UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported)
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November 6, 2014
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DIRECTV
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(Exact
Name of Registrant as Specified in Charter)
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Delaware
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(State or Other Jurisdiction of Incorporation)
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1-34554
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26-4772533
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(Commission File Number)
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(IRS Employer Identification No.)
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2260 East Imperial Highway
El Segundo, California
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90245
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(310) 964-5000
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(Registrant’s
Telephone Number, Including Area Code)
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Not Applicable
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(Former
Name or Former Address, if Changed Since Last Report)
|
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2.
below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM 2.02. Results of Operations and Financial Condition.
On November 6, 2014, DIRECTV issued a press release, which contained
information regarding the third quarter 2014 consolidated results of
DIRECTV. The press release did not include certain financial statements,
related notes and certain other financial information that will be filed
with the Securities and Exchange Commission as part of DIRECTV’s
Quarterly Report on Form 10-Q. A copy of the press release relating to
such announcement, dated November 6, 2014, is attached hereto as Exhibit
99.1 and is incorporated herein by reference.
This information shall not be deemed “filed” for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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DIRECTV
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(Registrant)
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Date: November 6, 2014
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By:
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/s/ Patrick T. Doyle
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Name:
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Patrick T. Doyle
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Title:
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Executive Vice President and
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Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
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Exhibit
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99.1
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Press Release, dated November 6, 2014
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4
Exhibit 99.1
DIRECTV
Announces Third Quarter 2014 Results
DIRECTV
Revenues Grow 6% to $8.4 Billion.
-
Revenue
driven by DIRECTV U.S. ARPU growth of 4.8% along with DIRECTV Latin
America subscriber growth over the last year.
DIRECTV
Adjusted OPBDA Increases 5% to $2.0 Billion; Reported OPBDA Grows 2% to
$2.0 Billion.
-
DIRECTV
U.S. improves OPBDA margin 120 basis points driving a 11% increase in
OPBDA.
DIRECTV
Free Cash Flow Increases 45% to Over $2.3 Billion Year To Date.
EL SEGUNDO, Calif.--(BUSINESS WIRE)--November 6, 2014--DIRECTV
(NASDAQ:DTV) today announced that third quarter 2014 revenues increased
6% to $8.37 billion, adjusted operating profit before depreciation and
amortization1 (OPBDA) and adjusted operating profit both
increased 5% to $2.04 billion and $1.28 billion, respectively, and
adjusted diluted earnings per share increased 4% to $1.33 compared to
last year's third quarter. Adjusted financial results exclude a pre-tax
charge of $62 million in the third quarter of 2014 resulting from the
revaluation of the net monetary assets of the company's subsidiary in
Venezuela. Reported OPBDA increased 2% to $1.98 billion, reported
operating profit was relatively unchanged at $1.22 billion and reported
diluted earnings per share declined to $1.21 compared to last year's
third quarter.
“Our third quarter financial results continue to demonstrate the strong
execution of our operations,” said Mike White, President and CEO
of DIRECTV. “In the U.S., although competition for subscribers continues
to be intense, revenue growth was very solid while operating profit
before depreciation and amortization margin expanded year-over-year for
the fifth consecutive quarter, highlighting our commitment to profitably
grow our businesses through disciplined subscriber acquisitions and
expense management, as well as smart pricing.” White added, “In Latin
America, due to challenging macroeconomic and foreign exchange
headwinds, we continue to focus on local currency performance which has
allowed us to profitably grow our businesses, as well as begin
generating positive cash flow in the region - one of our primary goals
for the year.”
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DIRECTV'S Operational Review
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DIRECTV Consolidated
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Three Months Ended September 30,
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Nine Months Ended September 30,
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Dollars in Millions except Earnings per Common Share
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2014
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2013
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2014
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2013
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Reported Financial Results
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Revenues
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$
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8,374
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$
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7,880
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$
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24,338
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$
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23,160
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Reported Operating Profit Before Depreciation and Amortization(1)
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1,977
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1,933
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6,071
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5,934
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Reported OPBDA Margin(1)
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23.6
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%
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24.5
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%
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24.9
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%
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25.6
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%
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Reported Operating Profit
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1,222
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1,225
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3,873
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3,817
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Reported Operating Profit Margin
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14.6
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%
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15.5
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%
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15.9
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%
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16.5
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%
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Reported Net Income Attributable to DIRECTV
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611
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699
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1,978
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2,049
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Reported Diluted Earnings Per Common Share
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$
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1.21
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$
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1.28
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$
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3.88
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$
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3.65
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Capital Expenditures and Cash Flow
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Cash Paid for Property and Equipment
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256
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218
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710
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563
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Cash Paid for Subscriber Leased Equipment - Subscriber Acquisitions
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327
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418
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872
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1,190
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Cash Paid for Subscriber Leased Equipment - Upgrade and Retention
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207
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255
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625
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718
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Cash Paid for Satellites
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80
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82
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189
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276
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Cash Flow Before Interest and Taxes(2)
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1,514
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1,085
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4,207
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3,371
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Free Cash Flow(3)
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792
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372
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2,330
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1,608
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Venezuela Currency Charge Impact On(4):
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Operating Profit Before Depreciation and Amortization
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(62
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)
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—
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(346
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)
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(166
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)
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Operating Profit
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(62
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)
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—
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(346
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)
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(166
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)
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Net Income Attributable to DIRECTV
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(62
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)
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—
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(346
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)
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(136
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)
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Diluted Earnings Per Common Share
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$
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(0.12
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)
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$
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—
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$
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(0.68
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)
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$
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(0.24
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)
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Adjusted Financial Results
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Adjusted Operating Profit Before Depreciation and Amortization(1)
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2,039
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1,933
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6,417
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6,100
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Adjusted OPBDA Margin(1)
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24.3
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%
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24.5
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%
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26.4
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%
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26.3
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%
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Adjusted Operating Profit
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1,284
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1,225
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4,219
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3,983
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Adjusted Operating Profit Margin
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15.3
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%
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15.5
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%
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17.3
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%
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17.2
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%
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Adjusted Net Income Attributable to DIRECTV
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673
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699
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2,324
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2,185
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Adjusted Diluted Earnings Per Common Share
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$
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1.33
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$
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1.28
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$
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4.56
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$
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3.89
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"Adjusted" financial results exclude the impact of the gains and charges
outlined above associated with the remeasurement of the net monetary
assets of the company's subsidiary in Venezuela. See footnote 4 for
additional information.
Third Quarter Review
DIRECTV's third quarter revenues increased 6% to $8.37 billion
principally due to strong ARPU growth at DIRECTV U.S. as well as
subscriber growth at DIRECTV Latin America (DTVLA) over the last twelve
months. These increases were partially offset by lower ARPU at DTVLA due
to unfavorable changes in exchange rates.
Adjusted OPBDA and adjusted operating profit both increased 5% to $2.04
billion and $1.28 billion, respectively, compared to the third quarter
of 2013. Adjusted OPBDA margin and adjusted operating profit margin both
declined slightly to 24.3% and 15.3%, respectively, as higher margin at
DIRECTV U.S. was more than offset by a decline in margin at DTVLA
primarily due to the favorable ECAD settlement in the prior year period
discussed below, as well as $19 million of transaction related costs in
the current quarter. Reported OPBDA increased 2% to $1.98 billion and
reported operating profit was relatively unchanged at $1.22 billion in
the third quarter.
In the third quarter of 2013, DTVLA settled a fee dispute and paid $92
million to Escritório Central de Arrecadação e Distribuição, or ECAD,
the organization in Brazil responsible for collecting performance rights
fees under Brazilian law. The settlement resulted in a $128 million
pre-tax gain for the reversal of amounts previously expensed. The gain
was comprised of a reduction in "Broadcast Programming and Other" of $70
million, a reduction in "Interest Expense" of $37 million and $21
million in "Other, net" in the Consolidated Statements of Operations.
Third quarter adjusted net income attributable to DIRECTV declined to
$673 million, as the higher adjusted operating profit was more than
offset by the impact of the favorable ECAD settlement in the prior year
period. Adjusted diluted earnings per share grew 4% to $1.33 in the
quarter due to the impact of share repurchases made prior to the
announcement of the pending transaction with AT&T. Reported net income
attributable to DIRECTV decreased to $611 million and reported diluted
earnings per share declined to $1.21.
Cash flow before interest and taxes2 increased 40% to $1.51
billion compared to the third quarter of 2013, primarily due to the
higher OPBDA along with a reduction in cash paid for leased equipment at
DIRECTV U.S. and DTVLA primarily related to declining set-top box costs
and the timing of purchases at DTVLA. The cash flow before interest and
taxes comparison was also favorably impacted by the $92 million payment
to settle the ECAD dispute in the third quarter of 2013. Free cash flow3
more than doubled to $792 million compared to the third quarter of 2013,
as the higher cash flow before interest and taxes was slightly offset by
an increase in income tax payments mainly due to the timing of payments.
Year to Date Review
DIRECTV's revenues for the first nine months of 2014 of $24.34 billion
increased 5% principally due to higher ARPU at DIRECTV U.S. as well as
subscriber growth over the last year at DTVLA. These increases were
partially offset by lower ARPU at DTVLA primarily due to unfavorable
changes in exchange rates.
Adjusted OPBDA increased 5% to $6.42 billion and adjusted operating
profit increased 6% to $4.22 billion compared with the same period of
2013. Adjusted OPBDA margin expanded slightly from 26.3% to 26.4% and
adjusted operating profit margin increased slightly from 17.2% to 17.3%
in the period as the higher margin at DIRECTV U.S. was mostly offset by
a decline in margin at DTVLA primarily due to the favorable ECAD
settlement in the prior year period and costs associated with the FIFA
World Cup in 2014. Also impacting the comparison was $39 million of
transaction related costs in 2014. Reported OPBDA increased 2% to $6.07
billion and reported operating profit increased 1% to $3.87 billion in
the first nine months of 2014.
Adjusted net income attributable to DIRECTV increased 6% to $2.32
billion compared with the first nine months of 2013 primarily due to
higher adjusted operating profit and favorable comparisons on the
"Other, net" line of the Consolidated Statements of Operations. "Other,
net" was impacted by a $34 million improvement in foreign currency
translation at Sky Brasil and a $59 million non-cash pre-tax charge in
the second quarter of 2013 due to the deconsolidation of DSN Northwest.
Also impacting the comparison was the favorable ECAD settlement in the
prior year period and an increase in income tax expense mostly related
to higher earnings before taxes. Adjusted diluted earnings per share
improved 17% to $4.56 due to the higher adjusted net income, as well as
the impact of share repurchases made prior to the announcement of the
proposed transaction with AT&T. Reported net income attributable to
DIRECTV decreased to $1.98 billion while reported diluted earnings per
share improved 6% to $3.88.
Cash flow before interest and taxes increased 25% to $4.21 billion
compared to the first nine months of 2013 primarily due to the higher
OPBDA along with a reduction in cash paid for leased equipment related
to declining equipment costs at DIRECTV U.S. and DTVLA, higher usage of
refurbished set-top boxes at DIRECTV U.S. and lower post-paid gross
additions at DTVLA. The cash flow before interest and taxes comparison
was also favorably impacted by lower satellite payments at DIRECTV U.S.
and the $92 million payment to settle the ECAD dispute in the third
quarter of 2013. Free cash flow grew 45% to $2.33 billion compared to
the first nine months of 2013, as the higher cash flow before interest
and taxes was partially offset by an increase in income tax payments
primarily related to higher earnings before taxes.
Also during the first nine months of 2014, but not included in free cash
flow, were a March 2014 debt issuance by DIRECTV U.S. of $1,250
million principal amount of 4.45% senior notes due in 2024, an April
2014 debt redemption by DIRECTV U.S. of $1,000 million principal amount
of 4.750% senior notes due in 2014, cash paid for share repurchases of
$1.39 billion, as well as a $383 million reduction in DIRECTV’s cash
balance resulting from the devaluation of the Venezuelan bolivar
denominated cash balances in 2014.
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SEGMENT FINANCIAL REVIEW
DIRECTV U.S. Segment
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DIRECTV U.S.
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Three Months Ended September 30,
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Nine Months Ended September 30,
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Dollars in Millions except ARPU
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2014
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2013
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2014
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|
2013
|
Reported Financial Results
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Revenues
|
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|
$
|
6,506
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|
|
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$
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6,170
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$
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18,865
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$
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17,903
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Average Monthly Revenue per Subscriber (ARPU) ($)
|
|
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|
107.27
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|
102.37
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103.57
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|
|
|
|
99.00
|
|
Operating Profit Before Depreciation and Amortization(1)
|
|
|
|
1,548
|
|
|
|
|
|
1,396
|
|
|
|
|
4,965
|
|
|
|
|
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4,568
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|
OPBDA Margin(1)
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|
23.8
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%
|
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22.6
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%
|
|
|
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26.3
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%
|
|
|
|
|
25.5
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%
|
Operating Profit
|
|
|
|
1,113
|
|
|
|
|
|
987
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|
|
|
|
3,675
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|
|
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|
|
3,343
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Operating Profit Margin
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|
|
17.1
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%
|
|
|
|
|
16.0
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%
|
|
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|
19.5
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%
|
|
|
|
|
18.7
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%
|
Capital Expenditures and Cash Flow
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Paid for Property and Equipment
|
|
|
|
187
|
|
|
|
|
|
155
|
|
|
|
|
514
|
|
|
|
|
|
420
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|
Cash Paid for Subscriber Leased Equipment - Subscriber Acquisitions
|
|
|
|
143
|
|
|
|
|
|
190
|
|
|
|
|
375
|
|
|
|
|
|
515
|
|
Cash Paid for Subscriber Leased Equipment - Upgrade and Retention
|
|
|
|
134
|
|
|
|
|
|
162
|
|
|
|
|
348
|
|
|
|
|
|
392
|
|
Cash Paid for Satellites
|
|
|
|
19
|
|
|
|
|
|
46
|
|
|
|
|
52
|
|
|
|
|
|
154
|
|
Cash Flow Before Interest and Taxes(2)
|
|
|
|
1,302
|
|
|
|
|
|
1,060
|
|
|
|
|
3,605
|
|
|
|
|
|
3,179
|
|
Subscriber Data (in 000's except Churn)
|
|
|
|
|
|
|
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|
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|
|
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|
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|
|
Gross Subscriber Additions
|
|
|
|
1,023
|
|
|
|
|
|
1,109
|
|
|
|
|
2,822
|
|
|
|
|
|
2,841
|
|
Average Monthly Subscriber Churn
|
|
|
|
1.73
|
%
|
|
|
|
|
1.61
|
%
|
|
|
|
1.58
|
%
|
|
|
|
|
1.53
|
%
|
Net Subscriber Additions (Disconnections)
|
|
|
|
(28
|
)
|
|
|
|
|
139
|
|
|
|
|
(50
|
)
|
|
|
|
|
76
|
|
Cumulative Subscribers
|
|
|
|
20,203
|
|
|
|
|
|
20,160
|
|
|
|
|
20,203
|
|
|
|
|
|
20,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Review
In the third quarter, DIRECTV U.S. revenues increased 5% to $6.51
billion compared with the third quarter of 2013 primarily due to strong
ARPU growth of 4.8%. The improvement in ARPU to $107.27 was driven by
price increases on programming packages, higher advanced receiver
service fees, increased ad sales, higher fees for the enhanced warranty
program and increased commercial business revenues. These improvements
were partially offset by increased promotional offers to existing
customers and lower revenue from pay-per-view events.
DIRECTV U.S. subscriber net losses were approximately 28,000 in the
third quarter of 2014 compared to subscriber net additions of 139,000 in
the prior year period. The change was primarily due to a decrease in
gross additions resulting mainly from stricter credit policies, as well
as a higher average monthly churn rate of 1.73% principally resulting
from a more competitive environment and subscribers rolling off larger
average promotional offers. DIRECTV U.S. ended the quarter with 20.20
million subscribers.
Third quarter OPBDA increased 11% to $1.55 billion and OPBDA margin
improved from 22.6% to 23.8% principally due to higher revenues combined
with lower upgrade and retention expenses mostly related to reduced
equipment costs, as well as relatively unchanged subscriber service
expense. Also contributing to the margin improvement was slower relative
growth in subscriber acquisition costs mainly associated with the
decrease in gross additions. Operating profit increased 13% to $1.11
billion and operating profit margin improved from 16.0% to 17.1% in the
third quarter mainly due to the higher OPBDA and OPBDA margin.
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
Dollars in Millions except ARPU
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
|
2013
|
Reported Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
1,820
|
|
|
|
|
|
$
|
1,662
|
|
|
|
|
$
|
5,330
|
|
|
|
|
|
$
|
5,076
|
|
Average Monthly Revenue per Subscriber (ARPU) ($)
|
|
|
|
48.88
|
|
|
|
|
|
49.42
|
|
|
|
|
49.02
|
|
|
|
|
|
51.68
|
|
Reported Operating Profit Before Depreciation and Amortization(1)
|
|
|
|
453
|
|
|
|
|
|
558
|
|
|
|
|
1,150
|
|
|
|
|
|
1,393
|
|
Reported OPBDA Margin(1)
|
|
|
|
24.9
|
%
|
|
|
|
|
33.6
|
%
|
|
|
|
21.6
|
%
|
|
|
|
|
27.4
|
%
|
Reported Operating Profit
|
|
|
|
137
|
|
|
|
|
|
262
|
|
|
|
|
253
|
|
|
|
|
|
518
|
|
Reported Operating Profit Margin
|
|
|
|
7.5
|
%
|
|
|
|
|
15.8
|
%
|
|
|
|
4.7
|
%
|
|
|
|
|
10.2
|
%
|
Capital Expenditures and Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Paid for Property and Equipment
|
|
|
|
69
|
|
|
|
|
|
62
|
|
|
|
|
195
|
|
|
|
|
|
142
|
|
Cash Paid for Subscriber Leased Equipment - Subscriber Acquisitions
|
|
|
|
184
|
|
|
|
|
|
228
|
|
|
|
|
497
|
|
|
|
|
|
675
|
|
Cash Paid for Subscriber Leased Equipment - Upgrade and Retention
|
|
|
|
73
|
|
|
|
|
|
93
|
|
|
|
|
277
|
|
|
|
|
|
326
|
|
Cash Paid for Satellites
|
|
|
|
55
|
|
|
|
|
|
32
|
|
|
|
|
120
|
|
|
|
|
|
112
|
|
Cash Flow Before Interest and Taxes(2)
|
|
|
|
250
|
|
|
|
|
|
53
|
|
|
|
|
604
|
|
|
|
|
|
162
|
|
Subscriber Data (in 000's except Churn)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Subscriber Additions(6)
|
|
|
|
993
|
|
|
|
|
|
1,023
|
|
|
|
|
3,415
|
|
|
|
|
|
3,393
|
|
Average Monthly Total Subscriber Churn(5)
|
|
|
|
2.99
|
%
|
|
|
|
|
2.27
|
%
|
|
|
|
2.42
|
%
|
|
|
|
|
2.43
|
%
|
Average Monthly Post-paid Subscriber Churn(5)
|
|
|
|
2.06
|
%
|
|
|
|
|
1.93
|
%
|
|
|
|
1.94
|
%
|
|
|
|
|
2.18
|
%
|
Net Subscriber Additions (Disconnections)(5)(6)
|
|
|
|
(119
|
)
|
|
|
|
|
260
|
|
|
|
|
785
|
|
|
|
|
|
1,008
|
|
Cumulative Subscribers (5) (6)
|
|
|
|
12,353
|
|
|
|
|
|
11,337
|
|
|
|
|
12,353
|
|
|
|
|
|
11,337
|
|
Venezuela Currency Charge Impact On(4):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit Before Depreciation and Amortization
|
|
|
|
(62
|
)
|
|
|
|
|
—
|
|
|
|
|
(346
|
)
|
|
|
|
|
(166
|
)
|
Operating Profit
|
|
|
|
(62
|
)
|
|
|
|
|
—
|
|
|
|
|
(346
|
)
|
|
|
|
|
(166
|
)
|
Adjusted Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Profit Before Depreciation and Amortization(1)
|
|
|
|
515
|
|
|
|
|
|
558
|
|
|
|
|
1,496
|
|
|
|
|
|
1,559
|
|
Adjusted OPBDA Margin(1)
|
|
|
|
28.3
|
%
|
|
|
|
|
33.6
|
%
|
|
|
|
28.1
|
%
|
|
|
|
|
30.7
|
%
|
Adjusted Operating Profit
|
|
|
|
199
|
|
|
|
|
|
262
|
|
|
|
|
599
|
|
|
|
|
|
684
|
|
Adjusted Operating Profit Margin
|
|
|
|
10.9
|
%
|
|
|
|
|
15.8
|
%
|
|
|
|
11.2
|
%
|
|
|
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"Adjusted" financial results exclude the impact of the gains and charges
outlined above associated with the remeasurement of the net monetary
assets of the company's subsidiary in Venezuela. See footnote 4 for
additional information.
DIRECTV Latin America owns approximately 93% of Sky Brasil, 41% of Sky
Mexico and 100% of PanAmericana, which covers most of the remaining
countries in the region. Sky Mexico, whose results are accounted for as
an equity method investment and therefore are not consolidated by DTVLA,
had approximately 6.52 million subscribers as of September 30, 2014,
bringing the total subscribers in the region to 18.87 million.
|
|
|
|
|
|
|
|
|
Sky Brasil Segment
|
|
|
|
|
|
|
|
|
|
Sky Brasil
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
Dollars in Millions except ARPU
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
|
2013
|
Reported Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
1,014
|
|
|
|
|
|
$
|
883
|
|
|
|
|
$
|
2,964
|
|
|
|
|
|
$
|
2,790
|
|
Average Monthly Revenue per Subscriber (ARPU) ($)
|
|
|
|
60.00
|
|
|
|
|
|
56.50
|
|
|
|
|
59.57
|
|
|
|
|
|
59.90
|
|
Operating Profit Before Depreciation and Amortization(1)
|
|
|
|
307
|
|
|
|
|
|
353
|
|
|
|
|
907
|
|
|
|
|
|
926
|
|
OPBDA Margin(1)
|
|
|
|
30.3
|
%
|
|
|
|
|
40.0
|
%
|
|
|
|
30.6
|
%
|
|
|
|
|
33.2
|
%
|
Operating Profit
|
|
|
|
118
|
|
|
|
|
|
169
|
|
|
|
|
380
|
|
|
|
|
|
379
|
|
Operating Profit Margin
|
|
|
|
11.6
|
%
|
|
|
|
|
19.1
|
%
|
|
|
|
12.8
|
%
|
|
|
|
|
13.6
|
%
|
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Expenditures
|
|
|
|
254
|
|
|
|
|
|
222
|
|
|
|
|
644
|
|
|
|
|
|
692
|
|
Net Subscriber Additions(5)(6) (in 000's)
|
|
|
|
27
|
|
|
|
|
|
88
|
|
|
|
|
273
|
|
|
|
|
|
216
|
|
Cumulative Subscribers(5)(6) (in 000's)
|
|
|
|
5,644
|
|
|
|
|
|
5,255
|
|
|
|
|
5,644
|
|
|
|
|
|
5,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Review
Excluding changes in foreign exchange rates, Sky Brasil's third quarter
revenues grew 14% versus the prior year period driven by an 8% increase
in the average number of subscribers and a 5% increase in local currency
ARPU. The increase in local currency ARPU was principally due to a
reduction in credits to existing subscribers. When factoring in changes
in foreign exchange rates, Sky Brasil's revenues increased 15% to $1.01
billion and ARPU improved 6% to $60.00 compared to the third quarter of
2013.
Third quarter net subscriber additions of approximately 27,000 declined
compared to the prior year period, as improved gross additions were more
than offset by the impact of increased churn associated with a reduction
in credits to existing customers and the introduction of a prepaid
service in the fourth quarter of 2013.
Excluding the impact of the favorable ECAD settlement in the third
quarter of 2013, Sky Brasil OPBDA increased 8% to $307 million, while
OPBDA margin declined from 32.0% to 30.3%. The decline in OPBDA margin
was principally due to increased expenses related to customer service
and systems initiatives. Also excluding the impact of the favorable ECAD
settlement, operating profit increased 19% to $118 million and operating
profit margin increased from 11.2% to 11.6%. Operating profit margin
improved as the decline in OPBDA margin was more than offset by the
impact of relatively unchanged depreciation expense.
|
|
|
|
|
|
|
|
|
PanAmericana and Other Segment
|
|
|
|
|
|
|
|
|
|
PanAmericana and Other
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
Dollars in Millions except ARPU
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
|
2013
|
Reported Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
806
|
|
|
|
|
|
$
|
779
|
|
|
|
|
$
|
2,366
|
|
|
|
|
|
$
|
2,286
|
|
Average Monthly Revenue per Subscriber (ARPU) ($)
|
|
|
|
39.64
|
|
|
|
|
|
43.07
|
|
|
|
|
40.12
|
|
|
|
|
|
44.27
|
|
Reported Operating Profit Before Depreciation and Amortization(1)
|
|
|
|
146
|
|
|
|
|
|
205
|
|
|
|
|
243
|
|
|
|
|
|
467
|
|
Reported OPBDA Margin(1)
|
|
|
|
18.1
|
%
|
|
|
|
|
26.3
|
%
|
|
|
|
10.3
|
%
|
|
|
|
|
20.4
|
%
|
Reported Operating Profit (Loss)
|
|
|
|
19
|
|
|
|
|
|
93
|
|
|
|
|
(127
|
)
|
|
|
|
|
139
|
|
Reported Operating Profit Margin
|
|
|
|
2.4
|
%
|
|
|
|
|
11.9
|
%
|
|
|
|
NM*
|
|
|
|
|
6.1
|
%
|
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Expenditures
|
|
|
|
127
|
|
|
|
|
|
193
|
|
|
|
|
445
|
|
|
|
|
|
563
|
|
Net Subscriber Additions (Disconnections) (in 000's)
|
|
|
|
(146
|
)
|
|
|
|
|
172
|
|
|
|
|
512
|
|
|
|
|
|
792
|
|
Cumulative Subscribers (in 000's)
|
|
|
|
6,709
|
|
|
|
|
|
6,082
|
|
|
|
|
6,709
|
|
|
|
|
|
6,082
|
|
Venezuela Currency Charge Impact On(4):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit Before Depreciation and Amortization
|
|
|
|
(62
|
)
|
|
|
|
|
—
|
|
|
|
|
(346
|
)
|
|
|
|
|
(166
|
)
|
Operating Profit
|
|
|
|
(62
|
)
|
|
|
|
|
—
|
|
|
|
|
(346
|
)
|
|
|
|
|
(166
|
)
|
Adjusted Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Profit Before Depreciation and Amortization(1)
|
|
|
|
208
|
|
|
|
|
|
205
|
|
|
|
|
589
|
|
|
|
|
|
633
|
|
Adjusted OPBDA Margin(1)
|
|
|
|
25.8
|
%
|
|
|
|
|
26.3
|
%
|
|
|
|
24.9
|
%
|
|
|
|
|
27.7
|
%
|
Adjusted Operating Profit
|
|
|
|
81
|
|
|
|
|
|
93
|
|
|
|
|
219
|
|
|
|
|
|
305
|
|
Adjusted Operating Profit Margin
|
|
|
|
10.0
|
%
|
|
|
|
|
11.9
|
%
|
|
|
|
9.3
|
%
|
|
|
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Percentage not meaningful
"Adjusted" financial results exclude the impact of the gains and charges
outlined above associated with the remeasurement of the net monetary
assets of the company's subsidiary in Venezuela. See footnote 4 for
additional information.
Third Quarter Review
Excluding changes in foreign exchange rates, third quarter revenues in
the PanAmericana and Other segment grew 45% versus the prior year period
driven by a 13% increase in the average number of subscribers and a 28%
increase in local currency ARPU. The increase in local currency ARPU was
principally due to price increases and growth in advanced services,
partially offset by the higher penetration of lower ARPU mass market
subscribers. When factoring in unfavorable changes in foreign exchange
rates, most notably in Argentina and Venezuela, revenues increased 3% to
$806 million compared to the third quarter of 2013, while ARPU decreased
8.0% to $39.64.
Subscriber net losses were approximately 146,000 in the third quarter of
2014 compared to subscriber net additions of 172,000 in the prior year
period. The change was primarily due to lower prepaid reconnection rates
following the completion of the FIFA World Cup tournament.
Also in the third quarter, adjusted OPBDA in the PanAmericana and Other
segment increased slightly to $208 million while adjusted OPBDA margin
declined to 25.8%. The decline in adjusted OPBDA margin was primarily
driven by higher programming costs in Venezuela and increased subscriber
acquisition costs mostly due to inflationary pressure on labor costs. In
addition, adjusted operating profit decreased to $81 million and
adjusted operating profit margin declined to 10.0% mainly due to the
impact of higher depreciation and amortization resulting from leased
equipment and infrastructure capital expenditures made over the last
year. Reported OPBDA and reported operating profit decreased to $146
million and $19 million, respectively.
CONFERENCE CALL INFORMATION
A live webcast of DIRECTV's third quarter 2014 earnings call will be
available on the company's website at investor.directv.com. The webcast
will begin at 2:00 p.m. ET, today, November 6, 2014. Access to the
earnings call is also available in the United States by dialing (888)
715-1393 and internationally by dialing (913) 312-1466. The conference
ID number is 5606519. A replay will also be archived on our website at
investor.directv.com beginning November 7, 2014.
FOOTNOTES
(1) Operating profit before depreciation and amortization, which is a
financial measure that is not determined in accordance with accounting
principles generally accepted in the United States of America, or GAAP,
should be used in conjunction with other GAAP financial measures and is
not presented as an alternative measure of operating results, as
determined in accordance with GAAP. Please see DIRECTV's Annual Report
on Form 10-K for the year ended December 31, 2013 for further discussion
of operating profit before depreciation and amortization. Operating
profit before depreciation and amortization margin is calculated by
dividing operating profit before depreciation and amortization by total
revenues.
(2) Cash flow before interest and taxes, which is a financial measure
that is not determined in accordance with GAAP, is calculated by
deducting amounts under the captions “Cash paid for property and
equipment”, “Cash paid for satellites”, “Cash paid for subscriber leased
equipment - subscriber acquisitions” and “Cash paid for subscriber
leased equipment - upgrade and retention” from “Net cash provided by
operating activities” from the Consolidated Statements of Cash Flows and
adding back net interest paid and “Cash paid for income taxes”. This
financial measure should be used in conjunction with other GAAP
financial measures and is not presented as an alternative measure of
cash flows from operating activities, as determined in accordance with
GAAP. DIRECTV management uses cash flow before interest and taxes to
evaluate the cash generated by our current subscriber base, net of
capital expenditures, and excluding the impact of interest and taxes,
for the purpose of allocating resources to activities such as adding new
subscribers, retaining and upgrading existing subscribers, for
additional capital expenditures and as a measure of performance for
incentive compensation purposes. We believe this measure is useful to
investors, along with other GAAP measures (such as cash flows from
operating and investing activities), to compare our operating
performance to other communications, entertainment and media companies.
We believe that investors also use current and projected cash flow
before interest and taxes to determine the ability of our current and
projected subscriber base to fund required and discretionary spending
and to help determine the financial value of the company.
(3) Free cash flow, which is a financial measure that is not determined
in accordance with GAAP, is calculated by deducting amounts under the
captions “Cash paid for property and equipment”, “Cash paid for
satellites”, “Cash paid for subscriber leased equipment - subscriber
acquisitions”, and “Cash paid for subscriber leased equipment - upgrade
and retention” from “Net cash provided by operating activities” from the
Consolidated Statements of Cash Flows. This financial measure should be
used in conjunction with other GAAP financial measures and is not
presented as an alternative measure of cash flows from operating
activities, as determined in accordance with GAAP. DIRECTV management
uses free cash flow to evaluate the cash generated by our current
subscriber base, net of capital expenditures, for the purpose of
allocating resources to activities such as adding new subscribers,
retaining and upgrading existing subscribers, for additional capital
expenditures and as a measure of performance for incentive compensation
purposes. We believe this measure is useful to investors, along with
other GAAP measures (such as cash flows from operating and investing
activities), to compare our operating performance to other
communications, entertainment and media companies. We believe that
investors also use current and projected free cash flow to determine the
ability of our current and projected subscriber base to fund required
and discretionary spending and to help determine the financial value of
the company.
(4) In February 2013, the Venezuelan government announced a devaluation
of the bolivar from the official exchange rate of 4.3 bolivars per U.S.
dollar to an official rate of 6.3 bolivars per U.S. dollar. As a result
of the devaluation, we recorded a pre-tax charge of $166 million ($136
million after tax) in the first quarter of 2013 related to the
remeasurement of the bolivar denominated net monetary assets of our
Venezuelan subsidiary as of the date of the devaluation. This charge is
listed as "Venezuelan currency devaluation charge" in the Consolidated
Statements of Operations.
In the first quarter of 2013, the Venezuelan government announced an
additional currency exchange system, the Sistema Complementario de
Administración de Divisas, or SICAD 1, intended to function as an
auction system for participants to exchange bolivars for U.S. dollars.
Effective January 24, 2014, the Venezuelan government announced that
dividends and royalties would be subject to the SICAD 1 program. We
believe the SICAD 1 rate is the most representative rate to use for
remeasurement, as the official rate of 6.3 bolivars per U.S. dollar will
likely be reserved only for the settlement of U.S. dollar denominated
obligations related to purchases of “essential goods and services,” and
the equity of our Venezuelan subsidiary would be realized, if at all,
through permitted dividends paid at the SICAD 1 rate. Therefore, as of
March 31, 2014, we are remeasuring our Venezuelan subsidiary’s financial
statements in U.S. dollars using the exchange rate determined by
periodic auctions under SICAD 1, which was 10.7 bolivars per U.S. dollar
at that date. Until that date, we used the official exchange rate of 6.3
bolivars per U.S. dollar. As a result of the remeasurement, we recorded
a pre-tax (and after-tax) charge of $281 million in the first quarter of
2014 related to the remeasurement of the bolivar denominated net
monetary assets of our Venezuelan subsidiary. This charge is listed as
"Venezuelan currency devaluation charge" in the Consolidated Statements
of Operations. Beginning in the second quarter of 2014, we are
remeasuring the results of the Venezuelan subsidiary at the
weighted-average rate of SICAD 1 auctions during the reporting period,
and remeasuring the net monetary asset balance at the period-end rate
based on the latest auction. As of June 30, 2014 and September 30, 2014,
the period-end rates based on the latest auctions were 10.6 and 12.0
bolivars per U.S. dollar, respectively.
(5) Based on the results of an internal investigation, DTVLA determined
that, beginning in 2012, certain employees of Sky Brasil directed
activities which were inconsistent with Sky Brasil's authorized policies
for subscriber retention and churn management. These activities had the
effect of artificially reducing churn and increasing the Sky Brasil
subscriber base during portions of 2012 and the first quarter of 2013.
See DIRECTV's Current Report on Form 8-K filed with the SEC on June 27,
2013 for further details. Prior year results for subscribers, churn and
ARPU have not been adjusted for the findings of this investigation.
(6) DIRECTV Latin America subscriber data exclude subscribers of the Sky
Mexico service. In addition, DTVLA gross and net additions exclude 1,000
video subscribers acquired in transactions in Brazil during the nine
months ended September 30, 2013. DTVLA cumulative subscriber counts
include these acquired customers.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
NOTE: This presentation may include or incorporate by reference certain
statements that we believe are, or may be considered to be,
“forward-looking statements” within the meaning of various provisions of
the Securities Act of 1933 and the Securities Exchange Act of 1934.
These forward-looking statements generally can be identified by use of
statements that include phrases such as “believe,” “expect,” “estimate,”
“anticipate,” “intend,” “plan,” “project” or other similar words or
phrases. Similarly, statements that describe our objectives, plans or
goals also are forward-looking statements. All of these forward-looking
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical results or
from those expressed or implied by the relevant forward-looking
statement. Such risks and uncertainties include, but are not limited to:
increased competition; increasing programming costs and our ability to
renew programming contracts under favorable terms; increased subscriber
churn or subscriber upgrade and retention costs; potential material
increase in subscriber acquisition costs; general economic conditions;
risks associated with doing business internationally, which for DIRECTV
Latin America include political and economic instability and foreign
currency exchange rate volatility and controls; pace of technological
development; potential intellectual property infringement; loss of key
personnel; satellite construction or launch delays; satellite launch and
operational risks; loss of a satellite; theft of satellite programming
signals; U.S. and foreign governmental and regulatory action; ability to
maintain licenses and regulatory approvals; significant debt;
indemnification obligations; reliance on network and information
systems; and the outcome of legal proceedings. We may face other risks
described from time to time in periodic reports filed by us with the
U.S. Securities and Exchange Commission.
DIRECTV (NASDAQ:DTV) is one of the world's leading providers of digital
television entertainment services. Through its subsidiaries and
affiliated companies in the United States, Brazil, Mexico and other
countries in Latin America, DIRECTV provides digital television service
to over 20 million customers in the United States and nearly 19 million
customers in Latin America. DIRECTV sports and entertainment properties
include two regional sports networks (Rocky Mountain and Pittsburgh) and
minority ownership interests in Root Sports Northwest and Game Show
Network. For more information on DIRECTV, visit directv.com.
|
DIRECTV
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars in Millions, Except Per Share Amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
2014
|
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
8,374
|
|
|
|
|
|
$
|
7,880
|
|
|
|
|
|
$
|
24,338
|
|
|
|
|
|
$
|
23,160
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
3,732
|
|
|
|
|
|
3,441
|
|
|
|
|
|
10,613
|
|
|
|
|
|
9,912
|
|
Subscriber service expenses
|
|
|
|
608
|
|
|
|
|
|
583
|
|
|
|
|
|
1,733
|
|
|
|
|
|
1,674
|
|
Broadcast operations expenses
|
|
|
|
108
|
|
|
|
|
|
98
|
|
|
|
|
|
312
|
|
|
|
|
|
305
|
|
Selling, general and administrative expenses, exclusive of
depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
980
|
|
|
|
|
|
941
|
|
|
|
|
|
2,705
|
|
|
|
|
|
2,564
|
|
Upgrade and retention costs
|
|
|
|
398
|
|
|
|
|
|
411
|
|
|
|
|
|
1,081
|
|
|
|
|
|
1,153
|
|
General and administrative expenses
|
|
|
|
571
|
|
|
|
|
|
473
|
|
|
|
|
|
1,542
|
|
|
|
|
|
1,452
|
|
Venezuelan currency devaluation charge
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
281
|
|
|
|
|
|
166
|
|
Depreciation and amortization expense
|
|
|
|
755
|
|
|
|
|
|
708
|
|
|
|
|
|
2,198
|
|
|
|
|
|
2,117
|
|
Total operating costs and expenses
|
|
|
|
7,152
|
|
|
|
|
|
6,655
|
|
|
|
|
|
20,465
|
|
|
|
|
|
19,343
|
|
Operating profit
|
|
|
|
1,222
|
|
|
|
|
|
1,225
|
|
|
|
|
|
3,873
|
|
|
|
|
|
3,817
|
|
Interest income
|
|
|
|
18
|
|
|
|
|
|
15
|
|
|
|
|
|
43
|
|
|
|
|
|
56
|
|
Interest expense
|
|
|
|
(215
|
)
|
|
|
|
|
(182
|
)
|
|
|
|
|
(677
|
)
|
|
|
|
|
(618
|
)
|
Other, net
|
|
|
|
1
|
|
|
|
|
|
43
|
|
|
|
|
|
93
|
|
|
|
|
|
6
|
|
Income before income taxes
|
|
|
|
1,026
|
|
|
|
|
|
1,101
|
|
|
|
|
|
3,332
|
|
|
|
|
|
3,261
|
|
Income tax expense
|
|
|
|
(411
|
)
|
|
|
|
|
(391
|
)
|
|
|
|
|
(1,338
|
)
|
|
|
|
|
(1,192
|
)
|
Net income
|
|
|
|
615
|
|
|
|
|
|
710
|
|
|
|
|
|
1,994
|
|
|
|
|
|
2,069
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
|
(4
|
)
|
|
|
|
|
(11
|
)
|
|
|
|
|
(16
|
)
|
|
|
|
|
(20
|
)
|
Net income attributable to DIRECTV
|
|
|
|
$
|
611
|
|
|
|
|
|
$
|
699
|
|
|
|
|
|
$
|
1,978
|
|
|
|
|
|
$
|
2,049
|
|
Basic earnings attributable to DIRECTV per common share
|
|
|
|
$
|
1.22
|
|
|
|
|
|
$
|
1.29
|
|
|
|
|
|
$
|
3.92
|
|
|
|
|
|
$
|
3.68
|
|
Diluted earnings attributable to DIRECTV per common share
|
|
|
|
$
|
1.21
|
|
|
|
|
|
$
|
1.28
|
|
|
|
|
|
$
|
3.88
|
|
|
|
|
|
$
|
3.65
|
|
Weighted average number of common shares outstanding (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
502
|
|
|
|
|
|
541
|
|
|
|
|
|
505
|
|
|
|
|
|
557
|
|
Diluted
|
|
|
|
507
|
|
|
|
|
|
545
|
|
|
|
|
|
510
|
|
|
|
|
|
562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV
|
CONSOLIDATED BALANCE SHEETS
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
September 30, 2014
|
|
|
|
|
|
|
December 31, 2013
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
2,898
|
|
|
|
|
|
|
|
$
|
2,180
|
|
Accounts receivable, net of allowances of $118 and $95
|
|
|
|
2,485
|
|
|
|
|
|
|
|
2,547
|
|
Inventories
|
|
|
|
269
|
|
|
|
|
|
|
|
283
|
|
Deferred income taxes
|
|
|
|
115
|
|
|
|
|
|
|
|
140
|
|
Prepaid expenses and other
|
|
|
|
748
|
|
|
|
|
|
|
|
803
|
|
Total current assets
|
|
|
|
6,515
|
|
|
|
|
|
|
|
5,953
|
|
Satellites, net
|
|
|
|
2,485
|
|
|
|
|
|
|
|
2,467
|
|
Property and equipment, net
|
|
|
|
6,785
|
|
|
|
|
|
|
|
6,650
|
|
Goodwill
|
|
|
|
3,955
|
|
|
|
|
|
|
|
3,970
|
|
Intangible assets, net
|
|
|
|
883
|
|
|
|
|
|
|
|
920
|
|
Investments and other assets
|
|
|
|
1,971
|
|
|
|
|
|
|
|
1,945
|
|
Total assets
|
|
|
|
$
|
22,594
|
|
|
|
|
|
|
|
$
|
21,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
4,268
|
|
|
|
|
|
|
|
$
|
4,685
|
|
Unearned subscriber revenues and deferred credits
|
|
|
|
765
|
|
|
|
|
|
|
|
589
|
|
Current debt
|
|
|
|
1,439
|
|
|
|
|
|
|
|
1,256
|
|
Total current liabilities
|
|
|
|
6,472
|
|
|
|
|
|
|
|
6,530
|
|
Long-term debt
|
|
|
|
18,311
|
|
|
|
|
|
|
|
18,284
|
|
Deferred income taxes
|
|
|
|
1,759
|
|
|
|
|
|
|
|
1,804
|
|
Other liabilities and deferred credits
|
|
|
|
1,609
|
|
|
|
|
|
|
|
1,456
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
|
—
|
|
|
|
|
|
|
|
375
|
|
Total stockholders' deficit
|
|
|
|
(5,557
|
)
|
|
|
|
|
|
|
(6,544
|
)
|
Total liabilities and stockholders' deficit
|
|
|
|
$
|
22,594
|
|
|
|
|
|
|
|
$
|
21,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2013
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
1,994
|
|
|
|
|
|
|
|
|
|
$
|
2,069
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
|
2,198
|
|
|
|
|
|
|
|
|
|
2,117
|
|
Venezuelan currency devaluation charge
|
|
|
|
281
|
|
|
|
|
|
|
|
|
|
166
|
|
DSN Northwest deconsolidation charge
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
59
|
|
Amortization of deferred revenues and deferred credits
|
|
|
|
(37
|
)
|
|
|
|
|
|
|
|
|
(40
|
)
|
Share-based compensation expense
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
79
|
|
Equity in earnings from unconsolidated affiliates
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
|
|
(86
|
)
|
Net foreign currency exchange and transaction losses
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
42
|
|
Dividends received
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
38
|
|
Net gains from sale of investments
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
(8
|
)
|
Deferred income taxes
|
|
|
|
116
|
|
|
|
|
|
|
|
|
|
(19
|
)
|
Excess tax benefit from share-based compensation
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
(24
|
)
|
Other
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
(91
|
)
|
Change in other operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
200
|
|
Inventories
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
53
|
|
Prepaid expenses and other
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
9
|
|
Accounts payable and accrued liabilities
|
|
|
|
(399
|
)
|
|
|
|
|
|
|
|
|
(477
|
)
|
Unearned subscriber revenue and deferred credits
|
|
|
|
176
|
|
|
|
|
|
|
|
|
|
152
|
|
Other, net
|
|
|
|
153
|
|
|
|
|
|
|
|
|
|
116
|
|
Net cash provided by operating activities
|
|
|
|
4,726
|
|
|
|
|
|
|
|
|
|
4,355
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
(2,207
|
)
|
|
|
|
|
|
|
|
|
(2,471
|
)
|
Cash paid for satellites
|
|
|
|
(189
|
)
|
|
|
|
|
|
|
|
|
(276
|
)
|
Investment in companies, net of cash acquired
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
(47
|
)
|
Proceeds from sale of investments
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
140
|
|
Other, net
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
(158
|
)
|
Net cash used in investing activities
|
|
|
|
(2,384
|
)
|
|
|
|
|
|
|
|
|
(2,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV
|
CONSOLIDATED STATEMENTS OF CASH FLOWS-(continued)
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2013
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of commercial paper (maturity 90 days or less), net
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
90
|
|
Proceeds from short-term borrowings
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
441
|
|
Repayment of short-term borrowings
|
|
|
|
(371
|
)
|
|
|
|
|
|
|
|
|
(327
|
)
|
Proceeds from borrowings under revolving credit facility
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
10
|
|
Repayment of borrowings under revolving credit facility
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
Proceeds from long-term debt
|
|
|
|
1,406
|
|
|
|
|
|
|
|
|
|
1,484
|
|
Debt issuance costs
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
(8
|
)
|
Repayment of long-term debt
|
|
|
|
(1,044
|
)
|
|
|
|
|
|
|
|
|
(9
|
)
|
Repayment of other long-term obligations
|
|
|
|
(50
|
)
|
|
|
|
|
|
|
|
|
(48
|
)
|
Common shares repurchased and retired
|
|
|
|
(1,386
|
)
|
|
|
|
|
|
|
|
|
(3,228
|
)
|
Stock options exercised
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
—
|
|
Taxes paid in lieu of shares issued for share-based compensation
|
|
|
|
(58
|
)
|
|
|
|
|
|
|
|
|
(61
|
)
|
Excess tax benefit from share-based compensation
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
24
|
|
Other, net
|
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
6
|
|
Net cash used in financing activities
|
|
|
|
(1,241
|
)
|
|
|
|
|
|
|
|
|
(1,636
|
)
|
Effect of exchange rate changes on Venezuelan cash and cash
equivalents
|
|
|
|
(383
|
)
|
|
|
|
|
|
|
|
|
(187
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
718
|
|
|
|
|
|
|
|
|
|
(280
|
)
|
Cash and cash equivalents at beginning of the period
|
|
|
|
2,180
|
|
|
|
|
|
|
|
|
|
1,902
|
|
Cash and cash equivalents at end of the period
|
|
|
|
$
|
2,898
|
|
|
|
|
|
|
|
|
|
$
|
1,622
|
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
$
|
786
|
|
|
|
|
|
|
|
|
|
$
|
784
|
|
Cash paid for income taxes
|
|
|
|
1,134
|
|
|
|
|
|
|
|
|
|
1,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV
|
SELECTED SEGMENT DATA
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
2014
|
|
|
|
|
2013
|
DIRECTV U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
6,506
|
|
|
|
|
|
$
|
6,170
|
|
|
|
|
|
$
|
18,865
|
|
|
|
|
|
$
|
17,903
|
|
Operating profit before depreciation and amortization(1)
|
|
|
|
1,548
|
|
|
|
|
|
1,396
|
|
|
|
|
|
4,965
|
|
|
|
|
|
4,568
|
|
Operating profit before depreciation and amortization margin(1)
|
|
|
|
23.8
|
%
|
|
|
|
|
22.6
|
%
|
|
|
|
|
26.3
|
%
|
|
|
|
|
25.5
|
%
|
Operating profit
|
|
|
|
$
|
1,113
|
|
|
|
|
|
$
|
987
|
|
|
|
|
|
$
|
3,675
|
|
|
|
|
|
$
|
3,343
|
|
Operating profit margin
|
|
|
|
17.1
|
%
|
|
|
|
|
16.0
|
%
|
|
|
|
|
19.5
|
%
|
|
|
|
|
18.7
|
%
|
Depreciation and amortization
|
|
|
|
$
|
435
|
|
|
|
|
|
$
|
409
|
|
|
|
|
|
$
|
1,290
|
|
|
|
|
|
$
|
1,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SKY BRASIL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
1,014
|
|
|
|
|
|
$
|
883
|
|
|
|
|
|
$
|
2,964
|
|
|
|
|
|
$
|
2,790
|
|
Operating profit before depreciation and amortization(1)
|
|
|
|
307
|
|
|
|
|
|
353
|
|
|
|
|
|
907
|
|
|
|
|
|
926
|
|
Operating profit before depreciation and amortization margin(1)
|
|
|
|
30.3
|
%
|
|
|
|
|
40.0
|
%
|
|
|
|
|
30.6
|
%
|
|
|
|
|
33.2
|
%
|
Operating profit
|
|
|
|
$
|
118
|
|
|
|
|
|
$
|
169
|
|
|
|
|
|
$
|
380
|
|
|
|
|
|
$
|
379
|
|
Operating profit margin
|
|
|
|
11.6
|
%
|
|
|
|
|
19.1
|
%
|
|
|
|
|
12.8
|
%
|
|
|
|
|
13.6
|
%
|
Depreciation and amortization
|
|
|
|
$
|
189
|
|
|
|
|
|
$
|
184
|
|
|
|
|
|
$
|
527
|
|
|
|
|
|
$
|
547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PANAMERICANA AND OTHER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
806
|
|
|
|
|
|
$
|
779
|
|
|
|
|
|
$
|
2,366
|
|
|
|
|
|
$
|
2,286
|
|
Operating profit before depreciation and amortization (1)
|
|
|
|
146
|
|
|
|
|
|
205
|
|
|
|
|
|
243
|
|
|
|
|
|
467
|
|
Operating profit before depreciation and amortization margin(1)
|
|
|
|
18.1
|
%
|
|
|
|
|
26.3
|
%
|
|
|
|
|
10.3
|
%
|
|
|
|
|
20.4
|
%
|
Operating profit (loss)
|
|
|
|
$
|
19
|
|
|
|
|
|
$
|
93
|
|
|
|
|
|
$
|
(127
|
)
|
|
|
|
|
$
|
139
|
|
Operating profit margin
|
|
|
|
2.4
|
%
|
|
|
|
|
11.9
|
%
|
|
|
|
|
*NM
|
|
|
|
|
6.1
|
%
|
Depreciation and amortization
|
|
|
|
$
|
127
|
|
|
|
|
|
$
|
112
|
|
|
|
|
|
$
|
370
|
|
|
|
|
|
$
|
328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPORTS NETWORKS, ELIMINATIONS AND OTHER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
48
|
|
|
|
|
|
$
|
48
|
|
|
|
|
|
$
|
143
|
|
|
|
|
|
$
|
181
|
|
Operating loss before depreciation and amortization(1)
|
|
|
|
(24
|
)
|
|
|
|
|
(21
|
)
|
|
|
|
|
(44
|
)
|
|
|
|
|
(27
|
)
|
Operating loss
|
|
|
|
(28
|
)
|
|
|
|
|
(24
|
)
|
|
|
|
|
(55
|
)
|
|
|
|
|
(44
|
)
|
Depreciation and amortization
|
|
|
|
4
|
|
|
|
|
|
3
|
|
|
|
|
|
11
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
8,374
|
|
|
|
|
|
$
|
7,880
|
|
|
|
|
|
$
|
24,338
|
|
|
|
|
|
$
|
23,160
|
|
Operating profit before depreciation and amortization(1)
|
|
|
|
1,977
|
|
|
|
|
|
1,933
|
|
|
|
|
|
6,071
|
|
|
|
|
|
5,934
|
|
Operating profit before depreciation and amortization margin(1)
|
|
|
|
23.6
|
%
|
|
|
|
|
24.5
|
%
|
|
|
|
|
24.9
|
%
|
|
|
|
|
25.6
|
%
|
Operating profit
|
|
|
|
$
|
1,222
|
|
|
|
|
|
$
|
1,225
|
|
|
|
|
|
$
|
3,873
|
|
|
|
|
|
$
|
3,817
|
|
Operating profit margin
|
|
|
|
14.6
|
%
|
|
|
|
|
15.5
|
%
|
|
|
|
|
15.9
|
%
|
|
|
|
|
16.5
|
%
|
Depreciation and amortization
|
|
|
|
$
|
755
|
|
|
|
|
|
$
|
708
|
|
|
|
|
|
$
|
2,198
|
|
|
|
|
|
$
|
2,117
|
|
* Percentage not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
2014
|
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
6,506
|
|
|
|
|
|
$
|
6,170
|
|
|
|
|
|
$
|
18,865
|
|
|
|
|
|
$
|
17,903
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues, exclusive of depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast programming and other
|
|
|
|
3,057
|
|
|
|
|
|
2,904
|
|
|
|
|
|
8,625
|
|
|
|
|
|
8,147
|
|
Subscriber service expenses
|
|
|
|
397
|
|
|
|
|
|
391
|
|
|
|
|
|
1,130
|
|
|
|
|
|
1,102
|
|
Broadcast operations expenses
|
|
|
|
74
|
|
|
|
|
|
68
|
|
|
|
|
|
221
|
|
|
|
|
|
220
|
|
Selling, general and administrative expenses, exclusive of
depreciation and amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs
|
|
|
|
776
|
|
|
|
|
|
756
|
|
|
|
|
|
2,085
|
|
|
|
|
|
1,979
|
|
Upgrade and retention costs
|
|
|
|
347
|
|
|
|
|
|
359
|
|
|
|
|
|
942
|
|
|
|
|
|
1,002
|
|
General and administrative expenses
|
|
|
|
307
|
|
|
|
|
|
296
|
|
|
|
|
|
897
|
|
|
|
|
|
885
|
|
Depreciation and amortization expense
|
|
|
|
435
|
|
|
|
|
|
409
|
|
|
|
|
|
1,290
|
|
|
|
|
|
1,225
|
|
Total operating costs and expenses
|
|
|
|
5,393
|
|
|
|
|
|
5,183
|
|
|
|
|
|
15,190
|
|
|
|
|
|
14,560
|
|
Operating profit
|
|
|
|
1,113
|
|
|
|
|
|
987
|
|
|
|
|
|
3,675
|
|
|
|
|
|
3,343
|
|
Interest income
|
|
|
|
1
|
|
|
|
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
2
|
|
Interest expense
|
|
|
|
(204
|
)
|
|
|
|
|
(207
|
)
|
|
|
|
|
(650
|
)
|
|
|
|
|
(615
|
)
|
Other, net
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
|
5
|
|
|
|
|
|
22
|
|
Income before income taxes
|
|
|
|
915
|
|
|
|
|
|
787
|
|
|
|
|
|
3,032
|
|
|
|
|
|
2,752
|
|
Income tax expense
|
|
|
|
(336
|
)
|
|
|
|
|
(302
|
)
|
|
|
|
|
(1,124
|
)
|
|
|
|
|
(1,031
|
)
|
Net income
|
|
|
|
$
|
579
|
|
|
|
|
|
$
|
485
|
|
|
|
|
|
$
|
1,908
|
|
|
|
|
|
$
|
1,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
|
CONSOLIDATED BALANCE SHEETS
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
September 30, 2014
|
|
|
|
|
|
|
December 31, 2013
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
1,365
|
|
|
|
|
|
|
|
$
|
797
|
|
Accounts receivable, net of allowances of $77 and $59
|
|
|
|
2,045
|
|
|
|
|
|
|
|
2,103
|
|
Inventories
|
|
|
|
242
|
|
|
|
|
|
|
|
249
|
|
Prepaid expenses and other
|
|
|
|
448
|
|
|
|
|
|
|
|
494
|
|
Total current assets
|
|
|
|
4,100
|
|
|
|
|
|
|
|
3,643
|
|
Satellites, net
|
|
|
|
1,747
|
|
|
|
|
|
|
|
1,810
|
|
Property and equipment, net
|
|
|
|
3,833
|
|
|
|
|
|
|
|
3,724
|
|
Goodwill
|
|
|
|
3,191
|
|
|
|
|
|
|
|
3,191
|
|
Intangible assets, net
|
|
|
|
514
|
|
|
|
|
|
|
|
527
|
|
Other assets
|
|
|
|
498
|
|
|
|
|
|
|
|
551
|
|
Total assets
|
|
|
|
$
|
13,883
|
|
|
|
|
|
|
|
$
|
13,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND OWNER'S DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
3,236
|
|
|
|
|
|
|
|
$
|
3,695
|
|
Unearned subscriber revenues and deferred credits
|
|
|
|
558
|
|
|
|
|
|
|
|
380
|
|
Current debt
|
|
|
|
1,329
|
|
|
|
|
|
|
|
1,200
|
|
Total current liabilities
|
|
|
|
5,123
|
|
|
|
|
|
|
|
5,275
|
|
Long-term debt
|
|
|
|
18,167
|
|
|
|
|
|
|
|
18,203
|
|
Deferred income taxes
|
|
|
|
1,597
|
|
|
|
|
|
|
|
1,641
|
|
Other liabilities and deferred credits
|
|
|
|
773
|
|
|
|
|
|
|
|
595
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner's deficit
|
|
|
|
(11,777
|
)
|
|
|
|
|
|
|
(12,268
|
)
|
Total liabilities and owner's deficit
|
|
|
|
$
|
13,883
|
|
|
|
|
|
|
|
$
|
13,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
2013
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
1,908
|
|
|
|
|
|
|
|
|
|
$
|
1,721
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
|
1,290
|
|
|
|
|
|
|
|
|
|
1,225
|
|
Amortization of deferred revenues and deferred credits
|
|
|
|
(37
|
)
|
|
|
|
|
|
|
|
|
(40
|
)
|
Share-based compensation expense
|
|
|
|
55
|
|
|
|
|
|
|
|
|
|
60
|
|
Deferred income taxes
|
|
|
|
95
|
|
|
|
|
|
|
|
|
|
128
|
|
Excess tax benefit from share-based compensation
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
(20
|
)
|
Other
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
4
|
|
Change in other operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
136
|
|
|
|
|
|
|
|
|
|
127
|
|
Inventories
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
66
|
|
Prepaid expenses and other
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
67
|
|
Accounts payable and accrued liabilities
|
|
|
|
(499
|
)
|
|
|
|
|
|
|
|
|
(385
|
)
|
Unearned subscriber revenue and deferred credits
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
153
|
|
Other, net
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
37
|
|
Net cash provided by operating activities
|
|
|
|
3,204
|
|
|
|
|
|
|
|
|
|
3,143
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
|
(514
|
)
|
|
|
|
|
|
|
|
|
(420
|
)
|
Cash paid for subscriber leased equipment - subscriber acquisitions
|
|
|
|
(375
|
)
|
|
|
|
|
|
|
|
|
(515
|
)
|
Cash paid for subscriber leased equipment - upgrade and retention
|
|
|
|
(348
|
)
|
|
|
|
|
|
|
|
|
(392
|
)
|
Cash paid for satellites
|
|
|
|
(52
|
)
|
|
|
|
|
|
|
|
|
(154
|
)
|
Investment in companies, net of cash acquired
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
(38
|
)
|
Proceeds from sale of investments
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
12
|
|
Other, net
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
(67
|
)
|
Net cash used in investing activities
|
|
|
|
(1,274
|
)
|
|
|
|
|
|
|
|
|
(1,574
|
)
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of commercial paper (maturity 90 days or less), net
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
90
|
|
Proceeds from short-term borrowings
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
441
|
|
Repayment of short-term borrowings
|
|
|
|
(371
|
)
|
|
|
|
|
|
|
|
|
(327
|
)
|
Proceeds from borrowings under revolving credit facility
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
10
|
|
Repayment of borrowings under revolving credit facility
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
Proceeds from issuance of long-term debt
|
|
|
|
1,245
|
|
|
|
|
|
|
|
|
|
1,390
|
|
Debt issuance costs
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
(8
|
)
|
Repayment of long-term debt
|
|
|
|
(1,000
|
)
|
|
|
|
|
|
|
|
|
—
|
|
Repayment of other long-term obligations
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
(18
|
)
|
Cash dividends paid to Parent
|
|
|
|
(1,500
|
)
|
|
|
|
|
|
|
|
|
(3,200
|
)
|
Excess tax benefit from share-based compensation
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
20
|
|
Other, net
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
6
|
|
Net cash used in financing activities
|
|
|
|
(1,362
|
)
|
|
|
|
|
|
|
|
|
(1,606
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
568
|
|
|
|
|
|
|
|
|
|
(37
|
)
|
Cash and cash equivalents at beginning of the period
|
|
|
|
797
|
|
|
|
|
|
|
|
|
|
739
|
|
Cash and cash equivalents at end of the period
|
|
|
|
$
|
1,365
|
|
|
|
|
|
|
|
|
|
$
|
702
|
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
$
|
765
|
|
|
|
|
|
|
|
|
|
$
|
733
|
|
Cash paid for income taxes
|
|
|
|
927
|
|
|
|
|
|
|
|
|
|
786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation
Schedules
|
(Dollars in Millions)
|
(Unaudited)
|
|
DIRECTV
|
Reconciliation of Cash Flow Before Interest and Taxes2
and Free Cash Flow3 to
Net Cash Provided by Operating Activities
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Cash Flow Before Interest and Taxes
|
|
|
|
$
|
1,514
|
|
|
|
|
$
|
1,085
|
|
|
|
|
$
|
4,207
|
|
|
|
|
$
|
3,371
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
(373
|
)
|
|
|
|
(395
|
)
|
|
|
|
(786
|
)
|
|
|
|
(784
|
)
|
Interest income
|
|
|
|
18
|
|
|
|
|
15
|
|
|
|
|
43
|
|
|
|
|
56
|
|
Income taxes paid
|
|
|
|
(367
|
)
|
|
|
|
(333
|
)
|
|
|
|
(1,134
|
)
|
|
|
|
(1,035
|
)
|
Subtotal - Free Cash Flow
|
|
|
|
792
|
|
|
|
|
372
|
|
|
|
|
2,330
|
|
|
|
|
1,608
|
|
Add Cash Paid For:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
|
790
|
|
|
|
|
891
|
|
|
|
|
2,207
|
|
|
|
|
2,471
|
|
Satellites
|
|
|
|
80
|
|
|
|
|
82
|
|
|
|
|
189
|
|
|
|
|
276
|
|
Net Cash Provided by Operating Activities
|
|
|
|
$
|
1,662
|
|
|
|
|
$
|
1,345
|
|
|
|
|
$
|
4,726
|
|
|
|
|
$
|
4,355
|
|
(2) and (3) - See footnotes above
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Operating Profit Before Depreciation
and Amortization to Operating Profit*
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Operating profit before depreciation and amortization
|
|
|
|
$
|
1,977
|
|
|
|
|
$
|
1,933
|
|
|
|
|
$
|
6,071
|
|
|
|
|
$
|
5,934
|
Subtract: Depreciation and amortization
|
|
|
|
755
|
|
|
|
|
708
|
|
|
|
|
2,198
|
|
|
|
|
2,117
|
Operating profit
|
|
|
|
$
|
1,222
|
|
|
|
|
$
|
1,225
|
|
|
|
|
$
|
3,873
|
|
|
|
|
$
|
3,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* For a reconciliation of this non-GAAP financial measure for each
of our segments, please see the Notes to the Consolidated Financial
Statements which will be included in DIRECTV's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2014, which is
expected to be filed with the SEC in November 2014.
|
|
|
|
DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation
Schedules
|
(Dollars in Millions, Except Per Share Amounts)
|
(Unaudited)
|
DIRECTV
|
Reconciliation of Adjusted Operating Profit Before Depreciation
and Amortization (excluding the Venezuelan currency devaluation
charge) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
8,374
|
|
|
|
|
$
|
7,880
|
|
|
|
|
$
|
24,338
|
|
|
|
|
$
|
23,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge
|
|
|
|
$
|
2,039
|
|
|
|
|
$
|
1,933
|
|
|
|
|
$
|
6,417
|
|
|
|
|
$
|
6,100
|
|
OPBDA growth excluding Venezuelan currency devaluation charge
|
|
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
5.2
|
%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Operating profit before depreciation and amortization
|
|
|
|
1,977
|
|
|
|
|
1,933
|
|
|
|
|
6,071
|
|
|
|
|
5,934
|
|
Subtract: Depreciation and amortization
|
|
|
|
755
|
|
|
|
|
708
|
|
|
|
|
2,198
|
|
|
|
|
2,117
|
|
Operating profit
|
|
|
|
$
|
1,222
|
|
|
|
|
$
|
1,225
|
|
|
|
|
$
|
3,873
|
|
|
|
|
$
|
3,817
|
|
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge
|
|
|
|
24.3
|
%
|
|
|
|
24.5
|
%
|
|
|
|
26.4
|
%
|
|
|
|
26.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
8,374
|
|
|
|
|
$
|
7,880
|
|
|
|
|
$
|
24,338
|
|
|
|
|
$
|
23,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit excluding the Venezuelan currency devaluation charge
|
|
|
|
$
|
1,284
|
|
|
|
|
$
|
1,225
|
|
|
|
|
$
|
4,219
|
|
|
|
|
$
|
3,983
|
|
Operating profit growth excluding Venezuelan currency devaluation
charge
|
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
5.9
|
%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Operating profit
|
|
|
|
$
|
1,222
|
|
|
|
|
$
|
1,225
|
|
|
|
|
$
|
3,873
|
|
|
|
|
$
|
3,817
|
|
Operating profit margin excluding the Venezuelan currency
devaluation charge
|
|
|
|
15.3
|
%
|
|
|
|
15.5
|
%
|
|
|
|
17.3
|
%
|
|
|
|
17.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Net Income (excluding the Venezuelan
currency devaluation charge) to Net Income
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Net income attributable to DIRECTV excluding the Venezuelan currency
devaluation charge
|
|
|
|
$
|
673
|
|
|
|
|
$
|
699
|
|
|
|
|
$
|
2,324
|
|
|
|
|
$
|
2,185
|
Subtract: Venezuelan after-tax currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
136
|
Net income attributable to DIRECTV
|
|
|
|
$
|
611
|
|
|
|
|
$
|
699
|
|
|
|
|
$
|
1,978
|
|
|
|
|
$
|
2,049
|
Net income growth excluding Venezuelan currency devaluation charge
|
|
|
|
(3.7
|
)%
|
|
|
|
|
|
|
|
|
6.4
|
%
|
|
|
|
|
Diluted weighted average shares
|
|
|
|
507
|
|
|
|
|
545
|
|
|
|
|
510
|
|
|
|
|
562
|
Adjusted diluted earnings per common share
|
|
|
|
$
|
1.33
|
|
|
|
|
$
|
1.28
|
|
|
|
|
$
|
4.56
|
|
|
|
|
$
|
3.89
|
Adjusted diluted earnings per common share growth excluding
Venezuelan currency devaluation charge
|
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
17.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Net Income (excluding the Venezuelan
currency devaluation charge and the ECAD settlement gain) to Net
Income
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Net income attributable to DIRECTV excluding the Venezuelan currency
devaluation charge and the ECAD settlement gain
|
|
|
|
$
|
673
|
|
|
|
|
$
|
629
|
|
|
|
|
$
|
2,324
|
|
|
|
|
$
|
2,115
|
|
Subtract: Venezuelan after-tax currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
136
|
|
Subtract: ECAD settlement gain
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
Net income attributable to DIRECTV
|
|
|
|
$
|
611
|
|
|
|
|
$
|
699
|
|
|
|
|
$
|
1,978
|
|
|
|
|
$
|
2,049
|
|
Net income growth excluding the Venezuelan currency devaluation
charge and the ECAD settlement gain
|
|
|
|
7.0
|
%
|
|
|
|
|
|
|
|
|
9.9
|
%
|
|
|
|
|
|
Diluted weighted average shares
|
|
|
|
507
|
|
|
|
|
545
|
|
|
|
|
510
|
|
|
|
|
562
|
|
Adjusted diluted earnings per common share
|
|
|
|
$
|
1.33
|
|
|
|
|
$
|
1.15
|
|
|
|
|
$
|
4.56
|
|
|
|
|
$
|
3.76
|
|
Adjusted diluted earnings per common share growth excluding the
Venezuelan currency devaluation charge and the ECAD settlement gain
|
|
|
|
15.7
|
%
|
|
|
|
|
|
|
|
|
21.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America Non-GAAP Financial Measure Reconciliation
Schedules
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America
|
Reconciliation of Cash Flow Before Interest and Taxes2
to
Net Cash Provided by Operating Activities
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Cash Flow Before Interest and Taxes
|
|
|
|
$
|
250
|
|
|
|
|
$
|
53
|
|
|
|
|
$
|
604
|
|
|
|
|
$
|
162
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
(11
|
)
|
|
|
|
(39
|
)
|
|
|
|
(36
|
)
|
|
|
|
(69
|
)
|
Interest income
|
|
|
|
17
|
|
|
|
|
10
|
|
|
|
|
40
|
|
|
|
|
41
|
|
Income taxes paid
|
|
|
|
(58
|
)
|
|
|
|
(64
|
)
|
|
|
|
(200
|
)
|
|
|
|
(223
|
)
|
Add Cash Paid For:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
|
69
|
|
|
|
|
62
|
|
|
|
|
195
|
|
|
|
|
142
|
|
Subscriber leased equipment - subscriber acquisitions
|
|
|
|
184
|
|
|
|
|
228
|
|
|
|
|
497
|
|
|
|
|
675
|
|
Subscriber leased equipment - upgrade and retention
|
|
|
|
73
|
|
|
|
|
93
|
|
|
|
|
277
|
|
|
|
|
326
|
|
Satellites
|
|
|
|
55
|
|
|
|
|
32
|
|
|
|
|
120
|
|
|
|
|
112
|
|
Net Cash Provided by Operating Activities
|
|
|
|
$
|
579
|
|
|
|
|
$
|
375
|
|
|
|
|
$
|
1,497
|
|
|
|
|
$
|
1,166
|
|
(2) See footnotes above
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Operating Profit Before Depreciation
and Amortization (excluding the Venezuelan currency devaluation
charge) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
1,820
|
|
|
|
|
$
|
1,662
|
|
|
|
|
$
|
5,330
|
|
|
|
|
$
|
5,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge
|
|
|
|
$
|
515
|
|
|
|
|
$
|
558
|
|
|
|
|
$
|
1,496
|
|
|
|
|
$
|
1,559
|
|
OPBDA growth excluding Venezuelan currency devaluation charge
|
|
|
|
(7.7
|
)%
|
|
|
|
|
|
|
|
|
(4.0
|
)%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Operating profit before depreciation and amortization
|
|
|
|
453
|
|
|
|
|
558
|
|
|
|
|
1,150
|
|
|
|
|
1,393
|
|
Subtract: Depreciation and amortization
|
|
|
|
316
|
|
|
|
|
296
|
|
|
|
|
897
|
|
|
|
|
875
|
|
Operating profit
|
|
|
|
$
|
137
|
|
|
|
|
$
|
262
|
|
|
|
|
$
|
253
|
|
|
|
|
$
|
518
|
|
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge
|
|
|
|
28.3
|
%
|
|
|
|
33.6
|
%
|
|
|
|
28.1
|
%
|
|
|
|
30.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
1,820
|
|
|
|
|
$
|
1,662
|
|
|
|
|
$
|
5,330
|
|
|
|
|
$
|
5,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit excluding the Venezuelan currency devaluation charge
|
|
|
|
$
|
199
|
|
|
|
|
$
|
262
|
|
|
|
|
$
|
599
|
|
|
|
|
$
|
684
|
|
Operating Profit growth excluding Venezuelan currency devaluation
charge
|
|
|
|
(24.0
|
)%
|
|
|
|
|
|
|
|
|
(12.4
|
)%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Operating profit
|
|
|
|
$
|
137
|
|
|
|
|
$
|
262
|
|
|
|
|
$
|
253
|
|
|
|
|
$
|
518
|
|
Operating profit margin excluding the Venezuelan currency
devaluation charge
|
|
|
|
10.9
|
%
|
|
|
|
15.8
|
%
|
|
|
|
11.2
|
%
|
|
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV Latin America Non-GAAP Financial Measure Reconciliation
Schedules
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Operating Profit Before Depreciation
and Amortization (excluding the Venezuelan currency devaluation
charge and the ECAD settlement gain) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
1,820
|
|
|
|
|
$
|
1,662
|
|
|
|
|
$
|
5,330
|
|
|
|
|
$
|
5,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge and the ECAD settlement gain
|
|
|
|
$
|
515
|
|
|
|
|
$
|
488
|
|
|
|
|
$
|
1,496
|
|
|
|
|
$
|
1,489
|
|
OPBDA growth excluding Venezuelan currency devaluation charge
and the ECAD settlement gain
|
|
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
0.5
|
%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Subtract: ECAD settlement gain
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
Operating profit before depreciation and amortization
|
|
|
|
453
|
|
|
|
|
558
|
|
|
|
|
1,150
|
|
|
|
|
1,393
|
|
Subtract: Depreciation and amortization
|
|
|
|
316
|
|
|
|
|
296
|
|
|
|
|
897
|
|
|
|
|
875
|
|
Operating profit
|
|
|
|
$
|
137
|
|
|
|
|
$
|
262
|
|
|
|
|
$
|
253
|
|
|
|
|
$
|
518
|
|
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge and the ECAD
settlement gain
|
|
|
|
28.3
|
%
|
|
|
|
29.4
|
%
|
|
|
|
28.1
|
%
|
|
|
|
29.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge and the ECAD settlement gain)
to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
1,820
|
|
|
|
|
$
|
1,662
|
|
|
|
|
$
|
5,330
|
|
|
|
|
$
|
5,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit excluding the Venezuelan currency devaluation
charge and the ECAD settlement gain
|
|
|
|
$
|
199
|
|
|
|
|
$
|
192
|
|
|
|
|
$
|
599
|
|
|
|
|
$
|
614
|
|
Operating Profit growth excluding Venezuelan currency devaluation
charge and the ECAD settlement gain
|
|
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
(2.4
|
)%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Subtract: ECAD settlement gain
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
Operating profit
|
|
|
|
$
|
137
|
|
|
|
|
$
|
262
|
|
|
|
|
$
|
253
|
|
|
|
|
$
|
518
|
|
Operating profit margin excluding the Venezuelan currency
devaluation charge and the ECAD settlement gain
|
|
|
|
10.9
|
%
|
|
|
|
11.6
|
%
|
|
|
|
11.2
|
%
|
|
|
|
12.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sky Brasil Segment Non-GAAP Financial Measure Reconciliation
Schedules
|
(Dollars in Millions)
|
(Unaudited)
|
Sky Brasil
|
Reconciliation of Operating Profit Before Depreciation and
Amortization (excluding the ECAD settlement gain) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
1,014
|
|
|
|
|
$
|
883
|
|
|
|
|
$
|
2,964
|
|
|
|
|
$
|
2,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before depreciation and amortization excluding the
ECAD settlement gain
|
|
|
|
$
|
307
|
|
|
|
|
$
|
283
|
|
|
|
|
$
|
907
|
|
|
|
|
$
|
856
|
|
OPBDA growth excluding ECAD settlement gain
|
|
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
6.0
|
%
|
|
|
|
|
|
Subtract: ECAD settlement gain
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
Operating profit before depreciation and amortization
|
|
|
|
307
|
|
|
|
|
353
|
|
|
|
|
907
|
|
|
|
|
926
|
|
Subtract: Depreciation and amortization
|
|
|
|
189
|
|
|
|
|
184
|
|
|
|
|
527
|
|
|
|
|
547
|
|
Operating profit
|
|
|
|
$
|
118
|
|
|
|
|
$
|
169
|
|
|
|
|
$
|
380
|
|
|
|
|
$
|
379
|
|
Operating profit before depreciation and amortization margin
excluding the ECAD settlement gain
|
|
|
|
30.3
|
%
|
|
|
|
32.0
|
%
|
|
|
|
30.6
|
%
|
|
|
|
30.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Profit (excluding the ECAD settlement
gain) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
1,014
|
|
|
|
|
$
|
883
|
|
|
|
|
$
|
2,964
|
|
|
|
|
$
|
2,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit excluding the ECAD settlement gain
|
|
|
|
$
|
118
|
|
|
|
|
$
|
99
|
|
|
|
|
$
|
380
|
|
|
|
|
$
|
309
|
|
Operating profit growth excluding ECAD settlement gain
|
|
|
|
19.2
|
%
|
|
|
|
|
|
|
|
|
23.0
|
%
|
|
|
|
|
|
Subtract: ECAD settlement gain
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
|
|
|
—
|
|
|
|
|
(70
|
)
|
Operating profit
|
|
|
|
$
|
118
|
|
|
|
|
$
|
169
|
|
|
|
|
$
|
380
|
|
|
|
|
$
|
379
|
|
Operating profit margin excluding the ECAD settlement gain
|
|
|
|
11.6
|
%
|
|
|
|
11.2
|
%
|
|
|
|
12.8
|
%
|
|
|
|
11.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PanAmericana and Other Segment Non-GAAP Financial Measure
Reconciliation Schedules
|
(Dollars in Millions)
|
(Unaudited)
|
PanAmericana and Other
|
Reconciliation of Adjusted Operating Profit Before Depreciation
and Amortization (excluding the Venezuelan currency devaluation
charge) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
806
|
|
|
|
|
$
|
779
|
|
|
|
|
$
|
2,366
|
|
|
|
|
$
|
2,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge
|
|
|
|
$
|
208
|
|
|
|
|
$
|
205
|
|
|
|
|
$
|
589
|
|
|
|
|
$
|
633
|
|
OPBDA growth excluding Venezuelan currency devaluation charge
|
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
(7.0
|
)%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Operating profit before depreciation and amortization
|
|
|
|
146
|
|
|
|
|
205
|
|
|
|
|
243
|
|
|
|
|
467
|
|
Subtract: Depreciation and amortization
|
|
|
|
127
|
|
|
|
|
112
|
|
|
|
|
370
|
|
|
|
|
328
|
|
Operating profit (loss)
|
|
|
|
$
|
19
|
|
|
|
|
$
|
93
|
|
|
|
|
$
|
(127
|
)
|
|
|
|
$
|
139
|
|
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge
|
|
|
|
25.8
|
%
|
|
|
|
26.3
|
%
|
|
|
|
24.9
|
%
|
|
|
|
27.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge) to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Revenues
|
|
|
|
$
|
806
|
|
|
|
|
$
|
779
|
|
|
|
|
$
|
2,366
|
|
|
|
|
$
|
2,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit excluding the Venezuelan currency devaluation charge
|
|
|
|
$
|
81
|
|
|
|
|
$
|
93
|
|
|
|
|
$
|
219
|
|
|
|
|
$
|
305
|
|
Operating profit growth excluding Venezuelan currency devaluation
charge
|
|
|
|
(12.9
|
)%
|
|
|
|
|
|
|
|
|
(28.2
|
)%
|
|
|
|
|
|
Subtract: Venezuelan currency devaluation charge
|
|
|
|
62
|
|
|
|
|
—
|
|
|
|
|
346
|
|
|
|
|
166
|
|
Operating profit (loss)
|
|
|
|
$
|
19
|
|
|
|
|
$
|
93
|
|
|
|
|
$
|
(127
|
)
|
|
|
|
$
|
139
|
|
Operating profit margin excluding the Venezuelan currency
devaluation charge
|
|
|
|
10.0
|
%
|
|
|
|
11.9
|
%
|
|
|
|
9.3
|
%
|
|
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV U.S. Non-GAAP Financial Measure Reconciliation Schedules
|
(Dollars in Millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
|
Reconciliation of Pre-SAC Margin* to Operating Profit
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Operating profit
|
|
|
|
$
|
1,113
|
|
|
|
|
$
|
987
|
|
|
|
|
$
|
3,675
|
|
|
|
|
$
|
3,343
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber acquisition costs (expensed)
|
|
|
|
776
|
|
|
|
|
756
|
|
|
|
|
2,085
|
|
|
|
|
1,979
|
|
Depreciation and amortization
|
|
|
|
435
|
|
|
|
|
409
|
|
|
|
|
1,290
|
|
|
|
|
1,225
|
|
Cash paid for subscriber leased equipment - upgrade and retention
|
|
|
|
(134
|
)
|
|
|
|
(162
|
)
|
|
|
|
(348
|
)
|
|
|
|
(392
|
)
|
Pre-SAC Margin
|
|
|
|
$
|
2,190
|
|
|
|
|
$
|
1,990
|
|
|
|
|
$
|
6,702
|
|
|
|
|
$
|
6,155
|
|
Pre-SAC Margin as a percentage of revenue
|
|
|
|
33.7
|
%
|
|
|
|
32.3
|
%
|
|
|
|
35.5
|
%
|
|
|
|
34.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Cash Flow Before Interest and Taxes2
to
Net Cash Provided by Operating Activities
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Cash Flow Before Interest and Taxes
|
|
|
|
$
|
1,302
|
|
|
|
|
$
|
1,060
|
|
|
|
|
$
|
3,605
|
|
|
|
|
$
|
3,179
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
(368
|
)
|
|
|
|
(373
|
)
|
|
|
|
(765
|
)
|
|
|
|
(733
|
)
|
Interest income
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
|
Income taxes paid
|
|
|
|
(298
|
)
|
|
|
|
(284
|
)
|
|
|
|
(927
|
)
|
|
|
|
(786
|
)
|
Add Cash Paid For:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
|
187
|
|
|
|
|
155
|
|
|
|
|
514
|
|
|
|
|
420
|
|
Subscriber leased equipment - subscriber acquisitions
|
|
|
|
143
|
|
|
|
|
190
|
|
|
|
|
375
|
|
|
|
|
515
|
|
Subscriber leased equipment - upgrade and retention
|
|
|
|
134
|
|
|
|
|
162
|
|
|
|
|
348
|
|
|
|
|
392
|
|
Satellites
|
|
|
|
19
|
|
|
|
|
46
|
|
|
|
|
52
|
|
|
|
|
154
|
|
Net Cash Provided by Operating Activities
|
|
|
|
$
|
1,120
|
|
|
|
|
$
|
957
|
|
|
|
|
$
|
3,204
|
|
|
|
|
$
|
3,143
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
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(2) See footnotes above
|
* Pre-SAC Margin, which is a financial measure that is not
determined in accordance with accounting principles generally
accepted in the United States of America, or GAAP, is calculated for
DIRECTV U.S. by adding amounts under the captions “Subscriber
acquisition costs” and “Depreciation and amortization expense” to
“Operating Profit” from the Consolidated Statements of Operations
and subtracting "Cash paid for subscriber leased equipment - upgrade
and retention" from the Consolidated Statements of Cash Flows. This
financial measure should be used in conjunction with GAAP financial
measures and is not presented as an alternative measure of operating
results, as determined in accordance with GAAP. DIRECTV management
use Pre-SAC Margin to evaluate the profitability of DIRECTV U.S.'
current subscriber base for the purpose of allocating resources to
discretionary activities such as adding new subscribers, upgrading
and retaining existing subscribers and for capital expenditures. To
compensate for the exclusion of “Subscriber acquisition costs,”
management also uses operating profit and operating profit before
depreciation and amortization expense to measure profitability.
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|
DIRECTV believes this measure is useful to investors, along with
GAAP measures (such as revenues, operating profit and net income),
to compare DIRECTV U.S.’ operating performance to other
communications, entertainment and media companies. DIRECTV believes
that investors also use current and projected Pre-SAC Margin to
determine the ability of DIRECTV U.S.’ current and projected
subscriber base to fund discretionary spending and to determine the
financial returns for subscriber additions.
|
|
|
|
DIRECTV U.S. Non-GAAP Financial Measure SAC Calculations
|
(Dollars in Millions, Except Per Subscriber Amounts)
|
(Unaudited)
|
DIRECTV HOLDINGS LLC (DIRECTV U.S.)
|
SAC Calculation
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
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|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
Subscriber acquisition costs (expensed)
|
|
|
|
$
|
776
|
|
|
|
|
$
|
756
|
|
|
|
|
$
|
2,085
|
|
|
|
|
$
|
1,979
|
Cash paid for subscriber leased equipment - subscriber acquisitions
|
|
|
|
143
|
|
|
|
|
190
|
|
|
|
|
375
|
|
|
|
|
515
|
Total acquisition costs
|
|
|
|
$
|
919
|
|
|
|
|
$
|
946
|
|
|
|
|
$
|
2,460
|
|
|
|
|
$
|
2,494
|
Gross subscriber additions (000's)
|
|
|
|
1,023
|
|
|
|
|
1,109
|
|
|
|
|
2,822
|
|
|
|
|
2,841
|
Average subscriber acquisition costs - per subscriber (SAC)
|
|
|
|
$
|
898
|
|
|
|
|
$
|
853
|
|
|
|
|
$
|
872
|
|
|
|
|
$
|
878
|
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CONTACT:
DIRECTV
Media Contact:
Darris Gringeri, (212) 205-0882
or
Investor
Relations:
(310) 964-0808
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