Dish Network 2010 Annual Report Download - page 54

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
47
47
Earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is defined as “Net income
(loss) attributable to DISH Network common shareholders” plus “Interest expense, net of amounts capitalized” net of
“Interest income,” “Taxes” and “Depreciation and amortization.” This “non-GAAP measure” is reconciled to “Net
income (loss) attributable to DISH Network common shareholders” in our discussion of “Results of Operations”
below.
DISH Network subscribers. We include customers obtained through direct sales, third-party retailers and other
third-party distribution relationships in our DISH Network subscriber count. We also provide DISH Network
service to hotels, motels and other commercial accounts. For certain of these commercial accounts, we divide our
total revenue for these commercial accounts by an amount approximately equal to the retail price of our America’s
Top 120 programming package (but taking into account, periodically, price changes and other factors), and include
the resulting number, which is substantially smaller than the actual number of commercial units served, in our DISH
Network subscriber count.
Average monthly revenue per subscriber (“ARPU”). We are not aware of any uniform standards for calculating
ARPU and believe presentations of ARPU may not be calculated consistently by other companies in the same or
similar businesses. We calculate average monthly revenue per subscriber, or ARPU, by dividing average monthly
“Subscriber-related revenue” for the period (total “Subscriber-related revenue” during the period divided by the
number of months in the period) by our average DISH Network subscribers for the period. Average DISH Network
subscribers are calculated for the period by adding the average DISH Network subscribers for each month and
dividing by the number of months in the period. Average DISH Network subscribers for each month are calculated
by adding the beginning and ending DISH Network subscribers for the month and dividing by two.
Average monthly subscriber churn rate. We are not aware of any uniform standards for calculating subscriber
churn rate and believe presentations of subscriber churn rates may not be calculated consistently by different
companies in the same or similar businesses. We calculate subscriber churn rate for any period by dividing the
number of DISH Network subscribers who terminated service during the period by the average DISH Network
subscribers for the same period, and further dividing by the number of months in the period. When calculating
subscriber churn, the same methodology for calculating average DISH Network subscribers is used as when
calculating ARPU.
Free cash flow. We define free cash flow as “Net cash flows from operating activities” less “Purchases of property
and equipment,” as shown on our Consolidated Statements of Cash Flows.