Dish Network 2006 Annual Report Download - page 93

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–8
influence the operating decisions of an issuer, the cost method is used. For entities that are considered variable
interest entities we apply the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 46-
R, “Consolidation of Variable Interest Entities – An Interpretation of ARB No. 51” (“FIN 46-R”). All significant
intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been
reclassified to conform to the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of 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 options granted under our
stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, capital leases,
asset impairments, useful lives of property, equipment and intangible assets, 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, and
such differences may be material to the Consolidated Financial Statements. Estimates and assumptions are reviewed
periodically, and the effects of revisions are reflected prospectively beginning in the period they occur.
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 revenues and
expenses based on the exchange rates at the time such transactions arise, if known, or at the average rate for the period.
The difference is recorded to equity as a component of other comprehensive income (loss). Financial assets and
liabilities denominated in currencies other than the functional currency are recorded at the exchange rate at the time of
the transaction and subsequent gains and losses related to changes in the foreign currency are included in other
miscellaneous income and expense. Net transaction gains (losses) during 2006, 2005 and 2004 were not significant.
Statements of Cash Flows Data
The following presents our supplemental cash flow statement disclosure:
For the Years Ended December 31,
2006 2005 2004
(In thousands)
Cash paid for interest.................................................................................. $ 418,587 $ 372,403 $ 431,785
Capitalized interest...................................................................................... 20,091 7,597 3,105
Cash received for interest............................................................................ 73,337 34,623 56,317
Cash paid for income taxes......................................................................... 37,742 34,295 3,302
Assumption of net operating liabilities in asset acquisition......................... - - 25,685
Assumption of liabilities and long-term deferred revenue........................... - - 69,357
Employee benefits paid in Class A common stock...................................... 22,102 13,055 16,255
Satellites financed under capital lease obligations...................................... - 191,950 286,605
Reduction in satellite vendor financing....................................................... - - 13,712
Satellite and other vendor financing ........................................................... 15,000 1,940 6,519