Dish Network 2012 Annual Report Download - page 63

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Equipment Lease Programs
Pay-TV subscribers have the choice of leasing or purchasing the satellite receiver and other equipment necessary to
receive our pay-TV service. Most of our new Pay-TV subscribers choose to lease equipment and thus we retain title to
such equipment. New broadband subscribers lease the modem and other equipment necessary to receive broadband
services. Equipment leased to new and existing Pay-TV and broadband subscribers is capitalized and depreciated over
their estimated useful lives.
Foreign Currency Translation and Transactions
The functional currency of our foreign operations generally is the local currency. Assets and liabilities of foreign
operations (including intercompany balances for which settlement is not anticipated in the foreseeable future) are
translated at the spot rate in effect at the applicable reporting date, and our consolidated statements of operations
generally are translated at the average exchange rates in effect during the applicable period. The resulting unrealized
cumulative translation adjustment, net of applicable income taxes, is recorded as a component of “Accumulated other
comprehensive income (loss)” in our Consolidated Statements of Changes in Stockholders’ Equity (Deficit). Cash
flows from our operations in foreign countries are translated at actual exchange rates when known or at the average rate
for the applicable period. The effect of exchange rates on cash balances held in foreign currencies are separately
reported in our Consolidated Statements of Cash Flows. Transactions denominated in currencies other than our or our
foreign operations functional currencies are recorded based on exchange rates at the time such transactions arise.
Changes in exchange rates with respect to amounts recorded in our Consolidated Balance Sheets related to these non-
functional currency transactions result in transaction gains and losses that are reflected in our consolidated statement of
operations as unrealized (based on the applicable period end exchange rates) or realized upon settlement of the
transactions. Net transaction gains (losses) during 2012, 2011 and 2010 were not significant.
3. Basic and Diluted Net Income (Loss) Per Share
We present both basic earnings per share (“EPS”) and diluted EPS. Basic EPS excludes potential dilution and is
computed by dividing “Net income (loss) attributable to DISH Network” by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock
awards were exercised. The potential dilution from stock awards was computed using the treasury stock method
based on the average market value of our Class A common stock. The following table presents earnings per share
amounts for all periods and the basic and diluted weighted-average shares outstanding used in the calculation.
2012 2011 2010
Net income (loss) attributable to DISH Network............................................................ $ 636,687 $ 1,515,907 $ 984,729
Weighted-average common shares outstanding - Class A and B common stock:
Basic............................................................................................................................... 450,264 445,434 445,865
Dilutive impact of stock awards outstanding.................................................................. 2,635 1,431 732
Diluted............................................................................................................................ 452,899 446,865 446,597
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network................................... $ 1.41 $ 3.40 $ 2.21
Diluted net income (loss) per share attributable to DISH Network................................ $ 1.41 $ 3.39 $ 2.20
For the Years Ended December 31,
(In thousands, except per share amounts)
As of December 31, 2012, 2011 and 2010, there were stock awards to purchase 2.5 million, 5.0 million and 10.8
million shares, respectively, of Class A common stock outstanding, not included in the weighted-average common
shares outstanding above, as their effect is antidilutive.
F-16
DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Vesting of options and rights to acquire shares of our Class A common stock granted pursuant to our performance
based stock incentive plans (“Restricted Performance Units”) is contingent upon meeting certain goals, some of
which are not yet probable of being achieved. As a consequence, the following are also not included in the diluted
EPS calculation.
201220112010
Performance based options.......................... 7,929 9,549 10,979
Restricted Performance Units...................... 1,185 1,285 1,494
Total........................................................ 9,114 10,834 12,473
As of December 31,
(In thousands)
4. Statements of Cash Flow Data
The following presents our supplemental cash flow statement disclosure.
2012 2011 2010
Cash paid for interest (including capitalized interest)............................................... $ 539,359 $ 545,406 $ 472,586
Capitalized interest................................................................................................... 106,323 120 17,139
Cash received for interest......................................................................................... 92,770 37,502 36,853
Cash paid for income taxes....................................................................................... 272,266 38,761 525,028
Employee benefits paid in Class A common stock................................................... 22,280 24,804 29,127
Vendor financing...................................................................................................... - - 40,000
Satellites and other assets financed under capital lease obligations.......................... 6,707 10,548 5,282
Assets contributed from EchoStar to DISH Digital Holding LLC............................ 44,712 - -
For the Years Ended December 31,
(In thousands)
5. Other Comprehensive Income (Loss)
The following table presents the tax effects on each component of “Other comprehensive income (loss).”
Before Tax Net Before Tax Net Before Tax N et
Tax (Expense) of Tax Tax (Expense) of Tax Tax (Expense) of Tax
Amount Benefit Amount Amount Benefit Amount Amount Benefit Amount
Foreign currency translation adjustments.................................. 4,106$ -$ 4,106$ (9,139)$ -$ (9,139)$ (13,476)$ 5,067 (8,409)$
Unrealized holding gains (losses)
on available-for-sale securities............................................... 265,785 (12,892) 252,89 3 (1 3,96 5) - (13,965) 50,348 - 50,348
Recognition of previously unrealized (gains) losses on
available-for-sale securities included in net income (loss)...... (150,239) - (150,239) 11,790 - 11,790 (3,852) - (3,852)
Other comprehensive income (loss)........................................... 119,652$ (12,892)$ 106 ,760$ (11,314)$ -$ (11,314)$ 33,020$ 5,067$ 38,087$
2010
For the Years
Ended December 31,
(In thousands)
2012 2011
F-17