Dish Network 2010 Annual Report Download - page 75

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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - Continued
68
68
quality characteristics to the commercial paper described above. Based on our December 31, 2010 investment
portfolio, a hypothetical 10% increase in average interest rates would not have a material impact in the fair value of our
restricted cash and marketable investment securities.
Noncurrent Auction Rate and Mortgage Backed Securities
As of December 31, 2010, we held investments in auction rate securities (“ARS”) and mortgage backed securities
(“MBS”) of $119 million, which are reported at fair value. Events in the credit markets have reduced or eliminated
current liquidity for certain of our ARS and MBS investments. As a result, we classify these investments as noncurrent
assets as we intend to hold these investments until they recover or mature, and therefore interest rate risk associated
with these securities is mitigated. A hypothetical 10% adverse change in the price of these investments would result in
a decrease of approximately $12 million in the fair value of these investments.
Other Investment Securities
As of December 31, 2010, we had $105 million of nonpublic debt and equity instruments that we hold for strategic
business purposes. We account for these investments under the cost, equity and/or fair value methods of accounting.
A hypothetical 10% adverse change in the price of these nonpublic debt and equity instruments would result in a
decrease of approximately $11 million in the fair value of these investments.
Our ability to realize value from our strategic investments in companies that are not publicly traded depends on the
success of those companies’ businesses and their ability to obtain sufficient capital to execute their business plans.
Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell
these investments, or that when we desire to sell them we will not be able to obtain fair value for them.
Long-Term Debt
As of December 31, 2010, we had long-term debt of $6.515 billion on our Consolidated Balance Sheets. We estimated
the fair value of this debt to be approximately $6.486 billion using quoted market prices for our publicly traded debt,
which constitutes approximately 99% of our debt. The fair value of our debt is affected by fluctuations in interest rates.
A hypothetical 10% decrease in assumed interest rates would increase the fair value of our debt by approximately $159
million. To the extent interest rates increase, our costs of financing would increase at such time as we are required to
refinance our debt. As of December 31, 2010, a hypothetical 10% increase in assumed interest rates would increase
our annual interest expense by approximately $44 million.
Derivative Financial Instruments
From time to time, we speculate using derivative financial instruments, such amounts, however, are typically
insignificant.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our Consolidated Financial Statements are included in this report beginning on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.