Hughes Q2 DirecTV U.S. Sales Soar 16.2%

El Segundo, Calif.— Continued strong subscriber growth and higher average revenue per subscriber were the primary reasons for a 16.2 percent increase in second quarter sales at DirecTV U.S., the satellite TV service segment of Hughes Electronics' direct-to-home broadcast division.

DirecTV revenue for the second three months, ended June 30, hit $1.8 billion, up from $1.5 billion in the same period last year.

Second quarter operating profit, before depreciation and amortization, at DirecTV, more than doubled, to a record $324.8 million, compared with $156.6 million in the year-ago three months. The increase was due to the additional gross profit gained from DirecTV U.S.-augmented overall revenue, an improved mix of higher-margin revenue and favorable impact from continued cost control, said Hughes.

At the same time, parent Hughes moved into the black in the second quarter, recording net income of $21.6 million, compared with a net loss of $155.1 million in the same timeframe last year.

In past quarters, Hughes called its operating profit, before depreciation and amortization, number "earnings before interest, taxes, depreciation and amortization," or EBITDA, but the new terminology comes about because of guidance from the Securities and Exchange Commission.

Six-month revenue for DirecTV reached $3.5 billion, up from $3 billion in the first half of 2002. Operating profit in the first half, before depreciation and amortization, hit $555.2 million, compared with $250.3 million in the same timeframe the previous year.

The Hughes direct-to-home broadcast segment revenue in the second quarter climbed 9.4 percent, to $1.9 billion, from $1.8 billion in the year-ago period. The segment had operating profit, before depreciation and amortization, of $299.4 million in the second three months, compared with $60.5 million in the same quarter a year ago.

"The continued strong performance of our DirecTV U.S. business, drove Hughes' revenues and operating profit growth, before depreciation and amortization, in the quarter," said Jack A. Shaw, president/CEO.

DirecTV notched 181,000 net subscriber additions in the quarter and a $2.80 increase in average monthly revenue per subscriber, to nearly $61, said the company. Total subscribers as of June 30 were 9.9 million, an increase of 11 percent year-on-year.

Due to strong quarterly results, Hughes is increasing DirecTV full-year guidance. The company expects revenue of about $1.9 billion in the third quarter, and full-year revenue of about $7.5 billion, revised from $7.3 billion.

Operating profit, before depreciation and amortization, for DirecTV, is anticipated at between $225 million and $250 million in the third quarter. For the year, this should reach about $1 billion, revised upward from about $900 million. The company expects net subscriber additions of about 900,000 for 2003, revised from 800,000 to 850,000.

Consolidated Hughes revenue climbed 8.1 percent, hitting $2.4 billion in the second quarter, up from $2.2 billion year-on-year, while operating expenses fell 2.6 percent, to $2.2 billion.