Dish Network 2004 Annual Report Download - page 89

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
revenues and expenses for each reporting period. Estimates are used in accounting for, among other things, allowances
for uncollectible accounts, inventory allowances, self insurance obligations, deferred taxes and related valuation
allowances, loss contingencies, fair values of financial instruments, fair value of assets and liabilities acquired in
business combinations, asset impairments, useful lives of property and equipment, retailer commissions, programming
expenses, subscriber lives including those related to our co-branding and other distribution relationships, royalty
obligations and smart card replacement obligations. Actual results may differ from previously estimated amounts.
Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur.
During the three months ended December 31, 2003, we recorded approximately $61.4 million to reduce our estimated
royalty obligations related to the production of EchoStar receiver systems. The following details the decrease in the
financial statement line items affected by this change in estimate (in thousands):
Cost of sales – equipment ........................................... $ (6,839)
Cost of sales – subscriber promotion subsidies .......... (42,750)
Depreciation and amortization..................................... (5,937)
Property and equipment, net........................................ (5,341)
Inventories, net............................................................. (505)
Foreign Currency Translation
The functional currency of the majority of our foreign subsidiaries is the U.S. dollar because their sales and purchases
are predominantly denominated in that currency. However, for our subsidiaries where the functional currency is the
local currency, we translate assets and liabilities into U.S. dollars at the period end exchange rate and record the
translation adjustments as a component of other comprehensive income (loss). We translate revenues and expenses
based on the exchange rates at the time such transactions arise, if known, or at the average rate for the period.
Transactions denominated in currencies other than the functional currency are recorded at the exchange rate at the time
of the transaction and are included in other miscellaneous income and expense. Net transaction gains (losses) during
2004, 2003 and 2002 were not significant.
Statements of Cash Flows Data
The following presents our supplemental cash flow statement disclosure:
For the Years Ended December 31,
2004 2003 2002
(In thousands)
Cash paid for interest.................................................................................. $ 431,785 $ 477,036 $ 500,879
Capitalized interest...................................................................................... 3,105 8,428 23,876
Cash received for interest............................................................................ 56,317 64,490 113,402
Cash paid for income taxes......................................................................... 3,302 11,646 8,396
Forfeitures of deferred non-cash, stock-based compensation ..................... - 3,933 5,520
Assumption of net operating liabilities in asset acquisition (Note 2).......... 25,685 - -
Assumption of liabilities and long-term deferred revenue (Note 2)............ 69,357 - -
Satellite financed under capital lease (Note 4)............................................ 286,605 - -
Reduction in satellite vendor financing (Note 3)......................................... 13,712 - -
Satellite and other vendor financing ........................................................... 6,519 13,097 30,000
Cash and Cash Equivalents
We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. Cash
equivalents as of December 31, 2004 and 2003 consist of money market funds, corporate notes and commercial paper.
The cost of these investments approximates their fair market value.
F–9