Dish Network 2002 Annual Report Download - page 71

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-11
The following table summarizes the organizational structure of EchoStar and its principal subsidiaries as of
December 31, 2002:
Legal Entity
Referred to
Herein As Parent
EchoStar Communications Corporation ECC Publicly owned
EchoStar DBS Corporation EDBS ECC
EchoStar Orbital Corporation EOC ECC
EchoStar Satellite Corporation ESC EDBS
Echosphere Corporation Echosphere EDBS
EchoStar Technologies Corporation ETC EDBS
Significant Risks and Uncertainties
Substantial Leverage. EchoStar is highly leveraged, which makes it vulnerable to changes in general
economic conditions. As of December 31, 2002, EchoStar had outstanding long-term debt (including both the
current and long-term portions) totaling approximately $5.7 billion. EchoStar has semi-annual cash debt service
obligations for all of its outstanding long-term debt securities, as follows:
Semi-Annual Payment
Dates
Semi-Annual Debt
Service Requirements
9 1/4% Senior Notes due 2006 (“9 1/4% Seven Year Notes”)*..... February 1 and August 1 $ 17,343,750
9 3/8% Senior Notes due 2009 (“9 3/8% Ten Year Notes”) .......... February 1 and August 1 76,171,875
10 3/8% Senior Notes due 2007 (“10 3/8% Seven Year Notes”)..... April 1 and October 1 51,875,000
9 1/8% Senior Notes due 2009 (“9 1/8% Seven Year Notes”)....... January 15 and July 15 31,937,500
4 7/8% Convertible Subordinated Notes due 2007 (“4 7/8%
Convertible Notes”).................................................................... January 1 and July 1 24,375,000
5 3/4% Convertible Subordinated Notes due 2008 (“5 3/4%
Convertible Notes”).................................................................... May 15 and November 15 28,750,000
*Effective February 1, 2003, these notes were redeemed. See Note 14 – Subsequent Events for further
discussion.
Semi-annual debt service requirements related to EchoStar’s 9 1/8% Senior Notes due 2009 commenced on
July 15, 2002. There are no scheduled principal payment or sinking fund requirements prior to maturity of any of
these notes. EchoStar’s ability to meet its debt service obligations will depend on, among other factors, the
successful execution of its business strategy, which is subject to uncertainties and contingencies beyond EchoStar’s
control.
Expected Operating Losses. Since 1996, EchoStar has reported significant operating and net losses.
Improvements in EchoStar’s future results of operations are largely dependent upon its ability to increase its
customer base while maintaining its overall cost structure, controlling subscriber turnover and effectively managing
its subscriber acquisition costs. The high cost of obtaining new subscribers magnifies the negative effects of
subscriber turnover. No assurance can be given that EchoStar will be effective with regard to these matters.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of EchoStar and all of its wholly-
owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. EchoStar accounts
for investments in 50% or less owned entities using the equity or cost method, except for its investments in marketable
equity securities, which are carried at fair value.