Dish Network 2013 Annual Report Download - page 98

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - Continued
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Restricted Cash and Marketable Investment Securities and Noncurrent Marketable and Other Investment
Securities
Restricted Cash and Marketable Investment Securities
As of December 31, 2013, we had $95 million of restricted cash and marketable investment securities invested in:
(a) cash; (b) VRDNs convertible into cash at par value plus accrued interest generally in five business days or less;
(c) debt instruments of the United States Government and its agencies; (d) commercial paper and corporate notes
with an overall average maturity of less than one year and rated in one of the four highest rating categories by at
least two nationally recognized statistical rating organizations; and/or (e) instruments with similar risk, duration and
credit quality characteristics to the commercial paper described above. Based on our December 31, 2013 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 Other Investment Securities
As of December 31, 2013, we held investments in ARS and other investment securities of $134 million, which are
reported at fair value. Events in the credit markets have reduced or eliminated current liquidity for certain of our
ARS 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
$13 million in the fair value of these investments.
Long-Term Debt
As of December 31, 2013, we had long-term debt of $13.431 billion, excluding capital lease obligations, on our
Consolidated Balance Sheets. We estimated the fair value of this debt to be approximately $14.047 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 $319 million. To the extent interest rates increase, our costs of
financing would increase at such time as we are required to refinance our debt or raise additional debt. As of
December 31, 2013, a hypothetical 10% increase in assumed interest rates would increase our annual interest
expense by approximately $82 million.
Derivative Financial Instruments
From time to time, we invest in speculative financial instruments, including derivatives. As of December 31, 2013, we
held derivative financial instruments indexed to the trading price of common equity securities with a fair value of $293
million. The fair value of the derivative financial instruments is dependent on the trading price of the indexed common
equity which may be volatile and vary depending on, among other things, the issuer’s financial and operational
performance and market conditions. A hypothetical 10% adverse change in the market value of the underlying
common equity securities would result in a decrease of approximately $29 million in the fair value of these
investments.
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
None.