Dish Network 2008 Annual Report Download - page 126

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-44
As of December 31, 2008, our total unrecognized compensation cost related to our non-performance based
unvested stock options was $36 million and includes compensation expense that we will recognize for
EchoStar stock options held by our employees as a result of the Spin-off. This cost is based on an
estimated future forfeiture rate of approximately 4.4% per year and will be recognized over a weighted-
average period of approximately three years. Share-based compensation expense is recognized based on
awards ultimately expected to vest and is reduced for estimated forfeitures. SFAS 123R requires
forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. Changes in the estimated forfeiture rate can have a significant
effect on share-based compensation expense since the effect of adjusting the rate is recognized in the
period the forfeiture estimate is changed.
The fair value of each award for the years ended December 31, 2008, 2007 and 2006 was estimated at the
date of the grant using a Black-Scholes option pricing model with the following assumptions:
Stock Options
2008 2007 2006
Risk-free interest rate ......................................................... 1.00% - 3.42% 3.51% - 5.19% 4.49% - 5.22%
Volatility factor .................................................................. 19.98% - 39.90% 18.10% - 24.84% 24.71% - 25.20%
Expected term of options in years....................................... 3.0 - 7.5 2.5 - 10.0 6.0 - 10.0
Weighted-average fair value of options granted ................ $3.12 - $8.72 $7.19 - $48.20 $6.30 - $17.78
For the Years Ended December 31,
We do not currently plan to pay additional dividends on our common stock, and therefore the dividend
yield percentage is set at zero for all periods. The Black-Scholes option valuation model was developed
for use in estimating the fair value of traded stock options which have no vesting restrictions and are fully
transferable. Consequently, our estimate of fair value may differ from other valuation models. Further, the
Black-Scholes model requires the input of highly subjective assumptions. Changes in the subjective input
assumptions can materially affect the fair value estimate. Therefore, we do not believe the existing models
provide as reliable a single measure of the fair value of stock-based compensation awards as a market-
based model would.
We will continue to evaluate the assumptions used to derive the estimated fair value of our stock options as
new events or changes in circumstances become known.
15. Commitments and Contingencies
Commitments
Future maturities of our contractual obligations are summarized as follows:
Total 2009 2010 2011 2012 2013 Thereafter
Satellite-related obligations...... 1,948,490$ 184,754$ 132,385$ 105,774$ 136,492$ 136,492$ 1,252,593$
Operating lease obligations...... 109,223 42,230 24,168 17,641 10,551 5,536 9,097
Purchase obligations ................ 1,397,990 1,304,489 43,651 14,859 15,334 15,827 3,830
Total......................................... 3,455,703$ 1,531,473$ 200,204$ 138,274$ 162,377$ 157,855$ 1,265,520$
(In thousands)
Payments due by period
The table above does not include $233 million of liabilities associated with unrecognized tax benefits
which were accrued under the provisions of FIN 48, discussed in Note 10, and are included on our
Consolidated Balance Sheets as of December 31, 2008. Of this amount, it is reasonably possible that $106
million may be paid or settled within the next twelve months.