The DIRECTV Group Announces Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091105005437/en

The DIRECTV Group Free Cash Flow Increases 94% to a Record $643 Million

* Solid revenue growth and cost controls drive Cash Flow Before Interest and
Taxes growth of 41% at DIRECTV U.S. to $843 million and 62% at DIRECTV Latin
America to $81 million

The DIRECTV Group Grows Revenues 10% to Nearly $5.5 Billion

* Continued strong subscriber growth fuels revenue increase as DIRECTV Latin
America and DIRECTV U.S. attain 162,000 and 136,000 net subscriber additions,
respectively, in the third quarter

DIRECTV Repurchases $943 Million of Stock in the Quarter Bringing Total
Repurchases to $1.6 Billion for the Year
EL SEGUNDO, Calif.--(Business Wire)--
The DIRECTV Group, Inc. (NASDAQ:DTV) today reported that third quarter 2009
revenues increased 10% to $5.47 billion, operating profit before depreciation
and amortization1 (OPBDA) increased 8% to $1.35 billion while operating profit
increased 4% to $685 million compared to last year`s third quarter. Third
quarter net income attributable to The DIRECTV Group increased slightly to $366
million while diluted earnings per share increased 12% to $0.37 compared with
the same period last year.

"DIRECTV`s third quarter results are consistent with our goal to drive
substantial cash flow growth through a strategy of offering the best television
experience to higher quality subscribers," said Larry Hunter, interim chief
executive officer of The DIRECTV Group, Inc. "Fueled by strong top-line growth
and cost controls in both our U.S. and Latin American businesses, DIRECTV
Group`s free cash flow increased 94% to a record $643 million in the quarter and
has grown 32% to over $1.6 billion through the first nine months of 2009.

"In the United States, DIRECTV revenues increased 9% to $4.7 billion due to
solid subscriber and ARPU growth. Continued robust demand for our service fueled
an 8% increase in gross additions to 1.1 million subscribers and net additions
of 136,000 primarily due to the addition of AT&T as a marketing partner and
record demand for our industry-leading HD and DVR services." Hunter continued,
"In fact, about two-thirds of new subscribers signed-up for HD and/or DVR
services in the quarter representing the highest level in our history. Also in
the quarter, DIRECTV U.S. did an excellent job managing costs punctuated by the
second consecutive quarter of a sub-$700 cash SAC and only a 1.2% increase in
programming costs per subscriber. In addition, cash upgrade and retention costs
declined by 7% to $361 million as we tightened up our offers to existing
customers while striking a better economic balance between our retention
policies and monthly churn rate which increased modestly to 1.72% in the
quarter."

Hunter added, "DIRECTV Latin America also had strong third quarter results
highlighted by a 16% increase in revenues to $761 million as net additions more
than doubled to 162,000 due to continued strong subscriber growth throughout the
region which more than offset the unfavorable impact related to weaker
currencies in countries such as Brazil and Argentina. Bottom-line results were
also strong in Latin America as cash flow before interest and taxes increased
62% to $81 million in the quarter."

THE DIRECTV GROUP`S OPERATIONAL REVIEW

The DIRECTV Group Three Months Nine Months

Dollars in Millions except Earnings

per Common Share
Ended September 30, Ended September 30,
2009 2008 2009 2008
Revenues $ 5,465 $ 4,981 $ 15,584 $ 14,379
Operating Profit Before Depreciation and Amortization(1) 1,348 1,252 3,819 3,791
Operating Profit 685 658 1,811 2,116
Net Income Attributable to The DIRECTV Group 366 363 974 1,189
Diluted Earnings Per Common Share ($) 0.37 0.33 0.97 1.05
Capital Expenditures and Cash Flow
Cash Paid for DIRECTV U.S. Subscriber Leased Equipment - Acquisitions, Upgrade and Retention 231 279 766 805
Cash Paid for Property, Equipment and Satellites 284 257 782 767
Cash Flow Before Interest and Taxes(2) 862 619 2,210 1,954
Free Cash Flow(3) 643 332 1,650 1,249

Third Quarter Review

The DIRECTV Group`s third quarter revenues of $5.47 billion increased 10% over
the same period last year principally due to strong subscriber growth at DIRECTV
U.S. and DIRECTV Latin America (DTVLA). Operating profit before depreciation and
amortization increased 8% to $1.35 billion primarily due to the gross profit
associated with the higher revenues, partially offset by higher acquisition
costs related to the increase in gross subscriber additions and higher
subscriber services costs associated with service quality improvement
initiatives at DIRECTV U.S. Also impacting the comparison was an increase in
general and administrative expenses primarily due to higher currency-related
transaction charges in Venezuela ($48 million in the third quarter of 2009
compared with $17 million in the third quarter of 2008) as a result of DTVLA`s
ongoing efforts to repatriate cash from Venezuela. The DIRECTV Group`s operating
profit increased 4% to $685 million as the higher OPBDA was partially offset by
an increase in depreciation and amortization principally due to capitalization
of customer equipment under the DIRECTV U.S. and DIRECTV Latin America lease
programs.

Net income attributable to The DIRECTV Group increased 1% compared with the
third quarter of last year as the higher operating profit was mostly offset by
increased net interest expense due to higher average net debt balances and
higher income tax expense principally associated with a tax benefit in the third
quarter of 2008 relating to the partial reversal of a valuation allowance on
deferred tax assets of Sky Brazil. Diluted earnings per share increased 12% to
$0.37 as the higher net income was also favorably impacted by a 12% reduction in
average shares outstanding resulting from share repurchases made over the last
year.

Cash flow before interest and taxes2 grew 39% to $862 million and free cash
flow3 increased 94% to $643 million compared to the third quarter 2008 primarily
due to the higher OPBDA and cash provided by working capital changes. Free cash
flow was also favorably impacted by lower income taxes paid primarily due to the
timing of lower pre-tax earnings and prior-year credits. The quarter also
included cash paid for share repurchases of $943 million, the issuance of $2
billion of additional debt ($1 billion of 43/4% senior notes due 2014 and $1
billion of 57/8% senior notes due 2019), the repurchase of $583 million of 83/8%
senior notes and the repayment of $30 million under DIRECTV`s senior secured
credit facility. The remaining outstanding $327 million of 83/8% senior notes
was repurchased in October 2009.

Year-to-Date Review

The DIRECTV Group`s first nine months of revenues increased 8% to $15.58 billion
principally due to strong subscriber growth at DIRECTV U.S. and DIRECTV Latin
America. Operating profit before depreciation and amortization increased
slightly to $3.82 billion as the gross profit associated with the higher revenue
at both DIRECTV U.S. and DTVLA was offset by higher acquisition costs related to
the increase in gross subscriber additions, higher subscriber services costs
associated with service quality improvement initiatives, as well as increased
upgrade and retention expenses at DIRECTV U.S. Also impacting the comparison was
higher general and administrative expenses at DIRECTV Latin America primarily
due to $168 million in currency-related transaction charges at Venezuela in the
first nine months of 2009 compared with $27 million in the same period of 2008.
Operating profit declined 14% to $1.81 billion mostly due to higher depreciation
and amortization associated with the capitalization of customer equipment under
the DIRECTV U.S. and DIRECTV Latin America lease programs.

Net income attributable to The DIRECTV Group and diluted earnings per share
declined 18% and 8%, respectively, compared with the first nine months of 2008
primarily due to the lower operating profit and increased net interest expense
due to higher average net debt balances, partially offset by a decline in tax
expense principally resulting from lower earnings before tax, as well as a $57
million gain associated with the revaluation of U.S. dollar denominated monetary
net-liabilities held by Sky Brazil. In addition, earnings per share were
favorably impacted by a 12% decline in the average shares outstanding resulting
from share repurchases over the last year.

Cash flow before interest and taxes increased 13% to $2.21 billion and free cash
flow increased 32% to $1.65 billion compared to the first nine months of 2008
primarily due to lower working capital requirements and $69 million in dividend
payments received, primarily from Sky Mexico. Free cash flow was also favorably
impacted by lower income taxes paid primarily due to the timing of lower pre-tax
earnings and prior year credits, partially offset by higher net interest paid
due to higher average net debt balances. The first nine months of 2009 also
included cash paid for share repurchases of $1.61 billion, the issuance of $2
billion of additional debt ($1 billion of 43/4% senior notes due 2014 and $1
billion of 57/8% senior notes due 2019), the repurchase of $583 million of 83/8%
senior notes and the repayment of $78 million under DIRECTV`s senior secured
credit facility. The remaining outstanding $327 million of 83/8% senior notes
was repurchased in October 2009.

SEGMENT FINANCIAL REVIEW

DIRECTV U.S. Segment

Third Quarter Review

Net subscriber additions in the quarter declined to 136,000 as an increase in
gross additions was more than offset by higher customer disconnects. The 8%
increase in gross additions to 1,086,000 in the third quarter was mainly due to
marketing of the AT&T/DIRECTV bundle which began in February 2009, as well as
higher demand for HD and DVR services. Customer disconnects were higher in the
quarter due to a higher monthly churn rate of 1.72% on a larger subscriber base.
The increase in the churn rate was primarily due to stricter retention and
upgrade policies, as well as more aggressive competitor promotions.

DIRECTV U.S. revenues increased 9% to $4.70 billion in the quarter primarily due
to the larger subscriber base and higher ARPU. ARPU of $85.32 increased 2.1% as
programming package price increases as well as higher HD and DVR service fees
were partially offset by more competitive promotions for both new and existing
customers, one less week of NFL Sunday Ticket revenues in the quarter, lower
premium movie package buy rates and the expiration of a satellite lease.

Three Months Nine Months
DIRECTV U.S. Ended September 30, Ended September 30,

Dollars in Millions except ARPU
2009 2008 2009 2008
Revenue $ 4,703 $ 4,324 $ 13,545 $ 12,569
Average Monthly Revenue per Subscriber (ARPU) ($) 85.32 83.59 83.09 81.73
Operating Profit Before Depreciation and Amortization(1) 1,179 1,060 3,410 3,335
Operating Profit 611 532 1,660 1,842
Cash Flow Before Interest and Taxes(2) 843 598 2,083 1,819
Free Cash Flow(3) 529 361 1,488 1,090
Subscriber Data (in 000`s except Churn)
Gross Subscriber Additions 1,086 1,002 3,309 2,860
Average Monthly Subscriber Churn 1.72 % 1.64 % 1.53 % 1.50 %
Net Subscriber Additions 136 156 820 560
Cumulative Subscribers 18,441 17,320 18,441 17,320

Third quarter 2009 OPBDA increased 11% to $1.18 billion and operating profit
increased 15% to $611 million as the gross profit associated with the higher
revenues was mostly offset by higher subscriber acquisition costs primarily
related to the increase in gross subscriber additions and higher subscriber
services costs associated with service quality improvement initiatives.

DIRECTV Latin America Segment

The DIRECTV Group owns approximately 74% of Sky Brazil, 41% of Sky Mexico and
100% of PanAmericana, which covers most of the remaining countries in the
region. Sky Mexico, whose results are accounted for as an equity method
investment and therefore are not consolidated by DTVLA, had approximately 1.82
million subscribers as of September 30, 2009 bringing the total subscribers in
the region to 6.15 million.

Third Quarter Review

In the third quarter of 2009, DTVLA`s net subscriber additions more than doubled
to 162,000 due to a 22% increase in gross additions to 385,000 and a decline in
the average monthly churn rate to 1.75%. Gross additions increased principally
due to strong subscriber demand across the region, particularly in Brazil,
increased demand for HD and DVR services, as well as more attractive customer
promotions. Average monthly churn declined in the quarter primarily due to a
57,000 downward subscriber adjustment made in the third quarter of 2008.
Excluding the adjustment, churn increased 16 basis points compared to last year
primarily due to the impact from continued growth in DTVLA`s pre-paid business.
The total number of DIRECTV subscribers in Latin America as of September 30,
2009 increased 16% to 4.33 million compared to 3.73 million as of September 30,
2008.

Revenues for DIRECTV Latin America increased 16% to $761 million in the third
quarter principally due to strong subscriber growth over the last year,
particularly in Brazil, Argentina and Venezuela. ARPU increased slightly in the
quarter to $59.80 primarily due to price increases and higher fees for HD and
DVR services mostly offset by unfavorable exchange rates in the region compared
to last year, mainly in Brazil and Argentina.

Three Months Nine Months
DIRECTV Latin America Ended September 30, Ended September 30,

Dollars in Millions except ARPU
2009 2008 2009 2008
Revenue $ 761 $ 658 $ 2,039 $ 1,811
Average Monthly Revenue per Subscriber (ARPU) ($) 59.80 59.32 55.25 56.88
Operating Profit Before Depreciation and Amortization(1) 199 208 478 507
Operating Profit 103 142 217 322
Cash Flow Before Interest and Taxes(2) 81 50 244 218
Free Cash Flow(3) 38 12 118 113
Subscriber Data(4)(in 000`s except Churn)
Gross Subscriber Additions 385 315 1,115 1,052
Average Monthly Subscriber Churn 1.75 % 2.13 % 1.84 % 1.85 %
Net Subscriber Additions 162 79 438 463
Cumulative Subscribers 4,330 3,734 4,330 3,734

DIRECTV Latin America`s third quarter 2009 OPBDA declined 4% to $199 million as
the increased gross profit from the higher revenue was offset by an increase in
charges associated with the exchange of Venezuelan currency to U.S. dollars ($48
million in the third quarter of 2009 compared with $17 million in the third
quarter of 2008). The charges are a result of DTVLA`s ongoing efforts to
repatriate cash from Venezuela. In addition, OPBDA was impacted by higher
subscriber acquisition costs mostly due to the increase in gross subscriber
additions. Operating profit declined 27% to $103 million due to the lower OPBDA
and higher depreciation expenses primarily associated with an increase in basic
and advanced product receivers leased over the last year.

CONTACT INFORMATION

Media Contact: Darris Gringeri (212) 205-0882. Investor Relations: (310)
964-0808

CONFERENCE CALL INFORMATION

A live webcast of The DIRECTV Group`s third quarter 2009 earnings call will be
available on the company`s website at www.directv.com/investor. The webcast will
begin at 2:00 p.m. ET, today November 5, 2009. Access to the earnings call is
also available in the United States by dialing (800) 419-9895 and
internationally by dialing (913) 312-0945. The confirmation code is 3646473.
There will be no telephonic replay of the earnings call as it will be archived
on our website at www.directv.com/investor beginning November 6, 2009.

FOOTNOTES

(1) Operating profit before depreciation and amortization, which is a financial
measure that is not determined in accordance with accounting principles
generally accepted in the United States of America, or GAAP, 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.
Please see each of The DIRECTV Group`s and DIRECTV Holdings LLC`s Annual Reports
on Form 10-K for the year ended December 31, 2008 for further discussion of
operating profit before depreciation and amortization. Operating profit before
depreciation and amortization margin is calculated by dividing operating profit
before depreciation and amortization by total revenues.

(2) Cash flow before interest and taxes, which is a financial measure that is
not determined in accordance with GAAP, is calculated by deducting amounts under
the captions "Cash paid for property and equipment," "Cash paid for satellites,"
"Cash paid for subscriber leased equipment - subscriber acquisitions" and "Cash
paid for subscriber leased equipment - upgrade and retention" from "Net cash
provided by operating activities" from the Consolidated Statements of Cash Flows
and adding back net interest paid and "Cash paid for income taxes." This
financial measure should be used in conjunction with other GAAP financial
measures and is not presented as an alternative measure of cash flows from
operating activities, as determined in accordance with GAAP. The DIRECTV Group
and DIRECTV U.S. management use cash flow before interest and taxes to evaluate
the cash generated by our current subscriber base, net of capital expenditures,
and excluding the impact of interest and taxes, for the purpose of allocating
resources to activities such as adding new subscribers, retaining and upgrading
existing subscribers, for additional capital expenditures and as a measure of
performance for incentive compensation purposes. The DIRECTV Group and DIRECTV
U.S. believe this measure is useful to investors, along with other GAAP measures
(such as cash flows from operating and investing activities), to compare our
operating performance to other communications, entertainment and media
companies. We believe that investors also use current and projected cash flow
before interest and taxes to determine the ability of our current and projected
subscriber base to fund required and discretionary spending and to help
determine the financial value of the company.

(3) Free cash flow, which is a financial measure that is not determined in
accordance with GAAP, is calculated by deducting amounts under the captions
"Cash paid for property and equipment," "Cash paid for satellites," "Cash paid
for subscriber leased equipment - subscriber acquisitions," and "Cash paid for
subscriber leased equipment - upgrade and retention" from "Net cash provided by
operating activities" from the Consolidated Statements of Cash Flows. This
financial measure should be used in conjunction with other GAAP financial
measures and is not presented as an alternative measure of cash flows from
operating activities, as determined in accordance with GAAP. The DIRECTV Group
and DIRECTV U.S. management use free cash flow to evaluate the cash generated by
our current subscriber base, net of capital expenditures, for the purpose of
allocating resources to activities such as adding new subscribers, retaining and
upgrading existing subscribers, for additional capital expenditures and as a
measure of performance for incentive compensation purposes. The DIRECTV Group
and DIRECTV U.S. believe this measure is useful to investors, along with other
GAAP measures (such as cash flows from operating and investing activities), to
compare our operating performance to other communications, entertainment and
media companies. We believe that investors also use current and projected free
cash flow to determine the ability of our current and projected subscriber base
to fund required and discretionary spending and to help determine the financial
value of the company.

(4) DIRECTV Latin America subscriber data exclude subscribers of the Sky Mexico
service. Gross and net subscriber additions as well as churn exclude the impact
of the migration of approximately 9,000 subscribers to DIRECTV Latin America in
the first nine months of 2009, 8,000 migrated from DIRECTV Latin America to Sky
Mexico in the first nine months of 2008 as well as the impact of the migration
of 6,000 subscribers to DIRECTV Latin America in the third quarter 2009 and
4,000 migrated from DTVLA to Sky Mexico in the third quarter of 2008. Cumulative
subscriber totals include the impact of the migrated and acquired subscribers.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

NOTE: This release may include or incorporate by reference certain statements
that we believe are, or may be considered to be, "forward-looking statements"
within the meaning of various provisions of the Securities Act of 1933 and of
the Securities Exchange Act of 1934. These forward-looking statements generally
can be identified by use of statements that include phrases such as "believe,"
"expect," "estimate," "anticipate," "intend," "plan," "foresee," "project" or
other similar words or phrases. Similarly, statements that describe our
objectives, plans or goals also are forward-looking statements. All of these
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical results or from
those expressed or implied by the relevant forward-looking statement. Such risks
and uncertainties include, but are not limited to: economic conditions; product
demand and market acceptance; ability to simplify aspects of our business model,
improve customer service, create new and desirable programming content and
interactive features, and achieve anticipated economies of scale; government
action; local political or economic developments in or affecting countries where
we have operations, including political, economic and social uncertainties in
many Latin American countries in which DIRECTV Latin America operates; foreign
currency exchange rates; currency exchange controls; ability to obtain export
licenses; competition; the outcome of legal proceedings; ability to achieve cost
reductions; ability of third parties to timely perform material contracts;
ability to renew programming contracts under favorable terms; technological
risk; limitations on access to distribution channels; the success and timeliness
of satellite launches; in-orbit performance of satellites, including technical
anomalies; loss of uninsured satellites; theft of satellite programming signals;
and our ability to access capital to maintain our financial flexibility. We urge
you to consider these factors carefully in evaluating the forward-looking
statements.

The DIRECTV Group (NASDAQ:DTV) is the world`s leading provider of digital
television entertainment services. Through its subsidiaries and affiliated
companies in the United States, Brazil, Mexico and other countries in Latin
America, the DIRECTV Group provides digital television service to more than 18.4
million customers in the United States and over 6.1 million customers in Latin
America.

THE DIRECTV GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

Revenues $ 5,465 $ 4,981 $ 15,584 $ 14,379

Operating costs and expenses
Costs of revenues, exclusive of depreciation and amortization expense
Broadcast programming and other 2,271 2,072 6,404 5,894
Subscriber service expenses 406 339 1,126 952
Broadcast operations expenses 87 97 254 276
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
Subscriber acquisition costs 699 624 2,076 1,780
Upgrade and retention costs 277 268 819 745
General and administrative expenses 377 329 1,086 941
Depreciation and amortization expense 663 594 2,008 1,675
Total operating costs and expenses 4,780 4,323 13,773 12,263

Operating profit 685 658 1,811 2,116

Interest income 9 27 25 64
Interest expense (101 ) (103 ) (304 ) (248 )
Other, net 10 11 67 29

Income before income taxes 603 593 1,599 1,961

Income tax expense (219 ) (195 ) (585 ) (712 )

Net income 384 398 1,014 1,249

Less: Net income attributable to noncontrolling interest (18 ) (35 ) (40 ) (60 )

Net income attributable to The DIRECTV Group, Inc. $ 366 $ 363 $ 974 $ 1,189

Basic earnings attributable to
The DIRECTV Group, Inc. per common share $ 0.38 $ 0.33 $ 0.97 $ 1.05

Diluted earnings attributable to
The DIRECTV Group, Inc. per common share $ 0.37 $ 0.33 $ 0.97 $ 1.05

Weighted average number of common shares outstanding (in millions)
Basic 973 1,106 999 1,131
Diluted 977 1,111 1,003 1,136

THE DIRECTV GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)
September 30, December 31,
ASSETS 2009 2008
Current assets
Cash and cash equivalents $ 3,293 $ 2,005
Accounts receivable, net of allowances of $72 and $50 1,458 1,423
Inventories 234 192
Deferred income taxes 48 68
Prepaid expenses and other 443 356

Total current assets 5,476 4,044
Satellites, net 2,364 2,476
Property and equipment, net 4,153 4,171
Goodwill 3,811 3,753
Intangible assets, net 952 1,172
Investments and other assets 871 923

Total assets $ 17,627 $ 16,539

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 3,171 $ 3,115
Unearned subscriber revenues and deferred credits 526 362
Current portion of long-term debt 572 108

Total current liabilities 4,269 3,585
Long-term debt 6,591 5,725
Deferred income taxes 723 524
Other liabilities and deferred credits 1,625 1,749
Commitments and contingencies
Redeemable noncontrolling interest 325 325
Stockholders' equity 4,094 4,631

Total liabilities and stockholders' equity $ 17,627 $ 16,539

THE DIRECTV GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Nine Months Ended

September 30,
2009 2008
Cash Flows From Operating Activities
Net income $ 1,014 $ 1,249
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,008 1,675
Amortization of deferred revenues and deferred credits (38 ) (75 )
Share-based compensation expense 39 37
Dividends received 69 35
Net foreign currency transaction gains (57 ) -
Deferred income taxes 311 101
Other 2 (6 )
Change in other operating assets and liabilities:
Accounts receivable 30 137
Inventories (34 ) (37 )
Prepaid expenses and other (61 ) (70 )
Accounts payable and accrued liabilities (174 ) (412 )
Unearned subscriber revenue and deferred credits 147 136
Other, net (58 ) 51
Net cash provided by operating activities 3,198 2,821
Cash Flows From Investing Activities
Cash paid for property and equipment (1,508 ) (1,480 )
Cash paid for satellites (40 ) (92 )
Investment in companies, net of cash acquired (30 ) (203 )
Other, net 11 37
Net cash used in investing activities (1,567 ) (1,738 )
Cash Flows From Financing Activities
Cash proceeds from debt issuance 1,990 2,490
Debt issuance costs (12 ) (19 )
Repayment of long-term debt (661 ) (35 )
Repayment of other long-term obligations (85 ) (92 )
Capital contribution - 160
Common shares repurchased and retired (1,613 ) (1,790 )
Stock options exercised 33 100
Excess tax benefit from share-based compensation 5 8
Net cash (used in) provided by financing activities (343 ) 822
Net increase in cash and cash equivalents 1,288 1,905
Cash and cash equivalents at beginning of the period 2,005 1,083
Cash and cash equivalents at the end of the period $ 3,293 $ 2,988

Supplemental Cash Flow Information
Cash paid for interest $ 274 $ 201
Cash paid for income taxes 311 568

THE DIRECTV GROUP, INC.
SELECTED SEGMENT DATA
(Dollars in Millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
DIRECTV U.S.
Revenues $ 4,703 $ 4,324 $ 13,545 $ 12,569
Operating profit before depreciation and amortization (1) 1,179 1,060 3,410 3,335
Operating profit before depreciation and amortization margin (1) 25.1 % 24.5 % 25.2 % 26.5 %
Operating profit $ 611 $ 532 $ 1,660 $ 1,842
Operating profit margin 13.0 % 12.3 % 12.3 % 14.7 %
Depreciation and amortization $ 568 $ 528 $ 1,750 $ 1,493
Capital expenditures 357 418 1,142 1,240

DIRECTV LATIN AMERICA
Revenues $ 761 $ 658 $ 2,039 $ 1,811
Operating profit before depreciation and amortization (1) 199 208 478 507
Operating profit before depreciation and amortization margin (1) 26.1 % 31.6 % 23.4 % 28.0 %
Operating profit $ 103 $ 142 $ 217 $ 322
Operating profit margin 13.5 % 21.6 % 10.6 % 17.8 %
Depreciation and amortization $ 96 $ 66 $ 261 $ 185
Capital expenditures 158 110 405 322

CORPORATE and OTHER
Revenues $ 1 $ (1 ) $ - $ (1 )
Operating loss before depreciation and amortization (1) (30 ) (16 ) (69 ) (51 )
Operating loss (29 ) (16 ) (66 ) (48 )
Depreciation and amortization (1 ) - (3 ) (3 )
Capital expenditures - 8 1 10

TOTAL
Revenues $ 5,465 $ 4,981 $ 15,584 $ 14,379
Operating profit before depreciation and amortization (1) 1,348 1,252 3,819 3,791
Operating profit before depreciation and amortization margin (1) 24.7 % 25.1 % 24.5 % 26.4 %
Operating profit $ 685 $ 658 $ 1,811 $ 2,116
Operating profit margin 12.5 % 13.2 % 11.6 % 14.7 %
Depreciation and amortization $ 663 $ 594 $ 2,008 $ 1,675
Capital expenditures 515 536 1,548 1,572

(1) See footnote 1 above.

DIRECTV HOLDINGS LLC (DIRECTV U.S.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

Revenues $ 4,703 $ 4,324 $ 13,545 $ 12,569

Operating costs and expenses
Costs of revenues, exclusive of depreciation and amortization expense
Broadcast programming and other 1,998 1,841 5,668 5,216
Subscriber service expenses 338 296 946 839
Broadcast operations expenses 70 71 206 197
Selling, general and administrative expenses, exclusive of depreciation and amortization expense
Subscriber acquisition costs 621 565 1,871 1,602
Upgrade and retention costs 266 260 785 724
General and administrative expenses 231 231 659 656
Depreciation and amortization expense 568 528 1,750 1,493
Total operating costs and expenses 4,092 3,792 11,885 10,727

Operating profit 611 532 1,660 1,842

Interest income 1 9 4 31
Interest expense (85 ) (94 ) (254 ) (222 )
Other, net (19 ) 1 (13 ) 2

Income before income taxes 508 448 1,397 1,653

Income tax expense (197 ) (182 ) (539 ) (653 )

Net income $ 311 $ 266 $ 858 $ 1,000

DIRECTV HOLDINGS LLC (DIRECTV U.S.)
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)
September 30, December 31,
ASSETS 2009 2008
Current assets
Cash and cash equivalents $ 2,381 $ 1,149
Accounts receivable, net of allowances of $46 and $32 1,304 1,308
Inventories 223 182
Deferred income taxes 12 46
Prepaid expenses and other 324 261

Total current assets 4,244 2,946
Satellites, net 1,891 1,980
Property and equipment, net 3,116 3,348
Goodwill 3,167 3,189
Intangible assets, net 623 871
Other assets 204 212

Total assets $ 13,245 $ 12,546

LIABILITIES AND OWNER`S EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 2,437 $ 2,582
Unearned subscriber revenues and deferred credits 454 316
Current portion of long-term debt 572 108

Total current liabilities 3,463 3,006
Long-term debt 6,591 5,725
Deferred income taxes 480 405
Other liabilities and deferred credits 671 763
Commitments and contingencies
Owner`s equity 2,040 2,647

Total liabilities and owner`s equity $ 13,245 $ 12,546

DIRECTV HOLDINGS LLC (DIRECTV U.S.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Nine Months Ended

September 30,
2009 2008
Cash Flows From Operating Activities
Net income $ 858 $ 1,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 1,750 1,493
Amortization of deferred revenues and deferred credits (38 ) (75 )
Share-based compensation expense 31 31
Deferred income taxes 182 36
Other 15 10
Change in other operating assets and liabilities:
Accounts receivable 53 139
Inventories (33 ) (35 )
Prepaid expenses and other (62 ) (17 )
Accounts payable and accrued liabilities (196 ) (431 )
Unearned subscriber revenue and deferred credits 134 121
Other, net (64 ) 58
Net cash provided by operating activities 2,630 2,330
Cash Flows From Investing Activities
Cash paid for property and equipment (336 ) (343 )
Cash paid for subscriber leased equipment - subscriber acquisitions (445 ) (432 )
Cash paid for subscriber leased equipment - upgrade and retention (321 ) (373 )
Cash paid for satellites (40 ) (92 )
Investment in companies, net of cash acquired (11 ) (97 )
Other - 4
Net cash used in investing activities (1,153 ) (1,333 )
Cash Flows From Financing Activities
Cash proceeds from debt issuance 1,990 2,490
Debt issuance costs (12 ) (19 )
Repayment of long-term debt (661 ) (35 )
Repayment of other long-term obligations (66 ) (79 )
Cash dividends to Parent (1,500 ) (2,600 )
Excess tax benefit from share-based compensation 4 7
Net cash used in financing activities (245 ) (236 )
Net increase in cash and cash equivalents 1,232 761
Cash and cash equivalents at beginning of the period 1,149 802
Cash and cash equivalents at end of the period $ 2,381 $ 1,563

Supplemental Cash Flow Information
Cash paid for interest $ 224 $ 175
Cash paid for income taxes 375 585

Non-GAAP Financial Measure Reconciliation Schedules
(Unaudited)

The DIRECTV Group
Reconciliation of Operating Profit Before Depreciation and Amortization to Operating Profit*
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(Dollars in Millions)
Operating Profit Before Depreciation and Amortization $ 1,348 $ 1,252 $ 3,819 $ 3,791
Subtract: Depreciation and amortization expense 663 594 2,008 1,675
Operating Profit $ 685 $ 658 $ 1,811 $ 2,116

*For a reconciliation of this non-GAAP financial measure for each of our segments, please see the Notes to the Consolidated Financial Statements which will be included in The DIRECTV Group`s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which is expected to be filed with the SEC in November 2009.

The DIRECTV Group
Reconciliation of Cash Flow Before Interest and Taxes2 and Free Cash Flow3 to
Net Cash Provided by Operating Activities
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(Dollars in Millions)
Cash Flow Before Interest and Taxes $ 862 $ 619 $ 2,210 $ 1,954
Adjustments:
Cash paid for interest (73 ) (77 ) (274 ) (201 )
Interest income 9 27 25 64
Income taxes paid (155 ) (237 ) (311 ) (568 )
Subtotal - Free Cash Flow 643 332 1,650 1,249
Add Cash Paid For:
Property and equipment 506 521 1,508 1,480
Satellites 9 15 40 92
Net Cash Provided by Operating Activities $ 1,158 $ 868 $ 3,198 $ 2,821

DIRECTV Latin America
Reconciliation of Cash Flow Before Interest and Taxes2 and Free Cash Flow3 to
Net Cash Provided by Operating Activities
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(Dollars in Millions)
Cash Flow Before Interest and Taxes $ 81 $ 50 $ 244 $ 218
Adjustments:
Cash paid for interest (16 ) (10 ) (48 ) (29 )
Interest income 7 7 19 18
Income taxes paid (34 ) (35 ) (97 ) (94 )
Subtotal - Free Cash Flow 38 12 118 113
Add Cash Paid For:
Property and equipment 158 110 405 322
Net Cash Provided by Operating Activities $ 196 $ 122 $ 523 $ 435

(2) and (3) - See footnotes of this earnings release above.

DIRECTV HOLDINGS LLC (DIRECTV U.S.)
Non-GAAP Financial Measure Reconciliation and SAC Calculation
(Unaudited)

Reconciliation of Pre-SAC Margin* to Operating Profit
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(Dollars in Millions)
Operating Profit $ 611 $ 532 $ 1,660 $ 1,842
Adjustments:
Subscriber acquisition costs (expensed) 621 565 1,871 1,602
Depreciation and amortization expense 568 528 1,750 1,493
Cash paid for subscriber leased equipment - upgrade and retention (95 ) (128 ) (321 ) (373 )
Pre-SAC margin* $ 1,705 $ 1,497 $ 4,960 $ 4,564
Pre-SAC margin as a percentage of revenue* 36.3 % 34.6 % 36.6 % 36.3 %

Reconciliation of Cash Flow Before Interest and Taxes2 and Free Cash Flow3 to
Net Cash Provided by Operating Activities
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(Dollars in Millions)
Cash Flow Before Interest and Taxes $ 843 $ 598 $ 2,083 $ 1,819
Adjustments:
Cash paid for interest (57 ) (68 ) (224 ) (175 )
Interest income 1 9 4 31
Income taxes paid (258 ) (178 ) (375 ) (585 )
Subtotal - Free Cash Flow 529 361 1,488 1,090
Add Cash Paid For:
Property and equipment 117 124 336 343
Subscriber leased equipment - subscriber acquisitions 136 151 445 432
Subscriber leased equipment - upgrade and retention 95 128 321 373
Satellites 9 15 40 92
Net Cash Provided by Operating Activities $ 886 $ 779 $ 2,630 $ 2,330

(2) and (3) - See footnotes of this earnings release above.

* Pre-SAC 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 for DIRECTV U.S. by adding amounts under the captions "Subscriber acquisition costs" and "Depreciation and amortization expense" to "Operating Profit" from the Consolidated Statements of Operations and subtracting "Cash paid for subscriber leased equipment - upgrade and retention" from the Consolidated Statements of Cash
Flows. This financial measure should be used in conjunction with GAAP financial measures and is not presented as an alternative measure of operating results, as determined in accordance with GAAP. The DIRECTV Group and DIRECTV U.S. management use Pre-SAC Margin to evaluate the profitability of DIRECTV U.S.` current subscriber base for the purpose of allocating resources to discretionary activities such as adding new subscribers, upgrading and retaining existing subscribers and for capital expenditures. To
compensate for the exclusion of "Subscriber acquisition costs," management also uses operating profit and operating profit before depreciation and amortization expense to measure profitability.

The DIRECTV Group and DIRECTV U.S. believe this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net income), to compare DIRECTV U.S.` operating performance to other communications, entertainment and media companies. The DIRECTV Group and DIRECTV U.S. believe that investors also use current and projected Pre-SAC Margin to determine the ability of DIRECTV U.S.` current and projected subscriber base to fund discretionary spending and to determine the financial
returns for subscriber additions.

SAC Calculation
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(Dollars in Millions, Except SAC Amounts)
Subscriber acquisition costs (expensed) $ 621 $ 565 $ 1,871 $ 1,602
Cash paid for subscriber leased equipment - subscriber acquisitions 136 151 445 432
Total acquisition costs $ 757 $ 716 $ 2,316 $ 2,034
Gross subscriber additions (000's) 1,086 1,002 3,309 2,860
Average subscriber acquisition costs-per subscriber (SAC) $ 697 $ 715 $ 700 $ 711

The DIRECTV Group, Inc.
Media Contact: Darris Gringeri, 212-205-0882
Investor Relations: 310-964-0808

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