Dish Network 2007 Annual Report Download - page 66

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Table of Contents
add to our service using only that technology may allow us to further reduce conversion costs and create additional revenue opportunities. We
have also implemented MPEG-4 technology in all satellite receivers for new customers who subscribe to our HD programming packages. This
technology should result in further bandwidth efficiencies over time. We have not yet determined the extent to which we will convert the
EchoStar DBS System to these new technologies, or the period of time over which the conversions will occur. Since EchoStar X commenced
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:
Interest on Long
-Term Debt
We have semi-annual cash interest requirements for our outstanding long-term debt securities (see Note 5 in the Notes to the Consolidated
Financial Statements in Item 15 of this Annual Report on Form 10-K for details), as follows:
58
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS —
Continued
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
$
1,920,000
$
4,360,363