DIRECTV 2005 Annual Report Download - page 66

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THE DIRECTV GROUP, INC.
DIRECTV Latin America Segment
The following table provides operating results and a summary of key subscriber data for the
DIRECTV Latin America segment:
Change
2004 2003 $ %
(Dollars in Millions, Except Per
Subscriber Amounts)
Revenues ........................................... $675.2 $ 597.7 $77.5 13.0%
Operating Profit (Loss) Before Depreciation & Amortization ..... 45.9 (85.3) 131.2 NM
Operating Loss ....................................... (142.0) (284.6) 142.6 (50.1)%
Total number of subscribers (000’s) ........................ 1,646 1,499 147 9.8%
Net subscriber additions (losses) (000’s) ..................... 57 (83) 140 NM
ARPU ............................................. $35.80 $ 33.00 $2.80 8.5%
The increase in revenues is primarily a result of the larger subscriber base in 2004 as well as the
full year impact of consolidating the Venezuelan and Puerto Rican LOCs.
The 140,000 change in net subscriber additions resulted primarily from lower churn across a
majority of the LOCs and the relatively stable economic conditions in the region, partially offset by the
ongoing shut-down of DIRECTV Mexico and the migration of subscribers to the Sky Mexico platform.
This increase in net subscriber additions excludes approximately 89,500 subscribers acquired from the
PanAmericana entities as part of the Sky Transactions. The increase in ARPU is primarily due to the
consolidation of the Venezuelan and Puerto Rican LOCs in July 2003 as a result of our adoption of
FIN 46 and the consolidation of Sky Chile and Sky Colombia.
The improvement in operating profit (loss) before depreciation and amortization and operating
loss was primarily due to lower programming costs as a result of the renegotiation of certain contracts
in connection with the bankruptcy, partially offset by the $45.0 million charge related to asset write-
downs, severance and other costs related to the ongoing shut-down of DTVLA’s Mexico operations as
part of the Sky Transactions.
Network Systems Segment
The following table provides operating results for the Network Systems segment:
Change
2004 2003 $ %
(Dollars in Millions)
Revenues ....................................... $1,099.1 $1,271.0 $ (171.9) (13.5)%
Operating Loss Before Depreciation & Amortization ....... (1,682.9) (32.6) (1,650.3) NM
Operating Loss .................................. (1,778.5) (103.4) (1,675.1) NM
The decrease in revenues resulted primarily from lower sales of DIRECTV set-top receivers as a
result of the sale of the set-top receiver manufacturing operations to Thomson in June 2004. As we
expect to have significant continuing cash flows with the set-top receiver manufacturing operations
resulting from the five year supply agreement, the financial results of the set-top receiver
manufacturing operations prior to June 2004 are reported in continuing operations, and not as
discontinued operations. See Note 3 of the Notes to the Consolidated Financial Statements in Part II,
Item 8 of this Annual Report for more information related to the set-top receiver manufacturing
operations.
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