Dish Network 2009 Annual Report Download - page 144

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-54
Under the terms of the DISH Telesat Agreement, we make certain monthly payments to EchoStar that
commenced when the Nimiq 5 satellite was placed into service and continue through the service term. Unless
earlier terminated under the terms and conditions of the DISH Telesat Agreement, the service term will expire
ten years following the date it was placed in service. Upon expiration of the initial term we have the option to
renew the DISH Telesat Agreement on a year-to-year basis through the end-of-life of the Nimiq 5 satellite.
Upon in-orbit failure or end-of-life of the Nimiq 5 satellite, and in certain other circumstances, we have certain
rights to receive service from EchoStar on a replacement satellite.
QuetzSat-1 Lease Agreement. During November 2008, EchoStar entered into a ten-year satellite service
agreement with SES Latin America S.A (“SES”), which provides, among other things, for the provision by SES
to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite expected to be placed in service at
the 77 degree orbital location. During November 2008, EchoStar also entered into a transponder service
agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we will receive service from
EchoStar on 24 of the DBS transponders.
Under the terms of the QuetzSat-1 Transponder Agreement, we will make certain monthly payments to
EchoStar commencing when the QuetzSat-1 satellite is placed into service and continuing through the service
term. Unless earlier terminated under the terms and conditions of the QuetzSat-1 Transponder Agreement, the
service term will expire ten years following the actual service commencement date. Upon expiration of the
initial term, we have the option to renew the QuetzSat-1 Transponder Agreement on a year-to-year basis
through the end-of-life of the QuetzSat-1 satellite. Upon a launch failure, in-orbit failure or end-of-life of the
QuetzSat-1 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar
on a replacement satellite. QuetzSat-1 is expected to be completed during 2011.
TT&C Agreement. In connection with the Spin-off, we entered into a telemetry, tracking and control (“TT&C”)
agreement pursuant to which we receive TT&C services from EchoStar for a period ending on January 1, 2011.
DISH Network has the right, but not the obligation, to extend the agreement for up to one additional year. The
fees for the services provided under the TT&C agreement are cost plus a fixed margin. We may terminate the
TT&C agreement for any reason upon sixty days prior written notice.
Satellite Procurement Agreement. In connection with the Spin-off, we entered into a satellite procurement
agreement pursuant to which we had the right, but not the obligation, to engage EchoStar to manage the process
of procuring new satellite capacity for DISH Network. The satellite procurement agreement expired on January
1, 2010. However, we and EchoStar agreed that following January 1, 2010, we will continue to have the right,
but not the obligation, to engage EchoStar to manage the process of procuring new satellite capacity for DISH
Network pursuant to the Professional Services Agreement as described above.
“Cost of sales – subscriber promotion subsidies – EchoStar”
Receiver Agreement. EchoStar is currently our sole supplier of set-top box receivers. The table below indicates
the dollar value of set-top boxes and other equipment that we purchased from EchoStar as well as the amount of
such purchases that are included in “Cost of sales – subscriber promotion subsidies – EchoStar” on our
Consolidated Statements of Operations and Comprehensive Income (Loss). The remaining amount is included
in “Inventory” and “Property and equipment, net” on our Consolidated Balance Sheets.
2009 2008 2007
Set-top boxes and other equipment purchased from EchoStar...................... 1,174,763$ 1,491,556$ 1,280,296$
Set-top boxes and other equipment purchased from EchoStar included
in “Cost of sales – subscriber promotion subsidies – EchoStar”................. 188,793$ 167,508$ 123,730$
For the Years Ended December 31,
(In thousands)