DIRECTV 2004 Annual Report Download - page 60

THE DIRECTV GROUP, INC.
balance of $503.9 million as a cumulative effect of accounting change. The amount of the cumulative effect was $310.5 million,
net of taxes. The following table presents our results on a pro forma basis as if we had retroactively applied this new method:
2004
2003
2002
(Dollars in Millions, Except Per Share
and Per Subscriber Amounts)
Pro Forma:
Total operating costs and expenses
$
13,479.4
$
9,599.0
$
8,712.0
Operating loss
(2,119.4
)
(226.8
)
(526.6
)
Net loss attributable to common stockholders
(1,638.7
)
(416.8
)
(1,010.4
)
Basic and diluted net loss per common share
(1.18
)
(0.30
)
(0.75
)
Other Data:
Operating loss
$
(2,119.4
)
$
(226.8
)
$
(526.6
)
Add: Depreciation and amortization expense
838.0
754.9
676.7
Operating profit (loss) before depreciation and amortization
$
(1,281.4
)
$
528.1
$
150.1
Average subscriber acquisition costs—per subscriber (SAC)
$
643
$
604
$
570
For addition information regarding “Accounting Changes,” see Note 2 of the Notes to the Consolidated Financial Statements in
Item 8, Part II of this Form 10-K, which we incorporate herein by reference.
SECURITY RATINGS
Debt ratings by the various rating agencies reflect each agency’s opinion of the ability of issuers to repay debt obligations as
they come due. Ratings in the Ba range generally indicate moderate protection of interest and principal payments, potentially
outweighed by exposure to uncertainties or adverse conditions for Moody’s Investor Services, or Moody’s, and the BB range
for Standard & Poor’s Ratings Services, or S&P. Ratings in the B range generally indicate that the obligor currently has
financial capacity to meet its financial commitments but there is limited assurance over any long period of time that interest and
principal payments will be made or that other terms will be maintained. In general, lower ratings result in higher borrowing
costs. A security rating is not a recommendation to buy, sell, or hold securities and may be subject to revision or withdrawal at
any time by the assigning rating organization.
The Company
Effective January 24, 2005, Moody’s no longer provides a security rating for us, consistent with its normal practice of providing
a rating for only the primary debt issuer. Accordingly, Moody’s provides security ratings only at the DIRECTV U.S. level, as
described below.
On August 9, 2004, S&P affirmed its ratings on our long-term corporate rating of BB, removed the ratings from CreditWatch
and assigned a positive outlook. On February 2, 2005, S&P affirmed the ratings and revised the outlook to stable, citing
potential share repurchase activity while discretionary cash flow was negative.
DIRECTV U.S.
On April 20, 2004, Moody’s placed the long-term debt ratings for DIRECTV U.S. on review for possible upgrade, following
the announcement of the sale of our interest in PanAmSat to an affiliate of KKR. On January 24, 2005, Moody’s concluded its
review and raised DIRECTV U.S.’ senior implied rating from Ba3 to Ba2,
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