Dish Network 1998 Annual Report Download - page 38

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assurance can be made that such contingency plans will resolve any Year 2000 problems that may occur, in a manner
which is satisfactory or desirable to us.
Costs
We have not yet determined the full cost of our Year 2000 readiness plan and its related impact on our
financial condition. In the ordinary course of business, we have made capital expenditures over the past few years to
improve our systems, for reasons other than Year 2000 remediation. Because these upgrades also resulted in improved
Year 2000 readiness, replacement and remediation costs have not been material. We currently have budgeted $300,000
for the completion of our Year 2000 readiness plan. While there can be no assurance, we believe our costs to
successfully mitigate the Year 2000 issue will not be material to our operations. No assurance can be made, however,
as to the total cost for the Year 2000 plan until the plan has been completed.
Effects of Recently Issued Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1,
“Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” (“SOP 98-1”), which
provides guidance that requires capitalization of certain costs incurred during an internal-use software development
project. SOP 98-1 is effective for fiscal years beginning after December 15, 1998. We do not expect that adoption
of SOP 98-1 will materially affect our consolidated financial statements.
Inflation
Inflation has not materially affected our operations during the past three years. We believe that our ability to
increase the prices charged for our products and services in future periods will depend primarily on competitive
pressures. We do not have any material backlog of our products.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market Risks Associated With Financial Instruments
Interest Rate Risk. Our exposure to market risk for changes in interest rates relates to our debt obligations,
redeemable preferred stock and cash and marketable investment securities (unrestricted and restricted) portfolio.
As of December 31, 1998, we estimated the fair value of our fixed-rate debt and mortgages and other notes
payable to be approximately $1.9 billion using quoted market prices where available, or discounted cash flow analyses.
We estimated the fair value of our redeemable preferred stock (based on quoted market prices) to be approximately
$259.9 million on December 31, 1998. The market risk associated with our debt and redeemable preferred stock is the
potential increase in fair value resulting from a decrease in interest rates. A 10% decrease in assumed interest rates
would increase the fair value of our debt and redeemable preferred stock by approximately $50.8 million and
$8.5 million, respectively.
Based on our average balance of cash and cash equivalents and restricted and unrestricted marketable
investment securities during 1998, a 10% decrease in the average interest rate experienced in 1998 would not materially
impact our annual interest income.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our Consolidated Financial Statements are included in this report beginning on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.