Dish Network 1998 Annual Report Download - page 75

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–28
401(k) Employee Savings Plan
EchoStar sponsors a 401(k) Employee Savings Plan (the “401(k) Plan”) for eligible employees. Voluntary
employee contributions to the 401(k) Plan may be matched 50% by EchoStar, subject to a maximum annual
contribution by EchoStar of $1,000 per employee. EchoStar also may make an annual discretionary contribution to
the plan with approval by EchoStar’s Board of Directors, subject to the maximum deductible limit provided by the
Internal Revenue Code of 1986, as amended. EchoStar’s cash contributions to the 401(k) Plan totaled $226,000,
$329,000 and $314,000 during 1996, 1997 and 1998, respectively. Additionally, EchoStar contributed 55,000
shares of its Class A common stock in 1996 (fair value of $935,000) to the 401(k) Plan as a discretionary
contribution. During 1998, EchoStar contributed 80,000 shares of its Class A common stock (fair value of
approximately $2 million) to the 401(k) Plan related to its 1997 discretionary contribution. During 1999, EchoStar
expects to contribute 65,000 shares of its Class A common stock (fair value of approximately $3 million) to the
401(k) Plan related to its 1998 discretionary contribution.
10. Other Commitments and Contingencies
Leases
Future minimum lease payments under noncancelable operating leases as of December 31, 1998, are as follows (in thousands):
December 31,
minimum lease payments
Total rental expense for operating leases approximated $1 million in 1996, 1997 and 1998.
Purchase Commitments
As of December 31, 1998, EchoStar’s purchase commitments totaled approximately $59 million. The majority of these
commitments relate to EchoStar receiver systems and related components. All of the purchases related to these commitments are
expected to be made during 1999. EchoStar expects to finance these purchases from existing unrestricted cash balances and future
cash flows generated from operations, if any.
The News Corporation Limited
During February 1997, EchoStar and News Corporation announced an agreement pursuant to which, among
other things, News Corporation agreed to acquire approximately 50% of the outstanding capital stock of EchoStar.
News Corporation also agreed to make available for use by EchoStar the DBS permit for 28 frequencies at the
110° WL orbital slot purchased by MCI for more than $682 million following a 1996 FCC auction. During late April
1997, substantial disagreements arose between the parties regarding their obligations under this agreement. Those
substantial disagreements led the parties to litigation. In mid-1997, EchoStar filed a complaint seeking specific
performance of this agreement and damages, including lost profits. News Corporation filed an answer and
counterclaims seeking unspecified damages, denying all of the material allegations and asserting numerous defenses.
Discovery commenced in July 1997, and the case was set for trial commencing March 1999. In connection with the
pending 110 Acquisition, the litigation between EchoStar and News Corporation will be stayed and will be dismissed
with prejudice upon closing or if the transaction is terminated for reasons other than the breach by, or failure to fill a
condition within the control of, News Corporation or MCI.