Dish Network 1999 Annual Report Download - page 28

26
Year Ended December 31,
1995 1996 1997 1998 1999
Other Data
DISH Network subscribers....................................... –350,000 1,040,000 1,940,000 3,410,000
Average monthly revenue per subscriber ................. $ – $ 35.50 $ 38.50 $ 39.25 $ 43.63
EBITDA(2) ............................................................... (4,913) (65,931) (50,995) (20,255) (172,953)
Less amortization of subscriber acquisition costs .... –(16,073) (121,735) (18,869) –
EBITDA, as adjusted to exclude amortization of
subscriber acquisition costs.................................. (4,913) (82,004) (172,730) (39,124) (172,953)
Net cash flows from:
Operating activities............................................... (20,328) (27,425) 43 (16,890) (58,513)
Investing activities................................................ (38,119) (287,642) (597,249) (8,048) (62,826)
Financing activities............................................... 62,695 332,544 703,182 (13,722) 920,091
(1) The earnings (loss) per share amounts prior to 1997 have been restated as required to comply with Statement of Financial Accounting Standards
(“FAS”) No. 128, “Earnings Per Share.” For further discussion of earnings (loss) per share and the impact of FAS No. 128, see Note 2 to our
Consolidated Financial Statements.
The loss per share amount in 1999 of $(3.84) includes $(2.55) per share relating to basic and diluted loss per share before extraordinary charges
and $(1.29) per share relating to the extraordinary charge for early retirement of debt, net of tax.
(2) We believe it is common practice in the telecommunications industry for investment bankers and others to use various multiples of current or
projected EBITDA (earnings before interest, taxes, depreciation and amortization) for purposes of estimating current or prospective enterprise
value and as one of many measures of operating performance. Conceptually, EBITDA measures the amount of income generated each period
that could be used to service debt, because EBITDA is independent of the actual leverage employed by the business; but EBITDA ignores funds
needed for capital expenditures and expansion. Some investment analysts track the relationship of EBITDA to total debt as one measure of
financial strength. However, EBITDA does not purport to represent cash provided or used by operating activities and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles.
EBITDA differs significantly from cash flows from operating activities reflected in the consolidated statement of cash flows. Cash from
operating activities is net of interest and taxes paid and is a more comprehensive determination of periodic income on a cash (vs. accrual) basis,
exclusive of non-cash items of income and expenses such as depreciation and amortization. In contrast, EBITDA is derived from accrual basis
income and is not reduced for cash invested in working capital. Consequently, EBITDA is not affected by the timing of receivable collections or
when accrued expenses are paid. We are not aware of any uniform standards for determining EBITDA and believe presentations of EBITDA
may not be calculated consistently by different entities in the same or similar businesses. EBITDA is shown before and after amortization of
subscriber acquisition costs, which were deferred through September 1997 and amortized over one year. EBITDA for 1999 also excludes
approximately $61 million in non-cash, stock-based compensation expense resulting from significant post-grant appreciation of stock options
granted to employees.