Dish Network 2002 Annual Report Download - page 46

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44
Recently Issued Accounting Pronouncements
In July 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“FAS 146”), which will
require companies to record exit, including restructuring, or disposal costs when they are incurred and can be
measured at fair value, and subsequently adjust the recorded liability for changes in estimated cash flows. FAS 146
also provides specific guidance on accounting for employee and contract terminations that are part of restructuring
activities. The new requirements in FAS 146 are effective prospectively for exit or disposal activities initiated after
December 31, 2002. The application of FAS 146 is not expected to have a material impact on our financial position
or results of operations.
In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (“FAS 148”), which
(i) amends FAS Statement No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based
employee compensation (ii) amends the disclosure provisions of FAS 123 to require prominent disclosure about the
effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee
compensation and (iii) amends APB Opinion No. 28, “Interim Financial Reporting,” to require disclosure about
those effects in interim financial information. Items (ii) and (iii) of the new requirements in FAS 148 are effective
for financial statements for fiscal years ending after December 15, 2002. EchoStar has included the requirements of
item (ii) in Note 2 in the Notes to the Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-
K and will include the requirements of item (iii) beginning in its first interim period after December 15, 2002.
In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantors Accounting and Disclosure
Requirement for Guarantors, including Indirect Guarantors of Indebtedness Others” (“FIN 45”). FIN 45 creates new
disclosure and liability recognition requirements for certain guarantees, including, obligations to stand ready to
perform. The initial recognition and measurement requirements of FIN 45 is effective prospectively for guarantees
issued or modified after December 31, 2002 and the disclosure requirements are effective for financial statement
periods ending after December 15, 2002. In accordance with FIN 45, we have disclosed guarantee information.
In January 2003, the Financial Accounting Standards Boards issued FASB Interpretation No. 46,
“Consolidation of Variable Interest Entities” (“FIN 46”), which addresses the consolidation of variable interest entities
as defined in the Interpretation. FIN 46 requires an assessment of equity investments to determine if they are variable
interest entities. FIN 46 is immediately effective for all variable interest entities created after January 31, 2003. For
variable interest entities created before February 1, 2003, the provisions of FIN 46 must be applied no later than the
beginning of the first interim period or annual reporting period beginning after June 15, 2003. In addition, if it is
reasonably possible that an enterprise will consolidate or disclose information about a variable interest entity, the
enterprise shall discuss the following information in all financial statements issued after January 31, 2003: (i) the
nature, purpose, size or activities of the variable interest entity and (ii) the enterprise’s maximum exposure to loss as a
result of its involvement with the variable interest entity. We are currently evaluating the potential impact, if any, the
adoption of FIN 46 will have on our financial position and results of operations.
Seasonality
Our revenues vary throughout the year. As is typical in the subscription television service industry, our first
six months generally produce fewer new subscribers than the second half of the year. Our operating results in any
period may be affected by the incurrence of advertising and promotion expenses that do not necessarily produce
commensurate revenues in the short-term until the impact of such advertising and promotion is realized in future
periods.
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.