Dish Network 2001 Annual Report Download - page 98

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–33
9. Other Commitments and Contingencies
Leases
Future minimum lease payments under noncancelable operating leases as of December 31, 2001, are as
follows (in thousands):
Year ending December 31,
2002 ............................................................................................. $ 11,918
2003 ............................................................................................. 11,486
2004 ............................................................................................. 9,551
2005 ............................................................................................. 5,262
2006 ............................................................................................. 1,623
Thereafter ..................................................................................... 3,444
Total minimum lease payments.............................................. $ 43,284
Total rental expense for operating leases approximated $4 million, $9 million and $14 million in 1999, 2000
and 2001, respectively.
Purchase Commitments
As of December 31, 2001, EchoStar’s purchase commitments totaled approximately $79 million. The
majority of these commitments relate to EchoStar receiver systems and related components. All of the purchases
related to these commitments are expected to be made during 2002. EchoStar expects to finance these purchases from
existing unrestricted cash balances and future cash flows generated from operations.
Patents and Intellectual Property
Many entities, including some of EchoStar’s competitors, now have and may in the future obtain patents and
other intellectual property rights that cover or affect products or services directly or indirectly related to those that
EchoStar offers. EchoStar may not be aware of all patents and other intellectual property rights that its products may
potentially infringe. Damages in patent infringement cases can include a tripling of actual damages in certain cases.
Further, EchoStar cannot estimate the extent to which it may be required in the future to obtain licenses with respect to
patents held by others and the availability and cost of any such licenses. Various parties have asserted patent and other
intellectual property rights with respect to components within EchoStar’s direct broadcast satellite system. EchoStar
cannot be certain that these persons do not own the rights they claim, that its products do not infringe on these rights,
that it would be able to obtain licenses from these persons on commercially reasonable terms or, if it was unable to
obtain such licenses, that it would be able to redesign its products to avoid infringement.
Fee Dispute
EchoStar had a contingent fee arrangement with attorneys who represented EchoStar in prior litigation with
The News Corporation, Ltd. The contingent fee arrangement provides for the attorneys to be paid a percentage of any
net recovery obtained by EchoStar in the News Corporation litigation. The attorneys asserted that they might be entitled
to receive payments totaling hundreds of millions of dollars under this fee arrangement. EchoStar consistently
maintained that the demand significantly overstated the amount to which the attorneys might reasonably be entitled.
During mid-1999, EchoStar initiated litigation against the attorneys in the Arapahoe County, Colorado,
District Court arguing that the fee arrangement was void and unenforceable. In December 1999, the attorneys initiated
an arbitration proceeding before the American Arbitration Association. The litigation was stayed while the arbitration
proceeded. The arbitration hearing concluded on October 11, 2001. During the four week arbitration hearing, the
attorneys presented a damage model for $56 million. EchoStar asserted even that amount significantly overstated the