Dish Network 1999 Annual Report Download - page 38

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In addition to our DBS business plan, we have licenses, or applications pending with the FCC, for a two
satellite FSS Ku-band satellite system, a two satellite FSS Ka-band satellite system, and a proposed modification
thereof and a Low Earth Orbit Mobile-Satellite Service 6-satellite system. We will need to raise additional capital to
fully construct these satellites. We recently announced agreements for the construction and delivery of three new
satellites. Two of these satellites, EchoStar VII and EchoStar VIII, will be advanced, high-powered DBS satellites.
The third satellite, EchoStar IX, will be a hybrid Ku/Ka-band satellite.
The amount of capital required to fund our 2000 working capital and capital expenditure needs will vary,
dependent upon the growth rate of the DISH Network, our subscriber acquisition costs, and our ability to expand our
other business units. During 1999, subscriber growth exceeded our expectations. To the extent the subscriber growth
rate continues to exceed our expectations, it may be necessary for us to raise additional capital to fund increased
working capital requirements. In addition, our working capital and capital expenditure requirements could increase
materially in the event of increased competition for subscription television customers, significant satellite failures, or
general economic downturn, among other factors.
We expect that our future working capital, capital expenditure and debt service requirements will be satisfied
from existing cash and investment balances, and cash generated from operations. Our ability to generate positive future
operating and net cash flows is dependent, among other things, upon our ability to continue to rapidly expand our DISH
Network subscriber base, retain existing DISH Network subscribers, and our ability to grow our ETC and Satellite
Services businesses. There may be a number of other factors, some of which are beyond our control or ability to
predict, that could require us to raise additional capital. These factors include unexpected increases in operating costs
and expenses, a defect in or the loss of any satellite, or an increase in the cost of acquiring subscribers due to additional
competition, among other things. If cash generated from our operations is not sufficient to meet our debt service
requirements or other obligations, we would be required to obtain cash from other financing sources. There can be no
assurance that such financing would be available on terms acceptable to us, or if available, that the proceeds of such
financing would be sufficient to enable us to meet all of our obligations.
Year 2000 Readiness Disclosure
As of March 10, 2000 we have experienced no material Year 2000 related problems with any of our computer
systems. Both our internal financial and administrative systems and our service-delivery systems successfully
completed Year 2000 tests in the early hours of January 1, 2000. Although no material anomalies are expected, we will
continue to review all systems for any Year 2000 anomalies.
Effects of Recently Issued Accounting Pronouncements
None.
Inflation
Inflation has not materially affected our operations during the past three years. We believe that our ability to
increase the prices charged for our products and services in future periods will depend primarily on competitive
pressures. We do not have any material backlog of our products.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market Risks Associated With Financial Instruments
Interest Rate Risk. Our exposure to market risk for changes in interest rates relates to our debt obligations and
cash and marketable investment securities (unrestricted and restricted) portfolio.
As of December 31, 1999, we estimated the fair value of our fixed-rate debt and mortgages and other notes
payable to be approximately $3 billion using quoted market prices where available, or discounted cash flow analyses.
The market risk associated with our debt and redeemable preferred stock is the potential increase in fair value resulting
from a decrease in interest rates. A 10% decrease in assumed interest rates would increase the fair value of our debt by
approximately $130 million.