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Hughes Q3 DirecTV Revenue Climbs 22%

10/17/2001 10:11:00 AM Eastern

El Segundo, Calif. - Satellite television entertainment provider Hughes Electronics said revenue in its DirecTV direct-to-home digital broadcast segment increased 21.8 percent in the third quarter, reaching $1.57 billion, up from the $1.29 billion recorded in the year-ago three months.

The direct-to-home broadcast segment had negative Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $74.2 million, compared with a negative EBITDA of $17.7 million in the third quarter of 2000.

In the United States, DirecTV reported third-quarter revenue of $1.36 billion, an increase of 18 percent from the $1.15 billion reported in last year's third quarter. Hughes said the increase was primarily due to continued subscriber growth.

DirecTV added 953,000 gross subscribers during the third quarter, and, after accounting for churn, 425,000 net subscribers in the three months.

In addition, DirecTV made a one-time downward adjustment of about 143,000 subscribers. This was designed to correct errors that accumulated over the past 18 months related to subscribers who discontinued service prior to this past June 30, but were counted as active subscribers in the DirecTV database.

As a result, DirecTV had 10.3 million subscribers as of Sept. 30, representing a 14 percent rise over the 9 million customers as of Sept. 30, 2000.

Increased marketing expenses pushed down EBITDA for DirecTV in the United States in the third quarter to $20 million, excluding a one-time $48 million charge primarily related to severance. This compares with EBITDA of $36 million in the third quarter in 2000. The company said a 10 percent company-wide workforce reduction in the United States is expected to result in a savings of over $110 million annually.

The DirecTV DSL service segment, created following Hughes' April 2001 acquisition of Telocity, enjoyed third-quarter revenue of $9 million, but recorded a negative EBITDA of $33 million. No comparative financial data is available for the third quarter of 2000.

As of Sept. 30, DirecTV DSL had about 73,000 U.S. residential broadband customers, compared with about 23,000 customers as of Sept. 30, 2000.

Looking ahead, Hughes said there was no change in its revenue guidance for U.S. DirecTV revenue for the full year 2001. This should come in between $5.5 billion and $5.6 billion. The EBITDA forecast for the year, however, has been reduced to $200 million to $250 million from $250 million to $300 million. Net subscriber additions have been boosted from an expected 1.1 million to a range of 1.2 million to 1.3 million.

There is no change in the full-year guidance for DirecTV DSL. EBITDA remains in a range of negative $100 million to a negative $120 million. The prediction for net subscriber additions has been lowered from 75,000 to 40,000 to 50,000.

Overall third-quarter revenue at Hughes rose 24.6 percent to $2.10 billion, up from $1.69 billion in the year-ago three months. EBITDA for the quarter was $76.5 million. Excluding a one-time charge of $65.3 million, EBITDA for the quarter was $141.8 million. This compares to an EBITDA of $107.9 million in the third quarter of 2000. The company reported an operating loss of $203.7 million in the third quarter, compared with $130.4 million in the year-ago three months.

For the nine months, Hughes revenue increased 14.4 percent to $5.98 billion, compared with $5.23 billion in the same nine months last year. EBITDA was $271.7 million for the nine months, compared with $440.2 million in the same period in 2000. The company said its operating loss for the nine months was $579.2 million, compared with $232.9 million in the same nine months last year.

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