Condensed Consolidating Financial Statements

6 Months Ended

Jun. 30, 2011

Condensed Consolidating Financial Statements

Condensed Consolidating Financial Statements

Note 7: Condensed Consolidating Financial Statements

The following presents the condensed consolidating statements of operations for the three and six months ended June 30, 2011 and June 30, 2010, the condensed consolidating balance sheets as of June 30, 2011 and December 31, 2010, and the condensed consolidating statements of cash flows for the six months ended June 30, 2011 and 2010 of DIRECTV Holdings together with DIRECTV Financing, or the Co-Issuers, and each of DIRECTV Holdings' material subsidiaries (other than DIRECTV Financing), or the Guarantor Subsidiaries, and the eliminations necessary to present DIRECTV Holdings' financial statements on a consolidated basis. These condensed consolidating financial statements should be read in conjunction with the accompanying consolidated financial statements of DIRECTV Holdings.

Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2011

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Revenues			$	183		$	5,277		$	(183	)	$	5,277
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		—			2,207			—			2,207
		Subscriber service expenses		—			355			—			355
		Broadcast operations expenses		—			75			—			75
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		—			626			—			626
		Upgrade and retention costs		—			298			—			298
		General and administrative expenses		—			453			(183	)		270
	Depreciation and amortization expense			—			430			—			430

		Total operating costs and expenses		—			4,444			(183	)		4,261

Operating profit				183			833			—			1,016
Equity in income of consolidated subsidiaries				547			—			(547	)		—
Interest income				—			1			—			1
Interest expense				(185	)		(1	)		—			(186	)
Other, net				(14	)		43			—			29

Income before income taxes				531			876			(547	)		860
Income tax benefit (expense)				6			(329	)		—			(323	)

Net income			$	537		$	547		$	(547	)	$	537

Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2010

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Revenues			$	110		$	4,934		$	(110	)	$	4,934
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		—			2,019			—			2,019
		Subscriber service expenses		—			325			—			325
		Broadcast operations expenses		—			66			—			66
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		—			610			—			610
		Upgrade and retention costs		—			259			—			259
		General and administrative expenses		—			371			(110	)		261
	Depreciation and amortization expense			—			495			—			495

		Total operating costs and expenses		—			4,145			(110	)		4,035

Operating profit				110			789			—			899
Equity in income of consolidated subsidiaries				484			—			(484	)		—
Interest income				1			—			—			1
Interest expense				(114	)		(2	)		—			(116	)
Other, net				—			5			—			5

Income before income taxes				481			792			(484	)		789
Income tax benefit (expense)				1			(308	)		—			(307	)

Net income			$	482		$	484		$	(484	)	$	482

Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2011

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Revenues			$	327		$	10,422		$	(327	)	$	10,422
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		—			4,407			—			4,407
		Subscriber service expenses		—			706			—			706
		Broadcast operations expenses		—			149			—			149
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		—			1,308			—			1,308
		Upgrade and retention costs		—			557			—			557
		General and administrative expenses		—			813			(327	)		486
	Depreciation and amortization expense			—			872			—			872

		Total operating costs and expenses		—			8,812			(327	)		8,485

Operating profit				327			1,610			—			1,937
Equity in income of consolidated subsidiaries				1,031			—			(1,031	)		—
Interest income				—			1			—			1
Interest expense				(340	)		(2	)		—			(342	)
Other, net				(24	)		48			(1	)		23

Income before income taxes				994			1,657			(1,032	)		1,619
Income tax benefit (expense)				14			(625	)		—			(611	)

Net income			$	1,008		$	1,032		$	(1,032	)	$	1,008

Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2010

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Revenues			$	201		$	9,706		$	(201	)	$	9,706
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		—			4,033			—			4,033
		Subscriber service expenses		—			648			—			648
		Broadcast operations expenses		—			135			—			135
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		—			1,205			—			1,205
		Upgrade and retention costs		—			509			—			509
		General and administrative expenses		—			677			(201	)		476
	Depreciation and amortization expense			—			993			—			993

		Total operating costs and expenses		—			8,200			(201	)		7,999

Operating profit				201			1,506			—			1,707
Equity in income of consolidated subsidiaries				925			—			(925	)		—
Interest income				1			3			—			4
Interest expense				(209	)		(4	)		—			(213	)
Other, net				(9	)		9			—			—

Income before income taxes				909			1,514			(925	)		1,498
Income tax benefit (expense)				6			(589	)		—			(583	)

Net income			$	915		$	925		$	(925	)	$	915

Condensed Consolidating Balance Sheet
As of June 30, 2011

			Co-Issuers			Guarantor Subsidiaries		Eliminations			DIRECTV Holdings Consolidated

			(Dollars in Millions)
ASSETS
Total current assets			$	1,371		$	2,171	$	(87	)	$	3,455
Satellites, net				—			1,737		—			1,737
Property and equipment, net				—			2,801		—			2,801
Goodwill				1,828			1,349		—			3,177
Intangible assets, net				—			466		—			466
Other assets				14,720			6,906		(21,374	)		252

Total assets			$	17,919		$	15,430	$	(21,461	)	$	11,888

LIABILITIES AND OWNER'S EQUITY (DEFICIT)
Total current liabilities			$	222		$	2,809	$	(88	)	$	2,943
Long-term debt				13,462			—		—			13,462
Deferred income taxes				—			1,252		(217	)		1,035
Other liabilities and deferred credits				10,036			249		(10,036	)		249
Owner's equity (deficit)
	Capital stock and additional paid-in capital			51			4,665		(4,665	)		51
	Retained earnings (accumulated deficit)			(5,852	)		6,455		(6,455	)		(5,852	)

		Total owner's equity (deficit)		(5,801	)		11,120		(11,120	)		(5,801	)

Total liabilities and owner's equity (deficit)			$	17,919		$	15,430	$	(21,461	)	$	11,888

Condensed Consolidating Balance Sheet
As of December 31, 2010

			Co-Issuers			Guarantor Subsidiaries		Eliminations			DIRECTV Holdings Consolidated

			(Dollars in Millions)
ASSETS
Total current assets			$	743		$	2,147	$	(54	)	$	2,836
Satellites, net				—			1,794		—			1,794
Property and equipment, net				—			2,832		—			2,832
Goodwill				1,828			1,348		—			3,176
Intangible assets, net				—			495		—			495
Other assets				13,032			6,069		(18,834	)		267

Total assets			$	15,603		$	14,685	$	(18,888	)	$	11,400

LIABILITIES AND OWNER'S EQUITY (DEFICIT)
Total current liabilities			$	160		$	3,247	$	(52	)	$	3,355
Long-term debt				10,472			—		—			10,472
Deferred income taxes				—			1,123		(217	)		906
Other liabilities and deferred credits				8,592			289		(8,593	)		288
Owner's equity (deficit)
	Capital stock and additional paid-in capital			7			4,602		(4,602	)		7
	Retained earnings (accumulated deficit)			(3,628	)		5,424		(5,424	)		(3,628	)

		Total owner's equity (deficit)		(3,621	)		10,026		(10,026	)		(3,621	)

Total liabilities and owner's equity (deficit)			$	15,603		$	14,685	$	(18,888	)	$	11,400

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2011

			Co-Issuers			Guarantor Subsidiaries			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Cash flows from operating activities
	Net cash provided by operating activities		$	897		$	753		$	1,650

Cash flows from investing activities
	Cash paid for property and equipment			—			(245	)		(245	)
	Cash paid for subscriber leased equipment—subscriber acquisition			—			(324	)		(324	)
	Cash paid for subscriber leased equipment—upgrade and retention			—			(145	)		(145	)
	Cash paid for satellites			—			(48	)		(48	)
	Investment in companies, net of cash acquired			—			(11	)		(11	)
	Other			—			55			55

		Net cash used in investing activities		—			(718	)		(718	)

Cash flows from financing activities
	Cash proceeds from debt issuance			3,990			—			3,990
	Debt issuance costs			(30	)		—			(30	)
	Repayment of long-term debt			(1,000	)		—			(1,000	)
	Repayment of other long-term obligations			—			(54	)		(54	)
	Cash dividend to Parent			(3,250	)		—			(3,250	)
	Excess tax benefit from share-based compensation			—			21			21

		Net cash used in financing activities		(290	)		(33	)		(323	)

Net increase in cash and cash equivalents				607			2			609
Cash and cash equivalents at beginning of the period				683			4			687

Cash and cash equivalents at the end of the period			$	1,290		$	6		$	1,296

DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

(Unaudited)

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2010

			Co-Issuers			Guarantor Subsidiaries			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Cash flows from operating activities
	Net cash provided by operating activities		$	1,214		$	727		$	1,941

Cash flows from investing activities
	Cash paid for property and equipment			—			(222	)		(222	)
	Cash paid for subscriber leased equipment—subscriber acquisition			—			(246	)		(246	)
	Cash paid for subscriber leased equipment—upgrade and retention			—			(152	)		(152	)
	Cash paid for satellites			—			(69	)		(69	)
	Investment in companies, net of cash acquired			—			(1	)		(1	)

		Net cash used in investing activities		—			(690	)		(690	)

Cash flows from financing activities
	Cash proceeds from debt issuance			2,996			—			2,996
	Debt issuance costs			(16	)		—			(16	)
	Repayment of long-term debt			(1,103	)		—			(1,103	)
	Repayment of other long-term obligations			—			(48	)		(48	)
	Cash dividend to Parent			(4,000	)		—			(4,000	)
	Excess tax benefit from share-based compensation			—			8			8

		Net cash used in financing activities		(2,123	)		(40	)		(2,163	)

Net decrease in cash and cash equivalents				(909	)		(3	)		(912	)
Cash and cash equivalents at beginning of the period				1,709			7			1,716

Cash and cash equivalents at the end of the period			$	800		$	4		$	804

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

+ References+ Details

DIRECTV FINANCING CO INC 10-Q