Dish Network 1997 Annual Report Download - page 56

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
1. Organization and Business Activities – Continued
F–9
sufficient cash flows to pay its obligations, including its obligations on its long-term debt, or to pay cash dividends
on any of its preferred stock.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The financial statements for 1995 present the consolidation of Dish, Ltd. and its subsidiaries through the date of the
Exchange and the consolidation of ECC and its subsidiaries, thereafter. The Exchange and Merger was accounted for as a
reorganization of entities under common control and the historical cost basis of assets and liabilities was not affected by the
transaction. All significant intercompany accounts and transactions have been eliminated.
EchoStar accounts for investments in 50% or less owned entities using the equity method. At December 31,
1996 and 1997, these investments were not material to EchoStar’s consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses for each reporting period. Actual results could differ from those estimates.
Foreign Currency Transaction Gains and Losses
The functional currency of EchoStar’s foreign subsidiaries is the U.S. dollar because their sales and purchases
are predominantly denominated in that currency. Transactions denominated in currencies other than U.S. dollars are
recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in
transaction gains and losses which are reflected in income as unrealized (based on period-end translation) or realized
(upon settlement of the transaction). Net transaction gains (losses) during 1995, 1996 and 1997 were not material to
EchoStar’s results of operations.
Cash and Cash Equivalents
EchoStar considers all liquid investments purchased with an original maturity of 90 days or less to be cash
equivalents. Cash equivalents as of December 31, 1996 and 1997 consist of money market funds, corporate notes and
commercial paper; such balances are stated at cost which equates to market value.