DISH NETWORK
CORPORATION
9601 South Meridian
Boulevard
Englewood, Colorado
80112
RESPONSE
TO SEC LETTER OF JUNE 4, 2009
July 1,
2009
Via EDGAR
Larry
Spirgel
Assistant
Director
Division
of Corporation Finance
U.S.
Securities and Exchange Commission
100 F.
Street, N.E.
Washington,
D.C. 20549-0404
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Re:
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DISH
Network Corporation (“DISH Network” or the
“Company”)
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Form 10-K
for the Fiscal Year Ended December 31, 2008
Filed
March 2, 2009
Form 10-Q
for the Quarterly Period Ended March 31, 2009
File No.
0-26176
Dear Mr.
Spirgel:
We are
supplying the following responses to the comments contained in your letter dated
June 4, 2009, regarding the above-referenced documents. Our responses
are numbered in accordance with the numbered comments in your
letter.
Form 10-K for the Year Ended
December 31, 2008
Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
General
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1.
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We note your response to prior
comment 2 and the disclosure in your Form 10-Q for March 31, 2009 to which
you refer.
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·
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Please quantify the impact of
the lost subscribers, both the regular churn and the loss of the AT&T
arrangement on your financial results. This should include a
dollar amount as well as the number of lost subscribers and should discuss
the trend for the year as well as the impact on the current quarter. If you know
the dollar impact of the loss of the AT&T arrangement, that
information should be provided.
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9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 2
of 16
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·
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Please quantify the higher fees
you will pay to access assets or receive certain services as a result of
the spin-off of assets to Echostar or disclose that the higher fees did
not have or will not have a significant impact on your
operations.
|
Please provide us with your proposed
disclosures.
Response:
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·
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Please quantify the impact of
the lost subscribers, both the regular churn and the loss of the AT&T
arrangement on your financial results. This should include a
dollar amount as well as the number of lost subscribers and should discuss
the trend for the year as well as the impact on the current
quarter. If you know the dollar impact of the loss of the
AT&T arrangement, that information should be
provided.
|
We make a
significant upfront investment in each new subscriber that we
acquire. Once the upfront investment has been recouped for a new
subscriber, the subsequent cash flow is generally positive. The
impact of the loss of an AT&T subscriber is generally no different than the
loss of any other subscriber. As described in our quarterly report on
Form 10-Q for the quarter ended March 31, 2009, average revenue per subscriber
was approximately $70.03 per month. Therefore, we would expect a
reduction of approximately $70.03 per month, on average, for each lost
subscriber.
With
respect to our AT&T relationship, as described in our response to prior
comment 2, AT&T was the largest telecommunications company that offered our
services. As described in our quarterly report on Form 10-Q for the
quarter ended March 31, 2009, AT&T accounted for approximately 17% of our
gross subscriber additions for the year ended December 31, 2008 and 5% of our
gross subscriber additions for the three months ended March 31,
2009. Our AT&T agreement expired on February 1, 2009 but we
continued to activate new subscribers that had ordered DISH Network service
through AT&T prior to February 1st. It may be difficult for us to
develop alternative distribution channels that will fully replace AT&T and
if we are unable to do so, our gross and net subscriber additions may be further
impacted, our subscriber churn may increase, and our results of operations may
be adversely affected. We cannot quantify the effect of the loss of our AT&T
relationship given the short period of time since it ended. In the
future, as we are able to assess the results of our alternative distribution
channels, we will be in a better position to determine if the loss of the
AT&T relationship has had a material impact on our financial
results.
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 3 of
16
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·
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Please quantify the higher
fees you will pay to access assets or receive certain services as a result
of the spin-off of assets to Echostar or disclose that the higher fees did
not have or will not have a significant impact on your
operations.
|
Please provide us with your proposed
disclosures.
In
response to the Staff’s comment, in future applicable SEC filings, we will
include the following disclosure (updated as appropriate to reflect the
then-current circumstances).
The
higher fees we pay to EchoStar Corporation to access assets or receive certain
services following the spin-off, after taking into account the cost savings
realized from the spin-off, have not had a significant impact on our
operations.
DISH Network subscribers,
page 43
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2.
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We note your response to prior
comment 4. As we previously requested, in your next filing,
show the actual subscribers and not your estimation of the number of
subscribers represented by commercial accounts. You may show
your estimations as separate calculations that are clearly labeled as
supplementary data.
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Response:
The
number of DISH Network subscribers represented by commercial accounts is
immaterial to our total subscriber count. For many of these
commercial accounts, we do not have detailed end-user information because they
are billed under bulk payment arrangements. We are not aware of any
uniform industry standards for calculating the number of subscribers for these
types of accounts and we do not believe the disclosure of actual commercial
accounts is material to the readers of our SEC filings. We will
include such disclosure in applicable future filings if the number of such
subscribers becomes material when compared to our overall subscriber
base.
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 4 of
16
Liquidity and Capital
Resources
Satellite-Related
Obligations, page 59
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3.
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We note your response to prior
comment 10. Please disclose in future filings your estimate of
the cost for the launch of the second satellite and the year that you
anticipate incurring the
cost.
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Response:
In
response to the Staff’s comment, in future applicable SEC filings, we will
include the following disclosure (updated as appropriate to reflect the
then-current circumstances).
We have not yet procured a contract
for the launch of our EchoStar XV satellite. While the cost of this
launch will depend upon the terms and conditions of the contract, we estimate
that the cost could range from approximately $XX million to $XX
million. We anticipate incurring this cost between the current period
and the expected launch of the satellite in late 2010.
Future Capital Requirements,
page 60
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4.
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We note your response to prior
comment 11. Please disclose your response in future
filings.
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Response:
In
response to the Staff’s comment, in future applicable SEC filings, we will
include the following disclosure (updated as appropriate to reflect the
then-current circumstances).
The majority of our capital
expenditures for 2009 are driven by our satellite-related obligations and firm
purchase obligations which include, among other things, the costs associated
with subscriber premises equipment. These expenditures are necessary
to operate and maintain DISH Network. Consequently, we consider them
to be non-discretionary.
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 5
of 16
Critical Accounting
Estimates
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5.
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We note your response to prior
comment 13. Please revise your proposed disclosure to discuss
the methodologies and assumptions that are being used to value
assets. In situations where you are estimating useful life or
some other measurement, please provide sensitivity
analyses. Please provide us with your proposed
disclosures.
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Response:
In
response to the Staff’s comments, in our future applicable SEC filings, we will
include the following proposed disclosures under “Critical Accounting
Estimates.” For your reference, the additional disclosures
addressing your comments are underlined.
Critical Accounting
Estimates
The
preparation of the consolidated financial statements in conformity with GAAP
requires management to make estimates, judgments and assumptions that affect
amounts reported therein. Management bases its estimates, judgments
and assumptions on historical experience and on various other factors that are
believed to be reasonable under the circumstances. Due to the
inherent uncertainty involved in making estimates, actual results reported in
future periods may be affected by changes in those estimates. The
following represent what we believe are the critical accounting policies that
may involve a high degree of estimation, judgment and complexity. For
a summary of our significant accounting policies, including those discussed
below, see the applicable Notes to the Consolidated Financial Statements in the
applicable 10-K.
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·
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Capitalized
satellite receivers. Since
we retain ownership of certain equipment provided pursuant to our
subscriber equipment lease programs, we capitalize and depreciate
equipment costs that would otherwise be expensed at the time of
sale. Such capitalized costs are depreciated over the estimated
useful life of the equipment, which is based on, among other things,
management’s judgment of the risk of technological
obsolescence. Because of the inherent difficulty of making this
estimate, the estimated useful life of capitalized equipment may change
based on, among other things, historical experience and changes in
technology as well as our response to competitive
conditions. Changes in estimated useful life may impact
“Depreciation and amortization” on our Consolidated Statements of
Operations and Comprehensive Income (Loss). For
example, if we changed the estimated useful life of our capitalized
subscriber equipment by one year, annual depreciation expense would change
by approximately $XX
million.
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9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 6 of
16
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Accounting
for investments in private and publicly-traded
securities. We
hold debt and equity interests in companies, some of which are publicly
traded and have highly volatile prices. We record an investment
impairment charge in “Other, net” within “Other Income (Expense)” on our
Consolidated Statements of Operations and Comprehensive Income (Loss) when
we believe an investment has experienced a decline in value that is judged
to be other-than-temporary. We monitor our investments for
impairment by considering current factors including economic environment,
market conditions and the operational performance and other specific
factors relating to the business underlying the
investment. Future adverse changes in these factors could
result in losses or an inability to recover the carrying value of the
investments that may not be reflected in an investment’s current carrying
value, thereby possibly requiring an impairment charge in the
future.
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●
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Fair
value of financial instruments. Fair value
estimates of our financial instruments are made at a point in time, based
on relevant market data as well as the best information available about
the financial instrument. Recent economic conditions have
resulted in inactive markets for certain of our financial instruments,
including Mortgage-Backed Securities (“MBS”) and Auction Rate Securities
(“ARS”). For certain of these instruments, there is no or
limited observable market data. Fair value estimates for
financial instruments for which no or limited observable market data is
available are based on judgments regarding current economic conditions,
liquidity discounts, currency, credit and interest rate risks, loss
experience and other factors. These estimates involve
significant uncertainties and judgments and may be a less precise
measurement of fair value as compared to financial instruments where
observable market data is available. We
make certain assumptions related to expected maturity date, credit and
interest rate risk based upon market conditions and prior
experience. As a result, such calculated fair value
estimates may not be realizable in a current sale or immediate settlement
of the instrument. In addition, changes in the underlying
assumptions used in the fair value measurement technique, including
liquidity risks, and estimate of future cash flows, could significantly
affect these fair value estimates, which could have a material adverse
impact on our financial position and results of
operations. For
example, as of December 31, XXXX, we held $XX million of securities that
lack observable market quotes and a 10% decrease in our estimated fair
value of these securities would result in a decrease of the reported
amount by approximately $XX
million.
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9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 7 of
16
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●
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Valuation
of long-lived assets. We evaluate the carrying
value of long-lived assets to be held and used, other than goodwill and
intangible assets with indefinite lives, when events and circumstances
warrant such a review. We evaluate our satellite fleet for
recoverability as one asset group, see the applicable Notes to the
Consolidated Financial Statements in the applicable 10-K. The
carrying value of a long-lived asset or asset group is considered impaired
when the anticipated undiscounted cash flows from such asset or asset
group is less than its carrying value. In that event, a loss is
recorded in “Impairments of indefinite-lived and long-lived assets” on our
Consolidated Statements of Operations and Comprehensive Income (Loss)
based on the amount by which the carrying value exceeds the fair value of
the long-lived asset or asset group. Fair value is determined
primarily using the estimated cash flows associated with the asset or
asset group under review, discounted at a rate commensurate with the risk
involved. Losses on long-lived assets to be disposed of by sale
are determined in a similar manner, except that fair values are reduced
for estimated selling costs. Among other reasons, changes in
estimates of future cash flows could result in a write-down of the asset
in a future period.
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●
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Valuation
of goodwill and intangible assets with indefinite
lives. We evaluate the carrying value of
goodwill and intangible assets with indefinite lives annually, and also
when events and circumstances warrant. We use estimates of fair
value to determine the amount of impairment, if any, of recorded goodwill
and intangible assets with indefinite lives. Fair value is
determined primarily using the estimated future cash flows, discounted at
a rate commensurate with the risk involved. While our
impairment tests in 2008 indicated the fair value of our intangible assets
were significantly above their carrying amounts, significant changes in
our estimates of future cash flows could result in a write-down of
goodwill and intangible assets with indefinite lives in a future period,
which would be recorded in “Impairments of goodwill, indefinite-lived and
long-lived assets” on our Consolidated Statements of Operations and
Comprehensive Income (Loss) and could be material to our consolidated
results of operations and financial position. A
10% decrease in the estimated future cash flows or a 10% increase in the
discount rate used in estimating the fair value of these assets (while all
other assumptions remain unchanged) would not result in these assets being
impaired.
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9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 8 of
16
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●
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Income
taxes. Our income tax policy is to record the
estimated future tax effects of temporary differences between the tax
bases of assets and liabilities and amounts reported in the accompanying
consolidated balance sheets, as well as operating loss and tax credit
carryforwards. Determining necessary valuation allowances
requires us to make assessments about the timing of future events,
including the probability of expected future taxable income and available
tax planning opportunities. We periodically evaluate our need
for a valuation allowance based on both historical evidence, including
trends, and future expectations in each reporting period. Any
such valuation allowance is recorded in either “Income tax (provision)
benefit, net” on our Consolidated Statements of Operations and
Comprehensive Income (Loss) or “Accumulated other comprehensive income
(loss) within “Stockholders’ equity (deficit)” on our Consolidated Balance
Sheets. Future performance could have a significant effect on
the realization of tax benefits, or reversals of valuation allowances, as
reported in our consolidated results of
operations.
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●
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Uncertainty
in tax positions. Management
evaluates the recognition and measurement of uncertain tax positions based
on applicable tax law, regulations, case law, administrative rulings and
pronouncements and the facts and circumstances surrounding the tax
position. Changes in our estimates related to the recognition and
measurement of the amount recorded for uncertain tax positions could
result in significant changes in our “Income tax provision (benefit),”
which could be material to our consolidated results of
operations.
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●
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Contingent
liabilities. A
significant amount of management judgment is required in determining when,
or if, an accrual should be recorded for a contingency and the amount of
such accrual. Estimates generally are developed in consultation
with outside counsel and are based on an analysis of potential
outcomes. Due to the uncertainty of determining the likelihood
of a future event occurring and the potential financial statement impact
of such an event, it is possible that upon further development or
resolution of a contingent matter, a charge could be recorded in a future
period to “General and administrative expenses” on our Consolidated
Statements of Operations and Comprehensive Income (Loss) that would be
material to our consolidated results of operations and financial
position.
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9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 9 of
16
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6.
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We note your response to prior
comment 15. Please revise your proposed disclosure to provide
the quantitative information that was requested for Critical Accounting
Estimates. As we previously requested, please provide us with a
more detailed description of the models. Provide us with a
detailed description of the inputs (for example, the discount rates used)
and information used to develop those inputs for your
models. Tell us how your approach complies with paragraph 30
and the related appendices of SFAS 157. Further, please address
the following:
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·
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Since the securities are
considered illiquid, tell us the amount of the liquidity discount assigned
to such securities, if any, and your basis for that
discount. If a liquidity discount was not assigned, tell us
why.
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·
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Describe your assumptions about
risk – including quantitative
data.
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Please revise your disclosures in
critical accounting policies to include a detailed discussion of your accounting
policy. Further, provide a sensitivity analysis of your assumptions
based upon reasonably likely changes. For further guidance, refer to
Release No. 33-8350 “Interpretation: Commission Guidance
Regarding Management’s Discussion and Analysis of Financial Condition and
Results of Operations.”
Please provide us with your proposed
disclosures.
Response:
As of
December 31, 2008, our noncurrent marketable investment securities in Auction
Rate Securities, or ARS, and Mortgage Backed Securities, or MBS, which are
considered Level 3 per SFAS 157 guidance, were estimated and reported at $113
million. A 10% decrease in value of these securities would result in
a decrease in the overall value of these securities by approximately $11
million.
In
response to the Staff’s comment, we provided our proposed sensitivity disclosure
in the draft critical accounting estimates included in Response No.
5. Set forth below is a summary of our valuation models for MBS and
ARS, which are consistent with the guidance outlined in paragraph 30 in SFAS
157.
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 10
of 16
For MBS
that are considered to be illiquid, we used a three-step valuation model to
estimate their fair value.
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1.
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We
group MBS based on credit rating and expected date to maturity using
historical principal pay down rates into one of the following three
tranches:
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●
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AAA
credit-rated expected to pay off within 1
year;
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●
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AAA
credit-rated expected to pay off between 1-3 years;
or
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●
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Less
than AAA credit-rated and/or an expected pay off greater than 3
years.
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2.
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After
the bonds are separated into one of the above three tranches, we ascertain
comparable market trades for individual securities within each
tranche.
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3.
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The
comparable market price is adjusted for a liquidity discount that
historically has ranged from 0-10%, depending, primarily, on the expected
date to maturity, maturity volatility characteristics and credit
risks. The resulting price is the estimated value that we
believe to be the exit price for selling the particular MBS in an orderly
transaction.
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We use a
security-specific valuation model to measure the fair value of our
ARS. We hold two basic types of ARS, ARS collateralized by a specific
bond and ARS collateralized by more than one bond and other assets.
ARS
collateralized by a specific bond are those that issue multiple classes of
certificates, and collectively, the economics of the combined classes equate to
100% of the economics of the underlying collateral. Ownership by an
investor of the two classes together may be exchanged for the underlying
collateral pursuant to a conversion right in the securities’ offering
documents. We value our investments by looking to the underlying
collateral of these securities using the following approach:
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1.
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Actual
market trades, if available; or
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2.
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If
actual market trades are not available, then comparable market trades,
which are determined based upon maturity date, credit rating and coupon
rate.
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9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 11
of 16
Once the
value of the underlying collateral has been determined in its entirety, we
estimate the fair value of the specific classes of certificates not owned by us
through evaluation of non-binding dealer quotes. These quotes are
primarily influenced by the expected maturity date, credit rating, spread and
coupon rate basis of the underlying collateral and the specific risks and
rewards of ownership in that respective class. The value of the
specific class we do not own is subtracted from the value of the collateral in
its entirety to estimate the fair value of the class we own. We do
not apply a liquidity discount to this type of security as we likely have the
ability to purchase the other classes of certificates we currently do not own
and convert the collective classes for the underlying collateral (marketable
security) without penalty or discount. If that occurs, then we would
have an investment in the underlying marketable bond, for which observable
market trades or observable comparable market trades are available, as indicated
above.
ARS
collateralized by more than one bond and other assets are valued by obtaining
comparable market trades for comparable securities with like maturity dates,
credit ratings, spreads and coupon rate basis, from which the comparable price,
yield and implied credit and liquidity spread is determined. We use a
discounted cash flow model and have applied a liquidity discount for each of
these securities, depending on the expected date to maturity, maturity
volatility characteristics and credit spread, of less than 10% of par
value. The comparable security price and yield with the corresponding
additional liquidity discount results in the estimated value that we believe is
the exit price for selling the security in an orderly transaction.
Notes to Consolidated
Financial Statements
2. Summary of
Significant Accounting Policies
Principles of Consolidation
and Basis of Presentation, page F-10
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7.
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We note your response to prior
comment 16. Please provide us with your SAB 99
analysis.
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9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 12
of 16
Response:
In our
financial statements issued prior to the third quarter 2008, we had classified
VRDNs as “Cash and cash equivalents.” These VRDNs should have been
classified as “Marketable investment securities.” As of September 30,
2008, we included our VRDNs in “Marketable investment securities” and
reclassified all prior periods to conform to the current period
presentation. This reclassification affected our financial statements
as follows:
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●
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Condensed
Consolidated Balance Sheets – A reclassification from “Cash and cash
equivalents” to “Marketable investment securities” both of which are
current assets and therefore, there was no reclassification between
current and long-term assets.
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●
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Condensed
Consolidated Statements of Cash Flows – A reclassification between “Net
cash flows from investing activities” which was previously overstated with
the offset to “Net increase (decrease) in cash and cash
equivalents.”
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It is
unlikely that the judgment of a reasonable person relying upon the financial
statements would have been changed or influenced by this
reclassification. Since “Cash and cash equivalents” and “Marketable
investment securities” are the two most liquid captions on the Consolidated
Balance Sheets, changes between the two do not affect any significant metrics
that investors are likely to track for DISH Network as discussed in the
qualitative assessment below. Also, while the VRDNs are classified as
“Marketable Investment Securities,” they can be liquidated per the put option on
a same day or on a five business day settlement basis.
DISH
Network management’s assessment of each of the qualitative considerations within
SAB 99 is presented below in italics. This assessment indicates that
the reclassification is immaterial from a qualitative perspective.
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·
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Whether the misstatement arises
from items capable of precise measurement or whether they arise from an
estimate and, if so, the degree of imprecision inherent in the
estimate
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This represents a reclassification
between two financial statement captions within current assets. It is
not an estimation or measurement issue.
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 13
of 16
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·
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Whether the misstatement masks
a change in earnings or other
trends
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This reclassification had no
effect on reported earnings and therefore did not mask a change in earnings or
other trends.
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·
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Whether the misstatement hides
a failure to meet analysts’ consensus expectations for the
enterprise
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This reclassification had
no effect on any of the key measures used by analysts in evaluating our
financial or operating performance and therefore did not affect our ability to
meet analysts’ consensus expectations (see DISH Network specific considerations
below).
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·
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Whether the misstatement
changes a loss into income or vice
versa
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This reclassification had
no effect on reported earnings. As the purchases and sales of VRDNs
were at par, the purchases and sales had no effect on any revenue
classifications. Notwithstanding the classification on the balance
sheet, the related income is still represented in its entirety as interest
income.
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·
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Whether the misstatement
concerns a segment or other portion of the registrant’s business that has
been identified as playing a significant role in the registrant’s
operations or profitability
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The reclassification does not
concern a specific segment or other critical portion of the
business.
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·
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Whether the misstatement
affects the registrant’s compliance with regulatory
requirements
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The reclassification has no impact
on compliance with any regulatory requirements.
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·
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Whether the misstatement
affects the registrant’s compliance with loan covenants or other
contractual requirements
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The reclassification does not affect
loan covenants or any other contractual requirements.
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·
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Whether the misstatement has
the affect of increasing management’s compensation - for example, by
satisfying requirements for the award of bonuses or other forms of
incentive compensation
|
The reclassification has no
effect on compensation.
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 14
of 16
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●
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Whether the misstatement
involves concealment of an unlawful
transaction
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There is no concealment of any
unlawful transactions.
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·
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Among other factors, the
demonstrated volatility of the price of a registrant’s securities in
response to certain types of disclosures may provide guidance as to
whether investors regard quantitatively small misstatements as material.
Consideration of potential market reaction to disclosure of a misstatement
is by itself “too blunt an instrument to be depended on” in considering
whether a fact is material. When, however, management or the
independent auditor expects (based, for example, on a pattern of market
performance) that known misstatements may result in a significant positive
or negative market reaction, that expected reaction should be taken into
account when considering whether a misstatement is
material.
|
We did not expect this
reclassification to result in a market reaction, either positive or
negative. Based on the changes in market price of DISH Network stock
subsequent to this reclassification, we believe our analysis was
accurate. See DISH Network specific considerations
below.
DISH
Network
Specific
Considerations
We
believe the following metrics, measures or financial statement captions are
the primary ones used by the readers of our SEC filings to evaluate our
operating efficiency and overall financial performance:
GAAP
Items
Net
Income (loss) and earnings per share
Operating
income (loss)
Net cash
flow from operating activities
Assets
& liabilities (current v. non-current and in total)
Key Non-GAAP
Measures/Metrics
ARPU
Churn
Sub
Growth
SAC
EBITDA
Free cash
flow
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 15
of 16
The
reclassification between “Cash and cash equivalent” and “Marketable investment
securities” does not impact any of the above metrics.
The
quantitative effects of the reclassification were as follows:
|
As of December 31,
2007
|
||||||||||||||||
|
As
|
As
|
Change
|
||||||||||||||
|
Balance
Sheet:
|
Reported
|
Adjusted
|
$
|
% | ||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Cash
and cash equivalent
|
$ |
1,180,818
|
$ |
919,542
|
$ | (261,276 | ) | (22 | ) | |||||||
|
Marketable
investment securities
|
1,607,378
|
1,868,654
|
261,276
|
16
|
||||||||||||
|
For the Year Ended December 31,
2007
|
||||||||||||||||
|
As
|
As
|
Change
|
||||||||||||||
|
Statements of Cash
Flows:
|
Reported
|
Adjusted
|
$
|
% | ||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Net
cash flows from investing activities
|
$ | (2,382,992 | ) | $ | (2,470,832 | ) | $ |
(87,840
|
) |
(4
|
) | |||||
|
Net
increase (decrease) in cash and cash equivalent
|
(742,287 | ) | (830,128 | ) |
(87,841
|
) |
(12
|
) | ||||||||
|
For the Year Ended December 31,
2006
|
||||||||||||||||
|
As
|
As
|
Change
|
||||||||||||||
|
Reported
|
Adjusted
|
$
|
% | |||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Net
cash flows from investing activities
|
$ | (1,993,953 | ) | $ | (2,148,968 | ) | $ | (155,015 | ) | (8 | ) | |||||
|
Net
increase (decrease) in cash and cash equivalent
|
1,307,436
|
1,152,421
|
(155,015 | ) | (12 | ) | ||||||||||
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299
Mr. Larry
Spirgel
United
States Securities and Exchange Commission
Page 16
of 16
In
accordance with your request, we acknowledge that:
|
●
|
We
are responsible for the adequacy and accuracy of the disclosure in our
filings;
|
|
●
|
Staff
comments or changes to disclosures in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filings; and
|
|
●
|
We
may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the
United States.
|
We
appreciate your assistance in our compliance with applicable disclosure
requirements and enhancing the overall disclosures in our
filings. Should you have any questions or comments regarding our
responses, please call me at (303) 723-1285. I can also be reached by
fax at (720) 514-5957.
Sincerely,
/s/ Robert E.
Olson
Robert E.
Olson
Executive Vice President
and Chief Financial Officer
cc: Kyle
Moffatt, SEC
Dean
Suehiro, SEC
9601
South Meridian Blvd., Englewood, CO 80112 Tel:
303.723.1000 Fax: 303.723.1299