AT&T has filed paperwork with the Securities and Exchange Commission (SEC) to restate its June earnings report to reflect the impact of a $1.1 billion charge stemming from the revaluation of its Venezuelan DirecTV assets using a more accurate exchange rate.
In a Friday 8-K filing, AT&T concluded the Sistema Marginal de Divisas (SIMADI) exchange rate “was the most representative rate to use” for measuring the Venezuelan branch of its DirecTV business, marking a switch from the previously used Sistema Complementario de Administración de Divisas (SICAD) rate. The SIMADI measurement uses a rate of nearly 200 Venezuelan bolivars per U.S. dollar to value assets, while the SICAD uses a rate of around 12 Venezuelan bolivars per U.S. dollar.
“DIRECTV’s decision to change the exchange rate used to measure the Venezuelan subsidiary is due, in part, to the continued economic uncertainty and lack of liquidity in all three of the official currency exchange mechanisms in Venezuela, as well as the July 24, 2015 acquisition and change in management of DIRECTV and review by DIRECTV’s new independent accountant,” the company explained in the filing.
As AT&T previously warned, the jump to the new system means the company will take a $1.1 billion hit to the value of its DirecTV assets in the South American country. AT&T said the change will be reflected on a newly filed 10-Q quarterly report form for the fiscal quarter ended June 30, 2015.