DIRECTV 2003 Annual Report Download - page 50

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THE DIRECTV GROUP, INC.
revenues generated from the 2002 FIFA World Cup. A summary of DLA’s subscriber data for the years ended
December 31 is as follows:
2002 2001 Change
Total number of subscribers (000’s) ................................ 1,582 1,610 (28)
Net subscriber additions (losses) (000’s) ............................ (28) 305 (333)
ARPU ....................................................... $34.90 $41.80 $(6.90)
The decrease in net subscribers in 2002 was primarily due to the poor economic conditions and political
instability in several of the major countries in the region. The decrease in ARPU was primarily the result of the
devaluation of the Argentinean, Brazilian and Venezuelan currencies against the U.S. dollar.
The increase in operating loss before depreciation and amortization was due to the lower profit resulting
from the decreased revenues discussed above, the $80.0 million loss from the 2002 FIFA World Cup and the
consolidation of GEA beginning in May 2001, partially offset by lower operating expenses resulting from cost
savings initiatives including a reduction in advertising and promotion costs, and renegotiated programming
contracts.
The increased operating loss resulted from the change in operating loss before depreciation and amortization
and higher depreciation expense of $44.0 million resulting from assets placed in service in 2002 and 2001,
partially offset by a decrease in amortization expense of $30.0 million resulting from the discontinuation of
goodwill amortization expense in accordance with SFAS No. 142.
Satellite Services Segment
The following table provides Satellite Services segment operating results for the years ended December 31:
Change
2002 2001 $ %
(Dollars in Millions)
Revenues ............................................... $812.3 $870.1 $(57.8) (6.6)%
Operating Profit Before Depreciation & Amortization ............ 591.6 580.0 11.6 2.0%
Operating Profit .......................................... 255.9 165.3 90.6 54.8%
The decrease in revenues was primarily due to a decline in sales-type lease revenues that amounted to $19.6
million for 2002 compared to $67.9 million for 2001.
The higher operating profit before depreciation and amortization was principally due to increased operating
efficiencies that resulted from cost savings initiatives, a $40.1 million net gain related to the settlement of the
PAS-7 insurance claim in 2002 and a $7.0 million severance charge in 2001. These increases were partially offset
by the decline in revenues from sales-type lease transactions discussed above, an $18.7 million loss related to the
termination of several sales-type leases by a PanAmSat customer and 2002 net facilities restructuring and
severance charges of $13.7 million.
The increase in operating profit resulted from the increase in operating profit before depreciation and
amortization and lower amortization expense of $65.0 million for 2002 due to the discontinuation of goodwill
amortization in accordance with SFAS No. 142.
Backlog for the Satellite Services segment, which consists primarily of operating leases on satellite
transponders, was about $5.55 billion as of December 31, 2002 compared to about $5.84 billion as of
December 31, 2001.
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