Dish Network 2005 Annual Report Download - page 69

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS – Continued
59
• During January 2007, we entered into a contract for the construction of EchoStar XIV which is expected to
be completed during 2009. Future commitments related to this satellite are not included in the table above.
Leased Satellites. In addition to our lease of the AMC-15 and AMC-16 satellites discussed below under Capital
Lease Obligations, we have also entered satellite service agreements to lease capacity on other satellites, see “Item 1
– Business – Our Satellites.” Future commitments related to these satellites are included in the table above under
“Satellite-related obligations.”
• We are currently leasing all of the capacity on an existing in-orbit FSS satellite, AMC-2, at the 85 degree
orbital location. Our lease of this satellite is expected to continue through 2007 and has been accounted for
as an operating lease.
• An SES Americom DBS satellite, AMC-14, which is currently expected to launch during late 2007 and
commence commercial operation at an orbital location to be determined at a future date. The initial ten-
year lease for all of the capacity on the satellite will be accounted for as a capital lease.
• A Telesat FSS satellite, Anik F3, which is currently expected to launch during the second quarter of 2007.
We are required to make monthly payments for the 15-year period following commencement of
commercial operation. We will account for the Telesat Anik F3 satellite agreement as a capital lease.
• A Canadian DBS satellite, Ciel 2, which is currently expected to launch during 2009 and commence
commercial operation at the 129 degree orbital location. Our initial ten-year term lease for at least 50%
capacity on the satellite will be accounted for as a capital lease.
In certain circumstances the dates on which we are obligated to make these payments could be delayed. These
amounts will increase to the extent we procure insurance for our satellites or contract for the construction, launch or
lease of additional satellites. Further, as of December 31, 2006, we had not procured launches for five of the above
satellites. Our obligations will increase as we procure launches for these satellites.
Capital Lease Obligations
AMC-15. We make monthly payments to SES Americom to lease all of the capacity on AMC-15, an FSS satellite,
which commenced commercial operation during January 2005. The ten-year satellite service agreement is
renewable by us on a year to year basis following the initial term, and provides us with certain rights to replacement
satellites.
AMC-16. We also make monthly payments to SES Americom to lease all of the capacity on AMC 16, an FSS
satellite, which commenced commercial operation during February 2005. The ten-year satellite service agreement is
renewable by us on a year to year basis following the initial term, and provides us with certain rights to replacement
satellites.
In accordance with Statement of Financial Accounting Standards No. 13, “Accounting for Leases” (“SFAS 13”), we
have accounted for the satellite component of these agreements as a capital lease (see Note 5 in the Notes to the
Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K). The commitment related to the
present value of the net future minimum lease payments for the satellite component of the agreement is included under
Capital Lease Obligations in the table above. The commitment related to future minimum payments designated for the
lease of the orbital slots and other executory costs is included under Satellite-Related Obligations in the table above.
The commitment related to the amount representing interest is included under Interest on Long-Term Debt in the table
above.
Purchase Obligations
Our 2007 purchase obligations primarily consist of binding purchase orders for EchoStar receiver systems and
related equipment, and for products and services related to the operation of our DISH Network. Our purchase
obligations also include certain guaranteed fixed contractual commitments to purchase programming content. Our
purchase obligations can fluctuate significantly from period to period due to, among other things, management’s