Dish Network 2004 Annual Report Download - page 88

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
Significant Risks and Uncertainties
Substantial Leverage. We are highly leveraged, which makes us vulnerable to changes in general economic
conditions. As of December 31, 2004, we had outstanding long-term debt (including both the current and long-term
portions) totaling approximately $5.803 billion. We have quarterly and semi-annual cash interest requirements for
all of our outstanding long-term debt securities, as follows:
Annual
Quarterly/Semi-Annual Debt Service
Payment Dates Requirements
5 3/4% Convertible Subordinated Notes due 2008 ....... May 15 and November 15 57,500,000$
9 1/8% Senior Notes due 2009........................................ January 15 and July 15 40,711,461$
3% Convertible Subordinated Note due 2010 ................ June 30 and December 31 15,000,000$
Floating Rate Senior Notes due 2008.............................. January 1, April 1, July 1 and October 1 29,050,000$
5 3/4% Senior Notes due 2008 ....................................... April 1 and October 1 57,500,000$
6 3/8% Senior Notes due 2011........................................ April 1 and October 1 63,750,000$
3% Convertible Subordinated Note due 2011................. June 30 and December 31 750,000$
6 5/8% Senior Notes due 2014........................................ April 1 and October 1 66,250,000$
Interest accrues on our Floating Rate Senior Notes due 2008 based on the three month London Interbank Offered
Rate (“LIBOR”) plus 3.25%. The interest rate at December 31, 2004 was 5.81%. Semi-annual cash interest
requirements related to our 3% Convertible Subordinated Note due 2011 commenced on December 31, 2004.
Semi-annual cash interest requirements related to our 6 5/8% Senior Notes due 2014 will commence on April 1,
2005. There are no scheduled principal payment or sinking fund requirements prior to maturity on any of these
notes. Our ability to meet our debt service requirements will depend on, among other factors, the successful
execution of our business strategy, which is subject to uncertainties and contingencies beyond our control.
2. Summary of Significant Accounting Policies
Basis of Presentation
Effective January 1, 2004, we combined “Subscription television service” revenue and “Other subscriber-related
revenue” into “Subscriber-related revenue.” Additionally, “Equipment sales” and “Cost of sales – equipment” now
include non-DISH Network receivers and other accessories sold by our EchoStar International Corporation subsidiary
to international customers which were previously included in “Other” revenue and “Cost of sales – other,” respectively.
All prior period amounts were reclassified to conform to the current period presentation. Certain other prior year
amounts have been reclassified to conform with the current year presentation.
Principles of Consolidation
We consolidate all majority owned subsidiaries and investments in entities in which we have controlling influence.
Non-majority owned investments are accounted for using the equity method when we have the ability to
significantly influence the operating decisions of the investee. When we do not have the ability to significantly
influence the operating decisions of an investee, the cost method is used. For entities that are considered variable
interest entities we apply the provisions of FASB Interpretation No. (FIN) 46-R, “Consolidation of Variable Interest
Entities, and Interpretation of ARB No. 51” (“FIN 46-R”). All significant intercompany accounts and transactions
have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
(“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
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