DIRECTV 2006 Annual Report Download - page 143

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Reconciliation of DIRECTV U.S. Cash Flow before Interest and Taxes to ‘‘Net Cash Provided
by Operating Activities.’’
DIRECTV Holdings LLC Twelve Months
Ended
December 31,
2006
(Dollars in
Millions)
Cash Flow before Interest and Taxes ........................................... $1,419.4
Adjustments:
Cash paid for interest ................................................... (215.1)
Interest income ........................................................ 68.7
Income taxes paid ...................................................... (728.0)
Subtotal—Free Cash Flow .................................................. 545.0
Add Cash Paid For:
Property and equipment .................................................. 503.6
Subscriber leased equipment—subscriber acquisitions .............................. 598.6
Subscriber leased equipment—upgrade and retention .............................. 472.9
Satellites ............................................................ 222.3
Net Cash Provided by Operating Activities ....................................... $2,342.4
DIRECTV U.S. 2006 cash flow before interest and taxes is a financial measure that is not determined in
accordance with accounting principles generally accepted in the United States of America, or GAAP. This measure
was calculated by deducting amounts under the captions ‘‘Cash paid for property and equipment’’, ‘‘Cash paid for
subscriber leased equipment—subscriber acquisitions’’, ‘‘Cash paid for subscriber leased equipment—upgrade and
retention’’, ‘‘Cash paid for satellites’’ and ‘‘Interest income’’ from and adding back ‘‘Income taxes paid’’ and ‘‘Cash
paid for interest’’ to ‘‘Net cash provided by operating activities’’ from the Consolidated Statements of Cash Flows
and the Consolidated Statements of Operations found in the DIRECTV Holdings LLC Annual Report on
Form 10-K for the year ended December 31, 2006 filed with the SEC on March 1, 2007. 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 cash flow before interest and taxes to evaluate the cash generated by DIRECTV
U.S.’ 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 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.’ 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 operating performance of the company.