Dish Network 2009 Annual Report Download - page 78

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
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x Uncertainty in tax positions. Management evaluates the recognition and measurement of uncertain tax
positions based on applicable tax law, regulations, case law, administrative rulings and pronouncements and
the facts and circumstances surrounding the tax position. Changes in our estimates related to the recognition
and measurement of the amount recorded for uncertain tax positions could result in significant changes in our
“Income tax provision (benefit), net,” which could be material to our consolidated results of operations.
x Contingent liabilities. A significant amount of management judgment is required in determining when, or if,
an accrual should be recorded for a contingency and the amount of such accrual. Estimates generally are
developed in consultation with outside counsel and are based on an analysis of potential outcomes. Due to the
uncertainty of determining the likelihood of a future event occurring and the potential financial statement
impact of such an event, it is possible that upon further development or resolution of a contingent matter, a
charge could be recorded in a future period to “General and administrative expenses” on our Consolidated
Statements of Operations and Comprehensive Income (Loss) that would be material to our consolidated
results of operations and financial position.
New Accounting Pronouncements
Revenue Recognition – Multiple-Deliverable Arrangements
In October 2009, the Financial Accounting Standards Board issued Accounting Standards Update 2009-13 (“ASU
2009-13”), Revenue Recognition - Multiple-Deliverable Revenue Arrangements. ASU 2009-13 changes the
requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation
of arrangement consideration to each deliverable to be based on the relative selling price. We are currently evaluating
the impact, if any, ASU 2009-13 will have on our consolidated financial statements, when adopted, as required, on
January 1, 2011.
Seasonality
Historically, the first half of the year generally produces fewer new subscribers than the second half of the year, as is
typical in the pay-TV service industry. However, we can not provide assurance that this will continue in the future.
Inflation
Inflation has not materially affected our operations during the past three years. We believe that our ability to increase
the prices charged for our products and services in future periods will depend primarily on competitive pressures.
Backlog
We do not have any material backlog of our products.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risks Associated With Financial Instruments
Our investments and debt are exposed to market risks, discussed below.
Cash, Cash Equivalents and Current Marketable Investment Securities
As of December 31, 2009, our cash, cash equivalents and current marketable investment securities had a fair value
of $2.139 billion. Of that amount, a total of $1.975 billion was invested in: (a) cash; (b) VRDNs convertible into
cash at par value plus accrued interest in five business days or less; (c) debt instruments of the United States
Government and its agencies; (d) commercial paper and corporate notes with an overall average maturity of less
than one year and rated in one of the four highest rating categories by at least two nationally recognized statistical
rating organizations; and (e) instruments with similar risk, duration and credit quality characteristics to the
commercial paper and corporate obligations described above. The primary purpose of these investing activities has
been to preserve principal until the cash is required to, among other things, fund operations, make strategic