Dish Network 2012 Annual Report Download - page 77

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The temporary differences, which give rise to deferred tax assets and liabilities as of December 31, 2012 and 2011,
are as follows:
2012 2011
Deferred tax assets:
NOL, credit and other carryforwards.......................................... 18,862$ 23,017$
Unrealized losses on investments................................................ - 48,452
Accrued expenses........................................................................ 76,274 95,903
Stock-based compensation.......................................................... 25,477 23,365
Deferred revenue......................................................................... 62,727 45,556
State taxes net of federal effect................................................... - 4,917
Total deferred tax assets.............................................................. 183,340 241,210
Valuation allowance.................................................................... (22,358) (97,501)
Deferred tax asset after valuation allowance............................... 160,982 143,709
Deferred tax liabilities:
Depreciation and amortization.................................................... (1,659,240) (1,066,476)
Unrealized gains on investments................................................. (10,853) -
Other long-term liabilities........................................................... (30,511) (26,943)
State taxes net of federal effect................................................... (23,256) -
Total deferred tax liabilities........................................................ (1,723,860) (1,093,419)
Net deferred tax asset (liability).................................................. (1,562,878)$ (949,710)$
Current portion of net deferred tax asset .................................... 99,854$ 73,014$
Current portion of net deferred tax liability................................. - (48,310)
Noncurrent portion of net deferred tax asset (liability)............... (1,662,732) (974,414)
Total net deferred tax asset (liability).......................................... (1,562,878)$ (949,710)$
As of December 31,
(In thousands)
Accounting for Uncertainty in Income Taxes
In addition to filing federal income tax returns, we and one or more of our subsidiaries file income tax returns in all
states that impose an income tax and a small number of foreign jurisdictions where we have immaterial operations.
We are subject to U.S. federal, state and local income tax examinations by tax authorities for the years beginning in
2002 due to the carryover of previously incurred net operating losses. We are currently under a federal income tax
examination for fiscal year 2008.
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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
A reconciliation of the beginning and ending amount of unrecognized tax benefits included in “Long-term deferred
revenue, distribution and carriage payments and other long-term liabilities” on our Consolidated Balance Sheets is
as follows:
Unrecognized tax benefit 2012 2011 2010
Balance as of beginning of period..................................................................................... $ 266,703 $ 193,320 $ 224,029
Additions based on t ax positions related to the current year.............................................. 110,435 44,357 7,382
Additions based on t ax positions related to prior years..................................................... - 34,762 11,800
Reductions based on tax positions re lated to prior years................................................... (19,413) (1,169) (45,197)
Reductions based on tax positions re lated to settlements with taxing authorities..............
(
1,739
)
(
1,185
)
(
493
)
Reductions based on tax positions re lated to the lapse of the statute of limitations ..........
(
9,335
)
(
3,382
)
(
4,201
)
Balance as of end of period............................................................................................... 346,651$ 266,703$ 193,320$
For the Years Ended December 31,
(In thousands)
We have $302 million in unrecognized tax benefits that, if recognized, could favorably affect our effective tax rate. We
do not expect any portion of this amount to be paid or settled within the next twelve months.
Accrued interest and penalties on uncertain tax positions are recorded as a component of “Other, net” on our
Consolidated Statements of Operations and Comprehensive Income (Loss). During the year ended December 31,
2012, we recorded less than $1 million in interest and penalty expense to earnings. During the year ended
December 31, 2011, we recorded $4 million in interest and penalty expense to earnings. During the year ended
December 31, 2010, we recorded $3 million in interest and penalty benefit to earnings. Accrued interest and
penalties were $17 million and $17 million at December 31, 2012 and 2011, respectively. The above table excludes
these amounts.
13. Stockholders’ Equity (Deficit)
Common Stock
The Class A, Class B and Class C common stock are equivalent except for voting rights. Holders of Class A and Class
C common stock are entitled to one vote per share and holders of Class B common stock are entitled to 10 votes per
share. Each share of Class B and Class C common stock is convertible, at the option of the holder, into one share of
Class A common stock. Upon a change in control of DISH Network, each holder of outstanding shares of Class C
common stock is entitled to 10 votes for each share of Class C common stock held. Our principal stockholder owns the
majority of all outstanding Class B common stock. Together with all other stockholders, he also owns outstanding
Class A common stock. There are no shares of Class C common stock outstanding.
Common Stock Repurchase Program
Our Board of Directors previously authorized the repurchase of up to $1.0 billion of our Class A common stock.
On November 2, 2012, our Board of Directors extended this authorization such that we are currently authorized to
repurchase up to $1.0 billion of outstanding shares of our Class A common stock through and including December
31, 2013. As of December 31, 2012, we may repurchase up to $1.0 billion under this plan. During the years ended
December 31, 2012 and 2011, there were no repurchases of our Class A common stock. During the year ended
December 31, 2010, we repurchased 6.0 million shares of our Class A common stock for $107 million in the
aggregate.
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