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ANNUAL REPORT
Year ended December 31, 2003
ECHOSTAR COMMUNICATIONS CORPORATION

Table of contents

  • Page 1
    E C H O S T A R C O M M U N I C A T I O N S C O R P O R A T I O N ANNUAL REPORT Year ended December 31, 2003

  • Page 2
    ... distribution channels on sales of our video packages. Going forward, EchoStar plans to continue to address consumer demand in the areas of international, interactive, digital video recording and high definition television, and to develop technological features that will maintain our position...

  • Page 3

  • Page 4
    ...). Yes _X_ No ___ As of March 22, 2004, the aggregate market value of Class A Common Stock held by non-affiliates* of the Registrant approximated $8.2 billion based upon the closing price of the Class A Common Stock as reported on the Nasdaq National Market as of the close of business on that date...

  • Page 5
    ...Compensation ...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...Item 13. Certain Relationships and Related Transactions ...Item 14. Principal Accountant Fees and Services...PART IV Item 15. Exhibits, Financial Statement Schedules, and Reports...

  • Page 6
    ... and cable television industry, new competitors may enter the subscription television business, and new technologies may increase competition; DISH Network subscriber growth may decrease, subscriber turnover may increase and subscriber acquisition costs may increase; satellite programming signals...

  • Page 7
    ... information contained or incorporated by reference herein or in other reports we file with the SEC. In this document, the words "we," "our" and "us" refer to EchoStar Communications Corporation and its subsidiaries, unless the context otherwise requires. "EDBS" refers to EchoStar DBS Corporation...

  • Page 8
    ...which designs and develops DBS set-top boxes, antennae and other digital equipment for the DISH Network. We refer to this equipment collectively as "EchoStar receiver systems." ETC also designs, develops and distributes similar equipment for international satellite service providers. Since 1994, we...

  • Page 9
    ... our "America's Top 180" programming package and all four movie packages, which are discussed below, for $77.99 per month. Certain of our current new subscriber promotions include local programming in the qualifying programming packages for no additional fee. Movie Packages. We currently offer each...

  • Page 10
    ... fulfill point-of-sale needs. Additionally, we dedicate a DISH Network channel and provide a retailer specific website to provide information about special services and promotions that we offer from time to time. Promotional Subsidies. Our future success in the subscription television industry...

  • Page 11
    ..., high-speed data and other communications services. SBC Communications is marketing the bundled service, which became available to consumers in early 2004, and is responsible for integrated order-entry, customer service and billing. SBC purchases set-top box equipment from us to sell to bundled...

  • Page 12
    ... the 157 degree orbital location, capable of providing service to the Western United States. We currently broadcast the majority of our programming from the 110 and 119 degree locations. The majority of our customers have satellite receiver systems that are equipped to receive signals from both of...

  • Page 13
    ... and are not currently in use. During March 2003, an additional thruster on EchoStar VIII experienced an anomalous event and is not currently in use. The satellite is equipped with a total of 12 thrusters that help control spacecraft location, attitude, and pointing and is currently operating using...

  • Page 14
    ...location beginning August 1, 2003 and continuing at least until the new satellite is launched. We intend to use the capacity on the satellites to offer a combination of programming including local network channels in additional markets, together with satellite-delivered, high-speed internet services...

  • Page 15
    ... a television set. EchoStar Receiver Systems. EchoStar receiver systems include a small satellite dish, a digital satellite receiver that decrypts and decompresses signals for television viewing, a remote control, and other related components. We offer a number of set-top box models. Our standard...

  • Page 16
    ... number of markets in which we offer local network channels by satellite. Almost all of the functions necessary to provide satellite-delivered services occur at the digital broadcast operations centers. The digital broadcast operations centers use fiber optic lines and downlink antennas to receive...

  • Page 17
    ... of additional business for us and synergies that directly benefit DISH Network. For example, our satellite receivers are designed around the Digital Video Broadcasting standard, which is widely used in Europe and Asia. The same employees who design EchoStar receiver systems for the DISH Network are...

  • Page 18
    ... to regulate the operations of satellite companies. Specifically, the Communications Act gives the FCC regulatory jurisdiction over the following areas relating to communications satellite operations the assignment of satellite radio frequencies and orbital locations; licensing of satellites, earth...

  • Page 19
    ... Fixed-Satellite Service ("FSS") Ku/Ka-band satellite (EchoStar IX). Our satellites operate at the following orbital locations: EchoStar V and EchoStar VII operate at the 119 degree orbital location; EchoStar VI and EchoStar VIII operate at the 110 degree orbital location; EchoStar III operates...

  • Page 20
    ... to operate EchoStar IX (a hybrid Ka/Ku-band satellite) at the 121 degree orbital location. EchoStar also recently received Ka-band licenses at the 97 and 123 degree orbital locations. Use of these licenses and conditional authorizations is subject to certain technical and due diligence requirements...

  • Page 21
    ...otherwise needs improvement. Further, the satellite we currently operate at the 148 and 157 degree orbital locations are not able to provide service to Alaska and/or Hawaii. We received temporary waivers of the service requirement for the 148 degree orbital location subject to several conditions and...

  • Page 22
    ... sure that the Commission will not take enforcement action against us, which may result in fines and/or changes to our methodology for compliance with these rules. Other Open Access Requirements. The FCC has also commenced a proceeding regarding distribution of highspeed Internet access services and...

  • Page 23
    ...our strategy to compete with cable and other satellite companies, which provide local signals. While we have been able to reach retransmission consent agreements with most local network stations in markets where we currently offer local channels by satellite, roll-out of local channels in additional...

  • Page 24
    ...These damage claims could materially adversely affect our financial position. Finally, while the FCC has decided for now not to impose "must carry" obligations on satellite carriers for high definition television stations or dual digital/analog carriage obligations - i.e., additional requirements in...

  • Page 25
    ..., we cannot provide assurance that these requirements will not change or become more stringent in the future in a manner that could have a material adverse effect on our business. SEGMENT REPORTING DATA AND GEOGRAPHIC AREA DATA For operating segment and principal geographic area data for 2003, 2002...

  • Page 26
    ... senior financial officers, in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission promulgated thereunder. Our code of ethics is available on our corporate website at www.echostar.com. In the event that we make changes in, or provide...

  • Page 27
    ... President of DISH Network Service LLC and Customer Service Operations. Until February 2004, he served as Senior Vice President of DISH Network Service LLC. Mr. Kelly joined EchoStar in March 2000 as Senior Vice President of International Programming upon consummation of EchoStar's acquisition of...

  • Page 28
    .../Use/Location Segment(s) Using Property Owned or Leased Corporate headquarters, Englewood, Colorado ...EchoStar Technologies Corporation engineering offices and service center, Englewood, Colorado...EchoStar Technologies Corporation engineering offices, Englewood, Colorado...Digital broadcast...

  • Page 29
    ... means to receive network channels, including migration to local channels by satellite where available, and free off air antenna offers in other markets. However, we cannot predict with any degree of certainty how many subscribers will cancel their primary DISH Network programming as a result...

  • Page 30
    ...materially modify certain user-friendly electronic programming guide and related features that we currently offer to consumers. It is not possible to make a firm assessment of the probable outcome of the suit or to determine the extent of any potential liability or damages. Broadcast Innovation, LLC...

  • Page 31
    ... was settled with no material impact on our business. A purported class action relating to the use of terms such as "crystal clear digital video," "CD-quality audio," and "on-screen program guide," and with respect to the number of channels available in various programming packages was also filed...

  • Page 32
    ..., installers, and servicers of satellite equipment who contract with us and who allege that we: (1) charged back certain fees paid by members of the class to professional installers in violation of contractual terms; (2) manipulated the accounts of subscribers to deny payments to class members...

  • Page 33
    ... liability or damages. Satellite Insurance In September 1998, we filed a $219.3 million insurance claim for a total loss under the launch insurance policies covering EchoStar IV. The satellite insurance consists of separate substantially identical policies with different carriers for varying...

  • Page 34
    ... or commissions and may not necessarily represent actual transactions. The high and low closing sale prices of the class A common stock during 2002 and 2003 on the Nasdaq National Market (as reported by Nasdaq) are set forth below. 2002 First Quarter...Second Quarter...Third Quarter...Fourth Quarter...

  • Page 35
    ...2003, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this report. 1999 Statements of Operations Data Revenue: Subscription television services...Other subscriber-related revenue...DTH equipment sales...Other ...Total revenue ...Costs...

  • Page 36
    ...of approximately $30.2 million, on a pre-tax basis, related to the replacement of smart cards in satellite receivers owned by us and leased to consumers. See Note 3 to the Notes to the Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K. (2) Net loss in 2002 includes $689...

  • Page 37
    ...plan to offer our subscribers new and compelling programming and services, including next generation digital video recorder, or DVR, services, additional high-definition television, or HDTV, channels and interactive programming. In addition, we continue to develop bundled broadband service solutions...

  • Page 38
    ... digital broadcast centers, the transmission of local channels, contracted satellite telemetry, tracking and control services and transponder leases. Cost of sales - DTH equipment. "Cost of sales - DTH equipment" principally includes costs associated with digital set-top boxes and related components...

  • Page 39
    ...attract new DISH Network subscribers. Our "Subscriber acquisition costs" include the cost of EchoStar receiver systems sold to retailers and other distributors of our equipment, the cost of receiver systems sold directly by us to subscribers, net costs related to our free installation promotions and...

  • Page 40
    ... 2003 (As Restated) (1) Fav/(Unfav) % Statements of Operations Data Revenue: Subscription television services...Other subscriber-related revenue...DTH equipment sales...Other...Total revenue...Costs and Expenses: Subscriber-related expenses...% of Subscription television services revenue...Satellite...

  • Page 41
    ... 2003, the increased availability of local channels by satellite and an increase in subscribers with multiple set-top boxes. These increases were partially offset by certain subscriber promotions, discussed in "New subscriber promotions" below, under which new subscribers received free programming...

  • Page 42
    ... in the number of DISH Network subscribers. This growth resulted in increased expenses to support the DISH Network, including programming costs, personnel expenses, the opening of a new call center, and increased operating expenses related to the expansion of our DISH Network Service LLC business...

  • Page 43
    ... Free DISH promotion provides new subscribers with a choice of up to two EchoStar receivers, including one premium model system, and free installation for $49.99. The subscriber receives a $49.99 credit on their first month's bill. To be eligible, subscribers must provide a valid major credit card...

  • Page 44
    ...2003, our Digital Home Plan promotion offered new subscribers up to four EchoStar receivers, including various models, with a minimum required programming package subscription. Each plan includes in-home service, and the consumer must agree to a one-year commitment, provide a valid major credit card...

  • Page 45
    ... in depreciation related to the commencement of commercial operation of EchoStar VII, VIII and IX in April 2002, October 2002, and October 2003, respectively, and leased equipment and other additional depreciable assets placed in service during 2003. Interest income. "Interest income" totaled $65...

  • Page 46
    ... and we believe it to be a helpful measure for those evaluating companies in the multi-channel video programming distribution industry. Conceptually, EBITDA measures the amount of income generated each period that could be used to service debt, pay taxes and fund capital expenditures. EBITDA should...

  • Page 47
    ...) (1) 2001 Statements of Operations Data Revenue: Subscription television services...Other subscriber-related revenue...DTH equipment sales...Other...Total revenue...Costs and Expenses: Subscriber-related expenses...% of Subscription television services revenue...Satellite and transmission expenses...

  • Page 48
    ... promotions under which subscribers received discounted programming for 12 months. This decrease was partially offset by a $1.00 price increase in February 2002, the increased availability of local channels by satellite and an increase in subscribers with multiple set-top boxes. DTH equipment sales...

  • Page 49
    ...equipment and an increase in installations we perform on behalf of retailers. We exclude equipment capitalized under our equipment lease promotion from our calculation of subscriber acquisition costs. We also exclude payments and certain returned equipment received from disconnecting lease promotion...

  • Page 50
    ... to the merger related expenses recorded in 2002 offset by an increase in the number of DISH Network subscribers, resulting in recurring revenue which was large enough to support the cost of new and existing subscribers, together with the introduction of our equipment lease promotion in July 2000...

  • Page 51
    ...acquire new subscribers and the cost of subscriber acquisition and retention, including capitalized costs associated with our equipment lease promotion. The amount of capital required in 2004 will also depend on our levels of investment in infrastructure necessary to support additional local markets...

  • Page 52
    ... means to receive network channels, including migration to local channels by satellite where available, and free off air antenna offers in other markets. However, we cannot predict with any degree of certainty how many subscribers might ultimately cancel their primary DISH Network programming as...

  • Page 53
    ...outstanding on its 9 3/8% Senior Notes due 2009 in open market transactions. During the fourth quarter of 2003, we repurchased shares of our class A common stock in open market transactions for a total cost of approximately $190.4 million. This increase from 2002 to 2003 was partially offset by the...

  • Page 54
    ... means to receive network channels including migration to local channels by satellite where available, and free off air antenna offers in other markets. However, we cannot predict with any degree of certainty how many subscribers might ultimately cancel their primary DISH Network programming as...

  • Page 55
    ... OF OPERATIONS - Continued We offer various programs to existing subscribers including programs for new and upgraded equipment. We generally subsidize installation and all or a portion of the cost of EchoStar receivers pursuant to our subscriber retention programs. Costs related to subscriber...

  • Page 56
    ... better bandwidth utilization, provide back-up protection for our existing local channel offerings, allow us to offer local channels by satellite in additional markets; and could allow DISH Network to offer other value-added services. As previously discussed in Item 1. - Business, during March 2003...

  • Page 57
    ... subscriber equipment during 2004. In addition, in order to support the anticipated increase in the number of local markets in which we offer local network channels by satellite and for future broadband services, during 2004 we plan to construct four mini-digital broadcast operations centers...

  • Page 58
    ...financial position. Smart card replacement. We use conditional access technology, or smart cards, to encrypt the programming we transmit to subscribers so that only those who pay for service can receive our programming. Theft of cable and satellite programming has been widely reported and our signal...

  • Page 59
    ... based on a number of variables, including historical subscriber churn trends and the estimated per card costs for smart card replacements. Different assumptions or changes in, among other things, the timing of the replacement plan could result in increases or decreases in the smart card replacement...

  • Page 60
    ... required to fund operations. Consequently, the size of this portfolio fluctuates significantly as cash is received and used in our business. Our restricted and unrestricted cash, cash equivalents and marketable investment securities had an average annual return for the year ended December 31, 2003...

  • Page 61
    ... to, cash flow concerns, material litigation, violations of debt covenants and changes in business strategy. During the year ended December 31, 2003, we did not record any impairment charges with respect to these instruments. As of December 31, 2003, we estimated the fair market value of our fixed...

  • Page 62
    ... Statement for the Annual Meeting of Shareholders to be held on May 6, 2004, under the caption "Principal Accountant Fees and Services," which information is hereby incorporated herein by reference. PART IV Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following...

  • Page 63
    ...Credit Suisse First Boston Corporation, Lehman Brothers Inc. and UBS Warburg LLC (incorporated by reference to Exhibit 4.18 to the Annual Report on Form 10-K of EchoStar for the year ended December 31, 2001, Commission File No. 0-26176). Indenture, relating to EDBS 5 ¾% Senior Notes due 2008, dated...

  • Page 64
    ... by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q of EchoStar for the quarter ended September 30, 2003, Commission File No.0-26176). First Supplemental Indenture, relating to the 9 1/8% Senior Notes Due 2009, dated as of December 31, 2003 between EDBS and U.S. Bank Trust National...

  • Page 65
    ....1 to the Quarterly Report on Form 10-Q of EchoStar for the quarter ended March 31, 2001, Commission File No. 0-26176). Amended and Restated Contract dated February 1, 2001, between EchoStar Orbital Corporation and Space Systems/Loral, Inc., EchoStar VIII Satellite Program (110 degree West Longitude...

  • Page 66
    ....57 to the Annual Report on Form 10-K of EchoStar for the year ended December 31, 2002, Commission File No.0-26176). Satellite Service Agreement, dated as of March 21, 2003, between SES Americom, Inc., EchoStar Satellite Corporation and EchoStar Communications Corporation (incorporated by reference...

  • Page 67
    ..., thereunto duly authorized. ECHOSTAR COMMUNICATIONS CORPORATION By: /s/ Michael R. McDonnell Michael R. McDonnell Senior Vice President and Chief Financial Officer Date: March 26, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 68
    ...Independent Auditors...Report of Arthur Andersen LLP, Independent Auditors ...Consolidated Balance Sheets at December 31, 2003 and 2002...Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2003, 2002 and 2001...Consolidated Statements of Changes in...

  • Page 69
    ..., the financial position of EchoStar Communications Corporation and subsidiaries as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. As discussed...

  • Page 70
    ... report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of EchoStar Communications Corporation...

  • Page 71
    ...,208 shares issued and outstanding...Class C Common Stock, $.01 par value, 800,000,000 shares authorized, none outstanding...Additional paid-in capital...Non-cash, stock-based compensation...Accumulated other comprehensive income...Accumulated deficit...Treasury stock, at cost...Total stockholders...

  • Page 72
    ... per share amounts) For the Years Ended December 31, 2002 As Restated 2003 (Note 3) 2001 Revenue: Subscription television services...$ 5,399,382 Other subscriber-related revenue...10,493 DTH equipment sales...244,083 Other...85,338 Total revenue...5,739,296 Costs and Expenses: Subscriber-related...

  • Page 73
    ... of stock options ...1,555 Employee benefits ...39 Employee Stock Purchase Plan ...80 Forfeitures of deferred non-cash, stock-based compensation ...Deferred stock-based compensation recognized ...Change in unrealized holding gains (losses) on available-for-sale securities, net...Net loss ...Balance...

  • Page 74
    ... satellite insurance due to depreciation on related satellites (Note 4)...Funds released from escrow and restricted cash and marketable investment securities...Incentive payments under in-orbit satellite contract - Echo VI...Capitalized merger-related costs ...Investment in StarBand Communications...

  • Page 75
    ...which designs and develops DBS set-top boxes, antennae and other digital equipment for the DISH Network. We refer to this equipment collectively as "EchoStar receiver systems." ETC also designs, develops and distributes similar equipment for international satellite service providers. Since 1994, we...

  • Page 76
    ECHOSTAR COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Quarterly/Semi-Annual Debt Service Requirements $ 66,719,578 $ 51,875,000 $ 28,750,000 $ 20,759,375 $ 7,500,000 $ 5,512,500 $ 28,750,000 $ 31,875,000 9 3/8% Senior Notes due 2009*...10 3/8% Senior Notes due ...

  • Page 77
    ... royalty obligations related to the production of EchoStar receiver systems. The following details the decrease in the financial statement line items affected by this change in estimate (in thousands): Cost of sales - DTH equipment ...Cost of sales - subscriber promotion subsidies ...Depreciation...

  • Page 78
    ECHOSTAR COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued investment securities compared to the carrying amount, the historical volatility of the price of each security and any market and company specific factors related to each security. Generally, absent specific ...

  • Page 79
    ... to sell these securities prior to maturity. Inventories Inventories are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. Proprietary products are built by contract manufacturers to our specifications. Manufactured inventories include materials...

  • Page 80
    ... licensed orbital locations, including revenue attributable to programming offerings from such satellites, the direct operating and subscriber acquisition costs related to such programming, and future capital costs for replacement satellites. Projected revenue and cost amounts included current and...

  • Page 81
    ... a 2002 acquisition. Smart Card Replacement We use conditional access technology, or smart cards, to encrypt the programming we transmit to subscribers so that only those who pay for service can receive our programming. Theft of cable and satellite programming has been widely reported and our signal...

  • Page 82
    ... Subscription and pay-per-view revenues are recognized when programming is broadcast to subscribers. Subscriber fees for multiple set-top receivers and equipment rental are recognized as revenue, monthly as earned. Advertising revenue is recognized when the related services are performed. Payments...

  • Page 83
    ...2003, our Digital Home Plan promotion offered new subscribers up to four EchoStar receivers, including various models, with a minimum required programming package subscription. Each plan includes in-home service, and the consumer must agree to a one-year commitment, provide a valid major credit card...

  • Page 84
    ... - Continued upgrade fee or a two-year programming commitment, we offered new subscribers an option to connect up to three EchoStar receivers to up to four televisions. Since we retain ownership of equipment installed pursuant to the Digital Home Plan promotion, equipment costs are capitalized...

  • Page 85
    ... model requires the input of highly subjective assumptions and because changes in the subjective input assumptions can materially affect the fair market value estimate, the existing models do not necessarily provide a reliable single measure of the fair market value of stock-based compensation...

  • Page 86
    ...the Securities and Exchange Commission ("SEC") regarding our accrual for the replacement of smart cards. Those cards, which provide security that only paying customers can receive programming delivered by us, become obsolete as a result of piracy. During the consultation process, the SEC informed us...

  • Page 87
    ...... Statement of operations data Subscriber-related expenses...Operating income...Loss before income taxes...Income tax provision, net...Net loss...Comprehensive loss...Basic and diluted net loss to common shareholders...Basic and diluted net loss per common share... For the year ended December 31...

  • Page 88
    ... expense related to satellites or Digital Home Plan equipment. EchoStar I and II EchoStar I and EchoStar II are both Series 7000 class satellites designed and manufactured by Lockheed Martin Corporation. While both of those satellites are currently functioning properly in orbit, a similar...

  • Page 89
    ... and are not currently in use. During March 2003, an additional thruster on EchoStar VIII experienced an anomalous event and is not currently in use. The satellite is equipped with a total of 12 thrusters that help control spacecraft location, attitude, and pointing and is currently operating using...

  • Page 90
    ...that proceeding pending a ruling in the New York arbitration. At the time we filed our claim in 1998, we recognized an initial impairment loss of $106.0 million to write-down the carrying value of the satellite and related costs, and simultaneously recorded an insurance claim receivable for the same...

  • Page 91
    ... principal amount of its 9 3/8% Senior Notes due 2009. The difference between the market price paid and the principal amount of approximately $12.7 million and unamortized debt issuance costs related to the repurchased notes of approximately $1.6 million were recorded as charges to earnings and are...

  • Page 92
    ... cause its subsidiary, EDBS to make an offer to exchange (the "EDBS Exchange Offer") all of the outstanding 10 3/8% Senior Notes for a new class of notes issued by EDBS as soon as practical following the first date (as reflected in EDBS' most recent quarterly or annual financial statements) on which...

  • Page 93
    ... under any of EDBS' future secured credit facilities, if any. In the event of a change of control, as defined in the 10 3/8% Senior Notes Indenture, EDBS will be required to make an offer to repurchase all or any part of a holder's 10 3/8% Senior Notes at a purchase price equal to 101% of the...

  • Page 94
    ... with affiliates; merge or consolidate with another company; and transfer and sell assets In the event of a change of control, as defined in the 9 1/8% Senior Notes Indenture, EDBS will be required to make an offer to repurchase all or any part of a holder's 9 1/8% Senior Notes at a purchase price...

  • Page 95
    ...restrictive covenants that do not impose material limitations on us. In the event of a change of control, as defined in the related indenture, we will be required to make an offer to repurchase all or any part of the holder's 3% Convertible Subordinated Notes at a purchase price equal to 100% of the...

  • Page 96
    ... with affiliates; merge or consolidate with another company; and transfer and sell assets In the event of a change of control, as defined in the related indenture, EDBS will be required to make an offer to repurchase all or any part of a holder's Floating Rate Senior Notes at a purchase price equal...

  • Page 97
    ECHOSTAR COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued In the event of a change of control, as defined in the related indenture, EDBS will be required to make an offer to repurchase all or any part of a holder's 5 3/4% Senior Notes at a purchase price equal to 101...

  • Page 98
    ... previously recorded, exceeded the actual tax deductions allowed. Tax charges associated with the reversal of the prior tax benefit have been allocated to additional paid-in capital in accordance with Accounting Principals Board Opinion No. 25, "Accounting for Stock Issued to Employees". During 2003...

  • Page 99
    ECHOSTAR COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The components of the (provision for) benefit from income taxes are as follows: For the Years Ended December 31, 2002 As Restated 2003 (Note 3) 2001 (In thousands) Current (provision) benefit: Federal ...State...

  • Page 100
    ... open market purchases or privately negotiated transactions subject to market conditions and other factors. Our repurchase programs do not require us to acquire any specific number or amount of securities and any of those programs may be terminated at any time. We may enter into Rule 10b5-1 plans...

  • Page 101
    ... $ 20,173 Subscriber-related...Satellite and transmission...General and administrative...Total non-cash, stock-based compensation... Options to purchase an additional 8.0 million shares are outstanding as of December 31, 2003 and were granted with exercise prices equal to the fair market value of...

  • Page 102
    ... Incentive Plan. 9. Employee Benefit Plans Employee Stock Purchase Plan During 1997, the Board of Directors and shareholders approved an employee stock purchase plan (the "ESPP"), effective beginning October 1, 1997. Under the ESPP, we are authorized to issue a total of 800,000 shares of class...

  • Page 103
    ... during 2005. EchoStar X will enable better bandwidth utilization, provide back-up protection for our existing local channel offerings, allow us to offer local channels by satellite in additional markets; and could allow DISH Network to offer other value-added services. During March 2003 we entered...

  • Page 104
    ... we procure insurance for our satellites or contract for the construction, launch or lease of additional satellites. Purchase Obligations Our 2004 purchase obligations primarily consist of binding purchase orders for EchoStar satellite receiver systems and related equipment. Programming Contracts In...

  • Page 105
    ... related to the delivery of distant network channels to DirecTV customers by satellite. DirecTV settled that lawsuit with the networks. Under the terms of the settlement between DirecTV and the networks, some DirecTV customers were scheduled to lose access to their satellite-provided distant network...

  • Page 106
    ... means to receive network channels, including migration to local channels by satellite where available, and free off air antenna offers in other markets. However, we cannot predict with any degree of certainty how many subscribers will cancel their primary DISH Network programming as a result...

  • Page 107
    ...materially modify certain user-friendly electronic programming guide and related features that we currently offer to consumers. It is not possible to make a firm assessment of the probable outcome of the suit or to determine the extent of any potential liability or damages. Broadcast Innovation, LLC...

  • Page 108
    ... class action relating to the use of terms such as "crystal clear digital video," "CD-quality audio," and "on-screen program guide," and with respect to the number of channels available in various programming packages was also filed against us in the California State Superior Court for Los Angeles...

  • Page 109
    ..., installers, and servicers of satellite equipment who contract with us and who allege that we: (1) charged back certain fees paid by members of the class to professional installers in violation of contractual terms; (2) manipulated the accounts of subscribers to deny payments to class members...

  • Page 110
    ... Reporting Financial Data by Business Unit Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information" ("FAS 131") establishes standards for reporting information about operating segments in annual financial statements of public business...

  • Page 111
    ECHOSTAR COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued EchoStar Technologies Corporation $ 177,218 6,566 160,626 (211) 16,732 DISH Network Year Ended December 31, 2001 Total revenue ...$ 3,695,088 Depreciation and amortization ...243,926 Total costs and expenses ...

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    ... totaled $175.5 million. These international sales accounted for approximately 2.2%, 3.5% and 4.4% of our total revenue during each of the years ended December 31, 2003, 2002 and 2001, respectively. Revenues from these customers are included within the EchoStar Technologies Corporation operating...

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    ...680 0.01 0.01 14. Related Party Transactions We own 50% of NagraStar LLC ("NagraStar"), a joint venture that provides us with smart cards. Nagra USA owns the other 50% of NagraStar. NagraStar purchases these smart cards from NagraCard SA, a Swiss company which is an affiliate of Nagra USA. Because...

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    ...and technology, use of the TV Guide brand on our interactive program guides, and for distribution arrangements with Gemstar to provide for the launch and carriage of the TV Guide Channel as well as the extension of an existing distribution agreement for carriage of the TVG Network. We also signed an...

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    ...2004 Annual Meeting of Shareholders will be held on May 6, 2004. Shareholder Information Investor Relations Department EchoStar Communications Corporation 9601 S. Meridian Blvd. Englewood, Colorado 80112 www.echostar.com For more information please visit the Investor Relations section of our website...

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    (NASDAQ: DISH) 9601 S. Meridian Blvd. • Englewood, CO • 80112 • 303.723.1000 w w w. e c h o s t a r. c o m • w w w. d i s h n e t w o r k . c o m