DIRECTV 2002 Annual Report Download - page 4

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2
During this past year, HUGHES certainly
had its fair share of ups and downs; how-
ever, given the challenging economic
environment that persists in virtually all
markets in which we do business, we’re
extremely proud of the substantial
progress we made as a company.
While there is still much work ahead,
HUGHES is a much stronger company
today as we set our sights on the future.
In reviewing our businesses’ key accom-
plishments in 2002, a common theme
emerges. Every major strategy we pur-
sued – and business decision we made –
was predicated on achieving profitable
growth and maximizing cash flow. We
offer HUGHES’ 2002 consolidated
results as good evidence that this strategy
is working. Total revenues grew to $8.9
billion, earnings before interest, taxes,
depreciation and amortization (EBITDA)
increased by 71% to $668 million and
total cash requirements were about one-
fourth of the cash needs in 2001.
Tempering the achievements in 2002
was the challenge of our proposed
merger with EchoStar Communications
Corporation (EchoStar) by certain regu-
latory agencies. In light of the govern-
ment’s failure to approve the merger,
HUGHES, General Motors
Corporation (GM) and EchoStar
agreed to terminate the merger agree-
ment by a mutual settlement entered into
on December 9, 2002. The settlement
included a $600 million payment to
HUGHES from EchoStar, with
HUGHES retaining its 81% ownership
of PanAmSat. Although we firmly
believe that this merger would have
resulted in a compelling suite of services
to compete more effectively on a
national basis with the incumbent cable
companies, given the circumstances, our
decision to make a clean-break from
EchoStar – and quickly move forward
unencumbered – made the most sense
for HUGHES.
Before discussing our operating priorities
in more detail, it’s important to note that
during these trying times, the men and
women of HUGHES and its operating
companies have been steadfast in their
pursuit of excellence. We are grateful
for their brilliant performance in the
midst of all the adversity and are once
again reminded of the world-class status
of our employees.
Profitable Growth and
Maximizing Cash Flow
Across all of HUGHES, 2002 was a
year in which we rolled up our sleeves
and took a back-to-basics approach to
managing our company. As a result,
each business was sharply focused on its
core operations while reducing expenses
and improving profitability.
DIRECTV U.S. At DIRECTV in the
United States, we changed our strategy
to focus on generating higher subscriber
returns as opposed to our previous strat-
egy that placed a much greater emphasis
on aggressively growing our customer
base. We will continue to grow our cus-
tomer base through the acquisition of
high quality subscribers; however, we
believe that we can create the most
value by focusing on improving
A MESSAGE TO SHAREHOLDERS
Jack A. Shaw
President and Chief Executive Officer Harry J. Pearce
Chairman of the Board