DIRECTV 2011 Annual Report Download - page 64

DIRECTV
Operating profit before depreciation and amortization. The following table and amortization expense at DIRECTV U.S. due to the change in the estimated
presents our operating profit (loss) before depreciation and amortization by depreciable lives of HD set-top receivers at DIRECTV U.S., declining subscriber
segment: equipment capitalization and the end of the amortization of a subscriber related
intangible asset, partially offset by increased depreciation at DIRECTV Latin
Change
Operating profit (loss) before depreciation and America due to increased capitalization of subscriber equipment.
amortization by segment: 2011 2010 $ %
(Dollars in Millions) Interest income. Interest income was $34 million in 2011 and $39 million in
DIRECTV U.S. ..................... $5,289 $5,216 $ 73 1.4% 2010.
DIRECTV Latin America ............... 1,663 1,164 499 42.9% Interest expense. The increase in interest expense to $763 million in 2011
Sports Networks, Eliminations and Other .... 26 (2) 28 NM* from $557 million in 2010 was due to an increase in the average debt balances
Total operating profit before depreciation and compared to 2010, partially offset by a decrease in weighted average interest rates.
amortization .................... $6,978 $6,378 $600 9.4% We capitalized interest costs of $13 million in 2011 and $6 million in 2010.
Operating profit before depreciation and Liberty transaction and related gains (charges). In 2010, we recorded a
amortization margin ................. 25.6% 26.5% — — $67 million net gain from the settlement of the equity collars and debt assumed as
part of the Liberty Transaction.
* Percentage not meaningful.
Other, net. The significant components of ‘‘Other, net’’ were as follows:
Operating profit before depreciation and amortization increased in 2011
compared to 2010 primarily due to growth at our DIRECTV Latin America 2011 2010 Change
business. Operating profit before depreciation and amortization margin decreased in (Dollars in Millions)
2011 as compared to 2010 primarily due to higher programming costs at our Equity in earnings of unconsolidated subsidiaries ....... $109 $ 90 $ 19
DIRECTV U.S. business. Net foreign currency transaction (loss) gain ........... (50) 11 (61)
Fair-value adjustment loss on non-employee stock options . (4) (11) 7
Operating profit. The following table presents our operating profit (loss) by Loss on early extinguishment of debt ............... (25) (16) (9)
segment: Net gain from sale of investments ................. 63 6 57
Change Other ................................... (9) (11) 2
Operating profit (loss) by segment: 2011 2010 $ % Total .................................. $ 84 $69 $15
(Dollars in Millions)
DIRECTV U.S. ..................... $3,702 $3,290 $412 12.5% The increase in Other, net in 2011 as compared to 2010 is primarily due to
DIRECTV Latin America ............... 916 623 293 47.0% gains recognized on the sale of equity method investments and higher earnings in
Sports Networks, Eliminations and Other ..... 11 (17) 28 NM unconsolidated subsidiaries, partially offset by a net foreign currency transaction loss
Total operating profit ................. $4,629 $3,896 $733 18.8% for 2011 compared to a net foreign currency transaction gain in 2010, primarily
due to the depreciation of the Brazilian real compared to the U.S. dollar.
Operating profit margin ................ 17.0% 16.2% — —
Income tax expense. We recognized income tax expense of $1,348 million in
Operating profit and the operating profit margin increased from 2011 as 2011 and $1,202 million in 2010. The effective tax rate for 2011 was 33.8%
compared to 2010 as the lower operating profit before depreciation and compared to 34.2% for 2010. The lower effective tax rate was primarily attributable
amortization margin discussed above was more than offset by lower depreciation
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