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DIRECTV
Holdings LLC |
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Non-GAAP
Financial Reconciliation and Other Data |
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(Dollars in Millions) (Unaudited)
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Pre-Marketing
Margin Reconciliation to Operating Profit |
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For
the Three Months Ended |
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For
the Nine Months |
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Guidance |
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September
30, |
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Ended
September 30, |
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Full
Year |
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2003 |
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2002 |
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2003
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2002 |
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2003 |
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Operating profit |
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$
112.2 |
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$ 102.4 |
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418.9 |
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$ 171.6 |
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~$ 475 |
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Add back:
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Subscriber acquisition costs |
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Third party customer acquisitions |
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366.4 |
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332.4 |
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985.6 |
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1,014.9 |
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** |
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Direct customer acquisitions |
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111.9 |
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45.9 |
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249.1 |
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111.7 |
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** |
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Retention, upgrade and
other marketing costs |
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143.3 |
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92.2 |
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325.8 |
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286.2 |
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** |
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Depreciation and amortization
expense |
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122.6 |
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102.1 |
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371.1 |
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283.2 |
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~ 525 |
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Subtotal |
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744.2 |
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572.6 |
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1,931.6 |
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1,696.0 |
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~ 2,715 |
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Pre-marketing margin* |
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$
856.4 |
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$ 675.0 |
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$ 2,350.5 |
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$ 1,867.6 |
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~ $3,190 |
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Pre-marketing margin
as a percentage of revenue* |
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44.3% |
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41.8% |
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43.2% |
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40.3% |
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~42% |
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Other
Data |
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For
the Three Months Ended |
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For
the Nine Months Ended |
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September
30, |
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September
30, |
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2003
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2002 |
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2003
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2002 |
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Average monthly
revenue per subscriber (ARPU) |
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$
63.70 |
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$
59.20 |
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$
61.20 |
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$
58.10 |
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Average monthly
churn -% |
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1.6% |
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1.7% |
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1.5% |
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1.7% |
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Average subscriber
acquisition costs (SAC) |
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$
590 |
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$
555 |
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$
575 |
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$
535 |
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Total number
of subscribers - platform (000's) |
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11,852 |
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10,921 |
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11,852 |
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10,921 |
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Total owned and
operated subscribers (000's) |
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10,275 |
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9,201 |
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10,275 |
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9,201 |
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(*) Pre-Marketing Margin, which is a financial measure that
is not determined in accordance with accounting principles generally accepted
in the United States of America, or GAAP, is calculated by adding amounts
under the captions “Subscriber acquisition costs”, “Retention,
upgrade and other marketing costs” and “Depreciation and amortization
expense“ to “Operating Profit“. This financial measure
should be used in conjunction with other GAAP financial measures and is
not presented as an alternative measure of operating results, as determined
in accordance with GAAP. Hughes and DIRECTV U.S. management use Pre-Marketing
Margin to evaluate the profitability of DIRECTV U.S.’s current subscriber
base for the purpose of allocating resources to discretionary activities
such as, adding new subscribers, retaining and upgrading existing subscribers
and for capital expenditures. To compensate for the exclusion of “Subscriber
acquisition costs” and “Retention, upgrade and other marketing
costs”, management also uses operating profit and operating profit
before depreciation and amortization expense to measure profitability.Hughes
and DIRECTV U.S. believe this measure is useful to investors, along with
other GAAP measures (such as revenues, operating profit and net income),
to compare DIRECTV U.S.’s operating performance to other communications,
entertainment and media companies.
Hughes and DIRECTV U.S. believe that investors also use
current and projected Pre-Marketing Margin to determine the ability of
DIRECTV U.S.’s current and projected subscriber base to fund discretionary
spending and to determine the financial returns for subscriber additions.
(**) No individual guidance provided.
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