DIRECTV 2012 Annual Report Download - page 70

DIRECTV
in 2011 due to the higher gross subscriber additions and lower post paid churn in Liberty transaction and related gain. In 2010, we recorded a $67 million net
Venezuela and Brazil compared to 2010. gain from the settlement of the equity collars and debt assumed as part of the
Liberty Transaction.
Revenues. Revenues increased due to strong subscriber and ARPU growth
across the region, particularly in Brazil. ARPU increased primarily due to price Other, net. The significant components of ‘‘Other, net’’ were as follows:
increases and higher penetration of advanced products across the region, as well as 2011 2010 Change
favorable exchange rates in Brazil. (Dollars in Millions)
Operating profit before depreciation and amortization. Operating profit before Equity in earnings of unconsolidated subsidiaries ....... $109 $ 90 $ 19
depreciation and amortization increased in 2011 as compared to 2010, primarily Net foreign currency transaction gain (loss) ........... (50) 11 (61)
due to the increased gross profit generated from the higher revenues, partially offset Fair value adjustment loss on non-employee stock options . (4) (11) 7
by higher subscriber acquisition costs due to the higher number of gross subscriber Loss on early extinguishment of debt ............... (25) (16) (9)
additions, higher general and administrative costs as well as higher upgrade and Net gain from sale of investments ................. 63 6 57
retention costs resulting from the increased demand for advanced products. Other ................................... (9) (11) 2
Total .................................. $ 84 $69 $15
Operating profit. Operating profit increased in 2011 as compared to 2010,
primarily due to higher operating profit before depreciation and amortization, Income tax expense. We recognized income tax expense to $1,348 million in
discussed above, partially offset by higher depreciation and amortization expense 2011 and $1,202 million in 2010. The effective tax rate for 2011 was 33.8%
resulting from an increase in basic and advanced product receivers capitalized due to compared to 34.2% for 2010. The lower effective tax rate was primarily attributable
the higher gross subscriber additions attained over the last year. to a benefit recorded for previously unrecognized foreign tax credits and a benefit
recorded for domestic production activities deduction in 2011.
DIRECTV Other Income, Income Taxes and Net Income Attributable to Noncontrolling
Interest Net income attributable to noncontrolling interest. Net income attributable to
noncontrolling interest decreased to $27 million in 2011 as compared to
Interest income. Interest income was $34 million in 2011 and $39 million in
$114 million in 2010. This decrease was primarily a result of the Globo
2010.
Transaction in the fourth quarter of 2010 which increased our ownership
Interest expense. The increase in interest expense to $763 million in 2011 percentage in Sky Brasil and a net tax benefit attributable to the noncontrolling
from $557 million in 2010 was due to an increase in the average debt balances interest resulting from the release of a deferred income tax asset valuation allowance
compared to 2010, partially offset by a decrease in weighted average interest rates. in 2010.
We capitalized interest costs of $13 million in 2011 and $6 million in 2010.
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