DIRECTV 2004 Annual Report Download - page 35

THE DIRECTV GROUP, INC.
SUMMARY DATA — (continued)
Years Ended December 31,
2004
2003
2002
(Dollars in Millions)
Other Data:
Operating Loss
$
(2,119.4
)
$
(137.5
)
$
(409.6
)
Add: Depreciation and amortization expense
838.0
754.9
676.7
Operating Profit (Loss) Before Depreciation and Amortization(1)
$
(1,281.4
)
$
617.4
$
267.1
Operating Profit Before Depreciation and Amortization Margin(1)
N/A
6.6
%
3.3
%
Capital expenditures
$
1,023.1
$
747.4
$
954.5
Cash flows from operating activities
228.6
787.2
711.9
Cash flows from investing activities
1,033.1
(739.9
)
1,066.2
Cash flows from financing activities
(211.2
)
1,767.1
(1,524.9
)
Cash used in discontinued operations
—
(429.5
)
(155.0
)
(1)
Operating Profit (Loss) 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, can be calculated by
adding amounts under the caption “Depreciation and amortization expense” to “Operating Profit (Loss).” This measure
should be used in conjunction with GAAP financial measures and is not presented as an alternative measure of operating
results, as determined in accordance with GAAP. Our management and our Board of Directors use Operating Profit (Loss)
Before Depreciation and Amortization to evaluate our operating performance and to allocate resources and capital to
business segments. This metric is also used as a measure of performance for incentive compensation purposes and to
measure income generated from operations that could be used to fund capital expenditures, service debt or pay taxes.
Depreciation and amortization expense primarily represents an allocation to current expense of the cost of historical capital
expenditures and for acquired intangible assets. To compensate for the exclusion of depreciation and amortization expense
from operating profit, our management and Board of Directors separately measure and budget for capital expenditures and
business acquisitions.
We believe this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net
income), to compare our operating performance to other communications, entertainment and media service providers. We
believe that investors use current and projected Operating Profit (Loss) Before Depreciation and Amortization and similar
measures to estimate our current or prospective enterprise value and make investment decisions. This metric provides
investors with a means to compare operating results exclusive of depreciation and amortization expense. Our management
believes this is useful given the significant variation in depreciation and amortization expense that can result from the
timing of capital expenditures, the capitalization of intangible assets, potential variations in expected useful lives when
compared to other companies and periodic changes to estimated useful lives.
Operating Profit Before Depreciation and Amortization Margin is calculated by dividing Operating Profit Before
Depreciation and Amortization by Revenues.
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