DTV DTE Energy Company

DIRECTV Fourth Quarter Revenue Growth of 4% Drives Full Year Revenues Up 5% to $33.3 billion.

• DIRECTV Latin America full year revenues increase 3% to $7.1 billion principally related to the addition of approximately 903,000 net new subscribers during the year.
• Full year DIRECTV U.S. revenue growth of 5% to $26.0 billion driven by ARPU growth of 4.7% and annual subscriber growth of 99,000.

DIRECTV Full Year 2014 Adjusted Diluted Earnings Per Share Increase 12% to $6.08.

• EPS growth driven by a 3% increase in consolidated adjusted operating profit before depreciation and amortization as well as $1.4 billion of share repurchases in 2014.

DIRECTV Full Year Free Cash Flow Increases 21% to $3.1 billion.

DIRECTV (NASDAQ:DTV) today reported that fourth quarter 2014 revenues increased 4% to $8.92 billion, operating profit before depreciation and amortization1 (OPBDA) and operating profit decreased to $2.00 billion and $1.26 billion, respectively, and diluted earnings per share was unchanged at $1.53 compared to last year's fourth quarter.

“Our fourth quarter results, although marked by challenging macroeconomic conditions in Latin America and a conscious decision to reinvest in our U.S. business, capped off another strong year of operations for DIRECTV. In Latin America, despite the macroeconomic headwinds, our DIRECTV and Sky brands attracted over 1.4 million net new customers - surpassing the 19 million cumulative subscriber mark by year-end. More importantly, even excluding Venezuela, DTVLA improved cash flow by over $400 million and generated positive cash flow for the year - easily surpassing our internal plans for the business,” said Mike White, President and CEO of DIRECTV.

“And in the U.S., despite operating in a mature, hyper-competitive market with significant cost pressures, we were able to improve our OPBDA margins for the third consecutive year and surpass all of our 2014 plans for subscriber, revenue, OPBDA and cash flow growth, while also making significant headway on improving both the customer service and entertainment experience,” White added. “The focused performance of our two primary segments resulted in a 21% increase in our consolidated free cash flow, topping $3.1 billion for the year - and leaving us with $4.6 billion of cash on the balance sheet at year end.”

White finished, “2015 will bring additional challenges to our businesses, but given our solid continued operating momentum and the pending merger with AT&T, I am confident that we will continue to drive value for our shareholders for the foreseeable future.”

           

DIRECTV'S Operational Review

  DIRECTV Consolidated

Dollars in Millions except Earnings per Common Share

Three Months EndedDecember 31,       Twelve Months EndedDecember 31,       2014       2013       2014       2013 Reported Financial Results                                         Revenues       $ 8,922         $ 8,594         $ 33,260         $ 31,754   Reported Operating Profit Before Depreciation and Amortization(1) 2,000       2,044 8,071       7,978 Reported OPBDA Margin(1)       22.4 %       23.8 %       24.3 %       25.1 % Reported Operating Profit 1,255 1,333 5,128 5,150 Reported Operating Profit Margin       14.1 %       15.5 %       15.4 %       16.2 % Reported Net Income Attributable to DIRECTV       778         810         2,756         2,859   Reported Diluted Earnings Per Common Share       $ 1.53         $ 1.53         $ 5.40         $ 5.17   Capital Expenditures and Cash Flow                                         Cash Paid for Property and Equipment       269         310         979         873   Cash Paid for Subscriber Leased Equipment - Subscriber Acquisitions       301         399         1,173         1,589   Cash Paid for Subscriber Leased Equipment - Upgrade and Retention       163         229         788         947   Cash Paid for Satellites       96         101         285         377   Cash Flow Before Interest and Taxes(2)       1,268         1,484         5,475         4,855   Free Cash Flow(3)       814         1,000         3,144         2,608   Venezuela Currency Charge Impact On(4):                                         Operating Profit Before Depreciation and Amortization      

 

 

(346 )       (166 ) Operating Profit      

 

 

(346 )       (166 ) Net Income Attributable to DIRECTV      

 

 

(346 )       (136 ) Diluted Earnings Per Common Share      

 

 

       

 

 

        $ (0.68 )       $ (0.25 ) Adjusted Financial Results†                                         Adjusted Operating Profit Before Depreciation and Amortization(1)

 

 

8,417 8,144 Adjusted OPBDA Margin(1)      

 

 

 

 

25.3 %       25.6 % Adjusted Operating Profit

 

 

5,474 5,316 Adjusted Operating Profit Margin      

 

 

 

 

16.5 %       16.7 % Adjusted Net Income Attributable to DIRECTV      

 

 

3,102         2,995   Adjusted Diluted Earnings Per Common Share      

 

       

 

        $ 6.08         $ 5.42  

†"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.

Fourth Quarter Review

DIRECTV's fourth quarter revenues increased 4% to $8.92 billion principally due to strong ARPU growth at DIRECTV U.S.

Fourth quarter OPBDA and operating profit decreased to $2.00 billion and $1.26 billion, respectively, compared to the prior year period. OPBDA margin and operating profit margin declined to 22.4% and 14.1%, respectively, due to lower margins at DIRECTV Latin America (DTVLA), as well as a slight decline at DIRECTV U.S. The results of our Sports Networks, Eliminations and Other segment also impacted the comparison in the quarter with merger related costs of $33 million in 2014. This was offset by lower consulting costs in the fourth quarter 2014, as well as a pension settlement charge in the same period of 2013.

Fourth quarter net income attributable to DIRECTV decreased to $778 million primarily due to the lower operating profit and unfavorable comparisons in the "Other, net" line of the Consolidated Statements of Operations, partially offset by a decrease in income tax expense mostly due to lower earnings before taxes and a lower effective tax rate in the fourth quarter of 2014 related to the settlement and resolution of state income tax issues. "Other, net" was impacted by a $78 million decrease in equity earnings from Sky Mexico primarily related to Sky Mexico's recognition of certain one-time tax benefits in 2013, which was partially offset by a $39 million gain on interest rate swap contracts at DIRECTV. Diluted earnings per share was unchanged at $1.53 as the favorable impact of share repurchases made prior to the announcement of the pending transaction with AT&T offset the decline in net income.

Cash flow before interest and taxes2 declined to $1.27 billion compared to the fourth quarter of 2013 primarily due to a reduction in cash generated from working capital, partially offset by lower capital expenditures. The decrease in cash generated from working capital was mostly due to the timing of customer receivables at DIRECTV U.S. and the timing of vendor payments at DTVLA, partially offset by $90 million in proceeds from the settlement of certain swap contracts at DIRECTV U.S. The lower capital expenditures were principally due to a reduction in cash paid for leased equipment at DIRECTV U.S. and DTVLA mostly due to declining set-top box costs, higher usage of refurbished set-top boxes at DIRECTV U.S. and the timing of set-top box purchases at DTVLA. Fourth quarter free cash flow3 decreased to $814 million due to the lower cash flow before interest and taxes, partially offset by lower tax payments due to the timing of such payments.

Also during the quarter, but not included in free cash flow, was a December 2014 debt issuance by DIRECTV U.S. of $1,200 million principal amount of 3.950% senior notes due in 2025.

Full Year Review

DIRECTV's full year 2014 revenues increased 5% to $33.26 billion principally due to higher ARPU at DIRECTV U.S., as well as subscriber growth over the last year at DTVLA.

DIRECTV's adjusted OPBDA increased 3% to $8.42 billion and adjusted operating profit increased 3% to $5.47 billion in 2014. Adjusted OPBDA margin and adjusted operating profit margin declined to 25.3% and 16.5%, respectively, as higher margin at DIRECTV U.S. was more than offset by a decline in margin at DTVLA primarily due to costs associated with the FIFA World Cup in 2014 and the ECAD settlement in 2013 discussed below. The results of our Sports Networks, Eliminations and Other segment also impacted the annual comparison with merger related costs of $72 million in 2014. This was offset by lower consulting costs in 2014, as well as a pension settlement charge in 2013. Reported OPBDA increased 1% to $8.07 billion and reported operating profit declined slightly to $5.13 billion.

In September 2013, DTVLA settled a fee dispute and paid $92 million to Escritório Central de Arrecadação e Distribuição, or ECAD, the organization responsible for collecting performance rights fees under Brazilian law. The settlement resulted in a pre-tax gain for the reversal of amounts previously expensed of $128 million. The gain is 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.

Adjusted net income attributable to DIRECTV increased 4% to $3.10 billion in 2014 primarily due to the higher adjusted operating profit and favorable comparisons in the "Other, net" line of the Consolidated Statements of Operations, partially offset by an increase in interest expense principally related to higher average debt balances and an increase in income tax expense mostly due to higher adjusted earnings before taxes. "Other, net" was impacted by a $39 million gain on interest rate swap contracts, a $30 million improvement in foreign currency translation at Sky Brasil and a $59 million non-cash pre-tax charge in 2013 due to the deconsolidation of DIRECTV Sports Network (DSN) Northwest. Also impacting the comparison was the favorable ECAD settlement in the prior year and a $76 million decrease in equity earnings from Sky Mexico primarily related to Sky Mexico's recognition of certain one-time tax benefits in 2013. Adjusted diluted earnings per share increased 12% to $6.08 due to the higher adjusted net income and the favorable impact of share repurchases made prior to the announcement of the pending transaction with AT&T. Reported net income attributable to DIRECTV decreased to $2.76 billion, while reported diluted earnings per share improved 4% to $5.40 compared to the prior year.

In 2014, cash flow before interest and taxes increased 13% to $5.48 billion primarily due to higher adjusted OPBDA, as well as a reduction in cash paid for leased equipment at DIRECTV U.S. and DTVLA mostly due to declining set-top box costs, higher usage of refurbished set-top boxes at DIRECTV U.S. and lower post-paid gross additions, stricter upgrade policies and the timing of set-top-box purchases at DTVLA. Also impacting the comparison were $104 million in proceeds from the settlement of certain swap contracts at DIRECTV U.S. and a $92 million payment in 2013 to settle the ECAD dispute. Free cash flow grew 21% to $3.14 billion, as the higher cash flow before interest and taxes was partially offset by increased net interest payments principally related to the higher average debt balances and increased cash tax payments primarily related to higher adjusted earnings before taxes.

Also during 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, a December 2014 debt issuance by DIRECTV U.S. of $1,200 million principal amount of 3.950% senior notes due in 2025, 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.

SEGMENT FINANCIAL REVIEW

           

DIRECTV U.S. Segment

  DIRECTV U.S. Three Months EndedDecember 31,       Twelve Months EndedDecember 31, Dollars in Millions except ARPU       2014       2013       2014       2013 Reported Financial Results                                         Revenues       $ 7,136         $ 6,773         $ 26,001         $ 24,676   Average Monthly Revenue per Subscriber (ARPU) ($)       117.30         111.74         106.94         102.18   Operating Profit Before Depreciation and Amortization(1) 1,506       1,516 6,471       6,084 OPBDA Margin(1)       21.1 %       22.4 %       24.9 %       24.7 % Operating Profit 1,074 1,101 4,749 4,444 Operating Profit Margin       15.1 %       16.3 %       18.3 %       18.0 % Capital Expenditures and Cash Flow                                         Cash Paid for Property and Equipment       212         228         726         648   Cash Paid for Subscriber Leased Equipment - Subscriber Acquisitions       132         151         507         666   Cash Paid for Subscriber Leased Equipment - Upgrade and Retention       103         146         451         538   Cash Paid for Satellites       21         44         73         198   Cash Flow Before Interest and Taxes(2)       1,203         1,292         4,808         4,471   Subscriber Data (in 000's except Churn)                                         Gross Subscriber Additions       982         949         3,804         3,790   Average Monthly Subscriber Churn       1.37 %       1.41 %       1.52 %       1.50 % Net Subscriber Additions       149         93         99         169   Cumulative Subscribers       20,352         20,253         20,352         20,253    

Fourth Quarter Review

In the fourth quarter, DIRECTV U.S. revenues increased 5% to $7.14 billion compared with the fourth quarter of 2013 primarily due to strong ARPU growth along with a larger subscriber base. ARPU increased 5.0% to $117.30 mostly due to price increases on programming packages, higher advanced receiver service fees, higher ad sales, increased commercial business revenues and higher set-top box lease fees. These improvements were partially offset by increased promotional offers to existing customers and lower revenues from pay-per-view events. DIRECTV U.S. ended the year with 20.35 million subscribers.

DIRECTV U.S. net subscriber additions of approximately 149,000 increased compared to the prior year period principally due to higher gross subscriber additions and a four basis point improvement in the average monthly churn rate. The increase in gross additions was mainly associated with a successful new ad campaign, enhanced promotions, wider distribution in the consumer electronics channel and competitor programming disputes. The decrease in the monthly churn rate was primarily due to lower voluntary churn from improved retention practices, as well as more successful winback offers.

Fourth quarter OPBDA decreased slightly to $1.51 billion and OPBDA margin declined to 21.1% as higher revenues were offset by increased programming costs mostly related to programming supplier rate increases and higher subscriber acquisition costs. The higher subscriber acquisition costs were principally associated with an increase in promotional offers targeted at higher quality subscribers and a higher mix of sales from the consumer electronics channel, as well as increased usage of refurbished set-top boxes. The decline in margin was partially offset by lower upgrade and retention expenses mostly related to reduced equipment costs, as well as lower general and administrative expenses primarily related to a pension settlement charge in the fourth quarter of 2013. Operating profit decreased to $1.07 billion and operating profit margin declined to 15.1% in the fourth quarter mostly due to the decline in OPBDA margin.

Full Year Review

In 2014, DIRECTV U.S. revenues increased 5% to $26.00 billion compared to 2013 due to strong ARPU growth along with a larger subscriber base. ARPU increased 4.7% to $106.94 mostly due to price increases on programming packages, higher advanced receiver service fees, higher fees for an enhanced warranty program, higher ad sales and increased commercial business revenues. These improvements were partially offset by increased promotional offers to new and existing customers.

DIRECTV U.S. net subscriber additions of approximately 99,000 in 2014 decreased from the prior year as slightly higher gross additions were offset by a two basis point increase in the average monthly churn rate. The higher churn rate was primarily driven by a more competitive environment.

In 2014, OPBDA increased 6% to $6.47 billion and OPBDA margin improved from 24.7% to 24.9% principally due to higher revenues combined with lower upgrade and retention expenses mostly related to reduced equipment costs, as well as relatively unchanged general and administrative expenses. These margin improvements were partially offset by higher programming costs primarily related to programming supplier rate increases, as well as higher subscriber acquisition costs. The higher subscriber acquisition costs were principally associated with an increase in promotional offers targeted at higher quality subscribers and increased usage of refurbished set-top boxes. Operating profit increased 7% to $4.75 billion in 2014 and operating profit margin increased from 18.0% to 18.3% mostly due to the improvement in OPBDA margin.

           

DIRECTV Latin America

  DIRECTV Latin America Three Months EndedDecember 31,       Twelve Months EndedDecember 31, Dollars in Millions except ARPU       2014       2013       2014       2013 Reported Financial Results                                         Revenues       $ 1,731         $ 1,768         $ 7,061         $ 6,844   Average Monthly Revenue per Subscriber (ARPU) ($)       46.48         51.47         48.39         51.64   Reported Operating Profit Before Depreciation and Amortization(1) 499       550 1,649       1,943 Reported OPBDA Margin(1)       28.8 %       31.1 %       23.4 %       28.4 % Reported Operating Profit 189 258 442 776 Reported Operating Profit Margin       10.9 %       14.6 %       6.3 %       11.3 % Capital Expenditures and Cash Flow                                         Cash Paid for Property and Equipment       59         82         254         224   Cash Paid for Subscriber Leased Equipment - Subscriber Acquisitions       169         248         666         923   Cash Paid for Subscriber Leased Equipment - Upgrade and Retention       60         83         337         409   Cash Paid for Satellites       70         52         190         164   Cash Flow Before Interest and Taxes(2)       103         164         707         326   Subscriber Data (in 000's except Churn)                                         Gross Subscriber Additions(6)       980         989         4,395         4,382   Average Monthly Total Subscriber Churn(5)       2.31 %       2.21 %       2.39 %       2.37 % Average Monthly Post-paid Subscriber Churn(5)       2.00 %       1.85 %       1.95 %       2.10 % Net Subscriber Additions(5)(6)       118         231         903         1,239   Cumulative Subscribers(5)(6)       12,471         11,568         12,471         11,568   Venezuela Currency Charge Impact On(4):                                         Operating Profit Before Depreciation and Amortization      

 

 

(346 )       (166 ) Operating Profit      

 

       

 

        (346 )       (166 ) Adjusted Financial Results†                                         Adjusted Operating Profit Before Depreciation and Amortization(1)

 

 

1,995 2,109 Adjusted OPBDA Margin(1)      

 

 

 

 

28.3 %       30.8 % Adjusted Operating Profit

 

 

788 942 Adjusted Operating Profit Margin      

 

 

     

 

 

      11.2 %       13.8 %

†"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's results are accounted for as an equity method investment and therefore are not consolidated by DTVLA.

           

Sky Brasil Segment

  Sky Brasil Three Months EndedDecember 31,       Twelve Months EndedDecember 31, Dollars in Millions except ARPU       2014       2013       2014       2013 Reported Financial Results                                         Revenues       $ 923         $ 963         $ 3,887         $ 3,753   Average Monthly Revenue per Subscriber (ARPU) ($)       54.52         60.41         58.35         59.97   Operating Profit Before Depreciation and Amortization(1) 268       326 1,175       1,252 OPBDA Margin(1)       29.0 %       33.9 %       30.2 %       33.4 % Operating Profit 108 150 488 529 Operating Profit Margin       11.7 %       15.6 %       12.6 %       14.1 % Other Data                                         Total Capital Expenditures       223         269         867         961   Net Subscriber Additions (Disconnections)(5)(6) (in 000's)       (1 )       116         272         332   Cumulative Subscribers(5)(6) (in 000's)       5,643         5,371         5,643         5,371    

Fourth Quarter Review

Excluding changes in foreign exchange rates, Sky Brasil's fourth quarter revenues grew 7% versus the prior year period driven by a 6% increase in the average number of subscribers and a 1% increase in local currency ARPU. When factoring in changes in foreign exchange rates, Sky Brasil's revenues decreased to $923 million and ARPU declined 9.8% to $54.52 compared to the fourth quarter of 2013.

Subscriber net losses of approximately 1,000 in the fourth quarter of 2014 compared to subscriber net additions of approximately 116,000 in the prior year period. The change was primarily due to a higher average monthly churn rate driven by a higher mix of subscribers taking prepaid services, the migration of key systems that impacted existing subscribers and challenging macroeconomic conditions, as well as slightly lower gross additions also associated with the macroeconomic conditions.

Sky Brasil OPBDA decreased to $268 million in the fourth quarter of 2014 and OPBDA margin declined to 29.0%.The decline in OPBDA margin was principally due to increased expenses related to the migration of key systems and the rollout of a new broadband service, as well as higher subscriber acquisition costs mostly driven by higher advertising expenses. Fourth quarter operating profit decreased to $108 million and operating profit margin declined to 11.7%, as the decline in OPBDA margin was slightly offset by the impact of lower depreciation expense resulting from changes in foreign exchange rates.

Full Year Review

Excluding changes in foreign exchange rates, Sky Brasil's full year revenues grew 13% versus the prior year period driven by a 6% increase in the average number of subscribers and a 6% increase in local currency ARPU. The increase in local currency ARPU was principally due to a reduction in credits to existing subscribers, as well as growth in advanced services. When factoring in changes in foreign exchange rates, Sky Brasil's revenues increased 4% to $3.89 billion compared to 2013, while ARPU declined 2.7% to $58.35.

Subscriber net additions of approximately 272,000 declined compared to 2013, as improved gross additions were more than offset by the impact of higher disconnections associated with the larger subscriber base, as well as a slight increase in the total average monthly churn rate. The higher gross additions were primarily driven by demand related to the FIFA World Cup. The increase in the total churn rate was principally related to the introduction of a prepaid service in the fourth quarter of 2013, a reduction in credits to existing customers and challenging macroeconomic conditions, as well as the migration of key systems that impacted existing subscribers.

Excluding the impact of the favorable ECAD settlement in the third quarter of 2013, Sky Brasil’s full year OPBDA decreased slightly to $1.18 billion and OPBDA margin declined from 31.5% to 30.2%. The decline in OPBDA margin was principally due to increased expenses related to the rollout of the new broadband service and the migration of key systems. Also excluding the impact of the favorable ECAD settlement, operating profit increased 6% to $488 million and operating profit margin increased from 12.2% to 12.6%. Operating profit margin improved as the decline in OPBDA margin was more than offset by the impact of lower depreciation expense resulting from changes in foreign exchange rates.

           

PanAmericana and Other Segment

  PanAmericana and Other Three Months EndedDecember 31,       Twelve Months EndedDecember 31, Dollars in Millions except ARPU       2014       2013       2014       2013 Reported Financial Results                                         Revenues       $ 808         $ 805         $ 3,174         $ 3,091   Average Monthly Revenue per Subscriber (ARPU) ($)       39.78         43.74         40.03         44.19   Reported Operating Profit Before Depreciation and Amortization(1) 231       224 474       691 Reported OPBDA Margin(1)       28.6 %       27.8 %       14.9 %       22.4 % Reported Operating Profit (Loss) 81 108 (46 ) 247 Reported Operating Profit Margin       10.0 %       13.4 %       NM*       8.0 % Other Data                                         Total Capital Expenditures       135         196         580         759   Net Subscriber Additions (in 000's)       119         115         631         907   Cumulative Subscribers (in 000's)       6,828         6,197         6,828         6,197   Venezuela Currency Charge Impact On(4):                                         Operating Profit Before Depreciation and Amortization      

 

 

(346 )       (166 ) Operating Profit      

 

       

 

        (346 )       (166 ) Adjusted Financial Results†                                         Adjusted Operating Profit Before Depreciation and Amortization(1)

 

 

820 857 Adjusted OPBDA Margin(1)      

 

 

 

 

25.8 %       27.7 % Adjusted Operating Profit

 

 

300 413 Adjusted Operating Profit Margin      

 

 

     

 

 

      9.5 %       13.4 %

* 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.

Fourth Quarter Review

Excluding changes in foreign exchange rates, fourth quarter revenues in the PanAmericana and Other segment grew 42% versus the prior year period driven by a 10% increase in the average number of subscribers and a 29% 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 slightly to $808 million compared to the fourth quarter of 2013, while ARPU decreased 9.1% to $39.78.

Subscriber net additions of approximately 119,000 increased slightly compared to the fourth quarter of 2013 due to slightly higher gross additions and a lower average monthly total churn rate driven by an improvement in prepaid reconnection rates.

Fourth quarter OPBDA in the PanAmericana and Other segment increased 3% to $231 million and OPBDA margin improved to 28.6% from 27.8% in the prior year period. The increase in OPBDA margin was primarily due to a decrease in subscriber acquisition costs principally driven by lower advertising expenses. This margin improvement was partially offset by the ongoing impact of the decline in value of the Venezuelan bolivar, as well as inflation and the timing of price increases in Venezuela. Operating profit decreased to $81 million and operating profit margin declined to 10.0% as the higher OPBDA margin was more than offset by the impact of higher depreciation and amortization resulting from leased equipment and infrastructure capital expenditures made over the last year.

Full Year Review

Excluding changes in foreign exchange rates, full year revenues in the PanAmericana and Other segment grew 40% versus the prior year period driven by a 13% increase in the average number of subscribers and a 24% 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 $3.17 billion compared to 2013, while ARPU decreased 9.4% to $40.03.

Subscriber net additions of approximately 631,000 decreased compared to 2013 due to higher disconnections associated with the larger subscriber base, lower gross additions and a slight increase in the total average monthly churn rate. The decline in gross additions was primarily related to tighter sales filters instituted due to challenging macroeconomic conditions. The total churn rate was negatively impacted by a higher mix of subscribers taking prepaid services.

Adjusted OPBDA in the PanAmericana and Other segment decreased to $820 million in 2014 and adjusted OPBDA margin declined to 25.8%. The decline in adjusted OPBDA margin was primarily driven by the ongoing impact of the decline in value of the Venezuelan bolivar and higher programming costs associated with special events, including the FIFA World Cup. OPBDA margin was also negatively impacted by inflation and the timing of price increases in Venezuela. Adjusted operating profit decreased to $300 million and adjusted operating profit margin declined to 9.5% mainly due to the lower OPBDA margin, as well as the impact of higher depreciation and amortization resulting from leased equipment and infrastructure capital expenditures made over the last year. Reported OPBDA decreased to $474 million and reported operating loss was $46 million in 2014.

CONFERENCE CALL INFORMATION

A live webcast of DIRECTV's fourth 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 February 19, 2015. Access to the earnings call is also available in the United States by dialing (800) 533-9703 and internationally by dialing (785) 830-1926. The conference ID number is 3390787. A replay of the call will also be archived on our website at investor.directv.com.

FOOTNOTES

(1) Operating profit before depreciation and amortization, which is a financial measure that is not determined in accordance with accounting principles generally accepted in the United States of America, or GAAP, should be used in conjunction with other GAAP financial measures and is not presented as an alternative measure of operating results, as determined in accordance with GAAP. Please see DIRECTV's Annual Report on Form 10-K for the year ended December 31, 2014, which is expected to be filed in February 2015, 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. The period-end rates based on the latest auctions was 10.6 as of June 30, 2014 and 12.0 bolivars per U.S. dollar as of both September 30, 2014 and December 31, 2014.

(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 the full year of 2013.

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,” "strive" or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. All of these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or from those expressed or implied by the relevant forward-looking statement. Such risks and uncertainties include, but are not limited to: increased competition; increasing programming costs and our ability to renew programming contracts under favorable terms; increased subscriber churn or subscriber upgrade and retention costs; potential material increase in subscriber acquisition costs; general economic conditions; risks associated with doing business internationally, which for DIRECTV Latin America include political and economic instability and foreign currency exchange rate volatility and controls; pace of technological development; potential intellectual property infringement; loss of key personnel; satellite construction or launch delays; satellite launch and operational risks; loss of a satellite; theft of satellite programming signals; U.S. and foreign governmental and regulatory action; ability to maintain licenses and regulatory approvals; significant debt; indemnification obligations; reliance on network and information systems; and the outcome of legal proceedings. We may face other risks described from time to time in periodic reports filed by us with the U.S. Securities and Exchange Commission.

DIRECTV (NASDAQ:DTV) is one of the world's leading providers of digital television entertainment services. Through its subsidiaries and affiliated companies in the United States, Brazil, Mexico and other countries in Latin America, DIRECTV provides digital television service to over 20 million customers in the United States and over 19 million customers in Latin America. DIRECTV sports and entertainment properties include ownership interests and management of four Regional Sports Networks: ROOT SPORTS Rocky Mountain, Pittsburgh, Southwest and Northwest; and has minority ownership interests in 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 EndedDecember 31, Years EndedDecember 31, 2014       2013       2014       2013 Revenues       $ 8,922         $ 8,594         $ 33,260         $ 31,754   Operating costs and expenses Costs of revenues, exclusive of depreciation and amortization expense Broadcast programming and other 4,317 4,079 14,930 13,991 Subscriber service expenses 587 568 2,320 2,242 Broadcast operations expenses 118 104 430 409 Selling, general and administrative expenses, exclusive of depreciation and amortization expense Subscriber acquisition costs 954 855 3,659 3,419 Upgrade and retention costs 375 394 1,456 1,547 General and administrative expenses 538 550 2,041 2,002 Merger-related costs 33 — 72 — Venezuelan currency devaluation charge — — 281 166 Depreciation and amortization expense       745         711         2,943         2,828   Total operating costs and expenses       7,667         7,261         28,132         26,604   Operating profit 1,255 1,333 5,128 5,150 Interest income 25 16 68 72 Interest expense (221 ) (222 ) (898 ) (840 ) Other, net       57         100         150         106   Income before income taxes 1,116 1,227 4,448 4,488 Income tax expense       (335 )       (411 )       (1,673 )       (1,603 ) Net income 781 816 2,775 2,885 Less: Net income attributable to noncontrolling interest       (3 )       (6 )       (19 )       (26 ) Net income attributable to DIRECTV       $ 778         $ 810         $ 2,756         $ 2,859   Basic earnings attributable to DIRECTV per common share $ 1.55 $ 1.55 $ 5.46 $ 5.22 Diluted earnings attributable to DIRECTV per common share $ 1.53 $ 1.53 $ 5.40 $ 5.17   Weighted average number of common shares outstanding (in millions): Basic 502 523 505 548 Diluted 507 528 510 553                           DIRECTV CONSOLIDATED BALANCE SHEETS (Dollars in Millions) (Unaudited)   ASSETS       December 31, 2014                 December 31, 2013 Current assets Cash and cash equivalents $ 4,635 $ 2,180 Accounts receivable, net of allowances of $109 and $95 2,800 2,547 Inventories 299 283 Deferred income taxes 68 140 Prepaid expenses and other       1,017                   803   Total current assets 8,819 5,953 Satellites, net 3,040 2,467 Property and equipment, net 6,721 6,650 Goodwill 3,929 3,970 Intangible assets, net 994 920 Investments and other assets       1,956                   1,945   Total assets       $ 25,459                   $ 21,905     LIABILITIES AND STOCKHOLDERS' DEFICIT                               Current liabilities Accounts payable and accrued liabilities $ 5,048 $ 4,685 Unearned subscriber revenues and deferred credits 584 589 Current debt       1,327                   1,256   Total current liabilities 6,959 6,530 Long-term debt 19,485 18,284 Deferred income taxes 1,726 1,804 Other liabilities and deferred credits 2,117 1,456 Commitments and contingencies Redeemable noncontrolling interest — 375 Stockholders' deficit       (4,828 )                 (6,544 ) Total liabilities and stockholders' deficit       $ 25,459                   $ 21,905                               DIRECTV CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) (Unaudited) Years Ended December 31,           2014                 2013 Cash Flows From Operating Activities Net income $ 2,775 $ 2,885 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 2,943 2,828 Venezuelan currency devaluation charge 281 166 DSN Northwest deconsolidation charge — 59 Amortization of deferred revenues and deferred credits (48 ) (53 ) Share-based compensation expense 104 100 Equity in earnings from unconsolidated affiliates (133 ) (198 ) Net foreign currency transaction loss 87 52 Dividends received 28 41 Net gains from sale of investments (19 ) (8 ) Deferred income taxes 166 323 Excess tax benefit from share-based compensation (23 ) (24 ) Other 31 (7 ) Change in operating assets and liabilities: Accounts receivable (242 ) — Inventories (16 ) 118 Prepaid expenses and other (81 ) (334 ) Accounts payable and accrued liabilities 361 272 Unearned subscriber revenues and deferred credits (5 ) 26 Other, net         160                   148   Net cash provided by operating activities         6,369                   6,394   Cash Flows From Investing Activities Cash paid for property and equipment (2,940 ) (3,409 ) Cash paid for satellites (285 ) (377 ) Investment in companies, net of cash acquired (47 ) (66 ) Proceeds from sale of investments 32 257 Other, net         (123 )                 (158 ) Net cash used in investing activities         (3,363 )                 (3,753 )                           DIRECTV

CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)

(Dollars in Millions) (Unaudited) Years Ended December 31,         2014                 2013 Cash Flows From Financing Activities Repayment of commercial paper (maturity 90 days or less), net — (155 ) Proceeds from short-term borrowings 301 556 Repayment of short-term borrowings (501 ) (559 ) Proceeds from borrowings under revolving credit facility — 10 Repayment of borrowings under revolving credit facility — (10 ) Proceeds from long-term debt 2,650 2,099 Debt issuance costs (14 ) (12 ) Repayment of long-term debt (1,066 ) (15 ) Repayment of other long-term obligations (69 ) (63 ) Common shares repurchased and retired (1,386 ) (4,000 ) Stock options exercised 21 — Taxes paid in lieu of shares issued for share-based compensation (60 ) (61 ) Excess tax benefit from share-based compensation 23 24 Other, net       (67 )                 10   Net cash used in financing activities       (168 )                 (2,176 ) Effect of exchange rate changes on Venezuelan cash and cash equivalents       (383 )                 (187 ) Net increase in cash and cash equivalents 2,455 278 Cash and cash equivalents at beginning of the year       2,180                   1,902   Cash and cash equivalents at end of the year       $ 4,635                   $ 2,180   Supplemental Cash Flow Information Cash paid for interest $ 886 $ 840 Cash paid for income taxes 1,513 1,479                             DIRECTV SELECTED SEGMENT DATA (Dollars in Millions) (Unaudited) Three Months EndedDecember 31,       Years EndedDecember 31,         2014       2013       2014       2013 DIRECTV U.S. Revenues $ 7,136 $ 6,773 $ 26,001 $ 24,676 Operating profit before depreciation and amortization(1) 1,506 1,516 6,471 6,084 Operating profit before depreciation and amortization margin(1) 21.1 % 22.4 % 24.9 % 24.7 % Operating profit $ 1,074 $ 1,101 $ 4,749 $ 4,444 Operating profit margin 15.1 % 16.3 % 18.3 % 18.0 % Depreciation and amortization       $ 432         $ 415         $ 1,722         $ 1,640     SKY BRASIL Revenues $ 923 $ 963 $ 3,887 $ 3,753 Operating profit before depreciation and amortization(1) 268 326 1,175 1,252 Operating profit before depreciation and amortization margin(1) 29.0 % 33.9 % 30.2 % 33.4 % Operating profit $ 108 $ 150 $ 488 $ 529 Operating profit margin 11.7 % 15.6 % 12.6 % 14.1 % Depreciation and amortization       $ 160         $ 176         $ 687         $ 723     PANAMERICANA AND OTHER Revenues $ 808 $ 805 $ 3,174 $ 3,091 Operating profit before depreciation and amortization(1) 231 224 474 691 Operating profit before depreciation and amortization margin(1) 28.6 % 27.8 % 14.9 % 22.4 % Operating profit (loss) $ 81 $ 108 $ (46 ) $ 247 Operating profit margin 10.0 % 13.4 % NM* 8.0 % Depreciation and amortization       $ 150         $ 116         $ 520         $ 444     SPORTS NETWORKS, ELIMINATIONS AND OTHER Revenues $ 55 $ 53 $ 198 $ 234 Operating loss before depreciation and amortization(1) (5 ) (22 ) (49 ) (49 ) Operating loss (8 ) (26 ) (63 ) (70 ) Depreciation and amortization       3         4         14         21     TOTAL Revenues $ 8,922 $ 8,594 $ 33,260 $ 31,754 Operating profit before depreciation and amortization(1) 2,000 2,044 8,071 7,978 Operating profit before depreciation and amortization margin(1) 22.4 % 23.8 % 24.3 % 25.1 % Operating profit $ 1,255 $ 1,333 $ 5,128 $ 5,150 Operating profit margin 14.1 % 15.5 % 15.4 % 16.2 % Depreciation and amortization       $ 745         $ 711         $ 2,943         $ 2,828   *Percentage not meaningful (1)See footnote 1 above       DIRECTV HOLDINGS LLC (DIRECTV U.S.) CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Millions) (Unaudited)       Three Months EndedDecember 31,       Years EndedDecember 31, 2014       2013       2014       2013 Revenues       $ 7,136         $ 6,773         $ 26,001         $ 24,676                     Operating costs and expenses Costs of revenues, exclusive of depreciation and amortization expense Broadcast programming and other 3,718 3,469 12,343 11,616 Subscriber service expenses 389 372 1,519 1,474 Broadcast operations expenses 82 73 303 293 Selling, general and administrative expenses, exclusive of depreciation and amortization expense Subscriber acquisition costs 768 663 2,853 2,642 Upgrade and retention costs 334 348 1,276 1,350 General and administrative expenses 339 332 1,236 1,217 Depreciation and amortization expense       432         415         1,722         1,640   Total operating costs and expenses       6,062         5,672         21,252         20,232   Operating profit 1,074 1,101 4,749 4,444 Interest income 2 — 4 2 Interest expense (212 ) (212 ) (862 ) (827 ) Other, net       46         7         51         29   Income before income taxes 910 896 3,942 3,648 Income tax expense       (263 )       (322 )       (1,387 )       (1,353 ) Net income       $ 647         $ 574         $ 2,555         $ 2,295                             DIRECTV HOLDINGS LLC (DIRECTV U.S.) CONSOLIDATED BALANCE SHEETS (Dollars in Millions) (Unaudited)   ASSETS       December 31, 2014                 December 31, 2013 Current assets Cash and cash equivalents $ 3,211 $ 797 Accounts receivable, net of allowances of $66 and $59 2,354 2,103 Inventories 270 249 Prepaid expenses and other       804                   494   Total current assets 6,639 3,643 Satellites, net 1,717 1,810 Property and equipment, net 3,891 3,724 Goodwill 3,191 3,191 Intangible assets, net 512 527 Other assets       769                   551   Total assets       $ 16,719                   $ 13,446     LIABILITIES AND OWNER'S DEFICIT                               Current liabilities Accounts payable and accrued liabilities $ 4,048 $ 3,695 Unearned subscriber revenues and deferred credits 398 380 Current debt       1,200                   1,200   Total current liabilities 5,646 5,275 Long-term debt 19,327 18,203 Deferred income taxes 1,769 1,641 Other liabilities and deferred credits 687 595 Commitments and contingencies Owner's deficit       (10,710 )                 (12,268 ) Total liabilities and owner's deficit       $ 16,719                   $ 13,446                             DIRECTV HOLDINGS LLC (DIRECTV U.S.) CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) (Unaudited) Years Ended December 31,         2014                 2013 Cash Flows From Operating Activities Net income $ 2,555 $ 2,295 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 1,722 1,640 Amortization of deferred revenues and deferred credits (48 ) (53 ) Share-based compensation expense 83 78 Deferred income taxes 266 450 Excess tax benefit from share-based compensation (19 ) (20 ) Other (45 ) 18 Change in other operating assets and liabilities: Accounts receivable (227 ) (23 ) Inventories (21 ) 124 Prepaid expenses and other (164 ) (242 ) Accounts payable and accrued liabilities 311 312 Unearned subscriber revenue and deferred credits 18 15 Other, net       35                   39   Net cash provided by operating activities       4,466                   4,633   Cash Flows From Investing Activities Cash paid for property and equipment (726 ) (648 ) Cash paid for subscriber leased equipment - subscriber acquisitions (507 ) (666 ) Cash paid for subscriber leased equipment - upgrade and retention (451 ) (538 ) Cash paid for satellites (73 ) (198 ) Investment in companies, net of cash acquired (1 ) (53 ) Proceeds from sale of investments 16 12 Other, net       —                   (67 ) Net cash used in investing activities       (1,742 )                 (2,158 )                           DIRECTV HOLDINGS LLC (DIRECTV U.S.) CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued) (Dollars in Millions) (Unaudited) Years Ended December 31,         2014                 2013 Cash Flows From Financing Activities Repayment of commercial paper (maturity 90 days or less), net — (155 ) Proceeds from short-term borrowings 301 556 Repayment of short-term borrowings (501 ) (559 ) Proceeds from borrowings under revolving credit facility — 10 Repayment of borrowings under revolving credit facility — (10 ) Cash proceeds from debt issuance 2,437 1,947 Debt issuance costs (14 ) (12 ) Repayment of long-term debt (1,000 ) — Repayment of other long-term obligations (30 ) (24 ) Cash dividends to Parent (1,500 ) (4,200 ) Excess tax benefit from share-based compensation 19 20 Other, net       (22 )                 10   Net cash used in financing activities       (310 )                 (2,417 ) Net increase in cash and cash equivalents 2,414 58 Cash and cash equivalents at beginning of the period       797                   739   Cash and cash equivalents at end of the period       $ 3,211                   $ 797   Supplemental Cash Flow Information Cash paid for interest $ 852 $ 782 Cash paid for income taxes 1,251 1,108    

DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation Schedules(Dollars in Millions)(Unaudited)

DIRECTV

Reconciliation of Cash Flow Before Interest and Taxes(2) and Free Cash Flow(3) to

Net Cash Provided by Operating Activities

      Three Months EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Cash Flow Before Interest and Taxes $ 1,268       $ 1,484 $ 5,475       $ 4,855 Adjustments: Cash paid for interest (100 ) (56 ) (886 ) (840 ) Interest income 25 16 68 72 Income taxes paid       (379 )       (444 ) (1,513 )       (1,479 ) Subtotal - Free Cash Flow 814 1,000 3,144 2,608 Add Cash Paid For: Property and equipment 733 938 2,940 3,409 Satellites 96         101   285         377   Net Cash Provided by Operating Activities $ 1,643         $ 2,039   $ 6,369         $ 6,394  

(2)(3) - See footnotes above

                                            Reconciliation of Reported Operating Profit Before Depreciation and Amortization to Operating Profit* Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Operating profit before depreciation and amortization $ 2,000 $ 2,044 $ 8,071 $ 7,978 Subtract: Depreciation and amortization 745         711   2,943         2,828   Operating profit $ 1,255         $ 1,333   $ 5,128         $ 5,150                                             * 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 Annual Report on Form 10-K for the year ended December 31, 2014, which is expected to be filed with the SEC in February 2015.    

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 EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 8,922       $ 8,594 $ 33,260       $ 31,754   Operating profit before depreciation and amortization excluding the Venezuelan currency devaluation charge $ 2,000 $ 2,044 $ 8,417 $ 8,144 OPBDA growth excluding Venezuelan currency devaluation charge (2.2 )% 3.4 % Subtract: Venezuelan currency devaluation charge —         —   346         166   Operating profit before depreciation and amortization 2,000 2,044 8,071 7,978 Subtract: Depreciation and amortization 745         711   2,943         2,828   Operating profit $ 1,255         $ 1,333   $ 5,128         $ 5,150   Operating profit before depreciation and amortization margin excluding the Venezuelan currency devaluation charge       22.4 %       23.8 %       25.3 %       25.6 %     Reconciliation of Adjusted Operating Profit (excluding the Venezuelan currency

devaluation charge) to Operating Profit

Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 8,922 $ 8,594 $ 33,260 $ 31,754  

Operating profit excluding the Venezuelan currency devaluation charge

$ 1,255 $ 1,333 $ 5,474 $ 5,316 Operating Profit growth excluding Venezuelan currency devaluation charge (5.9 )% 3.0 % Subtract: Venezuelan currency devaluation charge —         —   346         166   Operating profit $ 1,255         $ 1,333   $ 5,128         $ 5,150   Operating profit margin excluding the Venezuelan currency devaluation charge       14.1 %       15.5 %       16.5 %       16.7 %     Reconciliation of Adjusted Net Income (excluding the Venezuelan currency devaluation charge) to Net Income Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Net income attributable to DIRECTV excluding the Venezuelan currency devaluation charge $ 778 $ 810 $ 3,102 $ 2,995 Net Income growth excluding Venezuelan currency devaluation charge (4.0 )% 3.6 % Subtract: Venezuelan after-tax currency devaluation charge —         —   346         136 Net income attributable to DIRECTV $ 778         $ 810   $ 2,756         $ 2,859 Diluted weighted average shares 507 528 510 553 Adjusted diluted earnings per common share $ 1.53 $ 1.53 $ 6.08 $ 5.42 Adjusted diluted earnings per common share growth excluding Venezuelan currency devaluation charge       — %                 12.2 %            

DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation Schedules(Dollars in Millions, Except Per Share Amounts)(Unaudited)

DIRECTV Reconciliation of Adjusted Net Income (excluding the Venezuelan currency devaluation charge and the ECAD settlement gain) to Net Income       Three Months EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Net income attributable to DIRECTV excluding the Venezuelan currency devaluation charge and the ECAD settlement gain $ 778       $ 810 $ 3,102       $ 2,917 Net income growth excluding the Venezuelan currency devaluation charge and the ECAD settlement gain (4.0 )% 6.3 % Subtract: Venezuelan after-tax currency devaluation charge — — 346 136 Subtract: ECAD settlement gain —         —   —         (78 Net income attributable to DIRECTV $ 778         $ 810   $ 2,756         $ 2,859 Diluted weighted average shares 507 528 510 553 Adjusted diluted earnings per common share $ 1.53 $ 1.53 $ 6.08 $ 5.27 Adjusted diluted earnings per common share growth excluding the Venezuelan currency devaluation charge and the ECAD settlement gain       — %                 15.4 %            

DIRECTV Latin America Non-GAAP Financial Measure Reconciliation Schedules(Dollars in Millions)(Unaudited)

DIRECTV Latin America Reconciliation of Cash Flow Before Interest and Taxes to

Net Cash Provided by Operating Activities

      Three Months EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Cash Flow Before Interest and Taxes $ 103       $ 164 $ 707       $ 326 Adjustments: Cash paid for interest (18 ) (11 ) (54 ) (80 ) Interest income 22 13 62 54 Income taxes paid       (65 )       (82 )       (265 )       (305 ) Add Cash Paid For: Property and equipment 59 82 254 224 Subscriber leased equipment - subscriber acquisitions 169 248 666 923 Subscriber leased equipment - upgrade and retention 60 83 337 409 Satellites 70         52   190         164   Net Cash Provided by Operating Activities       $ 400         $ 549         $ 1,897         $ 1,715       Reconciliation of Adjusted Operating Profit Before Depreciation and Amortization (excluding the Venezuelan currency devaluation charge) to Operating Profit Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 1,731 $ 1,768 $ 7,061 $ 6,844   Operating profit before depreciation and amortization excluding the Venezuelan currency devaluation charge $ 499 $ 550 $ 1,995 $ 2,109 OPBDA growth excluding Venezuelan currency devaluation charge (9.3 )% (5.4 )% Subtract: Venezuelan currency devaluation charge —         —   346         166   Operating profit before depreciation and amortization 499 550 1,649 1,943 Subtract: Depreciation and amortization 310         292   1,207         1,167   Operating profit $ 189         $ 258   $ 442         $ 776   Operating profit before depreciation and amortization margin excluding the Venezuelan currency devaluation charge       28.8 %       31.1 %       28.3 %       30.8 %     Reconciliation of Adjusted Operating Profit (excluding the Venezuelan currency devaluation charge) to Operating Profit Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 1,731 $ 1,768 $ 7,061 $ 6,844   Operating profit excluding the Venezuelan currency devaluation charge $ 189 $ 258 $ 788 $ 942 Operating Profit growth excluding Venezuelan currency devaluation charge (26.7 )% (16.3 )% Subtract: Venezuelan currency devaluation charge —         —   346         166   Operating profit $ 189         $ 258   $ 442         $ 776   Operating profit margin excluding the Venezuelan currency devaluation charge       10.9 %       14.6 %       11.2 %       13.8 %    

DIRECTV Latin America Non-GAAP Financial Measure Reconciliation Schedules(Dollars in Millions)(Unaudited)

DIRECTV Latin America 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 EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 1,731       $ 1,768 $ 7,061       $ 6,844   Operating profit before depreciation and amortization excluding the Venezuelan currency devaluation charge and the ECAD settlement gain $ 499 $ 550 $ 1,995 $ 2,039 OPBDA growth excluding Venezuelan currency devaluation charge and the ECAD settlement gain (9.3 )% (2.2 )% Subtract: Venezuelan currency devaluation charge — — 346 166 Subtract: ECAD settlement gain —         —   —         (70 ) Operating profit before depreciation and amortization 499 550 1,649 1,943 Subtract: Depreciation and amortization 310         292   1,207         1,167   Operating profit $ 189         $ 258   $ 442         $ 776   Operating profit before depreciation and amortization margin excluding the Venezuelan currency devaluation charge and the ECAD settlement gain       28.8 %       31.1 %       28.3 %       29.8 %     Reconciliation of Adjusted Operating Profit (excluding the Venezuelan currency devaluation charge and the ECAD settlement gain) to Operating Profit Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 1,731 $ 1,768 $ 7,061 $ 6,844   Operating profit excluding the Venezuelan currency devaluation charge and the ECAD settlement gain $ 189 $ 258 $ 788 $ 872 Operating Profit growth excluding Venezuelan currency devaluation charge and the ECAD settlement gain (26.7 )% (9.6 )% Subtract: Venezuelan currency devaluation charge — — 346 166 Subtract: ECAD settlement gain —         —   —         (70 ) Operating profit $ 189         $ 258   $ 442         $ 776   Operating profit margin excluding the Venezuelan currency devaluation charge and the ECAD settlement gain       10.9 %       14.6 %       11.2 %       12.7 %    

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 EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 923       $ 963 $ 3,887       $ 3,753   Operating profit before depreciation and amortization excluding the ECAD settlement gain $ 268 $ 326 $ 1,175 $ 1,182 OPBDA growth excluding ECAD settlement gain (17.8 )% (0.6 )% Subtract: ECAD settlement gain —         —   —         (70 ) Operating profit before depreciation and amortization 268 326 1,175 1,252 Subtract: Depreciation and amortization 160         176   687         723   Operating profit $ 108         $ 150   $ 488         $ 529   Operating profit before depreciation and amortization margin excluding the ECAD settlement gain       29.0 %       33.9 %       30.2 %       31.5 %     Reconciliation of Operating Profit (excluding the ECAD settlement gain) to Operating Profit Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 923 $ 963 $ 3,887 $ 3,753   Operating profit excluding the ECAD settlement gain $ 108 $ 150 $ 488 $ 459 Operating profit growth excluding ECAD settlement gain (28.0 )% 6.3 % Subtract: ECAD settlement gain —         —   —         (70 ) Operating profit $ 108         $ 150   $ 488         $ 529   Operating profit margin excluding the ECAD settlement gain       11.7 %       15.6 %       12.6 %       12.2 %    

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 EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 808       $ 805 $ 3,174       $ 3,091   Operating profit before depreciation and amortization excluding the Venezuelan currency devaluation charge $ 231 $ 224 $ 820 $ 857 OPBDA growth excluding Venezuelan currency devaluation charge 3.1 % (4.3 )% Subtract: Venezuelan currency devaluation charge —         —   346         166   Operating profit before depreciation and amortization 231 224 474 691 Subtract: Depreciation and amortization 150         116   520         444   Operating profit (loss) $ 81         $ 108   $ (46 )       $ 247   Operating profit before depreciation and amortization margin excluding the Venezuelan currency devaluation charge       28.6 %       27.8 %       25.8 %       27.7 %     Reconciliation of Adjusted Operating Profit (excluding the Venezuelan currency devaluation charge) to Operating Profit Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Revenues $ 808 $ 805 $ 3,174 $ 3,091   Operating profit excluding the Venezuelan currency devaluation charge $ 81 $ 108 $ 300 $ 413 Operating profit growth excluding Venezuelan currency devaluation charge (25.0 )% (27.4 )% Subtract: Venezuelan currency devaluation charge —         —   346         166   Operating profit (loss) $ 81         $ 108   $ (46 )       $ 247   Operating profit margin excluding the Venezuelan currency devaluation charge       10.0 %       13.4 %       9.5 %       13.4 %    

DIRECTV U.S. Non-GAAP Financial Measure Reconciliation Schedules(Dollars in Millions, Except Per Subscriber Amounts)(Unaudited)

DIRECTV HOLDINGS LLC (DIRECTV U.S.) Reconciliation of Pre-SAC Margin* to Operating Profit       Three Months EndedDecember 31,       Years EndedDecember 31, 2014       2013 2014       2013 Operating profit $ 1,074       $ 1,101 $ 4,749       $ 4,444 Adjustments: Subscriber acquisition costs (expensed) 768 663 2,853 2,642 Depreciation and amortization 432 415 1,722 1,640 Cash paid for subscriber leased equipment - upgrade and retention (103 )       (146 ) (451 )       (538 ) Pre-SAC Margin $ 2,171         $ 2,033   $ 8,873         $ 8,188   Pre-SAC Margin as a percentage of revenue       30.4 %       30.0 %       34.1 %       33.2 % * Pre-SAC Margin, which is a financial measure that is not determined in accordance with accounting principles generally accepted in the United States of America, or GAAP, is calculated for DIRECTV U.S. by adding amounts under the captions “Subscriber acquisition costs” and “Depreciation and amortization expense” to “Operating Profit” from the Consolidated Statements of Operations and subtracting "Cash paid for subscriber leased equipment - upgrade and retention" from the Consolidated Statements of Cash Flows. This financial measure should be used in conjunction with GAAP financial measures and is not presented as an alternative measure of operating results, as determined in accordance with GAAP. DIRECTV management use Pre-SAC Margin to evaluate the profitability of DIRECTV U.S.' current subscriber base for the purpose of allocating resources to discretionary activities such as adding new subscribers, upgrading and retaining existing subscribers and for capital expenditures. To compensate for the exclusion of “Subscriber acquisition costs,” management also uses operating profit and operating profit before depreciation and amortization expense to measure profitability.   DIRECTV believes this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net income), to compare DIRECTV U.S.’ operating performance to other communications, entertainment and media companies. DIRECTV believes that investors also use current and projected Pre-SAC Margin to determine the ability of DIRECTV U.S.’ current and projected subscriber base to fund discretionary spending and to determine the financial returns for subscriber additions.     Reconciliation of Cash Flow Before Interest and Taxes to Net Cash Provided by Operating Activities Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Cash Flow Before Interest and Taxes $ 1,203 $ 1,292 $ 4,808 $ 4,471 Adjustments: Cash paid for interest (87 ) (49 ) (852 ) (782 ) Interest income 2 — 4 2 Income taxes paid       (324 )       (322 )       (1,251 )       (1,108 ) Add Cash Paid For: Property and equipment 212 228 726 648 Subscriber leased equipment - subscriber acquisitions 132 151 507 666 Subscriber leased equipment - upgrade and retention 103 146 451 538 Satellites 21         44   73         198   Net Cash Provided by Operating Activities       $ 1,262         $ 1,490         $ 4,466         $ 4,633       SAC Calculation Three Months EndedDecember 31, Years EndedDecember 31, 2014       2013 2014       2013 Subscriber acquisition costs (expensed) $ 768 $ 663 $ 2,853 $ 2,642 Cash paid for subscriber leased equipment - subscriber acquisitions 132         151   507         666 Total acquisition costs $ 900         $ 814   $ 3,360         $ 3,308 Gross subscriber additions (000's) 982 949 3,804 3,790 Average subscriber acquisition costs - per subscriber (SAC)       $ 916         $ 858         $ 883         $ 873  

DIRECTVMedia Contact:Darris Gringeri, (212) 205-0882orInvestor Relations:Martin Sheehan, (310) 964-0808