Dish Network 2008 Annual Report Download - page 94

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-12
Long-Lived Assets
We account for impairments of long-lived assets in accordance with the provisions of Statement of
Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets” (“SFAS 144”). We review our long-lived assets and identifiable finite lived intangible assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Based on the guidance under SFAS 144, we evaluate our satellite fleet for
recoverability as one asset group. For assets which are held and used in operations, the asset would be
impaired if the carrying value of the asset (or asset group) exceeded its undiscounted future net cash flows.
Once an impairment is determined, the actual impairment is reported as the difference between the carrying
value and the fair value as estimated using discounted cash flows. Assets which are to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell. We consider relevant cash
flow, estimated future operating results, trends and other available information in assessing whether the
carrying value of assets are recoverable.
Goodwill and Other Intangible Assets
We account for our goodwill and intangible assets in accordance with the provisions of Statement of
Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), which
requires goodwill and indefinite lived intangible assets with indefinite useful lives not be amortized, but to
be tested for impairment annually or whenever indicators of impairments arise. Intangible assets that have
finite lives are amortized over their estimated useful lives and tested for impairment as described above for
long-lived assets. Our intangible assets with indefinite lives primarily consist of FCC licenses. Generally,
we have determined that our FCC licenses have indefinite useful lives due to the following:
x FCC spectrum is a non-depleting asset;
x Existing DBS licenses are integral to our business and will contribute to cash flows
indefinitely;
x Replacement satellite applications are generally authorized by the FCC subject to certain
conditions, without substantial cost under a stable regulatory, legislative and legal
environment;
x Maintenance expenditures in order to obtain future cash flows are not significant;
x DBS licenses are not technologically dependent; and
x We intend to use these assets indefinitely.
In accordance with the guidance of Emerging Issues Task Force (“EITF”) Issue No. 02-7, “Unit of
Accounting for Testing Impairment of Indefinite-Lived Intangible Assets” (“EITF 02-7”), we combine all
our indefinite lived FCC licenses into a single unit of accounting. The analysis encompasses future cash
flows from satellites transmitting from such licensed orbital locations, including revenue attributable to
programming offerings from such satellites, the direct operating and subscriber acquisition costs related to
such programming, and future capital costs for replacement satellites. Projected revenue and cost amounts
include current and projected subscribers. In conducting our annual impairment test in 2008, we
determined that the estimated fair value of the FCC licenses, calculated using the discounted cash flow
analysis, exceeded their carrying amount.