This excerpt taken from the DTV 8-K filed Feb 7, 2007.
DIRECTV U.S. Fourth Quarter Financial Highlights
· Increased Net Subscriber Additions 38% to 275,000 Driven by the Largest Reduction in Churn in 3 Years to 1.57% and a 6% Increase in Gross Subscriber Additions
· Grew Revenues 12% to Over $3.8 Billion Fueled by a 6.8% Increase in Average Monthly Revenue Per Subscriber (ARPU) to $80.70
· Generated Cash Flow Before Interest and Taxes of $343 Million in the Fourth Quarter Increasing Full Year 2006 Results by 83% to $1.42 Billion
El Segundo, Calif., February 7, 2007 The DIRECTV Group, Inc. (NYSE:DTV) today reported that fourth quarter revenues increased 16% to $4.18 billion and operating profit before depreciation and amortization(1) more than doubled to $915 million compared to last years fourth quarter. The DIRECTV Group reported that fourth quarter 2006 operating profit and net income also more than doubled to $595 million and $356 million, respectively, when compared to the same period last year. Earnings per share were $0.29 compared with $0.09 in the same period last year. These financial results include the effect of $408 million of equipment that DIRECTV U.S. capitalized during the fourth quarter under its lease program, which was introduced March 1, 2006.
Fourth quarter results point to the continuing progress and operating strength at DIRECTV U.S. highlighted by strong revenue and cash flow growth. These results were driven by improved operating metrics including subscriber growth, churn, ARPU and subscriber acquisition costs, a reflection of the competitive strength of our business. Gross subscriber additions of over 1 million in the quarter were 6% higher than last year but more importantly, we attained an even greater growth rate for higher-quality subscribers compared to last year, said Chase Carey, president and CEO of The DIRECTV Group, Inc. The emphasis on adding higher quality subscribers who purchase significantly more advanced products and services helped drive our monthly churn rate from 1.70% last year to 1.57% in the current quarter, the biggest improvement in over 3 years. The higher gross additions combined with the lower churn rate drove a 38% increase in net subscriber additions to 275,000 in the quarter.
Carey continued, DIRECTV U.S. financial results were also strong in the quarter highlighted by a 12% increase in revenues to $3.8 billion fueled by a 6.8% ARPU increasethe highest growth rate in over two yearsand continued strong subscriber growth. Operating profit before depreciation and amortization nearly doubled to $876 million primarily due to the capitalization of set-top boxes under the new lease program implemented in March 2006, the gross profit generated from the higher revenues and to a smaller degree, the reduction in subscriber acquisition costs or SAC to $626. Also impacting the quarterly results were higher upgrade and retention costs primarily due to the increased number of customers upgrading to high definition
and digital video recorder services, as well as converting to our new MPEG-4 equipment. These high-value subscribers generate the highest ARPU, lowest churn and greatest cash flow for DIRECTV over the long term.
Carey added, As we head into 2007, we have many reasons to be excited. First, we will launch several new innovative programming services over the coming months such as NASCAR HotPass, the Championship Gaming Series, and DIRECTV On Demand. But perhaps the most important initiative will be the launch of up to 100 national HD channels in the second half of this year following the successful launch of a new satellite. With this added capacity, we expect to offer significantly more HD channels than most of our competitors, providing DIRECTV with a huge advantage in this rapidly growing marketplace. Carey concluded, We also expect stronger operational performance in 2007 now that we have launched our new set-top boxes, strengthened our sales channels and implemented several key changes to our installation and customer service infrastructure that will drive improved efficiencies and quality. As a result, were looking for even better results from DIRECTV U.S. in 2007.