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DIRECTV to Provide New SEC Network on August 14, 2014

in Direct TV Rebate, Uncategorized / Comments Off

DIRECTV and ESPN Combine to Enable SEC Fans with More than 45
Exclusive Football Games at Launch

EL SEGUNDO, Calif. & BRISTOL, Conn.–(BUSINESS WIRE)–
DIRECTV and ESPN have entered into an agreement for DIRECTV to provide
the new SEC Network to fans and followers of the Southeastern Conference
when the network launches Aug. 14. The first college football game on
the new network will air Aug. 28 featuring #20 Texas A&M vs. #9 South
Carolina
.

“The SEC boasts powerhouse athletic programs, especially in football,
representing deeply loyal communities, many of which do not have any
professional teams,” said Dan York, DIRECTV’s Chief Content Officer.
“The depth of SEC competition and the quality ESPN brings to game
production and complementary programming makes SEC Network a valuable
addition to our sports programming lineup, and we’re excited to bring it
into our customers’ homes and on their devices.”

“Our agreement with DIRECTV continues to push the SEC Network towards
one of the most successful network launches when it debuts on August
14,” said Sean Breen, Disney and ESPN Media Networks Senior Vice
President, Affiliate Sales. “We’re proud to deliver the SEC Network
nationwide via DIRECTV in advance of the Texas A&M and South Carolina
game later this month.”

The SEC Network will deliver at least 45 exclusive SEC football games
this season. Recently released pre-season polls rank seven SEC teams in
the college football preseason top 25, ensuring consistently close,
competitive match-ups on SEC Network. The network will also serve as an
all-access pass to nationally competitive events, news and information,
expert analysis, classic games and in-depth features on the most storied
conference in college athletics.

SEC Commissioner Mike Slive said, “With opening day now firmly in sight,
we are happy to count DIRECTV, the country’s largest satellite provider,
among our many distributors for the SEC Network. The SEC is home to the
most passionate fans in college sports, and I am pleased to have such a
wide distribution by launch date for the benefit of SEC fans everywhere.”

“With the launch of SEC Network just days away, we look forward to
serving these legions of current and prospective students, alumni and
loyal supporters with quality content and coverage nationwide,” added

Justin Connolly, ESPN Senior Vice President, College Networks.

About DIRECTV:

DIRECTV (NASDAQ: DTV) is one of the world’s leading providers of digital
television entertainment services delivering a premium video experience
through state-of-the-art technology, unmatched programming and industry
leading customer service to more than 38 million customers in the U.S.
and Latin America. In the U.S., DIRECTV offers its 20 million customers
access to more than 195 HD channels and Dolby-Digital® 5.1
theater-quality sound, access to exclusive sports programming such as
NFL SUNDAY TICKET™, Emmy-award winning technology and higher customer
satisfaction than the leading cable companies for 14 years running.
DIRECTV Latin America, through its subsidiaries and affiliated companies
in Brazil, Mexico, Argentina, Venezuela, Colombia, and other Latin
American countries, leads the pay TV category in technology, programming
and service, delivering an unrivaled digital television experience to
more than 18 million customers. 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 the most up-to-date information on DIRECTV,
please visit www.directv.com.

About SEC Network:

The Southeastern Conference and ESPN have signed a 20-year agreement
through 2034 to create and operate a multiplatform network that will
launch August 14, 2014. The new network and its accompanying digital
platform will air SEC content 24/7 including more than 1,000 events in
its first year. The network will televise 45 SEC football games, more
than 100 men’s basketball games, 60 women’s basketball games, 75
baseball games, and events from across the SEC’s 21 sports annually.
Programming will also include in-depth commentary and analysis in studio
shows, daily news and information original content such as SEC Storied,
spring football games, and more. Hundreds of additional live events from
various sports will be offered exclusively on the digital platform.

Source: DIRECTV

DIRECTV
Robert Mercer, 310-964-4683
rgmercer@directv.com
or
ESPN
Gracie
Blackburn, 704-350-3489
gracie.blackburn@espn.com
Kristie
Chong Adler, 646-547-5637
kristie.chong@espn.com

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DIRECTV Announces Second Quarter 2014 Results

in Direct TV Rebate, Uncategorized / Comments Off

DIRECTV Surpasses 39 Million Total Subscribers in the Quarter.

  • Sky Brasil and PanAmericana achieve record-breaking gross
    subscriber additions resulting in strong DTVLA second quarter net new
    customer additions of 543,000.

DIRECTV Revenues Grow 5% to $8.1 Billion.

  • Revenue driven by DIRECTV U.S. ARPU growth of 4.6% along with
    strong DIRECTV Latin America subscriber growth over the last year.

DIRECTV’s Reported Diluted EPS Increases 35% to $1.59.

DIRECTV Free Cash Flow Increases 24% to Nearly $1.5 Billion Year
To Date.

EL SEGUNDO, Calif.–(BUSINESS WIRE)–
DIRECTV (NASDAQ:DTV) today reported that second quarter 2014 revenues
increased 5% to $8.11 billion, reported operating profit before
depreciation and amortization1 (OPBDA) increased 3% to $2.15
billion
, reported operating profit increased 5% to $1.42 billion and
reported diluted earnings per share increased 35% to $1.59 compared to
last year’s second quarter.

“Building on our first quarter momentum, DIRECTV delivered yet another
excellent quarter of operating and financial results,” said

Mike White ,
President and CEO of DIRECTV. “We continue to extend our position as the
world’s largest pay TV service with industry leading growth by
leveraging the strength of our premier brands and distinctive products
and service offerings throughout the Americas.” White added, “DIRECTV
Latin America’s second quarter results highlight the tremendous success
of our unparalleled FIFA World Cup coverage, while DIRECTV U.S.
continues to successfully execute on our overarching goal to balance top
line sales with bottom line profitability. Overall, DIRECTV continues to
deliver on our strategic imperatives as we prepare for the exciting
opportunities that our merger with AT&T will bring to our customers,
employees and key stakeholders.”

 

DIRECTV’S Operational Review

 
DIRECTV Consolidated Three Months Ended
June 30,
Six Months Ended
June 30,
Dollars in Millions except Earnings per Common Share   2014   2013 2014   2013
Reported Financial Results                      
Revenues   $ 8,109     $ 7,700   $ 15,964     $ 15,280  
Reported Operating Profit Before Depreciation and Amortization(1) 2,153   2,081 4,094   4,001
Reported OPBDA Margin(1)   26.6 %   27.0 % 25.6

%

  26.2

%

Reported Operating Profit 1,424 1,350 2,651 2,592
Reported Operating Profit Margin   17.6 %   17.5 % 16.6 %   17.0 %
Reported Net Income Attributable to DIRECTV   806     660   1,367     1,350  
Reported Diluted Earnings Per Common Share   $ 1.59     $ 1.18   $ 2.67     $ 2.37  
Capital Expenditures and Cash Flow                      
Cash Paid for Property and Equipment   255     193   454     345  
Cash Paid for Subscriber Leased Equipment – Subscriber Acquisitions   300     403   545     772  
Cash Paid for Subscriber Leased Equipment – Upgrade and Retention   212     236   418     463  
Cash Paid for Satellites   55     116   109     194  
Cash Flow Before Interest and Taxes(2)   1,408     1,179   2,693     2,286  
Free Cash Flow(3)   652     526   1,538     1,236  
Venezuela Currency Charge Impact On(4):                      
Operating Profit Before Depreciation and Amortization   (3 )     (284 )   (166 )
Operating Profit   (3 )     (284 )   (166 )
Net Income Attributable to DIRECTV   (3 )     (284 )   (136 )
Diluted Earnings Per Common Share   $     $   $ (0.55 )   $ (0.24 )
Adjusted Financial Results                      
Adjusted Operating Profit Before Depreciation and Amortization(1) 2,156 2,081 4,378 4,167
Adjusted OPBDA Margin(1)   26.6 %   27.0 % 27.4 %   27.3 %
Adjusted Operating Profit 1,427 1,350 2,935 2,758
Adjusted Operating Profit Margin   17.6 %   17.5 % 18.4 %   18.0 %
Adjusted Net Income Attributable to DIRECTV   809     660   1,651     1,486  
Adjusted Diluted Earnings Per Common Share   $ 1.59     $ 1.18   $ 3.22     $ 2.61  

“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.

Second Quarter Review

DIRECTV’s second quarter revenues increased 5% to $8.11 billion
principally due to strong ARPU growth at DIRECTV U.S. as well as
subscriber growth at DIRECTV Latin America (DTVLA) and DIRECTV U.S. over
the last twelve months. These increases were partially offset by lower
ARPU at DTVLA due to unfavorable changes in exchange rates. Reported
OPBDA increased 3% to $2.15 billion, while reported OPBDA margin
decreased to 26.6% in the quarter. The decline in margin was primarily
due to higher programming and subscriber acquisition costs at both
DIRECTV U.S. and DTVLA. Reported operating profit increased 5% to $1.42
billion
, while reported operating profit margin remained flat at 17.6%.
The operating profit margin was unchanged as the lower OPBDA margin was
offset by the impact of lower depreciation expense at DTVLA compared to
the prior year period.

Second quarter reported net income attributable to DIRECTV increased 22%
to $806 million due to the higher reported operating profit, as well as
favorable changes on the “Other, net” line of the Consolidated
Statements of Operations. “Other, net” was impacted by a $44 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. Reported diluted earnings per share
grew 35% to $1.59 in the quarter due to the higher adjusted net income
attributable to DIRECTV and the impact of share repurchases.

Cash flow before interest and taxes2 increased 19% to $1.41
billion
compared to the second 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 related to declining set-top box costs and the
timing of purchases at DTVLA. Free cash flow3 grew 24% to
$652 million compared to the second quarter of 2013, as the higher cash
flow before interest and taxes was partially offset by an increase in
income tax payments related to higher earnings before taxes, as well as
higher interest payments associated with an increase in average debt
balances.

Also during the quarter, but not included in free cash flow, were an
April 2014 debt redemption by DIRECTV U.S. of $1,000 million principal
amount of 4.750% senior notes due in 2014 and cash paid for share
repurchases of $491 million. DIRECTV halted share buybacks following the
announcement of the proposed transaction with AT&T on May 18, 2014.

Year to Date Review

DIRECTV’s revenues for the first six months of 2014 of $15.96 billion
increased 4% principally due to higher ARPU at DIRECTV U.S. as well as
subscriber growth over the last year at DTVLA and DIRECTV U.S. These
increases were partially offset by lower ARPU at DTVLA primarily due to
unfavorable changes in exchange rates. Adjusted OPBDA increased 5% to
$4.38 billion and adjusted operating profit increased 6% to $2.94
billion
compared with the same period of 2013. Adjusted OPBDA margin
remained relatively unchanged in the period, while adjusted operating
profit margin expanded from 18.0% to 18.4% due to the impact of
relatively unchanged depreciation expense at DTVLA compared to the prior
year period. Reported OPBDA and reported operating profit both increased
2% to $4.09 billion and $2.65 billion, respectively, in the first half
of the year.

Adjusted net income attributable to DIRECTV increased 11% to $1.65
billion
compared with the first six 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 $44 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.
These increases were partially offset by an increase in income tax
expense related to higher earnings before taxes, as well as higher
interest expense associated with an increase in average debt balances.
Adjusted diluted earnings per share improved 23% to $3.22 due to the
higher net income, as well as the impact of share repurchases. Reported
net income attributable to DIRECTV increased slightly to $1.37 billion
while reported diluted earnings per share improved 13% to $2.67.

Cash flow before interest and taxes increased 18% to $2.69 billion
compared to the first six months of 2013 primarily due to the higher
OPBDA, along with a reduction in cash paid for leased equipment at
DIRECTV U.S. and DTVLA related to declining set-top box costs and the
timing of purchases at DTVLA. Free cash flow grew 24% to $1.54 billion
compared to the first six months of 2013, as the higher cash flow before
interest and taxes was partially offset by an increase in income tax
payments related to higher earnings before taxes, as well as higher
interest payments associated with an increase in average debt balances.

Also during the first half 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 $316 million reduction in DIRECTV’s cash
balance resulting from the devaluation of the Venezuelan bolivar
denominated cash balance in March 2014.

 

SEGMENT FINANCIAL REVIEW

DIRECTV U.S. Segment

 
DIRECTV U.S. Three Months Ended
June 30,
Six Months Ended
June 30,
Dollars in Millions except ARPU   2014   2013 2014   2013
Reported Financial Results                      
Revenues   $ 6,272     $ 5,943   $ 12,359     $ 11,733  
Average Monthly Revenue per Subscriber (ARPU) ($)   103.26     98.73   101.72     97.43  
Operating Profit Before Depreciation and Amortization(1) 1,748   1,651 3,417   3,172
OPBDA Margin(1)   27.9 %   27.8 % 27.6 %   27.0 %
Operating Profit 1,319 1,241 2,562 2,356
Operating Profit Margin   21.0 %   20.9 % 20.7 %   20.1 %
Capital Expenditures and Cash Flow                      
Cash Paid for Property and Equipment   183     154   327     265  
Cash Paid for Subscriber Leased Equipment – Subscriber Acquisitions   115     151   232     325  
Cash Paid for Subscriber Leased Equipment – Upgrade and Retention   104     119   214     230  
Cash Paid for Satellites   22     55   33     108  
Cash Flow Before Interest and Taxes(2)   1,236     1,127   2,303     2,119  
Subscriber Data (in 000’s except Churn)                      
Gross Subscriber Additions   908     839   1,799     1,732  
Average Monthly Subscriber Churn   1.55 %   1.53 % 1.50 %   1.49 %
Net Subscriber Disconnections   (34 )   (84 ) (22 )   (63 )
Cumulative Subscribers   20,231     20,021   20,231     20,021  
 

Second Quarter Review

In the quarter, DIRECTV U.S. revenues increased 6% to $6.27 billion
compared with the second quarter of 2013 primarily due to strong ARPU
growth along with a larger subscriber base. The ARPU increase of 4.6% to
$103.26 was driven by price increases on programming packages, higher
advanced receiver service fees, higher fees for the new enhanced
warranty program, as well as increased commercial business and ad sales
revenues. These improvements were partially offset by increased
promotional offers to new and existing customers.

DIRECTV U.S. net subscriber losses of approximately (34) thousand
improved compared to the prior year period primarily due to an 8%
increase in gross additions to approximately 908 thousand, partially
offset by a slightly higher average monthly churn rate of 1.55%
principally resulting from a more competitive environment. The
improvement in gross additions was primarily driven by streamlined
promotional offers and investments in retail distributors. DIRECTV U.S.
ended the quarter with 20.23 million subscribers.

Second quarter OPBDA increased 6% to $1.75 billion and OPBDA margin
improved slightly from 27.8% to 27.9% 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 improvements were mostly offset by higher
subscriber acquisition costs associated with the increase in gross
additions and higher programming costs primarily related to programming
supplier rate increases. Operating profit increased 6% to $1.32 billion
and operating profit margin was up slightly from 20.9% to 21.0% in the
second quarter mainly due to the higher OPBDA and OPBDA margin.

 

DIRECTV Latin America

 
DIRECTV Latin America Three Months Ended
June 30,
Six Months Ended
June 30,
Dollars in Millions except ARPU   2014   2013 2014   2013
Reported Financial Results                      
Revenues   $ 1,789     $ 1,686   $ 3,510     $ 3,414  
Average Monthly Revenue per Subscriber (ARPU) ($)   48.88     51.13   48.79     52.82  
Reported Operating Profit Before Depreciation and Amortization(1) 438   455 697   835
Reported OPBDA Margin(1)   24.5 %   27.0 % 19.9 %   24.5 %
Reported Operating Profit 142 139 116 256
Reported Operating Profit Margin   7.9 %   8.2 % 3.3 %   7.5 %
Capital Expenditures and Cash Flow                      
Cash Paid for Property and Equipment   70     39   126     80  
Cash Paid for Subscriber Leased Equipment – Subscriber Acquisitions   185     252   313     447  
Cash Paid for Subscriber Leased Equipment – Upgrade and Retention   108     117   204     233  
Cash Paid for Satellites   27     58   65     80  
Cash Flow Before Interest and Taxes(2)   150     7   354     109  
Subscriber Data (in 000’s except Churn)                      
Gross Subscriber Additions(6)   1,311     1,189   2,422     2,370  
Average Monthly Total Subscriber Churn(5)   2.10 %   3.10 % 2.11 %   2.51 %
Average Monthly Post-paid Subscriber Churn(5)   1.90 %   2.86 % 1.88 %   2.31 %
Net Subscriber Additions(5)(6)   543     165   904     748  
Cumulative Subscribers (5) (6)   12,472     11,077   12,472     11,077  
Venezuela Currency Charge Impact On(4):                      
Operating Profit Before Depreciation and Amortization   (3 )     (284 )   (166 )
Operating Profit   (3 )     (284 )   (166 )
Adjusted Financial Results                      
Adjusted Operating Profit Before Depreciation and Amortization(1) 441 455 981 1,001
Adjusted OPBDA Margin(1)   24.7 %   27.0 % 27.9 %   29.3 %
Adjusted Operating Profit 145 139 400 422
Adjusted Operating Profit Margin   8.1 %   8.2 % 11.4 %   12.4 %
 

“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 6.36 million subscribers as of June 30, 2014, bringing
the total subscribers in the region to 18.83 million.

 

Sky Brasil Segment

 
Sky Brasil Three Months Ended
June 30,
Six Months Ended
June 30,
Dollars in Millions except ARPU   2014   2013 2014   2013
Reported Financial Results                      
Revenues   $ 1,011     $ 942   $ 1,950     $ 1,907  
Average Monthly Revenue per Subscriber (ARPU) ($)   60.77     60.32   59.21     61.72  
Operating Profit Before Depreciation and Amortization(1) 289   262 600   573
OPBDA Margin(1)   28.6 %   27.8 % 30.8 %   30.0 %
Operating Profit 114 56 262 210
Operating Profit Margin   11.3 %   5.9 % 13.4 %   11.0 %
Other Data                      
Total Capital Expenditures   229     263   390     470  
Net Subscriber Additions (Disconnections)(5)(6) (in 000’s)   137     (80 ) 246     128  
Cumulative Subscribers(5)(6) (in 000’s)   5,617     5,167   5,617     5,167  
 

Second Quarter Review

Excluding changes in foreign exchange rates, Sky Brasil’s second quarter
revenues grew 15% versus the prior year period driven by a 7% increase
in the average number of subscribers and an 8% increase in local
currency ARPU. The increase in local currency ARPU was principally due
to reduced promotional offers, as well as growth in advanced services.
When factoring in unfavorable changes in foreign exchange rates, Sky
Brasil’s revenues increased 7% to $1.01 billion and ARPU improved 0.7%
to $60.77 compared to the second quarter of 2013.

Second quarter net subscriber additions of approximately 137 thousand
were higher than the prior year period due to record gross additions, as
well as a lower average monthly churn rate. The increase in gross
additions was primarily driven by demand related to the FIFA World Cup.
Churn in the quarter was lower than the prior year period due to the
termination of subscribers related to the improper crediting of certain
customer accounts in the second quarter of 2013(5).

Also in the second quarter, Sky Brasil OPBDA increased 10% to $289
million
and OPBDA margin expanded from 27.8% to 28.6% primarily due to
the increase in local currency ARPU, partially offset by higher expenses
associated with the broadband network buildout. Operating profit more
than doubled to $114 million and operating profit margin increased from
5.9% to 11.3% due to the improvements in OPBDA and OPBDA margin, as well
as lower depreciation expense compared to the prior year period. The
second quarter of 2013 was unfavorably impacted by additional
depreciation associated with capitalized installation costs and
subscriber equipment related to the higher subscriber churn(5).

 

PanAmericana and Other Segment

 
PanAmericana and Other Three Months Ended
June 30,
Six Months Ended
June 30,
Dollars in Millions except ARPU   2014   2013 2014   2013
Reported Financial Results                      
Revenues   $ 778     $ 744   $ 1,560     $ 1,507  
Average Monthly Revenue per Subscriber (ARPU) ($)   38.96     42.96   39.99     44.79  
Reported Operating Profit Before Depreciation and Amortization(1) 149   193 97   262
Reported OPBDA Margin(1)   19.2 %   25.9 % 6.2 %   17.4 %
Reported Operating Profit (Loss) 28 83 (146 ) 46
Reported Operating Profit Margin   3.6 %   11.2 % *NM   3.1 %
Other Data                      
Total Capital Expenditures   161     203   318     370  
Net Subscriber Additions (in 000’s)   406     245   658     620  
Cumulative Subscribers (in 000’s)   6,855     5,910   6,855     5,910  
Venezuela Currency Charge Impact On(4):                      
Operating Profit Before Depreciation and Amortization   (3 )     (284 )   (166 )
Operating Profit   (3 )     (284 )   (166 )
Adjusted Financial Results                      
Adjusted Operating Profit Before Depreciation and Amortization(1) 152 193 381 428
Adjusted OPBDA Margin(1)   19.5 %   25.9 % 24.4 %   28.4 %
Adjusted Operating Profit 31 83 138 212
Adjusted Operating Profit Margin   4.0 %   11.2 % 8.8 %   14.1 %
 

* 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.

Second Quarter Review

Excluding changes in foreign exchange rates, second quarter revenues in
the PanAmericana and Other segment grew 42% versus the prior year period
driven by a 15% increase in the average number of subscribers and a 23%
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 5% to
$778 million compared to the second quarter of 2013, while ARPU
decreased 9.3% to $38.96.

Second quarter subscriber net additions of approximately 406 thousand
were higher than the prior year period due to record gross additions and
lower average monthly subscriber churn primarily driven by demand
related to the FIFA World Cup, including higher pre-paid subscriber
reconnection rates.

Also in the second quarter, reported OPBDA and reported OPBDA margin in
the PanAmericana and Other segment decreased to $149 million and 19.2%,
respectively. The declines were primarily due to higher programming
costs associated with special events including the FIFA World Cup and
increased subscriber acquisition costs related to the higher gross
additions. OPBDA margin was also negatively impacted by inflation and
the timing of price increases in Venezuela. In addition, reported
operating profit decreased to $28 million and reported operating profit
margin declined to 3.6% due to the lower OPBDA and OPBDA margin, as well
as the impact of higher depreciation and amortization resulting from
increased leased equipment and infrastructure capital expenditures.

CONFERENCE CALL INFORMATION

A live webcast of DIRECTV’s second 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 July 31, 2014. Access to the earnings
call is also available in the United States by dialing (888) 300-2342
and internationally by dialing (719) 325-2333. The conference ID number
is 9916031. A replay will also be archived on our website at
investor.directv.com beginning August 1, 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. 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.

(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 six
months ended June 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 over 18 million
customers in Latin America. DIRECTV sports and entertainment properties
include two regional sports networks (Rocky Mountain and Pittsburgh) and
minority ownership interests in Root Sports Northwest and Game Show
Network. For more information on DIRECTV, visit directv.com.

       
DIRECTV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
 
Three Months Ended
June 30,
Six Months Ended
June 30,
2014   2013 2014   2013
Revenues   $ 8,109     $ 7,700     $ 15,964     $ 15,280  
Operating costs and expenses
Costs of revenues, exclusive of depreciation and amortization expense
Broadcast programming and other 3,498 3,275 6,881 6,471
Subscriber service expenses 574 554 1,125 1,091
Broadcast operations expenses 107 97 204 207
Selling, general and administrative expenses, exclusive of
depreciation and amortization expense
Subscriber acquisition costs 898 809 1,725 1,623
Upgrade and retention costs 362 374 683 742
General and administrative expenses 517 510 971 979
Venezuelan currency devaluation charge 281 166
Depreciation and amortization expense   729     731     1,443     1,409  
Total operating costs and expenses   6,685     6,350     13,313     12,688  
Operating profit 1,424 1,350 2,651 2,592
Interest income 12 19 25 41
Interest expense (230 ) (219 ) (462 ) (436 )
Other, net   35     (75 )   92     (37 )
Income before income taxes 1,241 1,075 2,306 2,160
Income tax expense   (431 )   (414 )   (927 )   (801 )
Net income 810 661 1,379 1,359
Less: Net income attributable to noncontrolling interest   (4 )   (1 )   (12 )   (9 )
Net income attributable to DIRECTV   $ 806     $ 660     $ 1,367     $ 1,350  
Basic earnings attributable to DIRECTV per common share $ 1.60 $ 1.19 $ 2.70 $ 2.39
Diluted earnings attributable to DIRECTV per common share $ 1.59 $ 1.18 $ 2.67 $ 2.37
Weighted average number of common shares outstanding (in millions):
Basic 504 556 507 565
Diluted 508 561 512 569
 
DIRECTV    
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)
 
ASSETS   June 30, 2014     December 31, 2013
Current assets
Cash and cash equivalents $ 2,290 $ 2,180
Accounts receivable, net of allowances of $127 and $95 2,489 2,547
Inventories 312 283
Deferred income taxes 110 140
Prepaid expenses and other   668     803  
Total current assets 5,869 5,953
Satellites, net 2,464 2,467
Property and equipment, net 6,874 6,650
Goodwill 3,992 3,970
Intangible assets, net 903 920
Investments and other assets   2,024     1,945  
Total assets   $ 22,126     $ 21,905  
LIABILITIES AND STOCKHOLDERS’ DEFICIT            
Current liabilities
Accounts payable and accrued liabilities $ 4,314 $ 4,685
Unearned subscriber revenues and deferred credits 637 589
Current debt   1,542     1,256  
Total current liabilities 6,493 6,530
Long-term debt 18,439 18,284
Deferred income taxes 1,798 1,804
Other liabilities and deferred credits 1,523 1,456
Commitments and contingencies
Redeemable noncontrolling interest 375
Total stockholders’ deficit   (6,127 )   (6,544 )
Total liabilities and stockholders’ deficit   $ 22,126     $ 21,905  
 
DIRECTV    
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Six Months Ended
June 30,
    2014     2013
Cash Flows From Operating Activities
Net income $ 1,379 $ 1,359
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 1,443 1,409
Venezuelan currency devaluation charge 281 166
DSN Northwest deconsolidation charge 59
Amortization of deferred revenues and deferred credits (24 ) (26 )
Share-based compensation expense 45 59
Equity in earnings from unconsolidated affiliates (78 ) (56 )
Net foreign currency transaction (gain) loss (11 ) 33
Dividends received 35
Net gains from sale of investments (17 ) (8 )
Deferred income taxes 115 (39 )
Excess tax benefit from share-based compensation (22 ) (24 )
Other 45 29
Change in other operating assets and liabilities:
Accounts receivable 133 140
Inventories (29 )
Prepaid expenses and other 122 22
Accounts payable and accrued liabilities (342 ) (322 )
Unearned subscriber revenue and deferred credits 48 43
Other, net   (24 )   131  
Net cash provided by operating activities   3,064     3,010  
Cash Flows From Investing Activities
Cash paid for property and equipment (1,417 ) (1,580 )
Cash paid for satellites (109 ) (194 )
Investment in companies, net of cash acquired (8 ) (27 )
Proceeds from sale of investments 29 140
Other, net   (4 )   (18 )
Net cash used in investing activities   (1,509 )   (1,679 )
 
DIRECTV    
CONSOLIDATED STATEMENTS OF CASH FLOWS-(continued)
(Dollars in Millions)
(Unaudited)
Six Months Ended
June 30,
    2014   2013
Cash Flows From Financing Activities
Issuance (repayment) of commercial paper (maturity 90 days or less),
net
25 (105 )
Proceeds from short-term borrowings 270 284
Repayment of short-term borrowings (235 ) (262 )
Proceeds from borrowings under revolving credit facility 10
Repayment of borrowings under revolving credit facility (10 )
Proceeds from long-term debt 1,329 1,445
Debt issuance costs (7 ) (7 )
Repayment of long-term debt (1,026 ) (3 )
Repayment of other long-term obligations (34 ) (32 )
Common shares repurchased and retired (1,386 ) (1,968 )
Stock options exercised 10
Taxes paid in lieu of shares issued for share-based compensation (57 ) (61 )
Excess tax benefit from share-based compensation 22 24
Other, net   (40 )   4  
Net cash used in financing activities   (1,129 )   (681 )
Effect of exchange rate changes on Venezuelan cash and cash
equivalents
  (316 )   (187 )
Net increase in cash and cash equivalents 110 463
Cash and cash equivalents at beginning of the period   2,180     1,902  
Cash and cash equivalents at end of the period   $ 2,290     $ 2,365  
Supplemental Cash Flow Information
Cash paid for interest $ 413 $ 389
Cash paid for income taxes 767 702
 
DIRECTV        
SELECTED SEGMENT DATA
(Dollars in Millions)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
    2014   2013   2014   2013
DIRECTV U.S.
Revenues $ 6,272 $ 5,943 $ 12,359 $ 11,733
Operating profit before depreciation and amortization(1) 1,748 1,651 3,417 3,172
Operating profit before depreciation and amortization margin(1) 27.9 % 27.8 % 27.6 % 27.0 %
Operating profit $ 1,319 $ 1,241 $ 2,562 $ 2,356
Operating profit margin 21.0 % 20.9 % 20.7 % 20.1 %
Depreciation and amortization   $ 429     $ 410     $ 855     $ 816  
 
SKY BRASIL
Revenues $ 1,011 $ 942 $ 1,950 $ 1,907
Operating profit before depreciation and amortization(1) 289 262 600 573
Operating profit before depreciation and amortization margin(1) 28.6 % 27.8 % 30.8 % 30.0 %
Operating profit $ 114 $ 56 $ 262 $ 210
Operating profit margin 11.3 % 5.9 % 13.4 % 11.0 %
Depreciation and amortization   $ 175     $ 206     $ 338     $ 363  
 
PANAMERICANA AND OTHER
Revenues $ 778 $ 744 $ 1,560 $ 1,507
Operating profit before depreciation and amortization (1) 149 193 97 262
Operating profit before depreciation and amortization margin(1) 19.2 % 25.9 % 6.2 % 17.4 %
Operating profit (loss) $ 28 $ 83 $ (146 ) $ 46
Operating profit margin 3.6 % 11.2 % *NM 3.1 %
Depreciation and amortization   $ 121     $ 110     $ 243     $ 216  
 
SPORTS NETWORKS, ELIMINATIONS AND OTHER
Revenues $ 48 $ 71 $ 95 $ 133
Operating loss before depreciation and amortization(1) (33 ) (25 ) (20 ) (6 )
Operating loss (37 ) (30 ) (27 ) (20 )
Depreciation and amortization   4     5     7     14  
 
TOTAL
Revenues $ 8,109 $ 7,700 $ 15,964 $ 15,280
Operating profit before depreciation and amortization(1) 2,153 2,081 4,094 4,001
Operating profit before depreciation and amortization margin(1) 26.6 % 27.0 % 25.6 % 26.2 %
Operating profit $ 1,424 $ 1,350 $ 2,651 $ 2,592
Operating profit margin 17.6 % 17.5 % 16.6 % 17.0 %
Depreciation and amortization   $ 729     $ 731     $ 1,443     $ 1,409  
* Percentage not meaningful
 
DIRECTV HOLDINGS LLC (DIRECTV U.S.)    
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions)    
(Unaudited)
 
Three Months Ended
June 30,
Six Months Ended
June 30,
2014   2013 2014   2013
Revenues   $ 6,272     $ 5,943     $ 12,359     $ 11,733  
Operating costs and expenses
Costs of revenues, exclusive of depreciation and amortization expense
Broadcast programming and other 2,800 2,642 5,568 5,243
Subscriber service expenses 374 360 733 711
Broadcast operations expenses 75 71 147 152
Selling, general and administrative expenses, exclusive of
depreciation and amortization expense
Subscriber acquisition costs 661 594 1,309 1,223
Upgrade and retention costs 314 324 595 643
General and administrative expenses 300 301 590 589
Depreciation and amortization expense   429     410     855     816  
Total operating costs and expenses   4,953     4,702     9,797     9,377  
Operating profit 1,319 1,241 2,562 2,356
Interest income 1 1 1
Interest expense (223 ) (206 ) (446 ) (408 )
Other, net   (5 )   4         16  
Income before income taxes 1,091 1,040 2,117 1,965
Income tax expense   (407 )   (394 )   (788 )   (729 )
Net income   $ 684     $ 646     $ 1,329     $ 1,236  
DIRECTV HOLDINGS LLC (DIRECTV U.S.)    
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)
 
ASSETS   June 30, 2014   December 31, 2013
Current assets
Cash and cash equivalents $ 865 $ 797
Accounts receivable, net of allowances of $82 and $59 2,019 2,103
Inventories 283 249
Prepaid expenses and other   411     494  
Total current assets 3,578 3,643
Satellites, net 1,760 1,810
Property and equipment, net 3,754 3,724
Goodwill 3,191 3,191
Intangible assets, net 517 527
Other assets   540     551  
Total assets   $ 13,340     $ 13,446  
LIABILITIES AND OWNER’S DEFICIT            
Current liabilities
Accounts payable and accrued liabilities $ 3,277 $ 3,695
Unearned subscriber revenues and deferred credits 426 380
Current debt   1,460     1,200  
Total current liabilities 5,163 5,275
Long-term debt 18,327 18,203
Deferred income taxes 1,606 1,641
Other liabilities and deferred credits 665 595
Commitments and contingencies
Owner’s deficit   (12,421 )   (12,268 )
Total liabilities and owner’s deficit   $ 13,340     $ 13,446  
 
DIRECTV HOLDINGS LLC (DIRECTV U.S.)    
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Six Months Ended
June 30,
    2014   2013
Cash Flows From Operating Activities
Net income $ 1,329 $ 1,236
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 855 816
Amortization of deferred revenues and deferred credits (24 ) (26 )
Share-based compensation expense 35 45
Deferred income taxes 48 75
Excess tax benefit from share-based compensation (18 ) (20 )
Other (5 ) 3
Change in other operating assets and liabilities:
Accounts receivable 170 141
Inventories (34 ) 13
Prepaid expenses and other 81 102
Accounts payable and accrued liabilities (422 ) (284 )
Unearned subscriber revenue and deferred credits 46 49
Other, net   23     36  
Net cash provided by operating activities   2,084     2,186  
Cash Flows From Investing Activities
Cash paid for property and equipment (327 ) (265 )
Cash paid for subscriber leased equipment – subscriber acquisitions (232 ) (325 )
Cash paid for subscriber leased equipment – upgrade and retention (214 ) (230 )
Cash paid for satellites (33 ) (108 )
Investment in companies, net of cash acquired (1 ) (21 )
Proceeds from sale of investments 16 12
Other, net       2  
Net cash used in investing activities   (791 )   (935 )
Cash Flows From Financing Activities
Issuance (repayment) of commercial paper (maturity 90 days or less),
net
25 (105 )
Proceeds from short-term borrowings 270 284
Repayment of short-term borrowings (235 ) (262 )
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 ) (7 )
Repayment of long-term debt (1,000 )
Repayment of other long-term obligations (15 ) (12 )
Cash dividends paid to Parent (1,500 ) (1,950 )
Excess tax benefit from share-based compensation 18 20
Other, net   (26 )   4  
Net cash used in financing activities   (1,225 )   (638 )
Net increase in cash and cash equivalents 68 613
Cash and cash equivalents at beginning of the period   797     739  
Cash and cash equivalents at end of the period   $ 865     $ 1,352  
Supplemental Cash Flow Information
Cash paid for interest $ 397 $ 360
Cash paid for income taxes 629 502
 
DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation
Schedules
(Dollars in Millions)        
(Unaudited)
DIRECTV
Reconciliation of Cash Flow Before Interest and Taxes2
and Free Cash Flow
3 to

Net Cash Provided by Operating Activities

Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Cash Flow Before Interest and Taxes $ 1,408 $ 1,179 $ 2,693 $ 2,286
Adjustments:
Cash paid for interest (85 ) (64 ) (413 ) (389 )
Interest income 12 19 25 41
Income taxes paid   (683 )   (608 ) (767 )   (702 )
Subtotal – Free Cash Flow 652 526 1,538 1,236
Add Cash Paid For:
Property and equipment 767 832 1,417 1,580
Satellites 55     116   109     194  
Net Cash Provided by Operating Activities $ 1,474     $ 1,474   $ 3,064     $ 3,010  
(2) and (3) – See footnotes above                        
 
Reconciliation of Reported Operating Profit Before Depreciation
and Amortization to Operating Profit*
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Operating profit before depreciation and amortization $ 2,153 $ 2,081 $ 4,094 $ 4,001
Subtract: Depreciation and amortization 729     731   1,443     1,409
Operating profit $ 1,424     $ 1,350   $ 2,651     $ 2,592
 
* 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 June 30, 2014, which is expected to
be filed with the SEC in July 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
June 30,
  Six Months Ended
June 30,
2014   2013 2014   2013
Revenues $ 8,109 $ 7,700 $ 15,964 $ 15,280
 
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge
$ 2,156 $ 2,081 $ 4,378 $ 4,167
OPBDA growth excluding Venezuelan currency devaluation charge 3.6 % 5.1 %
Subtract: Venezuelan currency devaluation charge 3       284     166  
Operating profit before depreciation and amortization 2,153 2,081 4,094 4,001
Subtract: Depreciation and amortization 729     731   1,443     1,409  
Operating profit $ 1,424     $ 1,350   $ 2,651     $ 2,592  
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge
  26.6 %   27.0 %   27.4 %   27.3 %
 
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge) to Operating Profit
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Revenues $ 8,109 $ 7,700 $ 15,964 $ 15,280
 
Operating profit excluding the Venezuelan currency devaluation charge $ 1,427 $ 1,350 $ 2,935 $ 2,758
Operating profit growth excluding Venezuelan currency devaluation
charge
5.7 % 6.4 %
Subtract: Venezuelan currency devaluation charge 3       284     166  
Operating profit $ 1,424     $ 1,350   $ 2,651     $ 2,592  
Operating profit margin excluding the Venezuelan currency
devaluation charge
  17.6 %   17.5 %   18.4 %   18.0 %
 
Reconciliation of Adjusted Net Income (excluding the Venezuelan
currency devaluation charge) to Net Income
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Net income attributable to DIRECTV excluding the Venezuelan currency
devaluation charge
$ 809 $ 660 $ 1,651 $ 1,486
Subtract: Venezuelan after-tax currency devaluation charge 3       284     136
Net income attributable to DIRECTV $ 806     $ 660   $ 1,367     $ 1,350
Net income growth excluding Venezuelan currency devaluation charge 22.6 % 11.1 %
Diluted weighted average shares 508 561 512 569
Adjusted diluted earnings per common share $ 1.59 $ 1.18 $ 3.22 $ 2.61
Adjusted diluted earnings per common share growth excluding
Venezuelan currency devaluation charge
  34.7 %         23.4 %    
 
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
June 30,
  Six Months Ended
June 30,
2014   2013 2014   2013
Cash Flow Before Interest and Taxes $ 150 $ 7 $ 354 $ 109
Adjustments:
Cash paid for interest (12 ) (13 ) (25 ) (30 )
Interest income 10 16 23 31
Income taxes paid   (53 )   (69 ) (142 )   (159 )
Add Cash Paid For:
Property and equipment 70 39 126 80
Subscriber leased equipment – subscriber acquisitions 185 252 313 447
Subscriber leased equipment – upgrade and retention 108 117 204 233
Satellites 27     58   65     80  
Net Cash Provided by Operating Activities $ 485     $ 407   $ 918     $ 791  
(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
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Revenues $ 1,789 $ 1,686 $ 3,510 $ 3,414
 
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge
$ 441 $ 455 $ 981 $ 1,001
OPBDA growth excluding Venezuelan currency devaluation charge (3.1 )% (2.0 )%
Subtract: Venezuelan currency devaluation charge 3       284     166  
Operating profit before depreciation and amortization 438 455 697 835
Subtract: Depreciation and amortization 296     316   581     579  
Operating profit $ 142     $ 139   $ 116     $ 256  
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge
  24.7 %   27.0 %   27.9 %   29.3 %
 
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge) to Operating Profit
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Revenues $ 1,789 $ 1,686 $ 3,510 $ 3,414
 
Operating profit excluding the Venezuelan currency devaluation charge $ 145 $ 139 $ 400 $ 422
Operating Profit growth excluding Venezuelan currency devaluation
charge
4.3 % (5.2 )%
Subtract: Venezuelan currency devaluation charge 3       284     166  
Operating profit $ 142     $ 139   $ 116     $ 256  
Operating profit margin excluding the Venezuelan currency
devaluation charge
  8.1 %   8.2 %   11.4 %   12.4 %
 
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
June 30,
  Six Months Ended
June 30,
2014   2013 2014   2013
Revenues $ 778 $ 744 $ 1,560 $ 1,507
 
Operating profit before depreciation and amortization excluding the
Venezuelan currency devaluation charge
$ 152 $ 193 $ 381 $ 428
OPBDA growth excluding Venezuelan currency devaluation charge (21.2 )% (11.0 )%
Subtract: Venezuelan currency devaluation charge 3       284     166  
Operating profit before depreciation and amortization 149 193 97 262
Subtract: Depreciation and amortization 121     110   243     216  
Operating profit (loss) $ 28     $ 83   $ (146 )   $ 46  
Operating profit before depreciation and amortization margin
excluding the Venezuelan currency devaluation charge
  19.5 %   25.9 %   24.4 %   28.4 %
 
Reconciliation of Adjusted Operating Profit (excluding the
Venezuelan currency devaluation charge) to Operating Profit
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Revenues $ 778 $ 744 $ 1,560 $ 1,507
 
Operating profit excluding the Venezuelan currency devaluation charge $ 31 $ 83 $ 138 $ 212
Operating profit growth excluding Venezuelan currency devaluation
charge
(62.7 )% (34.9 )%
Subtract: Venezuelan currency devaluation charge 3       284     166  
Operating profit (loss) $ 28     $ 83   $ (146 )   $ 46  
Operating profit margin excluding the Venezuelan currency
devaluation charge
  4.0 %   11.2 %   8.8 %   14.1 %
 
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
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Operating profit $ 1,319 $ 1,241 $ 2,562 $ 2,356
Adjustments:
Subscriber acquisition costs (expensed) 661 594 1,309 1,223
Depreciation and amortization 429 410 855 816
Cash paid for subscriber leased equipment – upgrade and retention (104 )   (119 ) (214 )   (230 )
Pre-SAC Margin $ 2,305     $ 2,126   $ 4,512     $ 4,165  
Pre-SAC Margin as a percentage of revenue   36.8 %   35.8 %   36.5 %   35.5 %
 
Reconciliation of Cash Flow Before Interest and Taxes2
to

Net Cash Provided by Operating Activities

Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
Cash Flow Before Interest and Taxes $ 1,236 $ 1,127 $ 2,303 $ 2,119
Adjustments:
Cash paid for interest (77 ) (50 ) (397 ) (360 )
Interest income 1 1 1
Income taxes paid   (628 )   (502 ) (629 )   (502 )
Add Cash Paid For:
Property and equipment 183 154 327 265
Subscriber leased equipment – subscriber acquisitions 115 151 232 325
Subscriber leased equipment – upgrade and retention 104 119 214 230
Satellites 22     55   33     108  
Net Cash Provided by Operating Activities $ 955     $ 1,055   $ 2,084     $ 2,186  
 
(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.
 
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
June 30,
  Six Months Ended
June 30,
2014   2013 2014   2013
Subscriber acquisition costs (expensed) $ 661 $ 594 $ 1,309 $ 1,223
Cash paid for subscriber leased equipment – subscriber acquisitions 115     151   232     325
Total acquisition costs $ 776     $ 745   $ 1,541     $ 1,548
Gross subscriber additions (000’s) 908 839 1,799 1,732
Average subscriber acquisition costs – per subscriber (SAC)   $ 855     $ 888     $ 857     $ 894

Source: DIRECTV

DIRECTV

Darris Gringeri, (212) 205-0882

Investor Relations:
(310) 964-0808

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DIRECTV and DISH Support Passage of STELA Reauthorization by U.S. House of Representatives

in Direct TV Rebate, Uncategorized / Comments Off

EL SEGUNDO, Calif. & ENGLEWOOD, Colo.–(BUSINESS WIRE)–
DIRECTV and DISH Network issued the following statement today in support
of Congressional efforts to reauthorize the Satellite Television
Extension and Localism Act (STELA):

“On behalf of our 34 million DIRECTV and DISH satellite television
customers, we thank the leadership of the U.S. House of Representatives,
along with the Energy and Commerce Committee and the Judiciary
Committee, for their bipartisan work to reauthorize STELA for five more
years. We support H.R. 4572, the ‘STELA Reauthorization Act of 2014,’ as
an important step in Congress’ 2014 STELA reauthorization process.

“Critically, the legislation ensures continuity of service to more than
1.5 million distant signal customers who would, otherwise, lose service
at the end of this year. It also addresses one of the most egregious
forms of retransmission consent abuse – joint negotiating agreements
among broadcasters.”

About DIRECTV: 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 more than 20 million customers in the United
States
and more than 18 million customers in Latin America. For more
information on DIRECTV please visit http://www.directv.com.

About DISH: DISH Network Corporation (NASDAQ: DISH), through its
subsidiaries, provides approximately 14.097 million pay-TV subscribers,
as of March 31, 2014, with the highest quality programming and
technology with the most choices at the best value. Subscribers enjoy a
high definition line-up with more than 200 national HD channels, the
most international channels, and award-winning HD and DVR technology.
DISH Network Corporation is a Fortune 250 company. Visit www.dish.com.

Source: DIRECTV and DISH Network Corporation

DIRECTV
Andrew Reinsdorf, 202-383-6340
areinsdorf@directv.com
or
DISH
Network
Jeff Blum, 202-293-0038
Jeffrey.blum@dishnetwork.com

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