3,122
|
|
Co-Issuers for the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
2,388
|
|
$
|
(4,208
|
)
|
$
|
(1,820
|
)
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(917
|
)
|
$
|
(917
|
)
|
Net cash used in investing activities
|
|
$
|
|
|
$
|
(917
|
)
|
$
|
(917
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments
|
|
$
|
|
|
$
|
5,125
|
|
$
|
5,125
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(1,888
|
)
|
$
|
5,125
|
|
$
|
3,237
|
|
Co-Issuers for the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,835
|
|
$
|
(1,556
|
)
|
$
|
279
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(1,221
|
)
|
$
|
(1,221
|
)
|
Net cash used in investing activities
|
|
$
|
|
|
$
|
(1,221
|
)
|
$
|
(1,221
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments
|
|
$
|
|
|
$
|
2,777
|
|
$
|
2,777
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(2,290
|
)
|
$
|
2,777
|
|
$
|
487
|
|
108
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
|
|
|
|
|
|
|
|
|
|
|
Guarantor Subsidiaries for the year ended December 31, 2013
|
|
As Previously
Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Net cash provided by operating activities
|
|
$
|
2,211
|
|
$
|
4,314
|
|
$
|
6,525
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(5,537
|
)
|
$
|
(5,537
|
)
|
Net cash used in investing activities
|
|
$
|
(2,158
|
)
|
$
|
(5,537
|
)
|
$
|
(7,695
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments (funding)
|
|
$
|
(3
|
)
|
$
|
1,223
|
|
$
|
1,220
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(58
|
)
|
$
|
1,223
|
|
$
|
1,165
|
|
Guarantor Subsidiaries for the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,766
|
|
$
|
4,181
|
|
$
|
5,947
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(5,118
|
)
|
$
|
(5,118
|
)
|
Net cash used in investing activities
|
|
$
|
(1,724
|
)
|
$
|
(5,118
|
)
|
$
|
(6,842
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments
|
|
$
|
13
|
|
$
|
937
|
|
$
|
950
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(35
|
)
|
$
|
937
|
|
$
|
902
|
|
Guarantor Subsidiaries for the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,745
|
|
$
|
1,528
|
|
$
|
3,273
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(2,785
|
)
|
$
|
(2,785
|
)
|
Net cash used in investing activities
|
|
$
|
(1,691
|
)
|
$
|
(2,785
|
)
|
$
|
(4,476
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments
|
|
$
|
20
|
|
$
|
1,257
|
|
$
|
1,277
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(54
|
)
|
$
|
1,257
|
|
$
|
1,203
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2013
|
|
As Previously
Reported
|
|
Adjustments
|
|
As Revised
|
|
|
|
(Dollars in Millions)
|
|
Net cash provided by operating activities
|
|
$
|
2,418
|
|
$
|
(607
|
)
|
$
|
1,811
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of investments
|
|
$
|
11
|
|
$
|
234
|
|
$
|
245
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(188
|
)
|
$
|
(188
|
)
|
Net cash used in investing activities
|
|
$
|
(1,829
|
)
|
$
|
46
|
|
$
|
(1,783
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments (funding)
|
|
$
|
(364
|
)
|
$
|
561
|
|
$
|
197
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(272
|
)
|
$
|
561
|
|
$
|
289
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,877
|
|
$
|
(269
|
)
|
$
|
1,608
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany funding
|
|
$
|
|
|
$
|
(4
|
)
|
$
|
(4
|
)
|
Net cash used in investing activities
|
|
$
|
(1,639
|
)
|
$
|
(4
|
)
|
$
|
(1,643
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments
|
|
$
|
39
|
|
$
|
273
|
|
$
|
312
|
|
Net cash provided by financing activities
|
|
$
|
5
|
|
$
|
273
|
|
$
|
278
|
|
Non-Guarantor Subsidiaries for the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,537
|
|
$
|
74
|
|
$
|
1,611
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Cash paid for satellites
|
|
$
|
(104
|
)
|
$
|
(1
|
)
|
$
|
(105
|
)
|
Intercompany funding
|
|
$
|
|
|
$
|
(148
|
)
|
$
|
(148
|
)
|
Net cash used in investing activities
|
|
$
|
(1,330
|
)
|
$
|
(149
|
)
|
$
|
(1,479
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Intercompany payments
|
|
$
|
114
|
|
$
|
75
|
|
$
|
189
|
|
Net cash provided by (used in) financing activities
|
|
$
|
(63
|
)
|
$
|
75
|
|
$
|
12
|
|
109
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of OperationsAs Revised
For the Year Ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
|
|
$
|
24,676
|
|
$
|
7,141
|
|
$
|
(63
|
)
|
$
|
31,754
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
11,616
|
|
|
2,430
|
|
|
(55
|
)
|
|
13,991
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
1,474
|
|
|
768
|
|
|
|
|
|
2,242
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
293
|
|
|
124
|
|
|
(8
|
)
|
|
409
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
2,642
|
|
|
777
|
|
|
|
|
|
3,419
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
1,350
|
|
|
197
|
|
|
|
|
|
1,547
|
|
General and administrative expenses
|
|
|
70
|
|
|
|
|
|
1,217
|
|
|
715
|
|
|
|
|
|
2,002
|
|
Venezuelan currency devaluation charge
|
|
|
|
|
|
|
|
|
|
|
|
166
|
|
|
|
|
|
166
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
1,640
|
|
|
1,188
|
|
|
|
|
|
2,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
70
|
|
|
|
|
|
20,232
|
|
|
6,365
|
|
|
(63
|
)
|
|
26,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(70
|
)
|
|
|
|
|
4,444
|
|
|
776
|
|
|
|
|
|
5,150
|
|
Equity in income of consolidated subsidiaries
|
|
|
2,900
|
|
|
2,880
|
|
|
|
|
|
2,349
|
|
|
(8,129
|
)
|
|
|
|
Interest income
|
|
|
16
|
|
|
|
|
|
2
|
|
|
62
|
|
|
(8
|
)
|
|
72
|
|
Interest expense
|
|
|
(1
|
)
|
|
(824
|
)
|
|
(3
|
)
|
|
(20
|
)
|
|
8
|
|
|
(840
|
)
|
Other, net
|
|
|
(7
|
)
|
|
|
|
|
29
|
|
|
84
|
|
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax
|
|
|
2,838
|
|
|
2,056
|
|
|
4,472
|
|
|
3,251
|
|
|
(8,129
|
)
|
|
4,488
|
|
Income tax benefit (expense)
|
|
|
21
|
|
|
293
|
|
|
(1,592
|
)
|
|
(325
|
)
|
|
|
|
|
(1,603
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
2,859
|
|
|
2,349
|
|
|
2,880
|
|
|
2,926
|
|
|
(8,129
|
)
|
|
2,885
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(26
|
)
|
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,859
|
|
$
|
2,349
|
|
$
|
2,880
|
|
$
|
2,900
|
|
$
|
(8,129
|
)
|
$
|
2,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of OperationsAs Revised
For the Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
59
|
|
$
|
23,235
|
|
$
|
6,583
|
|
$
|
(137
|
)
|
$
|
29,740
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
10,743
|
|
|
2,355
|
|
|
(70
|
)
|
|
13,028
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
1,464
|
|
|
673
|
|
|
|
|
|
2,137
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
306
|
|
|
116
|
|
|
(8
|
)
|
|
414
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
2,673
|
|
|
724
|
|
|
|
|
|
3,397
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
1,253
|
|
|
174
|
|
|
|
|
|
1,427
|
|
General and administrative expenses
|
|
|
42
|
|
|
1
|
|
|
1,201
|
|
|
630
|
|
|
(59
|
)
|
|
1,815
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
1,501
|
|
|
936
|
|
|
|
|
|
2,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
42
|
|
|
1
|
|
|
19,141
|
|
|
5,608
|
|
|
(137
|
)
|
|
24,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(42
|
)
|
|
58
|
|
|
4,094
|
|
|
975
|
|
|
|
|
|
5,085
|
|
Equity in income of consolidated subsidiaries
|
|
|
2,980
|
|
|
2,819
|
|
|
|
|
|
2,286
|
|
|
(8,085
|
)
|
|
|
|
Interest income
|
|
|
2
|
|
|
1
|
|
|
|
|
|
68
|
|
|
(12
|
)
|
|
59
|
|
Interest expense
|
|
|
(2
|
)
|
|
(773
|
)
|
|
(3
|
)
|
|
(76
|
)
|
|
12
|
|
|
(842
|
)
|
Other, net
|
|
|
(4
|
)
|
|
(65
|
)
|
|
33
|
|
|
176
|
|
|
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
2,934
|
|
|
2,040
|
|
|
4,124
|
|
|
3,429
|
|
|
(8,085
|
)
|
|
4,442
|
|
Income tax benefit (expense)
|
|
|
15
|
|
|
246
|
|
|
(1,305
|
)
|
|
(421
|
)
|
|
|
|
|
(1,465
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
2,949
|
|
|
2,286
|
|
|
2,819
|
|
|
3,008
|
|
|
(8,085
|
)
|
|
2,977
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(28
|
)
|
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,949
|
|
$
|
2,286
|
|
$
|
2,819
|
|
$
|
2,980
|
|
$
|
(8,085
|
)
|
$
|
2,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of OperationsAs Revised
For the Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Revenues
|
|
$
|
|
|
$
|
682
|
|
$
|
21,872
|
|
$
|
5,422
|
|
$
|
(750
|
)
|
$
|
27,226
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
|
|
|
|
|
9,799
|
|
|
1,916
|
|
|
(60
|
)
|
|
11,655
|
|
Subscriber service expenses
|
|
|
|
|
|
|
|
|
1,435
|
|
|
476
|
|
|
|
|
|
1,911
|
|
Broadcast operations expenses
|
|
|
|
|
|
|
|
|
300
|
|
|
96
|
|
|
(7
|
)
|
|
389
|
|
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
|
|
|
|
|
2,794
|
|
|
596
|
|
|
|
|
|
3,390
|
|
Upgrade and retention costs
|
|
|
|
|
|
|
|
|
1,209
|
|
|
118
|
|
|
|
|
|
1,327
|
|
General and administrative expenses
|
|
|
11
|
|
|
|
|
|
1,729
|
|
|
519
|
|
|
(683
|
)
|
|
1,576
|
|
Depreciation and amortization expense
|
|
|
|
|
|
|
|
|
1,587
|
|
|
762
|
|
|
|
|
|
2,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
11
|
|
|
|
|
|
18,853
|
|
|
4,483
|
|
|
(750
|
)
|
|
22,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
(11
|
)
|
|
682
|
|
|
3,019
|
|
|
939
|
|
|
|
|
|
4,629
|
|
Equity in income of consolidated subsidiaries
|
|
|
2,622
|
|
|
1,947
|
|
|
|
|
|
1,925
|
|
|
(6,494
|
)
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
1
|
|
|
44
|
|
|
(11
|
)
|
|
34
|
|
Interest expense
|
|
|
|
|
|
(692
|
)
|
|
(4
|
)
|
|
(78
|
)
|
|
11
|
|
|
(763
|
)
|
Other, net
|
|
|
(4
|
)
|
|
(25
|
)
|
|
60
|
|
|
53
|
|
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
2,607
|
|
|
1,912
|
|
|
3,076
|
|
|
2,883
|
|
|
(6,494
|
)
|
|
3,984
|
|
Income tax benefit (expense)
|
|
|
2
|
|
|
13
|
|
|
(1,129
|
)
|
|
(234
|
)
|
|
|
|
|
(1,348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
2,609
|
|
|
1,925
|
|
|
1,947
|
|
|
2,649
|
|
|
(6,494
|
)
|
|
2,636
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(27
|
)
|
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to DIRECTV
|
|
$
|
2,609
|
|
$
|
1,925
|
|
$
|
1,947
|
|
$
|
2,622
|
|
$
|
(6,494
|
)
|
$
|
2,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of Comprehensive IncomeAs Revised
For the Year Ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Net income
|
|
$
|
2,859
|
|
$
|
2,349
|
|
$
|
2,880
|
|
$
|
2,926
|
|
$
|
(8,129
|
)
|
$
|
2,885
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
Amortization of amounts resulting from changes in plan provisions recognized as periodic benefit cost
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Cash flows hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains arising during the period
|
|
|
80
|
|
|
80
|
|
|
|
|
|
80
|
|
|
(160
|
)
|
|
80
|
|
Reclassification adjustments included in net income
|
|
|
(49
|
)
|
|
(49
|
)
|
|
|
|
|
(49
|
)
|
|
98
|
|
|
(49
|
)
|
Foreign currency translation adjustments
|
|
|
(167
|
)
|
|
|
|
|
|
|
|
(173
|
)
|
|
167
|
|
|
(173
|
)
|
Reclassification adjustment for net losses on securities recognized during the period
|
|
|
1
|
|
|
|
|
|
|
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(74
|
)
|
|
31
|
|
|
|
|
|
(141
|
)
|
|
104
|
|
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
2,785
|
|
|
2,380
|
|
|
2,880
|
|
|
2,785
|
|
|
(8,025
|
)
|
|
2,805
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,785
|
|
$
|
2,380
|
|
$
|
2,880
|
|
$
|
2,765
|
|
$
|
(8,025
|
)
|
$
|
2,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of Comprehensive IncomeAs Revised
For the Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Net income
|
|
$
|
2,949
|
|
$
|
2,286
|
|
$
|
2,819
|
|
$
|
3,008
|
|
$
|
(8,085
|
)
|
$
|
2,977
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(45
|
)
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
Cash flows hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses arising during the period
|
|
|
(10
|
)
|
|
(10
|
)
|
|
|
|
|
(10
|
)
|
|
20
|
|
|
(10
|
)
|
Reclassification adjustments included in net income
|
|
|
(7
|
)
|
|
(7
|
)
|
|
|
|
|
(7
|
)
|
|
14
|
|
|
(7
|
)
|
Foreign currency translation adjustments
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
(32
|
)
|
|
17
|
|
|
(32
|
)
|
Unrealized holding losses on securities
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
(4
|
)
|
|
4
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
(71
|
)
|
|
(17
|
)
|
|
|
|
|
(53
|
)
|
|
55
|
|
|
(86
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
2,878
|
|
|
2,269
|
|
|
2,819
|
|
|
2,955
|
|
|
(8,030
|
)
|
|
2,891
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,878
|
|
$
|
2,269
|
|
$
|
2,819
|
|
$
|
2,942
|
|
$
|
(8,030
|
)
|
$
|
2,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of Comprehensive IncomeAs Revised
For the Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Net income
|
|
$
|
2,609
|
|
$
|
1,925
|
|
$
|
1,947
|
|
$
|
2,649
|
|
$
|
(6,494
|
)
|
$
|
2,636
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to changes in plan experience and actuarial assumptions arising during the period
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39
|
)
|
Amortization of amounts resulting from changes in plan experience and actuarial assumptions recognized as periodic benefit cost
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Amortization of amounts resulting from changes in plan provisions recognized as periodic benefit cost
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Foreign currency translation adjustments
|
|
|
(84
|
)
|
|
|
|
|
|
|
|
(94
|
)
|
|
84
|
|
|
(94
|
)
|
Unrealized holding losses on securities
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
(6
|
)
|
|
6
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
(119
|
)
|
|
|
|
|
|
|
|
(100
|
)
|
|
90
|
|
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
2,490
|
|
|
1,925
|
|
|
1,947
|
|
|
2,549
|
|
|
(6,404
|
)
|
|
2,507
|
|
Less: Comprehensive income attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
(17
|
)
|
|
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to DIRECTV
|
|
$
|
2,490
|
|
$
|
1,925
|
|
$
|
1,947
|
|
$
|
2,532
|
|
$
|
(6,404
|
)
|
$
|
2,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Balance SheetAs Revised
As of December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
979
|
|
$
|
1,133
|
|
$
|
2,577
|
|
$
|
1,775
|
|
$
|
(511
|
)
|
$
|
5,953
|
|
Satellites, net
|
|
|
|
|
|
|
|
|
1,810
|
|
|
657
|
|
|
|
|
|
2,467
|
|
Property and equipment, net
|
|
|
|
|
|
|
|
|
3,724
|
|
|
2,926
|
|
|
|
|
|
6,650
|
|
Goodwill
|
|
|
|
|
|
1,828
|
|
|
1,363
|
|
|
779
|
|
|
|
|
|
3,970
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
|
527
|
|
|
401
|
|
|
(8
|
)
|
|
920
|
|
Intercompany receivables
|
|
|
4,799
|
|
|
7,820
|
|
|
20,988
|
|
|
1,386
|
|
|
(34,993
|
)
|
|
|
|
Investment in subsidiaries
|
|
|
(10,177
|
)
|
|
17,812
|
|
|
|
|
|
(12,247
|
)
|
|
4,612
|
|
|
|
|
Other assets
|
|
|
92
|
|
|
190
|
|
|
361
|
|
|
1,416
|
|
|
(114
|
)
|
|
1,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
(4,307
|
)
|
$
|
28,783
|
|
$
|
31,350
|
|
$
|
(2,907
|
)
|
$
|
(31,014
|
)
|
$
|
21,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
448
|
|
$
|
1,478
|
|
$
|
3,812
|
|
$
|
1,303
|
|
$
|
(511
|
)
|
$
|
6,530
|
|
Long-term debt
|
|
|
|
|
|
18,203
|
|
|
|
|
|
81
|
|
|
|
|
|
18,284
|
|
Deferred income taxes
|
|
|
|
|
|
9
|
|
|
1,632
|
|
|
277
|
|
|
(114
|
)
|
|
1,804
|
|
Intercompany liabilities
|
|
|
1,390
|
|
|
21,019
|
|
|
7,820
|
|
|
4,764
|
|
|
(34,993
|
)
|
|
|
|
Other liabilities and deferred credits
|
|
|
399
|
|
|
321
|
|
|
274
|
|
|
470
|
|
|
(8
|
)
|
|
1,456
|
|
Redeemable noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
375
|
|
|
|
|
|
375
|
|
Stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock and additional paid-in capital
|
|
|
3,652
|
|
|
25
|
|
|
4,930
|
|
|
3,671
|
|
|
(8,626
|
)
|
|
3,652
|
|
Retained earnings (accumulated deficit)
|
|
|
(9,874
|
)
|
|
(12,286
|
)
|
|
12,882
|
|
|
(13,620
|
)
|
|
13,024
|
|
|
(9,874
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
(322
|
)
|
|
14
|
|
|
|
|
|
(228
|
)
|
|
214
|
|
|
(322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(6,544
|
)
|
|
(12,247
|
)
|
|
17,812
|
|
|
(10,177
|
)
|
|
4,612
|
|
|
(6,544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
(4,307
|
)
|
$
|
28,783
|
|
$
|
31,350
|
|
$
|
(2,907
|
)
|
$
|
(31,014
|
)
|
$
|
21,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Balance SheetAs Revised
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
859
|
|
$
|
866
|
|
$
|
2,788
|
|
$
|
1,537
|
|
$
|
(496
|
)
|
$
|
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
|
|
|
4,579
|
|
|
6,155
|
|
|
16,355
|
|
|
1,448
|
|
|
(28,537
|
)
|
|
|
|
Investment in subsidiaries
|
|
|
(8,810
|
)
|
|
14,804
|
|
|
|
|
|
(10,540
|
)
|
|
4,546
|
|
|
|
|
Other assets
|
|
|
180
|
|
|
91
|
|
|
241
|
|
|
1,294
|
|
|
(95
|
)
|
|
1,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
(3,192
|
)
|
$
|
23,744
|
|
$
|
26,271
|
|
$
|
(1,686
|
)
|
$
|
(24,582
|
)
|
$
|
20,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
384
|
|
$
|
628
|
|
$
|
3,526
|
|
$
|
1,499
|
|
$
|
(496
|
)
|
$
|
5,541
|
|
Long-term debt
|
|
|
|
|
|
17,170
|
|
|
|
|
|
|
|
|
|
|
|
17,170
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
1,397
|
|
|
361
|
|
|
(86
|
)
|
|
1,672
|
|
Intercompany liabilities
|
|
|
1,451
|
|
|
16,355
|
|
|
6,349
|
|
|
4,382
|
|
|
(28,537
|
)
|
|
|
|
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
|
|
|
3,690
|
|
|
(8,504
|
)
|
|
4,021
|
|
Retained earnings (accumulated deficit)
|
|
|
(9,210
|
)
|
|
(10,535
|
)
|
|
10,002
|
|
|
(12,418
|
)
|
|
12,951
|
|
|
(9,210
|
)
|
Accumulated other comprehensive loss
|
|
|
(242
|
)
|
|
(17
|
)
|
|
|
|
|
(82
|
)
|
|
99
|
|
|
(242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (deficit)
|
|
|
(5,431
|
)
|
|
(10,540
|
)
|
|
14,804
|
|
|
(8,810
|
)
|
|
4,546
|
|
|
(5,431
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
(3,192
|
)
|
$
|
23,744
|
|
$
|
26,271
|
|
$
|
(1,686
|
)
|
$
|
(24,582
|
)
|
$
|
20,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of Cash FlowsAs Revised
For the Year Ended December 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 (used in) operating activities
|
|
$
|
2,300
|
|
$
|
(1,902
|
)
|
$
|
6,525
|
|
$
|
1,811
|
|
$
|
(2,340
|
)
|
$
|
6,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
|
|
|
|
|
(1,852
|
)
|
|
(1,557
|
)
|
|
|
|
|
(3,409
|
)
|
Cash paid for satellites
|
|
|
|
|
|
|
|
|
(198
|
)
|
|
(179
|
)
|
|
|
|
|
(377
|
)
|
Investment in companies, net of cash acquired
|
|
|
|
|
|
|
|
|
(53
|
)
|
|
(13
|
)
|
|
|
|
|
(66
|
)
|
Proceeds from sale of investments
|
|
|
|
|
|
|
|
|
12
|
|
|
245
|
|
|
|
|
|
257
|
|
Return of capital from subsidiary
|
|
|
1,897
|
|
|
|
|
|
|
|
|
|
|
|
(1,897
|
)
|
|
|
|
Intercompany funding
|
|
|
(248
|
)
|
|
(1,157
|
)
|
|
(5,537
|
)
|
|
(188
|
)
|
|
7,130
|
|
|
|
|
Other, net
|
|
|
|
|
|
|
|
|
(67
|
)
|
|
(91
|
)
|
|
|
|
|
(158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
1,649
|
|
|
(1,157
|
)
|
|
(7,695
|
)
|
|
(1,783
|
)
|
|
5,233
|
|
|
(3,753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of commercial paper (maturity 90 days or less), net
|
|
|
|
|
|
(155
|
)
|
|
|
|
|
|
|
|
|
|
|
(155
|
)
|
Proceeds from short-term borrowings
|
|
|
|
|
|
556
|
|
|
|
|
|
|
|
|
|
|
|
556
|
|
Repayment of short-term borrowings
|
|
|
|
|
|
(559
|
)
|
|
|
|
|
|
|
|
|
|
|
(559
|
)
|
Proceeds from borrowings under revolving credit facility
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
Repayment of borrowings under revolving credit facility
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
Proceeds from long-term debt
|
|
|
|
|
|
1,947
|
|
|
|
|
|
152
|
|
|
|
|
|
2,099
|
|
Debt issuance costs
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
Repayment of long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
(15
|
)
|
Repayment of other long-term obligations
|
|
|
|
|
|
|
|
|
(24
|
)
|
|
(39
|
)
|
|
|
|
|
(63
|
)
|
Common shares repurchased and retired
|
|
|
(4,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,000
|
)
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
(61
|
)
|
|
|
|
|
(51
|
)
|
|
(10
|
)
|
|
61
|
|
|
(61
|
)
|
Excess tax benefit from share-based compensation
|
|
|
24
|
|
|
|
|
|
20
|
|
|
4
|
|
|
(24
|
)
|
|
24
|
|
Intercompany payments
|
|
|
178
|
|
|
5,535
|
|
|
1,220
|
|
|
197
|
|
|
(7,130
|
)
|
|
|
|
Cash dividend to Parent
|
|
|
|
|
|
(4,200
|
)
|
|
|
|
|
|
|
|
4,200
|
|
|
|
|
Other, net
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(3,859
|
)
|
|
3,122
|
|
|
1,165
|
|
|
289
|
|
|
(2,893
|
)
|
|
(2,176
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes in Venezuelan cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
(187
|
)
|
|
|
|
|
(187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
90
|
|
|
63
|
|
|
(5
|
)
|
|
130
|
|
|
|
|
|
278
|
|
Cash and cash equivalents at beginning of the year
|
|
|
408
|
|
|
728
|
|
|
11
|
|
|
755
|
|
|
|
|
|
1,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the year
|
|
$
|
498
|
|
$
|
791
|
|
$
|
6
|
|
$
|
885
|
|
$
|
|
|
$
|
2,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of Cash FlowsAs Revised
For the Year Ended December 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 (used in) operating activities
|
|
$
|
2,055
|
|
$
|
(1,820
|
)
|
$
|
5,947
|
|
$
|
1,608
|
|
$
|
(2,156
|
)
|
$
|
5,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
|
|
|
|
|
(1,488
|
)
|
|
(1,472
|
)
|
|
|
|
|
(2,960
|
)
|
Cash paid for satellites
|
|
|
|
|
|
|
|
|
(253
|
)
|
|
(136
|
)
|
|
|
|
|
(389
|
)
|
Investment in companies, net of cash acquired
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
(9
|
)
|
|
|
|
|
(16
|
)
|
Proceeds from sale of investments
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
24
|
|
Return of capital from subsidiary
|
|
|
3,775
|
|
|
|
|
|
|
|
|
|
|
|
(3,775
|
)
|
|
|
|
Intercompany funding
|
|
|
(369
|
)
|
|
(917
|
)
|
|
(5,118
|
)
|
|
(4
|
)
|
|
6,408
|
|
|
|
|
Other, net
|
|
|
|
|
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
3,406
|
|
|
(917
|
)
|
|
(6,842
|
)
|
|
(1,643
|
)
|
|
2,633
|
|
|
(3,363
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of commercial paper (maturity 90 days or less), net
|
|
|
|
|
|
156
|
|
|
|
|
|
|
|
|
|
|
|
156
|
|
Proceeds from short-term borrowings
|
|
|
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
|
202
|
|
Proceeds from borrowings under revolving credit facility
|
|
|
|
|
|
400
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
Repayment of borrowings under revolving credit facility
|
|
|
|
|
|
(400
|
)
|
|
|
|
|
|
|
|
|
|
|
(400
|
)
|
Proceeds from long-term debt
|
|
|
|
|
|
5,190
|
|
|
|
|
|
|
|
|
|
|
|
5,190
|
|
Debt issuance costs
|
|
|
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
(36
|
)
|
Repayment of long-term debt
|
|
|
|
|
|
(1,500
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,500
|
)
|
Repayment of other long-term obligations
|
|
|
|
|
|
|
|
|
(21
|
)
|
|
(30
|
)
|
|
|
|
|
(51
|
)
|
Common shares repurchased and retired
|
|
|
(5,175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,175
|
)
|
Stock options exercised
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
(61
|
)
|
|
|
|
|
(52
|
)
|
|
(9
|
)
|
|
61
|
|
|
(61
|
)
|
Excess tax benefit from share-based compensation
|
|
|
30
|
|
|
|
|
|
25
|
|
|
5
|
|
|
(30
|
)
|
|
30
|
|
Intercompany payments
|
|
|
21
|
|
|
5,125
|
|
|
950
|
|
|
312
|
|
|
(6,408
|
)
|
|
|
|
Cash dividend to Parent
|
|
|
|
|
|
(5,900
|
)
|
|
|
|
|
|
|
|
5,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(5,182
|
)
|
|
3,237
|
|
|
902
|
|
|
278
|
|
|
(477
|
)
|
|
(1,242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
279
|
|
|
500
|
|
|
7
|
|
|
243
|
|
|
|
|
|
1,029
|
|
Cash and cash equivalents at beginning of the year
|
|
|
129
|
|
|
228
|
|
|
4
|
|
|
512
|
|
|
|
|
|
873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the year
|
|
$
|
408
|
|
$
|
728
|
|
$
|
11
|
|
$
|
755
|
|
$
|
|
|
$
|
1,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119
Table of Contents
DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
Condensed Consolidating Statement of Cash FlowsAs Revised
For the Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Co-Issuers
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
DIRECTV
Consolidated
|
|
|
|
(Dollars in Millions)
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,813
|
|
$
|
279
|
|
$
|
3,273
|
|
$
|
1,611
|
|
$
|
(1,791
|
)
|
$
|
5,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
|
|
|
|
|
(1,595
|
)
|
|
(1,329
|
)
|
|
|
|
|
(2,924
|
)
|
Cash paid for satellites
|
|
|
|
|
|
|
|
|
(141
|
)
|
|
(105
|
)
|
|
|
|
|
(246
|
)
|
Investment in companies, net of cash acquired
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
(11
|
)
|
Proceeds from sale of investments
|
|
|
|
|
|
|
|
|
55
|
|
|
61
|
|
|
|
|
|
116
|
|
Return of capital from subsidiary
|
|
|
3,487
|
|
|
|
|
|
|
|
|
|
|
|
(3,487
|
)
|
|
|
|
Intercompany funding
|
|
|
(223
|
)
|
|
(1,221
|
)
|
|
(2,785
|
)
|
|
(148
|
)
|
|
4,377
|
|
|
|
|
Other, net
|
|
|
|
|
|
|
|
|
1
|
|
|
42
|
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
3,264
|
|
|
(1,221
|
)
|
|
(4,476
|
)
|
|
(1,479
|
)
|
|
890
|
|
|
(3,022
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
|
|
|
3,990
|
|
|
|
|
|
|
|
|
|
|
|
3,990
|
|
Debt issuance costs
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
(30
|
)
|
Repayment of long-term debt
|
|
|
|
|
|
(1,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,000
|
)
|
Repayment of short-term borrowings
|
|
|
|
|
|
|
|
|
|
|
|
(39
|
)
|
|
|
|
|
(39
|
)
|
Repayment of other long-term obligations
|
|
|
|
|
|
|
|
|
(66
|
)
|
|
(118
|
)
|
|
|
|
|
(184
|
)
|
Common shares repurchased and retired
|
|
|
(5,496
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,496
|
)
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
(58
|
)
|
|
|
|
|
(29
|
)
|
|
(24
|
)
|
|
53
|
|
|
(58
|
)
|
Excess tax benefit from share-based compensation
|
|
|
25
|
|
|
|
|
|
21
|
|
|
4
|
|
|
(25
|
)
|
|
25
|
|
Intercompany payments
|
|
|
134
|
|
|
2,777
|
|
|
1,277
|
|
|
189
|
|
|
(4,377
|
)
|
|
|
|
Cash dividend to Parent
|
|
|
|
|
|
(5,250
|
)
|
|
|
|
|
|
|
|
5,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(5,395
|
)
|
|
487
|
|
|
1,203
|
|
|
12
|
|
|
901
|
|
|
(2,792
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(318
|
)
|
|
(455
|
)
|
|
|
|
|
144
|
|
|
|
|
|
(629
|
)
|
Cash and cash equivalents at beginning of the year
|
|
|
447
|
|
|
683
|
|
|
4
|
|
|
368
|
|
|
|
|
|
1,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the year
|
|
$
|
129
|
|
$
|
228
|
|
$
|
4
|
|
$
|
512
|
|
$
|
|
|
$
|
873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120
Table of Contents
DIRECTV