Hughes Electronics Corporation reported Monday that second quarter 2002 revenues increased 11.3% to $2,209.7 million, compared with $1,985.1 million in the second quarter of 2001.
EBITDA(1) for the quarter increased 50.1% to $123.1 million compared with $82.0 million in the second quarter of last year. EBITDA margin(1) was 5.6% in the quarter compared with an EBITDA margin of 4.1% last year. The operating loss for the quarter was $138.5 million compared with an operating loss of $223.0 million in the second quarter of 2001.
“The improving financial performance at DirecTV U.S. continues to fuel HUGHES’ growth,” said Jack A. Shaw, HUGHES’ president and chief executive officer. “DirecTV U.S. had quarterly revenues of $1,549 million, which were 15% higher than last year, primarily due to subscriber growth during the last 12 months.”
Shaw added, “DirecTV U.S. was also the driving force behind our EBITDA growth. As a result of the strong revenue growth and lower subscriber acquisition costs, the DirecTV U.S. EBITDA of $148 million was nearly double last year’s second quarter result. In addition, excluding the losses from the World Cup soccer tournament at DirecTV Latin America, each of our business units showed improvement in EBITDA compared to last year.
“Although DirecTV U.S. net subscriber additions of 202,000 fell short of our target of 225,000 to 250,000 for the second quarter, we gained 53% more subscribers than in last year’s second quarter. Furthermore, because the operating performance of the business continues to improve, we are increasing DirecTV U.S.’ full year estimates for revenue and EBITDA, while maintaining our year-end subscriber guidance.”
In the second quarter of 2002, HUGHES reported an operating loss of $138.5 million compared with an operating loss of $223.0 million in 2001. This lower operating loss was due to higher EBITDA and the elimination of approximately $72 million of goodwill amortization expense in 2002 as a result of adopting the new Statement of Financial Accounting Standards Number 142 (SFAS 142) accounting rules for goodwill and intangible assets.
These changes were partially offset by higher depreciation expense in each of HUGHES’ operating segments, mostly at DirecTV U.S. due to the launch of two new satellites as well as additional infrastructure expenditures made during the last year.
HUGHES had a second quarter 2002 net loss of $155.1 million compared to a net loss of $156.5 million in the same period of 2001. The lower operating loss and a $37 million gain resulting from the favorable resolution of remaining contingencies associated with the exit from the DirecTV Japan business (recorded in Other, net), were mostly offset by increased net interest expense including an interest charge of $47 million for losses associated with the final settlement of a contractual dispute with General Electric Capital Corporation (GECC), and the discontinuation of the minority interest adjustment related to DirecTV Latin America.
