DIRECTV 2005 Annual Report Download - page 47

THE DIRECTV GROUP, INC.
SUMMARY DATA—(continued)
Years Ended December 31,
2005 2004 2003
(Dollars in Millions)
Other Data:
Operating Profit (Loss) ............................................. $ 632.6 $(2,119.4) $ (137.5)
Add: Depreciation and amortization expense ............................... 853.2 838.0 754.9
Operating Profit (Loss) Before Depreciation and Amortization (1) ................. $1,485.8 $(1,281.4) $ 617.4
Operating Profit Before Depreciation and Amortization-Margin (1) ................. 11.3% N/A 6.6%
Capital expenditures (2) ............................................ $ 923.7 $ 1,023.1 $ 747.4
Cash flows from operating activities ..................................... 1,171.9 228.6 787.2
Cash flows from investing activities ..................................... (723.3) 886.8 (1,084.7)
Cash flows from financing activities ..................................... 945.3 (242.7) 1,767.1
Cash used in discontinued operations .................................... — — (429.5)
(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 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 (Loss) Before
Depreciation and Amortization by Revenues.
(2) Capital expenditures include cash paid and amounts accrued during the period for property, equipment and satellites.
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