Dish Network 2011 Annual Report Download - page 83

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - Continued
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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, 2011, we held investments in ARS and MBS of $109 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 $11 million in the fair value of
these investments.
Investment in DBSD North America and Other Investment Securities
As of December 31, 2011, we had $1.3 billion of noncurrent public and 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 public and nonpublic debt and
equity instruments would result in a decrease of approximately $130 million in the fair value of these investments.
Of the $1.3 billion, a total of $1.298 billion is invested in DBSD North America. If our FCC applications and
waiver requests are not granted by the FCC, or are granted in a manner that varies from the form we have requested,
it could cause the value of these assets to be impaired, potentially requiring us to take significant write-downs on
these assets. See Note 10 in the Notes to our Consolidated Financial Statements in Item 15 of this Annual Report on
Form 10-K for further discussion.
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, 2011, we had long-term debt of $7.222 billion on our Consolidated Balance Sheets. We estimated
the fair value of this debt to be approximately $7.807 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 $213
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, 2011, a hypothetical 10% increase in assumed interest rates would increase
our annual interest expense by approximately $52 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.