Dish Network 2004 Annual Report Download - page 90

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
Marketable and Non-Marketable Investment Securities and Restricted Cash
We currently classify all marketable investment securities as available-for-sale. We adjust the carrying value of our
available-for-sale securities to fair market value and report the related temporary unrealized gains and losses as a
separate component of “Accumulated other comprehensive income” within “Total stockholders’ equity (deficit),” net of
related deferred income tax. Declines in the fair market value of a marketable investment security which are estimated
to be “other than temporary” are recognized in the consolidated statement of operations, thus establishing a new cost
basis for such investment. We evaluate our marketable investment securities portfolio on a quarterly basis to determine
whether declines in the fair market value of these securities are other than temporary. This quarterly evaluation consists
of reviewing, among other things, the fair market value of our marketable investment securities compared to the
carrying amount, the historical volatility of the price of each security and any market and company specific factors
related to each security. Generally, absent specific factors to the contrary, declines in the fair market value of
investments below cost basis for a period of less than six months are considered to be temporary. Declines in the fair
market value of investments for a period of six to nine months are evaluated on a case by case basis to determine
whether any company or market-specific factors exist which would indicate that such declines are other than temporary.
Declines in the fair market value of investments below cost basis for greater than nine months are considered other than
temporary and are recorded as charges to earnings, absent specific factors to the contrary.
As of December 31, 2004 and 2003, we had unrealized gains of approximately $51.8 million and $79.6 million,
respectively, as a part of “Accumulated other comprehensive income” within “Total stockholders’ equity (deficit).”
During the year ended December 31, 2004, we did not record any charge to earnings for other than temporary
declines in the fair market value of our marketable investment securities. During the years ended December 31,
2003 and 2002, we recorded aggregate charges to earnings for other than temporary declines in the fair market
value of certain of our marketable investment securities of approximately $2.0 million and $117.1 million,
respectively, and established a new cost basis for these securities. In addition, during the years ended December 31,
2004, 2003 and 2002, we realized net losses of approximately $9.0 million and net gains of approximately $21.9
million and $11.6 million on sales of marketable and non-marketable investment securities, respectively. Realized
gains and losses are accounted for on the specific identification method.
Our approximately $1.213 billion of restricted and unrestricted cash, cash equivalents and marketable investment
securities includes debt and equity securities which we own for strategic and financial purposes. The fair market value
of these strategic marketable investment securities aggregated approximately $174.3 million and $249.4 million as of
December 31, 2004 and 2003, respectively. Our portfolio generally, and our strategic investments particularly, has
experienced and continues to experience volatility. If the fair market value of our strategic marketable securities
portfolio does not remain above cost basis or if we become aware of any market or company specific factors that
indicate that the carrying value of certain of our strategic marketable securities is impaired, we may be required to
record charges to earnings in future periods equal to the amount of the decline in fair market value.
We also have strategic equity investments in certain non-marketable investment securities. We account for such
unconsolidated investments under either the equity method or cost method of accounting. These securities are not
publicly traded and accordingly, it is not practical to regularly estimate the fair value of these investments, however,
these investments are subject to an evaluation for other than temporary impairment on a quarterly basis. This quarterly
evaluation consists of reviewing, among other things, company business plans and current financial statements, if
available, for factors that may indicate an impairment of our investment. Such factors may include, but are not limited
to, cash flow concerns, material litigation, violations of debt covenants and changes in business strategy. The fair value
of these investments is not estimated unless there are identified changes in circumstances that are likely to have a
significant adverse effect on the fair value of the investment. Our ability to realize value from our strategic investments
in companies that are not publicly traded is dependent on the success of their business and their ability to obtain
sufficient capital to execute their business plans. Since private markets are not as liquid as public markets, there is also
increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able
to obtain full value for them. For the year ended December 31, 2004, we had $90.4 million aggregate carrying amount
of non-marketable and unconsolidated strategic equity investments, of which $52.7 million is accounted for under the
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