Echostar’s 108 Dish (DISH)

From AAO Weblog

One of the more substantial SAB 108 adjustments noted so far: Echostar Communications ratcheted up its accumulated deficit by another $62 million.

Reason being, from the 10-K/A:

“We adopted the provisions of SAB 108 during the fourth quarter of 2006. In accordance with the transition provisions of SAB 108, we recorded a $62.3 million cumulative increase, net of tax of $37.4 million, to accumulated deficit as of January 1, 2006. Historically, while our financial statements reflected payments to certain programming and other vendors for a full year, each 12-month period included several days or weeks from the prior calendar year. This discrepancy between our calendar and fiscal year for certain vendor accruals was immaterial to prior years’ consolidated financial statements. However, the growth of our subscriber base over the past 10 years has increased this discrepancy resulting in a cumulative increase to opening accumulated deficit of $78.4 million for programming obligations and $21.3 million for other vendor obligations.

That’s one of the odder errors seen so far: it sounds like the firm was paid for the full amounts due, but under-accrued for their responsibilities. When the payments get made, the balance sheet is under-levered. Different.

We concluded that these adjustments are immaterial to prior years’ consolidated financial statements under our previous method of assessing materiality, and therefore elected, as permitted under the transition provisions of SAB 108, to reflect the effect of these adjustments in liabilities as of January 1, 2006, with the offsetting adjustment reflected as a cumulative effect adjustment to opening accumulated deficit as of January 1, 2006.”

http://www.accountingobserver.com/blog/