Dish Network 2014 Annual Report Download - page 83

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
73
73
LIQUIDITY AND CAPITAL RESOURCES
Cash, Cash Equivalents and Current Marketable Investment Securities
We consider all liquid investments purchased within 90 days of their maturity to be cash equivalents. See “Item 7A.
– Quantitative and Qualitative Disclosures About Market Risk” for further discussion regarding our marketable
investment securities. As of December 31, 2014, our cash, cash equivalents and current marketable investment
securities totaled $9.236 billion compared to $9.739 billion as of December 31, 2013, a decrease of $503 million.
This decrease in cash, cash equivalents and current marketable investment securities primarily resulted from the
$1.343 billion paid related to the acquisition of the H Block wireless spectrum licenses, $1.320 billion related to
AWS-3 auction deposits, capital expenditures of $1.216 billion and $1.1 billion in repurchases and redemption of
our long-term debt, partially offset by cash of $2.408 billion generated from continuing operations and $1.992
billion in net proceeds from the issuance of long-term debt.
AWS-3 Auction. On February 13, 2015, Northstar Wireless and SNR Wireless each filed applications with the FCC
to acquire certain AWS-3 Licenses that were made available in the auction designated by the FCC as the AWS-3
Auction for which it was named as winning bidder and had made the required down payments. Issuance of any
AWS-3 licenses to Northstar Wireless or SNR Wireless depends, among other things, upon the FCC’s review and
approval of the applications filed by Northstar Wireless and SNR Wireless. We cannot predict the timing or the
outcome of the FCC’s review of those applications. We own an 85% non-controlling interest in each of Northstar
Spectrum and SNR Holdco, the parent companies of Northstar Wireless and SNR Wireless, respectively. After
Northstar Wireless and SNR Wireless have made the final payments to the FCC for the AWS-3 licenses, our total
non-controlling equity and debt investments in these entities and their parent companies, respectively, will be
approximately $9.778 billion. We have funded and will fund these investments from existing cash and marketable
investment securities. Such funding has included and will include $899 million in total equity and debt investments
in the Northstar Entities and SNR Entities during the fourth quarter 2014, cash and marketable investment securities
as of December 31, 2014, cash generated from operations during 2015, and a $400 million refund from the FCC to
one of our wholly-owned subsidiaries related to the AWS-3 Auction. Under the applicable accounting guidance in
ASC 810, Northstar Spectrum and SNR Holdco are considered variable interest entities and, based on the
characteristics of the structure of these entities and in accordance with the applicable accounting guidance, we have
consolidated these entities into our financial statements beginning in the fourth quarter 2014. See Note 2 in the Notes
to our Consolidated Financial Statements in this Annual Report on Form 10-K for further discussion.
In the event that the FCC grants the Northstar Licenses and the SNR Licenses, we may need to make significant
additional loans to the Northstar Entities and the SNR Entities, or they may need to partner with others, so that the
Northstar Entities and the SNR Entities may commercialize, build-out and integrate the Northstar Licenses and the
SNR Licenses, and comply with regulations applicable to the Northstar Licenses and the SNR Licenses. Depending
upon the nature and scope of such commercialization, build-out, integration efforts, and regulatory compliance, any
such loans or partnerships could vary significantly. There can be no assurance that we will be able to obtain a
profitable return on our non-controlling investments in the Northstar Entities and the SNR Entities.
We have used a substantial portion of our existing cash and marketable investment securities to fund our non-
controlling debt and equity investments in the Northstar Entities and the SNR Entities. As a result of, among other
things, these non-controlling investments, we may need to raise significant additional capital in the future, which
may not be available on acceptable terms or at all. In addition, economic weakness or weak results of operations
may limit our ability to generate sufficient internal cash to fund these non-controlling debt and equity investments,
capital expenditures, acquisitions and other strategic transactions, as well as to fund ongoing operations and service
our debt. As a result, these conditions make it difficult for us to accurately forecast and plan future business
activities because we may not have access to funding sources necessary for us to pursue organic and strategic
business development opportunities. See Note 16 “Commitments and Contingencies – Wireless Spectrum” in the
Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K for further discussion.
The following discussion highlights our cash flow activities during the years ended December 31, 2014, 2013 and
2012.