DIRECTV 2011 Annual Report Download - page 119

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
business segments. This metric is also used as a measure of performance for incentive
Selected information for our operating segments is reported as follows: compensation purposes and to measure income generated from operations that could be used to
fund capital expenditures, service debt or pay taxes. Depreciation and amortization expense
Sports primarily represents an allocation to current expense of the cost of historical capital expenditures
DIRECTV Networks, and for intangible assets resulting from prior business acquisitions. To compensate for the
DIRECTV Latin Eliminations exclusion of depreciation and amortization expense from operating profit, our management and
U.S. America and Other Total our Board of Directors separately measure and budget for capital expenditures and business
acquisitions.
(Dollars in millions)
2011 We believe this measure is useful to investors, along with GAAP measures (such as revenues,
External revenues ................. $21,864 $5,096 $ 266 $27,226 operating profit and net income), to compare our operating performance to other
Intersegment revenues .............. 8 — (8) — 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
Revenues ...................... $21,872 $5,096 $ 258 $27,226 estimate our current or prospective enterprise value and make investment decisions. This metric
Operating profit .................. $3,702 $ 916 $ 11 $ 4,629 provides investors with a means to compare operating results exclusive of depreciation and
Add: Depreciation and amortization expense . 1,587 747 15 2,349 amortization. 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
Operating profit before depreciation and of intangible assets, potential variations in expected useful lives when compared to other
amortization (1) ................ $5,289 $1,663 $ 26 $ 6,978 companies and periodic changes to estimated useful lives.
Segment assets ................... $11,796 $5,264 $1,363 $18,423
Capital expenditures ............... 1,736 1,428 6 3,170 The following represents a reconciliation of operating profit before
2010 depreciation and amortization to reported net income on the Consolidated
External revenues ................. $20,261 $3,597 $ 244 $24,102
Intersegment revenues .............. 7 — (7) — Statements of Operations:
Revenues ...................... $20,268 $3,597 $ 237 $24,102
Years Ended December 31,
Operating profit (loss) .............. $3,290 $ 623 $ (17) $ 3,896 2011 2010 2009
Add: Depreciation and amortization expense . 1,926 541 15 2,482
(Dollars in Millions)
Operating profit (loss) before depreciation and
amortization (1) ................ $5,216 $1,164 $ (2) $ 6,378 Operating profit before depreciation and
Segment assets ................... $11,400 $4,696 $1,813 $17,909 amortization ......................... $6,978 $ 6,378 $ 5,313
Capital expenditures ............... 1,557 857 2 2,416 Depreciation and amortization expense ......... (2,349) (2,482) (2,640)
2009
External revenues ................. $18,664 $2,878 $ 23 $21,565 Operating profit ........................ 4,629 3,896 2,673
Intersegment revenues .............. 7 — (7) —
Interest income ........................ 34 39 41
Revenues ...................... $18,671 $2,878 $ 16 $21,565
Interest expense ........................ (763) (557) (423)
Operating profit (loss) .............. $2,410 $ 331 $ (68) $ 2,673
Add: Depreciation and amortization expense . 2,275 366 (1) 2,640 Liberty transaction and related gains (charges) . . . . — 67 (491)
Operating profit (loss) before depreciation and Other, net ............................ 84 69 34
amortization (1) ................ $4,685 $ 697 $ (69) $ 5,313 Income before income taxes ................ 3,984 3,514 1,834
Segment assets ................... $12,408 $3,772 $2,080 $18,260 Income tax expense ...................... (1,348) (1,202) (827)
Capital expenditures ............... 1,485 584 2 2,071
Net income ........................... 2,636 2,312 1,007
(1) Operating profit (loss) before depreciation and amortization, which is a financial measure that is
not determined in accordance with GAAP can be calculated by adding amounts under the caption Less: Net income attributable to noncontrolling
‘‘Depreciation and amortization expense’’ to ‘‘Operating profit (loss).’’ This measure should be interests ............................ (27) (114) (65)
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 Board of Net income attributable to DIRECTV ......... $2,609 $ 2,198 $ 942
Directors use operating profit (loss) before depreciation and amortization to evaluate the operating
performance of our company and our business segments and to allocate resources and capital to
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