Dish Network 2002 Annual Report Download - page 90

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-30
future payments under these guarantees are equal to the respective amounts of outstanding principal and accrued
interest.
5. Income Taxes
As of December 31, 2002, EchoStar had net operating loss carryforwards (“NOL’s”) for federal income tax
purposes of approximately $3.082 billion and capital loss and credit carryforwards of approximately $9 million. The
NOL’s begin to expire in the year 2011 and capital loss and credit carryforwards will begin to expire in the year 2006.
During 2002, EchoStar increased its valuation allowance by approximately $289 million to fully offset all
net deferred tax assets. Included in this increase is $222 million relating to deferred tax assets generated during
2002 and $67 million relating to the balance of the net deferred tax asset that was not offset by a valuation allowance
at December 31, 2001.
The federal NOL includes amounts related to tax deductions totaling approximately $160 million for exercised
stock options. The tax benefit of these deductions has been allocated directly to contributed capital and has been offset
by a valuation allowance.
During 2002, stock option compensation expenses related to the 1999 Incentive Plan, for which an estimated
deferred tax benefit was previously recorded, exceeded the actual tax deductions allowed. Tax charges associated with
the reversal of the prior tax benefit have been allocated to additional paid-in capital in accordance with Accounting
Principals Board Opinion No. 25, “Accounting for Stock Issued to Employees”. During 2002, a charge of $7 million
was made to additional paid-in capital.
The components of the (provision for) benefit from income taxes are as follows (in thousands):
Year Ended December 31,
2000 2001 2002
Current (provision) benefit:
Federal............................................................................. $ – $ (1,400) $ –
State................................................................................. (80) (860) (5,279)
Foreign ............................................................................ (475) (593) (2,075)
(555) (2,853) (7,354)
Deferred (provision) benefit:
Federal............................................................................. 247,519 44,910 234,501
State................................................................................. 28,809 4,736 (10,874)
Increase in valuation allowance...................................... (276,328) (48,246) (288,817)
– 1,400 (65,190)
Total (provision) benefit............................................. $ (555) $ (1,453) $ (72,544)