Dish Network 1997 Annual Report Download - page 58

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
2. Summary of Significant Accounting Policies – Continued
F–11
Restricted cash and marketable investment securities held in escrow accounts, as reflected in the
accompanying consolidated balance sheets, include cash restricted by the various indentures associated with certain of
EchoStar’s debt financing transactions (see Note 5), plus investment earnings thereon. Restricted cash and marketable
investment securities are invested in certain permitted debt and other marketable investment securities until disbursed
for the express purposes identified in the applicable indenture.
As of December 31, 1996, other restricted cash included a total of $25 million held in two escrow accounts for
the benefit of EchoStar Receiver System manufacturers. These deposits were released from their respective escrow
accounts during May 1997. In addition, $6 million at December 31, 1996 was restricted by an indenture to satisfy
certain covenants pertaining to launch insurance for EchoStar II. This covenant was satisfied during September 1997.
The major components of Restricted Cash and Marketable Investment Securities are as follows (in thousands):
December 31, 1996 December 31, 1997
Amortized
Cost
Unrealized
Holding
Gain
Market
Value
Amortized
Cost
Unrealized
Holding
Loss
Market
Value
Commercial paper ............... $77,569 $ – $77,569 $128,743 $( 9) $128,734
Corporate notes ................... – – – 38,093 –38,093
Government bonds .............. 368 –368 16,706 (11) 16,695
Certificates of deposit .......... 1,100 –1,100 2,245 –2,245
Accrued interest .................. 254 –254 1,995 –1,995
$79,291 $ – $79,291 $187,782 $(20) $187,762
Marketable investment securities and restricted cash and marketable investment securities include debt
securities of $427 million with contractual maturities of one year or less, $28 million with contractual maturities of
between one and five years, and $4 million with contractual maturities of more than five years. Actual maturities may
differ from contractual maturities as a result of EchoStar’s ability to sell these securities prior to maturity.
Fair Value of Financial Instruments
Fair values for EchoStar’s 1994 Notes, 1996 Notes, 1997 Notes (as defined, see Note 5) and Series B Preferred Stock (as
defined, see Note 7) are based on quoted market prices. The fair values of EchoStar’s mortgages and other notes payable are
estimated using discounted cash flow analyses. The interest rates assumed in such discounted cash flow analyses reflect interest rates
currently being offered for loans with similar terms to borrowers of similar credit quality. The following table summarizes the book
and fair values of EchoStar’s debt facilities and Series B Preferred Stock at December 31, 1997 (in thousands):
Book Value
1994 Notes ................................ ................................ ........................... $499,863 $570,960
1996 Notes ................................ ................................ ........................... 438,512 488,650
1997 Notes ................................ ................................ ........................... 375,000 406,875
Mortgages and other notes payable ................................ ........................ 69,731 69,127
12 1/8% Series B Senior Redeemable Exchangeable Preferred Stock .......... 199,164 209,000