Form 8-K DIRECTV For: Feb 19

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02.     Results of Operations and Financial Condition.

On February 19, 2015, DIRECTV issued a press release, which contained information regarding the fourth quarter 2014 consolidated results of DIRECTV. The press release did not include certain financial statements, related notes and certain other financial information that will be filed with the Securities and Exchange Commission as part of DIRECTV’s Annual Report on Form 10-K. A copy of the press release relating to such announcement, dated February 19, 2015, is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

4

Exhibit 99.1

DIRECTV Announces Fourth Quarter and Full Year 2014 Results

DIRECTV Fourth Quarter Revenue Growth of 4% Drives Full Year Revenues Up 5% to $33.3 billion.

• DIRECTV Latin America full year revenues increase 3% to $7.1 billion principally related to the addition of approximately 903,000 net new subscribers during the year.
• Full year DIRECTV U.S. revenue growth of 5% to $26.0 billion driven by ARPU growth of 4.7% and annual subscriber growth of 99,000.

DIRECTV Full Year 2014 Adjusted Diluted Earnings Per Share Increase 12% to $6.08.

• EPS growth driven by a 3% increase in consolidated adjusted operating profit before depreciation and amortization as well as $1.4 billion of share repurchases in 2014.

DIRECTV Full Year Free Cash Flow Increases 21% to $3.1 billion.

EL SEGUNDO, Calif.--(BUSINESS WIRE)--February 19, 2015--DIRECTV (NASDAQ: DTV) today reported that fourth quarter 2014 revenues increased 4% to $8.92 billion, operating profit before depreciation and amortization¹ (OPBDA) and operating profit decreased to $2.00 billion and $1.26 billion, respectively, and diluted earnings per share was unchanged at $1.53 compared to last year's fourth quarter.

“Our fourth quarter results, although marked by challenging macroeconomic conditions in Latin America and a conscious decision to reinvest in our U.S. business, capped off another strong year of operations for DIRECTV. In Latin America, despite the macroeconomic headwinds, our DIRECTV and Sky brands attracted over 1.4 million net new customers - surpassing the 19 million cumulative subscriber mark by year-end. More importantly, even excluding Venezuela, DTVLA improved cash flow by over $400 million and generated positive cash flow for the year - easily surpassing our internal plans for the business,” said Mike White, President and CEO of DIRECTV.

“And in the U.S., despite operating in a mature, hyper-competitive market with significant cost pressures, we were able to improve our OPBDA margins for the third consecutive year and surpass all of our 2014 plans for subscriber, revenue, OPBDA and cash flow growth, while also making significant headway on improving both the customer service and entertainment experience,” White added. “The focused performance of our two primary segments resulted in a 21% increase in our consolidated free cash flow, topping $3.1 billion for the year - and leaving us with $4.6 billion of cash on the balance sheet at year end.”

White finished, “2015 will bring additional challenges to our businesses, but given our solid continued operating momentum and the pending merger with AT&T, I am confident that we will continue to drive value for our shareholders for the foreseeable future.”

^†"Adjusted financial results" exclude the impact of the gains and charges outlined above associated with the remeasurement of the net monetary assets of the company's subsidiary in Venezuela. See footnote 4 for additional information.

Fourth Quarter Review

DIRECTV's fourth quarter revenues increased 4% to $8.92 billion principally due to strong ARPU growth at DIRECTV U.S.

Fourth quarter OPBDA and operating profit decreased to $2.00 billion and $1.26 billion, respectively, compared to the prior year period. OPBDA margin and operating profit margin declined to 22.4% and 14.1%, respectively, due to lower margins at DIRECTV Latin America (DTVLA), as well as a slight decline at DIRECTV U.S. The results of our Sports Networks, Eliminations and Other segment also impacted the comparison in the quarter with merger related costs of $33 million in 2014. This was offset by lower consulting costs in the fourth quarter 2014, as well as a pension settlement charge in the same period of 2013.

Fourth quarter net income attributable to DIRECTV decreased to $778 million primarily due to the lower operating profit and unfavorable comparisons in the "Other, net" line of the Consolidated Statements of Operations, partially offset by a decrease in income tax expense mostly due to lower earnings before taxes and a lower effective tax rate in the fourth quarter of 2014 related to the settlement and resolution of state income tax issues. "Other, net" was impacted by a $78 million decrease in equity earnings from Sky Mexico primarily related to Sky Mexico's recognition of certain one-time tax benefits in 2013, which was partially offset by a $39 million gain on interest rate swap contracts at DIRECTV. Diluted earnings per share was unchanged at $1.53 as the favorable impact of share repurchases made prior to the announcement of the pending transaction with AT&T offset the decline in net income.

Cash flow before interest and taxes² declined to $1.27 billion compared to the fourth quarter of 2013 primarily due to a reduction in cash generated from working capital, partially offset by lower capital expenditures. The decrease in cash generated from working capital was mostly due to the timing of customer receivables at DIRECTV U.S. and the timing of vendor payments at DTVLA, partially offset by $90 million in proceeds from the settlement of certain swap contracts at DIRECTV U.S. The lower capital expenditures were principally due to a reduction in cash paid for leased equipment at DIRECTV U.S. and DTVLA mostly due to declining set-top box costs, higher usage of refurbished set-top boxes at DIRECTV U.S. and the timing of set-top box purchases at DTVLA. Fourth quarter free cash flow³ decreased to $814 million due to the lower cash flow before interest and taxes, partially offset by lower tax payments due to the timing of such payments.

Also during the quarter, but not included in free cash flow, was a December 2014 debt issuance by DIRECTV U.S. of $1,200 million principal amount of 3.950% senior notes due in 2025.

Full Year Review

DIRECTV's full year 2014 revenues increased 5% to $33.26 billion principally due to higher ARPU at DIRECTV U.S., as well as subscriber growth over the last year at DTVLA.

DIRECTV's adjusted OPBDA increased 3% to $8.42 billion and adjusted operating profit increased 3% to $5.47 billion in 2014. Adjusted OPBDA margin and adjusted operating profit margin declined to 25.3% and 16.5%, respectively, as higher margin at DIRECTV U.S. was more than offset by a decline in margin at DTVLA primarily due to costs associated with the FIFA World Cup in 2014 and the ECAD settlement in 2013 discussed below. The results of our Sports Networks, Eliminations and Other segment also impacted the annual comparison with merger related costs of $72 million in 2014. This was offset by lower consulting costs in 2014, as well as a pension settlement charge in 2013. Reported OPBDA increased 1% to $8.07 billion and reported operating profit declined slightly to $5.13 billion.

In September 2013, DTVLA settled a fee dispute and paid $92 million to Escritório Central de Arrecadação e Distribuição, or ECAD, the organization responsible for collecting performance rights fees under Brazilian law. The settlement resulted in a pre-tax gain for the reversal of amounts previously expensed of $128 million. The gain is comprised of a reduction in "Broadcast Programming and Other" of $70 million, a reduction in "Interest Expense" of $37 million and $21 million in "Other, net" in the Consolidated Statements of Operations.

Adjusted net income attributable to DIRECTV increased 4% to $3.10 billion in 2014 primarily due to the higher adjusted operating profit and favorable comparisons in the "Other, net" line of the Consolidated Statements of Operations, partially offset by an increase in interest expense principally related to higher average debt balances and an increase in income tax expense mostly due to higher adjusted earnings before taxes. "Other, net" was impacted by a $39 million gain on interest rate swap contracts, a $30 million improvement in foreign currency translation at Sky Brasil and a $59 million non-cash pre-tax charge in 2013 due to the deconsolidation of DIRECTV Sports Network (DSN) Northwest. Also impacting the comparison was the favorable ECAD settlement in the prior year and a $76 million decrease in equity earnings from Sky Mexico primarily related to Sky Mexico's recognition of certain one-time tax benefits in 2013. Adjusted diluted earnings per share increased 12% to $6.08 due to the higher adjusted net income and the favorable impact of share repurchases made prior to the announcement of the pending transaction with AT&T. Reported net income attributable to DIRECTV decreased to $2.76 billion, while reported diluted earnings per share improved 4% to $5.40 compared to the prior year.

In 2014, cash flow before interest and taxes increased 13% to $5.48 billion primarily due to higher adjusted OPBDA, as well as a reduction in cash paid for leased equipment at DIRECTV U.S. and DTVLA mostly due to declining set-top box costs, higher usage of refurbished set-top boxes at DIRECTV U.S. and lower post-paid gross additions, stricter upgrade policies and the timing of set-top-box purchases at DTVLA. Also impacting the comparison were $104 million in proceeds from the settlement of certain swap contracts at DIRECTV U.S. and a $92 million payment in 2013 to settle the ECAD dispute. Free cash flow grew 21% to $3.14 billion, as the higher cash flow before interest and taxes was partially offset by increased net interest payments principally related to the higher average debt balances and increased cash tax payments primarily related to higher adjusted earnings before taxes.

Also during 2014, but not included in free cash flow, were a March 2014 debt issuance by DIRECTV U.S. of $1,250 million principal amount of 4.45% senior notes due in 2024, an April 2014 debt redemption by DIRECTV U.S. of $1,000 million principal amount of 4.750% senior notes due in 2014, a December 2014 debt issuance by DIRECTV U.S. of $1,200 million principal amount of 3.950% senior notes due in 2025, cash paid for share repurchases of $1.39 billion, as well as a $383 million reduction in DIRECTV’s cash balance resulting from the devaluation of the Venezuelan bolivar denominated cash balances in 2014.

SEGMENT FINANCIAL REVIEW

Fourth Quarter Review

In the fourth quarter, DIRECTV U.S. revenues increased 5% to $7.14 billion compared with the fourth quarter of 2013 primarily due to strong ARPU growth along with a larger subscriber base. ARPU increased 5.0% to $117.30 mostly due to price increases on programming packages, higher advanced receiver service fees, higher ad sales, increased commercial business revenues and higher set-top box lease fees. These improvements were partially offset by increased promotional offers to existing customers and lower revenues from pay-per-view events. DIRECTV U.S. ended the year with 20.35 million subscribers.

DIRECTV U.S. net subscriber additions of approximately 149,000 increased compared to the prior year period principally due to higher gross subscriber additions and a four basis point improvement in the average monthly churn rate. The increase in gross additions was mainly associated with a successful new ad campaign, enhanced promotions, wider distribution in the consumer electronics channel and competitor programming disputes. The decrease in the monthly churn rate was primarily due to lower voluntary churn from improved retention practices, as well as more successful winback offers.

Fourth quarter OPBDA decreased slightly to $1.51 billion and OPBDA margin declined to 21.1% as higher revenues were offset by increased programming costs mostly related to programming supplier rate increases and higher subscriber acquisition costs. The higher subscriber acquisition costs were principally associated with an increase in promotional offers targeted at higher quality subscribers and a higher mix of sales from the consumer electronics channel, as well as increased usage of refurbished set-top boxes. The decline in margin was partially offset by lower upgrade and retention expenses mostly related to reduced equipment costs, as well as lower general and administrative expenses primarily related to a pension settlement charge in the fourth quarter of 2013. Operating profit decreased to $1.07 billion and operating profit margin declined to 15.1% in the fourth quarter mostly due to the decline in OPBDA margin.

Full Year Review

In 2014, DIRECTV U.S. revenues increased 5% to $26.00 billion compared to 2013 due to strong ARPU growth along with a larger subscriber base. ARPU increased 4.7% to $106.94 mostly due to price increases on programming packages, higher advanced receiver service fees, higher fees for an enhanced warranty program, higher ad sales and increased commercial business revenues. These improvements were partially offset by increased promotional offers to new and existing customers.

DIRECTV U.S. net subscriber additions of approximately 99,000 in 2014 decreased from the prior year as slightly higher gross additions were offset by a two basis point increase in the average monthly churn rate. The higher churn rate was primarily driven by a more competitive environment.

In 2014, OPBDA increased 6% to $6.47 billion and OPBDA margin improved from 24.7% to 24.9% principally due to higher revenues combined with lower upgrade and retention expenses mostly related to reduced equipment costs, as well as relatively unchanged general and administrative expenses. These margin improvements were partially offset by higher programming costs primarily related to programming supplier rate increases, as well as higher subscriber acquisition costs. The higher subscriber acquisition costs were principally associated with an increase in promotional offers targeted at higher quality subscribers and increased usage of refurbished set-top boxes. Operating profit increased 7% to $4.75 billion in 2014 and operating profit margin increased from 18.0% to 18.3% mostly due to the improvement in OPBDA margin.

^†"Adjusted financial results" exclude the impact of the gains and charges outlined above associated with the remeasurement of the net monetary assets of the company's subsidiary in Venezuela. See footnote 4 for additional information.

DIRECTV Latin America owns approximately 93% of Sky Brasil, 41% of Sky Mexico and 100% of PanAmericana, which covers most of the remaining countries in the region. Sky Mexico's results are accounted for as an equity method investment and therefore are not consolidated by DTVLA.

Fourth Quarter Review

Excluding changes in foreign exchange rates, Sky Brasil's fourth quarter revenues grew 7% versus the prior year period driven by a 6% increase in the average number of subscribers and a 1% increase in local currency ARPU. When factoring in changes in foreign exchange rates, Sky Brasil's revenues decreased to $923 million and ARPU declined 9.8% to $54.52 compared to the fourth quarter of 2013.

Subscriber net losses of approximately 1,000 in the fourth quarter of 2014 compared to subscriber net additions of approximately 116,000 in the prior year period. The change was primarily due to a higher average monthly churn rate driven by a higher mix of subscribers taking prepaid services, the migration of key systems that impacted existing subscribers and challenging macroeconomic conditions, as well as slightly lower gross additions also associated with the macroeconomic conditions.

Sky Brasil OPBDA decreased to $268 million in the fourth quarter of 2014 and OPBDA margin declined to 29.0%.The decline in OPBDA margin was principally due to increased expenses related to the migration of key systems and the rollout of a new broadband service, as well as higher subscriber acquisition costs mostly driven by higher advertising expenses. Fourth quarter operating profit decreased to $108 million and operating profit margin declined to 11.7%, as the decline in OPBDA margin was slightly offset by the impact of lower depreciation expense resulting from changes in foreign exchange rates.

Full Year Review

Excluding changes in foreign exchange rates, Sky Brasil's full year revenues grew 13% versus the prior year period driven by a 6% increase in the average number of subscribers and a 6% increase in local currency ARPU. The increase in local currency ARPU was principally due to a reduction in credits to existing subscribers, as well as growth in advanced services. When factoring in changes in foreign exchange rates, Sky Brasil's revenues increased 4% to $3.89 billion compared to 2013, while ARPU declined 2.7% to $58.35.

Subscriber net additions of approximately 272,000 declined compared to 2013, as improved gross additions were more than offset by the impact of higher disconnections associated with the larger subscriber base, as well as a slight increase in the total average monthly churn rate. The higher gross additions were primarily driven by demand related to the FIFA World Cup. The increase in the total churn rate was principally related to the introduction of a prepaid service in the fourth quarter of 2013, a reduction in credits to existing customers and challenging macroeconomic conditions, as well as the migration of key systems that impacted existing subscribers.

Excluding the impact of the favorable ECAD settlement in the third quarter of 2013, Sky Brasil’s full year OPBDA decreased slightly to $1.18 billion and OPBDA margin declined from 31.5% to 30.2%. The decline in OPBDA margin was principally due to increased expenses related to the rollout of the new broadband service and the migration of key systems. Also excluding the impact of the favorable ECAD settlement, operating profit increased 6% to $488 million and operating profit margin increased from 12.2% to 12.6%. Operating profit margin improved as the decline in OPBDA margin was more than offset by the impact of lower depreciation expense resulting from changes in foreign exchange rates.

* Percentage not meaningful

^†"Adjusted financial results" exclude the impact of the gains and charges outlined above associated with the remeasurement of the net monetary assets of the company's subsidiary in Venezuela. See footnote 4 for additional information.

Fourth Quarter Review

Excluding changes in foreign exchange rates, fourth quarter revenues in the PanAmericana and Other segment grew 42% versus the prior year period driven by a 10% increase in the average number of subscribers and a 29% increase in local currency ARPU. The increase in local currency ARPU was principally due to price increases and growth in advanced services, partially offset by the higher penetration of lower ARPU mass market subscribers. When factoring in unfavorable changes in foreign exchange rates, most notably in Argentina and Venezuela, revenues increased slightly to $808 million compared to the fourth quarter of 2013, while ARPU decreased 9.1% to $39.78.

Subscriber net additions of approximately 119,000 increased slightly compared to the fourth quarter of 2013 due to slightly higher gross additions and a lower average monthly total churn rate driven by an improvement in prepaid reconnection rates.

Fourth quarter OPBDA in the PanAmericana and Other segment increased 3% to $231 million and OPBDA margin improved to 28.6% from 27.8% in the prior year period. The increase in OPBDA margin was primarily due to a decrease in subscriber acquisition costs principally driven by lower advertising expenses. This margin improvement was partially offset by the ongoing impact of the decline in value of the Venezuelan bolivar, as well as inflation and the timing of price increases in Venezuela. Operating profit decreased to $81 million and operating profit margin declined to 10.0% as the higher OPBDA margin was more than offset by the impact of higher depreciation and amortization resulting from leased equipment and infrastructure capital expenditures made over the last year.

Full Year Review

Excluding changes in foreign exchange rates, full year revenues in the PanAmericana and Other segment grew 40% versus the prior year period driven by a 13% increase in the average number of subscribers and a 24% increase in local currency ARPU. The increase in local currency ARPU was principally due to price increases and growth in advanced services, partially offset by the higher penetration of lower ARPU mass market subscribers. When factoring in unfavorable changes in foreign exchange rates, most notably in Argentina and Venezuela, revenues increased 3% to $3.17 billion compared to 2013, while ARPU decreased 9.4% to $40.03.

Subscriber net additions of approximately 631,000 decreased compared to 2013 due to higher disconnections associated with the larger subscriber base, lower gross additions and a slight increase in the total average monthly churn rate. The decline in gross additions was primarily related to tighter sales filters instituted due to challenging macroeconomic conditions. The total churn rate was negatively impacted by a higher mix of subscribers taking prepaid services.

Adjusted OPBDA in the PanAmericana and Other segment decreased to $820 million in 2014 and adjusted OPBDA margin declined to 25.8%. The decline in adjusted OPBDA margin was primarily driven by the ongoing impact of the decline in value of the Venezuelan bolivar and higher programming costs associated with special events, including the FIFA World Cup. OPBDA margin was also negatively impacted by inflation and the timing of price increases in Venezuela. Adjusted operating profit decreased to $300 million and adjusted operating profit margin declined to 9.5% mainly due to the lower OPBDA margin, as well as the impact of higher depreciation and amortization resulting from leased equipment and infrastructure capital expenditures made over the last year. Reported OPBDA decreased to $474 million and reported operating loss was $46 million in 2014.

CONFERENCE CALL INFORMATION

A live webcast of DIRECTV's fourth quarter 2014 earnings call will be available on the company's website at investor.directv.com. The webcast will begin at 2:00 p.m. ET, today February 19, 2015. Access to the earnings call is also available in the United States by dialing (800) 533-9703 and internationally by dialing (785) 830-1926. The conference ID number is 3390787. A replay of the call will also be archived on our website at investor.directv.com.

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 DIRECTV's Annual Report on Form 10-K for the year ended December 31, 2014, which is expected to be filed in February 2015, 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. DIRECTV management uses 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. We 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. DIRECTV management uses 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. We 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) In February 2013, the Venezuelan government announced a devaluation of the bolivar from the official exchange rate of 4.3 bolivars per U.S. dollar to an official rate of 6.3 bolivars per U.S. dollar. As a result of the devaluation, we recorded a pre-tax charge of $166 million ($136 million after tax) in the first quarter of 2013 related to the remeasurement of the bolivar denominated net monetary assets of our Venezuelan subsidiary as of the date of the devaluation. This charge is listed as "Venezuelan currency devaluation charge" in the Consolidated Statements of Operations.

In the first quarter of 2013, the Venezuelan government announced an additional currency exchange system, the Sistema Complementario de Administración de Divisas, or SICAD 1, intended to function as an auction system for participants to exchange bolivars for U.S. dollars. Effective January 24, 2014, the Venezuelan government announced that dividends and royalties would be subject to the SICAD 1 program. We believe the SICAD 1 rate is the most representative rate to use for remeasurement, as the official rate of 6.3 bolivars per U.S. dollar will likely be reserved only for the settlement of U.S. dollar denominated obligations related to purchases of “essential goods and services,” and the equity of our Venezuelan subsidiary would be realized, if at all, through permitted dividends paid at the SICAD 1 rate. Therefore, as of March 31, 2014, we are remeasuring our Venezuelan subsidiary’s financial statements in U.S. dollars using the exchange rate determined by periodic auctions under SICAD 1, which was 10.7 bolivars per U.S. dollar at that date. Until that date, we used the official exchange rate of 6.3 bolivars per U.S. dollar. As a result of the remeasurement, we recorded a pre-tax (and after-tax) charge of $281 million in the first quarter of 2014 related to the remeasurement of the bolivar denominated net monetary assets of our Venezuelan subsidiary. This charge is listed as "Venezuelan currency devaluation charge" in the Consolidated Statements of Operations. Beginning in the second quarter of 2014, we are remeasuring the results of the Venezuelan subsidiary at the weighted-average rate of SICAD 1 auctions during the reporting period, and remeasuring the net monetary asset balance at the period-end rate based on the latest auction. The period-end rates based on the latest auctions was 10.6 as of June 30, 2014 and 12.0 bolivars per U.S. dollar as of both September 30, 2014 and December 31, 2014.

(5) Based on the results of an internal investigation, DTVLA determined that, beginning in 2012, certain employees of Sky Brasil directed activities which were inconsistent with Sky Brasil's authorized policies for subscriber retention and churn management. These activities had the effect of artificially reducing churn and increasing the Sky Brasil subscriber base during portions of 2012 and the first quarter of 2013. See DIRECTV's Current Report on Form 8-K filed with the SEC on June 27, 2013 for further details. Prior year results for subscribers, churn and ARPU have not been adjusted for the findings of this investigation.

(6) DIRECTV Latin America subscriber data exclude subscribers of the Sky Mexico service. In addition, DTVLA gross and net additions exclude 1,000 video subscribers acquired in the full year of 2013.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

NOTE: This presentation 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 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,” “project,” "strive" 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: increased competition; increasing programming costs and our ability to renew programming contracts under favorable terms; increased subscriber churn or subscriber upgrade and retention costs; potential material increase in subscriber acquisition costs; general economic conditions; risks associated with doing business internationally, which for DIRECTV Latin America include political and economic instability and foreign currency exchange rate volatility and controls; pace of technological development; potential intellectual property infringement; loss of key personnel; satellite construction or launch delays; satellite launch and operational risks; loss of a satellite; theft of satellite programming signals; U.S. and foreign governmental and regulatory action; ability to maintain licenses and regulatory approvals; significant debt; indemnification obligations; reliance on network and information systems; and the outcome of legal proceedings. We may face other risks described from time to time in periodic reports filed by us with the U.S. Securities and Exchange Commission.

DIRECTV (NASDAQ: DTV) is one of the world's leading providers of digital television entertainment services. Through its subsidiaries and affiliated companies in the United States, Brazil, Mexico and other countries in Latin America, DIRECTV provides digital television service to over 20 million customers in the United States and over 19 million customers in Latin America. DIRECTV sports and entertainment properties include ownership interests and management of four Regional Sports Networks: ROOT SPORTS Rocky Mountain, Pittsburgh, Southwest and Northwest; and has minority ownership interests in Game Show Network. For more information on DIRECTV, visit directv.com.

DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation Schedules
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DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation Schedules
(Dollars in Millions, Except Per Share Amounts)
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DIRECTV Consolidated Non-GAAP Financial Measure Reconciliation Schedules
(Dollars in Millions, Except Per Share Amounts)
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DIRECTV Latin America Non-GAAP Financial Measure Reconciliation Schedules
(Dollars in Millions)
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DIRECTV Latin America Non-GAAP Financial Measure Reconciliation Schedules
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Sky Brasil Segment Non-GAAP Financial Measure Reconciliation Schedules
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PanAmericana and Other Segment Non-GAAP Financial Measure Reconciliation Schedules
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DIRECTV U.S. Non-GAAP Financial Measure Reconciliation Schedules
(Dollars in Millions, Except Per Subscriber Amounts)
(Unaudited)

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