Dish Network 2004 Annual Report Download - page 92

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
satellite were to fail during launch or while in-orbit, the resultant loss would be charged to expense in the period such
loss was incurred. The amount of any such loss would be reduced to the extent of insurance proceeds estimated to be
received, if any. Depreciation is recorded on a straight-line basis over lives ranging from one to forty years. Repair and
maintenance costs are charged to expense when incurred. Renewals and betterments are capitalized.
Long-lived Assets
We account for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). We review our long-
lived assets and identifiable intangible assets for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Based on the guidance under SFAS 144, we evaluate
our satellite fleet for recoverability as an asset group. For assets which are held and used in operations, the asset
would be impaired if the carrying value of the asset (or asset group) exceeded its undiscounted future net cash
flows. Once an impairment is determined, the actual impairment is reported as the difference between the carrying
value and the fair value as estimated using discounted cash flows. Assets which are to be disposed of are reported
at the lower of the carrying amount or fair value less costs to sell. We consider relevant cash flow, estimated future
operating results, trends and other available information in assessing whether the carrying value of assets are
recoverable.
Goodwill and Intangible Assets
We account for our goodwill and intangible assets in accordance with the provisions of Statement of Financial
Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), which requires goodwill
and intangible assets with indefinite useful lives not be amortized, but to be tested for impairment annually or
whenever indicators of impairments arise. Intangible assets that have finite lives continue to be amortized over their
estimated useful lives. Our intangible assets consist primarily of FCC licenses. Generally, we have determined that
our FCC licenses have indefinite useful lives due to the following:
• FCC spectrum is a non-depleting asset;
• Existing DBS licenses are integral to our business and will contribute to cash flows indefinitely;
• Replacement satellite applications are generally authorized by the FCC subject to certain conditions,
without substantial cost under a stable regulatory, legislative and legal environment;
• Maintenance expenditures in order to obtain future cash flows are not significant;
• DBS licenses are not technologically dependent; and
• We intend to use these assets for the foreseeable future.
In accordance with the guidance of EITF Issue No. 02-7, “Unit of Accounting for Testing Impairment of Indefinite-
Lived Intangible Asset,” ("EITF 02-7”) we combine all our indefinite life FCC licenses into a single unit of
accounting. The analysis encompasses future cash flows from satellites transmitting from such licensed orbital
locations, including revenue attributable to programming offerings from such satellites, the direct operating and
subscriber acquisition costs related to such programming, and future capital costs for replacement satellites.
Projected revenue and cost amounts included current and projected subscribers. In conducting our annual
impairment test in 2004, we determined that the estimated fair value of the FCC licenses, calculated using the
discounted cash flow analysis, exceeded their carrying amount.
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