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Table of Contents
ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued
has not been set. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or
damages.
Enron Commercial Paper Investment
During October 2001, we received approximately $40.0 million from the sale of Enron commercial paper to a third party broker. That
commercial paper was ultimately purchased by Enron. During November 2003, an action was commenced in the United States Bankruptcy
Court for the Southern District of New York, against approximately 100 defendants, including us, who invested in Enron’s commercial paper.
The complaint alleges that Enron’
s October 2001 purchase of its commercial paper was a fraudulent conveyance and voidable preference under
bankruptcy laws. We dispute these allegations. We typically invest in commercial paper and notes which are rated in one of the four highest
rating categories by at least two nationally recognized statistical rating organizations. At the time of our investment in Enron commercial paper,
it was considered to be high quality and low risk. We cannot predict with any degree of certainty the outcome of the suit or determine the
extent of any potential liability or damages.
Riyad Alshuaibi
During 2002, Riyad Alshuaibi filed suit against Michael Kelly, one of our executive officers, Kelly Broadcasting Systems, Inc. (“KBS”), and
EchoStar in the District Court of New Jersey. Plaintiff alleged breach of contract, breach of fiduciary duty, fraud, negligence, and unjust
enrichment resulting in damages in excess of $50.0 million. We denied the allegations of plaintiff’s complaint. On October 26, 2006, we
reached a settlement which did not have a material impact on our results of operations.
Other
In addition to the above actions, we are subject to various other legal proceedings and claims which arise in the ordinary course of business. In
our opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our financial position, results of
operations or liquidity.
10. Segment Reporting
Financial Data by Business Unit
Statement of Financial Accounting Standards No. 131, “Disclosures About Segments of an Enterprise and Related Information” (“SFAS 131”)
establishes standards for reporting information about operating segments in annual financial statements of public business enterprises and
requires that those enterprises report selected information about operating segments in interim financial reports issued to stockholders.
Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by the
chief operating decision maker(s) of an enterprise. Total assets by segment have not been specified because the information is not available to
the chief operating decision-maker. Under this definition we currently operate as two business units. The All Other category consists of
revenue, expenses and net income (loss) from other operating segments for which the disclosure requirements of SFAS 131 do not apply.
F-42