DIRECTV 2010 Annual Report Download - page 117

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Sports calculated by adding amounts under the caption ‘‘Depreciation and
DIRECTV Networks, amortization expense’’ to ‘‘Operating profit (loss).’’ This measure should be
DIRECTV Latin Eliminations
U.S. America and Other Total used in conjunction with GAAP financial measures and is not presented as an
(Dollars in millions) alternative measure of operating results, as determined in accordance with
2009 GAAP. Our management and Board of Directors use operating profit (loss)
External revenues ................ $18,664 $2,878 $ 23 $21,565 before depreciation and amortization to evaluate the operating performance of
Intersegment revenues ............. 7 — (7) — our company and our business segments and to allocate resources and capital
to business segments. This metric is also used as a measure of performance for
Revenues ...................... $18,671 $2,878 $ 16 $21,565
incentive compensation purposes and to measure income generated from
Operating profit (loss) ............. $ 2,410 $ 331 $ (68) $ 2,673 operations that could be used to fund capital expenditures, service debt or pay
Add: Depreciation and amortization taxes. Depreciation and amortization expense primarily represents an allocation
expense ..................... 2,275 366 (1) 2,640 to current expense of the cost of historical capital expenditures and for
Operating profit (loss) before intangible assets resulting from prior business acquisitions. To compensate for
depreciation and amortization (1) .... $ 4,685 $ 697 $ (69) $ 5,313 the exclusion of depreciation and amortization expense from operating profit,
our management and our Board of Directors separately measure and budget
Segment assets .................. $12,408 $3,772 $2,080 $18,260 for capital expenditures and business acquisitions.
Capital expenditures .............. 1,485 584 2 2,071
We believe this measure is useful to investors, along with GAAP measures
2008 (such as revenues, operating profit and net income), to compare our operating
External revenues ................ $17,310 $2,383 $ — $19,693 performance to other communications, entertainment and media service
Intersegment revenues ............. — — — — providers. We believe that investors use current and projected operating profit
Revenues ...................... $17,310 $2,383 $ — $19,693 (loss) before depreciation and amortization and similar measures to estimate
our current or prospective enterprise value and make investment decisions.
Operating profit (loss) ............. $ 2,330 $ 426 $ (61) $ 2,695 This metric provides investors with a means to compare operating results
Add: Depreciation and amortization exclusive of depreciation and amortization. Our management believes this is
expense ..................... 2,061 264 (5) 2,320 useful given the significant variation in depreciation and amortization expense
Operating profit (loss) before that can result from the timing of capital expenditures, the capitalization of
depreciation and amortization (1) .... $ 4,391 $ 690 $ (66) $ 5,015 intangible assets, potential variations in expected useful lives when compared to
Segment assets .................. $12,546 $3,301 $ 692 $16,539 other companies and periodic changes to estimated useful lives.
Capital expenditures .............. 1,765 447 17 2,229
(1) Operating profit (loss) before depreciation and amortization, which is a
financial measure that is not determined in accordance with GAAP can be
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