Dish Network 1998 Annual Report Download - page 57

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–10
Restrictions on cash held in escrow under the terms of indentures were removed as a result of the Tender
Offers. The restricted cash balances as of December 31, 1998 have been reclassified and included in the “as
adjusted” amount of cash, cash equivalents and marketable investment securities. The restriction on the insurance
receivable of $106 million (not shown) was also removed.
The increase in as adjusted and pro forma total assets includes $1.17 billion of assets to be acquired by
EchoStar pursuant to the 110 Acquisition offset by an approximately $48.1 million decrease in total cash, cash
equivalents and marketable investment securities as a result of the Tender Offers and EchoStar’s redemption on
February 8, 1999, of all of its outstanding Series A Preferred Stock and related accumulated dividends
(approximately $91 million).
The increase in additional paid-in capital consists of the additional assets valued at $1.17 billion, to be
acquired by EchoStar in the 110 Acquisition. Based on the 20 trading day average closing price of EchoStar’s Class
A Shares of $51.05 as of March 11, 1999, EchoStar would have issued 22,918,707 shares to consummate the 110
Acquisition.
The increase in accumulated deficit results from (a) interest expense of approximately $13.3 million from
December 31, 1998 through January 25, 1999, the date of consummation of the Tender Offers (other than with
respect to the Senior Exchange Notes) on debt repurchased and paid, (b) dividends on the Series B Preferred Stock
for the period between January 1, 1999 and January 4, 1999 (the date on which the Series B Preferred Stock was
exchanged into Senior Exchange Notes) and interest expense on the Senior Exchange Notes for the period between
January 4, 1999 and February 2, 1999 (the closing date of that Tender Offer) totaling approximately $2.5 million,
(c) approximately $70 million representing the excess of the $91 million redemption price for the Series A Preferred
Stock over its carrying value at December 31, 1998 and (d) the estimated extraordinary loss upon the early
retirement of the notes pursuant to the Tender Offers of approximately $269 million (approximately $236 million of
tender premiums and consent fees and approximately $33 million associated with the write-off of unamortized
deferred financing costs and other transaction-related costs) that EchoStar will report in 1999.
Organization and Legal Structure
Certain companies principally owned and controlled by Mr. Charles W. Ergen were reorganized in 1993
into Dish, Ltd. (together with its subsidiaries, “Dish, Ltd.”). In April 1995, ECC was formed to complete an initial
public offering of its Class A common stock. Concurrently, Mr. Ergen exchanged all of his then outstanding shares
of Class B common stock and 8% Series A Cumulative Preferred Stock of Dish, Ltd. for like shares of ECC. In
December 1995, ECC merged Dish, Ltd. with a wholly-owned subsidiary of ECC (the “Merger”). Substantially all
of EchoStar’s operations are conducted by subsidiaries of Dish, Ltd. The following table summarizes the
organizational structure of EchoStar and its principal subsidiaries as of December 31, 1998:
Legal Entity
Referred to
Herein As
EchoStar Communications Corporation ECC Publicly owned
EchoStar DBS Corporation DBS Corp ECC
EchoStar Space Corporation Space ECC
Direct Broadcasting Satellite Corporation DBSC ECC
EchoStar Satellite Broadcasting Corporation ESBC DBS Corp
Dish, Ltd. Dish, Ltd. ESBC
EchoStar Satellite Corporation ESC Dish, Ltd.
Echosphere Corporation Echosphere Dish, Ltd.
EchoStar Technologies Corporation (formerly HTS, a Texas
Corporation) ETC Dish, Ltd.
Houston Tracker Systems, Inc., a Colorado Corporation formed in 1998 HTS Dish, Ltd.
DirectSat Corporation DirectSat Dish, Ltd.
EchoStar International Corporation EIC Dish, Ltd.