DIRECTV 2012 Annual Report Download - page 117

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
financial measures and is not presented as an alternative measure of operating results, as determined in The following represents a reconciliation of operating profit before
accordance with GAAP. Our management and Board of Directors use operating profit (loss) before depreciation depreciation and amortization to reported net income on the Consolidated
and amortization to evaluate the operating performance of 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 Statements of Operations:
incentive 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 primarily represents an Years Ended December 31,
allocation to current expense of the cost of historical capital expenditures and for intangible assets resulting from 2012 2011 2010
prior business acquisitions. To compensate for the exclusion of depreciation and amortization expense from
(Dollars in Millions)
operating profit, our management and our Board of Directors separately measure and budget for capital
expenditures and business acquisitions. Operating profit before depreciation and
amortization ......................... $7,522 $ 6,978 $ 6,378
We believe this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and
net income), to compare our operating performance to other communications, entertainment and media service Depreciation and amortization expense ......... (2,437) (2,349) (2,482)
providers. We believe that investors use current and projected operating profit (loss) before depreciation and
amortization and similar measures to estimate our current or prospective enterprise value and make investment Operating profit ........................ 5,085 4,629 3,896
decisions. This metric provides investors with a means to compare operating results exclusive of depreciation and Interest income ........................ 59 34 39
amortization. Our management believes this is useful given the significant variation in depreciation and Interest expense ........................ (842) (763) (557)
amortization expense that can result from the timing of capital expenditures, the capitalization of intangible
assets, potential variations in expected useful lives when compared to other companies and periodic changes to Liberty transaction and related gain ...........——67
estimated useful lives. Other, net ............................ 140 84 69
Income before income taxes ................ 4,442 3,984 3,514
Income tax expense ...................... (1,465) (1,348) (1,202)
Net income ........................... 2,977 2,636 2,312
Less: Net income attributable to noncontrolling
interest ............................ (28) (27) (114)
Net income attributable to DIRECTV ......... $2,949 $ 2,609 $ 2,198
97