Dish Network 2003 Annual Report Download - page 56

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
51
Semi-annual debt service requirements related to our 3% Convertible Subordinated Notes due 2010 commenced on
December 31, 2003. Semi-annual debt service requirements related to our 5 3/4% Senior Notes due 2008 and our
6 3/8% Senior Notes due 2011 will commence on April 1, 2004. Quarterly debt service requirements related to our
Floating Rate Senior Notes due 2008 commenced on January 1, 2004. There are no scheduled principal payment or
sinking fund requirements prior to maturity on any of these notes.
Satellite-Related Obligations
During July 2003, we entered into a contract for the construction of EchoStar X, a Lockheed Martin A2100 class
DBS satellite. Construction is expected to be completed 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.
As previously discussed in Item 1. – Business, during March 2003 we entered into a satellite service agreement with
SES Americom for all of the capacity on a new FSS satellite, which may be located at the 105 degree orbital
location or certain other orbital locations. We also agreed to lease all of the capacity on an existing in-orbit FSS
satellite at the 105 degree orbital location beginning August 1, 2003 and continuing at least until the new satellite is
launched. In connection with this agreement, we prepaid $50.0 million to SES Americom to partially fund
construction of the new satellite. The ten-year satellite service agreement for the new satellite is renewable by us on
a year to year basis following the initial term, and provides us with certain rights to replacement satellites. We are
required to make monthly payments to SES Americom for both the existing in-orbit FSS satellite and also for the
new satellite for the ten-year period following its launch. During August 2003, we exercised our option under the
SES Americom agreement to also lease for an initial ten-year term all of the capacity on a new DBS satellite at an
orbital location to be determined at a future date. We anticipate that this satellite will be launched during the fourth
quarter of 2005.
During February 2004, we entered into two additional satellite service agreements for capacity on FSS satellites.
Pending the successful launch and entry into service of the previously described new FSS satellite, the satellite
under the first of these agreements is scheduled for launch during the first half of 2005. This agreement is a ten-year
satellite service agreement that is renewable by us on a year to year basis following the initial term, and provides us
with certain rights to replacement satellites. We are required to make monthly payments for this satellite for the ten-
year period following its launch. The satellite under the second of these agreements is planned for launch during the
second half of 2006 and is contingent upon, among other things, obtaining necessary regulatory approvals. There
can be no assurance that we will obtain these approvals or that the satellite will ultimately be launched. It is our
intent to use the capacity on this satellite to offer additional value-added services. Future commitments related to
this contingent satellite are included in the table above.
As a result of our recent agreements with fixed satellite service providers and for the construction of EchoStar X,
our obligations for payments related to satellites have increased substantially. In certain circumstances the dates on
which we are obligated to make these payments could be delayed. These amounts will increase when we commence
payments for the launch of EchoStar X, and would further increase to the extent 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.