EchoStar Holds 4Q Nos. Due to SEC Talks3/11/2004 4:31 AM Eastern
EchoStar Communications Corp. has delayed releasing its fourth-quarter financial results as it continues discussions with the Securities and Exchange Commission, which claimed that the direct-broadcast satellite service provider overaccrued $17 million and $9 million for smart cards in 2001 and 2002, respectively.
Those cards -- which provide security that allows only paying customers to receive programming delivered by EchoStar -- became obsolete as a result of piracy.
From 1996-2002, EchoStar gradually established a reserve to accrue for the estimated cost to replace the cards, which are included in satellite receivers EchoStar sells and leases to consumers.
The SEC concluded that EchoStar's accrual to replace the smart cards in satellite receivers sold to and owned by consumers was appropriate. However, the commission determined that the company should not have accrued a liability for smart cards in satellite receivers owned by EchoStar and leased to consumers
EchoStar said it would likely delay the filing of its 10-K annual report until March 30, at which time it would also release its fourth-quarter financial statements. The Denver-based company said it will likely have to restate its 2001 financial statements to account for the reversal of the $17 million accrual.
The company said in a prepared statement that the SEC has no other outstanding issues regarding its financial or other reporting.
EchoStar said it added 340,000 net new subscribers in the fourth quarter, finishing the year with 9.45 million customers. Its stock rose $1.23 per share Thursday, closing at $35.35 each.