DIRECTV Announces Third Quarter 2012 Results

DIRECTV (NASDAQ:DTV) today reported an increase in third quarter 2012 revenues of 8% to $7.42 billion, operating profit before depreciation and amortization 1 (OPBDA) of 6% to $1.69 billion and operating profit of 4% to $1.07 billion compared to last year's third quarter. DIRECTV reported an increase in third quarter net income of 9% to $565 million and diluted earnings per share of 29% to $0.90 compared with the same period last year.

“DIRECTV delivered another strong quarter highlighted by solid revenue, earnings and cash flow growth,” 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 services throughout the Americas." White added, "DIRECTV U.S.' third quarter results reflect successful execution of our long-term strategy to strike a more optimal balance between our top and bottom lines while DIRECTV Latin America continues to profitably increase market share in the rapidly growing Latin America pay-TV market by offering best-in-class service to both the advanced and middle market segments.”

DIRECTV's Operational Review

Third Quarter Review

DIRECTV's third quarter revenues of $7.42 billion increased 8% principally due to subscriber growth at DIRECTV Latin America (DTVLA) and DIRECTV U.S., as well as higher ARPU at DIRECTV U.S. Operating profit before depreciation and amortization (OPBDA) increased 6% to $1.69 billion and operating profit increased 4% to $1.07 billion in the quarter compared with the same period last year. OPBDA and operating profit margin declined slightly in the quarter primarily due to higher customer service and general and administrative expenses at DTVLA. Also in the quarter, DIRECTV U.S. OPBDA and operating profit margins were higher as lower subscriber acquisition and general and administrative expenses, as well as relatively unchanged upgrade and retention costs were partially offset by increased programming costs including an extra week of NFL Sunday Ticket expense.
DIRECTV Consolidated Dollars in Millions except Earnings per Common Share

Three Months Ended

September 30,

Nine Months Ended

September 30,
      2012       2011       2012       2011
Revenues       $ 7,416         $ 6,844         $ 21,686         $ 19,763  
Operating Profit Before Depreciation and Amortization (1) 1,686       1,584 5,598 5,196
OPBDA Margin (1)       22.7 %       23.1 %       25.8 %       26.3 %
Operating Profit 1,068 1,030 3,787 3,415
Operating Profit Margin       14.4 %       15.0 %       17.5 %       17.3 %
Net Income Attributable to DIRECTV       565         516         2,007         1,891  
Diluted Earnings Per Common Share       0.90         0.70         3.06         2.47  
Capital Expenditures and Cash Flow                                      
Cash paid for property and equipment       178         188         546         464  
Cash paid for subscriber leased equipment - subscriber acquisitions       379         470         1,081         1,155  
Cash paid for subscriber leased equipment - upgrade and retention       186         206         533         541  
Cash paid for satellites       47         108         231         156  
Cash Flow Before Interest and Taxes (2)       957         788         3,293         2,685  
Free Cash Flow (3)       319         235         1,742         1,295  

Net income attributable to DIRECTV increased 9% to $565 million and diluted earnings per share improved 29% to $0.90 compared with the third quarter of last year primarily due to the higher operating profit as well as a $72 million pre-tax non-cash loss in the third quarter of 2011 associated with the revaluation of U.S. dollar denominated net liabilities in Brazil. These changes were partially offset by higher income taxes in 2012 driven by higher pre-tax income and a lower effective tax rate in 2011 resulting from foreign tax credits not previously recognized. In addition, diluted earnings per share were favorably impacted by share repurchases made over the last twelve months.

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