Dish Network 2007 Annual Report Download - page 101

Table of Contents
ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued
Long
-Term Deferred Revenue, Distribution and Carriage Payments
Certain programmers provide us up-front payments. Such amounts are deferred and in accordance with EITF Issue No. 02-16, “Accounting by
a Customer (Including a Reseller) for Certain Consideration Received from a Vendor” (“EITF 02-16”) are recognized as reductions to
“Subscriber-related expenses” on a straight-line basis over the relevant remaining contract term (up to 10 years). The current and long-term
portions of these deferred credits are recorded in the Consolidated Balance Sheets in “Deferred revenue and other” and “Long-term deferred
revenue, distribution and carriage payments and other long-term liabilities,” respectively.
We receive equity interests in content providers in consideration for or in conjunction with affiliation agreements. We account for these equity
interests received in accordance with Emerging Issues Task Force Issue No. 00-8, “Accounting by a Grantee for an Equity Instrument to be
Received in Conjunction with Providing Goods or Services” (“EITF 00-8”). During the years ended December 31, 2006, 2005 and 2004, we
made cash payments and entered into agreements and in 2004 assumed certain liabilities in exchange for equity interests in certain entities.
During 2006, 2005 and 2004, we recorded approximately $25.0 million, nil and $77.3 million related to the fair value of these equity interests
in “Other noncurrent assets,” respectively. These unconsolidated investments are accounted for under either the equity method or cost method
of accounting. Of the amounts recorded during 2006, 2005 and 2004, approximately $25.0 million, nil and $56.5 million in value of these
equity interests was recorded as a deferred credit, respectively, and are recognized as a reduction to “Subscriber-related expenses” ratably as
our actual costs are incurred under the related agreements in accordance with the guidance under EITF 02-16. These deferred credits are
included as a component of current “Deferred revenue and other” and “Long-term deferred revenue, distribution and carriage payments and
other long-term liabilities” in our Consolidated Balance Sheets.
Sales Taxes
In accordance with the guidance of EITF Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities
Should Be Presented in the Income Statement” (“EITF 06-3”), we account for sales taxes imposed on our goods and services on a net basis in
our “Consolidated Statements of Operations and Comprehensive Income (Loss).” Since we primarily act as an agent for the governmental
authorities, the amount charged to the customer is collected and remitted directly to the appropriate jurisdictional entity.
Income Taxes
We establish a provision for income taxes currently payable or receivable and for income tax amounts deferred to future periods in accordance
with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS 109 requires that deferred
tax assets or liabilities be recorded for the estimated future tax effects of differences that exist between the book and tax bases of assets and
liabilities. Deferred tax assets are offset by valuation allowances in accordance with SFAS 109, when we believe it is more likely than not that
such net deferred tax assets will not be realized.
Fair Value of Financial Instruments
Fair values for our publicly traded debt securities are based on quoted market prices. The fair values of our private debt is estimated based on
an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available
information. In performing this analysis, we make various assumptions, among other things, regarding credit spreads, and the impact of these
factors on the value of the notes.
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