Dish Network 1998 Annual Report Download - page 63

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–16
6 ¾% Series C Cumulative Convertible Preferred Stock.................. –4,715 4,715
As of December 31, 1996, 1997 and 1998, options to purchase approximately 1,025,000, 1,525,000 and
1,447,000 shares of Class A common stock were outstanding, respectively. Common stock equivalents (employee
stock options and warrants) are excluded from the calculation of diluted loss per share as they are antidilutive.
Securities that are convertible into shares of Class A common stock (8% Series A Cumulative Preferred Stock and
6 ¾% Series C Cumulative Convertible Preferred Stock) also are excluded from the calculation of diluted loss per
share as they are antidilutive.
New Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, “Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use” (“SOP 98-1”), which provides guidance that requires
capitalization of certain costs incurred during an internal-use software development project. SOP 98-1 is effective for fiscal years
beginning after December 15, 1998. EchoStar does not expect that adoption of SOP 98-1 will materially affect EchoStar’s
consolidated financial statements.
Reclassifications
Certain prior year balances in the consolidated financial statements have been reclassified to conform with the 1998 presentation.
3. Property and Equipment
Property and equipment consist of the following (in thousands):
December 31,
1997 1998
EchoStar I................................................................... $ 201,607 $ 201,607
EchoStar II.................................................................. 228,694 228,694
EchoStar III................................................................. –234,083
EchoStar IV ................................................................ –105,005
Furniture, fixtures and equipment ................................. 92,264 182,747
Buildings and improvements ........................................ 28,101 60,867
Land........................................................................... 6,356 6,563
Tooling and other ........................................................ 4,336 5,552
Vehicles ..................................................................... 1,320 1,288
Construction in progress .............................................. 398,142 18,329
Total property and equipment................................. 960,820 1,044,735
Accumulated depreciation............................................ (85,961) (167,821)
Property and equipment, net................................... $ 874,859 $ 876,914
EchoStar III, which was launched in October 1997, commenced commercial operation in January 1998.
EchoStar IV, which was launched in May 1998, commenced commercial operation in August 1998. As
of December 31, 1997 construction in progress primarily consisted of EchoStar III ($234 million) and
EchoStar IV ($120 million).
EchoStar IV Impairment
As previously announced, the south solar array on EchoStar IV did not properly deploy subsequent to the
launch of EchoStar IV on May 8, 1998. This anomaly has resulted in a reduction of power available to operate the
satellite. In addition, an unrelated anomaly discovered during the third quarter of 1998 resulted in the failure of six
transponders. The satellite is equipped with a total of 44 transponders. Only 24 transponders are necessary to fully
utilize EchoStar’s 24 frequencies at 148° WL, where the satellite is located.