DIRECTV 2002 Annual Report Download - page 55

HUGHES ELECTRONICS CORPORATION
EBITDA was $160 million in 2001 compared to $151 million in 2000. The operating loss in 2001
for the DIRECTV U.S. businesses was $279 million compared to $244 million in 2000. The change in
EBITDA resulted from increased profit on the higher revenues discussed above and the improvement
in subscriber service expenses and broadcast operations expenses due mostly to the exit of the
PRIMESTAR business in September 2000, which more than offset higher subscriber acquisition costs
and operating costs and a $48 million charge related to 2001 employee reductions. The higher
operating loss was principally due to increased depreciation primarily associated with customer leased
DIRECTV receiving equipment.
Latin America. Revenues for the Latin America DIRECTV businesses increased 34% to
$727 million in 2001 from $541 million in 2000. The increase in revenues was primarily due to
continued subscriber growth as well as the consolidation of GEA. Subscribers grew to 1.6 million at
December 31, 2001 compared to 1.3 million in 2000. Latin America DIRECTV added 305,000 net new
subscribers in 2001, compared to 501,000 net new subscribers added in 2000. During 2001 and 2000,
the average revenue per subscriber for the Latin American businesses was about $43 and $45 per
month, respectively, of which approximately $34 and $36 was generated from monthly programming
subscriptions, respectively, with the remainder derived from fees associated with leased equipment.
EBITDA was a negative $132 million in 2001 compared to negative EDITDA of $171 million in
2000. The change in EBITDA resulted primarily from the increased revenues discussed above, partially
offset by a $29 million charge for the recent devaluation of the Argentinean peso, higher marketing
costs and a $10 million charge related to 2001 employee reductions. The Latin America DIRECTV
businesses incurred an operating loss of $331 million in 2001 compared to an operating loss of
$309 million in 2000. The increased operating loss resulted from higher depreciation expense due to
an increase in customer leased DIRECTV receiving equipment and amortization of goodwill that
resulted primarily from the GEA transaction.
DIRECTV Broadband. Revenues and EBITDA for DIRECTV Broadband were $27 million and
negative $106 million for 2001, respectively. DIRECTV Broadband incurred an operating loss of
$143 million for 2001. Since its April 3, 2001 acquisition, DIRECTV Broadband has added about
26,500 net subscribers. Net subscriber additions were negatively impacted by customer churn that
resulted from the bankruptcy of two wholesale providers of DSL services. At December 31, 2001,
DIRECTV Broadband had more than 91,000 residential broadband subscribers in the United States.
Satellite Services Segment
Revenues for the Satellite Services segment in 2001 decreased $153.5 million to $870.1 million
from $1,023.6 million in 2000. The decrease was primarily due to a decline in new outright sales and
sales-type lease transactions. Revenues associated with outright sales and sales-type leases of
transponders were $67.9 million in 2001 compared to $243.3 million for 2000. Revenues from
operating leases of transponders, satellite services and other were 92.2% of total 2001 revenues and
increased by 2.8% to $802.2 million from $780.3 million in 2000.
EBITDA for 2001 was $580.0 million compared to $694.0 million for 2000. The decrease in
EBITDA was due to the decreased revenues discussed above, higher direct operating and selling,
general and administrative expenses to support the continued satellite fleet expansion, costs
associated with new service initiatives, and a $7.0 million severance charge in the third quarter of
2001. EBITDA margin for 2001 was 66.7% compared to 67.8% for 2000. The decrease in EBITDA
margin was due to the lower sales and higher operating costs. Operating profit was $165.3 million for
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