DIRECTV 2005 Annual Report Download - page 12

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Reconciliation of DIRECTV U.S. Free Cash Flow
to “Net Cash Provided by Operating Activities.”
Twelve
Months
Dollars in Millions Ended
12/31/05
DIRECTV U.S.
Free Cash Flow $536
Plus: Cash paid for property & equipment 380
Plus: Cash paid for satellites 367
Net Cash Provided by Operating Activities $1,283
DIRECTV U.S. 2005 free cash flow, which is a financial measure that is not determined in
accordance with accounting principles generally accepted in the United States of America, or
GAAP, was calculated by deducting amounts under the captions “Cash paid for property and
equipment” and “Cash paid for satellites” from “Net Cash Provided by Operating Activities” from
the Consolidated Statements of Cash Flows found in the DIRECTV Holdings LLC Annual Report
on Form 10-K for the year ended December 31, 2005 filed with the SEC on March 10, 2006.
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. The DIRECTV Group and DIRECTV U.S. management use free cash
flow to evaluate the cash generated by DIRECTV U.S.’ 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 and for additional capital expenditures. The
DIRECTV Group and DIRECTV U.S. believe this measure is useful to investors, along with
other GAAP measures (such as cash flows from operating and investing activities), to compare
DIRECTV U.S.’ 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.