DIRECTV 2010 Annual Report Download - page 66

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DIRECTV
Operating profit before depreciation and amortization. The following table Interest expense. The increase in interest expense to $423 million in 2009
presents our operating profit (loss) before depreciation and amortization by from $360 million in 2008 was due to an increase in the average debt balance
segment: compared to 2008, partially offset by decreased interest rates. We capitalized
$18 million of interest costs in both 2009 and 2008.
Change
Operating profit (loss) before depreciation and
amortization by segment: 2009 2008 $ % Liberty transaction and related gains (charges). In 2009 we incurred
(Dollars in Millions) $491 million in costs related to the Liberty Transaction, which is comprised of a
DIRECTV U.S. ...................... $4,685 $4,391 $294 6.7% $337 premium paid to LEI shareholders, $111 million in net losses for the partial
DIRECTV Latin America ................ 697 690 7 1.0% settlement and fair-value adjustments related to the equity collars and non-employee
Sports Networks, Eliminations and Other ...... (69) (66) (3) 4.5% stock options and stock appreciation rights and $43 million of charges for
transaction related costs.
Total operating profit before depreciation and
amortization ...................... $5,313 $5,015 $298 5.9% Other, net. The significant components of ‘‘Other, net’’ were as follows:
The increase in total operating profit before depreciation and amortization was 2009 2008 Change
due to higher gross profit from the increase in revenues, partially offset by higher (Dollars in Millions)
subscriber acquisition, upgrade and retention and general and administrative costs at Equity in earnings of unconsolidated subsidiaries ........ $51 $55 $ (4)
both DIRECTV U.S. and DIRECTV Latin America. Net foreign currency transaction gain ............... 62 — 62
Loss from impairment of investments ............... (45) — (45)
Operating profit. The following table presents our operating profit (loss) by Loss on early extinguishment of debt ............... (34) — (34)
segment: Net gain (loss) from sale of investments ............. — 1 (1)
Other .................................... — (1) 1
Change
Operating profit (loss) by segment: 2009 2008 $ % Total ................................... $34 $55 $(21)
(Dollars in Millions)
DIRECTV U.S. ..................... $2,410 $2,330 $ 80 3.4% In 2009, Other, net decreased due primarily to the recognition of a charge for
DIRECTV Latin America ............... 331 426 (95) (22.3)% the other than temporary impairment of investments, a loss on the early
Sports Networks, Eliminations and Other ..... (68) (61) (7) 11.5% extinguishment of our 8.375% senior notes and decreased earnings from our
unconsolidated subsidiaries, partially offset by a foreign currency transaction gain
Total operating profit ................ $2,673 $2,695 $(22) (0.8)% related to net U.S. dollar denominated liabilities held by Sky Brazil.
The decrease in our operating profit was primarily due to increased Income tax expense. The increase in the effective tax rate to 45% in 2009
depreciation and amortization from the DIRECTV U.S. and DIRECTV Latin from 35% in 2008 is primarily attributable to the non-recoverability of Liberty
America set-top receiver lease programs, more than offsetting our increase in Transaction related charges.
operating profit before depreciation and amortization.
Income from discontinued operations, net of taxes. During 2008, we recorded a
Interest income. The decrease in interest income to $41 million in 2009 from net $6 million adjustment as a result of the expiration of the statute of limitations
$81 million in 2008 was due to lower interest rates and lower average cash balances in the federal jurisdiction offset by the write-off of foreign incentive income tax
due mostly to the use of cash to fund our share repurchase program. benefits related to previously divested businesses.
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