DIRECTV 2010 Annual Report Download - page 140

Operating profit before depreciation and amortization, which is a financial measure that is not
Non-GAAP Financial Measure Reconciliation Schedules
determined in accordance with accounting principles generally accepted in the United States of
(Unaudited) (Dollars in Millions)
America, or GAAP, should be used in conjunction with other GAAP financial measures and is not
2008 2009 2010 presented as an alternative measure of operating results, as determined in accordance with GAAP.
DIRECTV Consolidated Please see each of DIRECTV and DIRECTV Holdings LLC’s Annual Reports on Form 10-K for the
Operating Profit before Depreciation & Amortization ...... $5,015 $5,313 $ 6,378 year ended December 31, 2010 for further discussion of operating profit before depreciation and
Subtract: Depreciation and amortization expenses ......... 2,320 2,640 2,482 amortization. Operating profit before depreciation and amortization margin is calculated by dividing
Operating Profit ............................. $2,695 $2,673 $ 3,896 operating profit before depreciation and amortization by total revenues.
Cash flow before interest and taxes, which is a financial measure that is not determined in
2008 2009 2010
accordance with GAAP, is calculated by deducting amounts under the captions ‘‘Cash paid for
Cash Flow before Interest & Taxes .................. $2,640 $3,215 $ 3,916 property and equipment’’, ‘‘Cash paid for satellites’’, ‘‘Cash paid for subscriber leased equipment—
Adjustments: subscriber acquisitions’’ and ‘‘Cash paid for subscriber leased equipment—upgrade and retention’’
Cash Interest & Taxes ........................ (959) (855) (1,126) from ‘‘Net cash provided by operating activities’’ from the Consolidated Statements of Cash Flows
Subtotal—Free Cash Flow ....................... 1,681 2,360 2,790 and adding back net interest paid and ‘‘Cash paid for income taxes’’. This financial measure should be
Add Cash Paid For: used in conjunction with other GAAP financial measures and is not presented as an alternative
Property, Plant & Equipment .................... 2,229 2,071 2,416 measure of cash flows from operating activities, as determined in accordance with GAAP. DIRECTV
management use cash flow before interest and taxes to evaluate the cash generated by our current
Net Cash Provided by Operating Activities ............. $3,910 $4,431 $ 5,206 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
2008 2009 2010
DIRECTV U.S. existing subscribers, for additional capital expenditures and as a measure of performance for incentive
Operating Profit before Depreciation & Amortization ...... $4,391 $4,685 $ 5,216 compensation purposes. DIRECTV believe this measure is useful to investors, along with other
Subtract: Depreciation and amortization expenses ......... 2,061 2,275 1,926 GAAP measures (such as cash flows from operating and investing activities), to compare our
operating performance to other communications, entertainment and media companies. We believe
Operating Profit ............................. $2,330 $2,410 $ 3,290
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
2008 2009 2010
to help determine the financial value of the company.
Cash Flow before Interest & Taxes .................. $2,517 $3,072 $ 3,510
Adjustments: Free cash flow is a financial measure that is not determined in accordance with GAAP. Free
Cash Interest & Taxes ........................ (1,005) (866) (1,162) Cash Flow is calculated by deducting amounts under the captions ‘‘Cash paid for property and
equipment’’, ‘‘Cash paid for satellites’’, ‘‘Cash paid for subscriber leased equipment—subscriber
Subtotal—Free Cash Flow ....................... 1,512 2,206 2,348 acquisitions’’, and ‘‘Cash paid for subscriber leased equipment—upgrade and retention’’ from ‘‘Net
Add Cash Paid For: cash provided by operating activities’’ from the Consolidated Statements of Cash Flows. This
Property, Plant & Equipment .................... 1,765 1,485 1,557 financial measure should be used in conjunction with other GAAP financial measures and is not
Net Cash Provided by Operating Activities ............. $3,277 $3,691 $ 3,905 presented as an alternative measure of cash flows from operating activities, as determined in
accordance with GAAP. DIRECTV management use this measure to evaluate the cash generated by
2008 2009 2010
DIRECTV Latin America our current subscriber base, net of capital expenditures, for the purpose of allocating resources to
Operating Profit before Depreciation & Amortization ...... $ 690 $ 697 $1,164 activities such as adding new subscribers, retaining and upgrading existing subscribers, for additional
Subtract: Depreciation and amortization expenses ......... 264 366 541 capital expenditures and as a measure of performance for incentive compensation purposes.
DIRECTV believes this measure is useful to investors, along with other GAAP measures (such as cash
Operating Profit ............................. $ 426 $ 331 $ 623 flows from operating and investing activities), to compare our operating 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.