Dish Network 2013 Annual Report Download - page 89

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
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The increase in “Net cash outflows from investing activities from continuing operations” from 2011 to 2012 of $221
million primarily related to net purchases of marketable investment securities of $2.728 billion and an increase in
capital expenditures of $185 million, partially offset by a decrease in net purchases of strategic investments of $2.755
billion. The increase in capital expenditures included $37 million for satellites, $26 million associated with our Pay-TV
and Broadband subscriber acquisition and retention lease programs and $122 million of other corporate capital
expenditures. The decrease in net purchases of strategic investments primarily resulted from our 2011 investments in
DBSD North America of $1.139 billion and in TerreStar of $1.345 billion.
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Cash flows from financing activities from continuing operations. Our financing activities generally include net
proceeds related to the issuance of long-term debt, cash used for the repurchase, redemption or payment of long-term
debt and capital lease obligations, dividends paid on our Class A and Class B common stock and repurchases of our
Class A common stock. For the years ended December 31, 2013, 2012 and 2011, we reported “Net cash inflows from
financing activities from continuing operations” of $1.852 billion, $4.004 billion and $94 million, respectively.
The net cash inflows in 2013 primarily resulted from net proceeds of $2.292 billion from the issuance in April 2013 of
our 4 1/4% Senior Notes due 2018 and 5 1/8% Senior Notes dues 2020, partially offset by the repurchases and
redemption of our 7% Senior Notes due 2013 of $500 million.
The net cash inflows in 2012 primarily related to the net proceeds of $4.387 billion from the issuance of our 5 7/8%
Senior Notes due 2022, our 4 5/8% Senior Notes due 2017 and our 5% Senior Notes due 2023, partially offset by the
$453 million dividend paid in cash on our Class A and Class B common stock.
The net cash inflows in 2011 primarily related to the net proceeds of $1.973 billion from the issuance of our 6 3/4%
Senior Notes due 2021, partially offset by the repurchases and redemption of our 6 3/8% Senior Notes due 2011 of $1.0
billion and the $893 million dividend paid in cash on our Class A and Class B common stock.
Other Liquidity Items
Subscriber Base
DISH added approximately 1,000 net Pay-TV subscribers during the year ended December 31, 2013, compared to
the addition of approximately 89,000 net Pay-TV subscribers during the same period in 2012. The decrease versus
the same period in 2012 primarily resulted from lower gross new Pay-TV subscriber activations. See “Results of
Operations” above for further discussion. There are a number of factors that impact our future cash flow compared
to the cash flow we generate at any given point in time, including our Pay-TV churn rate and how successful we are
at retaining our current Pay-TV subscribers. As we lose Pay-TV subscribers from our existing base, the positive
cash flow from that base is correspondingly reduced.
Satellites
Operation of our pay-TV service requires that we have adequate satellite transmission capacity for the programming
we offer. Moreover, current competitive conditions require that we continue to expand our offering of new
programming. While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels
and some backup capacity to recover the transmission of certain critical programming, our backup capacity is
limited. In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite
capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a
failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand
programming as necessary to remain competitive and cause us to expend a significant portion of our cash to acquire
or lease additional satellite capacity.