##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
 OR
 o
    
    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
 DISH DBS Corporation
   Colorado
    
    84-1328967(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)9601 South Meridian BoulevardEnglewood, Colorado
    
    80112(Address of principal executive offices)
    
    (Zip Code)
    o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   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




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##### 



TABLE OF CONTENTS
 PART IDisclosure regarding forward-looking statements
    
    
    iItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    2Item 1B. Unresolved Staff Comments
    
    
    13Item 2. Properties
    
    
    14Item 3. Legal Proceedings
    
    
    14Item 4. Submission of Matters to a Vote of Security Holders
    
    
    *PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    20Item 6. Selected Financial Data
    
    
    *Item 7. Managements Narrative Analysis of Results of Operations
    
    
    21Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 8. Financial Statements and Supplementary Data
    
    
    36Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    36Item 9A. Controls and Procedures
    
    
    36Item 9B. Other Information
    
    
    36PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    *Item 11. Executive Compensation
    
    
    *Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    *Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    *Item 14. Principal Accountant Fees and Services
    
    
    37PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    38Signatures
    
    
    42Index to Consolidated Financial Statements
    
    
    F-1EX-21EX-31.1EX-31.2EX-32.1EX-32.2
  
 *
    
    This item has been omitted pursuant to the reduced disclosure format as set forth in
General Instructions (I) (2) (a) and (c) of Form 10-K. i




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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 Item 1A. Risk Factors.
 
    
    Weakening economic conditions, including the recent downturn in financial markets and
reduced consumer spending, may adversely affect our ability to grow or maintain our
business.
    
    If we do not improve our operational performance and customer satisfaction, our gross
subscriber additions may decrease and our subscriber churn may increase.
    
    If declines in DISH Network gross subscriber additions, increases in subscriber churn
and higher subscriber acquisition and retention costs continue, our financial performance
will be further adversely affected.
    
    We face intense and increasing competition from satellite television providers, cable
television providers, telecommunications companies, and companies that provide/facilitate
the delivery of video content via the internet.
    
    We may be required to make substantial additional investments in order to maintain
competitive high definition, or HD, programming offerings.
    
    Technology in our industry changes rapidly and could cause our services and products to
become obsolete.
    
    We may need additional capital, which may not be available on acceptable terms or at
all, in order to continue investing in our business and to finance acquisitions and other
strategic transactions.
    
    AT&T Incs, or AT&T, termination of its distribution agreement with us may reduce
subscriber additions and increase churn if we are not able to develop alternative
distribution channels.
    
    As technology changes, and in order to remain competitive, we may have to upgrade or
replace subscriber equipment and make substantial investments in our infrastructure.
    
    We rely on EchoStar Corporation, or EchoStar, to design and develop all of our new
set-top boxes and certain related components, and to provide transponder capacity, digital
broadcast operations and other services for us. Our business would be adversely affected
if EchoStar ceases to provide these services to us and we are unable to obtain suitable
replacement services from third parties.
    
    We rely on one or a limited number of vendors, and the inability of these key vendors to
meet our needs could have a material adverse effect on our business.
    
    Our programming signals are subject to theft, and we are vulnerable to other forms of
fraud that could require us to make significant expenditures to remedy.
    
    We depend on third parties to solicit orders for DISH Network services that represent a
significant percentage of our total gross subscriber acquisitions.
 i




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
    
    We depend on others to provide the programming that we offer to our subscribers and, if
we lose access to this programming, our subscriber losses and subscriber churn may
increase.
    
    Our competitors may be able to leverage their relationships with programmers so that
they are able to reduce their programming costs and offer exclusive content that will place
them at a competitive advantage to us.
    
    We depend on the Cable Act for access to programming from cable-affiliate programmers at
cost-effective rates.
    
    We face increasing competition from other distributors of foreign language programming
that may limit our ability to maintain our foreign language programming subscriber base.
    
    Our local programming strategy faces uncertainty because we may not be able to obtain
necessary retransmission consents from local network stations.
    
    We are subject to significant regulatory oversight and changes in applicable regulatory
requirements could adversely affect our business.
    
    We have substantial debt outstanding and may incur additional debt that could have an
effect on our future earnings.
    
    If we are unsuccessful in defending Tivos litigation against us, we could be prohibited
from offering digital video recorder, or DVR, technology that would in turn put us at a
significant disadvantage to our competitors.
    
    We have limited owned and leased satellite capacity and satellite failures could
adversely affect our business.
    
    Our owned and leased satellites are subject to risks related to launch that could limit
our ability to utilize these satellites.
    
    Our owned and leased satellites are subject to significant operational and atmospheric
risks that could limit our ability to utilize these satellites.
    
    Our owned and leased satellites have minimum design lives of 12 years, but could fail or
suffer reduced capacity before then.
    
    We currently have no commercial insurance coverage on the satellites we own and could
face significant impairment charges if one of our satellites fails.
    
    We may have potential conflicts of interest with EchoStar due
to DISHs common ownership
and management.
    
    We rely on key personnel and the loss of their services or the inability to attract and
retain them may negatively affect our businesses.
    
    Our parent, DISH, is controlled by one principal stockholder who is also our Chairman,
President and Chief Executive Officer.
    
    We are party to various lawsuits which, if adversely decided, could have a significant
adverse impact on our business, particularly lawsuits regarding intellectual property.
    
    We may pursue acquisitions and other strategic transactions to complement or expand our
business which may not be successful and in which we may lose the entire value of our
investment.
 ii




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
    
    Our business depends substantially on Federal Communications Commission, or FCC,
licenses that can expire or be revoked or modified and applications that may not be
granted.
    
    We are subject to digital HD carry-one-carry-all requirements that cause capacity
constraints.
    
    We cannot assure you that there will not be deficiencies leading to material weaknesses
in our internal control over financial reporting.
    
    We may face other risks described from time to time in periodic and current reports we
file with the Securities and Exchange Commission, or SEC.
   iii




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PART I
 
 Item 1. BUSINESS
 Brief Description of Our Business
  ®
  Business Strategy
  
    
    High-Quality Products.We offer a wide selection of local and national programming,
featuring more national and local HD channels than most pay-TV providers and the only
HD-only programming packages currently available in the industry. We have been a
technology leader in our industry, introducing award-winning DVRs, dual tuner receivers,
1080p video on demand, and external hard drives. We plan to leverage Slingbox
placeshifting technology and other technologies to maintain and improve our
competitiveness in the future.
    
    Outstanding Customer Service.We strive to provide outstanding customer service by
improving the quality of the initial installation of subscriber equipment, improving the
reliability of our equipment, better educating our customers about our products and
services, and resolving customer problems promptly and effectively when they do arise.
    
    Great Value.We have historically been viewed as the low-cost provider in the pay-TV
industry because we offer the lowest everyday prices available to consumers after
introductory promotions expire. We believe that a key factor to being a value leader in
the industry is our low cost structure which is an asset we continuously strive to
maintain.
 WHERE YOU CAN FIND MORE INFORMATION
  1




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WEBSITE ACCESS
 http://www.dishnetwork.com
 http://www.dishnetwork.com
 
 Item 1A. RISK FACTORS
 The risks and uncertainties described below are not the only ones facing us. Additional risks and
uncertainties that we are unaware of or that we currently believe to be immaterial also may become
important factors that affect us.
 If any of the following events occur, our business, financial condition or results of operations
could be materially and adversely affected.
 Weakening economic conditions, including the recent downturn in financial markets and reduced
consumer spending, may adversely affect our ability to grow or maintain our business.
  
    
    Fewer Subscriber Additions and Increased Churn.We could continue to face fewer gross
subscriber additions and increased churn due to, among other things: (i) the downturn in
the housing market in the United Stares combined with lower discretionary spending; (ii)
increased price competition for our products and services; and (iii) the potential loss of
retailers, who generate a significant portion of our new subscribers, because many of them
are small businesses that are more susceptible to the negative effects of a weak economy.
In particular, subscriber churn may increase with respect to subscribers who purchase our
lower tier programming packages and who may be more sensitive to deteriorating economic
conditions.
    
    Lower ARPU.Our ARPU could be negatively impacted by more aggressive introductory
offers. Furthermore, due to lower levels of disposable income, our customers may downgrade
to lower cost programming packages and elect not to purchase premium services or pay per
view movies.
    
    Higher Subscriber Acquisition and Retention Costs.Our profits may be adversely
affected by increased subscriber acquisition and retention costs necessary to attract and
retain subscribers in a more difficult economic environment.
    
    Increased Impairment Charges.We may be more likely to incur impairment charges or
losses related to our debt and equity investments due to the significant deterioration of
the overall debt and equity markets. A prolonged downturn could further reduce the value
of certain assets including, among other things, satellites and FCC licenses, and thus
increase the possibility of impairment charges related to these investments as well.
 If we do not improve our operational performance and customer satisfaction, our gross subscriber
additions may decrease and our subscriber churn may increase.
  2




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If declines in DISH Network gross subscriber additions, increases in subscriber churn and higher
subscriber acquisition and retention costs continue, our financial performance will be further
adversely affected.
     We face intense and increasing competition from satellite television providers, cable television
providers, telecommunications companies, and companies that provide/facilitate the delivery of
video content via the internet.
    3




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We may be required to make substantial additional investments in order to maintain competitive HD
programming offerings.
  Technology in our industry changes rapidly and could cause our services and products to become
obsolete.
    We may need additional capital, which may not be available on acceptable terms or at all, in order
to continue investing in our business and to finance acquisitions and other strategic transactions.
  4




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AT&Ts termination of its distribution agreement with us may reduce subscriber additions and
increase churn if we are not able to develop alternative distribution channels.
  As technology changes, and in order to remain competitive, we may have to upgrade or replace
subscriber equipment and make substantial investments in our infrastructure.
  We rely on EchoStar to design and develop all of our new set-top boxes and certain related
components, and to provide transponder capacity, digital broadcast operations and other services
for us. Our business would be adversely affected if EchoStar ceases to provide these services to
us and we are unable to obtain suitable replacement services from third parties.
   5




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We rely on one or a limited number of vendors, and the inability of these key vendors to meet our
needs could have a material adverse effect on our business.
  Our programming signals are subject to theft, and we are vulnerable to other forms of fraud that
could require us to make significant expenditures to remedy.
   We depend on third parties to solicit orders for DISH Network services that represent a significant
percentage of our total gross subscriber acquisitions.
  We depend on others to provide the programming that we offer to our subscribers and, if we lose
access to this programming, our subscriber losses and subscriber churn may increase.
  6




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Our competitors may be able to leverage their relationships with programmers so that they are able
to reduce their programming costs and offer exclusive content that will place them at a competitive
advantage to us.
  We depend on the Cable Act for access to programming from cable-affiliate programmers at
cost-effective rates.
   We face increasing competition from other distributors of foreign language programming that may
limit our ability to maintain our foreign language programming subscriber base.
  Our local programming strategy faces uncertainty because we may not be able to obtain necessary
retransmission consents from local network stations.
  7




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We are subject to significant regulatory oversight and changes in applicable regulatory
requirements could adversely affect our business.
 Item 1.
Business  Government Regulation  FCC Regulation under the Communication Act
 We have substantial debt outstanding and may incur additional debt that could have an effect on our
future earnings.
  
    
    requiring us to devote a substantial portion of our cash to make interest and principal
payments on our debt, thereby reducing the amount of cash available for other purposes. As
a result, we would have limited financial and operating flexibility in responding to
changing economic and competitive conditions;
    
    limiting our ability to raise additional debt because it may be more difficult for
highly leveraged issuers such as us to obtain debt financing on attractive terms; and
    
    placing us at a disadvantage compared to our competitors that have less debt.
  If we are unsuccessful in defending Tivos litigation against us, we could be prohibited from
offering DVR technology that would in turn put us at a significant disadvantage to our competitors.
  We have limited owned and leased satellite capacity and satellite failures could adversely affect
our business.
   8




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Our owned and leased satellites are subject to risks related to launch that could limit our ability
to utilize these satellites.
  We currently have no commercial insurance coverage
on the satellites we own
 Our owned and leased satellites are subject to significant operational and atmospheric risks that
could limit our ability to utilize these satellites.
      Our owned and leased satellites have minimum design lives of 12 years, but could fail or suffer
reduced capacity before then.
  9




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We currently have no commercial insurance coverage on the satellites we own and could face
significant impairment charges if one of our satellites fails.
  We may have potential conflicts of interest with EchoStar due to DISHs common ownership and
management.
  
    
    Cross officerships, directorships and stock ownership.DISH and we have significant
overlap in directors and executive officers with EchoStar, which may lead to conflicting
interests. For instance, certain of DISHs and our executive officers, including Charles
W. Ergen, DISHs and our Chairman, President and Chief Executive Officer , serve as
executive officers of EchoStar and provide management services to EchoStar pursuant to a
management services agreement between EchoStar and DISH. These individuals may have actual
or apparent conflicts of interest with respect to matters involving or affecting each
company. Furthermore, DISHs and our board of directors include persons who are members of
the board of directors of EchoStar, including Mr. Ergen, who serves as the Chairman of
EchoStar and DISH and as one of our directors. The executive officers and the members of
DISHs and our board of directors who overlap with EchoStar have fiduciary duties to
EchoStars shareholders. For example, there is the potential for a conflict of interest
when DISH and us, on the one hand, or EchoStar, on the other hand, look at acquisitions and
other corporate opportunities that may be suitable for both companies. In addition, DISHs
and our directors and officers own EchoStar stock and options to purchase EchoStar stock,
which they acquired or were granted prior to the Spin-off of EchoStar from DISH, including
Mr. Ergen, who owns approximately 53.0% of the total equity and controls approximately
87.0% of the voting power of EchoStar. These ownership interests could create actual,
apparent or potential conflicts of interest when these individuals are faced with decisions
that could have different implications for DISH and us, on the one hand, and EchoStar, on
the other hand.
    
    Intercompany agreements related to the Spin-off.DISH has entered into certain
agreements with EchoStar pursuant to which DISH provides EchoStar with certain management,
administrative, accounting, tax, legal and other services, for which EchoStar pays DISH at
its cost plus a fixed margin. In addition, DISH has entered into a number of intercompany
agreements covering matters such as tax sharing and EchoStars responsibility for certain
liabilities previously undertaken by DISH for certain of
EchoStars businesses. DISH and us have
also entered into certain commercial agreements with EchoStar pursuant to which EchoStar
is, among other things, obligated to sell to DISH and us at specified prices, set-top boxes and
related equipment. The terms of these agreements were established while EchoStar was a
wholly-owned subsidiary of DISH and us and
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were not the result of arms length negotiations. The allocation of assets, liabilities,
rights, indemnifications and other obligations between EchoStar and DISH under the
separation and other intercompany agreements DISH entered into with EchoStar in connection
with the Spin-off of EchoStar from DISH do not necessarily reflect what two unaffiliated
parties might have agreed to. Had these agreements been negotiated with unaffiliated third
parties, their terms may have been more favorable, or less favorable, to DISH. In addition,
conflicts could arise between DISH and us, on the one hand, and
EchoStar, on the other hand, in the interpretation or any extension or
renegotiation of these existing agreements.
    
    Future intercompany transactions.In the future, EchoStar or its affiliates may enter
into transactions with DISH or its subsidiaries or other affiliates. Although the terms of
any such transactions will be established based upon negotiations between EchoStar and DISH
and, when appropriate, subject to the approval of the disinterested directors on DISHs
board or a committee of disinterested directors, there can be no assurance that the terms
of any such transactions will be as favorable to DISH or its subsidiaries or affiliates as
may otherwise be obtained in arms length negotiations.
    
    Business Opportunities.DISH has retained interests in various U.S. and international
companies that have subsidiaries or controlled affiliates that own or operate domestic or
foreign services that may compete with services offered by EchoStar. DISH may also compete
with EchoStar when we participate in auctions for spectrum or orbital slots for satellites.
In addition, EchoStar may in the future use its satellites, uplink and transmission assets
to compete directly against DISH in the subscription television business.
   We rely on key personnel and the loss of their services or the inability to attract and retain them
may negatively affect our businesses.
  Our parent, DISH, is controlled by one principal stockholder who is also our Chairman, President
and Chief Executive Officer.
  11




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We are party to various lawsuits which, if adversely decided, could have a significant adverse
impact on our business, particularly lawsuits regarding intellectual property.
 Item 1.
Business  Patents and Trademarks
 We may pursue acquisitions and other strategic transactions to complement or expand our business
which may not be successful and in which we may lose the entire value of our investment.
  
    
    the diversion of our managements attention from our existing business to integrate
the operations and personnel of the acquired or combined business or joint venture;
    
    possible adverse effects on our operating results during the integration process;
    
    a high degree of risk involved in these transactions, which could become substantial
over time, and higher exposure to significant financial losses if the underlying
ventures are not successful; and
    
    our possible inability to achieve the intended objectives of the transaction.
   Our business depends substantially on FCC licenses that can expire or be revoked or modified and
applications that may not be granted.
  12




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We are subject to digital HD carry-one-carry-all requirements that cause capacity constraints.
   We cannot assure you that there will not be deficiencies leading to material weaknesses in our
internal control over financial reporting.
  We may face other risks described from time to time in periodic and current reports we file with
the SEC.
 
 Item 1B. UNRESOLVED STAFF COMMENTS
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Item 2. PROPERTIES
  Leased FromApproximate
    
    
    
    
    
    OtherSegment(s)
    
    Square
    
    
    
    
    
    ThirdDescription/Use/Location
    
    Using Property
    
    Footage
    
    Owned
    
    EchoStar
    
    PartyCorporate headquarters, Englewood, Colorado
    
    All
    
    
    476,000
    
    
    
    
    XCustomer call center, Littleton, Colorado
    
    DISH Network
    
    
    202,000
    
    
    
    
    XService center, Englewood, Colorado
    
    DISH Network
    
    
    93,343
    
    
    
    
    XService center, Spartanburg, South Carolina
    
    DISH Network
    
    
    316,000
    
    
    
    
    
    
    XCustomer call center, warehouse and service center, El Paso, Texas
    
    DISH Network
    
    
    171,000
    
    
    XCustomer call center, McKeesport, Pennsylvania
    
    DISH Network
    
    
    106,000
    
    
    
    
    
    
    XCustomer call center, Christiansburg, Virginia
    
    DISH Network
    
    
    103,000
    
    
    XCustomer call center and general offices, Tulsa, Oklahoma
    
    DISH Network
    
    
    79,000
    
    
    
    
    
    
    XCustomer call center and general offices, Pine Brook, New Jersey
    
    DISH Network
    
    
    67,000
    
    
    
    
    
    
    XCustomer call center, Alvin, Texas
    
    DISH Network
    
    
    60,000
    
    
    
    
    
    
    XCustomer call center, Phoenix, Arizona
    
    DISH Network
    
    
    57,000
    
    
    
    
    
    
    XCustomer call center, College Point, New York
    
    DISH Network
    
    
    60,000
    
    
    
    
    
    
    XCustomer call center, Thornton, Colorado
    
    DISH Network
    
    
    55,000
    
    
    XCustomer call center, Harlingen, Texas
    
    DISH Network
    
    
    54,000
    
    
    XCustomer call center, Bluefield, West Virginia
    
    DISH Network
    
    
    50,000
    
    
    XCustomer call center, Hilliard, Ohio
    
    DISH Network
    
    
    31,000
    
    
    
    
    
    
    XWarehouse, distribution and service center, Atlanta, Georgia
    
    DISH Network
    
    
    250,000
    
    
    
    
    
    
    XWarehouse and distribution center, Denver, Colorado
    
    DISH Network
    
    
    303,000
    
    
    
    
    
    
    XWarehouse and distribution center, Sacramento, California
    
    DISH Network
    
    
    82,000
    
    
    XWarehouse, Denver, Colorado
    
    DISH Network
    
    
    44,000
    
    
    X
  
 Item 3. LEGAL PROCEEDINGS
  Acacia
   14




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Broadcast Innovation, L.L.C.
    Channel Bundling Class Action
  Datasec
  15




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Distant Network Litigation
  Enron Commercial Paper Investment
  Finisar Corporation
    Global Communications
  16




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Guardian Media
   Katz Communications
  Multimedia Patent Trust
   Personalized Media Communications
   17




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Retailer Class Actions
  Superguide
  Technology Development Licensing
   Tivo Inc.
  18




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Voom
  Other
  19




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PART II
 
 Item 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
 Market Information.
 Cash Dividends.
    20




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Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
 You should read the following narrative analysis of our financial condition and results of
operations together with the audited consolidated financial statements and notes to the financial
statements included elsewhere in this annual report. This managements narrative analysis is
intended to help provide an understanding of our financial condition, changes in financial
condition and results of our operations and contains forward-looking statements that involve risks
and uncertainties. The forward-looking statements are not historical facts, but rather are based
on current expectations, estimates, assumptions and projections about our industry, business and
future financial results. Our actual results could differ materially from the results contemplated
by these forward-looking statements due to a number of factors, including those discussed in this
report, including under the caption Item 1A. Risk Factors in this Annual Report on Form 10-K.
 EXECUTIVE SUMMARY
 Overview
     21




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Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
         22




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Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 The Spin-off.
 
    
    DISH through which it retains the DISH Network pay-TV
business and
    
    EchoStar Corporation (EchoStar) which operates the digital set-top box business, and
holds certain satellites, uplink and satellite transmission assets, real estate and other
assets and related liabilities formerly held by DISH and us.
   EXPLANATION OF KEY METRICS AND OTHER ITEMS
 Subscriber-related revenue .
 Equipment sales and other revenue .
 Equipment sales, transitional services and other revenue  EchoStar.
 Subscriber-related expenses .
 Satellite and transmission expenses  EchoStar .
 Satellite and transmission expenses  other .
 23




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Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
  Equipment, transitional services and other cost of sales.
  Subscriber acquisition costs .
 SAC.
 General and administrative expenses .
 Interest expense.
 Other income (expense), net.
 Earnings before interest, taxes, depreciation and amortization (EBITDA).
 DISH Network subscribers.
 24




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Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
  Average monthly revenue per subscriber (ARPU) .
 Subscriber churn rate.
 Free cash flow .
 25




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Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 RESULTS OF OPERATIONS
 Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007.
 For the Years Ended December 31,
    
    
    VarianceStatements of Operations Data
    
    2008
    
    
    2007
    
    
    Amount
    
    
    %(In thousands)Revenue:Subscriber-related revenue
    
    $
    11,455,575
    
    
    $
    10,673,821
    
    
    $
    781,754
    
    
    
    7.3Equipment sales and other revenue
    
    
    124,255
    
    
    
    386,662
    
    
    
    (262,407
    )
    
    
    (67.9
    )Equipment sales, transitional services and other revenue  EchoStar
    
    
    37,351
    
    
    
    
    
    
    
    37,351
    
    
    NMTotal revenue
    
    
    11,617,181
    
    
    
    11,060,483
    
    
    
    556,698
    
    
    
    5.0Costs and Expenses:Subscriber-related expenses
    
    
    5,977,355
    
    
    
    5,488,396
    
    
    
    488,959
    
    
    
    8.9% of Subscriber-related revenue
    
    
    52.2
    %
    
    
    51.4
    %Satellite and transmission expenses  EchoStar
    
    
    305,322
    
    
    
    
    
    
    
    305,322
    
    
    NM% of Subscriber-related revenue
    
    
    2.7
    %
    
    
    0.0
    %Satellite and transmission expenses  other
    
    
    32,407
    
    
    
    180,446
    
    
    
    (148,039
    )
    
    
    (82.0
    )% of Subscriber-related revenue
    
    
    0.3
    %
    
    
    1.7
    %Equipment, transitional services and other cost of sales
    
    
    169,917
    
    
    
    269,817
    
    
    
    (99,900
    )
    
    
    (37.0
    )Subscriber acquisition costs
    
    
    1,531,741
    
    
    
    1,575,424
    
    
    
    (43,683
    )
    
    
    (2.8
    )General and administrative expenses
    
    
    540,090
    
    
    
    577,743
    
    
    
    (37,653
    )
    
    
    (6.5
    )% of Total revenue
    
    
    4.6
    %
    
    
    5.2
    %Litigation expense
    
    
    
    
    
    
    33,907
    
    
    
    (33,907
    )
    
    
    (100.0
    )Depreciation and amortization
    
    
    1,000,230
    
    
    
    1,320,625
    
    
    
    (320,395
    )
    
    
    (24.3
    )Total costs and expenses
    
    
    9,557,062
    
    
    
    9,446,358
    
    
    
    110,704
    
    
    
    1.2Operating income (loss)
    
    
    2,060,119
    
    
    
    1,614,125
    
    
    
    445,994
    
    
    
    27.6Other income (expense):Interest income
    
    
    52,755
    
    
    
    103,619
    
    
    
    (50,864
    )
    
    
    (49.1
    )Interest expense, net of amounts capitalized
    
    
    (368,838
    )
    
    
    (372,612
    )
    
    
    3,774
    
    
    
    1.0Other, net
    
    
    45,391
    
    
    
    (562
    )
    
    
    45,953
    
    
    NMTotal other income (expense)
    
    
    (270,692
    )
    
    
    (269,555
    )
    
    
    (1,137
    )
    
    
    (0.4
    )Income (loss) before income taxes
    
    
    1,789,427
    
    
    
    1,344,570
    
    
    
    444,857
    
    
    
    33.1Income tax benefit (provision), net
    
    
    (696,946
    )
    
    
    (534,176
    )
    
    
    (162,770
    )
    
    
    (30.5
    )Effective tax rate
    
    
    38.9
    %
    
    
    39.7
    %Net income (loss)
    
    $
    1,092,481
    
    
    $
    810,394
    
    
    $
    282,087
    
    
    
    34.8Other Data:DISH Network subscribers, as of period end (in millions)
    
    
    13.678
    
    
    
    13.780
    
    
    
    (0.102
    )
    
    
    (0.7
    )DISH Network subscriber additions, gross (in millions)
    
    
    2.966
    
    
    
    3.434
    
    
    
    (0.468
    )
    
    
    (13.6
    )DISH Network subscriber additions, net (in millions)
    
    
    (0.102
    )
    
    
    0.675
    
    
    
    (0.777
    )
    
    
    (115.1
    )Average monthly subscriber churn rate
    
    
    1.86
    %
    
    
    1.70
    %
    
    
    0.16
    %
    
    
    9.4Average monthly revenue per subscriber (ARPU)
    
    $
    69.27
    
    
    $
    65.83
    
    
    $
    3.44
    
    
    
    5.2Average subscriber acquisition costs per subscriber (SAC)
    
    $
    720
    
    
    $
    656
    
    
    $
    64
    
    
    
    9.8EBITDA
    
    $
    3,105,740
    
    
    $
    2,934,188
    
    
    $
    171,552
    
    
    
    5.8
 26




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##### Table of Contents



Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 DISH Network subscribers.
     Subscriber-related revenue.
 ARPU
  27




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##### Table of Contents



Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
  Equipment sales and other revenue.
 Equipment sales, transitional services and other revenue  EchoStar.
 Subscriber-related expenses.
  Satellite and transmission expenses  EchoStar .
 Satellite and transmission expenses  other.
 Equipment, transitional services and other cost of sales.
 28




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Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
  Subscriber acquisition costs.
 SAC.
      29




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##### Table of Contents



Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 General and administrative expenses.
 Litigation expense.
 Depreciation and amortization.
 Interest income .
 Other, net.
 Earnings before interest, taxes, depreciation and amortization .
 For the Years EndedDecember 31,2008
    
    
    2007(In thousands)EBITDA
    
    $
    3,105,740
    
    
    $
    2,934,188Less:Interest expense, net
    
    
    316,083
    
    
    
    268,993Income tax provision (benefit), net
    
    
    696,946
    
    
    
    534,176Depreciation and amortization
    
    
    1,000,230
    
    
    
    1,320,625Net income (loss)
    
    $
    1,092,481
    
    
    $
    810,394
  Income tax
(provision) benefit, net.
 Net
income (loss).
 30




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##### Table of Contents



Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006.
 For the Years Ended December 31,
    
    
    VarianceStatements of Operations Data
    
    2007
    
    
    2006
    
    
    Amount
    
    
    %(In thousands)Revenue:Subscriber-related revenue
    
    $
    10,673,821
    
    
    $
    9,422,271
    
    
    $
    1,251,550
    
    
    
    13.3Equipment sales and other revenue
    
    
    386,662
    
    
    
    390,476
    
    
    
    (3,814
    )
    
    
    (1.0
    )Total revenue
    
    
    11,060,483
    
    
    
    9,812,747
    
    
    
    1,247,736
    
    
    
    12.7Costs and Expenses:Subscriber-related expenses
    
    
    5,488,396
    
    
    
    4,822,310
    
    
    
    666,086
    
    
    
    13.8% of Subscriber-related revenue
    
    
    51.4
    %
    
    
    51.2
    %Satellite and transmission expenses  other
    
    
    180,446
    
    
    
    144,931
    
    
    
    35,515
    
    
    
    24.5% of Subscriber-related revenue
    
    
    1.7
    %
    
    
    1.5
    %Equipment, transitional services and other cost of sales
    
    
    269,817
    
    
    
    290,046
    
    
    
    (20,229
    )
    
    
    (7.0
    )Subscriber acquisition costs
    
    
    1,575,424
    
    
    
    1,600,912
    
    
    
    (25,488
    )
    
    
    (1.6
    )General and administrative expenses
    
    
    577,743
    
    
    
    539,630
    
    
    
    38,113
    
    
    
    7.1% of Total revenue
    
    
    5.2
    %
    
    
    5.5
    %Litigation expense
    
    
    33,907
    
    
    
    93,969
    
    
    
    (60,062
    )
    
    
    (63.9
    )Depreciation and amortization
    
    
    1,320,625
    
    
    
    1,110,385
    
    
    
    210,240
    
    
    
    18.9Total costs and expenses
    
    
    9,446,358
    
    
    
    8,602,183
    
    
    
    844,175
    
    
    
    9.8Operating income (loss)
    
    
    1,614,125
    
    
    
    1,210,564
    
    
    
    403,561
    
    
    
    33.3Other income (expense):Interest income
    
    
    103,619
    
    
    
    121,873
    
    
    
    (18,254
    )
    
    
    (15.0
    )Interest expense, net of amounts capitalized
    
    
    (372,612
    )
    
    
    (389,993
    )
    
    
    17,381
    
    
    
    4.5Other, net
    
    
    (562
    )
    
    
    (7,923
    )
    
    
    7,361
    
    
    NMTotal other income (expense)
    
    
    (269,555
    )
    
    
    (276,043
    )
    
    
    6,488
    
    
    
    (2.4
    )Income (loss) before income taxes
    
    
    1,344,570
    
    
    
    934,521
    
    
    
    410,049
    
    
    
    43.9Income tax (provision) benefit, net
    
    
    (534,176
    )
    
    
    (333,464
    )
    
    
    (200,712
    )
    
    
    (60.2
    )Effective tax rate
    
    
    39.7
    %
    
    
    35.7
    %Net income (loss)
    
    $
    810,394
    
    
    $
    601,057
    
    
    $
    209,337
    
    
    
    34.8Other Data:DISH Network subscribers, as of period end (in millions)
    
    
    13.780
    
    
    
    13.105
    
    
    
    0.675
    
    
    
    5.2DISH Network subscriber additions, gross (in millions)
    
    
    3.434
    
    
    
    3.516
    
    
    
    (0.082
    )
    
    
    (2.3
    )DISH Network subscriber additions, net (in millions)
    
    
    0.675
    
    
    
    1.065
    
    
    
    (0.390
    )
    
    
    (36.6
    )Average monthly subscriber churn rate
    
    
    1.70
    %
    
    
    1.64
    %
    
    
    0.06
    %
    
    
    3.7Average monthly revenue per subscriber (ARPU)
    
    $
    65.83
    
    
    $
    62.78
    
    
    $
    3.05
    
    
    
    4.9Average subscriber acquisition costs per subscriber (SAC)
    
    $
    656
    
    
    $
    686
    
    
    $
    (30
    )
    
    
    (4.4
    )EBITDA
    
    $
    2,934,188
    
    
    $
    2,313,026
    
    
    $
    621,162
    
    
    
    26.9
 31




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##### Table of Contents



Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 DISH Network subscribers .
  Subscriber-related revenue.
 ARPU .
 Equipment sales and other revenue .
 Subscriber-related expenses.
 Satellite and transmission expenses  other .
 Equipment, transitional services and other cost of sales.
 Subscriber acquisition costs.
 32




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##### Table of Contents



Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 SAC.
   General and administrative expenses
 Litigation expense.
 Depreciation and amortization.
 Interest income.
 Interest expense, net of amounts capitalized.
 Earnings before interest, taxes, depreciation and amortization .
 33




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##### Table of Contents



Item 7. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS  Continued
 For the Years EndedDecember 31,2007
    
    
    2006(In thousands)EBITDA
    
    $
    2,934,188
    
    
    $
    2,313,026Less:Interest expense, net
    
    
    268,993
    
    
    
    268,120Income tax provision (benefit), net
    
    
    534,176
    
    
    
    333,464Depreciation and amortization
    
    
    1,320,625
    
    
    
    1,110,385Net income (loss)
    
    $
    810,394
    
    
    $
    601,057
  Income tax (provision) benefit, net.
 Net income (loss).
 34




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##### Table of Contents



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risks Associated With Financial Instruments
  Interest Rate Risk
 Cash and Marketable Securities.
  Fixed Rate Debt, Mortgages and Other Notes Payable.
 Equity Risk
 Other Investments.
  Derivative Financial Instruments
  35




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##### Table of Contents



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9A. CONTROLS AND PROCEDURES
   Managements Annual Report on Internal Control Over Financial Reporting
   (i)
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect our transactions and dispositions of our assets;(ii)
    
    provide reasonable assurance that our transactions are recorded as necessary to permit
preparation of our financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and our directors; and(iii)
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on our
financial statements.
    
 Item 9B. OTHER INFORMATION
  36




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##### Table of Contents



Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Appointment of Independent Registered Public Accounting Firm
 Appointment of Independent Registered Public Accounting Firm for 2009 .
  Fees Paid to KPMG LLP for 2008 and 2007
  For the Years EndedDecember 31,2008
    
    
    2007Audit Fees (1)
    
    $
    1,797,264
    
    
    $
    1,802,158Audit-Related Fees (2)
    
    
    15,400
    
    
    
    16,000Total Audit and Audit-Related Fees
    
    
    1,812,664
    
    
    
    1,818,158Tax Fees (3)
    
    
    109,297
    
    
    
    199,727All Other Fees
    
    
    
    
    
    
    Total Fees
    
    $
    1,921,961
    
    
    $
    2,017,885
 
 (1)
    
    Consists of fees paid by us for the audit of our consolidated financial statements
included in our Annual Report on Form 10-K, review of our unaudited financial statements
included in our Quarterly Reports on Form 10-Q, fees in connection with the audit of DISHs
internal control over financial reporting and fees for other services that are normally
provided by the accountant in connection with registration statement filings, issuance of
consents and professional consultations with respect to accounting issues.(2)
    
    Consists of fees for audit of financial statements of certain employee benefit plans.(3)
    
    Consists of fees for tax consultation and tax compliance services. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accounting Firm
   
    
    Request for approval of services at a meeting of the Audit Committee; or
    
    Request for approval of services by members of the Audit Committee acting by written
consent.
  37




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Page(1
    )
    
    Financial StatementsReport of KPMG LLP, Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets at December 31, 2008 and 2007
    
    F-3Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended
December 31, 2008, 2007 and 2006
    
    F-4Consolidated Statements of Changes in Stockholders Equity (Deficit) for the years ended
December 31, 2006, 2007 and 2008
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    
    F-6Notes to Consolidated Financial Statements
    
    F-7(2
    )
    
    Financial Statement SchedulesNone. All schedules have been included in the Consolidated Financial Statements or
Notes thereto.(3
    )
    
    Exhibits
 Exhibit No.
    
    Description3.1(a)*
    
    Articles of Incorporation of DDBS (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)*
    
    Certificate of Amendment of the Articles of Incorporation of DDBS, dated as of August
25, 2003 (incorporated by reference to Exhibit 3.1(b) to the Annual Report on Form 10-K
of DDBS for the year ended December 31, 2003, Commission File No.333-31929).3.1(c)*
    
    Amendment of the Articles of Incorporation of DDBS, effective December 12, 2008
(incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of DDBS
filed December 12, 2008, Registration No. 333-31929).3.1(d)*
    
    Bylaws of DDBS (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 DDBS 6 3/8% Senior Notes due 2011, dated as of October 2, 2003,
between DDBS and U.S. Bank Trust National Association, as Trustee (incorporated by
reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q of DISH for the quarter
ended September 30, 2003, Commission File No. 0-26176).4.2*
    
    First Supplemental Indenture, relating to the 6 3/8% Senior Notes Due 2011, dated as of
December 31, 2003 between DDBS and U.S. Bank Trust National Association, as Trustee
(incorporated by reference to Exhibit 4.14 to the Annual Report on Form 10-K of DISH
for the year ended December 31, 2003, Commission File No. 0-26176).4.3*
    
    Indenture, relating to the 6 5/8% Senior Notes Due 2014, dated October 1, 2004 between
DDBS and U.S. Bank Trust National Association, as Trustee (incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K of DISH filed October 1, 2004, Commission
File No. 0-26176).4.4*
    
    Indenture, relating to the 7 1/8% Senior Notes Due 2016, dated as of February 2, 2006
between DDBS and U.S. Bank Trust National Association, as Trustee (incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K of DISH filed February 3,
2006, Commission File No. 0-26176).
 38




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##### Table of Contents



Exhibit No.
    
    Description4.5*
    
    Indenture, relating to the 7% Senior Notes Due 2013, dated as of October 18, 2006
between DDBS and U.S. Bank Trust National Association, as Trustee (incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K of DISH filed October 18,
2006, Commission File No. 0-26176).4.6*
    
    Indenture, relating to the 7 3/4% Senior
Notes Due 2015, dated as of May 27, 2008
between DDBS and U.S. Bank Trust
National Association, as Trustee
(incorporated by reference to Exhibit
4.1 to the Current Report on Form 8-K of
DISH filed May 28, 2008, Commission File
No.0-26176).10.1*
    
    DISH 1995 Stock Incentive Plan (incorporated by reference to Exhibit 10.16 to the
Registration Statement on Form S-1 of DISH, Registration No. 33-91276).**10.2*
    
    Amended and Restated DISH 1999 Stock Incentive Plan (incorporated by reference to
Exhibit A to DISHs Definitive Proxy Statement on Schedule 14A dated August 24,
2005).**10.3*
    
    1995 Non-employee Director Stock Option Plan (incorporated by reference to Exhibit 4.4
to the Registration Statement on Form S-8 of DISH, Registration No. 333-05575).**10.4*
    
    Amended and Restated 2001 Non-employee Director Stock Option Plan (incorporated by
reference to Appendix A to DISHs Definitive Proxy Statement on Schedule 14A dated
April 7, 2006).**10.5*
    
    2002 Class B CEO Stock Option Plan (incorporated by reference to Appendix A to DISHs
Definitive Proxy Statement on Schedule 14A dated April 9, 2002).**10.6*
    
    Satellite Service Agreement, dated as of March 21, 2003, between SES Americom, Inc.,
EchoStar Satellite Corporation and DISH (incorporated by reference to Exhibit 10.1 to
the Quarterly Report on Form 10-Q of DISH for the quarter ended March 31, 2003,
Commission File No.0-26176).10.7*
    
    Amendment No. 1 to Satellite Service Agreement dated March 31, 2003 between SES
Americom Inc. and DISH (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended September 30, 2003, Commission File
No.0-26176).10.8*
    
    Satellite Service Agreement dated as of August 13, 2003 between SES Americom Inc. and
DISH (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of
DISH for the quarter ended September 30, 2003, Commission File No.0-26176).10.9*
    
    Satellite Service Agreement, dated February 19, 2004, between SES Americom, Inc. and
DISH (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of
DISH for the quarter ended March 31, 2004, Commission File No.0-26176).10.10*
    
    Amendment No. 1 to Satellite Service Agreement, dated March 10, 2004, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended March 31, 2004, Commission File
No.0-26176).10.11*
    
    Amendment No. 3 to Satellite Service Agreement, dated February 19, 2004, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.3 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended March 31, 2004, Commission File
No.0-26176).10.12*
    
    Whole RF Channel Service Agreement, dated February 4, 2004, between Telesat Canada and
DISH (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of
DISH for the quarter ended March 31, 2004, Commission File No.0-26176).10.13*
    
    Letter Amendment to Whole RF Channel Service Agreement, dated March 25, 2004, between
Telesat Canada and DISH (incorporated by reference to Exhibit 10.5 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended March 31, 2004, Commission File
No.0-26176).
 39




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##### Table of Contents



Exhibit No.
    
    Description10.14*
    
    Amendment No. 2 to Satellite Service Agreement, dated April 30, 2004, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended June 30, 2004, Commission File
No.0-26176).10.15*
    
    Second Amendment to Whole RF Channel Service Agreement, dated May 5, 2004, between
Telesat Canada and DISH (incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended June 30, 2004, Commission File
No.0-26176).10.16*
    
    Third Amendment to Whole RF Channel Service Agreement, dated October 12, 2004, between
Telesat Canada and DISH (incorporated by reference to Exhibit 10.22 to the Annual
Report on Form 10-K of DISH for the year ended December 31, 2004, Commission File
No.0-26176).10.17*
    
    Amendment No. 4 to Satellite Service Agreement, dated October 21, 2004, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.23 to the Annual
Report on Form 10-K of DISH for the year ended December 31, 2004, Commission File
No.0-26176).10.18*
    
    Amendment No. 3 to Satellite Service Agreement, dated November 19, 2004 between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.24 to the Annual
Report on Form 10-K of DISH for the year ended December 31, 2004, Commission File
No.0-26176).10.19*
    
    Amendment No. 5 to Satellite Service Agreement, dated November 19, 2004, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.25 to the Annual
Report on Form 10-K of DISH for the year ended December 31, 2004, Commission File
No.0-26176).10.20*
    
    Amendment No. 6 to Satellite Service Agreement, dated December 20, 2004, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.26 to the Annual
Report on Form 10-K of DISH for the year ended December 31, 2004, Commission File
No.0-26176).10.21*
    
    Description of the 2005 Long-Term Incentive Plan dated January 26, 2005 (incorporated
by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of DISH for the
quarter ended March 31, 2005, Commission File No.0-26176).**10.22*
    
    Amendment No. 4 to Satellite Service Agreement, dated April 6, 2005, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended June 30, 2005, Commission File
No.0-26176).10.23*
    
    Amendment No. 5 to Satellite Service Agreement, dated June 20, 2005, between SES
Americom, Inc. and DISH (incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended June 30, 2005, Commission File
No.0-26176).10.24*
    
    Incentive Stock Option Agreement (Form A) (incorporated by reference to Exhibit 99.1 to
the Current Report on Form 8-K of DISH filed July 7, 2005, Commission File
No.0-26176).**10.25*
    
    Incentive Stock Option Agreement (Form B) (incorporated by reference to Exhibit 99.2 to
the Current Report on Form 8-K of DISH filed July 7, 2005, Commission File
No.0-26176).**10.26*
    
    Restricted Stock Unit Agreement (Form A) (incorporated by reference to Exhibit 99.3 to
the Current Report on Form 8-K of DISH filed July 7, 2005, Commission File
No.0-26176).**10.27*
    
    Restricted Stock Unit Agreement (Form B) (incorporated by reference to Exhibit 99.4 to
the Current Report on Form 8-K of DISH filed July 7, 2005, Commission File
No.0-26176).**10.28*
    
    Incentive Stock Option Agreement (1999 Long-Term Incentive Plan) (incorporated by
reference to Exhibit 99.5 to the Current Report on Form 8-K of DISH filed July 7, 2005,
Commission File No.0-26176).**
 40




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##### Table of Contents



Exhibit No.
    
    Description10.29*
    
    Nonemployee Director Stock Option Agreement (incorporated by reference to Exhibit 99.6
to the Current Report on Form 8-K of DISH filed July 7, 2005, Commission File
No.0-26176).**10.30*
    
    Nonqualifying Stock Option Agreement (2005 Long-Term Incentive Plan (incorporated by
reference to Exhibit 99.7 to the Current Report on Form 8-K of DISH filed July 7, 2005,
Commission File No.0-26176).**10.31*
    
    Restricted Stock Unit Agreement (2005 Long-Term Incentive Plan) (incorporated by
reference to Exhibit 99.8 to the Current Report on Form 8-K of DISH filed July 7, 2005,
Commission File No.0-26176).**10.32*
    
    Separation Agreement between EchoStar and DISH (incorporated by reference from Exhibit
2.1 to the Form 10 (File No. 001-33807) of EchoStar).10.33*
    
    Transition Services Agreement between EchoStar and DISH (incorporated by reference from
Exhibit 10.1 to the Form 10 (File No. 001-33807) of EchoStar).10.34*
    
    Tax Sharing Agreement between EchoStar and DISH (incorporated by reference from Exhibit
10.2 to the Form 10 (File No. 001-33807) of EchoStar).10.35*
    
    Employee Matters Agreement between EchoStar and DISH (incorporated by reference from
Exhibit 10.3 to the Form 10 (File No. 001-33807) of EchoStar).10.36*
    
    Intellectual Property Matters Agreement between EchoStar, EchoStar Acquisition L.L.C.,
Echosphere L.L.C., DDBS, EIC Spain SL, EchoStar Technologies L.L.C. and DISH
(incorporated by reference from Exhibit 10.4 to the Form 10 (File No. 001-33807) of
EchoStar).10.37*
    
    Management Services Agreement between EchoStar and DISH (incorporated by reference from
Exhibit 10.5 to the Form 10 (File No. 001-33807) of EchoStar).10.38*
    
    NIMIQ 5 Transponder Service Agreement, dated March 11, 2008, between Bell ExpressVu
Limited Partnership, acting through its general partner Bell ExpressVu Inc., on the one
hand, and EchoStar and DISH (solely as to the obligation set forth in Section 19.10),
on the other hand (incorporated by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q of DISH for the quarter ended March 31, 2008, Commission File No.0-26176).10.39*
    
    NIMIQ 5 Transponder Service Agreement, dated March 11, 2008, between EchoStar and DISH
Network L.L.C. (incorporated by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q of DISH for the quarter ended March 31, 2008, Commission File No.0-26176).10.40*
    
    Amendment No. 1 to Receiver Agreement dated December 31, 2007 between EchoSphere L.L.C.
and EchoStar Technologies L.L.C. (incorporated by reference to Exhibit 99.1 to the
Quarterly Report on Form 10-Q of DISH for the quarter ended September 30, 2008,
Commission File No.0-26176).10.41*
    
    Amendment No. 1 to Broadcast Agreement dated December 31, 2007 between EchoStar and
EchoStar Satellite L.L.C. (incorporated by reference to Exhibit 99.2 to the Quarterly
Report on Form 10-Q of DISH for the quarter ended September 30, 2008, Commission File
No.0-26176).10.42*
    
    Description of the 2008 Long-Term
Incentive Plan dated December 22, 2008 (incorporated by
reference to Exhibit 10.42 to the Annual Report on Form 10-K of DISH
for the year ended December 31, 2008, Commission File No. 0-26176).21
    
    Subsidiaries of DISH DBS
Corporation.31.1
    
    Section 302 Certification by Chairman and Chief Executive Officer.31.2
    
    Section 302 Certification by Executive Vice President and Chief Financial Officer.32.1
    
    Section 906 Certification by Chairman and Chief Executive Officer.32.2
    
    Section 906 Certification by Executive Vice President and Chief Financial Officer.
 
 
    
    Filed herewith.*
    
    Incorporated by reference.**
    
    Constitutes a management contract or compensatory plan or arrangement. 41




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##### Table of Contents



SIGNATURES
  DISH DBS CORPORATIONBy:
    /s/ Bernard L. HanBernard L. HanExecutive Vice President and Chief Financial Officer   Signature
    
    Title
    
    Date/s/ Charles W. Ergen
    
    Chief Executive Officer, President
and Chairman
    
    March 16, 2009Charles W. Ergen
    
    (Principal
Executive Officer)/s/ Bernard L. Han
    
    Executive Vice President and Chief Financial Officer
    
    March 16, 2009Bernard L. Han
    
    (Principal
Financial and Accounting Officer)/s/ James DeFranco
    
    Director
    
    March 16, 2009James DeFranco/s/ R. Stanton Dodge
    
    Director
    
    March 16, 2009R. Stanton Dodge
 42




---



##### 



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  
 PageConsolidated Financial Statements:Report of KPMG LLP, Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at December 31, 2008 and 2007
    
    
    F-3Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31,
2008, 2007 and 2006
    
    
    F-4Consolidated Statements of Changes in Stockholders Equity (Deficit) for the years ended December 31,
2006, 2007 and 2008
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Accounting
for Uncertainty in Income Taxes
  
 F-2




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##### Table of Contents



DISH DBS CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
  As of December 31,2008
    
    
    2007AssetsCurrent Assets:Cash and cash equivalents
    
    $
    98,001
    
    
    $
    482,251Marketable investment securities (Note 4)
    
    
    383,089
    
    
    
    620,499Trade
accounts receivable  other, net of allowance for doubtful accounts
of $15,207 and $14,019, respectively
    
    
    798,976
    
    
    
    685,109Trade accounts receivable  EchoStar
    
    
    20,604
    
    
    
    Advances to affiliates
    
    
    
    
    
    
    78,578Inventories, net
    
    
    426,671
    
    
    
    295,200Current deferred tax assets (Note 9)
    
    
    84,734
    
    
    
    38,297Other current assets
    
    
    70,645
    
    
    
    77,929Other current assets  EchoStar
    
    
    966
    
    
    
    Total current assets
    
    
    1,883,686
    
    
    
    2,277,863Noncurrent Assets:Restricted cash and marketable investment securities (Note 4)
    
    
    70,743
    
    
    
    159,046Property and equipment, net (Note 6)
    
    
    2,430,717
    
    
    
    3,471,034FCC authorizations
    
    
    679,570
    
    
    
    802,691Intangible assets, net (Note 7)
    
    
    5,135
    
    
    
    150,424Other investment securities (Note 4)
    
    
    26,647
    
    
    
    78,207Other noncurrent assets, net
    
    
    59,483
    
    
    
    91,112Total noncurrent assets
    
    
    3,272,295
    
    
    
    4,752,514Total assets
    
    $
    5,155,981
    
    
    $
    7,030,377Liabilities and Stockholders Equity (Deficit)Current Liabilities:Trade accounts payable  other
    
    $
    175,022
    
    
    $
    289,649Trade accounts payable  EchoStar
    
    
    297,629
    
    
    
    Advances from affiliates
    
    
    
    
    
    
    85,613Deferred revenue and other
    
    
    830,529
    
    
    
    853,791Accrued programming
    
    
    1,020,086
    
    
    
    914,074Income taxes payable
    
    
    
    
    
    
    145,747Other accrued expenses
    
    
    595,725
    
    
    
    561,576Current portion of capital lease obligations, mortgages and other notes payable (Note 8)
    
    
    13,333
    
    
    
    49,0575 3/4% Senior Notes due 2008 (Note 8)
    
    
    
    
    
    
    1,000,000Total current liabilities
    
    
    2,932,324
    
    
    
    3,899,507Long-term obligations, net of current portion:6 3/8% Senior Notes due 2011
    
    
    1,000,000
    
    
    
    1,000,0006 5/8% Senior Notes due 2014
    
    
    1,000,000
    
    
    
    1,000,0007 1/8% Senior Notes due 2016
    
    
    1,500,000
    
    
    
    1,500,0007% Senior Notes due 2013
    
    
    500,000
    
    
    
    500,0007 3/4% Senior Notes due 2015
    
    
    750,000
    
    
    
    Capital lease obligations, mortgages and other notes payable, net of current portion (Note 8)
    
    
    219,422
    
    
    
    547,608Deferred tax liabilities
    
    
    264,436
    
    
    
    327,318Long-term deferred revenue, distribution and carriage payments and other long-term
liabilities
    
    
    199,476
    
    
    
    259,656Total long-term obligations, net of current portion
    
    
    5,433,334
    
    
    
    5,134,582Total liabilities
    
    
    8,365,658
    
    
    
    9,034,089Commitments and Contingencies (Note 12)Stockholders Equity (Deficit):Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and
outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1,142,529
    
    
    
    1,121,012Accumulated other comprehensive income (loss)
    
    
    (8,792
    )
    
    
    396Accumulated earnings (deficit)
    
    
    (4,343,414
    )
    
    
    (3,125,120
    )Total stockholders equity (deficit)
    
    
    (3,209,677
    )
    
    
    (2,003,712
    )Total liabilities and stockholders equity (deficit)
    
    $
    5,155,981
    
    
    $
    7,030,377
  F-3




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##### Table of Contents



DISH DBS CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Revenue:Subscriber-related revenue
    
    $
    11,455,575
    
    
    $
    10,673,821
    
    
    $
    9,422,271Equipment sales and other revenue
    
    
    124,255
    
    
    
    386,662
    
    
    
    390,476Equipment sales  EchoStar
    
    
    11,601
    
    
    
    
    
    
    
    Transitional services and other revenue  EchoStar
    
    
    25,750
    
    
    
    
    
    
    
    Total revenue
    
    
    11,617,181
    
    
    
    11,060,483
    
    
    
    9,812,747Costs and Expenses:Subscriber-related expenses (exclusive of depreciation shown
below  Note 6)
    
    
    5,977,355
    
    
    
    5,488,396
    
    
    
    4,822,310Satellite and transmission expenses (exclusive of depreciation
shown below  Note 6):EchoStar
    
    
    305,322
    
    
    
    
    
    
    
    Other
    
    
    32,407
    
    
    
    180,446
    
    
    
    144,931Equipment, transitional services and other cost of sales
    
    
    169,917
    
    
    
    269,817
    
    
    
    290,046Subscriber acquisition costs:Cost of sales  subscriber promotion subsidies  EchoStar
(exclusive of depreciation shown below  Note 6)
    
    
    167,508
    
    
    
    128,739
    
    
    
    138,721Other subscriber promotion subsidies
    
    
    1,124,103
    
    
    
    1,219,943
    
    
    
    1,246,836Subscriber acquisition advertising
    
    
    240,130
    
    
    
    226,742
    
    
    
    215,355Total subscriber acquisition costs
    
    
    1,531,741
    
    
    
    1,575,424
    
    
    
    1,600,912General and administrative expenses  EchoStar
    
    
    53,373
    
    
    
    
    
    
    
    General and administrative expenses
    
    
    486,717
    
    
    
    577,743
    
    
    
    539,630Litigation expense (Note 12)
    
    
    
    
    
    
    33,907
    
    
    
    93,969Depreciation and amortization (Note 6)
    
    
    1,000,230
    
    
    
    1,320,625
    
    
    
    1,110,385Total costs and expenses
    
    
    9,557,062
    
    
    
    9,446,358
    
    
    
    8,602,183Operating income (loss)
    
    
    2,060,119
    
    
    
    1,614,125
    
    
    
    1,210,564Other Income (Expense):Interest income
    
    
    52,755
    
    
    
    103,619
    
    
    
    121,873Interest expense, net of amounts capitalized
    
    
    (368,838
    )
    
    
    (372,612
    )
    
    
    (389,993
    )Other, net
    
    
    45,391
    
    
    
    (562
    )
    
    
    (7,923
    )Total other income (expense)
    
    
    (270,692
    )
    
    
    (269,555
    )
    
    
    (276,043
    )Income (loss) before income taxes
    
    
    1,789,427
    
    
    
    1,344,570
    
    
    
    934,521Income tax (provision) benefit, net (Note 9)
    
    
    (696,946
    )
    
    
    (534,176
    )
    
    
    (333,464
    )Net income (loss)
    
    $
    1,092,481
    
    
    $
    810,394
    
    
    $
    601,057Foreign currency translation adjustments
    
    
    
    
    
    
    123
    
    
    
    167Unrealized holding gains (losses) on available-for-sale securities
    
    
    6,436
    
    
    
    22
    
    
    
    401Recognition of previously unrealized (gains) losses on
available-for-sale securities included in net income (loss)
    
    
    (11,247
    )
    
    
    
    
    
    
    Deferred income tax (expense) benefit
    
    
    (1,577
    )
    
    
    (3
    )
    
    
    (134
    )Comprehensive income (loss)
    
    $
    1,086,093
    
    
    $
    810,536
    
    
    $
    601,491
  F-4




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##### Table of Contents



DISH DBS CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
  AccumulatedDeficit andAccumulatedAdditional
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    TotalBalance, December 31, 2005
    
    
    1
    
    
    $
    
    
    
    $
    1,011,343
    
    
    $
    (1,266,734
    )
    
    $
    (255,391
    )SAB 108 adjustments, net of tax of $37 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62,345
    )
    
    
    (62,345
    )Capital distribution to affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (161,099
    )
    
    
    (161,099
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    17,435
    
    
    
    
    
    
    
    17,435Income tax (expense) benefit related to stock awards and other
    
    
    
    
    
    
    
    
    
    
    3,925
    
    
    
    
    
    
    
    3,925Change in unrealized holding gains (losses)
on available-for-sale securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    401
    
    
    
    401Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    167Dividend to EchoStar Orbital Corporation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (400,000
    )
    
    
    (400,000
    )Deferred income tax (expense) benefit attributable to
unrealized holding gains (losses) on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (134
    )
    
    
    (134
    )Other
    
    
    
    
    
    
    
    
    
    
    222
    
    
    
    
    
    
    
    222Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    601,057
    
    
    
    601,057Balance, December 31, 2006
    
    
    1
    
    
    $
    
    
    
    $
    1,032,925
    
    
    $
    (1,288,687
    )
    
    $
    (255,762
    )Capital
contribution from DISH (Note 16)
    
    
    
    
    
    
    
    
    
    
    56,390
    
    
    
    
    
    
    
    56,390Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    21,329
    
    
    
    
    
    
    
    21,329Income tax (expense) benefit related to stock awards and other
    
    
    
    
    
    
    
    
    
    
    10,368
    
    
    
    
    
    
    
    10,368Change in unrealized holding gains (losses)
on available-for-sale securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    22Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    123Deferred income tax (expense) benefit attributable to
unrealized holding gains (losses) on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Dividend to EchoStar Orbital Corporation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,646,753
    )
    
    
    (2,646,753
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180
    
    
    
    180Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810,394
    
    
    
    810,394Balance, December 31, 2007
    
    
    1
    
    
    $
    
    
    
    $
    1,121,012
    
    
    $
    (3,124,724
    )
    
    $
    (2,003,712
    )Capital
contribution from DISH
    
    
    
    
    
    
    
    
    
    
    5,221
    
    
    
    
    
    
    
    5,221Dividends to
EchoStar Orbital Corporation (Note 16)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,150,000
    )
    
    
    (1,150,000
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    15,349
    
    
    
    
    
    
    
    15,349Income tax (expense) benefit related to stock awards and other
    
    
    
    
    
    
    
    
    
    
    947
    
    
    
    
    
    
    
    947Change in unrealized holding gains (losses)
on available-for-sale securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,811
    )
    
    
    (4,811
    )Deferred income tax (expense) benefit attributable to
unrealized holding gains (losses) on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,577
    )
    
    
    (1,577
    )Capital distribution to affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (130,299
    )
    
    
    (130,299
    )Capital contribution to DISH in connection with the Spin-off
(Note 1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,033,276
    )
    
    
    (1,033,276
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,092,481
    
    
    
    1,092,481Balance, December 31, 2008
    
    
    1
    
    
    $
    
    
    
    $
    1,142,529
    
    
    $
    (4,352,206
    )
    
    $
    (3,209,677
    )
  F-5




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##### Table of Contents



DISH DBS CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Cash Flows From Operating Activities:Net income (loss)
    
    $
    1,092,481
    
    
    $
    810,394
    
    
    $
    601,057Adjustments to reconcile net income (loss) to net cash flows from operating activities:Depreciation and amortization
    
    
    1,000,230
    
    
    
    1,320,625
    
    
    
    1,110,385Equity in losses (earnings) of affiliates
    
    
    (1,739
    )
    
    
    831
    
    
    
    Realized and unrealized losses (gains) on investments
    
    
    (42,226
    )
    
    
    
    
    
    
    Non-cash, stock-based compensation
    
    
    15,349
    
    
    
    21,329
    
    
    
    17,435Deferred tax expense (benefit) (Note 9)
    
    
    180,245
    
    
    
    255,852
    
    
    
    274,762Amortization of debt discount and deferred financing costs
    
    
    3,821
    
    
    
    3,650
    
    
    
    7,149Other, net
    
    
    3,579
    
    
    
    5,279
    
    
    
    (4,386
    )Change in noncurrent assets
    
    
    7,744
    
    
    
    2,768
    
    
    
    54,955Change in long-term deferred revenue, distribution and carriage payments and other
long-term liabilities
    
    
    (98,957
    )
    
    
    (15,475
    )
    
    
    50,956Changes in current assets and current liabilities:Trade accounts receivable  other
    
    
    (142,614
    )
    
    
    (20,009
    )
    
    
    (193,564
    )Allowance for doubtful accounts
    
    
    1,188
    
    
    
    (186
    )
    
    
    5,406Advances to affiliates
    
    
    78,578
    
    
    
    71,314
    
    
    
    64,824Trade accounts receivable  EchoStar
    
    
    (20,604
    )
    
    
    
    
    
    
    Inventories
    
    
    (157,761
    )
    
    
    (80,841
    )
    
    
    16,707Other current assets
    
    
    3,106
    
    
    
    27,284
    
    
    
    11,144Trade accounts payable
    
    
    (110,912
    )
    
    
    30,791
    
    
    
    37,319Trade accounts payable  EchoStar
    
    
    297,629
    
    
    
    
    
    
    
    Advances from affiliates
    
    
    (85,613
    )
    
    
    (80,264
    )
    
    
    76,476Deferred revenue and other
    
    
    (23,262
    )
    
    
    31,305
    
    
    
    62,600Accrued programming and other accrued expenses
    
    
    (65,106
    )
    
    
    206,326
    
    
    
    307,207Net cash flows from operating activities
    
    
    1,935,156
    
    
    
    2,590,973
    
    
    
    2,500,432Cash Flows From Investing Activities:Purchases of marketable investment securities
    
    
    (4,372,496
    )
    
    
    (2,479,745
    )
    
    
    (1,822,298
    )Sales and maturities of marketable investment securities
    
    
    4,595,360
    
    
    
    2,708,568
    
    
    
    1,302,720Purchases of property and equipment
    
    
    (1,155,377
    )
    
    
    (1,111,536
    )
    
    
    (1,429,957
    )Change in restricted cash and marketable investment securities
    
    
    79,898
    
    
    
    (701
    )
    
    
    (48,799
    )FCC authorizations
    
    
    
    
    
    
    (97,463
    )
    
    
    Purchase of strategic investments included in noncurrent assets and other investment securities
    
    
    
    
    
    
    (21,775
    )
    
    
    (560
    )Proceeds from sale of strategic investment
    
    
    106,200
    
    
    
    
    
    
    
    Other
    
    
    3
    
    
    
    3,469
    
    
    
    (843
    )Net cash flows from investing activities
    
    
    (746,412
    )
    
    
    (999,183
    )
    
    
    (1,999,737
    )Cash Flows From Financing Activities:Contribution of cash and cash equivalents to DISH in connection with the Spin-off 
(Note 1)
    
    
    (27,723
    )
    
    
    
    
    
    
    Proceeds from issuance of 7 1/8% Senior Notes due 2016
    
    
    
    
    
    
    
    
    
    
    1,500,000Proceeds from issuance of 7% Senior Notes due 2013
    
    
    
    
    
    
    
    
    
    
    500,000Proceeds from issuance of 7 3/4% Senior Notes due 2015
    
    
    750,000
    
    
    
    
    
    
    
    Repurchases and redemption of 5 3/4% Senior Notes due 2008
    
    
    (1,000,000
    )
    
    
    
    
    
    
    Redemption of Floating Rate Senior Notes due 2008
    
    
    
    
    
    
    
    
    
    
    (500,000
    )Repurchases and redemption of 9 1/8% Senior Notes due 2009
    
    
    
    
    
    
    
    
    
    
    (441,964
    )Deferred debt issuance costs
    
    
    (4,972
    )
    
    
    
    
    
    
    (14,210
    )Capital
contribution from DISH (Note 16)
    
    
    
    
    
    
    53,642
    
    
    
    Dividend to EchoStar Orbital Corporation
    
    
    (1,150,000
    )
    
    
    (2,645,805
    )
    
    
    (400,000
    )Capital distribution to affiliate
    
    
    (130,299
    )
    
    
    
    
    
    
    (161,099
    )Repayment of capital lease obligations, mortgages and other notes payable
    
    
    (10,000
    )
    
    
    (43,515
    )
    
    
    (40,642
    )Excess tax benefits recognized on stock option exercises
    
    
    
    
    
    
    12,505
    
    
    
    6,888Net cash flows from financing activities
    
    
    (1,572,994
    )
    
    
    (2,623,173
    )
    
    
    448,973Net increase (decrease) in cash and cash equivalents
    
    
    (384,250
    )
    
    
    (1,031,383
    )
    
    
    949,668Cash and cash equivalents, beginning of period
    
    
    482,251
    
    
    
    1,513,634
    
    
    
    563,966Cash and cash equivalents, end of period
    
    $
    98,001
    
    
    $
    482,251
    
    
    $
    1,513,634
  F-6




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and Business Activities
 Principal Business
 
 Spin-off of Technology and Certain Infrastructure Assets
  
    
    DISH Network Corporation which retained its subscription television business, the
DISH Network®, and
    
    EchoStar Corporation which sells equipment, including set-top boxes and related
components, to DISH Network and international customers, and provides digital broadcast
operations and satellite services to DISH Network and other customers.
   F-7




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  January 1,2008(In thousands)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    27,723Marketable investment securities
    
    
    3,743Trade accounts receivable, net
    
    
    28,071Inventories, net
    
    
    18,548Current deferred tax assets
    
    
    5,033Other current assets
    
    
    3,212Total current assets
    
    
    86,330Restricted cash and marketable investment securities
    
    
    3,150Property and equipment, net
    
    
    1,201,641FCC authorizations
    
    
    123,121Intangible assets, net
    
    
    146,093Other noncurrent assets, net
    
    
    25,608Total assets
    
    $
    1,585,943LiabilitiesCurrent Liabilities:Trade accounts payable
    
    $
    3,715Deferred revenue and other accrued expenses
    
    
    35,474Current portion of capital lease obligations, mortgages and other notes payable
    
    
    39,136Total current liabilities
    
    
    78,325Long-term obligations, net of current portion:Capital lease obligations, mortgages and other notes payable, net of current portion
    
    
    339,243Deferred tax liabilities
    
    
    135,099Total long-term obligations, net of current portion
    
    
    474,342Total liabilities
    
    
    552,667Net assets distributed
    
    $
    1,033,276
 F-8




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 2. Summary of Significant Accounting Policies
 Principles of Consolidation and Basis of Presentation
   Use of Estimates
  Foreign Currency Translation
  F-9




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Cash and Cash Equivalents
  Inventories
  Marketable Investment Securities
   
    
    the fair value of our marketable investment securities compared to the carrying amount,
    
    the historical volatility of the price of each security, and
    
    any market and company specific factors related to each security.
  Length of TimeInvestment Has Been In a
    
    Treatment of the Decline in ValueContinuous Loss Position
    
    (absent specific factors to the contrary)Less than six months
    
    Generally, considered temporary.Six to nine months
    
    Evaluated on a case by case basis to
determine whether any company or
market-specific factors exist which would
indicate that such decline is
other-than-temporary.Greater than nine months
    
    Generally, considered other-than-temporary.
The decline in value is recorded as a charge
to earnings.
 Property and Equipment
  F-10




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Long-Lived Assets
  Goodwill and Other Intangible Assets
  
    
    FCC spectrum is a non-depleting asset;
    
    Existing DBS licenses are integral to our business and will contribute to cash
flows indefinitely;
    
    Replacement satellite applications are generally authorized by the FCC subject to
certain conditions, without substantial cost under a stable regulatory, legislative
and legal environment;
    
    Maintenance expenditures in order to obtain future cash flows are not significant;
    
    DBS licenses are not technologically dependent; and
    
    We intend to use these assets indefinitely.
  F-11




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Other Investment Securities
  Long-Term Deferred Revenue, Distribution and Carriage Payments
   Sales Taxes
  Income Taxes
  F-12




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Accounting for Uncertainty in Income Taxes
  Fair Value of Financial Instruments
  Deferred Debt Issuance Costs
  Revenue Recognition
     F-13




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Subscriber-Related Expenses
   Subscriber Acquisition Costs
  
    
    Cost of sales  subscriber promotion subsidiesincludes the cost of our receiver
systems sold to retailers and other distributors of our equipment and receiver systems
sold directly by us to subscribers.
    
    Other subscriber promotion subsidiesincludes net costs related to promotional
incentives and costs related to installation.
    
    Subscriber acquisition advertisingincludes advertising and marketing expenses
related to the acquisition of new DISH Network subscribers. Advertising costs are
expensed as incurred.
  Equipment Lease Programs
  F-14




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Research and Development Costs
  New Accounting Pronouncements
 Revised Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements
  3. Statements of Cash Flow Data
  For the Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Cash paid for interest
    
    $
    375,763
    
    
    $
    375,718
    
    
    $
    345,296Capitalized interest
    
    
    5,607
    
    
    
    7,434
    
    
    
    12,079Cash received for interest
    
    
    52,755
    
    
    
    103,619
    
    
    
    121,873Cash paid by
us for income taxes (Note 9)
    
    
    34,814
    
    
    
    37,510
    
    
    
    14,903Satellites financed under capital lease obligations
    
    
    
    
    
    
    198,219
    
    
    
    Satellite and other vendor financing
    
    
    24,469
    
    
    
    
    
    
    
    15,000Net assets contributed in connection with the
Spin-off, excluding cash and cash equivalents
    
    
    1,005,553
    
    
    
    
    
    
    
    
 F-15




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 4. Marketable Investment Securities, Restricted Cash and Other Investment Securities
  As of December 31,2008
    
    
    2007(In thousands)Marketable investment securities:Current marketable investment securities  VRDNs
    
    $
    205,513
    
    
    $
    124,739Current marketable investment securities  other
    
    
    177,576
    
    
    
    495,760Total current marketable investment securities
    
    
    383,089
    
    
    
    620,499Restricted marketable investment securities (1)
    
    
    10,680
    
    
    
    44,743Total marketable investment securities
    
    
    393,769
    
    
    
    665,242Restricted cash and cash equivalents:Restricted cash and cash equivalents (1)
    
    
    60,063
    
    
    
    114,303Total restricted cash and cash equivalents
    
    
    60,063
    
    
    
    114,303Other investment securities:Other investment securities  cost method
    
    
    5,739
    
    
    
    59,038Other investment securities  equity method
    
    
    20,908
    
    
    
    19,169Total other investment securities
    
    
    26,647
    
    
    
    78,207Total marketable investment securities,
restricted cash and other investment securities
    
    $
    480,479
    
    
    $
    857,752
 
 (1)
    
    Restricted marketable investment securities and restricted cash and cash equivalents are
included in Restricted cash and marketable investment securities on our Consolidated Balance
Sheets. Marketable Investment Securities
  Current Marketable Investment Securities  VRDNs
  Current Marketable Investment Securities  other
  Restricted Marketable Investment Securities
  F-16




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Other Investment Securities
   Unrealized Gains (Losses) on Marketable Investment Securities
  As of December 31,2008
    
    
    2007Marketable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    MarketableInvestment
    
    
    Unrealized
    
    
    Investment
    
    
    UnrealizedSecurities
    
    
    Gains
    
    
    Losses
    
    
    Net
    
    
    Securities
    
    
    Gains
    
    
    Losses
    
    
    Net(In thousands)Debt securities:VRDNs
    
    $
    205,513
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    124,739
    
    
    $
    
    
    
    $
    
    
    
    $
    Other (including restricted)
    
    
    188,256
    
    
    
    60
    
    
    
    (8,852
    )
    
    
    (8,792
    )
    
    
    540,503
    
    
    
    4,065
    
    
    
    (4,210
    )
    
    
    (145
    )Total marketable investment securities
    
    $
    393,769
    
    
    $
    60
    
    
    $
    (8,852
    )
    
    $
    (8,792
    )
    
    $
    665,242
    
    
    $
    4,065
    
    
    $
    (4,210
    )
    
    $
    (145
    )
  Marketable Investment Securities in a Loss Position
  F-17




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Primary
    
    
    As of December 31, 2008Reason for
    
    
    Total
    
    
    Less than Six Months
    
    
    Six to Nine Months
    
    
    Nine Months or MoreInvestment
    
    Unrealized
    
    
    Fair
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedCategory
    
    Loss
    
    
    Value
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss(In thousands)Temporary marketDebt securities
    
    fluctuations
    
    $
    144,798
    
    
    $
    
    
    
    $
    
    
    
    $
    6,529
    
    
    $
    (19
    )
    
    $
    138,269
    
    
    $
    (8,833
    )Total
    
    
    
    
    
    $
    144,798
    
    
    $
    
    
    
    $
    
    
    
    $
    6,529
    
    
    $
    (19
    )
    
    $
    138,269
    
    
    $
    (8,833
    )
 As of December 31, 2007(In thousands)Temporary marketDebt securities
    
    fluctuations
    
    $
    402,822
    
    
    $
    277,478
    
    
    $
    (5,504
    )
    
    $
    125,344
    
    
    $
    (1,466
    )
    
    $
    
    
    
    $
    Total
    
    
    
    
    
    $
    402,822
    
    
    $
    277,478
    
    
    $
    (5,504
    )
    
    $
    125,344
    
    
    $
    (1,466
    )
    
    $
    
    
    
    $
    
 Fair Value Measurements
  
    
    Level 1, defined as observable inputs being quoted prices in active markets for
identical assets;
    
    Level 2, defined as observable inputs including quoted prices for similar assets; and
    
    Level 3, defined as unobservable inputs in which little or no market data exists,
therefore requiring assumptions based on the best information available.
  Total Fair Value As of December 31, 2008Assets
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Marketable investment securities
    
    $
    393,769
    
    
    $
    
    
    
    $
    393,769
    
    
    $
    Total assets at fair value
    
    $
    393,769
    
    
    $
    
    
    
    $
    393,769
    
    
    $
    
 Gains and Losses on Sales and Changes in Carrying Values of Investments
  For the Years Ended December 31,Other Income (Expense):
    
    2008
    
    
    2007
    
    
    2006(In thousands)Marketable investment securities  other-than-temporary impairments
    
    $
    (11,247
    )
    
    $
    
    
    
    $
    Other investment securities  gains (losses) on sales/exchanges
    
    
    53,473
    
    
    
    
    
    
    
    Other
    
    
    3,165
    
    
    
    (562
    )
    
    
    (7,923
    )Total
    
    $
    45,391
    
    
    $
    (562
    )
    
    $
    (7,923
    )
 F-18




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 5. Inventories
  As of December 31,2008
    
    
    2007(In thousands)Finished goods  DBS
    
    $
    238,343
    
    
    $
    159,894Raw materials
    
    
    146,353
    
    
    
    69,021Work-in-process  used
    
    
    61,663
    
    
    
    67,542Work-in-process  new
    
    
    2,414
    
    
    
    13,417Subtotal
    
    
    448,773
    
    
    
    309,874Inventory allowance
    
    
    (22,102
    )
    
    
    (14,674
    )Inventories, net
    
    $
    426,671
    
    
    $
    295,200
 6. Property and Equipment
  DepreciableLife
    
    As of December 31,(In Years)
    
    2008
    
    
    2007(In thousands)Equipment leased to customers
    
    2-5
    
    $
    3,021,149
    
    
    $
    2,773,085EchoStar I
    
    12
    
    
    201,607
    
    
    
    201,607EchoStar II (1)
    
    N/A
    
    
    
    
    
    
    228,694EchoStar III (2)
    
    12
    
    
    
    
    
    
    234,083EchoStar IV  fully depreciated (2)
    
    N/A
    
    
    
    
    
    
    78,511EchoStar V
    
    9
    
    
    203,511
    
    
    
    203,511EchoStar VI (2)
    
    12
    
    
    
    
    
    
    244,305EchoStar VII
    
    12
    
    
    177,000
    
    
    
    177,000EchoStar VIII (2)
    
    12
    
    
    
    
    
    
    175,801EchoStar IX (2)
    
    12
    
    
    
    
    
    
    127,376EchoStar X
    
    12
    
    
    177,192
    
    
    
    177,192EchoStar XI
    
    12
    
    
    200,198
    
    
    
    EchoStar XII (2)
    
    10
    
    
    
    
    
    
    190,051Satellites acquired under capital lease agreements (3)
    
    10-15
    
    
    223,423
    
    
    
    775,051Furniture, fixtures, equipment and other
    
    1-10
    
    
    419,505
    
    
    
    979,990Buildings and improvements
    
    1-40
    
    
    64,872
    
    
    
    192,757Land
    
    
    
    
    3,760
    
    
    
    7,816Construction in progress
    
    
    
    
    171,207
    
    
    
    276,215Total property and equipment
    
    
    
    $
    4,863,424
    
    
    $
    7,043,045Accumulated depreciation
    
    
    
    
    (2,432,707
    )
    
    
    (3,572,011
    )Property and equipment, net
    
    
    
    $
    2,430,717
    
    
    $
    3,471,034
 
 (1)
    
    EchoStar II experienced a failure that rendered the satellite a total loss and was
written-off during the second quarter 2008 (see further discussion below).(2)
    
    These satellites were transferred to EchoStar in connection with the Spin-off.(3)
    
    The capital lease agreements for AMC-15 and AMC-16 were contributed to EchoStar in
connection with the Spin-off. F-19




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  As of December 31,2008
    
    
    2007(In thousands)Progress amounts for satellite construction, including certain amounts
prepaid under satellite service agreements and launch costs
    
    $
    150,468
    
    
    $
    191,454Uplinking equipment
    
    
    
    
    
    
    49,036Software related projects
    
    
    12,102
    
    
    
    8,802Other
    
    
    8,637
    
    
    
    26,923Construction in progress
    
    $
    171,207
    
    
    $
    276,215
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Equipment leased to customers
    
    $
    827,599
    
    
    $
    854,533
    
    
    $
    686,125Satellites
    
    
    89,435
    
    
    
    245,349
    
    
    
    231,977Furniture, fixtures, equipment and other
    
    
    73,447
    
    
    
    176,842
    
    
    
    150,186Identifiable intangible assets subject to amortization
    
    
    5,009
    
    
    
    36,031
    
    
    
    36,677Buildings and improvements
    
    
    4,740
    
    
    
    7,870
    
    
    
    5,420Total depreciation and amortization
    
    $
    1,000,230
    
    
    $
    1,320,625
    
    
    $
    1,110,385
   Our Satellites
  F-20




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 OriginalDegree
    
    UsefulLaunch
    
    Orbital
    
    Life
    
    Lease TermSatellites
    
    Date
    
    Location
    
    (Years)
    
    (Years)Owned:EchoStar I
    
    December 1995
    
    
    148
    
    
    
    12EchoStar V
    
    September 1999
    
    
    129
    
    
    
    12EchoStar VII
    
    February 2002
    
    
    119
    
    
    
    12EchoStar X
    
    February 2006
    
    
    110
    
    
    
    12EchoStar XI
    
    July 2008
    
    
    110
    
    
    
    12Leased from EchoStar:EchoStar III
    
    October 1997
    
    
    61.5
    
    
    
    12
    
    
    
    2EchoStar IV (1)
    
    May 1998
    
    
    77
    
    
    
    12
    
    
    Month to monthEchoStar VI
    
    July 2000
    
    
    72.7
    
    
    
    12
    
    
    
    2EchoStar VIII (1)
    
    August 2002
    
    
    77
    
    
    
    12
    
    
    
    2EchoStar IX
    
    August 2003
    
    
    121
    
    
    
    12
    
    
    Month to monthEchoStar XII
    
    July 2003
    
    
    61.5
    
    
    
    10
    
    
    
    2AMC-15 (1)
    
    December 2004
    
    
    105
    
    
    
    10
    
    
    Month to monthLeased from Other Third Party:Anik F3 (2)
    
    April 2007
    
    
    118.7
    
    
    
    15
    
    
    
    15Ciel II (3)
    
    December 2008
    
    
    129
    
    
    
    10
    
    
    
    10Under Construction:Leased from EchoStar:Nimiq 5 (4)
    
    Late 2009
    
    
    72.7
    
    
    
    10
    
    
    
    10QuetzSat-1 (4)
    
    
    2011
    
    
    
    77
    
    
    
    10
    
    
    
    10
 
 (1)
    
    We currently do not lease the entire capacity available on these satellites.(2)
    
    This satellite is accounted for as a capital lease.(3)
    
    Ciel II was placed in service in February 2009 and will be accounted for as a capital
lease.(4)
    
    Lease payments will commence when the satellite is placed into service. Satellite Anomalies
   Long-Lived Satellite
Assets
 F-21




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Owned Satellites
 EchoStar I
 EchoStar II.
 EchoStar V.
 EchoStar VII
 EchoStar X
 Leased Satellites
 EchoStar III
 F-22




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  EchoStar IV.
 EchoStar VI.
 EchoStar VIII
 EchoStar IX.
 EchoStar XII.
 AMC-14.
 F-23




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Long-Lived Satellite Assets.
 7. FCC Authorizations, Intangible Assets and Goodwill
   As of December 31,2008
    
    
    2007Intangible
    
    
    Accumulated
    
    
    Intangible
    
    
    AccumulatedAssets
    
    
    Amortization
    
    
    Assets
    
    
    Amortization(In thousands)Contract based
    
    $
    
    
    
    $
    
    
    
    $
    188,205
    
    
    $
    (60,381
    )Customer and reseller relationships
    
    
    
    
    
    
    
    
    
    
    73,298
    
    
    
    (68,466
    )Technology-based
    
    
    5,814
    
    
    
    (679
    )
    
    
    25,500
    
    
    
    (7,732
    )Total
    
    $
    5,814
    
    
    $
    (679
    )
    
    $
    287,003
    
    
    $
    (136,579
    )
   For the Years Ending December 31,2009
    
    
    1,1632010
    
    
    1,1632011
    
    
    1,1632012
    
    
    1,1632013
    
    
    483Thereafter
    
    
    Total
    
    $
    5,135
 8. Long-Term Debt
 5 3/4% Senior Notes due 2008
 3 4
 F-24




---



##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 6 3/8% Senior Notes due 2011
    
    
    general unsecured senior obligations of DDBS;
    
    ranked equally in right of payment with all of DDBS and the guarantors existing
and future unsecured senior debt; and
    
    ranked effectively junior to our and the guarantors current and future secured
senior indebtedness up to the value of the collateral securing such indebtedness.
  
    
    incur additional indebtedness or enter into sale and leaseback transactions;
    
    pay dividends or make distribution on DDBS capital stock or repurchase DDBS
capital stock;
    
    make certain investments;
    
    create liens;
    
    enter into transactions with affiliates;
    
    merge or consolidate with another company; and
    
    transfer and sell assets.
  6 5/8% Senior Notes due 2014
    
    
    general unsecured senior obligations of DDBS;
    
    ranked equally in right of payment with all of DDBS and the guarantors existing
and future unsecured senior debt; and
    
    ranked effectively junior to our and the guarantors current and future secured
senior indebtedness up to the value of the collateral securing such indebtedness.
  
    
    incur additional indebtedness or enter into sale and leaseback transactions;
    
    pay dividends or make distribution on DDBS capital stock or repurchase DDBS
capital stock;
    
    make certain investments;
    
    create liens;
    
    enter into transactions with affiliates;
    
    merge or consolidate with another company; and
    
    transfer and sell assets.
 F-25




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  7 1/8% Senior Notes due 2016
    
    
    general unsecured senior obligations of DDBS;
    
    ranked equally in right of payment with all of DDBS and the guarantors existing
and future unsecured senior debt; and
    
    ranked effectively junior to our and the guarantors current and future secured
senior indebtedness up to the value of the collateral securing such indebtedness.
  
    
    incur additional debt;
    
    pay dividends or make distribution on DDBS capital stock or repurchase DDBS
capital stock;
    
    make certain investments;
    
    create liens or enter into sale and leaseback transactions;
    
    enter into transactions with affiliates;
    
    merge or consolidate with another company; and
    
    transfer and sell assets.
  7% Senior Notes due 2013
    
    
    general unsecured senior obligations of DDBS;
    
    ranked equally in right of payment with all of DDBS and the guarantors existing
and future
 F-26




---



##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 unsecured senior debt; and
    
    ranked effectively junior to our and the guarantors current and future secured
senior indebtedness up to the value of the collateral securing such indebtedness.
  
    
    incur additional debt;
    
    pay dividends or make distribution on DDBS capital stock or repurchase DDBS
capital stock;
    
    make certain investments;
    
    create liens or enter into sale and leaseback transactions;
    
    enter into transactions with affiliates;
    
    merge or consolidate with another company; and
    
    transfer and sell assets.
  7 3 4 % Senior Notes due 2015
 3 4 3 4
 3 4 3 4
 3 4
 
    
    general unsecured senior obligations of DDBS;
    
    ranked equally in right of payment with all of DDBS and the guarantors existing
and future unsecured senior debt; and
    
    ranked effectively junior to our and the guarantors current and future secured
senior indebtedness up to the value of the collateral securing such indebtedness.
 3 4
 
    
    incur additional debt;
    
    pay dividends or make distribution on DDBS capital stock or repurchase DDBS
capital stock;
    
    make certain investments;
    
    create liens or enter into sale and leaseback transactions;
    
    enter into transactions with affiliates;
    
    merge or consolidate with another company; and
    
    transfer and sell assets.
 3 4
 F-27




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Interest on Long-Term Debt
 AnnualSemi-Annual
    
    Debt ServicePayment Dates
    
    Requirements6 3/8% Senior Notes due 2011
    
    April 1 and October 1
    
    $
    63,750,0006 5/8% Senior Notes due 2014
    
    April 1 and October 1
    
    $
    66,250,0007 1/8% Senior Notes due 2016
    
    February 1 and August 1
    
    $
    106,875,0007 % Senior Notes due 2013
    
    April 1 and October 1
    
    $
    35,000,0007 3/4% Senior Notes due 2015
    
    May 31 and November 30
    
    $
    58,125,000
  Fair Value of our Long-Term Debt
  As of December 31,2008
    
    
    2007Book Value
    
    
    Fair Value
    
    
    Book Value
    
    
    Fair Value(In thousands)5 3/4% Senior Notes due 2008
    
    $
    
    
    
    $
    
    
    
    $
    1,000,000
    
    
    $
    997,5006 3/8% Senior Notes due 2011
    
    
    1,000,000
    
    
    
    899,000
    
    
    
    1,000,000
    
    
    
    1,019,0006 5/8% Senior Notes due 2014
    
    
    1,000,000
    
    
    
    840,300
    
    
    
    1,000,000
    
    
    
    995,0007 1/8% Senior Notes due 2016
    
    
    1,500,000
    
    
    
    1,246,890
    
    
    
    1,500,000
    
    
    
    1,522,5007% Senior Notes due 2013
    
    
    500,000
    
    
    
    419,000
    
    
    
    500,000
    
    
    
    505,0007 3/4% Senior Notes due 2015
    
    
    750,000
    
    
    
    600,000
    
    
    
    
    
    
    
    Mortgages and other notes payable
    
    
    46,210
    
    
    
    46,210
    
    
    
    33,118
    
    
    
    33,118Subtotal
    
    $
    4,796,210
    
    
    $
    4,051,400
    
    
    $
    5,033,118
    
    
    $
    5,072,118Capital lease obligations (1)
    
    
    186,545
    
    
    
    N/A
    
    
    
    563,547
    
    
    
    N/ATotal
    
    $
    4,982,755
    
    
    $
    4,051,400
    
    
    $
    5,596,665
    
    
    $
    5,072,118
 
 (1)
    
    Pursuant to SFAS 107 Disclosures about Fair Value of Financial Instruments, disclosures
regarding fair value of capital leases are not required.  F-28




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Capital Lease Obligations, Mortgages and Other Notes Payable
  As of December 31,2008
    
    
    2007(In thousands)Satellites and other capital lease obligations
    
    $
    186,545
    
    
    $
    563,5478% note payable for EchoStar VII satellite vendor financing, payable over 13 years from launch
    
    
    9,881
    
    
    
    10,9068% note payable for EchoStar IX satellite vendor financing, payable over 14 years from launch
    
    
    
    
    
    
    8,1396% note payable for EchoStar X satellite vendor financing, payable over 15 years from launch
    
    
    12,498
    
    
    
    13,2486% note payable for EchoStar XI satellite vendor financing, payable over 15 years from launch
    
    
    17,500
    
    
    
    Mortgages and other unsecured notes payable due in installments through 2017
with interest rates ranging from approximately 2% to 13%
    
    
    6,331
    
    
    
    825Total
    
    $
    232,755
    
    
    $
    596,665Less current portion
    
    
    (13,333
    )
    
    
    (49,057
    )Capital lease obligations, mortgages and other notes payable, net of current portion
    
    $
    219,422
    
    
    $
    547,608
 Capital Lease Obligations
 Anik F3.
   For the Years Ending December 31,2009
    
    $
    48,7992010
    
    
    48,2972011
    
    
    48,0002012
    
    
    48,0002013
    
    
    48,000Thereafter
    
    
    400,000Total minimum lease payments
    
    
    641,096Less: Amount representing lease of the orbital location and
estimated executory costs (primarily insurance and
maintenance) including profit thereon, included in total
minimum lease payments
    
    
    (346,719
    )Net minimum lease payments
    
    
    294,377Less: Amount representing interest
    
    
    (107,832
    )Present value of net minimum lease payments
    
    
    186,545Less: Current portion
    
    
    (9,229
    )Long-term portion of capital lease obligations
    
    $
    177,316
 F-29




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  Payments due by periodTotal
 
    

2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter(In thousands)Long-term debt obligations
    
    $
    4,750,000
    
    
    $
    
    
    
    $
    
    
    
    $
    1,000,000
    
    
    $
    
    
    
    $
    500,000
    
    
    $
    3,250,000Capital lease obligations
    
    
    186,545
    
    
    
    9,229
    
    
    
    9,391
    
    
    
    9,800
    
    
    
    10,556
    
    
    
    11,371
    
    
    
    136,198Mortgages and other notes payable
    
    
    46,210
    
    
    
    4,104
    
    
    
    4,143
    
    
    
    4,375
    
    
    
    4,622
    
    
    
    4,183
    
    
    
    24,783Total
    
    $
    4,982,755
    
    
    $
    13,333
    
    
    $
    13,534
    
    
    $
    1,014,175
    
    
    $
    15,178
    
    
    $
    515,554
    
    
    $
    3,410,981
 9. Income Taxes and Accounting for Uncertainty in Income Taxes
 Income Taxes
       F-30




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Current (provision) benefit:Federal
    
    $
    (459,864
    )
    
    $
    (204,590
    )
    
    $
    (21,418
    )State
    
    
    (56,837
    )
    
    
    (71,756
    )
    
    
    (35,764
    )Foreign
    
    
    
    
    
    
    (1,978
    )
    
    
    (1,520
    )(516,701
    )
    
    
    (278,324
    )
    
    
    (58,702
    )Deferred (provision) benefit:Federal
    
    
    (156,589
    )
    
    
    (233,729
    )
    
    
    (310,688
    )State
    
    
    (19,354
    )
    
    
    (22,372
    )
    
    
    24,817Decrease (increase) in valuation allowance
    
    
    (4,302
    )
    
    
    249
    
    
    
    11,109(180,245
    )
    
    
    (255,852
    )
    
    
    (274,762
    )Total benefit (provision)
    
    $
    (696,946
    )
    
    $
    (534,176
    )
    
    $
    (333,464
    )
  For the Years Ended December 31,2008
    
    2007
    
    2006% of pre-tax (income)/lossStatutory rate
    
    
    (35.0
    )
    
    
    (35.0
    )
    
    
    (35.0
    )State income taxes, net of Federal benefit
    
    
    (2.6
    )
    
    
    (4.1
    )
    
    
    (0.8
    )Foreign taxes and income not U.S. taxable
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )Stock option compensation
    
    
    
    
    
    
    (0.2
    )
    
    
    Deferred tax asset adjustment for filed returns
    
    
    
    
    
    
    
    
    
    
    (0.9
    )Other
    
    
    (1.1
    )
    
    
    (0.3
    )
    
    
    (0.1
    )Decrease (increase) in valuation allowance
    
    
    (0.2
    )
    
    
    
    
    
    
    1.2Total benefit (provision) for income taxes
    
    
    (38.9
    )
    
    
    (39.7
    )
    
    
    (35.7
    )
 F-31




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  As of December 31,2008
    
    
    2007(In thousands)Deferred tax assets:NOL, credit and other carryforwards
    
    $
    447
    
    
    $
    1,327Unrealized losses on investments
    
    
    6,335
    
    
    
    2,100Accrued expenses
    
    
    45,078
    
    
    
    71,450Stock compensation
    
    
    7,434
    
    
    
    10,041Deferred revenue
    
    
    59,005
    
    
    
    63,684Fixed assets and other
    
    
    76,780
    
    
    
    5,876Other
    
    
    387
    
    
    
    19,512Total deferred tax assets
    
    
    195,466
    
    
    
    173,990Valuation allowance
    
    
    (6,897
    )
    
    
    Deferred tax asset after valuation allowance
    
    
    188,569
    
    
    
    173,990Deferred tax liabilities:Equity method investments
    
    
    (302
    )
    
    
    (18,455
    )Depreciation and amortization
    
    
    (359,831
    )
    
    
    (417,767
    )State taxes net of federal effect
    
    
    (8,138
    )
    
    
    (25,056
    )Other
    
    
    
    
    
    
    (1,733
    )Total deferred tax liabilities
    
    
    (368,271
    )
    
    
    (463,011
    )Net deferred tax asset (liability)
    
    $
    (179,702
    )
    
    $
    (289,021
    )Current portion of net deferred tax asset (liability)
    
    $
    84,734
    
    
    $
    38,297Noncurrent portion of net deferred tax asset (liability)
    
    
    (264,436
    )
    
    
    (327,318
    )Total net deferred tax asset (liability)
    
    $
    (179,702
    )
    
    $
    (289,021
    )
 Accounting for Uncertainty in Income Taxes
   Balance as of January 1, 2008
    
    $
    20,160Additions based on tax positions related to the current year
    
    
    37,583Reductions based on tax positions related to the current year
    
    
    Additions for tax positions of prior years
    
    
    150,360Balance as of December 31, 2008
    
    $
    208,103
   F-32




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  10. Employee Benefit Plans
 Employee Stock Purchase Plan
  401(k) Employee Savings Plan
   11. Stock-Based Compensation
 Share-Based Payment
 F-33




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Stock Incentive Plans
  
    
    an adjusted DISH stock option for the same number of shares that were
exercisable under the original DISH stock option, with an exercise price equal to
the exercise price of the original DISH stock option multiplied by 0.831219.
    
    a new EchoStar stock option for one-fifth of the number of shares that were
exercisable under the original DISH stock option, with an exercise price equal to
the exercise price of the original DISH stock option multiplied by 0.843907.
     As of December 31, 2008DISH Network Awards
    
    EchoStar AwardsRestricted
    
    
    
    
    
    RestrictedStock
    
    Stock
    
    Stock
    
    StockStock Incentive Awards Outstanding
    
    Options
    
    Units
    
    Options
    
    UnitsHeld by DDBS employees
    
    
    18,267,950
    
    
    
    517,735
    
    
    
    1,722,714
    
    
    
    85,866
   F-34




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Options Outstanding
    
    Options ExercisableNumber
    
    Weighted-
    
    
    
    
    
    Number
    
    Weighted-Outstanding
    
    Average
    
    Weighted-
    
    Exercisable
    
    Average
    
    Weighted-as of
    
    Remaining
    
    Average
    
    as of
    
    Remaining
    
    AverageDecember 31,
    
    Contractual
    
    Exercise
    
    December 31,
    
    Contractual
    
    Exercise2008
    
    Life
    
    Price
    
    2008
    
    Life
    
    Price$
    4.99
    
    
    -
    
    $
    6.00
    
    
    
    11,000
    
    
    
    0.13
    
    
    $
    4.99
    
    
    
    11,000
    
    
    
    0.13
    
    
    $
    4.99$
    6.01
    
    
    -
    
    $
    20.00
    
    
    
    6,845,450
    
    
    
    9.04
    
    
    $
    11.11
    
    
    
    35,450
    
    
    
    1.30
    
    
    $
    14.72$
    20.01
    
    
    -
    
    $
    29.00
    
    
    
    9,333,900
    
    
    
    6.68
    
    
    $
    25.47
    
    
    
    3,675,950
    
    
    
    5.93
    
    
    $
    25.03$
    29.01
    
    
    -
    
    $
    31.00
    
    
    
    82,000
    
    
    
    8.58
    
    
    $
    29.28
    
    
    
    24,000
    
    
    
    4.50
    
    
    $
    29.09$
    31.01
    
    
    -
    
    $
    40.00
    
    
    
    1,140,600
    
    
    
    7.95
    
    
    $
    34.71
    
    
    
    297,000
    
    
    
    6.73
    
    
    $
    33.92$
    40.01
    
    
    -
    
    $
    66.00
    
    
    
    855,000
    
    
    
    1.48
    
    
    $
    50.99
    
    
    
    855,000
    
    
    
    1.48
    
    
    $
    50.99$
    4.99
    
    
    -
    
    $
    66.00
    
    
    
    18,267,950
    
    
    
    7.40
    
    
    $
    21.86
    
    
    
    4,898,400
    
    
    
    5.15
    
    
    $
    30.00
 Stock Award Activity
  2008
    
    2007
    
    2006Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseOptions (1)
    
    Price
    
    Options (1)
    
    Price (2)
    
    Options (1)
    
    Price (2)Total stock options outstanding, beginning of period
    
    
    14,786,967
    
    
    $
    22.80
    
    
    
    22,002,305
    
    
    $
    25.65
    
    
    
    24,304,951
    
    
    $
    24.36Granted
    
    
    7,998,500
    
    
    
    13.67
    
    
    
    1,493,526
    
    
    
    42.77
    
    
    
    2,066,000
    
    
    
    32.48Exercised
    
    
    (669,117
    )
    
    
    20.74
    
    
    
    (2,029,258
    )
    
    
    24.98
    
    
    
    (1,481,946
    )
    
    
    14.15Forfeited and cancelled
    
    
    (3,848,400
    )
    
    
    12.92
    
    
    
    (1,554,356
    )
    
    
    19.42
    
    
    
    (2,886,700
    )
    
    
    25.63Total stock options outstanding, end of period
    
    
    18,267,950
    
    
    
    21.86
    
    
    
    19,912,217
    
    
    
    27.53
    
    
    
    22,002,305
    
    
    
    25.65Performance based stock options outstanding, end of
period (3)
    
    
    9,094,250
    
    
    
    16.28
    
    
    
    9,910,250
    
    
    
    20.47
    
    
    
    10,615,250
    
    
    
    19.06Exercisable at end of period
    
    
    4,898,400
    
    
    
    30.00
    
    
    
    5,528,097
    
    
    
    35.02
    
    
    
    6,138,455
    
    
    
    32.88
 
 (1)
    
    On the date of the Spin-off, former DDBS employees that
transferred to EchoStar held approximately 5.1 million DISH stock
options. Stock options activity associated with these employees is included in the 2007 and
2006 activity. However, these stock options are  excluded from the 2008 activity because these individuals were no
longer DDBS employees after the Spin-off.(2)
    
    The weighted average exercise prices for 2007 and 2006 reflect share prices before the
Spin-off.(3)
    
    These stock options, which are included in the caption Total stock options outstanding, end of
period, were issued pursuant to two separate long-term, performance-based stock incentive plans.
Vesting of these stock options is contingent upon meeting certain long-term DISH-specific goals.
See discussion of the 2005 LTIP and 2008 LTIP below.   F-35




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 2008
    
    2007
    
    2006Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Restricted
    
    Average
    
    Restricted
    
    Average
    
    Restricted
    
    AverageStock
    
    Grant Date
    
    Stock
    
    Grant Date
    
    Stock
    
    Grant DateAwards (1)
    
    Fair Value
    
    Awards (1)
    
    Fair Value (2)
    
    Awards (1)
    
    Fair Value (2)Total restricted stock awards outstanding, beginning of period
    
    
    538,746
    
    
    $
    26.56
    
    
    
    839,798
    
    
    $
    30.90
    
    
    
    632,970
    
    
    $
    29.46Granted
    
    
    88,322
    
    
    
    11.09
    
    
    
    39,580
    
    
    
    43.43
    
    
    
    327,496
    
    
    
    33.30Exercised
    
    
    (30,000
    )
    
    
    26.66
    
    
    
    (30,000
    )
    
    
    31.16
    
    
    
    (20,000
    )
    
    
    30.16Forfeited and cancelled
    
    
    (79,333
    )
    
    
    28.33
    
    
    
    (137,800
    )
    
    
    30.44
    
    
    
    (100,668
    )
    
    
    29.83Total restricted stock awards outstanding, end of period
    
    
    517,735
    
    
    
    23.69
    
    
    
    711,578
    
    
    
    35.18
    
    
    
    839,798
    
    
    
    30.90Restricted performance units outstanding, end of period (3)
    
    
    447,735
    
    
    
    23.31
    
    
    
    611,578
    
    
    
    31.70
    
    
    
    709,798
    
    
    
    30.82
 
 (1)
    
    On the date of the Spin-off, former DDBS employees that
transferred to EchoStar held approximately 173,000 DISH
restricted stock awards. Restricted stock award activity associated
with these employees is
included in the 2007 and 2006 activity. However, these restricted
stock awards are excluded from the 2008 activity because
these individuals were no longer DDBS employees after the Spin-off.(2)
    
    The weighted average grant date fair values for 2007 and 2006 reflect share prices before the
Spin-off.(3)
    
    These restricted performance units, which are included in the caption Total restricted stock
awards outstanding, end of period, were issued pursuant to two separate long-term,
performance-based stock incentive plans. Vesting of these restricted performance units is
contingent upon meeting certain long-term DISH-specific goals. See discussion of the 2005 LTIP and
2008 LTIP below. Long-Term Performance-Based Plans
 1999 LTIP.
 2005 LTIP.
   F-36




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 2005 LTIPVestedTotal
    
    
    Portion(In thousands)DISH Network awards held by DISH Network employees
    
    $
    49,039
    
    
    $
    12,798EchoStar awards held by DISH Network employees
    
    
    9,957
    
    
    
    2,599Total
    
    $
    58,996
    
    
    $
    15,397
  2008 LTIP.
  As ofDecember 31, 2008Weighted-Number of
    
    
    AverageStock Options
    
    Awards
    
    
    Exercise Price2005 LTIP
    
    
    3,269,250
    
    
    $
    25.522008 LTIP
    
    
    5,825,000
    
    
    $
    11.09Total
    
    
    9,094,250
    
    
    $
    16.28
 Restricted Performance Units2005 LTIP
    
    
    359,4132008 LTIP
    
    
    88,322Total
    
    
    447,735
  Stock-Based Compensation Expense
  F- 37




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 For the Years Ended December 31,2008
    
    
    2007
    
    
    2006(In thousands)Subscriber-related
    
    $
    797
    
    
    $
    967
    
    
    $
    879Satellite and transmission
    
    
    
    
    
    
    645
    
    
    
    512General and administrative
    
    
    14,552
    
    
    
    19,717
    
    
    
    16,044Total non-cash, stock based compensation
    
    $
    15,349
    
    
    $
    21,329
    
    
    $
    17,435
   Stock Options

    For the Years Ended December 31,2008
    
    2007
    

2006Risk-free interest rate
    
    1.00%  3.42%
    
    3.51%  5.19%
    
    4.49%  5.22%Volatility factor
    
    19.98%  39.90%
    
    18.63%  24.84%
    
    24.71%  25.20%Expected term of options in years
    
    3.0  7.5
    
    6.0  10.0
    
    6.0  10.0Weighted-average fair value of options granted
    
    $3.12  $8.72
    
    $10.55  $21.41
    
    $11.06  $17.78
   F- 38




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 12. Commitments and Contingencies
 Commitments
  Payments due by periodTotal
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter(In thousands)Satellite-related obligations
    
    $
    1,805,340
    
    
    $
    78,454
    
    
    $
    95,535
    
    
    $
    105,774
    
    
    $
    136,492
    
    
    $
    136,492
    
    
    $
    1,252,593Operating lease obligations
    
    
    109,223
    
    
    
    42,230
    
    
    
    24,168
    
    
    
    17,641
    
    
    
    10,551
    
    
    
    5,536
    
    
    
    9,097Purchase obligations
    
    
    1,397,990
    
    
    
    1,304,489
    
    
    
    43,651
    
    
    
    14,859
    
    
    
    15,334
    
    
    
    15,827
    
    
    
    3,830Total
    
    $
    3,312,553
    
    
    $
    1,425,173
    
    
    $
    163,354
    
    
    $
    138,274
    
    
    $
    162,377
    
    
    $
    157,855
    
    
    $
    1,265,520
   Satellite-Related Obligations
 Ciel II .
 Satellites
under Construction.
 
    
    Nimiq 5.In March 2008, we entered into a ten-year transponder service agreement with
EchoStar to lease 16 DBS transponders on Nimiq 5, a Canadian DBS satellite which is
expected to be completed during 2009.
 F- 39




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 
    
    QuetzSat-1.In November 2008, we entered into a ten-year transponder service agreement
with EchoStar to lease 24 DBS transponders on QuetzSat-1, a satellite being constructed by
SES Latin America S.A. (SES). QuetzSat-1 is expected to be completed during 2011.
 Guarantees
  Purchase Obligations
  Programming Contracts
  Rent Expense
  Patents and Intellectual Property
  F- 40




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Contingencies
 Separation Agreement
  Acacia
    Broadcast Innovation, L.L.C.
    F- 41




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  Channel Bundling Class Action
  Datasec
  Distant Network Litigation
  Enron Commercial Paper Investment
  Finisar Corporation
  F- 42




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
   Global Communications
  Guardian Media
   Katz Communications
  F- 43




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Multimedia Patent Trust
   Personalized Media Communications
   Retailer Class Actions
  F- 44




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Superguide
  Technology Development Licensing
   Tivo Inc.
    F- 45




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  Voom
  Other
  13. Segment Reporting
 Financial Data by Business Unit
  F- 46




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 EchoStar
    
    
    
    
    
    
    
    
    
    DISH
    
    
    
    
    
    DDBSDISH
    
    Technologies
    
    All
    
    
    
    
    
    Consolidated
    
    Other
    
    andNetwork
    
    Corporation
    
    Other
    
    Eliminations
    
    Total
    
    Activities
    
    Subsidiaries(In thousands)Year Ended December 31, 2008Total revenue
    
    $
    11,617,187
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    11,617,187
    
    
    $
    (6
    )
    
    $
    11,617,181Depreciation and amortization
    
    
    1,000,230
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,230
    
    
    
    
    
    
    
    1,000,230Total costs and expenses
    
    
    9,561,007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,561,007
    
    
    
    (3,945
    )
    
    
    9,557,062Interest income
    
    
    51,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,217
    
    
    
    1,538
    
    
    
    52,755Interest expense, net of amounts
capitalized
    
    
    (369,878
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (369,878
    )
    
    
    1,040
    
    
    
    (368,838
    )Other
    
    
    (168,713
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (168,713
    )
    
    
    214,104
    
    
    
    45,391Income tax benefit (provision), net
    
    
    (665,859
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (665,859
    )
    
    
    (31,087
    )
    
    
    (696,946
    )Net income (loss)
    
    
    902,947
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    902,947
    
    
    
    189,534
    
    
    
    1,092,481Year Ended December 31, 2007Total revenue
    
    $
    10,808,753
    
    
    $
    177,774
    
    
    $
    141,100
    
    
    $
    (37,252
    )
    
    $
    11,090,375
    
    
    $
    (29,892
    )
    
    $
    11,060,483Depreciation and amortization
    
    
    1,215,626
    
    
    
    8,238
    
    
    
    105,546
    
    
    
    
    
    
    
    1,329,410
    
    
    
    (8,785
    )
    
    
    1,320,625Total costs and expenses
    
    
    9,198,397
    
    
    
    232,382
    
    
    
    123,972
    
    
    
    (37,780
    )
    
    
    9,516,971
    
    
    
    (70,613
    )
    
    
    9,446,358Interest income
    
    
    134,136
    
    
    
    40
    
    
    
    3,696
    
    
    
    
    
    
    
    137,872
    
    
    
    (34,253
    )
    
    
    103,619Interest expense, net of amounts
capitalized
    
    
    (404,628
    )
    
    
    (43
    )
    
    
    (648
    )
    
    
    
    
    
    
    (405,319
    )
    
    
    32,707
    
    
    
    (372,612
    )Other
    
    
    (39,732
    )
    
    
    23
    
    
    
    (15,567
    )
    
    
    (528
    )
    
    
    (55,804
    )
    
    
    55,242
    
    
    
    (562
    )Income tax benefit (provision), net
    
    
    (545,047
    )
    
    
    31,565
    
    
    
    19,383
    
    
    
    
    
    
    
    (494,099
    )
    
    
    (40,077
    )
    
    
    (534,176
    )Net income (loss)
    
    
    755,085
    
    
    
    (23,023
    )
    
    
    23,992
    
    
    
    
    
    
    
    756,054
    
    
    
    54,340
    
    
    
    810,394Year Ended December 31, 2006Total revenue
    
    $
    9,514,347
    
    
    $
    186,984
    
    
    $
    146,190
    
    
    $
    (29,035
    )
    
    $
    9,818,486
    
    
    $
    (5,739
    )
    
    $
    9,812,747Depreciation and amortization
    
    
    1,038,744
    
    
    
    4,546
    
    
    
    71,004
    
    
    
    
    
    
    
    1,114,294
    
    
    
    (3,909
    )
    
    
    1,110,385Total costs and expenses
    
    
    8,326,513
    
    
    
    219,299
    
    
    
    84,338
    
    
    
    (29,035
    )
    
    
    8,601,115
    
    
    
    1,068
    
    
    
    8,602,183Interest income
    
    
    123,995
    
    
    
    4
    
    
    
    2,402
    
    
    
    
    
    
    
    126,401
    
    
    
    (4,528
    )
    
    
    121,873Interest expense, net of amounts
capitalized
    
    
    (457,149
    )
    
    
    (74
    )
    
    
    (927
    )
    
    
    
    
    
    
    (458,150
    )
    
    
    68,157
    
    
    
    (389,993
    )Other
    
    
    37,070
    
    
    
    
    
    
    
    323
    
    
    
    
    
    
    
    37,393
    
    
    
    (45,316
    )
    
    
    (7,923
    )Income tax benefit (provision), net
    
    
    (310,408
    )
    
    
    22,887
    
    
    
    (27,222
    )
    
    
    
    
    
    
    (314,743
    )
    
    
    (18,721
    )
    
    
    (333,464
    )Net income (loss)
    
    
    581,342
    
    
    
    (9,498
    )
    
    
    36,428
    
    
    
    
    
    
    
    608,272
    
    
    
    (7,215
    )
    
    
    601,057
 Geographic Information
 UnitedStates
    
    
    International
    
    
    Total(In thousands)Long-lived assets, including FCC authorizations2008
    
    $
    3,115,422
    
    
    $
    
    
    
    $
    3,115,4222007
    
    $
    4,421,739
    
    
    $
    2,410
    
    
    $
    4,424,149Revenue2008
    
    $
    11,617,181
    
    
    $
    
    
    
    $
    11,617,1812007
    
    $
    10,972,020
    
    
    $
    88,463
    
    
    $
    11,060,4832006
    
    $
    9,752,078
    
    
    $
    60,669
    
    
    $
    9,812,747
  F- 47




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 14. Valuation and Qualifying Accounts
  Balance at
    
    Charged to
    
    
    
    
    
    Balance atBeginning
    
    Costs and
    
    
    
    
    
    End ofof Year
    
    Expenses
    
    Deductions
    
    Year(In thousands)Allowance for doubtful accountsFor the years ended:December 31, 2008
    
    $
    14,019
    
    
    $
    98,629
    
    
    $
    (97,441
    )
    
    $
    15,207December 31, 2007
    
    $
    14,205
    
    
    $
    101,914
    
    
    $
    (102,100
    )
    
    $
    14,019December 31, 2006
    
    $
    8,799
    
    
    $
    68,643
    
    
    $
    (63,237
    )
    
    $
    14,205Allowance for inventoryFor the years ended:December 31, 2008
    
    $
    14,674
    
    
    $
    15,046
    
    
    $
    (7,618
    )
    
    $
    22,102December 31, 2007
    
    $
    12,740
    
    
    $
    2,642
    
    
    $
    (708
    )
    
    $
    14,674December 31, 2006
    
    $
    9,987
    
    
    $
    10,093
    
    
    $
    (7,340
    )
    
    $
    12,740
 15. Quarterly Financial Data (Unaudited)
  For the Three Months EndedMarch 31
    
    June 30
    
    September 30
    
    December 31(In thousands)Year ended December 31, 2008:Total revenue
    
    $
    2,844,393
    
    
    $
    2,914,989
    
    
    $
    2,936,778
    
    
    $
    2,921,021Operating income (loss)
    
    
    505,971
    
    
    
    620,643
    
    
    
    418,189
    
    
    
    515,316Net income (loss)
    
    
    262,980
    
    
    
    349,834
    
    
    
    223,710
    
    
    
    255,957Year ended December 31, 2007:Total revenue
    
    $
    2,639,703
    
    
    $
    2,755,407
    
    
    $
    2,789,835
    
    
    $
    2,875,538Operating income (loss)
    
    
    339,185
    
    
    
    443,254
    
    
    
    398,097
    
    
    
    433,589Net income (loss)
    
    
    172,749
    
    
    
    232,246
    
    
    
    205,126
    
    
    
    200,273
 16. Related Party Transactions
 Related Party Transactions with DISH
   F- 48




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
     Related Party Transactions with EchoStar
    Equipment sales  EchoStar
 Remanufactured Receiver Agreement.
 F-49




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Transitional services and other revenue  EchoStar
 Transition Services Agreement.
  Management Services Agreement.
  Real Estate Lease Agreement
 Satellite and transmission expenses  EchoStar
 Broadcast Agreement.
 Satellite Capacity Agreements.
 F- 50




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
  Cost of sales  subscriber promotion subsidies  EchoStar
 Receiver Agreement.
  General and administrative  EchoStar
 Product Support Agreement.
 Real Estate Lease Agreements.
 Inverness Lease Agreement.
 Meridian Lease Agreement.
 Santa Fe Lease Agreement.
 Services Agreement.
 F- 51




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
 Tax sharing agreement
  Other EchoStar transactions
 Nimiq 5 Agreement.
   QuetzSat-1 Lease Agreement.
 F- 52




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##### Table of Contents



DISH DBS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
   F- 53