Dish Network 2006 Annual Report Download - page 67

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS – Continued
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commercial operation during the second quarter of 2006 and provided that other planned satellites are successfully
deployed, this increased satellite capacity and our 8PSK transition will afford us greater flexibility in delaying and
reducing the costs otherwise required to convert our subscriber base to MPEG-4.
While we may be able to generate increased revenue from such conversions, the deployment of equipment including
new technologies will increase the cost of our consumer equipment, at least in the short term. Our expensed and
capitalized subscriber acquisition and retention costs will increase to the extent we subsidize those costs for new and
existing subscribers. These increases may be mitigated to the extent we successfully redeploy existing receivers and
implement other equipment cost reduction strategies.
In an effort to reduce subscriber turnover, we offer existing subscribers a variety of options for upgraded and add on
equipment. We generally lease receivers and subsidize installation of EchoStar receiver systems under these
subscriber retention programs. As discussed above, we will have to upgrade or replace subscriber equipment
periodically as technology changes. As a consequence, our retention costs, which are included in “Subscriber-
related expenses,” and our capital expenditures related to our equipment lease program for existing subscribers, will
increase, at least in the short term, to the extent we subsidize the costs of those upgrades and replacements. Our
capital expenditures related to subscriber retention programs could also increase in the future to the extent we
increase penetration of our equipment lease program for existing subscribers, if we introduce other more aggressive
promotions, if we offer existing subscribers more aggressive promotions for HD receivers or EchoStar receivers
with other enhanced technologies, or for other reasons.
Cash necessary to fund retention programs and total subscriber acquisition costs are expected to be satisfied from
existing cash and marketable investment securities balances and cash generated from operations to the extent
available. We may, however, decide to raise additional capital in the future to meet these requirements. If we
decided to raise capital today, a variety of debt and equity funding sources would likely be available to us.
However, there can be no assurance that additional financing will be available on acceptable terms, or at all, if
needed in the future.
Obligations and Future Capital Requirements
Contractual obligations and off-balance sheet arrangements. In general, we do not engage in off-balance sheet
financing activities. Future maturities of our outstanding debt and contractual obligations are summarized as
follows:
Payments due by period
Total 2007 2008-2009 2010-2011 Thereafter
(In thousands)
Long-term debt obligations..................... 6,525,000$ 1,000,000$ 1,000,000$ 1,525,000$ 3,000,000$
Satellite-related obligations.................... 2,758,699 658,047 711,128 268,930 1,120,594
Capital lease obligations......................... 404,942 34,701 81,378 99,883 188,980
Operating lease obligations..................... 91,849 32,462 39,637 16,187 3,563
Purchase obligations .............................. 1,258,289 934,780 294,219 29,290 -
Mortgages and other notes payable ....... 37,379 3,768 5,675 5,710 22,226
Total....................................................... 11,076,158$ 2,663,758$ 2,132,037$ 1,945,000$ 4,335,363$