<PAGE>   1
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

        For the transition period from _____________ to ________________.

                        Commission file number: 333-31929

                            ECHOSTAR DBS CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                                    <C>
                        COLORADO                                                       84-1328967
(State or other jurisdiction of incorporation or organization            (I.R.S. Employer Identification No.)

                    5701 S. SANTA FE
                   LITTLETON, COLORADO                                                   80120
        (Address of principal executive offices)                                       (Zip Code)
</TABLE>

       Registrant's telephone number, including area code: (303) 723-1000


        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

         As of March 24, 2000, the Registrant's outstanding Common stock
consisted of 1,000 shares of Common Stock, $0.01 par value.

         THE REGISTRANT  MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
(I)(1)(a) AND(b) OF FORM 10-K AND IS THEREFORE FILING THIS ANNUAL REPORT ON
FORM 10-K WITH THE REDUCED DISCLOSURE FORMAT.


                       DOCUMENTS INCORPORATED BY REFERENCE

         The  following  documents  are  incorporated  into  this  Form  10-K by
reference:

         None


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<PAGE>   2

                                TABLE OF CONTENTS


                                     PART I

<TABLE>
<S>       <C>                                                                                             <C>
     Item 1.   Business................................................................................     1
     Item 2.   Properties..............................................................................     2
     Item 3.   Legal Proceedings.......................................................................     3
     Item 4.   Submission of Matters to a Vote of Security Holders.....................................     *

                                                    PART II

     Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters...................     5
     Item 6.   Selected Financial Data.................................................................     *
     Item 7.   Management's Narrative Analysis of Results of Operations................................     5
     Item 7A.  Quantitative and Qualitative Disclosures About Market Risk..............................    10
     Item 8.   Financial Statements and Supplementary Data.............................................    10
     Item 9.   Changes In and Disagreements with Accountants on Accounting and Financial Disclosure....    10

                                                    PART III

     Item 10.  Directors and Executive Officers of the Registrant......................................     *
     Item 11.  Executive Compensation..................................................................     *
     Item 12.  Security Ownership of Certain Beneficial Owners and Management..........................     *
     Item 13.  Certain Relationships and Related Transactions..........................................     *

                                                    PART IV

     Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.........................    11

                 Signatures............................................................................    15
                 Index to Financial Statements.........................................................   F-1
</TABLE>




-----------------------------
*  This item has been omitted pursuant to the reduced disclosure format as set
   forth in General Instructions (1)(1)(a) and (b) of Form 10-K.


<PAGE>   3


                                     PART I

ITEM 1.  BUSINESS

         All statements contained herein, as well as statements made in press
releases and oral statements that may be made by us or by officers, directors or
employees acting on our behalf, that are not statements of historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could
cause our actual results to be materially different from historical results or
from any future results expressed or implied by such forward-looking statements.
Among the factors that could cause our actual results to differ materially are
the following: a total or partial loss of a satellite due to operational
failures, space debris or otherwise; an unsuccessful launch or deployment of our
sixth satellite, EchoStar VI; delays in the construction of our seventh, eighth
or ninth satellites; a decrease in sales of digital equipment and related
services to international direct-to-home or DTH service providers; a decrease in
DISH Network subscriber growth; an increase in subscriber turnover; an increase
in subscriber acquisition costs; impediments to the retransmission of local or
distant broadcast network signals which could result from pending litigation; an
inability to obtain certain retransmission consents; our inability to retain
necessary authorizations from the FCC; an increase in competition from cable,
direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; the introduction of new
technologies and competitors into the subscription television business; a change
in the regulations governing the subscription television service industry; the
outcome of any litigation in which we may be involved; general business and
economic conditions; and other risk factors described from time to time in our
reports filed with the Securities and Exchange Commission. In addition to
statements that explicitly describe such risks and uncertainties, readers are
urged to consider statements that include the terms "believes," "belief,"
"expects," "plans," "anticipates," "intends" or the like to be uncertain and
forward-looking. All cautionary statements made herein should be read as being
applicable to all forward-looking statements wherever they appear. In this
connection, investors should consider the risks described herein and should not
place undue reliance on any forward-looking statements.

BRIEF DESCRIPTION OF BUSINESS

         We are a wholly-owned subsidiary of EchoStar Communications
Corporation, a publicly traded company on the Nasdaq National Market under the
symbol "DISH". During March 1999, EchoStar received approval from the Federal
Communications Commission to reorganize certain of its direct and indirect
wholly-owned subsidiaries in order to streamline its organization and
operations. During the first quarter of 1999, EchoStar placed ownership of all
of its direct broadcast satellites and related FCC licenses into EchoStar
Satellite Corporation. DirectSat Corporation, Direct Broadcasting Satellite
Corporation and EchoStar Space Corporation were merged into EchoStar Satellite
Corporation. Dish, Ltd., and EchoStar Satellite Broadcasting Company were merged
into the Company. EchoStar IV and the related FCC licenses were transferred to
EchoStar Satellite Corporation. The accompanying financial statements
retroactively reflect this reorganization.

         Unless otherwise stated, or the context otherwise requires, references
to EchoStar and our parent company shall include all of its direct and indirect
wholly-owned subsidiaries. We refer readers of this report to EchoStar's Annual
Report for the year ended December 31, 1999. Substantially all of our operations
are conducted by subsidiaries. Our operations include three interrelated
business units:

          o    The  DISH  Network  - our  direct  broadcast  satellite,  or DBS,
               subscription  television  service  in the  United  States.  As of
               December 31, 1999, we had  approximately 3.4 million DISH Network
               subscribers.

          o    EchoStar Technologies Corporation - our engineering division,
               which is principally responsible for the design of digital
               set-top boxes, or satellite receivers, necessary for consumers to
               receive DISH Network programming, and the sale of set-top boxes
               to international direct-to-home satellite operators. We have also
               provided uplink center design, construction oversight and other
               project integration services for international direct-to-home
               ventures.

          o    Satellite Services - our division that provides video, audio and
               data services to business television customers and other
               satellite users.



                                       1
<PAGE>   4


RECENT DEVELOPMENTS

         During February 2000, we announced the formation of a joint venture
with OpenTV Corp. intended to offer DISH Network customers and other video
platforms around the world a low cost, interactive digital receiver with a
built-in hard disk drive that will permit viewers to pause and record live
programs without the need for video tape. The new set-top box, expected to be
available during the fourth quarter of 2000, would offer interactive television
services developed by OpenTV. In connection with formation of the joint venture,
OpenTV and EchoStar licensed certain intellectual property rights to the joint
venture and EchoStar was issued 2,252,252 shares of OpenTV common Stock. The
shares of OpenTV common Stock are subject to forfeiture if EchoStar fails to
activate the OpenTV system in at least 500,000 set top boxes on or before
February 23, 2003.

         During February 2000, we also 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. Both will include
spot-beam technology which could allow DISH Network to offer local channels or
other value added services in as many as 60 or more markets across the United
States. The third satellite, EchoStar IX, will be a hybrid Ku/Ka-band satellite,
which may provide our satellite services division with increased opportunities
to attract business customers and may provide DISH Network customers with
expanded services such as Internet, data and potentially two-way wireless
communications.

         During February 2000, EchoStar filed suit against DirecTV and Thomson
Consumer Electronics/RCA in the Federal District Court of Colorado. The suit
alleges that DirecTV has utilized improper conduct in order to fend off
competition from the DISH Network. According to the complaint, DirecTV has
demanded that certain retailers stop displaying EchoStar merchandise and has
threatened to cause economic damage to retailers if they continued to offer both
product lines in head-to-head competition. The suit alleges that DirecTV has
acted in violation of federal and state anti-trust laws in order to protect
DirecTV's market share. EchoStar is seeking injunctive relief and monetary
damages. It is too early in the litigation to make an assessment of the probable
outcome.

         During March 2000, EchoStar announced the acquisition of Kelly
Broadcasting Systems, Inc., a New Jersey based provider of international and
foreign-language programming in the United States. In connection with the
acquisition, EchoStar issued approximately 255,000 shares of its Class A common
stock, valued at the date of issuance at approximately $31 million, and will pay
$3.5 million in cash for 100% ownership of KBS. The acquisition of KBS will be
accounted for as a purchase transaction.

ITEM 2. PROPERTIES

         The following table sets forth certain information concerning our
material properties:

<TABLE>
<CAPTION>
                                                           SEGMENT(S) USING        APPROXIMATE
DESCRIPTION/USE/LOCATION                                       PROPERTY           SQUARE FOOTAGE      OWNED OR LEASED
-------------------------------------------------------  --------------------  -------------------  -------------------

<S>                                                       <C>                       <C>                  <C>
Corporate headquarters and customer service,
   Littleton, Colorado................................             All               156,000                Owned

EchoStar Technologies Corporation office and
   distribution center, Englewood, Colorado...........             ETC               155,000                Owned

Warehouse and distribution center, Denver, Colorado...             ETC               132,800                Leased

Customer service center, El Paso, Texas...............        DISH Network           100,000                Leased

Customer service center, McKeesport, Pennsylvania.....        DISH Network           100,000                Leased

Digital broadcast operations center, Gilbert, AZ......       DISH Network and
                                                            Satellite Services       120,000                Owned

Office and distribution center, Sacramento,
   California.........................................             ETC                78,500                Owned

Digital broadcast operations center, Cheyenne,               DISH Network and
   Wyoming............................................      Satellite Services        55,000                Owned

Customer service center, Thornton, Colorado...........         DISH Network           55,000                Owned

European headquarters and warehouse, Almelo, The
   Netherlands........................................         ETC and Other          53,800                Owned
</TABLE>


                                       2
<PAGE>   5


ITEM 3.  LEGAL PROCEEDINGS

DirecTV

         During February 2000, EchoStar filed suit against DirecTV and Thomson
Consumer Electronics/RCA in the Federal District Court of Colorado. The suit
alleges that DirecTV has utilized improper conduct in order to fend off
competition from the DISH Network. According to the complaint, DirecTV has
demanded that certain retailers stop displaying EchoStar merchandise and has
threatened to cause economic damage to retailers if they continued to offer both
product lines in head-to-head competition. The suit alleges that DirecTV has
acted in violation of federal and state anti-trust laws in order to protect
DirecTV's market share. EchoStar is seeking injunctive relief and monetary
damages. It is too early in the litigation to make an assessment of the probable
outcome.

The News Corporation Limited

         During February 1997, News Corporation agreed to acquire approximately
50% of our outstanding capital stock. During late April 1997, substantial
disagreements arose between the parties regarding their obligations under this
agreement. Those substantial disagreements led to litigation which the parties
subsequently settled. In connection with the News Corporation litigation, we
have a contingent fee arrangement with the attorneys who represented us in that
litigation, which provides for the attorneys to be paid a percentage of any net
recovery obtained in the News Corporation litigation. The attorneys have
asserted that they may be entitled to receive payments totaling hundreds of
millions of dollars under this fee arrangement. We are vigorously contesting the
attorneys' interpretation of the fee arrangement, which we believe significantly
overstates the magnitude of our liability. We also believe that the fee
arrangement is void and unenforceable because the attorneys who represented us
are seeking a fee that we believe is unreasonable and excessive, among other
things. If we are unable to resolve this fee dispute with the attorneys, it
would be resolved through arbitration or litigation. During mid-1999, we
initiated litigation against the attorneys in the District Court, Arapahoe
County, Colorado, arguing that the fee arrangement is void and unenforceable. We
have also asserted claims for breach of fiduciary duty, constructive fraud,
breach of the fee arrangement, and misappropriation of trade secrets against the
attorneys. In December 1999, the attorneys initiated an arbitration proceeding
before the American Arbitration Association. It is too early to determine the
outcome of negotiations, arbitration or litigation regarding this fee dispute.

WIC Premium Television Ltd.

         During July 1998, a lawsuit was filed by WIC Premium Television Ltd.,
an Alberta corporation, in the Federal Court of Canada Trial Division, against
General Instrument Corporation, HBO, Warner Communications, Inc., John Doe,
Showtime, United States Satellite Broadcasting Company, Inc., EchoStar, and two
of EchoStar's wholly-owned subsidiaries. The lawsuit seeks, among other things,
an interim and permanent injunction prohibiting the defendants from activating
receivers in Canada and from infringing any copyrights held by WIC. It is too
early to determine whether or when any other lawsuits or claims will be filed.
It is also too early to make an assessment of the probable outcome of the
litigation or to determine the extent of any potential liability or damages.

         During September 1998, WIC filed another lawsuit in the Court of
Queen's Bench of Alberta Judicial District of Edmonton against certain
defendants, including EchoStar. WIC is a company authorized to broadcast certain
copyrighted work, such as movies and concerts, to residents of Canada. WIC
alleges that the defendants engaged in, promoted, and/or allowed satellite dish
equipment from the United States to be sold in Canada and to Canadian residents
and that some of the defendants allowed and profited from Canadian residents
purchasing and viewing subscription television programming that is only
authorized for viewing in the United States. The lawsuit seeks, among other
things, an interim and permanent injunction prohibiting the defendants from
importing hardware into Canada and from activating receivers in Canada, together
with damages in excess of $175 million.

         We filed motions to dismiss each of the actions for lack of personal
jurisdiction. The Court in the Alberta court action recently denied our Motion
to Dismiss. The Alberta Court also granted a motion to add more EchoStar parties
to the lawsuit. EchoStar Satellite Corporation, EchoStar DBS Corporation,
EchoStar Technologies Corporation, and EchoStar Satellite Broadcast Corporation
have been added as defendants in the litigation. The newly added defendants have
also challenged jurisdiction. The Court in the Federal court action has stayed
that case before ruling on our motion to dismiss. We intend to vigorously defend
the suits in the event our motions are denied.



                                       3
<PAGE>   6




It is too early to determine whether or when any other lawsuits or claims will
be filed. It is also too early to make an assessment of the probable outcome of
the litigation or to determine the extent of any potential liability or damages.

Broadcast network programming

         Under the Satellite Home Viewer Act, the determination of whether a
household qualifies as "unserved" for the purpose of eligibility to receive a
distant network channel depends, in part, on whether that household can receive
a signal of "Grade B intensity" as defined by the FCC.

         During 1998, the national networks and local affiliate stations
challenged, based upon copyright infringement, PrimeTime 24's methods of selling
network programming to consumers. Historically, we obtained distant broadcast
network signals for distribution to our customers through PrimeTime 24. The
United States District Court for the Southern District of Florida entered a
nationwide permanent injunction preventing PrimeTime 24 from selling its
programming to consumers unless the programming was sold in accordance with
certain stipulations in the injunction. The injunction covers distributors as
well. The plaintiffs in the Florida litigation informed us they considered us a
distributor for purposes of that injunction. A federal district court in North
Carolina also issued an injunction against PrimeTime 24 prohibiting certain
distant signal retransmissions in the Raleigh area. The Fourth Circuit Court of
Appeals recently affirmed the North Carolina Court's decision. We have
implemented Satellite Home Viewer Act compliance procedures which materially
restrict the market for the sale of network channels by us.

         In October 1998, we filed a declaratory judgment action in the United
States District Court for the District of Colorado against the four major
networks. We asked the court to enter a judgment declaring that our method of
providing distant network programming does not violate the Satellite Home Viewer
Act and hence does not infringe the networks' copyrights. In November 1998, the
four major broadcast networks and their affiliate groups filed a complaint
against us in federal court in Miami alleging, among other things, copyright
infringement. The court combined the case that we filed in Colorado with the
case in Miami and transferred it to the Miami court.

         In February 1999, CBS, NBC, Fox and ABC filed a "Motion for Temporary
Restraining Order, Preliminary Injunction and Contempt Finding" against DirecTV
in Miami related to the delivery of distant network channels to DirecTV
customers by satellite. Under the terms of a settlement between DirecTV and the
networks, some DirecTV customers were scheduled to lose access to their
satellite-provided network channels by July 31, 1999, while other DirecTV
customers were to be disconnected by December 31, 1999. Subsequently, PrimeTime
24 and substantially all providers of satellite-delivered network programming
other than us agreed to this cut-off schedule.

         The networks are pursuing a Motion for Preliminary Injunction in the
Miami Court, asking the Court to enjoin us from providing network programming
except under very limited circumstances. In general, the networks want us to
turn off programming to our customers on the same schedule agreed to by DirecTV.

         A preliminary injunction hearing was held during September 1999. The
Court took the issues under advisement to consider the networks' request for an
injunction, whether to hear live testimony before ruling upon the request, and
whether to hear argument on why the Satellite Home Viewer Act may be
unconstitutional, among other things. The Court did not say when a decision will
be made, or whether an additional hearing will be necessary prior to ruling on
the networks' preliminary injunction motion.

         If this case is decided against us, or a preliminary injunction is
issued, significant material restrictions on the sale of distant ABC, NBC, CBS
and Fox channels by us could result, including potentially a nationwide
permanent prohibition on our broadcast of ABC, NBC, CBS and Fox network channels
by satellite. The litigation and the new legislation discussed above, among
other things, could also require us to terminate delivery of network signals to
a material portion of our subscriber base, which could cause many of these
subscribers to cancel their subscription to our other services. While the
networks have not sought monetary damages, they have sought to recover attorney
fees if they prevail. We have sent letters to some of our subscribers warning
that their access to distant broadcast network channels might be terminated soon
and have terminated ABC, NBC, CBS and Fox programming to many customers.


                                       4
<PAGE>   7


         In November 1999, Congress passed new legislation regarding the
satellite delivery of network programming and it was signed into law by
President Clinton. This new law has the potential of reducing the number of
customers whose network channels EchoStar may otherwise be required to terminate
as the law "grandfathers" in many subscribers.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         As of March 19, 1997, all 1,000 authorized, issued and outstanding
shares of our common stock were held by EchoStar. There is currently no
established trading market for our common stock.

         We have never declared or paid any cash dividends on our common stock
and do not expect to declare dividends in the foreseeable future. Payment of any
future dividends will depend upon our earnings and capital requirements, our
debt facilities, and other factors the Board of Directors considers appropriate.
We currently intend to retain our earnings, if any, to support future growth and
expansion. Our ability to declare dividends is affected by covenants in our debt
facilities.

ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

         All statements contained herein, as well as statements made in press
releases and oral statements that may be made by us or by officers, directors or
employees acting on our behalf, that are not statements of historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could
cause our actual results to be materially different from historical results or
from any future results expressed or implied by such forward-looking statements.
Among the factors that could cause our actual results to differ materially are
the following: a total or partial loss of a satellite due to operational
failures, space debris or otherwise; an unsuccessful launch or deployment of our
sixth satellite, EchoStar VI; delays in the construction of our seventh, eighth
or ninth satellites; a decrease in sales of digital equipment and related
services to international direct-to-home or DTH service providers; a decrease in
DISH Network subscriber growth; an increase in subscriber turnover; an increase
in subscriber acquisition costs; impediments to the retransmission of local or
distant broadcast network signals which could result from pending litigation; an
inability to obtain certain retransmission consents; our inability to retain
necessary authorizations from the FCC; an increase in competition from cable,
direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; the introduction of new
technologies and competitors into the subscription television business; a change
in the regulations governing the subscription television service industry; the
outcome of any litigation in which we may be involved; general business and
economic conditions; and other risk factors described from time to time in our
reports filed with the Securities and Exchange Commission. In addition to
statements that explicitly describe such risks and uncertainties, readers are
urged to consider statements that include the terms "believes," "belief,"
"expects," "plans," "anticipates," "intends" or the like to be uncertain and
forward-looking. All cautionary statements made herein should be read as being
applicable to all forward-looking statements wherever they appear. In this
connection, investors should consider the risks described herein and should not
place undue reliance on any forward-looking statements.

RESULTS OF OPERATIONS

Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998.

         Revenue. Total revenue for the year ended December 31, 1999 was $1.606
billion, an increase of $620 million compared to total revenue for the year
ended December 31, 1998 of $986 million. The increase in total revenue was
primarily attributable to DISH Network subscriber growth. We expect that our
revenues will continue to increase as the number of DISH Network subscribers
increases. As a result of our free system and free installation programs, our
ability to provide major local broadcast network signals and general economic
conditions, we expect strong sales during the first quarter of 2000.


                                       5
<PAGE>   8


         DISH Network  subscription  television  services revenue totaled $1.343
billion for the year ended  December  31,  1999,  an  increase  of $674  million
compared to the same period in 1998. This increase was directly  attributable to
the  increase  in the number of DISH  Network  subscribers  and  higher  average
revenue per  subscriber.  Average  DISH Network  subscribers  for the year ended
December  31, 1999  increased  approximately  85% compared to the same period in
1998.  As December  31,  1999,  we had  approximately  3.4 million  DISH Network
subscribers  compared to 1.9 million at December 31, 1998.  Monthly  revenue per
subscriber   more  than  $43  during  the  year  ended  December  31,  1999  and
approximated  $39 during the same period during 1998. DISH Network  subscription
television services revenue principally  consists of revenue from basic, premium
and pay-per-view  subscription  television  services.  DISH Network subscription
television  services  revenue  will  continue  to  increase to the extent we are
successful in increasing the number of DISH Network  subscribers and maintaining
or increasing revenue per subscriber.

         For the year ended December 31, 1999, DTH equipment sales and
integration services totaled $178 million, a decrease of $76 million compared to
the same period during 1998. DTH equipment sales consist of sales of digital
set-top boxes and other digital satellite broadcasting equipment to
international DTH service operators and sales of DBS accessories. This expected
decrease in DTH equipment sales and integration services revenue was primarily
attributable to a decrease in demand combined with a decrease in the sales price
of digital set-top boxes attributable to increased competition.

         Substantially all of our EchoStar Technologies Corporation, or ETC,
revenues have resulted from sales to two international DTH providers. We
currently have agreements to provide equipment to DTH service operators in Spain
and Canada. As a result, our ETC business currently is economically dependent on
these two DTH providers. Our future revenue from the sale of DTH equipment and
integration services in international markets depends largely on the success of
these DTH operators and continued demand for our digital set-top boxes. Although
there can be no assurance, we expect that our DTH equipment and integration
services revenue for the year ended December 31, 2000 will approximate DTH
equipment and integration services revenue during 1999. Although we continue to
actively pursue additional distribution and integration service opportunities
internationally, no assurance can be given that any such efforts will be
successful.

         As previously reported, since 1998, Telefonica, one of the two DTH
service providers described above, has had recurrent discussions and
negotiations for a possible merger with Sogecable (Canal Plus Satellite), one of
its primary competitors. While we are not currently aware of any formal
negotiations between Telefonica and Canal Plus Satellite, there are again rumors
of a potential merger in the marketplace. Although we have binding purchase
orders from Telefonica for deliveries of DTH equipment in 2000, we cannot
predict the impact, if any, eventual consummation of this possible merger might
have on our future sales to Telefonica.

         Satellite services revenue totaled $41 million during 1999, an increase
of $19 million as compared to the same period during 1998. These revenues
principally include fees charged to content providers for signal carriage and
revenues earned from business television, or BTV customers. The increase in
satellite services revenue was primarily attributable to increased BTV revenue
due to the addition of new full-time BTV customers. Satellite services revenue
for the year ended December 31, 2000 is expected to increase as compared to the
year ended December 31, 1999, to the extent we are successful in increasing the
number of our BTV customers and developing and implementing new services.

         In order, among other things, to prepare for a potential adverse result
in our pending litigation with the four major broadcast networks and their
affiliate groups, we have sent letters to some of our subscribers warning that
their access to CBS, NBC, Fox and ABC distant network channels might be
terminated this year. Such terminations would result in a small reduction in
average monthly revenue per subscriber and possibly increased subscriber
turnover. While there can be no assurance, any such decreases could be offset by
increases in average monthly revenue per subscriber resulting from the delivery
of local network channels by satellite, and increases in other programming
offerings that will follow the launch of EchoStar VI during the second quarter
of 2000.

         DISH Network Operating Expenses. DISH Network operating expenses
totaled $745 million during 1999, an increase of $348 million or 88%, compared
to the same period in 1998. The increase in DISH Network operating expenses was
consistent with, and primarily attributable to, the increase in the number of
DISH Network subscribers.


                                       6
<PAGE>   9


DISH Network operating expenses represented 55% and 59% of subscription
television services revenue during the years ended December 31, 1999 and 1998,
respectively.

         Subscriber-related expenses totaled $581 million during 1999, an
increase of $283 million compared to the same period in 1998. Such expenses,
which include programming expenses, copyright royalties, residuals payable to
retailers and distributors, and billing, lockbox and other variable subscriber
expenses, represented 43% of subscription television services revenues during
the year ended December 31, 1999 compared to 45% during the same period in 1998.
Although we do not currently expect subscriber-related expenses as a percentage
of subscription television services revenue to increase materially in future
periods, there can be no assurance this expense to revenue ratio will not
materially increase.

         Customer service center and other expenses principally consist of costs
incurred in the operation of our DISH Network customer service centers, such as
personnel and telephone expenses, as well as subscriber equipment installation
and other operating expenses. Customer service center and other expenses totaled
$122 million during 1999, an increase of $50 million as compared to the same
period in 1998. The increase in customer service center and other expenses
resulted from increased personnel and telephone expenses to support the growth
of the DISH Network, and non-cash compensation expense from significant
post-grant appreciation of stock options granted to certain key customer service
center employees during 1999. Customer service center and other expenses totaled
9% of subscription television services revenue during 1999, as compared to 11%
during the same period in 1998. Customer service center and other expenses in
total, and as a percentage of subscription television services revenue, may
increase in future periods as we continue to develop our customer service
centers to provide additional customer support and help us better accommodate
anticipated subscriber growth.

         Satellite and transmission expenses include expenses associated with
the operation of our digital broadcast center, contracted satellite telemetry,
tracking and control services, and satellite in-orbit insurance. Satellite and
transmission expenses totaled $42 million during 1999, a $16 million increase
compared to the same period in 1998. This increase resulted from higher
satellite and other digital broadcast center operating expenses due to an
increase in the number of operational satellites, and non-cash compensation
expense from significant post-grant appreciation of stock options granted to
certain key digital broadcast operations center employees during 1999. We expect
satellite and transmission expenses to continue to increase in the future as
additional satellites or digital broadcast centers are placed in service.
Satellite and transmission expenses totaled 3% and 4% of subscription television
services revenue during the year ended December 31, 1999 and 1998, respectively.
While we can provide no assurance, we expect this expense to revenue ratio to
decline to the extent we are successful in increasing the number of DISH Network
subscribers and maintaining or increasing revenue per subscriber.

         Cost of sales - DTH equipment and Integration Services. Cost of sales -
DTH  equipment  and  integration  services  totaled $150 million  during 1999, a
decrease of $25 million compared to the same period in 1998. Cost of sales - DTH
equipment and integration  services  principally  includes costs associated with
digital set-top boxes and related components sold to international DTH operators
and DBS  accessories.  Cost of sales - DTH  equipment and  integration  services
represented  84%  and 69% of DTH  equipment  revenue,  during  the  years  ended
December  31,  1999 and 1998,  respectively.  The lower  margin was  principally
attributable to a $16.6 million loss provision primarily for component parts and
purchase  commitments  related to our first generation model 7100 set-top boxes,
for which production has been suspended in favor of our second  generation model
7200 set-top boxes. The write-off partially offset the expected decrease in cost
of sales - DTH equipment and integration services  attributable to a decrease in
demand combined with increased  competition.  We expect that cost of sales - DTH
equipment and integration services may increase as a percentage of DTH equipment
revenue  in  the  future,   due  to  price  pressure  resulting  from  increased
competition from other providers of DTH equipment.

         Marketing  Expenses.  Marketing  expenses  totaled $742 million  during
1999,  an increase  of $410  million  compared  to the same period in 1998.  The
increase in marketing  expenses  was  primarily  attributable  to an increase in
subscriber  promotion  subsidies.  Subscriber  promotion  subsidies  include the
excess of  transaction  costs over  transaction  proceeds at the time of sale of
EchoStar receiver systems,  activation  allowances paid to retailers,  and other
promotional  incentives.  Advertising and other expenses totaled $65 million and
$48 million during the years ended December 31, 1999 and 1998, respectively.


                                       7
<PAGE>   10


         During 1999, our total subscriber acquisition costs, inclusive of
acquisition marketing expenses, totaled approximately $729 million, or
approximately $385 per new subscriber activation. Comparatively, our subscriber
acquisition costs during the year ended December 31, 1998, inclusive of
acquisition marketing expenses and deferred subscriber acquisition costs,
totaled $314 million, or approximately $285 per new subscriber activation. The
increase in our subscriber acquisition costs, on a per new subscriber activation
basis, principally resulted from the introduction of several aggressive
marketing promotions to acquire new subscribers.

         During 1999, our marketing promotions included our DISH Network
One-Rate Plan, C-band bounty program, Great Rewards program (PrimeStar bounty),
cable bounty and a free installation program. Our subscriber acquisition costs
under these programs are significantly higher than those under our marketing
programs historically.

         Under the DISH Network One-Rate Plan, consumers are eligible to receive
a rebate that ranges from $100 up to $299 on the purchase of certain EchoStar
receiver systems. To be eligible for this rebate, a subscriber must make a
one-year commitment to subscribe to our America's Top 100 CD programming package
plus additional channels. The amount of the monthly programming commitment
determines the amount of the rebate. Although subscriber acquisition costs are
materially higher under this plan compared to previous promotions, DISH Network
One-Rate Plan customers generally provide materially greater average revenue per
subscriber than a typical DISH Network subscriber. In addition, we believe that
these customers represent lower credit risk and therefore may be marginally less
likely to disconnect their service than other DISH Network subscribers. To the
extent that actual consumer participation levels exceed present expectations,
subscriber acquisition costs may materially increase. Although there can be no
assurance as to the ultimate duration of the DISH Network One-Rate Plan, it will
continue through at least April 2000.

         Under our bounty programs, current cable, C-band and PrimeStar
customers are eligible to receive a free base-level EchoStar receiver system and
free installation. In addition, PrimeStar customers are eligible to receive six
months of our America's Top 40 programming or our DISH Latino programming (both
packages retail for $19.99 per month) without charge. A subscriber must make a
one-year commitment to subscribe to either our America's Top 40, our DISH Latino
programming package or our America's Top 100 CD programming package and prove
that they are a current cable, C-band or PrimeStar customer to be eligible for
these programs. Under our free installation program all customers who purchase
an EchoStar receiver system through April 30, 2000 are eligible to receive a
free professional installation.

         We subsidize the purchase and installation of EchoStar receiver systems
in order to attract new DISH Network subscribers. Consequently, our subscriber
acquisition costs are significant. While our average subscriber acquisition cost
was $385 for all of 1999, it was higher during the fourth quarter, averaging
approximately $425 per subscriber. As a result of our free system and free
installation promotion which is anticipated to continue through at least April
30, 2000, we expect our subscriber acquisition costs for 2000 will be highest
during the first several months of the year, but may decline thereafter, and may
average as much as $450 or more for the full year. In connection with our plans
to encourage as many new subscribers as possible to be ready for the additional
services that will become available at the 110(Degree) WL orbital location, and
as a result of continuing competition and our plans to attempt to continue to
drive rapid subscriber growth, we expect that our subscriber acquisition costs
during 2000 could increase by as much as $25 per subscriber or more on average
compared to the fourth quarter of 1999.

         In connection with the launch of EchoStar V and EchoStar VI, we will
utilize the 110(Degree) orbital location to enhance revenue opportunities with
new value added services for our current and future subscribers, and maintain
our primary DBS service at the 119(Degree) orbital location. Our existing
subscribers will need to upgrade their dish and receiver systems in order to
take advantage of all of the services we offer. To encourage existing
subscribers to upgrade their systems and remain subscribers, we are currently
subsidizing upgrades by existing subscribers to our DISH 500 system. The cost of
this program could be significant if utilized by a large number of our existing
subscribers.

         Our subscriber acquisition costs, both in the aggregate and on a per
new subscriber activation basis, may materially increase further to the extent
that we continue or expand our bounty programs, our "free system/free
installation" program, or the DISH Network One-Rate Plan, or if we determine
that more aggressive promotions are necessary to respond to competition, or for
other reasons.

         Further, in November 1999 we entered into an exclusive multi-year
agreement with Superstar/Netlink Group, a subsidiary of TVGuide, to attempt to
convert its current and inactive C-band (large dish) subscribers to our


                                       8
<PAGE>   11


DBS (small dish) services. Under the terms of the agreement, we will incur
substantial subscriber acquisition costs, including payments to Superstar and
the retailer, and for equipment and other incentives to the consumer for each
Superstar subscriber who actually converts to and remains a subscriber to our
DBS Services. Subscriber acquisition costs under the terms of this agreement are
generally higher than under our marketing promotions. As a result of this
agreement, subscriber acquisition costs may increase to the extent our efforts
to convert Superstar's subscribers are even more successful than we currently
anticipate. If subscriber acquisition costs increase materially, it could
adversely affect our financial condition and results of operations.

         General and Administrative Expenses. General and administrative
expenses totaled $196 million during 1999, an increase of $101 million as
compared to the same period in 1998. The increase in G&A expenses was
principally attributable to increased personnel expenses to support the growth
of the DISH Network and non-cash compensation expense from significant
post-grant appreciation of stock options granted to key employees during 1999.
G&A expenses as a percentage of total revenue increased to 12% during the year
ended December 31, 1999 compared to 10% during the same period in 1998. Although
we expect G&A expenses as a percentage of total revenue to remain near the
current level or decline modestly in future periods, this expense to revenue
ratio could increase.

         EBITDA. EBITDA represents earnings before interest, taxes,
depreciation, amortization, and non-cash, stock-based compensation. EBITDA was
negative $183 million during the year ended December 31, 1999 compared to
negative $29 million during the same period in 1998. EBITDA, as adjusted to
exclude amortization of subscriber acquisition costs, was negative $183 million
for the year ended December 31, 1999 compared to negative $48 million for the
same period in 1998. This decline in EBITDA principally resulted from an
increase in DISH Network operating and marketing expenses. It is important to
note that EBITDA does not represent cash provided or used by operating
activities. Further, our calculation of EBITDA for the year ended December 31,
1999 does not include approximately $61 million of non-cash compensation expense
resulting from post-grant appreciation of stock options granted to employees.
EBITDA should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.

         As previously discussed, to the extent we expand our current marketing
promotions and our subscriber acquisition costs materially increase, our EBITDA
results will be negatively impacted because subscriber acquisition costs are
expensed as incurred.

         Depreciation and Amortization. Depreciation and amortization expenses
aggregated $110 million during 1999, a $8 million increase compared to the same
period in 1998, during which subscriber acquisition costs were amortized.
Commencing October 1997, we instead expensed all of these costs at the time of
sale. The increase in depreciation and amortization expenses principally
resulted from an increase in depreciation related to the commencement of
operation of EchoStar IV in August of 1998, the commencement of operation of
EchoStar V in November 1999 and other depreciable assets placed in service
during 1999, partially offset by subscriber acquisition costs becoming fully
amortized during the third quarter of 1998.

         Other Income and Expense. Other expense, net totaled $209 million
during 1999, an increase of $46 million compared to the same period in 1998.
This increase resulted from an increase in interest expense. In January 1999, we
refinanced our outstanding 12 1/2% Senior Secured Notes due 2002 issued in June
1997, our 12 7/8% Senior Secured Discount Notes due 2004 issued in 1994, and our
13 1/8% Senior Secured Discount Notes due 2004 issued in 1996 at more favorable
interest rates and terms. In connection with the refinancing, we consummated an
offering of 9 1/4% Senior Notes due 2006, referred to herein as the seven year
notes, and 9 3/8% Senior Notes due 2009, referred to herein as the ten year
notes. Although the seven and ten year notes have lower interest rates than the
debt securities we repurchased, interest expense increased by approximately $34
million because we raised additional debt to cover tender premiums and consent
and other fees related to the refinancing.

         Extraordinary Charge for Early Retirement of Debt. In connection with
the January 1999 refinancing, we recognized an extraordinary loss of $229
million comprised of debt costs, discounts, tender costs, and premiums paid over
the accreted values of the debt retired.


                                       9
<PAGE>   12


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 $2 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 $116 million.

         Based on our average balance of cash and cash equivalents and
restricted and unrestricted marketable investment securities during 1999, a 10%
decrease in the average interest rate experienced in 1999 would not materially
impact our annual interest income.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Our Condensed  Consolidated  Financial  Statements are included in this
report beginning on page F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


                                       10
<PAGE>   13



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

   (a) The following documents are filed as part of this report:

<TABLE>
<CAPTION>
       (1) Financial Statements                                                                                PAGE

<S>                                                                                                            <C>
           Report of Independent Public Accountants..........................................................   F-2
           Condensed Consolidated Balance Sheets at December 31, 1998 and 1999...............................   F-3
           Condensed Consolidated Statements of Operations and Comprehensive Loss for the years
              ended December 31, 1997, 1998 and 1999.........................................................   F-4
           Condensed Consolidated Statements of Changes in Stockholder's Equity for the years ended
              December 31, 1997, 1998 and 1999...............................................................   F-5
           Condensed Consolidated Statements of Cash Flows for the years ended December 31, 1997,
              1998 and 1999..................................................................................   F-6
           Notes to Condensed Consolidated Financial Statements..............................................   F-7

       (2) Financial Statement Schedules

           None. All schedules have been included in the Condensed Consolidated
           Financial Statements or Notes thereto.

       (3) Exhibits
</TABLE>

<TABLE>
<CAPTION>
  Exhibit No.       Description
  -----------       -----------
<S>                 <C>
        3.1(a)*     Articles of Incorporation of the Company (incorporated by
                    reference to Exhibit 3.4(a) to the Company's Registration
                    Statement on Form S-4, Registration No. 333-31929).

        3.1(b)*     Bylaws of the Company (incorporated by reference to Exhibit
                    3.4(b) to the Company's Registration Statement on Form S-4,
                    Registration No. 333-31929).

        4.1*        Indenture relating to the Seven Year Notes, dated as of
                    January 25, 1999, by and among the Company, the Guarantors
                    and U.S. Bank Trust National Association, as
                    trustee.(incorporated by reference to Exhibit 4.1 to the
                    Company's Registration Statement on Form s-4, Registration
                    No. 333-71345).

        4.2*        Indenture relating to the Ten Year Notes, dated as of
                    January 25, 1999, by and among the Company, the Guarantors
                    and U.S. Bank Trust National Association, as trustee.
                    (incorporated by reference to Exhibit 4.3 to the Company's
                    Registration Statement on Form s-4, Registration No.
                    333-71345).

        4.3*        Registration Rights Agreement relating to the Seven Year
                    Notes by and among the Company, the Guarantors and the
                    parties named therein. (incorporated by reference to Exhibit
                    4.5 to the Company's Registration Statement on Form s-4,
                    Registration No. 333-71345).

        4.4*        Registration Rights Agreement relating to the Ten Year Notes
                    by and among the Company, the Guarantors and the parties
                    named therein. (incorporated by reference to Exhibit 4.6 to
                    the Company's Registration Statement on Form s-4,
                    Registration No. 333-71345).

       10.1(a)*     Satellite Construction Contract, dated as of February 6,
                    1990, between EchoStar Satellite Corporation ("ESC") and
                    Martin Marietta as successor to General Electric, EchoStar,
                    Astro-Space Division ("General Electric") (incorporated by
                    reference to Exhibit 10.1(a) to the Registration Statement
                    on Form S-1 of Dish, Ltd. ("Dish") Registration No.
                    33-76450).

       10.1(b)*     First Amendment to the Satellite Construction Contract,
                    dated as of October 2, 1992, between ESC and Martin Marietta
                    as successor to General Electric (incorporated by reference
                    to Exhibit 10.1(b) to the Registration Statement on Form S-1
                    of Dish, Registration No. 33-76450).
</TABLE>


                                       11
<PAGE>   14

<TABLE>
<S>                 <C>
       10.1(c)*     Second Amendment to the Satellite Construction Contract,
                    dated as of October 30, 1992, between ESC and Martin
                    Marietta as successor to General Electric (incorporated by
                    reference to Exhibit 10.1(c) to the Registration Statement
                    on Form S-1 of Dish, Registration No. 33-76450).

       10.1(d)*     Third Amendment to the Satellite Construction Contract,
                    dated as of April 1, 1993, between ESC and Martin Marietta
                    (incorporated by reference to Exhibit 10.1(d)to the
                    Registration Statement on Form S-1 of Dish, Registration No.
                    33-76450).

       10.1(e)*     Fourth Amendment to the Satellite Construction Contract,
                    dated as of August 19, 1993, between ESC and Martin Marietta
                    (incorporated by reference to Exhibit 10.1(e) to the
                    Registration Statement on Form S-1 of Dish, Registration No.
                    33-76450).

       10.1(f)*     Form of Fifth Amendment to the Satellite Construction
                    Contract, between ESC and Martin Marietta (incorporated by
                    reference to Exhibit 10.1(f) to the Registration Statement
                    on Form S-1 of Dish, Registration No. 33-81234).

       10.1(g)*     Sixth Amendment to the Satellite Construction Contract,
                    dated as of June 7, 1994, between ESC and Martin Marietta
                    (incorporated by reference to Exhibit 10.1(g) to the
                    Registration Statement on Form S-1 of Dish, Registration No.
                    33-81234).

       10.1(h)*     Eighth Amendment to the Satellite Construction Contract,
                    dated as of July 18, 1996, between ESC and Martin Marietta
                    (incorporated by reference to Exhibit 10.1(h) to the
                    Quarterly Report on Form 10-Q of EchoStar for the quarter
                    ended June 30, 1996, Commission File No. 0-26176).

       10.2*        Key Employee Bonus Plan, dated as of January 1, 1994
                    (incorporated by reference to Exhibit 10.7 to the
                    Registration Statement on Form S-1 of Dish, Registration No.
                    33-76450).

       10.3*        Consulting Agreement, dated as of February 17, 1994, between
                    ESC and Telesat Canada (incorporated by reference to Exhibit
                    10.8 to the Registration Statement on Form S-1 of Dish,
                    Registration No. 33-76450).

       10.4*        Form of Satellite Launch Insurance Declarations
                    (incorporated by reference to Exhibit 10.10 to the
                    Registration Statement on Form S-1 of Dish, Registration No.
                    33-81234).

       10.5*        Dish 1994 Stock Incentive Plan (incorporated by reference to
                    Exhibit 10.11 to the Registration Statement on Form S-1 of
                    Dish, Registration No. 33-76450).

       10.6*        Form of Tracking, Telemetry and Control Contract between
                    AT&T Corp. and ESC (incorporated by reference to Exhibit
                    10.12 to the Registration Statement on Form S-1 of Dish,
                    Registration No. 33-81234).

       10.7*        Manufacturing Agreement, dated as of March 22, 1995, between
                    Houston Tracker Systems, Inc. and SCI Technology, Inc.
                    (incorporated by reference to Exhibit 10.12 to the
                    Registration Statement on Form S-1 of Dish, Commission File
                    No. 33-81234).

       10.8*        Statement of Work, dated January 31, 1995 from ESC to
                    Divicom Inc. (incorporated by reference to Exhibit 10.14 to
                    the Registration Statement on Form S-1 of ECC, Registration
                    No. 33-91276).

       10.9*        Launch Services Contract, dated as of June 2, 1995, by and
                    between EchoStar Space Corporation and
                    Lockheed-Khrunichev-Energia International, Inc.
                    (incorporated by reference to Exhibit 10.15 to the
                    Registration Statement on Form S-1 of ECC, Registration No.
                    33-91276).

       10.10*       EchoStar 1995 Stock Incentive Plan (incorporated by
                    reference to Exhibit 10.16 to the Registration Statement on
                    Form S-1 of ECC, Registration No. 33-91276).
</TABLE>


                                       12
<PAGE>   15


<TABLE>
<S>                 <C>
       10.11(a)*    Eighth Amendment to Satellite Construction Contract, dated
                    as of February 1, 1994, between DirectSat Corporation and
                    Martin Marietta (incorporated by reference to Exhibit
                    10.17(a) to the Quarterly Report on Form 10-Q of ECC for the
                    quarter ended June 30, 1996, Commission File No. 0-26176).

       10.11(b)*    Ninth Amendment to Satellite Construction Contract, dated as
                    of February 1, 1994, between DirectSat Corporation and
                    Martin Marietta (incorporated by reference to Exhibit 10.15
                    to the Registration Statement of Form S-4 of ECC,
                    Registration No. 333-03584).

       10.11(c)*    Tenth Amendment to Satellite Construction Contract, dated as
                    of July 18, 1996, between DirectSat Corporation and Martin
                    Marietta (incorporated by reference to Exhibit 10.17(b) to
                    the Quarterly Report on Form 10-Q of ECC for the quarter
                    ended June 30, 1996, Commission File No. 0-26176).

       10.12*       Satellite Construction Contract, dated as of July 18, 1996,
                    between EDBS and Lockheed Martin Corporation (incorporated
                    by reference to Exhibit 10.18 to the Quarterly Report on
                    Form 10-Q of ECC for the quarter ended June 30, 1996,
                    Commission File No. 0-26176).

       10.13*       Confidential Amendment to Satellite Construction Contract
                    between DBSC and Martin Marietta, dated as of May 31, 1995
                    (incorporated by reference to Exhibit 10.14 to the
                    Registration Statement of Form S-4 of ECC, Registration No.
                    333-03584).

       10.14*       Agreement between HTS, ESC and ExpressVu Inc., dated January
                    8, 1997, as amended (incorporated by reference to Exhibit
                    10.18 to the Annual Report on Form 10-K of ECC for the year
                    ended December 31, 1996, as amended, Commission file No.
                    0-26176).

       10.15*       Amendment No. 9 to Satellite Construction Contract,
                    effective as of July 18, 1996, between Direct Satellite
                    Broadcasting Corporation, a Delaware corporation ("DBSC")
                    and Martin Marietta Corporation (incorporated by reference
                    to Exhibit 10.1 to the Quarterly Report on Form 10-Q of ECC
                    for the quarterly period ended June 30, 1997, Commission
                    File No. 0-26176).

       10.16*       Amendment No. 10 to Satellite Construction Contract,
                    effective as of May 31, 1996, between DBSC and Lockheed
                    Martin Corporation (incorporated by reference to Exhibit
                    10.2 to the Quarterly Report on Form 10-Q of ECC for the
                    quarterly period ended June 30, 1997, Commission File No.
                    0-26176).

       10.17*       Contract for Launch Services, dated April 5, 1996, between
                    Lockheed Martin Commercial Launch Services, Inc. and
                    EchoStar Space Corporation (incorporated by reference to
                    Exhibit 10.3 to the Quarterly Report on Form 10-Q of ECC for
                    the quarterly period ended June 30, 1997, Commission File
                    No. 0-26176).

       10.18*       OEM Manufacturing, Marketing and Licensing Agreement, dated
                    as of February 17, 1998, by and among HTS, ESC and Philips
                    Electronics North America Corporation (incorporated by
                    reference to Exhibit 10.1 to the Quarterly Report on Form
                    10-Q of ECC for the quarterly period ended March 31, 1998,
                    Commission File No. 0-26176).

       10.19*       Licensing Agreement, dated as of February 23, 1998, by and
                    among HTS, ESC and VTech Communications Ltd. (incorporated
                    by reference to Exhibit 10.2 to the Quarterly Report on Form
                    10-Q of ECC for quarterly period ended March 31, 1998,
                    Commission File No. 0-26176).

       10.20*       Purchase Agreement by and among American Sky Broadcasting,
                    LLC, The News Corporation Limited, MCI Telecommunications
                    Corporation and EchoStar Communications Corporation, dated
                    November 30, 1998. (incorporated by reference to Exhibit
                    10.1 to the Form 8-K filed by ECC on November 30, 1998,
                    Commission File No. 0-26176).
</TABLE>


                                       13
<PAGE>   16


<TABLE>
<S>                 <C>
     10.21*         Voting Agreement dated November 30, 1998, among EchoStar
                    Communications Corporation, American Sky Broadcasting, LLC,
                    The News Corporation Limited and MCI Telecommunications
                    Corporation (incorporated by reference to Exhibit 10.3 to
                    the Current Report on Form 8-K of EchoStar, filed as of
                    December 1, 1998).

     10.25*         First Amendment, dated June 23, 1999, to the Purchase
                    Agreement dated November 30, 1998, by and among American Sky
                    Broadcasting, LLC, The News Corporation Limited, MCI
                    Telecommunications Corporation, and EchoStar Communications
                    Corporation (incorporated by reference to Exhibit 10.3 to
                    the Current Report on Form 8-K of EchoStar, filed as of July
                    2, 1999, Commission File No. 0-26176).

     10.26*         Registration Rights Agreement, dated June 24, 1999, by and
                    among EchoStar Communications Corporation, MCI
                    Telecommunications Corporation, American Sky Broadcasting,
                    LLC, and News America Incorporated (incorporated by
                    reference to Exhibit 10.4 to the Current Report on Form 8-K
                    of EchoStar, filed as of July 2, 1999, Commission File No.
                    0-26176).

     27             Financial Data Schedule.
</TABLE>

-------------------

*        Incorporated by reference.
**       Constitutes a management contract or compensatory plan or arrangement.
         Filed herewith.

  (b)  Reports on Form 8-K

       No reports on Form 8-K were filed during the fourth quarter of 1999.






                                       14
<PAGE>   17



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, EchoStar has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                              ECHOSTAR DBS CORPORATION

                              By: /s/ Steven B. Schaver
                                  --------------------------------------
                                  Steven B. Schaver
                                  Chief Financial Officer

Date:  March 24, 2000

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of EchoStar
and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature                           Title                                                 Date
---------                           -----                                                 ----

<S>                                 <C>                                                 <C>
/s/ Charles W. Ergen                President and Director                              March 24, 2000
-------------------------------     (Principal Executive Officer)
Charles W. Ergen


/s/ Steven B. Schaver               Chief Financial Officer                             March 24, 2000
-------------------------------     (Principal Financial Officer)
Steven B. Schaver


/s/ James DeFranco                  Director                                            March 24, 2000
-------------------------------
James DeFranco


/s/ David K. Moskowitz              Director                                            March 24, 2000
-------------------------------
David K. Moskowitz




* By:   /s/ David K. Moskowitz
      ------------------------
            David K. Moskowitz
            Attorney-in-Fact
</TABLE>

                                       15
<PAGE>   18


              INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                            <C>
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
   Report of Independent Public Accountants..................................................................   F-2
   Condensed Consolidated Balance Sheets at December 31, 1998 and 1999.......................................   F-3
   Condensed Consolidated Statements of Operations and Comprehensive Loss for the years ended
      December 31, 1997, 1998 and 1999.......................................................................   F-4
   Condensed Consolidated Statements of Changes in Stockholder's Equity for the years ended
      December 31, 1997, 1998 and 1999.......................................................................   F-5
   Condensed Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1998 and 1999......   F-6
   Notes to Condensed Consolidated Financial Statements......................................................   F-7
</TABLE>



                                      F-1
<PAGE>   19


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To EchoStar DBS Corporation:

         We have audited the accompanying condensed consolidated balance sheets
of EchoStar DBS Corporation (a Colorado corporation) and subsidiaries, as
described in Note 1, as of December 31, 1998 and 1999, and the related condensed
consolidated statements of operations and comprehensive loss, changes in
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
EchoStar DBS Corporation and subsidiaries as of December 31, 1998 and 1999, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
generally accepted accounting principles.


                                                       ARTHUR ANDERSEN LLP





Denver, Colorado,
March 10, 2000.


                                      F-2
<PAGE>   20



                            ECHOSTAR DBS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,
                                                                                  -------------------------------
                                                                                      1998              1999
                                                                                  --------------   --------------
<S>                                                                                <C>            <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                                       $    25,308    $   159,761
   Marketable investment securities                                                      7,000         24,774
   Trade accounts receivable, net of allowance for uncollectible accounts of
      $2,996 and $13,109, respectively                                                 107,743        157,944
   Insurance receivable                                                                   --          106,000
   Inventories                                                                          76,708        123,184
   Other current assets                                                                 24,823         27,027
                                                                                   -----------    -----------
Total current assets                                                                   241,582        598,690
Restricted Assets:
   Interest and satellite escrows and other restricted cash and marketable
investment securities                                                                   77,657           --
   Insurance receivable                                                                106,000           --
                                                                                   -----------    -----------
Total restricted assets                                                                183,657           --
Property and equipment, net                                                            853,818      1,314,007
FCC authorizations, net                                                                103,266        722,234
Deferred tax assets                                                                     60,638         56,061
Other noncurrent assets                                                                 27,212         39,215
                                                                                   -----------    -----------
     Total assets                                                                  $ 1,470,173    $ 2,730,207
                                                                                   ===========    ===========

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities:
   Trade accounts payable                                                          $    90,562        187,703
   Deferred revenue                                                                    132,857        181,034
   Accrued expenses                                                                    176,158        483,635
   Advances from affiliates, net                                                        54,805        272,440
   Current portion of long-term debt                                                    22,679         21,017
                                                                                   -----------    -----------
Total current liabilities                                                              477,061      1,145,829

Long-term obligations, net of current portion:
   1994 Notes                                                                          571,674          1,503
   1996 Notes                                                                          497,955          1,097
   1997 Notes                                                                          375,000             15
   Seven Year Notes                                                                       --          375,000
   Ten Year Notes                                                                         --        1,625,000
   Mortgages and other notes payable, net of current portion                            43,450         25,445
   Notes payable to ECC, including accumulated interest                                 59,812           --
   Long-term deferred satellite services revenue and other long-term liabilities        33,358         18,812
                                                                                   -----------    -----------
Total long-term obligations, net of current portion                                  1,581,249      2,046,872
                                                                                   -----------    -----------
     Total liabilities                                                               2,058,310      3,192,701

Commitments and Contingencies (Note 8)

Stockholder's Equity (Deficit):
   Common Stock, $.01 par value, 1,000 shares authorized, issued and
   outstanding                                                                            --             --
   Additional paid-in capital                                                          145,164      1,448,324
   Deferred stock-based compensation                                                      --         (117,780)
   Accumulated deficit                                                                (733,301)    (1,793,038)
                                                                                   -----------    -----------
Total stockholder's equity (deficit)                                                  (588,137)      (462,494)
                                                                                   -----------    -----------
     Total liabilities and stockholder's equity (deficit)                          $ 1,470,173    $ 2,730,207
                                                                                   ===========    ===========
</TABLE>



     See accompanying Notes to Condensed Consolidated Financial Statements.


                                      F-3
<PAGE>   21


                            ECHOSTAR DBS CORPORATION
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                           -----------------------------------------
                                                               1997          1998           1999
                                                           -----------    -----------    -----------
<S>                                                        <C>            <C>            <C>
REVENUE:
   DISH Network:
     Subscription television services                      $   298,883    $   669,310    $ 1,343,234
     Other                                                      42,925         12,799          9,369
                                                           -----------    -----------    -----------
   Total DISH Network                                          341,808        682,109      1,352,603
   DTH equipment sales and integration services                 90,263        253,841        178,325
   Satellite services                                           11,135         22,304         40,657
   C-band and other                                             32,696         27,655         34,706
                                                           -----------    -----------    -----------
Total revenue                                                  475,902        985,909      1,606,291

COSTS AND EXPENSES:
   DISH Network Operating Expenses:
     Subscriber-related expenses                               143,529        298,443        580,979
     Customer service center and other                          35,078         72,482        121,576
     Satellite and transmission                                 14,563         26,067         42,391
                                                           -----------    -----------    -----------
   Total DISH Network operating expenses                       193,170        396,992        744,946
   Cost of sales - DTH equipment and integration
      services                                                  60,918        174,615        149,527
   Cost of sales - C-band and other                             23,909         16,496         17,076
   Marketing:
     Subscriber promotion subsidies                            148,502        283,694        677,527
     Advertising and other                                      34,843         47,986         64,660
                                                           -----------    -----------    -----------
   Total marketing expenses                                    183,345        331,680        742,187
   General and administrative                                   66,060         94,824        196,093
   Amortization of subscriber acquisition costs                121,428         18,819           --
   Depreciation and amortization                                51,408         83,338        110,031
                                                           -----------    -----------    -----------
Total costs and expenses                                       700,238      1,116,764      1,959,860
                                                           -----------    -----------    -----------

Operating loss                                                (224,336)      (130,855)      (353,569)

Other Income (Expense):
   Interest income                                              12,512         10,111         12,566
   Interest expense, net of amounts capitalized               (110,003)      (172,942)      (196,390)
   Other                                                        (1,451)          (618)       (24,892)
                                                           -----------    -----------    -----------
Total other income (expense)                                   (98,942)      (163,449)      (208,716)
                                                           -----------    -----------    -----------

Loss before income taxes                                      (323,278)      (294,304)      (562,285)
Income tax provision, net                                         (146)           (71)          (131)
                                                           -----------    -----------    -----------
Net loss before extraordinary charges                         (323,424)      (294,375)      (562,416)
Extraordinary  charge for early  retirement of debt, net
  of tax                                                          --             --         (228,733)
                                                           -----------    -----------    -----------
Net loss                                                   $  (323,424)   $  (294,375)   $  (791,149)
                                                           ===========    ===========    ===========

Change in unrealized  gain (loss) on  available-for-sale
   securities, net of tax                                            4              8           --
                                                           -----------    -----------    -----------
Comprehensive loss                                         $  (323,420)   $  (294,367)   $  (791,149)
                                                           ===========    ===========    ===========
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements.


                                      F-4
<PAGE>   22


                            ECHOSTAR DBS CORPORATION
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
                    (In thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                                       ACCUMULATED
                                                                                         DEFICIT
                                                                                           AND
                                                                             DEFERRED   UNREALIZED
                                               COMMON STOCK  ADDITIONAL      STOCK-      HOLDING
                                             ---------------  PAID-IN        BASED        GAINS
                                              SHARES   AMT.   CAPITAL     COMPENSATION   (LOSSES)         TOTAL
                                             -------- ------ ----------   ------------  -----------    -----------
                                             (Note 1)
<S>                                           <C>      <C>   <C>            <C>          <C>            <C>
Balance, December 31, 1996                    3        $ -   $  108,841     $       -    $ (115,514)    $   (6,673)
   Purchase price "pushed-down" to DBSC by
     ECC (Note 1)                             -          -       16,323             -             -         16,323
   Unrealized holding gains on
     available-for-sale securities, net       -          -            -             -             4              4
   Net loss                                   -          -            -             -      (323,424)      (323,424)
                                             --        ---   ----------     ---------   -----------    -----------
Balance, December 31, 1997                    3          -      125,164             -      (438,934)      (313,770)
   Contribution of satellite asset            -          -       20,000             -             -         20,000
   Unrealized holding gains on
     available-for-sale securities, net       -          -            -             -             8              8
   Net loss                                   -          -            -             -      (294,375)      (294,375)
                                             --        ---   ----------     ---------   -----------    -----------
Balance, December 31, 1998                    3          -      145,164             -      (733,301)      (588,137)
   Contribution of satellite assets
     acquired by ECC from News Corporation
     and MCI                                  -          -    1,124,320             -             -      1,124,320
   Deferred stock-based compensation
     funded by ECC                            -          -      178,840      (178,840)            -              -
   Deferred stock-based compensation
     recognized                               -          -            -        61,060             -         61,060
   Capital contribution to ECC                -          -            -             -      (268,588)      (268,588)
   Net loss                                   -          -            -             -      (791,149)      (791,149)
                                             --        ---   ----------     ---------   -----------    -----------
Balance, December 31, 1999                    3        $ -   $1,448,324     $(117,780)  $(1,793,038)   $  (462,494)
                                             ==        ===   ==========     =========   ===========    ===========
</TABLE>

      See accompanying Notes to Condensed Consolidated Financial Statements.

                                       F-5

<PAGE>   23


                            ECHOSTAR DBS CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                               YEAR ENDED DECEMBER 31,
                                                                                         ------------------------------------
                                                                                            1997         1998         1999
                                                                                         ---------    ---------    ---------
<S>                                                                                      <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                                 $(323,424)   $(294,375)   $(791,149)
Adjustments to reconcile net loss to net cash flows from operating activities:
   Extraordinary charge for early retirement of debt                                            --           --      228,733
   Loss on impairment of satellite (Note 3)                                                     --           --       13,741
   Loss on disposal of assets                                                                   --           --        9,846
   Deferred stock-based compensation recognized                                                 --           --       61,060
   Depreciation and amortization                                                            51,408       83,338      110,031
   Amortization of subscriber acquisition costs                                            121,428       18,819           --
   Interest on notes payable to ECC added to principal                                       5,215        5,215          330
   Deferred income tax benefit                                                                (361)          --           --
   Amortization of debt discount and deferred financing costs                               83,221      125,724       13,440
   Change in reserve for excess and obsolete inventory                                      (1,823)       1,341       (1,301)
   Change in long-term deferred satellite services revenue and other long-term
   liabilities                                                                              12,056       13,858       10,173
   Superstar exclusivity fee                                                                    --           --      (10,000)
   Other, net                                                                                  403           --           --
   Changes in current assets and current liabilities:
     Trade accounts receivable, net                                                        (52,562)     (41,698)     (50,201)
     Inventories                                                                            51,597      (55,056)     (45,175)
     Subscriber acquisition costs                                                          (72,118)          --           --
     Other current assets                                                                   13,359      (11,611)       2,373
     Trade accounts payable                                                                 27,808       21,526       97,141
     Deferred revenue                                                                       18,120       10,642       48,177
     Accrued expenses                                                                       58,124       68,328      217,727
                                                                                         ---------    ---------    ---------
Net cash flows from operating activities                                                    (7,549)     (53,949)     (85,054)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable investment securities                                              (36,586)      (8,970)    (186,866)
Sales of marketable investment securities                                                   51,513        5,868      169,092
Purchases of restricted marketable investment securities                                    (1,495)          --           --
Funds released from escrow and restricted cash and marketable investment
securities                                                                                 120,215      116,468       77,657
Offering proceeds and investment earnings placed in escrow                                (227,561)      (6,343)          --
Repayments from (advances to) affiliates, net                                                9,976           --           --
Purchases of property and equipment                                                       (221,750)    (153,513)     (87,597)
Advances from News Corporation and MCI for satellite payments                                   --           --       67,804
Other                                                                                         (391)       3,150       (1,318)
                                                                                         ---------    ---------    ---------
Net cash flows from investing activities                                                  (306,079)     (43,340)      38,772

CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from affiliates                                                                        --       77,090      217,635
Net proceeds from issuance of 1997 Notes                                                   362,500           --           --
Proceeds from issuance of Seven Year Notes                                                      --           --      375,000
Proceeds for issuance of Ten Year Notes                                                         --           --    1,625,000
Debt issuance costs and prepayment premiums                                                     --           --     (233,721)
Retirement of 1994 Notes                                                                        --           --     (575,674)
Retirement of 1996 Notes                                                                        --           --     (501,350)
Retirement of 1997 Notes                                                                        --           --     (378,110)
Capital contribution to ECC                                                                     --           --     (268,588)
Repayment of note payable to ECC                                                           (12,000)          --      (60,142)
Repayments of mortgage indebtedness and other notes payable                                (13,253)     (16,552)     (22,180)
Other                                                                                           --           --        2,865
                                                                                         ---------    ---------    ---------
Net cash flows from financing activities                                                   337,247       60,538      180,735
                                                                                         ---------    ---------    ---------
Net increase (decrease) in cash and cash equivalents                                        23,619      (36,751)     134,453
Cash and cash equivalents, beginning of year                                                38,440       62,059       25,308
                                                                                         ---------    ---------    ---------
Cash and cash equivalents, end of year                                                   $  62,059    $  25,308    $ 159,761
                                                                                         =========    =========    =========
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements.

                                      F-6
<PAGE>   24


                            ECHOSTAR DBS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   ORGANIZATION AND BUSINESS ACTIVITIES

Basis of Presentation

         EchoStar DBS Corporation ("DBS Corp," or the "Company"), is a
wholly-owned subsidiary of EchoStar Communications Corporation ("ECC" and
together with its subsidiaries "EchoStar"), a publicly traded company on the
Nasdaq National Market. During March 1999, EchoStar received approval from the
Federal Communications Commission ("FCC") to reorganize certain of its direct
and indirect wholly-owned subsidiaries in order to streamline its organization
and operations. During the first quarter of 1999, EchoStar placed ownership of
all of its direct broadcast satellites and related FCC licenses into EchoStar
Satellite Corporation ("ESC"). DirectSat Corporation, Direct Broadcasting
Satellite Corporation ("DBSC") and EchoStar Space Corporation ("Space") were
merged into ESC. Dish, Ltd., and EchoStar Satellite Broadcasting Company
("ESBC") were merged into the Company. EchoStar IV and the related FCC licenses
were transferred to ESC. The accompanying financial statements retroactively
reflect this reorganization.

         DBS Corp was formed under Colorado law in January 1996 for the initial
purpose of participating in an FCC auction. On January 26, 1996, DBS Corp
submitted the winning bid of $52.3 million for 24 direct broadcast satellite
("DBS") frequencies at the 148(degree) West Longitude ("WL") orbital location.
Funds necessary to complete the purchase of the DBS frequencies and commence
construction of the Company's fourth DBS satellite, EchoStar IV, were advanced
to the Company by ECC. In June 1997, DBS Corp completed an offering (the "1997
Notes Offering") of 12 1/2% Senior Secured Notes due 2002 (the "1997 Notes").
The 1997 Notes were retired on January 25, 1999 upon completion of the Tender
Offers (as defined herein). Prior to consummation of the 1997 Notes Offering,
ECC contributed all of the outstanding capital stock (the "Contribution") of
ESBC to DBS Corp. As a result of the Contribution, ESBC became a wholly-owned
subsidiary of DBS Corp. This transaction was accounted for as a reorganization
of entities under common control in which ESBC is treated as the predecessor of
DBS Corp.


                                       F-7
<PAGE>   25

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


         During 1994, EchoStar acquired approximately 40% of the outstanding
common stock of Direct Broadcasting Satellite Corporation ("Old DBSC"). Old
DBSC's principal assets included an FCC conditional satellite permit and
specific orbital slot assignments for a total of 22 DBS frequencies. Through
December 1996, EchoStar advanced Old DBSC a total of $46 million in the form of
notes receivable to enable Old DBSC to make required payments under its
satellite (EchoStar III) construction contract. On January 8, 1997, EchoStar
consummated the merger of Old DBSC with a wholly-owned subsidiary of EchoStar,
DBSC, as defined above. EchoStar issued approximately 650,000 shares of its
Class A common stock to acquire the remaining 60% of Old DBSC that it did not
previously own. This transaction was accounted for as a purchase and the excess
of the purchase price over the fair value of Old DBSC's tangible assets was
allocated to Old DBSC's FCC authorizations (approximately $16 million). Upon
consummation of the merger, Old DBSC ceased to exist.

Principal Business

         Unless otherwise stated herein, or the context otherwise requires,
references herein to EchoStar shall include ECC, DBS Corp and all direct and
indirect wholly-owned subsidiaries thereof. Substantially all of EchoStar's
operations are conducted by subsidiaries of DBS Corp. The operations of EchoStar
include three interrelated business units:

o    The DISH Network - a direct broadcast satellite ("DBS") subscription
     television service in the United States. As of December 31, 1999, EchoStar
     had approximately 3.4 million DISH Network subscribers.

o    EchoStar Technologies Corporation ("ETC") - engaged in the design of DBS
     set-top boxes, antennae and other digital equipment for the DISH Network
     ("EchoStar receiver systems"), and the design and distribution of similar
     equipment for direct-to-home ("DTH") projects of others internationally,
     together with the provision of uplink center design, construction oversight
     and other project integration services for international DTH ventures.

o    Satellite Services - engaged in the delivery of video, audio and data
     services to business television customers and other satellite users. These
     services may include satellite uplink services, satellite transponder space
     usage, billing, customer service and other services.

         Since 1994, EchoStar has deployed substantial resources to develop the
"EchoStar DBS System." The EchoStar DBS System consists of EchoStar's
FCC-allocated DBS spectrum, DBS satellites ("EchoStar I," "EchoStar II,"
"EchoStar III," "EchoStar IV," and "EchoStar V"), digital satellite receivers,
digital broadcast operations centers, customer service facilities, and other
assets utilized in its operations. EchoStar's principal business strategy is to
continue developing its subscription television service in the United States to
provide consumers with a fully competitive alternative to cable television
service.

Organization and Legal Structure

         In December 1995, ECC merged Dish, Ltd. with a wholly-owned subsidiary
of ECC. During the first quarter of 1999, EchoStar placed ownership of all of
its direct broadcast satellites and related FCC licenses into ESC. DirectSat
Corporation, DBSC and Space were merged into ESC. Dish, Ltd. and ESBC were
merged into DBS Corp. EchoStar IV and the related FCC licenses were transferred
to ESC. Substantially all of EchoStar's operations are conducted by subsidiaries
of DBS Corp.

         The following table summarizes the organizational structure of EchoStar
and its principal subsidiaries as of December 31, 1999:


                                       F-8
<PAGE>   26


                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

<TABLE>
<CAPTION>
                                                  REFERRED TO
LEGAL ENTITY                                       HEREIN AS           PARENT
------------                                      -----------      ---------------
<S>                                               <C>              <C>
EchoStar Communications Corporation               ECC              Publicly owned
EchoStar DBS Corporation                          DBS Corp         ECC
EchoStar Satellite Corporation                    ESC              DBS Corp
Echosphere Corporation                            Echosphere       DBS Corp
EchoStar Technologies Corporation                 ETC              DBS Corp
</TABLE>

Significant Risks and Uncertainties

         Substantial Leverage. The Company is highly leveraged, which makes it
vulnerable to changes in general economic conditions. As of December 31, 1999,
the Company had outstanding long-term debt (including both the current and
long-term portions) totaling approximately $2.0 billion. In August 1999, Company
began paying semi-annual cash debt service payments of approximately $94 million
related to its 9 1/4% Senior Notes due 2006 (the "Seven Year Notes") and its 9
3/8% Senior Notes due 2009 (the "Ten Year Notes"). The Company's ability to meet
its debt service obligations will depend on, among other factors, the successful
execution of its business strategy, which is subject to uncertainties and
contingencies beyond its control.

         Expected Operating Losses. Since 1996, the Company has reported
significant operating and net losses. Improvements in the Company's future
results of operations are largely dependent upon its ability to increase its
customer base while maintaining its overall cost structure, controlling
subscriber turnover and effectively managing its subscriber acquisition costs.
No assurance can be given that the Company will be effective with regard to
these matters. In addition, the Company incurs significant acquisition costs to
obtain DISH Network subscribers. The high cost of obtaining new subscribers
magnifies the negative effects of subscriber turnover.


                                       F-9
<PAGE>   27

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

         The Company accounts for investments in 50% or less owned entities
using the equity method. At December 31, 1997, 1998 and 1999, these investments
were not material to the Company's consolidated financial statements. All
significant intercompany accounts and transactions have been eliminated.

Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses for each reporting
period. Actual results could differ from those estimates.

Foreign Currency Transaction Gains and Losses

         The functional currency of the Company's foreign subsidiaries is the
U.S. dollar because their sales and purchases are predominantly denominated in
that currency. Transactions denominated in currencies other than U.S. dollars
are recorded based on exchange rates at the time such transactions arise.
Subsequent changes in exchange rates result in transaction gains and losses
which are reflected in income as unrealized (based on period-end translation) or
realized (upon settlement of the transaction). Net transaction gains (losses)
during 1997, 1998 and 1999 were not material to the Company's results of
operations.

Statements of Cash Flows Data

         The following  presents the Company's  supplemental cash flow statement
disclosure (in thousands):

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                  --------------------------------------
                                                                                      1997           1998         1999
                                                                                   ----------    ----------   ----------
<S>                                                                                <C>           <C>          <C>
Cash paid for interest                                                             $    5,953    $   57,706   $  126,172
Cash paid for income taxes                                                                209            83          119
Capitalized interest                                                                   43,169        21,619           --
Satellite vendor financing                                                             14,400        12,950           --
Other notes payable                                                                     5,322            --           --
Contribution of satellite asset                                                            --        20,000           --
Assets acquired from News Corporation and MCI:
   FCC licenses and other                                                                  --            --      626,120
   Satellites                                                                              --            --      451,200
   Digital broadcast operations center                                                     --            --       47,000
Capital contribution from ECC                                                              --            --    1,124,320
The purchase price of DBSC was allocated as follows in the related purchase
     accounting:
   EchoStar III satellite under construction                                           51,241            --           --
   FCC authorizations                                                                  16,243            --           --
   Note payable to ECC, including accrued interest of $3,382                          (49,382)           --           --
   Accounts payable and accrued expenses                                               (1,279)           --           --
   Other notes payable                                                                   (500)           --           --
   Additional paid-in capital                                                         (16,323)           --           --
</TABLE>


                                      F-10
<PAGE>   28


                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Cash and Cash Equivalents

         The Company considers all liquid investments purchased with an original
maturity of 90 days or less to be cash equivalents. Cash equivalents as of
December 31, 1998 and 1999 consist of money market funds, corporate notes and
commercial paper; such balances are stated at cost which equates to market
value.


                                      F-11
<PAGE>   29
                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Marketable Investment Securities and Restricted Cash and Marketable Investment
Securities

         As of December 31, 1998 and 1999, the Company has classified all
marketable investment securities as available-for-sale. The fair market value of
marketable investment securities approximates the carrying value and represents
the quoted market prices at the balance sheet dates. Related unrealized gains
and losses are reported as a separate component of stockholder's equity, net of
related deferred income taxes, if applicable. The specific identification method
is used to determine cost in computing realized gains and losses.

         Restricted cash and marketable investment securities, as reflected in
the accompanying consolidated balance sheets, include cash restricted by the
indenture related to the 1997 Notes, plus investment earnings thereon and
restricted cash placed in trust for the purpose of repaying a note payable, as
of December 31, 1998 and 1999, respectively. The major components of marketable
investment securities and restricted cash and marketable investment securities
are as follow (in thousands):

<TABLE>
<CAPTION>
                                                                     RESTRICTED CASH AND MARKETABLE
                             MARKETABLE INVESTMENT SECURITIES            INVESTMENT SECURITIES
                                      DECEMBER 31,                             DECEMBER 31,
                             --------------------------------        ------------------------------
                               1998                     1999           1998                  1999
                             -------                  -------        -------               --------
<S>                          <C>                      <C>            <C>                   <C>
Commercial paper             $    --                  $ 9,053        $ 8,424               $     --
Corporate notes and bonds      7,000                    7,742         54,360                     --
Government bonds                  --                    7,979         14,517                     --
Accrued interest                  --                       --            356                     --
                             -------                  -------        -------               --------
                             $ 7,000                  $24,774        $77,657               $     --
                             =======                  =======        =======               ========
</TABLE>

         At December 31, 1999 marketable investment securities include debt
securities of $25 million with contractual maturities of one year or less and no
debt securities with maturities greater than one year. Actual maturities may
differ from contractual maturities as a result of the Company's ability to sell
these securities prior to maturity.

Fair Value of Financial Instruments

         Fair values for the Company's 1994 Notes, 1996 Notes, 1997 Notes, Seven
Year Notes, and Ten Year Notes are based on quoted market prices. The fair
values of the Company's mortgages and other notes payable are estimated using
discounted cash flow analyses. The interest rates assumed in such discounted
cash flow analyses reflect interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality.

         The following table summarizes the book and fair values of the
Company's debt facilities at December 31, 1998 and 1999 (in thousands):

<TABLE>
<CAPTION>
                                               DECEMBER 31, 1998                   DECEMBER 31, 1999
                                         ---------------------------         ----------------------------
                                         BOOK VALUE        FAIR VALUE        BOOK VALUE        FAIR VALUE
                                         ----------        ----------        ----------        ----------
<S>                                      <C>               <C>               <C>               <C>
1994 Notes                               $  571,674        $  636,480        $    1,503        $    1,503
1996 Notes                                  497,955           580,000             1,097             1,097
1997 Notes                                  375,000           431,250                15                15
Seven Year Notes                                 --                --           375,000           377,813
Ten Year Notes                                   --                --         1,625,000         1,637,188
Mortgages and other notes payable            66,129            61,975            46,462            46,065
</TABLE>


                                      F-12
<PAGE>   30

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Inventories

         Inventories are stated at the lower of cost or market value. Cost is
determined using the first-in, first-out method. Proprietary products are
manufactured by outside suppliers to the Company's specifications. Manufactured
inventories include materials, labor and manufacturing overhead. Cost of other
inventories includes parts, contract manufacturers' delivered price, assembly
and testing labor, and related overhead, including handling and storage costs.
Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                  DECEMBER 31,      DECEMBER 31,
                                                     1998              1999
                                                  ------------      ------------
<S>                                               <C>               <C>
Finished goods - DBS                               $  44,936         $  63,054
Raw materials                                          8,473            35,751
Finished goods - reconditioned and other              18,406            19,509
Work-in-process                                        2,420             7,666
Consignment                                            7,654             1,084
Reserve for excess and obsolete inventory             (5,181)           (3,880)
                                                   ---------         ---------
                                                   $  76,708         $ 123,184
                                                   =========         =========
</TABLE>

         During December 1999, the Company provided for losses of $16.6 million,
primarily for component parts and purchase commitments related to its first
generation model 7100 set-top boxes. Production of model 7100 has been suspended
in favor of its second generation model 7200 set-top boxes.

Property and Equipment

         Property and equipment are stated at cost. Cost includes interest
capitalized of $32 million and $16 million during the years ended December 31,
1997 and 1998, respectively. No interest was capitalized during 1999. The costs
of satellites under construction are capitalized during the construction phase,
assuming the eventual successful launch and in-orbit operation of the satellite.
If a satellite were to fail during launch or while in-orbit, the resultant loss
would be charged to expense in the period such loss was incurred. The amount of
any such loss would be reduced to the extent of insurance proceeds received as a
result of the launch or in-orbit failure. Depreciation is recorded on a
straight-line basis for financial reporting purposes. Repair and maintenance
costs are charged to expense when incurred. Renewals and betterments are
capitalized.

         The Company reviews its long-lived assets and identifiable intangible
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. For assets which are
held and used in operations, the asset would be impaired if the book value of
the asset exceeded the undiscounted future net cash flows related to the asset.
For those assets which are to be disposed of, the assets would be impaired to
the extent the fair value does not exceed the book value. The Company considers
relevant cash flow, estimated future operating results, trends and other
available information including the fair value of frequency rights owned, in
assessing whether the carrying value of assets are recoverable.

FCC Authorizations

         FCC authorizations are recorded at cost and amortized using the
straight-line method over a period of 40 years. Such amortization commences at
the time the related satellite becomes operational; capitalized costs are
written off at the time efforts to provide services are abandoned. FCC
authorizations include interest capitalized of $11 million and $6 million during
the years ended December 31, 1997 and 1998, respectively.


                                      F-13
<PAGE>   31

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Revenue Recognition

         Revenue from the provision of DISH Network subscription television
services and satellite services is recognized as revenue in the period such
services are provided. Revenue from sales of digital set-top boxes and related
accessories is recognized upon shipment to customers. Revenue from the provision
of integration services is recognized as revenue in the period the services are
performed.

Subscriber Promotion Subsidies and Subscriber Acquisition Costs

         In August 1996, the Company began selling its receiver systems below
manufactured cost to consumers conditioned upon the consumer's one-year prepaid
subscription to the DISH Network's America's Top 50 CD programming package. From
August 1996 through September 1997, the excess of the Company's aggregate costs
(equipment, programming and other) over proceeds from equipment sales and
prepaid programming was expensed ("subscriber promotion subsidies") upon
shipment of the equipment. Remaining costs were deferred ("subscriber
acquisition costs") and amortized over the term of the prepaid subscription
(normally one year). Effective October 1997, promotional programs changed and
new subscribers were not required to prepay for a year of programming.
Consequently, the Company began expensing subscriber acquisition costs as
incurred. As of December 31, 1998, all previously deferred costs were fully
amortized.

         During November 1999, EchoStar entered into an exclusive multi-year
agreement with Superstar/Netlink Group ("Superstar"), a subsidiary of TV Guide,
Inc., to convert its current and inactive C-band subscribers to EchoStar's DBS
services. Under the terms of the agreement, Superstar will actively solicit its
C-band subscribers to convert to EchoStar's DBS services and will not provide
its subscriber lists to cable providers or other DBS providers. In exchange, in
December 1999, EchoStar paid Superstar a $10,000,000 exclusivity fee. In
addition, EchoStar will incur substantial subscriber acquisition costs,
including payments to Superstar and the retailer, and for equipment and other
incentives to the consumer for each Superstar subscriber who actually converts
to and remains a subscriber to our DBS services. The exclusivity fee will be
amortized to expense as subscribers projected to be converted are activated for
DISH Network services.

Deferred Debt Issuance Costs and Debt Discount

         Costs of issuing debt are deferred and amortized to interest expense
over the terms of the respective notes. Prior to being refinanced during January
1999, the original issue discounts related to the 1994 Notes and the 1996 Notes
were being accreted to interest expense so as to reflect a constant rate of
interest on the accreted balance of the 1994 Notes and the 1996 Notes.

Deferred Revenue

         Deferred  revenue  principally  consists of  prepayments  received from
subscribers for DISH Network programming. Such amounts are recognized as revenue
in the period the programming is provided to the subscriber.

Long-Term Deferred Satellite Services Revenue

         Long-term deferred satellite services revenue consists of advance
payments from certain content providers for carriage of their signal on the DISH
Network. Such amounts are deferred and recognized as revenue on a straight-line
basis over the related contract terms (up to ten years).


                                      F-14
<PAGE>   32

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Accrued Expenses

         Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                         ------------------------
                                                                           1998            1999
                                                                         --------        --------
<S>                                                                      <C>             <C>
Marketing                                                                $ 33,463        $ 88,204
Royalties and copyright fees                                               49,400          87,390
Interest                                                                   24,918          78,460
Programming                                                                35,472          59,769
Advances from News Corporation and MCI for satellite payments                  --          67,804
Other                                                                      32,905         102,008
                                                                         --------        --------
                                                                         $176,158        $483,635
                                                                         ========        ========
</TABLE>

Advertising Costs

         Advertising costs, exclusive of subscriber promotion subsidies, are
expensed as incurred and totaled $35 million, $48 million and $65 million for
the years ended December 31, 1997, 1998 and 1999, respectively.

Research and Development Costs

         Research and development costs are expensed as incurred. Research and
development costs totaled $6 million, $8 million and $10 million for the years
ended December 31, 1997, 1998, and 1999, respectively.

Comprehensive Loss

         The change in unrealized gain (loss) on available-for-sale securities
is the only component of the Company's other comprehensive loss. Accumulated
other comprehensive loss presented on the accompanying consolidated balance
sheets consists of the accumulated net unrealized loss on available-for-sale
securities, net of deferred taxes.

Reclassifications

         Certain prior year balances in the  consolidated  financial  statements
have been reclassified to conform with the 1999 presentation.

3. PROPERTY AND EQUIPMENT

         Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                            LIFE             -------------------------------
                                          (IN YEARS)             1998               1999
                                         -----------         -----------         -----------
<S>                                      <C>                 <C>                 <C>
EchoStar I                                        12         $   201,607         $   201,607
EchoStar II                                       12             228,694             228,694
EchoStar III                                      12             234,083             234,083
EchoStar IV                                       10             105,005              89,505
EchoStar V                                        12                  --             208,578
Furniture, fixtures and equipment               2-12             182,717             241,527
Buildings and improvements                      7-40              42,121              47,745
Land                                              --               1,640               1,659
Tooling and other                                  2               5,551               5,811
Vehicles                                           7               1,288               1,119
Construction in progress                          --              18,329             319,308
                                                             -----------         -----------
    Total property and equipment                               1,021,035           1,579,636
Accumulated depreciation                                        (167,217)           (265,629)
                                                             -----------         -----------
    Property and equipment, net                              $   853,818         $ 1,314,007
                                                             ===========         ===========
</TABLE>


                                      F-15
<PAGE>   33

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

         Construction in progress consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                            ------------------------
                                                                              1998           1999
                                                                            --------        --------
<S>                                                                         <C>             <C>
Progress amounts for satellite construction, launch, and launch
   insurance:
     EchoStar VI                                                            $     --        $243,633
Digital broadcast operations center                                               --          47,000
Other                                                                         18,329          28,675
                                                                            --------        --------
                                                                            $ 18,329        $319,308
                                                                            ========        ========
</TABLE>

EchoStar IV Impairment

         As a result of the failure of EchoStar IV solar arrays to fully deploy
and the unrelated failure of 20 transponders to date, a maximum of approximately
16 of the 44 transponders on EchoStar IV are currently available for use at this
time. Due to the normal degradation of the solar arrays, the number of available
transponders may further decrease over time. Based on current data from Lockheed
Martin, we expect that at least 10 high power transponders or 5 extra-high power
transponders will probably be available over the remaining useful life of the
satellite, absent significant additional transponder problems or other failures.

         In addition to transponder failures, EchoStar IV experienced anomalies
affecting its heating systems and fuel system during 1999. As a result of the
heating system and fuel system anomalies, the remaining useful life of EchoStar
IV has been reduced to less than 10 years. Accordingly, as of November 1, 1999,
EchoStar prospectively revised the remaining useful life of EchoStar IV. This
change, after the additional loss provision discussed below, increased
EchoStar's net loss for 1999 by approximately $357,000.

         During September 1998, EchoStar recorded a $106 million provision for
loss in connection with the partial failure of EchoStar IV solar arrays to
deploy. During December 1999, EchoStar recorded an additional $13.7 million
provision for loss related to the reduction in the remaining useful life of
EchoStar IV. The aggregate loss provision of $119.7 million represented
EchoStar's estimate, at December 31, 1999, of the asset impairment attributable
to lost transmission capacity on EchoStar IV resulting from the solar array
anomaly described above. EchoStar also recorded a $106 million gain, during
September 1998, attributable to an anticipated insurance claim receivable that
it believes is probable of receipt. While there can be no assurance as to the
amount of the final insurance settlement, EchoStar believes that it will receive
insurance proceeds at least equal to the $106 million receivable recorded. To
the extent that it appears probable that EchoStar will receive insurance
proceeds in excess of the $106 million currently recorded and that no further
provision for loss is necessary, a gain will be recognized for the incremental
amount in the period that the amount of the final settlement can be reasonably
estimated.

         In September 1998, EchoStar filed a $219.3 million insurance claim for
a constructive total loss under the launch insurance policy related to EchoStar
IV. However, if the Company receive $219.3 million for a constructive total loss
on the satellite, the insurers would obtain the sole right to the benefits of
salvage from EchoStar IV under the terms of the launch insurance policy.
Although we believe we have suffered a total loss of EchoStar IV under that
definition in the launch insurance policy, we intend to negotiate a settlement
with the insurers to compensate us


                                      F-16
<PAGE>   34

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

for the reduced satellite transmission capacity and allow us to retain title to
the asset.

         The satellite insurance policy for EchoStar IV consists of separate
identical policies with different carriers for varying amounts which, in
combination, create a total insured amount of $219.3 million. Two of the
participants in EchoStar's insurance line have notified EchoStar they believe
that its alleged delay in providing required insurance claim information may
reduce their obligation to pay any settlement related to the claim. One carrier
recently asserted it has no obligation to pay. EchoStar strongly disagrees with
the position taken by those insurers and continues to believe that the EchoStar
IV insurance claim will be resolved in a manner satisfactory to EchoStar.
However, there can be no assurance that EchoStar will receive the amount claimed
or, if it does, that EchoStar will retain title to EchoStar IV with its reduced
capacity. EchoStar met with its insurance carriers in November 1999 and is
continuing discussions to resolve its claim.

         While there can be no assurance, we do not currently expect a material
adverse impact on short or medium term satellite operations. We will continue to
evaluate the performance of EchoStar IV and may modify our loss assessment as
new events or circumstances develop.

4.       LONG-TERM DEBT

Tender Offers

         Tender offers for EchoStar's 12 7/8% Senior Secured Discount Notes due
June 1, 2004, (the "1994 Notes"), 13 1/8% Senior Secured Discount Notes due
2004, (the "1996 Notes") and 13 1/8% Senior Secured Discount Notes due 2004,
(the "1997 Notes") were consummated on January 25, 1999. The tender offers were
funded with proceeds from the offering of the Seven Year Notes and the Ten Year
Notes. Except for residual aggregate non-tendered debt of approximately $2.6
million, the 1994 Notes, 1996 Notes and the 1997 Notes that were outstanding at
December 31, 1998 were retired in connection with closing of the tender offers
and the concurrent sale of the Seven and Ten Year Notes. Additionally,
substantially all of the restrictive covenants contained in each of the
respective indentures were removed upon closing of the tender offers. As a
result of the January 1999 refinancing, an extraordinary loss of $269 million
was recognized, comprised of deferred debt costs, discounts, tender costs, and
premiums paid over the accreted values of the debt retired. A brief summary of
the terms of the residual notes outstanding follows.

1994 Notes

         In June 1994, Dish, Ltd. issued the 1994 Notes and Common Stock
Warrants (the "Warrants") (collectively, the "1994 Notes Offering"). The 1994
Notes Offering resulted in net proceeds to Dish, Ltd. of $323 million. The 1994
Notes bear interest at a rate of 12 7/8% computed on a semi-annual bond
equivalent basis. Interest on the 1994 Notes will not be payable in cash prior
to June 1, 1999, with the 1994 Notes accreting to a principal value at stated
maturity of $1,000 per bond (an aggregate of approximately $1.5 million for the
bonds not tendered) by that date. Commencing in December 1999, interest on the
1994 Notes will be payable in cash on December 1 and June 1 of each year. The
remaining balance of 1994 Notes matures on June 1, 2004.

1996 Notes

         In March 1996, ESBC issued the 1996 Notes (the "1996 Notes Offering").
The 1996 Notes Offering resulted in net proceeds to ESBC of approximately $337
million. The 1996 Notes bear interest at a rate of 13 1/8%, computed on a
semi-annual bond equivalent basis. Interest on the 1996 Notes will not be
payable in cash prior to March 15, 2000, with the 1996 Notes accreting to a
principal amount at stated maturity of $1,000 per bond (an aggregate of
approximately $1.1 million for the bonds not tendered) by that date. Commencing
in September 2000, interest on the 1996 Notes will be payable in cash on
September 15 and March 15 of each year. The 1996 Notes that remain outstanding
following the Tender Offers mature on March 15, 2004.


                                      F-17
<PAGE>   35

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1997 Notes

         In June 1997, DBS Corp issued the 1997 Notes (the "1997 Notes
Offering"). The 1997 Notes Offering resulted in net proceeds to DBS Corp of
approximately $363 million. Interest accrues on the 1997 Notes at a rate of 12
1/2% and is payable in cash semi-annually on January 1 and July 1 of each year,
commencing January 1, 1998. Approximately $109 million of the net proceeds of
the 1997 Notes Offering was placed in the Interest Escrow to fund the first five
semi-annual interest payments (through January 1, 2000). Additionally,
approximately $112 million of the net proceeds of the 1997 Notes Offering was
placed in the Satellite Escrow to fund the construction, launch and insurance of
EchoStar IV. The 1997 Notes that remain outstanding following the Tender Offers
mature on July 1, 2002.

                                      F-18
<PAGE>   36
                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Seven and Ten Year Notes

         On January 25, 1999, DBS Corp sold $375 million principal amount of
9 1/4% Senior Notes due 2006 (the Seven Year Notes) and $1.625 billion principal
amount of 9 3/8% Senior Notes due 2009 (the Ten Year Notes). Interest accrues at
annual rates of 9 1/4% and 9 3/8% on the Seven Year and Ten Year Notes,
respectively. Interest on the Seven and Ten Year Notes is payable semi-annually
in cash in arrears on February 1 and August 1 of each year, commencing August 1,
1999.

         Concurrently with the closing of the Seven and Ten Year Notes offering,
EchoStar used approximately $1.658 billion of net proceeds received from the
sale of the Seven and Ten Year Notes to complete tender offers for its
outstanding 1994 Notes, 1996 Notes and 1997 Notes. In February 1999, EchoStar
used approximately $268 million of net proceeds received from the sale of the
Seven and Ten Year Notes to complete the tender offers related to the 12 1/8%
Senior Exchange Notes due 2004, (the "Senior Exchange Notes") issued on January
4, 1999, in exchange for all issued and outstanding 12 1/8% Series B Senior
Redeemable Exchangeable Preferred Stock ("Series B Preferred Stock").

         With the exception of certain de minimis domestic and foreign
subsidiaries, the Seven and Ten Year Notes are fully, unconditionally and
jointly and severally guaranteed by all subsidiaries of DBS Corp, (collectively,
the "Seven and Ten Year Notes Guarantors"). The Seven and Ten Year Notes are
general senior unsecured obligations which:

     o   rank pari passu in right of payment to each other and to all existing
         and future senior unsecured obligations;

     o   rank senior to all existing and future junior obligations; and

     o   are effectively junior to secured obligations to the extent of the
         collateral securing such obligations, including any borrowings under
         future secured credit facilities.

         Except under certain circumstances requiring prepayment premiums, and
in other limited circumstances, the Seven and Ten Year Notes are not redeemable
at DBS Corp's option prior to February 1, 2003 and February 1, 2004,
respectively. Thereafter, the Seven Year Notes will be subject to redemption, at
the option of DBS Corp, in whole or in part, at redemption prices decreasing
from 104.625% during the year commencing February 1, 2003 to 100% on or after
February 1, 2005, together with accrued and unpaid interest thereon to the
redemption date. The Ten Year Notes will be subject to redemption, at the option
of DBS Corp, in whole or in part, at redemption prices decreasing from 104.688%
during the year commencing February 1, 2004 to 100% on or after February 1,
2008, together with accrued and unpaid interest thereon to the redemption date.

         The indentures related to the Seven and Ten Year Notes (the "Seven and
Ten Year Notes Indentures") contain restrictive covenants that, among other
things, impose limitations on the ability of DBS Corp to:

     o   incur additional indebtedness;

     o   apply the proceeds of certain asset sales;

     o   create, incur or assume liens;

     o   create dividend and other payment restrictions with respect to DBS
         Corp's subsidiaries;

     o   merge, consolidate or sell assets; and

     o   enter into transactions with affiliates.

         In addition, DBS Corp may pay dividends on its equity securities only
if no default shall have occurred or is continuing under the Seven and Ten Year
Notes Indentures; and after giving effect to such dividend and the incurrence of
any indebtedness (the proceeds of which are used to finance the dividend), DBS
Corps's ratio of total indebtedness to cash flow (calculated in accordance with
the Indentures) would not exceed 8.0 to 1.0. Moreover, the aggregate amount of
such dividends generally may not exceed the sum of the difference of cumulative
consolidated cash flow (calculated in accordance with the Indentures) minus 120%
of consolidated interest expense of DBS Corp (calculated in accordance with the
Indentures), in each case from April 1, 1999 plus an amount equal to 100% of the
aggregate net cash proceeds received by DBS Corp and its subsidiaries from the
issuance or sale of certain equity interests of DBS Corp or EchoStar.


                                      F-19
<PAGE>   37

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

         In the event of a change of control, as defined in the Seven and Ten
Year Notes Indentures, DBS Corp will be required to make an offer to repurchase
all of the Seven and Ten Year Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, together with accrued and unpaid interest
thereon, to the date of repurchase.

Mortgages and Other Notes Payable

         Mortgages and other notes payable consists of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                                                             DECEMBER 31,
                                                                                                         --------------------
                                                                                                           1998        1999
                                                                                                         --------     -------
<S>                                                                                                      <C>          <C>
8.25% note payable for satellite vendor financing for EchoStar I due in equal
  monthly installments of $772, including interest, through February 2001                                $ 17,137     $ 9,606
8.25% note payable for satellite vendor financing for EchoStar II due in equal
  monthly installments of $562, including interest, through November 2001                                  17,416      11,909
8.25% note payable for satellite vendor financing for EchoStar III due in
  equal monthly installments of $294, including interest, through October 2002                             12,183       8,645
8.25% note payable for satellite vendor financing for EchoStar IV due in equal
  monthly installments of $264, including interest, through May 2003                                       12,950       9,409
Mortgages and other unsecured notes payable due in installments through
  November 2009 with interest rates ranging from 4% to 10%                                                  6,443       6,893
                                                                                                         --------     -------
Total                                                                                                      66,129      46,462
Less current portion                                                                                      (22,679)    (21,017)
                                                                                                         --------     -------
Mortgages and other notes payable, net of current portion                                                $ 43,450     $25,445
                                                                                                         ========     =======
</TABLE>

         Future maturities of the Company's outstanding long-term debt are
summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                        RESIDUAL
                                                                         NOTES,
                                                                     MORTGAGES AND
                                    SEVEN YEAR        TEN YEAR        OTHER NOTES
                                      NOTES             NOTES            PAYABLE          TOTAL
                                    ----------       ----------      -------------      ----------
<S>                                 <C>              <C>             <C>                <C>
YEAR ENDING DECEMBER 31,
   2000                             $                $               $    21,017        $   21,017
   2001                                    --                --           13,776            13,776
   2002                                    --                --            6,080             6,080
   2003                                    --                --            1,909             1,909
   2004                                    --                --            3,253             3,253
   Thereafter                         375,000         1,625,000            3,042         2,003,042
                                     --------        ----------      -----------        ----------
Total                                $375,000        $1,625,000      $    49,077        $2,049,077
                                     ========        ==========      ===========        ==========
</TABLE>


Satellite Vendor Financing

         The purchase price for satellites is required to be paid in progress
payments, some of which are non-contingent payments that are deferred until
after the respective satellites are in orbit (satellite vendor financing). The
Company utilized $36 million, $28 million, $14 million and $13 million of
satellite vendor financing for EchoStar I, EchoStar II, EchoStar III and
EchoStar IV, respectively. The satellite vendor financing with respect to
EchoStar I and EchoStar II is secured by substantially all assets of DBS Corp
and its subsidiaries (subject to certain restrictions) and a corporate guarantee
of ECC. The satellite vendor financings for both EchoStar III and EchoStar IV
are secured by an ECC corporate guarantee.


                                      F-20
<PAGE>   38

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

5. INCOME TAXES

         As of December 31, 1999, the Company had net operating loss
carryforwards ("NOLs") for Federal income tax purposes of approximately $1.530
billion. The NOLs expire beginning in the year 2012. The use of the NOLs is
subject to statutory and regulatory limitations regarding changes in ownership.
Financial Accounting Standard No. 109, "Accounting for Income Taxes," ("FAS No.
109") requires that the potential future tax benefit of NOLs be recorded as an
asset. FAS No. 109 also requires that deferred tax assets and liabilities be
recorded for the estimated future tax effects of temporary differences between
the tax basis and book value of assets and liabilities. Deferred tax assets are
offset by a valuation allowance if deemed necessary.

         In 1999, the Company increased its valuation allowance sufficient to
fully offset net deferred tax assets arising during the year. Realization of net
deferred tax assets is not assured and is principally dependent on generating
future taxable income prior to expiration of the NOLs. Management believes
existing net deferred tax assets in excess of the valuation allowance will, more
likely than not, be realized. The Company continuously reviews the adequacy of
its valuation allowance. Future decreases to the valuation allowance will be
made only as changed circumstances indicate that it is more likely that not the
additional benefits will be realized. Any future adjustments to the valuation
allowance will be recognized as a separate component of the Company's provision
for income taxes.

         The temporary differences that give rise to deferred tax assets and
liabilities as of December 31, 1998 and 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                   DECEMBER 31,
                                                                                           ---------------------------
                                                                                              1998              1999
                                                                                           ---------         ---------
<S>                                                                                        <C>               <C>
Current deferred tax assets:
  Accrued royalties                                                                        $  15,971         $  30,018
  Inventory reserves and cost methods                                                          1,759             1,355
  Accrued expenses                                                                             9,845            29,263
  Allowance for doubtful accounts                                                              1,098             4,842
  Reserve for warranty costs                                                                     101                78
  Unrealized holding loss on marketable investment securities                                     --                --
                                                                                           ---------         ---------
Total current deferred tax assets                                                             28,774            65,556

Current deferred tax liabilities:
  Subscriber acquisition costs and other                                                          --               (28)
                                                                                           ---------         ---------
Total current deferred tax liabilities                                                            --               (28)
                                                                                           ---------         ---------
Gross current deferred tax assets                                                             28,774            65,528
Valuation allowance                                                                          (22,065)          (54,242)
                                                                                           ---------         ---------
Net current deferred tax assets                                                                6,709            11,286

Noncurrent deferred tax assets:
  General business and foreign tax credits                                                     2,072             2,504
  Net operating loss carryforwards                                                           164,123           568,859
  Amortization of original issue discount on 1994 Notes
    and 1996 Notes                                                                           105,095                --
  Other                                                                                       12,999             9,551
                                                                                           ---------         ---------
Total noncurrent deferred tax assets                                                         284,289           580,914
Noncurrent deferred tax liabilities:
  Depreciation                                                                               (24,115)          (43,949)
  Other                                                                                         (144)             (245)
                                                                                           ---------         ---------
Total noncurrent deferred tax liabilities                                                    (24,259)          (44,194)
                                                                                           ---------         ---------
Gross deferred tax assets                                                                    260,030           536,720
                                                                                           ---------         ---------
Valuation allowance                                                                         (199,392)         (480,659)
                                                                                           ---------         ---------
Net noncurrent deferred tax assets                                                            60,638            56,061
                                                                                           ---------         ---------
Net deferred tax assets                                                                    $  67,347         $  67,347
                                                                                           =========         =========
</TABLE>


                                      F-21
<PAGE>   39
                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


         The components of the benefit from  (provision for) income taxes are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                              ------------------------------------------
                                                 1997             1998            1999
                                              --------         --------         --------
<S>                                           <C>              <C>              <C>
Current benefit (provision):
  Federal                                     $   (361)        $     --         $     --
  State                                             (9)               6              (46)
  Foreign                                         (137)             (77)             (85)
                                              --------         --------         --------
                                                  (507)             (71)            (131)
Deferred benefit:
  Federal                                      108,598           97,819          285,724
  State                                          8,082            7,319           27,720
  Increase in valuation allowance             (116,319)        (105,138)        (313,444)
                                              --------         --------         --------
                                                   361               --               --
                                              --------         --------         --------
     Total benefit (provision)                $   (146)        $    (71)        $  (131)
                                              ========         ========         ========
</TABLE>

         The actual tax benefit (provision) for 1997, 1998 and 1999 are
reconciled to the amounts computed by applying the statutory Federal tax rate to
income before taxes as follows:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                         -------------------------------------
                                                          1997            1998            1999
                                                         -----           -----           -----
<S>                                                      <C>             <C>             <C>
Statutory rate                                            35.0%           35.0%           35.0%
State income taxes, net of Federal benefit                 1.6             1.6             2.3
Research and development and foreign tax credits           0.7              --              --
Non-deductible interest expense                           (0.5)           (1.3)           (0.3)
Other                                                     (0.8)            0.4             1.5
Increase in valuation allowance                          (36.0)          (35.7)          (38.5)
                                                         -----           -----           -----
Total benefit from income taxes                             --%             --%             --%
                                                         =====           =====           =====
</TABLE>

6. STOCK COMPENSATION PLANS

Stock Incentive Plan

         In April 1994, EchoStar adopted a stock incentive plan to provide
incentive to attract and retain officers, directors and key employees. EchoStar
currently has reserved up to 40 million shares of its Class A common stock for
granting awards under its 1995 Stock Incentive Plan and an additional 40 million
shares of its Class A common stock for granting awards under its 1999 Stock
Incentive Plan. In general, stock options granted through December 31, 1999 have
included exercise prices not less than the fair market value of EchoStar's Class
A common stock at the date of grant, and vest, as determined by EchoStar's Board
of Directors, generally at the rate of 20% per year.

         During 1999, EchoStar adopted the 1999 Incentive Plan which provided
certain key employees a contingent incentive including stock options and cash.
The payment of these incentives was contingent upon the achievement of certain
financial and other goals of EchoStar. EchoStar met certain of these goals
during 1999. Accordingly, EchoStar accrued $675,000 related to cash incentives
to be paid. EchoStar also recorded approximately $179 million of deferred
compensation related to post-grant appreciation of options to purchase
approximately 2.1 million shares, granted pursuant to the 1999 Incentive Plan.
The related deferred compensation will be recognized over the five-year vesting
period. As a result of substantial post-grant appreciation of options, variable
plan accounting principles require that EchoStar recognize during 1999, $61
million of the total of $179 million of deferred stock-based compensation under
this performance based plan. The remainder will be recognized over the remaining
vesting period.


                                      F-22
<PAGE>   40

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

         Options to purchase an additional 5.6 million shares were granted at
fair market value during 1999 pursuant to the Long Term Incentive Plan. Vesting
of these options is contingent on meeting certain longer-term goals, the
achievement of which can not be reasonably predicted as of December 31, 1999.
Accordingly, no compensation was recorded during 1999 related to these long-term
options. EchoStar will continue to evaluate the likelihood of achieving these
long-term goals and will record the related compensation at the time achievement
of these goals becomes probable. The Board of Directors has approved a 2000
Incentive Plan. Any future payments under this plan are contingent upon the
achievement of certain financial and other goals.

         A summary of EchoStar's incentive stock option activity for the years
ended December 31, 1997, 1998 and 1999 is as follows:

<TABLE>
<CAPTION>
                                                  1997                          1998                           1999
                                      ------------------------------  ------------------------------  ------------------------------
                                                   WEIGHTED-AVERAGE                WEIGHTED-AVERAGE                WEIGHTED-AVERAGE
                                                       EXERCISE                        EXERCISE                         EXERCISE
                                        OPTIONS         PRICE          OPTIONS          PRICE          OPTIONS           PRICE
                                      -----------  ----------------  -----------   ----------------  -----------   ----------------
<S>                                   <C>          <C>               <C>           <C>               <C>           <C>
Options outstanding, beginning of
   year                                 4,101,092    $      3.57       6,098,268      $      3.75      5,788,060      $      4.07
Granted                                 3,118,200           4.26       2,792,540             4.70     10,423,856            15.42
Repriced                                1,023,176           4.25              --               --             --               --
Exercised                                (392,632)          2.41        (752,728)            3.13     (1,904,057)            3.67
Forfeited                              (1,751,568)          4.87      (2,350,020)            4.27       (386,039)            9.84
                                      -----------    -----------     -----------      -----------    -----------      -----------
Options outstanding, end of year        6,098,268    $      3.75       5,788,060      $      4.07     13,921,820      $     12.51
                                      ===========    ===========     ===========      ===========    ===========      ===========
Exercisable at end of year              1,388,036    $      3.04       1,929,212      $      3.46      1,377,716      $      3.71
                                      ===========    ===========     ===========      ===========    ===========      ===========
</TABLE>


         Exercise prices for options  outstanding as of December 31, 1999 are as
follows:

<TABLE>
<CAPTION>
                                        OPTIONS OUTSTANDING                             OPTIONS EXERCISABLE
                       -----------------------------------------------------      ----------------------------------
                           NUMBER                                                    NUMBER
                        OUTSTANDING       WEIGHTED-AVERAGE      WEIGHTED-          EXERCISABLE
                           AS OF             REMAINING           AVERAGE              AS OF            WEIGHTED-
      RANGE OF          DECEMBER 31,        CONTRACTUAL         EXERCISE           DECEMBER 31,         AVERAGE
   EXERCISE PRICES          1999               LIFE               PRICE               1999           EXERCISE PRICE
----------------------  ------------      ----------------    --------------      ------------       ---------------
<S>                     <C>               <C>                 <C>                 <C>                <C>
$ 2.333    -  $ 2.967       509,759              2.79             $   2.37             482,795           $  2.33
  4.250    -    4.573     2,509,249              5.51                 4.27             814,814              4.27
  5.500    -    6.868       658,198              6.62                 5.70              73,318              5.92
  8.243    -    10.00       204,036              7.21                 9.97               2,327              8.24
 10.973    -   13.200     8,410,426              8.61                12.01               4,462             11.39
 20.406    -   20.406     1,034,152              7.29                20.41                  --                --
 38.360    -   38.360       288,000              9.50                38.36                  --                --
 45.407    -   45.407       128,000              9.75                45.41                  --                --
 97.500    -   97.500       180,000             10.00                97.50                  --                --
---------------------    ----------             -----             --------           ---------           -------
   $ 2.333 - $ 97.500    13,921,820              7.67             $  12.51           1,377,716           $  3.71
=====================    ==========             =====             ========           =========           =======
</TABLE>

         On July 1, 1997, the Board of Directors approved a repricing of
substantially all outstanding options with an exercise price greater than $4.25
per share of Class A common stock to $4.25 per share. The Board of Directors
would not typically consider reducing the exercise price of previously granted
options. However, these options were repriced due to the occurrence of certain
events beyond the reasonable control of the employees of EchoStar which


                                      F-23
<PAGE>   41


                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

significantly reduced the incentive these options were intended to create. The
fair market value of the Class A common stock was $3.81 on the date of the
repricing. Options to purchase approximately 1,024,000 shares of Class A common
stock were affected by this repricing.






                                      F-24
<PAGE>   42



                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Accounting for Stock-Based Compensation

         EchoStar has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," ("APB 25") and related
interpretations in accounting for its stock-based compensation plans. Under APB
25, EchoStar generally does not recognize compensation expense on the issuance
of stock under its Stock Incentive Plan because the option terms are typically
fixed and typically the exercise price equals the market price of the underlying
stock on the date of grant. In October 1995, the Financial Accounting Standards
Board issued Financial Accounting Standard No. 123, "Accounting and Disclosure
of Stock-Based Compensation," ("FAS No. 123") which established an alternative
method of expense recognition for stock-based compensation awards to employees
based on fair values. EchoStar elected to not adopt FAS No. 123 for expense
recognition purposes.

         Pro forma information regarding net income and earnings per share is
required by FAS No. 123 and has been determined as if EchoStar had accounted for
its stock-based compensation plans using the fair value method prescribed by
that statement. For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options' vesting period. All
options are initially assumed to vest. Compensation previously recognized is
reversed to the extent applicable to forfeitures of unvested options. The fair
value of each option grant was estimated at the date of the grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>

                                                            YEAR ENDED DECEMBER 31,
                                                 --------------------------------------------
                                                     1997            1998            1999
                                                 ------------    ------------    ------------
<S>                                                      <C>          <C>           <C>
Risk-free interest rate                                  6.09%        5.64%         5.38%
Volatility factor                                          68%          67%           76%
Dividend yield                                           0.00%        0.00%         0.00%
Expected term of options                          6 years      6 years      6 years
Weighted-average fair value of options granted    $  2.60      $  3.01      $ 14.27
</TABLE>

         The Company's pro forma net loss was $325 million, $297 million and
$741 million for the years ended December 31, 1997, 1998 and 1999, respectively.
The pro forma net loss for 1999 is less than the loss reported in the statement
of operations because the $61 million charge for the post-grant appreciation of
stock-based compensation, determined under APB 25 and reported by the Company,
is greater than the amount of stock-based compensation that would have been
reported by the Company under the provisions of FAS No. 123.

         The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its
stock-based compensation awards.

7.       EMPLOYEE BENEFIT PLANS

Employee Stock Purchase Plan

         During 1997, the Board of Directors and shareholders approved an
employee stock purchase plan (the "ESPP"), effective beginning October 1, 1997.
Under the ESPP, EchoStar is authorized to issue a total of 400,000 shares of
Class A common stock. Substantially all full-time employees who have been
employed by EchoStar for at least one calendar quarter are eligible to
participate in the ESPP. Employee stock purchases are made through payroll
deductions. Under the terms of the ESPP, employees may not deduct an amount
which would permit such employee to purchase capital stock of EchoStar under all
stock purchase plans of EchoStar at a rate which would




                                      F-25
<PAGE>   43

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

exceed $25,000 in fair market value of capital stock in any one year. The
purchase price of the stock is 85% of the closing price of the Class A common
stock on the last business day of each calendar quarter in which such shares of
Class A common stock are deemed sold to an employee under the ESPP. The ESPP
shall terminate upon the first to occur of (i) October 1, 2007 or (ii) the date
on which the ESPP is terminated by the Board of Directors. During 1997, 1998 and
1999, employees purchased approximately 16,000, 64,000 and 22,000 shares of
Class A common stock through the ESPP, respectively.

401(k) Employee Savings Plan

         EchoStar sponsors a 401(k) Employee Savings Plan (the "401(k) Plan")
for eligible employees. Voluntary employee contributions to the 401(k) Plan may
be matched 50% by EchoStar, subject to a maximum annual contribution by EchoStar
of $1,000 per employee. EchoStar also may make an annual discretionary
contribution to the plan with approval by EchoStar's Board of Directors, subject
to the maximum deductible limit provided by the Internal Revenue Code of 1986,
as amended. EchoStar's cash contributions to the 401(k) Plan totaled $329,000 in
1997, and $314,000 in 1998 and 1999. Additionally, during 1998, EchoStar
contributed 320,000 shares of its Class A common stock (fair value of
approximately $2 million) to the 401(k) Plan related to its 1997 discretionary
contribution. During 1999, EchoStar contributed 260,000 shares of its Class A
common stock (fair value of approximately $3 million) to the 401(k) Plan related
to its 1998 discretionary contribution. During 2000, EchoStar expects to
contribute approximately 60,000 shares of its Class A common stock (fair value
of approximately $6 million) to the 401(k) Plan related to its 1999
discretionary contribution.

8.       OTHER COMMITMENTS AND CONTINGENCIES

Leases

         Future minimum lease payments under noncancelable operating leases as
of December 31, 1999, are as follows (in thousands):

<TABLE>
<CAPTION>

YEAR ENDING DECEMBER 31,
<S>                                                               <C>
   2000                                                           $  6,662
   2001                                                              6,565
   2002                                                              5,912
   2003                                                              4,996
   2004                                                              2,195
   Thereafter                                                        5,760
                                                                  --------
      Total minimum lease payments                                $ 32,090
                                                                  ========
</TABLE>

         Total rental expense for operating leases approximated $1 million in
1997 and 1998 and $3 million in 1999.

Purchase Commitments

         As of December 31, 1999, the Company's purchase commitments totaled
approximately $209 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 2000. The Company expects to finance
these purchases from existing unrestricted cash balances and future cash flows
generated from operations, if any.

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


                                      F-26
<PAGE>   44


                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

DirecTV

         During February 2000 EchoStar filed suit against DirecTV and Thomson
Consumer Electronics/RCA in the Federal District Court of Colorado. The suit
alleges that DirecTV has utilized improper conduct in order to fend off
competition from the DISH Network. According to the complaint, DirecTV has
demanded that certain retailers stop displaying EchoStar merchandise and has
threatened to cause economic damage to retailers if they continued to offer both
product lines in head-to-head competition. The suit alleges that DirecTV has
acted in violation of federal and state anti-trust laws in order to protect
DirecTV's market share. EchoStar is seeking injunctive relief and monetary
damages. It is too early in the litigation to make an assessment of the probable
outcome.

The News Corporation Limited

         During February 1997, News Corporation agreed to acquire approximately
50% of the outstanding capital stock of EchoStar. During late April 1997,
substantial disagreements arose between the parties regarding their obligations
under this agreement. Those substantial disagreements led to litigation which
the parties subsequently settled. In connection with the News Corporation
litigation, EchoStar has a contingent fee arrangement with the attorneys who
represented EchoStar in that litigation, which provides for the attorneys to be
paid a percentage of any net recovery obtained in the News Corporation
litigation. The attorneys have asserted that they may be entitled to receive
payments totaling hundreds of millions of dollars under this fee arrangement.
EchoStar is vigorously contesting the attorneys' interpretation of the fee
arrangement, which it believes significantly overstates the magnitude of its
liability. EchoStar also believes that the fee arrangement is void and
unenforceable because the attorneys who represented EchoStar are seeking a fee
that it believes is unreasonable and excessive, among other things. If EchoStar
is unable to resolve this fee dispute with the attorneys, it would be resolved
through arbitration or litigation. During mid-1999, EchoStar initiated
litigation against the attorneys in the District Court, Arapahoe County,
Colorado, arguing that the fee arrangement is void and unenforceable. EchoStar
has also asserted claims for breach of fiduciary duty, constructive fraud,
breach of the fee arrangement, and misappropriation of trade secrets against the
attorneys. In December 1999, the attorneys initiated an arbitration proceeding
before the American Arbitration Association. It is too early to determine the
outcome of negotiations, arbitration or litigation regarding this fee dispute.

WIC Premium Television Ltd.

         During July 1998, a lawsuit was filed by WIC Premium Television Ltd.,
an Alberta corporation, in the Federal Court of Canada Trial Division, against
General Instrument Corporation, HBO, Warner Communications, Inc., John Doe,
Showtime, United States Satellite Broadcasting Company, Inc., EchoStar, and two
of EchoStar's wholly-owned subsidiaries. The lawsuit seeks, among other things,
an interim and permanent injunction prohibiting the defendants from activating
receivers in Canada and from infringing any copyrights held by WIC. It is too
early to determine whether or when any other lawsuits or claims will be filed.
It is also too early to make an assessment of the probable outcome of the
litigation or to determine the extent of any potential liability or damages.



                                      F-27
<PAGE>   45

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

         During September 1998, WIC filed another lawsuit in the Court of
Queen's Bench of Alberta Judicial District of Edmonton against certain
defendants, including EchoStar. WIC is a company authorized to broadcast certain
copyrighted work, such as movies and concerts, to residents of Canada. WIC
alleges that the defendants engaged in, promoted, and/or allowed satellite dish
equipment from the United States to be sold in Canada and to Canadian residents
and that some of the defendants allowed and profited from Canadian residents
purchasing and viewing subscription television programming that is only
authorized for viewing in the United States. The lawsuit seeks, among other
things, an interim and permanent injunction prohibiting the defendants from
importing hardware into Canada and from activating receivers in Canada, together
with damages in excess of $175 million.

         EchoStar filed motions to dismiss each of the actions for lack of
personal jurisdiction. The Court in the Alberta court action recently denied its
Motion to Dismiss. The Alberta Court also granted a motion to add more EchoStar
parties to the lawsuit. EchoStar Satellite Corporation, EchoStar DBS
Corporation, EchoStar Technologies Corporation, and EchoStar Satellite Broadcast
Corporation have been added as defendants in the litigation. The newly added
defendants have also challenged jurisdiction. The Court in the Federal court
action has stayed that case before ruling on EchoStar's motion to dismiss.
EchoStar intends to vigorously defend the suits in the event its motions are
denied. It is too early to determine whether or when any other lawsuits or
claims will be filed. It is also too early to make an assessment of the probable
outcome of the litigation or to determine the extent of any potential liability
or damages.

Broadcast network programming

         Under the Satellite Home Viewer Act, the determination of whether a
household qualifies as "unserved" for the purpose of eligibility to receive a
distant network channel depends, in part, on whether that household can receive
a signal of "Grade B intensity" as defined by the FCC.

         During 1998, the national networks and local affiliate stations
challenged, based upon copyright infringement, PrimeTime 24's methods of selling
network programming to consumers. Historically, we obtained distant broadcast
network signals for distribution to our customers through PrimeTime 24. The
United States District Court for the Southern District of Florida entered a
nationwide permanent injunction preventing PrimeTime 24 from selling its
programming to consumers unless the programming was sold in accordance with
certain stipulations in the injunction. The injunction covers distributors as
well. The plaintiffs in the Florida litigation informed us they considered us a
distributor for purposes of that injunction. A federal district court in North
Carolina also issued an injunction against PrimeTime 24 prohibiting certain
distant signal retransmissions in the Raleigh area. The Fourth Circuit Court of
Appeals recently affirmed the North Carolina Court's decision. We have
implemented Satellite Home Viewer Act compliance procedures which materially
restrict the market for the sale of network channels by us.

         In October 1998, EchoStar filed a declaratory judgment action in the
United States District Court for the District of Colorado against the four major
networks. EchoStar asked the court to enter a judgment declaring that our method
of providing distant network programming does not violate the Satellite Home
Viewer Act and hence does not infringe the networks' copyrights. In November
1998, the four major broadcast networks and their affiliate groups filed a
complaint against EchoStar in federal court in Miami alleging, among other
things, copyright infringement. The court combined the case that EchoStar filed
in Colorado with the case in Miami and transferred it to the Miami court.

         In February 1999, CBS, NBC, Fox and ABC filed a "Motion for Temporary
Restraining Order, Preliminary Injunction and Contempt Finding" against DirecTV
in Miami related to the delivery of distant network channels to DirecTV
customers by satellite. Under the terms of a settlement between DirecTV and the
networks, some DirecTV customers were scheduled to lose access to their
satellite-provided network channels by July 31, 1999, while other DirecTV
customers were to be disconnected by December 31, 1999. Subsequently, PrimeTime
24 and substantially all providers of satellite-delivered network programming
other than us agreed to this cut-off schedule.


                                      F-28
<PAGE>   46

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

         The networks are pursuing a Motion for Preliminary Injunction in the
Miami Court, asking the Court to enjoin EchoStar from providing network
programming except under very limited circumstances. In general, the networks
want EchoStar to turn off programming to its customers on the same schedule
agreed to by DirecTV.

         A preliminary injunction hearing was held during September 1999. The
Court took the issues under advisement to consider the networks' request for an
injunction, whether to hear live testimony before ruling upon the request, and
whether to hear argument on why the Satellite Home Viewer Act may be
unconstitutional, among other things. The Court did not say when a decision will
be made, or whether an additional hearing will be necessary prior to ruling on
the networks' preliminary injunction motion.

         If this case is decided against EchoStar, or a preliminary injunction
is issued, significant material restrictions on the sale of distant ABC, NBC,
CBS and Fox channels by EchoStar could result, including potentially a
nationwide permanent prohibition on its broadcast of ABC, NBC, CBS and Fox
network channels by satellite. The litigation and the new legislation discussed
above, among other things, could also require EchoStar to terminate delivery of
network signals to a material portion of our subscriber base, which could cause
many of these subscribers to cancel their subscription to EchoStar's other
services. While the networks have not sought monetary damages, they have sought
to recover attorney fees if they prevail. EchoStar has sent letters to some of
its subscribers warning that their access to distant broadcast network channels
might be terminated soon and have terminated ABC, NBC, CBS and Fox programming
to many customers.

         In November 1999, Congress passed new legislation regarding the
satellite delivery of network programming and it was signed into law by
President Clinton. This new law has the potential of reducing the number of
customers whose network channels EchoStar may otherwise be required to terminate
as the law "grandfathers" in many subscribers.

Meteoroid Events

         In November 1998 and 1999, certain meteoroid events occurred as the
Earth's orbit passed through the particulate trail of Comet 55P (Tempel-Tuttle).
Similar meteoroid events are expected to occur again in November 2000. These
meteoroid events pose a potential threat to all in orbit geosynchronous
satellites including our DBS satellites. While the probability that our
satellites will be damaged by space debris is very small, that probability will
increase by several orders of magnitude during these meteoroid events.

9.       SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS

         With the exception of certain de minimis domestic and foreign
subsidiaries (collectively, the "Non-Guarantors"), the Seven and Ten Year Notes
are fully, unconditionally and jointly and severally guaranteed by all
subsidiaries of DBS Corp.

         The combined assets, stockholders' equity, net loss and operating cash
flows of the Non-Guarantors represent less than 1% of the combined and
consolidated assets, stockholder's equity, net loss and operating cash flows of
DBS Corp, including the non-guarantors during both 1998 and 1999. Summarized
combined and consolidated financial information for DBS Corp is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                            -----------------------------------------
                                                                1997          1998            1999
                                                            -----------    -----------    -----------
<S>                                                         <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA:
   Revenue                                                  $   475,877    $   985,909    $ 1,606,291
   Expenses                                                     700,104      1,116,764      1,959,860
                                                            -----------    -----------    -----------
   Operating loss                                              (224,227)      (130,855)      (353,569)
   Other income (expense)                                       (98,941)      (163,449)      (208,716)
                                                            -----------    -----------    -----------
   Net loss before taxes                                       (323,168)      (294,304)      (562,285)
   Income tax benefit (provision), net                             (146)           (71)          (131)
                                                            -----------    -----------    -----------
   Net loss before extraordinary charges                       (323,314)      (294,375)      (562,416)
   Extraordinary charge for early retirement of debt, net
      of tax                                                          -              -       (228,733)
                                                            -----------    -----------    -----------
   Net loss                                                 $  (323,314)   $  (294,375)   $  (791,149)
                                                            ===========    ===========    ===========
</TABLE>


                                      F-29
<PAGE>   47

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

<TABLE>
<CAPTION>

                                                                  DECEMBER 31,
                                                          --------------------------
                                                             1998           1999
                                                          -----------    -----------
<S>                                                       <C>            <C>
BALANCE SHEETS DATA:
   Current assets                                         $   241,582    $   598,690
   Property and equipment, net                                853,818      1,314,007
   Other noncurrent assets                                    374,773        817,510
                                                          -----------    -----------
   Total assets                                           $ 1,470,173    $ 2,730,207
                                                          ===========    ===========



   Current liabilities                                    $   477,061    $ 1,145,829
   Long-term liabilities                                    1,581,249      2,046,872
   Stockholder's equity (deficit)                            (588,137)      (462,494)
                                                          -----------    -----------
   Total liabilities and stockholder's equity (deficit)   $ 1,470,173    $ 2,730,207
                                                          ===========    ===========
</TABLE>




                                      F-30
<PAGE>   48

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


10.      SEGMENT REPORTING

Business Unit Descriptions

         The operations of EchoStar include three interrelated business units:

     o   The DISH Network - a DBS subscription television service in the United
         States.

     o   EchoStar Technologies Corporation - the design, distribution and sale
         of EchoStar receiver systems for the DISH Network as well as for
         direct-to-home projects of other internationally, together with the
         provision of uplink center design, construction oversight and other
         project integration services for international direct-to-home ventures.

     o   Satellite Services - engaged in the delivery of video, audio and data
         services to business television customers and other satellite users.
         These services my include satellite uplink services, satellite
         transponder space usage, billing, customer service and other services.

         The accounting policies for the above business units are the same as
those described in the summary of significant accounting policies for the
consolidated entity. Both EchoStar and the Company account for intersegment
sales and transfers at cost. All other revenue and expenses from segments below
the quantitative thresholds are attributable to sales of C-band equipment and
other corporate administrative functions. Only those assets and measures of
profit and loss that are included in the measure of assets and profit and loss
used by EchoStar's chief operating decision maker are reported (in thousands).

Financial Data by Business Unit

<TABLE>
<CAPTION>

                                                                                                                           DBS CORP,
                                                                                             ECHOSTAR       OTHER        AFFILIATES
                                      DISH                     SATELLITE    ELIMINATIONS   CONSOLIDATED     ECHOSTAR        AND
                                    NETWORK         ETC        SERVICES      AND OTHER        TOTAL        ACTIVITY     SUBSIDIARIES
                                  -----------   -----------   -----------   -----------    -----------   -----------    -----------
<S>                               <C>           <C>           <C>           <C>            <C>           <C>            <C>
YEAR ENDED DECEMBER 31, 1997
  Revenue                         $   378,377   $    82,609   $     3,458   $    12,974    $   477,418   $    (1,516)   $   475,902
  Depreciation and amortization       158,992         1,659             -        12,625        173,276          (440)       172,836
  Total expenses                      569,998        73,081           329        58,281        701,689        (1,451)       700,238
  EBITDA                              (32,629)       11,186         3,129       (32,681)       (50,995)         (505)       (51,500)
  Interest income                      10,114           180             -         6,957         17,251        (4,739)        12,512
  Interest expense                     27,503             -             -        76,689        104,192         5,811        110,003
  Income tax provision, net                (7)          (32)            -          (107)          (146)            -           (146)
  Net income (loss)                  (231,223)        4,378         2,889       (88,869)      (312,825)      (10,599)      (323,424)

YEAR ENDED DECEMBER 31, 1998
  Revenue                         $   733,382   $   251,958   $    23,442   $   (26,116)   $   982,666   $     3,243    $   985,909
  Depreciation and amortization        85,107         2,097            26        15,406        102,636          (479)       102,157
  Total expenses                      871,269       193,852         3,495        36,941      1,105,557        11,207      1,116,764
  EBITDA                              (52,781)       60,202        19,973       (47,649)       (20,255)       (8,443)       (28,698)
  Interest income                       9,280             -             2        21,004         30,286       (20,175)        10,111
  Interest expense                     49,042           282             -       118,205        167,529         5,413        172,942
  Income tax benefit
    (provision), net                       17           (11)            -           (50)           (44)          (27)           (71)
  Net loss                           (199,356)       30,333        18,409      (110,268)      (260,882)      (33,493)      (294,375)

YEAR ENDED DECEMBER 31, 1999
  Revenue                         $ 1,373,789   $   160,276   $    47,312   $    21,464    $ 1,602,841   $     3,450    $ 1,606,291
  Depreciation and amortization        97,899         4,434           193        10,702        113,228        (3,197)       110,031
  Total expenses                    1,622,928       165,238        15,956       145,810      1,949,932         9,928      1,959,860
  EBITDA                             (151,241)         (528)       31,549       (52,733)      (172,953)       (9,675)      (182,628)
  Interest income                      26,205             1           375          (402)        26,179       (13,613)        12,566
  Interest expense                   (201,356)         (253)            -            (4)      (201,613)        5,223       (196,390)
  Income tax benefit
    (provision), net                        -           (46)            -          (108)          (154)           23           (131)
  Net income (loss)                (1,949,914)      (31,884)       27,273     1,161,678       (792,847)        1,698       (791,149)
</TABLE>

                                      F-31
<PAGE>   49

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


Geographic Information

<TABLE>
<CAPTION>

                                                                           OTHER
                    UNITED STATES        EUROPE       INTERNATIONAL        TOTAL
                    --------------   --------------   --------------   --------------
<S>                 <C>              <C>              <C>              <C>
1997
Total revenue*      $      446,461   $       20,592   $        8,849   $      475,902
Long-lived assets          957,166            1,217              121          958,504

1998
Total revenue*      $      967,746   $       18,163   $           --   $      985,909
Long-lived assets          955,586            1,498               --          957,084

1999
Total revenue*      $    1,583,442   $       22,849   $           --   $    1,606,291
Long-lived assets        2,033,142            3,099               --        2,036,241
</TABLE>

* Revenues are attributed to geographic regions based upon the location from
which the sale originated.

Transactions with Major Customers

         During 1999, export sales to two customers together totaled $126
million and accounted for approximately 8% of the Company's total revenue.
Revenues from these customers are included within the EchoStar Technologies
Corporation business unit. Complete or partial loss of one or both of these
customers would have a material adverse effect on the Company's results of
operations.

11.  VALUATION AND QUALIFYING ACCOUNTS

         The Company's valuation and qualifying accounts as of December 31,
1997, 1998 and 1999 are as follows (in thousands):

<TABLE>
<CAPTION>

                                             BALANCE AT   CHARGED TO
                                            BEGINNING OF   COSTS AND                  BALANCE AT
                                                YEAR       EXPENSES    DEDUCTIONS    END OF YEAR
                                             ----------   ----------   ----------    ----------
<S>                                          <C>          <C>          <C>           <C>
YEAR ENDED DECEMBER 31, 1997:
  Assets:
    Allowance for doubtful accounts          $    1,494   $    4,343   $   (4,490)   $    1,347
    Loan loss reserve                               141            7          (87)           61
    Reserve for inventory                         5,663        1,650       (3,473)        3,840
  Liabilities:
    Reserve for warranty costs and other            763            -          (53)          710

YEAR ENDED DECEMBER 31, 1998:
  Assets:
    Allowance for doubtful accounts          $    1,347   $   10,692   $   (9,043)   $    2,996
    Loan loss reserve                                61           31          (92)            -
    Reserve for inventory                         3,840        1,744         (403)        5,181
  Liabilities:
    Reserve for warranty costs and other            710            -         (435)          275

YEAR ENDED DECEMBER 31, 1999:
  Assets:
    Allowance for doubtful accounts          $    2,996   $   23,481   $  (13,368)   $   13,109
    Reserve for inventory                         5,181        1,718       (3,019)        3,880
  Liabilities:
    Reserve for warranty costs and other            275            -          (65)          210
</TABLE>




                                      F-32
<PAGE>   50

                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


12.  QUARTERLY FINANCIAL DATA (UNAUDITED)

         The Company's quarterly results of operations are summarized as follows
(in thousands):

<TABLE>
<CAPTION>

                                                     THREE MONTHS ENDED
                                ------------------------------------------------------------
                                  MARCH 31         JUNE 30      SEPTEMBER 30     DECEMBER 31
                                ------------    ------------    ------------    ------------
<S>                             <C>             <C>             <C>             <C>
Year Ended December 31, 1998:
  Total revenue                 $    214,024    $    246,165    $    236,755    $    288,965
  Operating loss                     (21,682)        (17,106)        (17,206)        (74,861)
  Net loss                           (57,261)        (53,122)        (60,577)       (123,415)

Year Ended December 31, 1999:
  Total revenue                 $    310,335    $    350,445    $    431,259    $    514,252
  Operating loss                     (57,437)        (53,285)        (79,623)       (163,224)
  Net loss                          (333,317)       (105,936)       (126,532)       (225,364)
</TABLE>

         The portion of the revenue received from certain Satellite Services
customers, over and above guaranteed minimum channel lease payments, has been
reclassified to subscription television services for each of the first three
quarters. The total amount of the reclassification was approximately $9.6
million. The related expense items have been similarly reclassified.

13.  SUBSEQUENT EVENTS

         On February 1, 2000, EchoStar filed suit against DirecTV and Thomson
Consumer Electronics/RCA in the Federal District Court of Colorado. The suit
alleges that DirecTV has utilized improper conduct in order to fend off
competition. According to the complaint, DirecTV has demanded that certain
retailers stop displaying EchoStar merchandise and has threatened to cause
economic damage to retailers if they continued to offer both product lines in
head-to-head competition. The suit alleges that DirecTV has acted in violation
of federal and state anti-trust laws in order to protect DirecTV's market share.
EchoStar is seeking injunctive relief and monetary damages. It is too early in
the litigation to make an assessment of the probable outcome.

         During February 2000, EchoStar announced the formation of a joint
venture with OpenTV Corp. intended to offer DISH Network customers and other
video platforms around the world a low cost, interactive digital receiver with a
built-in hard disk drive that will permit viewers to pause and record live
programs without the need for video tape. The new set-top box is expected to be
available during the fourth quarter of 2000. In connection with formation of the
joint venture, OpenTV and EchoStar licensed certain intellectual property rights
to the joint venture and EchoStar was issued 2,252,252 shares of OpenTV common
stock. The shares of OpenTV common stock are subject to forfeiture if EchoStar
fails to activate the OpenTV system in at least 500,000 set top boxes on or
before February 23, 2003.

         During February 2000, EchoStar also 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.
Both will include spot-beam technology which could allow DISH Network to offer
local channels or other value added services in as many as 60 or more markets
across the United States. The third satellite, EchoStar IX, will be a hybrid
Ku/Ka-band satellite, which may provide EchoStar with increased opportunities to
attract business customers and may provide DISH Network customers with expanded
services such as Internet, data and potentially two-way wireless communications.


                                      F-33
<PAGE>   51
                            ECHOSTAR DBS CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


         During March 2000, EchoStar announced the acquisition of Kelly
Broadcasting Systems, Inc. ("KBS"), a New Jersey based provider of international
and foreign-language programming in the United States. In connection with the
acquisition, EchoStar issued approximately 255,000 shares of its Class A common
stock, valued at the date of issuance at approximately $31 million, and paid
$3.5 million in cash, for 100% ownership of KBS.

         During March 2000, EchoStar announced a $50 million investment in iSKY
Inc. Pursuant to the agreement, following the launch of iSKY's service,
currently anticipated during late 2001, EchoStar would also distribute the iSKY
satellite Internet service along with DISH Network satellite TV service through
its more than 23,000 retailers nationwide. With this investment, EchoStar will
own 12% of iSKY and receive warrants which, based on reaching iSKY customer
targets, could increase its stake up to 20.8% on an outstanding basis.


                                      F-34
<PAGE>   52



                                 EXHIBIT INDEX

<TABLE>
<CAPTION>


  EXHIBIT NO.      DESCRIPTION
  -----------      -----------
<S>               <C>
        3.1(a)*   Articles of Incorporation of the Company (incorporated by
                  reference to Exhibit 3.4(a) to the Company's Registration
                  Statement on Form S-4, Registration No. 333-31929).

        3.1(b)*   Bylaws of the Company (incorporated by reference to Exhibit
                  3.4(b) to the Company's Registration Statement on Form S-4,
                  Registration No. 333-31929).

        4.1*      Indenture relating to the Seven Year Notes, dated as of
                  January 25, 1999, by and among the Company, the Guarantors and
                  U.S. Bank Trust National Association, as trustee.(incorporated
                  by reference to Exhibit 4.1 to the Company's Registration
                  Statement on Form s-4, Registration No. 333-71345).

        4.2*      Indenture relating to the Ten Year Notes, dated as of January
                  25, 1999, by and among the Company, the Guarantors and U.S.
                  Bank Trust National Association, as trustee. (incorporated by
                  reference to Exhibit 4.3 to the Company's Registration
                  Statement on Form s-4, Registration No. 333-71345).

        4.3*      Registration Rights Agreement relating to the Seven Year Notes
                  by and among the Company, the Guarantors and the parties named
                  therein. (incorporated by reference to Exhibit 4.5 to the
                  Company's Registration Statement on Form s-4, Registration No.
                  333-71345).

        4.4*      Registration Rights Agreement relating to the Ten Year Notes
                  by and among the Company, the Guarantors and the parties named
                  therein. (incorporated by reference to Exhibit 4.6 to the
                  Company's Registration Statement on Form s-4, Registration No.
                  333-71345).

       10.1(a)*   Satellite Construction Contract, dated as of February 6, 1990,
                  between EchoStar Satellite Corporation ("ESC") and Martin
                  Marietta as successor to General Electric, EchoStar,
                  Astro-Space Division ("General Electric") (incorporated by
                  reference to Exhibit 10.1(a) to the Registration Statement on
                  Form S-1 of Dish, Ltd. ("Dish") Registration No. 33-76450).

       10.1(b)*   First Amendment to the Satellite Construction Contract, dated
                  as of October 2, 1992, between ESC and Martin Marietta as
                  successor to General Electric (incorporated by reference to
                  Exhibit 10.1(b) to the Registration Statement on Form S-1 of
                  Dish, Registration No. 33-76450).
</TABLE>


<PAGE>   53
<TABLE>

<S>               <C>
       10.1(c)*   Second Amendment to the Satellite Construction Contract, dated
                  as of October 30, 1992, between ESC and Martin Marietta as
                  successor to General Electric (incorporated by reference to
                  Exhibit 10.1(c) to the Registration Statement on Form S-1 of
                  Dish, Registration No. 33-76450).

       10.1(d)*   Third Amendment to the Satellite Construction Contract, dated
                  as of April 1, 1993, between ESC and Martin Marietta
                  (incorporated by reference to Exhibit 10.1(d)to the
                  Registration Statement on Form S-1 of Dish, Registration No.
                  33-76450).

       10.1(e)*   Fourth Amendment to the Satellite Construction Contract, dated
                  as of August 19, 1993, between ESC and Martin Marietta
                  (incorporated by reference to Exhibit 10.1(e) to the
                  Registration Statement on Form S-1 of Dish, Registration No.
                  33-76450).

       10.1(f)*   Form of Fifth Amendment to the Satellite Construction
                  Contract, between ESC and Martin Marietta (incorporated by
                  reference to Exhibit 10.1(f) to the Registration Statement on
                  Form S-1 of Dish, Registration No. 33-81234).

       10.1(g)*   Sixth Amendment to the Satellite Construction Contract, dated
                  as of June 7, 1994, between ESC and Martin Marietta
                  (incorporated by reference to Exhibit 10.1(g) to the
                  Registration Statement on Form S-1 of Dish, Registration No.
                  33-81234).

      10.1(h)*    Eighth Amendment to the Satellite Construction Contract, dated
                  as of July 18, 1996, between ESC and Martin Marietta
                  (incorporated by reference to Exhibit 10.1(h) to the Quarterly
                  Report on Form 10-Q of EchoStar for the quarter ended June 30,
                  1996, Commission File No. 0-26176).

       10.2*      Key Employee Bonus Plan, dated as of January 1, 1994
                  (incorporated by reference to Exhibit 10.7 to the Registration
                  Statement on Form S-1 of Dish, Registration No. 33-76450).

       10.3*      Consulting Agreement, dated as of February 17, 1994, between
                  ESC and Telesat Canada (incorporated by reference to Exhibit
                  10.8 to the Registration Statement on Form S-1 of Dish,
                  Registration No. 33-76450).

       10.4*      Form of Satellite Launch Insurance Declarations (incorporated
                  by reference to Exhibit 10.10 to the Registration Statement on
                  Form S-1 of Dish, Registration No. 33-81234).

       10.5*      Dish 1994 Stock Incentive Plan (incorporated by reference to
                  Exhibit 10.11 to the Registration Statement on Form S-1 of
                  Dish, Registration No. 33-76450).

       10.6*      Form of Tracking, Telemetry and Control Contract between AT&T
                  Corp. and ESC (incorporated by reference to Exhibit 10.12 to
                  the Registration Statement on Form S-1 of Dish, Registration
                  No. 33-81234).

       10.7*      Manufacturing Agreement, dated as of March 22, 1995, between
                  Houston Tracker Systems, Inc. and SCI Technology, Inc.
                  (incorporated by reference to Exhibit 10.12 to the
                  Registration Statement on Form S-1 of Dish, Commission File
                  No. 33-81234).

       10.8*      Statement of Work, dated January 31, 1995 from ESC to Divicom
                  Inc. (incorporated by reference to Exhibit 10.14 to the
                  Registration Statement on Form S-1 of ECC, Registration No.
                  33-91276).

       10.9*      Launch Services Contract, dated as of June 2, 1995, by and
                  between EchoStar Space Corporation and
                  Lockheed-Khrunichev-Energia International, Inc. (incorporated
                  by reference to Exhibit 10.15 to the Registration Statement on
                  Form S-1 of ECC, Registration No. 33-91276).

       10.10*     EchoStar 1995 Stock Incentive Plan (incorporated by reference
                  to Exhibit 10.16 to the Registration Statement on Form S-1 of
                  ECC, Registration No. 33-91276).
</TABLE>

<PAGE>   54
<TABLE>

<S>               <C>
       10.11(a)*  Eighth Amendment to Satellite Construction Contract, dated as
                  of February 1, 1994, between DirectSat Corporation and Martin
                  Marietta (incorporated by reference to Exhibit 10.17(a) to the
                  Quarterly Report on Form 10-Q of ECC for the quarter ended
                  June 30, 1996, Commission File No. 0-26176).

       10.11(b)*  Ninth Amendment to Satellite Construction Contract, dated as
                  of February 1, 1994, between DirectSat Corporation and Martin
                  Marietta (incorporated by reference to Exhibit 10.15 to the
                  Registration Statement of Form S-4 of ECC, Registration No.
                  333-03584).

       10.11(c)*  Tenth Amendment to Satellite Construction Contract, dated as
                  of July 18, 1996, between DirectSat Corporation and Martin
                  Marietta (incorporated by reference to Exhibit 10.17(b) to the
                  Quarterly Report on Form 10-Q of ECC for the quarter ended
                  June 30, 1996, Commission File No. 0-26176).

       10.12*     Satellite Construction Contract, dated as of July 18, 1996,
                  between EDBS and Lockheed Martin Corporation (incorporated by
                  reference to Exhibit 10.18 to the Quarterly Report on Form
                  10-Q of ECC for the quarter ended June 30, 1996, Commission
                  File No. 0-26176).

       10.13*     Confidential Amendment to Satellite Construction Contract
                  between DBSC and Martin Marietta, dated as of May 31, 1995
                  (incorporated by reference to Exhibit 10.14 to the
                  Registration Statement of Form S-4 of ECC, Registration No.
                  333-03584).

       10.14*     Agreement between HTS, ESC and ExpressVu Inc., dated January
                  8, 1997, as amended (incorporated by reference to Exhibit
                  10.18 to the Annual Report on Form 10-K of ECC for the year
                  ended December 31, 1996, as amended, Commission file No.
                  0-26176).

       10.15*     Amendment No. 9 to Satellite Construction Contract, effective
                  as of July 18, 1996, between Direct Satellite Broadcasting
                  Corporation, a Delaware corporation ("DBSC") and Martin
                  Marietta Corporation (incorporated by reference to Exhibit
                  10.1 to the Quarterly Report on Form 10-Q of ECC for the
                  quarterly period ended June 30, 1997, Commission File No.
                  0-26176).

       10.16*     Amendment No. 10 to Satellite Construction Contract, effective
                  as of May 31, 1996, between DBSC and Lockheed Martin
                  Corporation (incorporated by reference to Exhibit 10.2 to the
                  Quarterly Report on Form 10-Q of ECC for the quarterly period
                  ended June 30, 1997, Commission File No. 0-26176).

       10.17*     Contract for Launch Services, dated April 5, 1996, between
                  Lockheed Martin Commercial Launch Services, Inc. and EchoStar
                  Space Corporation (incorporated by reference to Exhibit 10.3
                  to the Quarterly Report on Form 10-Q of ECC for the quarterly
                  period ended June 30, 1997, Commission File No. 0-26176).

       10.18*     OEM Manufacturing, Marketing and Licensing Agreement, dated as
                  of February 17, 1998, by and among HTS, ESC and Philips
                  Electronics North America Corporation (incorporated by
                  reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q
                  of ECC for the quarterly period ended March 31, 1998,
                  Commission File No. 0-26176).

       10.19*     Licensing Agreement, dated as of February 23, 1998, by and
                  among HTS, ESC and VTech Communications Ltd. (incorporated by
                  reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q
                  of ECC for quarterly period ended March 31, 1998, Commission
                  File No. 0-26176).

       10.20*     Purchase Agreement by and among American Sky Broadcasting,
                  LLC, The News Corporation Limited, MCI Telecommunications
                  Corporation and EchoStar Communications Corporation, dated
                  November 30, 1998. (incorporated by reference to Exhibit 10.1
                  to the Form 8-K filed by ECC on November 30, 1998, Commission
                  File No. 0-26176).
</TABLE>

<PAGE>   55

<TABLE>
<S>               <C>
       10.21*     Voting Agreement dated November 30, 1998, among EchoStar
                  Communications Corporation, American Sky Broadcasting, LLC,
                  The News Corporation Limited and MCI Telecommunications
                  Corporation (incorporated by reference to Exhibit 10.3 to the
                  Current Report on Form 8-K of EchoStar, filed as of December
                  1, 1998).

     10.25*       First Amendment, dated June 23, 1999, to the Purchase
                  Agreement dated November 30, 1998, by and among American Sky
                  Broadcasting, LLC, The News Corporation Limited, MCI
                  Telecommunications Corporation, and EchoStar Communications
                  Corporation (incorporated by reference to Exhibit 10.3 to the
                  Current Report on Form 8-K of EchoStar, filed as of July 2,
                  1999, Commission File No. 0-26176).

     10.26*       Registration Rights Agreement, dated June 24, 1999, by and
                  among EchoStar Communications Corporation, MCI
                  Telecommunications Corporation, American Sky Broadcasting,
                  LLC, and News America Incorporated (incorporated by reference
                  to Exhibit 10.4 to the Current Report on Form 8-K of EchoStar,
                  filed as of July 2, 1999, Commission File No. 0-26176).

        27        Financial Data Schedule.
</TABLE>

-------------------

*        Incorporated by reference.
**       Constitutes a management contract or compensatory plan or arrangement.
         Filed herewith.