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Table of Contents
ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued
The fair value of our strategic marketable investment securities aggregated $321.2 million and $148.5 million as of December 31, 2006 and
2005, respectively. During the year ended December 31, 2006, our strategic investments, have experienced and continue to experience
volatility. If the fair value of our strategic marketable investment 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 securities is impaired, we may be required to
record charges to earnings in future periods equal to the amount of the decline in fair value.
The following table reflects the length of time that the individual securities have been in an unrealized loss position, aggregated by investment
category, where those declines are considered temporary in accordance with our policy.
Government Bonds . We believe the unrealized losses on our government bonds were caused primarily by interest rate increases. At
December 31, 2006 and 2005, maturities on these government bonds ranged from one to eight months. We have the ability and intent to hold
these investments until maturity when the Government is required to redeem them at their full face value. Accordingly, we do not consider
these investments to be other-than-temporarily impaired as of December 31, 2006.
Corporate Equity Securities. At December 31, 2006 and 2005, the unrealized loss on our investments in corporate equity securities represents
an investment in the marketable common stock of three companies in the communications industry and one company in the satellite
communications service industry, respectively. We are not aware of any specific factors which indicate the unrealized loss is due to anything
other than temporary market fluctuations.
Other Non-Marketable Securities. We also have several strategic investments in certain non-marketable equity securities which are included
in “Other noncurrent assets, net” on our Consolidated Balance Sheets. Generally, we account for our unconsolidated equity investments under
either the equity method or cost method of accounting. Because these equity securities are not publicly traded, it is not practical to regularly
estimate the fair value of the 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 equity investments is not estimated
unless there are identified changes in circumstances that may indicate an impairment exists and these changes are likely to have a significant
adverse effect on the fair value of the investment. As of December 31, 2006 and 2005, we had $188.6 million and $94.2 million aggregate
carrying amount of non-marketable and unconsolidated strategic equity investments, respectively, of which $97.8 million and $52.7 million is
accounted for under the cost method, respectively. During the year ended December 31, 2006, we recorded $18.0 million of impairment
charges with respect to these investments. During the years ended
F-10
As of December 31, 2006
Less than Six Months
Six to Nine Months
Nine Months or More
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Loss
Value
Loss
Value
Loss
Value
Loss
(In thousands)
Government bonds
$
75,572
$
(227
)
$
—
$
—
$
26,211
$
(12
)
$
101,783
$
(239
)
Corporate equity securities
5,702
(2,179
)
—
—
—
—
5,702
(2,179
)
Total
$
81,274
$
(2,406
)
$
—
$
—
$
26,211
$
(12
)
$
107,485
$
(2,418
)
As of December 31, 2005
(In thousands)
Government bonds
$
—
$
—
$
—
$
—
$
119,290
$
(662
)
$
119,290
$
(662
)
Corporate equity securities
32,444
(379
)
—
—
—
—
32,444
(379
)
Total
$
32,444
$
(379
)
$
—
$
—
$
119,290
$
(662
)
$
151,734
$
(1,041
)