Dish Network 2009 Annual Report Download - page 62

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
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Tivo litigation expense. We recorded $361 million of “Tivo litigation expense” during the year ended December 31,
2009 for supplemental damages, contempt sanctions and interest. See Note 14 in the Notes to the Consolidated
Financial Statements in Item 15 of this Annual Report on Form 10-K for further discussion.
Depreciation and amortization. “Depreciation and amortization” expense totaled $940 million during the year ended
December 31, 2009, a $60 million or 6.0% decrease compared to the same period in 2008. The decrease in
“Depreciation and amortization” expense was primarily due to the declines in depreciation expense related to set-top
boxes used in our lease programs and the abandonment of a software development project during 2008 that was
designed to support our IT systems. The decrease related to set-top-boxes was primarily attributable to capitalization of
a higher mix of new advanced equipment in 2009 compared to the same period in 2008, which has a longer estimated
useful life. In addition, the satellite depreciation expense declined due to the retirements of certain satellites from
commercial service, almost entirely offset by depreciation expense associated with satellites placed in service in 2008.
Interest income. “Interest income” totaled $30 million during the year ended December 31, 2009, a decrease of $21
million or 41.4% compared to the same period in 2008. This decrease principally resulted from lower percentage
returns earned on our cash and marketable investment securities, partially offset by higher average cash and marketable
investment securities balances during the year ended December 31, 2009.
Interest expense, net of amounts capitalized. “Interest expense, net of amounts capitalized” totaled $388 million
during the year ended December 31, 2009, an increase of $19 million or 5.0% compared to the same period in 2008.
This change primarily resulted from an increase in interest expense related to the issuance of debt during 2009 and
2008 and the Ciel II capital lease, partially offset by a decrease in interest expense associated with 2008 debt
redemptions.
Other, net. “Other, net” expense totaled $16 million during the year ended December 31, 2009 compared to $169
million in 2008, a decrease of $153 million. This decrease primarily resulted from $178 million less in impairment
charges on marketable and other investment securities, partially offset by $33 million less in net gains on the sale and
exchanges of investments in 2009 compared to 2008.
Earnings before interest, taxes, depreciation and amortization. EBITDA was $2.311 billion during the year ended
December 31, 2009, a decrease of $576 million or 20.0% compared to the same period in 2008. EBITDA for the year
ended December 31, 2009 was negatively impacted by the $361 million “Tivo litigation expense.” The following
table reconciles EBITDA to the accompanying financial statements.
2009 2008
EBITDA.......................................................................................................... 2,311,398$ 2,887,697$
Less:
Interest expense, net ..................................................................................... 358,391 318,661
Income tax provision (benefit), net............................................................... 377,429 665,859
Depreciation and amortization...................................................................... 940,033 1,000,230
Net income (loss) attributable to DISH Network common shareholders........ 635,545$ 902,947$
For the Years Ended
December 31,
(In thousands)
EBITDA is not a measure determined in accordance with accounting principles generally accepted in the United
States, or GAAP, and should not be considered a substitute for operating income, net income or any other measure
determined in accordance with GAAP. EBITDA is used as a measurement of operating efficiency and overall
financial performance and we believe it to be a helpful measure for those evaluating companies in the pay-TV
industry. Conceptually, EBITDA measures the amount of income generated each period that could be used to
service debt, pay taxes and fund capital expenditures. EBITDA should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with GAAP.
Income tax (provision) benefit, net. Our income tax provision was $377 million during the year ended December
31, 2009, a decrease of $288 million compared to the same period in 2008. The decrease in the provision was
primarily related to the decrease in “Income (loss) before income taxes” and a decrease in our effective tax rate.