DIRECTV 2003 Annual Report Download - page 40

THE DIRECTV GROUP, INC.
administrative expenses” in the Consolidated Statements of Income and were released from our commitment to
spend up to approximately $1 billion in additional sales, marketing, development and promotion efforts in
support of certain specified products and services.
Beginning in the first quarter of 2003, we no longer allocate general corporate expenses to our subsidiaries.
Prior period segment information has been reclassified to conform to the current period presentation.
During 2002, we recorded a $95.0 million gain, net of legal costs, as an offset to “Selling, general and
administrative expenses” in the Consolidated Statements of Income as a result of the favorable resolution of a
lawsuit we filed against the U. S. government on March 22, 1991. The lawsuit was based upon NASA’s breach
of contract to launch ten satellites on the Space Shuttle.
During 2001, we announced a nearly 10% reduction of our approximately 7,900 employees, excluding
DIRECTV customer service representatives, located in the U.S. As a result, about 750 employees across all
business disciplines were given notification of termination that resulted in an expense of $87.5 million in 2001 to
“Selling, general and administrative expenses” in the Consolidated Statements of Income. Of that charge, $80.0
million was related to employee severance benefits and $7.5 million was for other costs primarily related to a
remaining lease obligation associated with excess office space and employee equipment. The remaining accrual
amounted to $3.8 million and $14.1 million at December 31, 2003 and 2002, respectively.
In addition to the significant operating gains and losses described above, we recognized a number of
significant non-operating gains and losses during the years ended December 31, 2003, 2002 and 2001. These
transactions are more fully described in Note 6: Investments, Note 14: Other Income and Expenses and Note 17:
Acquisitions and Divestitures in the Consolidated Financial Statements in Item 8.
RESULTS OF OPERATIONS
2003 Compared To 2002
Consolidated
Revenues. The following table presents our revenues, by segment, for the years ended December 31:
Change
Revenues By Segment: 2003 2002 $ %
(Dollars in Millions)
Direct-To-Home Broadcast ................................... $ 8,291.9 $7,120.9 $1,171.0 16.4%
Satellite Services ........................................... 831.0 812.3 18.7 2.3%
Network Systems .......................................... 1,322.0 1,169.9 152.1 13.0%
EliminationsandOther ...................................... (323.7) (240.6) (83.1) (34.5)%
TotalRevenues ........................................ $10,121.2 $8,862.5 $1,258.7 14.2%
The $1,171.0 million increase in revenues at the Direct-To-Home Broadcast segment resulted primarily
from the addition of new subscribers in 2003 and higher ARPU on the larger subscriber base at DIRECTV U.S.
The increase in revenues at DIRECTV U.S. was partially offset by a decrease in revenues at DLA due to the
$55.0 million of revenues generated by the 2002 FIFA World Cup, a decline in the number of subscribers and the
further depreciation of certain Latin American currencies in 2003. The $152.1 million increase in revenues at the
Network Systems segment resulted primarily from higher sales in its set-top receiver and DIRECWAY satellite
broadband businesses.
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