0001001082
us-gaap:CommonClassBMember
2009-06-30
0001001082
us-gaap:CommonClassAMember
2009-06-30
0001001082
dish:CommonStockClassCMember
2009-06-30
0001001082
us-gaap:CommonClassBMember
2008-12-31
0001001082
us-gaap:CommonClassAMember
2008-12-31
0001001082
dish:CommonStockClassCMember
2008-12-31
0001001082
2009-06-12
2009-06-12
0001001082
2007-12-31
0001001082
2009-04-01
2009-06-30
0001001082
2008-04-01
2008-06-30
0001001082
2008-01-01
2008-06-30
0001001082
2009-06-30
0001001082
2008-12-31
0001001082
2008-06-30
0001001082
us-gaap:CommonClassBMember
2009-07-24
0001001082
us-gaap:CommonClassAMember
2009-07-24
0001001082
2009-01-01
2009-06-30
iso4217:USD
xbrli:shares
xbrli:shares
iso4217:USD
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-->
<!-- xbrl,ns -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b></div>
<div align="left">
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. Organization and Business Activities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Principal Business</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">DISH Network Corporation is a holding company. Its subsidiaries (which together with DISH Network
Corporation are referred to as “DISH Network,” the “Company,” “we,” “us” and/or “our”) operate the
DISH Network<sup style="font-size: 85%; vertical-align: text-top">®</sup> direct broadcast satellite (“DBS”) subscription television service in the United
States which had 13.610 million subscribers as of June 30, 2009. We have deployed substantial
resources to develop the “DISH Network DBS System.” The DISH Network DBS System consists of our
licensed Federal Communications Commission (“FCC”) authorized DBS and Fixed Satellite Service
(“FSS”) spectrum, our owned and leased satellites, receiver systems, third-party broadcast
operations, customer service facilities, in-home service and call center operations and certain
other assets utilized in our operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Spin-off of Technology and Certain Infrastructure Assets</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On January 1, 2008, we completed a tax-free distribution of our technology and set-top box business
and certain infrastructure assets (the “Spin-off”) into a separate publicly-traded company,
EchoStar Corporation (“EchoStar”). DISH Network and EchoStar now operate as separate
publicly-traded companies, and neither entity has any ownership interest in the other. However, a
substantial majority of the voting power of both companies is owned beneficially by Charles W.
Ergen, our Chairman, President and Chief Executive Officer. The two entities consist of the
following:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><i>DISH Network Corporation </i>— which retained its DISH Network<sup style="font-size: 85%; vertical-align: text-top">®</sup> subscription television
business and</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><i>EchoStar Corporation </i>— 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.</td>
</tr>
</table>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 2 - us-gaap:SignificantAccountingPoliciesTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. Summary of Significant Accounting Policies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Basis of Presentation</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States (“GAAP”) and with the
instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information.
Accordingly, these statements do not include all of the information and notes required for complete
financial statements prepared under GAAP. In our opinion, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been included. Operating
results for the six months ended June 30, 2009 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2009. For further information, refer to the
Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for
the year ended December 31, 2008 (“2008 10-K”). Certain prior period amounts have been
reclassified to conform to the current period presentation. Further, in connection with
preparation of the condensed consolidated financial statements and in accordance with the recently
issued Statement of Financial Accounting Standards No. 165 “Subsequent Events” (“SFAS 165”), we
evaluated subsequent events after the balance sheet date of June 30, 2009 through August 10,
2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Principles of Consolidation</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We consolidate all majority owned subsidiaries and investments in entities in which we have
controlling influence. Non-majority owned investments are accounted for using the equity method
when we have the ability to significantly influence the operating decisions of the investee. When
we do not have the ability to significantly
influence the operating decisions of an investee, the cost method is used. For entities that are
considered variable interest entities we apply the provisions of Financial Accounting Standards
Board (“FASB”) Interpretation No. 46R, “Consolidation of Variable Interest Entities – An
Interpretation of ARB No. 51” (“FIN 46R”). All significant intercompany accounts and transactions
have been eliminated in consolidation.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Use of Estimates</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of financial statements in conformity with GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue
and expenses for each reporting period. Estimates are used in accounting for, among other things,
allowances for doubtful accounts, inventory allowances, self-insurance obligations, deferred taxes
and related valuation allowances, uncertain tax positions, loss contingencies, fair value of
financial instruments, fair value of options granted under our stock-based compensation plans, fair
values of assets and liabilities acquired in business combinations, capital leases, asset
impairments, useful lives of property, equipment and intangible assets, retailer incentives,
programming expenses, subscriber lives and royalty obligations. Illiquid credit markets and
general downward economic conditions have increased the inherent uncertainty in the estimates and
assumptions indicated above. Actual results may differ from previously estimated amounts, and such
differences may be material to the Condensed Consolidated Financial Statements. Estimates and
assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in
the period they occur.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Fair Value of Financial Instruments</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, the carrying value of our cash and cash equivalents,
marketable investment securities, trade accounts receivable, net of allowance for doubtful
accounts, and current liabilities is equal to or approximates fair value due to their short-term
nature. See Note 7 for the fair value of our long-term debt.
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 3 - us-gaap:EarningsPerSharePolicyTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>3. Basic and Diluted Income (Loss) Per Share</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“SFAS 128”) requires
entities to present both basic earnings per share (“EPS”) and diluted EPS. Basic EPS excludes
dilution and is computed by dividing net income (loss) by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if
stock awards were exercised and convertible securities were converted to common stock.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The potential dilution from our subordinated notes convertible into common stock was computed using
the “if converted method.” The potential dilution from stock awards was computed using the
treasury stock method based on the average market value of our Class A common stock. The following
table reflects the basic and diluted weighted-average shares outstanding used to calculate basic
and diluted earnings per share. Earnings per share amounts for all periods are presented below in
accordance with the requirements of SFAS 128.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Three Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Six Months</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Basic net income (loss)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">63,420</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">335,885</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">376,104</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">594,468</td>
<td> </td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Interest on dilutive subordinated convertible notes, net of related tax effect
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,461</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">234</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,922</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Diluted net income (loss)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">63,420</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">338,346</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">376,338</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">599,390</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Weighted-average common shares outstanding — Class A and B common stock:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Basic
</div></td>
<td> </td>
<td> </td>
<td align="right">446,752</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">449,724</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">446,813</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">449,263</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Dilutive impact of stock awards outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">669</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,348</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">968</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,638</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Dilutive impact of subordinated notes convertible into common shares
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,781</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">482</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,781</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Diluted
</div></td>
<td> </td>
<td> </td>
<td align="right">447,421</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">460,853</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">448,263</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">460,682</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Earnings per share — Class A and B common stock:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Basic net income (loss) per share
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.14</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.75</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.84</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1.32</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Diluted net income (loss) per share
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.14</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.73</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.84</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1.30</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Shares of Class A common stock issuable upon conversion of:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">3% Convertible Subordinated Note due 2010 (repaid during third quarter 2008)
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,299</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,299</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">3% Convertible Subordinated Note due 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">482</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">482</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">482</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">482</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and 2008, there were stock awards to purchase 10.7 million and 3.6 million
shares of Class A common stock outstanding, respectively, not included in the above denominator as
their effect is antidilutive. In addition, during the three months ended June 30, 2009, the
convertible note is not included in the diluted EPS calculation as its conversion would be
antidilutive.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Vesting of options and rights to acquire shares of our Class A common stock (“Restricted
performance units”) granted pursuant to our long-term incentive plans is contingent upon meeting
certain long-term goals which have not yet been achieved. As a consequence, the following are not
included in the diluted EPS calculation:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="66%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>As of June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7">(In thousands)</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Performance-based options
</div></td>
<td> </td>
<td> </td>
<td align="right">10,300</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,568</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Restricted performance units
</div></td>
<td> </td>
<td> </td>
<td align="right">603</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">577</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td> </td>
<td align="right">10,903</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,145</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 4 - dish:MarketableInvestmentSecuritiesRestrictedCashAndOtherInvestmentSecuritiesTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>4. Marketable Investment Securities, Restricted Cash and Other Investment Securities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our marketable investment securities, restricted cash and other investment securities consist of
the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>As of</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Marketable investment securities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current marketable investment securities — VRDNs
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">837,857</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">239,611</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Current marketable investment securities — strategic
</div></td>
<td> </td>
<td> </td>
<td align="right">139,814</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13,561</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current marketable investment securities — other
</div></td>
<td> </td>
<td> </td>
<td align="right">230,383</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">207,386</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px"><i>Total current marketable investment securities</i>
</div></td>
<td> </td>
<td> </td>
<td align="right">1,208,054</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">460,558</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Restricted marketable investment securities (1)
</div></td>
<td> </td>
<td> </td>
<td align="right">12,936</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">22,407</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Noncurrent marketable investment securities — ARS and MBS (2)
</div></td>
<td> </td>
<td> </td>
<td align="right">91,772</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">113,394</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px"><b>Total marketable investment
securities</b>
</div></td>
<td> </td>
<td> </td>
<td align="right">1,312,762</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">596,359</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Restricted cash and cash equivalents
(1)</b>
</div></td>
<td> </td>
<td> </td>
<td align="right">132,353</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">61,199</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Other investment securities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other investment securities — cost
method
</div></td>
<td> </td>
<td> </td>
<td align="right">2,805</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">15,795</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other investment securities — equity method
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26,784</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other investment securities — fair value method
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,323</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px"><b>Total other investment securities
(2)</b>
</div></td>
<td> </td>
<td> </td>
<td align="right">2,805</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">44,902</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Total marketable investment securities, restricted cash and other investment securities</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,447,920</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">702,460</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(1)</td>
<td> </td>
<td>Restricted marketable investment securities and restricted cash and cash equivalents
are included in “Restricted cash and marketable investment securities” on our Condensed
Consolidated Balance Sheets.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(2)</td>
<td> </td>
<td>Noncurrent marketable investment securities — auction rate securities (“ARS”), mortgage
backed securities (“MBS”) and other investment securities are included in “Marketable and
other investment securities” on our Condensed Consolidated Balance Sheets.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Marketable Investment Securities</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our marketable investment securities portfolio consists of various debt and equity instruments, all
of which are classified as available-for-sale.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Current Marketable Investment Securities — VRDNs</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Variable rate demand notes (“VRDNs”) are long-term floating rate municipal bonds with embedded put
options that allow the bondholder to sell the security at par plus accrued interest. All of the
put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised of many
municipalities and financial institutions that serve as the pledged liquidity source. While they
are classified as marketable investment securities, the put option allows for VRDNs to be
liquidated on a same day or on a five business day settlement basis.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Current Marketable Investment Securities — Strategic</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our strategic marketable investment securities are highly speculative and have experienced and
continue to experience volatility. As of June 30, 2009, a significant portion of our strategic
investment portfolio consisted of securities of a few issuers and the value of that portfolio
therefore depends on those issuers.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We account for debt securities, purchased at a discount that is related to credit quality, pursuant
to the guidance of Statement of Position 03-3, “Accounting for Certain Loans or Debt Securities
Acquired in a Transfer,” (“SOP 03-3”). SOP 03-3 limits the yield that may be accreted (accretable
yield) to the excess of our estimate of undiscounted expected principal, interest, and other cash
flows (including the effects of prepayments) expected to be collected over our initial investment.
These investments are accounted for under the cost recovery method, partial accrual or full accrual
methods based on management’s quarterly evaluation of these securities. The face value of these
securities as of June 30, 2009 and December 31, 2008 was $137 million and $9 million, respectively.
The carrying value, which is equal to fair value, of these securities at June 30, 2009 and
December 31, 2008 was $54 million and $2 million, respectively. The total discount on these
securities was $92 million as of June 30, 2009 with $13 million classified as accretable yield and
the remaining $79 million classified as non-accretable yield. As of December 31, 2008, the entire
discount of $6 million was classified as non-accretable yield.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Current Marketable Investment Securities — Other</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our other current marketable investment securities portfolio includes investments in various debt
instruments including corporate and government bonds.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Restricted Cash and Marketable Investment Securities</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, our restricted marketable investment securities,
together with our restricted cash, included amounts required as collateral for our letters of
credit. Restricted cash and marketable investment securities as of June 30, 2009 included $62
million related to our litigation with Tivo.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Noncurrent Marketable Investment Securities — ARS and MBS</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have investments in ARS and MBS which are classified as available-for-sale securities and
reported at fair value. Recent events in the credit markets have reduced or eliminated current
liquidity for certain of our ARS and MBS investments. As a result, we classify these investments
as noncurrent assets as we intend to hold these investments until they recover or mature.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The valuation of our ARS and MBS investments portfolio is subject to uncertainties that are
difficult to estimate. Due to the lack of observable market quotes for identical assets, we
utilize analyses that rely on Level 2 and/or Level 3 inputs as defined by Statement of Financial
Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). These inputs include, among
other things, observed prices on similar assets as well as our assumptions and estimates related to
the counterparty credit quality, default risk underlying the security and overall capital market
liquidity. These securities were also compared, when possible, to other observable market data
with similar characteristics.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other Investment Securities</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have several strategic investments in certain equity securities that are included in noncurrent
“Marketable and other investment securities” on our Condensed Consolidated Balance Sheets accounted
for using the cost, equity or fair value methods of accounting.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our ability to realize value from our strategic investments in companies that are not publicly
traded depends on the success of those companies’ businesses and their ability to obtain sufficient
capital to execute their business plans. Because private markets are not as liquid as public
markets, there is also increased risk that we will not be able to sell these investments, or that
when we desire to sell them we will not be able to obtain fair value for them.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Unrealized Gains (Losses) on Marketable Investment Securities</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, we had accumulated net unrealized losses of $66 million
and $116 million, both net of related tax effect, respectively, as a part of “Accumulated other
comprehensive income (loss)” within “Total stockholders’ equity (deficit).” A full valuation
allowance has been established against the deferred
tax assets associated with these unrealized capital losses. The components of our
available-for-sale investments are detailed in the table below.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>As of June 30, 2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>As of December 31, 2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Marketable</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Marketable</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Investment</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Unrealized</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Investment</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Unrealized</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Securities</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Gains</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Losses</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Net</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Securities</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Gains</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Losses</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Net</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Debt securities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">VRDNs
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">837,857</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">239,611</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">ARS and MBS
</div></td>
<td> </td>
<td> </td>
<td align="right">91,772</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">443</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(103,303</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(102,860</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">113,394</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(103,943</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(103,943</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td NOWRAP>
<div style="margin-left:30px; text-indent:-15px">Other (including restricted)
</div></td>
<td> </td>
<td> </td>
<td align="right">358,890</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,556</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,087</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">19,469</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">231,863</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(12,442</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(12,442</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Equity securities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">24,243</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17,307</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(40</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">17,267</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,491</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Total marketable investment securities</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,312,762</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">41,307</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(107,430</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(66,123</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">596,359</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(116,385</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(116,385</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, restricted and non-restricted marketable investment securities include debt
securities of $1.156 billion with contractual maturities of one year or less and $133 million with
contractual maturities greater than one year. Actual maturities may differ from contractual
maturities as a result of our ability to sell these securities prior to maturity.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Marketable Investment Securities in a Loss Position</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with the guidance of FASB Staff Position No. 115-1 (“FSP 115-1”) “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments,” the following table
reflects the length of time that the individual securities, accounted for as available-for-sale,
have been in an unrealized loss position, aggregated by investment category. As of June 30, 2009,
the unrealized losses on our investments in debt securities primarily represent investments in
auction rate, mortgage and asset-backed securities. We are not aware of any specific factors
indicating that the underlying issuers of these investments would not be able to pay interest as it
becomes due or repay the principal at maturity. Therefore, we believe that these changes in the
estimated fair values of these marketable investment securities are related to temporary market
fluctuations. In addition, we have the ability and intent to hold our investments in these debt
securities until they recover or mature.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px solid #000000"><b>As of June 30, 2009</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Primary</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Total</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Less than Six Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six to Nine Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Nine Months or More</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center"><b>Investment</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Reason for</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Fair</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Fair</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Unrealized</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Fair</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Unrealized</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Fair</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Unrealized</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Category</b><b></b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Unrealized Loss</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Loss</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Loss</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Loss</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Debt securities
</div></td>
<td> </td>
<td colspan="3" align="center">Temporary market fluctuations</td>
<td> </td>
<td align="left">$</td>
<td align="right">209,779</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">35,517</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(70</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">174,262</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(107,320</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Equity securities
</div></td>
<td> </td>
<td colspan="3" align="center" NOWRAP>Temporary market<br />
fluctuations</td>
<td> </td>
<td> </td>
<td align="right">217</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">217</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(40</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Total </b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">209,996</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">35,517</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(70</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">217</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(40</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">174,262</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(107,320</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style=" font-size: 18pT">
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px solid #000000"><b>As of December 31, 2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Debt securities
</div></td>
<td> </td>
<td colspan="3" align="center" NOWRAP>Temporary market<br />fluctuations</td>
<td> </td>
<td align="left">$</td>
<td align="right">295,676</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,070</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(540</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">8,114</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(24</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">285,492</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(115,821</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Total </b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">295,676</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,070</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(540</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">8,114</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(24</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">285,492</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(115,821</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Fair Value Measurements</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">SFAS 157 “Fair Value Measurements” established a new framework for measuring fair value for all
financial and non-financial instruments and expands related disclosures. Broadly, the SFAS 157
framework requires fair value to be determined based on the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market
participants. SFAS 157
established market or observable inputs as the preferred source of values, followed by unobservable
inputs or assumptions based on hypothetical transactions in the absence of market inputs.
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Level 1, defined as observable inputs being quoted prices in active markets for
identical assets;</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Level 2, defined as observable inputs including quoted prices for similar assets; and</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Level 3, defined as unobservable inputs in which little or no market data exists,
therefore requiring assumptions based on the best information available.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our assets measured at fair value on a recurring basis were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>Total Fair Value As of June 30, 2009</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Assets</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Level 1</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Level 2</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Level 3</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Marketable investment
securities</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,312,762</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">34,226</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,195,225</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">83,311</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Changes in Level 3 instruments are as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Level 3</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Current and</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Noncurrent</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Marketable</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Other</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Investment</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Investment</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Securities</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Securities</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance as of December 31,
2008</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">106,679</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">104,356</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,323</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net realized/unrealized gains/(losses) included in earnings
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,809</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(8,486</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,323</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net realized/unrealized gains/(losses) included in other comprehensive income (loss)
</div></td>
<td> </td>
<td> </td>
<td align="right">1,298</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,298</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Purchases, issuances and settlements, net
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(13,857</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(13,857</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance as of June 30,
2009</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">83,311</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">83,311</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Gains and Losses on Sales and Changes in Carrying Values of Investments</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">“Other, net” income and expense included on our Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss) includes other changes in the carrying amount of our marketable and
non-marketable investments as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000"><b>For the Three Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000"><b>For the Six Months</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Other Income (Expense):</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Marketable investment securities — gains (losses) on sales/exchange
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(11,994</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">208</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(4,732</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">2,483</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Marketable investment securities — other-than-temporary impairments
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(12,903</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(12,903</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other investment securities — unrealized gains (losses) on fair value
investments and other-than-temporary impairments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(34,020</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(175</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(34,955</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,807</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">1,680</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,370</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(470</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,301</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Total</b>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(44,334</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(11,500</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(40,157</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(18,528</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 5 - us-gaap:InventoryDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>5. Inventories</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Inventories consist of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>As of</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Finished goods — DBS
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">166,840</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">238,343</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Raw materials
</div></td>
<td> </td>
<td> </td>
<td align="right">125,084</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">146,353</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Work-in-process — used
</div></td>
<td> </td>
<td> </td>
<td align="right">62,672</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">61,663</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Work-in-process — new
</div></td>
<td> </td>
<td> </td>
<td align="right">1,239</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,414</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Subtotal
</div></td>
<td> </td>
<td> </td>
<td align="right">355,835</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">448,773</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Inventory allowance
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(32,731</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(22,102</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Inventories, net
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">323,104</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">426,671</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 6 - dish:SatellitesTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>6. Satellites</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We currently utilize twelve satellites in geostationary orbit approximately 22,300 miles above the
equator, five of which are owned by us. Each of the owned satellites had an original estimated
minimum useful life of at least 12 years. We currently lease capacity on five satellites from
EchoStar with terms of up to two years and we account for these as operating leases. (See Note 12
for further discussion of our satellite leases with EchoStar.) We also lease two satellites from
third parties, which are accounted for as capital leases pursuant to Statement of Financial
Accounting Standards No. 13, “Accounting for Leases” (“SFAS 13”). The capital leases are
depreciated over the shorter of the economic life or the term of the satellite agreement.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Operation of our programming service requires that we have adequate satellite transmission capacity
for the programming we offer. Moreover, current competitive conditions require that we continue to
expand our offering of new programming, particularly by expanding local HD coverage and offering
more HD national channels. While we generally have had in-orbit satellite capacity sufficient to
transmit our existing channels and some backup capacity to recover the transmission of certain
critical programming, our backup capacity is limited.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In the event of a failure or loss of any of our satellites, we may need to acquire or lease
additional satellite capacity or relocate one of our other satellites and use it as a replacement
for the failed or lost satellite. Such a failure could result in a prolonged loss of critical
programming or a significant delay in our plans to expand programming as necessary to remain
competitive and thus may have a material adverse effect on our business, financial condition and
results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Prior to 2009, certain satellites in our fleet have experienced anomalies, some of which have had a
significant adverse impact on their remaining life or commercial operation. There can be no
assurance that future anomalies will not cause further losses, which could further impact the
remaining life or commercial operation of any of these satellites. See “<i>Long-Lived Satellite
Assets</i>” below for further discussion of evaluation of impairment. There can be no assurance that
we can recover critical transmission capacity in the event one or more of our in-orbit satellites
were to fail. We do not anticipate carrying insurance for any of the in-orbit satellites that we
own, and we will bear the risk associated with any in-orbit satellite failures. Recent
developments with respect to our satellites are discussed below.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Owned Satellites</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>EchoStar V. </i></b>EchoStar V was originally designed with a minimum 12-year design life. Momentum wheel
failures in prior years, together with relocation of the satellite between orbital locations,
resulted in increased fuel consumption, as disclosed in previous SEC filings. During 2005, as a
result of this increased fuel consumption, we reduced the
remaining estimated useful life of the satellite and as of October 2008, the satellite was fully
depreciated. In late July 2009, it was determined that the satellite had less fuel remaining than
previously estimated. The satellite was removed from the 148 degree orbital location and retired
from commercial service on August 3, 2009. The retirement of this satellite is not expected to
have a material impact on the DISH Network service.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the retirement of EchoStar V, we currently do not have any satellites positioned at
the 148 degree orbital location. While we are exploring alternatives for the continued use of this
orbital location, there can be no assurance that the FCC will determine that our future use of this
orbital location complies fully with all licensing requirements. If
the FCC decides to revoke this license, we may be required to write-off
its $68 million carrying value.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Leased Satellites</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>EchoStar XII. </i></b>Prior to 2009, EchoStar XII experienced anomalies resulting in the loss of
electrical power available from its solar arrays. During March and May 2009, EchoStar XII
experienced more of these anomalies, which further reduced the
electrical power available to operate
EchoStar XII. We currently operate EchoStar XII in full continental United States (“CONUS”)/spot
beam hybrid mode. If we continue to operate the satellite in this mode, as a result of this loss
of electrical power, we would be unable to use the full complement of its available transponders
for the 12-year design life of the satellite. However, since the number of useable transponders on
EchoStar XII depends on, among other things, whether EchoStar XII is operated in CONUS, spot beam,
or hybrid CONUS/spot beam mode, we are unable to determine at this time the actual number of
transponders that will be available at any given time or how many transponders can be used during
the remaining estimated life of the satellite.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Long-Lived Satellite Assets</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We account for impairments of long-lived satellite assets in accordance with the provisions of
Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets” (“SFAS 144”). SFAS 144 requires a long-lived asset or asset group to be tested
for recoverability whenever events or changes in circumstance indicate that its carrying amount may
not be recoverable. Based on the guidance under SFAS 144, we evaluate our satellite fleet for
recoverability as one asset group. While certain of the anomalies discussed above, and previously
disclosed, may be considered to represent a significant adverse change in the physical condition of
an individual satellite, based on the redundancy designed within each satellite and considering the
asset grouping, these anomalies (none of which caused a loss of service to subscribers for an
extended period) are not considered to be significant events that would require evaluation for
impairment recognition pursuant to the guidance under SFAS 144. Unless and until a specific
satellite is abandoned or otherwise determined to have no service potential, the net carrying
amount related to the satellite would not be written off.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 7 - us-gaap:LongTermDebtTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7. Long-Term Debt</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Fair Value of our Long-Term Debt</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the carrying value and fair values of our debt facilities as of June
30, 2009 and December 31, 2008:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>As of</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30, 2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>December 31, 2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Carrying</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Carrying</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">3% Convertible Subordinated Note due 2011
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">25,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">24,805</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">25,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23,768</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">6 3/8% Senior Notes due 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">1,000,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">975,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,000,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">899,000</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">7% Senior Notes due 2013
</div></td>
<td> </td>
<td> </td>
<td align="right">500,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">476,250</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">500,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">419,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">6 5/8% Senior Notes due 2014
</div></td>
<td> </td>
<td> </td>
<td align="right">1,000,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">922,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,000,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">840,300</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">7 3/4% Senior Notes due 2015
</div></td>
<td> </td>
<td> </td>
<td align="right">750,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">718,125</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">750,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">600,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">7 1/8% Senior Notes due 2016
</div></td>
<td> </td>
<td> </td>
<td align="right">1,500,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,403,445</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,500,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,246,890</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Mortgages and other notes payable
</div></td>
<td> </td>
<td> </td>
<td align="right">44,429</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">44,429</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">46,211</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">46,211</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Subtotal
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">4,819,429</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,564,554</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,821,211</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,075,169</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Capital lease obligations (1)
</div></td>
<td> </td>
<td> </td>
<td align="right">307,227</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">N/A</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">186,545</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">N/A</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total long-term debt (including current portion)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">5,126,656</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,564,554</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5,007,756</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,075,169</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(1)</td>
<td> </td>
<td>Pursuant to SFAS 107 “Disclosures about Fair Value of Financial Instruments,”
disclosure regarding fair value of capital leases is not required.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Capital Lease Obligations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Ciel II, a Canadian DBS satellite, was launched in December 2008 and commenced commercial operation
at the 129 degree orbital location in February 2009. We have leased 100% of the capacity on the
satellite for an initial term of ten years. Prior to the launch, we pre-paid $131 million to SES
Americom in connection with the lease agreement and we capitalized $16 million of interest related
to this satellite. In accordance with Statement of Financial Accounting Standards No.
13, “Accounting for Leases” (“SFAS 13”), we have accounted for this agreement as a capital lease
asset by recording $277 million as the estimated fair value of the satellite and recording a
capital lease obligation in the amount of $130 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, we had $500 million and $223 million, respectively,
capitalized for satellites acquired under capital leases included in “Property and equipment, net”
with related accumulated depreciation of $45 million and $26 million, respectively. This increase
during the six months ended June 30, 2009 related to the Ciel II satellite discussed above.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), we
recognized depreciation expense on satellites acquired under capital lease agreements as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Three Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Six Months</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Depreciation expense —
capital
leases
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">10,632</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,724</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">18,964</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,447</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Future minimum lease payments under our capital lease obligations, together with the present value
of the net minimum lease payments as of June 30, 2009, are as follows (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>For the Years Ended December 31,</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2009 (remaining six months)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">38,396</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2010
</div></td>
<td> </td>
<td> </td>
<td align="right">76,496</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">75,970</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">75,970</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">75,970</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">542,177</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total minimum lease payments
</div></td>
<td> </td>
<td> </td>
<td align="right">884,979</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Amount representing lease of the orbital location and estimated executory costs (primarily
insurance and maintenance) including profit thereon, included in total minimum lease payments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(408,474</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net minimum lease payments
</div></td>
<td> </td>
<td> </td>
<td align="right">476,505</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Amount representing interest
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(169,278</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Present value of net minimum lease payments
</div></td>
<td> </td>
<td> </td>
<td align="right">307,227</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Current portion
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(18,710</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-term portion of capital lease obligations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">288,517</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 8 - us-gaap:StockholdersEquityNoteDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>8. Stockholders’ Equity (Deficit)</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Common Stock Repurchase Program</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our board of directors previously authorized stock repurchases of up to $1.0 billion of our Class A
common stock. During the six months ended June 30, 2009, we repurchased 1.9 million shares of our
common stock for $19 million. As of June 30, 2009, we may repurchase up to $981 million under this
plan.
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 9 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>9. Stock-Based Compensation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Stock Incentive Plans</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Spin-off, as permitted by our existing stock incentive plans and consistent
with the Spin-off exchange ratio, each DISH Network stock option was converted into two stock
options as follows:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>an adjusted DISH Network stock option for the same number of shares that were
exercisable under the original DISH Network stock option, with an exercise price
equal to the exercise price of the original DISH Network stock option multiplied by
0.831219.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>a new EchoStar stock option for one-fifth of the number of shares that were
exercisable under the original DISH Network stock option, with an exercise price
equal to the exercise price of the original DISH Network stock option multiplied by
0.843907.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Similarly, each holder of DISH Network restricted stock units retained his or her DISH Network
restricted stock units and received one EchoStar restricted stock unit for every five DISH Network
restricted stock units that they held.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Consequently, the fair value of the DISH Network stock award and the new EchoStar stock award
immediately following the Spin-off was equivalent to the fair value of such stock award immediately
prior to the Spin-off.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We maintain stock incentive plans to attract and retain officers, directors and key employees.
Stock awards under these plans include both performance and non-performance based stock incentives.
As of June 30, 2009, we had
outstanding under these plans stock options to acquire 22.6 million shares of our Class A common
stock and 0.9 million restricted stock units. Stock options granted through June 30, 2009 were
granted with exercise prices equal to or greater than the market value of our Class A common stock
at the date of grant and with a maximum term of ten years. While historically we have issued stock
awards subject to vesting, typically at the rate of 20% per year,
some stock awards have been granted with immediate vesting and other stock awards vest only upon
the achievement of certain
company-wide objectives. As of June 30, 2009, we had 80.0 million shares of our Class A common
stock available for future grant under our stock incentive plans. The 2009 Stock Incentive Plan,
which was approved at the annual meeting of shareholders on May 11, 2009, allows us to grant new
stock awards following the expiration of our 1999 Stock Incentive Plan on April 16, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, the following stock awards were outstanding:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000"><b>As of June 30, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>DISH Network Awards</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>EchoStar Awards</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Restricted</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Restricted</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Stock</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Stock</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Stock</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Stock</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Stock Awards Outstanding</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Units</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Units</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Held by DISH Network employees
</div></td>
<td> </td>
<td> </td>
<td align="right">19,087,050</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">467,735</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,533,770</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">77,366</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Held by EchoStar employees
</div></td>
<td> </td>
<td> </td>
<td align="right">3,534,866</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">410,374</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">N/A</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">N/A</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td> </td>
<td align="right">22,621,916</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">878,109</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,533,770</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">77,366</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are responsible for fulfilling all stock awards related to DISH Network common stock and
EchoStar is responsible for fulfilling all stock awards related to EchoStar common stock,
regardless of whether such stock awards are held by our or EchoStar’s employees. Notwithstanding
the foregoing, based on the requirements of Statement of Financial Accounting Standards No. 123R,
“Share Based Payments” (“SFAS 123R”), our stock-based compensation expense, resulting from stock
awards outstanding at the Spin-off date, is based on the stock awards held by our employees
regardless of whether such stock awards were issued by DISH Network or EchoStar. Accordingly,
stock-based compensation that we expense with respect to EchoStar stock awards is included in
“Additional paid-in capital” on our Condensed Consolidated Balance Sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Stock Award Activity</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our stock option activity for the six months ended June 30, 2009 was as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>For the Six Months</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Ended June 30, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Weighted-</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Average</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total options outstanding, beginning of period
</div></td>
<td> </td>
<td> </td>
<td align="right">21,835,687</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">22.50</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">2,118,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13.55</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(130,287</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">6.05</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Forfeited and cancelled
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(1,201,984</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">23.76</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total options outstanding, end of period
</div></td>
<td> </td>
<td> </td>
<td align="right">22,621,916</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">21.69</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Performance based options outstanding, end of period (1)
</div></td>
<td> </td>
<td> </td>
<td align="right">10,299,750</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16.74</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercisable at end of period
</div></td>
<td> </td>
<td> </td>
<td align="right">7,422,672</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">29.22</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(1)</td>
<td> </td>
<td>These stock options, which are included in the caption “Total 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 company goals. See
discussion of the 2005 LTIP and 2008 LTIP below.</td>
</tr>
</table>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We realized tax benefits from stock awards exercised during the three and six months ended June 30,
2009 and 2008 as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Three Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Six Months</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax benefit from stock awards exercised
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">15</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,090</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,246</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Based on the closing market price of our Class A common stock on June 30, 2009, the aggregate
intrinsic value of our stock options was as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>As of June 30, 2009</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options Exercisable</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Aggregate intrinsic value
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">41,199</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,085</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our restricted stock unit activity for the six months ended June 30, 2009 was as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>For the Six Months</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Ended June 30, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Weighted-</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Restricted</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Average</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Stock</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Grant Date</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Units</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total restricted stock units outstanding, beginning of period
</div></td>
<td> </td>
<td> </td>
<td align="right">1,452,734</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">27.87</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">6,666</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11.11</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(20,000</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">25.07</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Forfeited and cancelled
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(561,291</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">30.58</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total restricted stock units outstanding, end of period
</div></td>
<td> </td>
<td> </td>
<td align="right">878,109</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26.09</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Restricted performance units outstanding, end of period (1)
</div></td>
<td> </td>
<td> </td>
<td align="right">602,734</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">24.08</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(1)</td>
<td> </td>
<td>These restricted performance units, which are included in the caption “Total restricted stock
units 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 company goals. See discussion of the 2005 LTIP and 2008
LTIP below.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Long-Term Performance-Based Plans</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>2005 LTIP. </i></b>In 2005, we adopted a long-term, performance-based stock incentive plan (the “2005
LTIP”) within the terms of our 1999 Stock Incentive Plan. The 2005 LTIP provides stock options and
restricted stock units, either alone or in combination, which vest over seven years at the rate of
10% per year during the first four years, and at
the rate of 20% per year thereafter. Exercise of the stock awards is subject to a performance
condition that a company-specific subscriber goal is achieved prior to March 31, 2015.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Contingent compensation related to the 2005 LTIP will not be recorded in our financial statements
unless and until management concludes achievement of the performance condition is probable. Given
the competitive nature of our business, small variations in subscriber churn, gross subscriber
addition rates and certain other factors can significantly impact subscriber growth. Consequently,
while it was determined that achievement of the goal was not probable as of June 30, 2009, that
assessment could change at any time.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with SFAS 123R, if all of the stock awards under the 2005 LTIP were vested and the
goal had been met or if we had determined that achievement of the goal was probable during the six
months ended June 30, 2009, we would have recorded total non-cash, stock-based compensation expense
for our employees as indicated in the table below. If the goal is met and there are unvested stock
awards at that time, the vested amounts would be expensed immediately on our Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss), with the unvested portion recognized
ratably over the remaining vesting period.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2005 LTIP</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Vested</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Portion</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">DISH Network awards held by DISH Network employees
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">43,650</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13,459</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">EchoStar awards held by DISH Network employees
</div></td>
<td> </td>
<td> </td>
<td align="right">8,863</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,733</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">52,513</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">16,192</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>2008 LTIP. </i></b>In December 2008, we adopted a long-term, performance-based stock incentive plan (the
“2008 LTIP”) within the terms of our 1999 Stock Incentive Plan. Since our 1999 Stock Incentive
Plan has expired, stock awards issued under our 2008 LTIP after March 31, 2009 will be granted
within the terms of the 2009 Stock Incentive Plan. The 2008 LTIP provides stock options and
restricted stock units, either alone or in combination, which vest based on company-specific
subscriber and financial metrics. Exercise of the stock awards is contingent on achieving these
goals prior to December 31, 2015.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with SFAS 123R, management has determined it is probable that a portion of the 2008
LTIP stock awards will vest and as a result, we have recorded non-cash, stock-based compensation
expense for the six months ended June 30, 2009 as indicated in the table below. Additional
compensation related to the 2008 LTIP will be recorded based on management’s assessment of the
probability of meeting the remaining performance conditions. If the remaining goals are achieved
and the remaining 2008 LTIP stock awards vest, we will recognize the additional non-cash,
stock-based compensation expense on our Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss) over the term of this stock incentive plan as follows.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Non-Cash</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Stock-Based</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Compensation</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>2008 LTIP</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Expense</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td align="center" colspan="2">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total expense
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">27,458</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Expense recognized during the six months ended June 30, 2009
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,357</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Remaining expense expected to be recognized during 2009
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,389</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Remaining expense over the term of the plan
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">24,712</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Of the 22.6 million stock options and 0.9 million restricted stock units outstanding under our
stock incentive plans as of June 30, 2009, the following awards were outstanding pursuant to the
2005 LTIP and the 2008 LTIP:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>As of June 30, 2009</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Weighted-</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Average</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Number of</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Exercise</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Awards</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Price</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Stock Options</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2005 LTIP
</div></td>
<td> </td>
<td> </td>
<td align="right">3,979,250</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">25.22</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2008 LTIP
</div></td>
<td> </td>
<td> </td>
<td align="right">6,320,500</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">11.41</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td> </td>
<td align="right">10,299,750</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">16.74</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Restricted Performance Units</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2005 LTIP
</div></td>
<td> </td>
<td> </td>
<td align="right">521,912</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2008 LTIP
</div></td>
<td> </td>
<td> </td>
<td align="right">80,822</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td> </td>
<td align="right">602,734</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Stock-Based Compensation</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Total non-cash, stock-based compensation expense for all of our employees is shown in the following
table for the three and six months ended June 30, 2009 and 2008 and was allocated to the same
expense categories as the base compensation for such employees:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Three Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Six Months</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Subscriber-related
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">247</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">189</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">506</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">460</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">General and administrative
</div></td>
<td> </td>
<td> </td>
<td align="right">3,819</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,053</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,769</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,341</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total non-cash, stock-based compensation
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">4,066</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,242</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,275</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,801</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, our total unrecognized compensation cost related to our non-performance based
unvested stock awards was $29 million and includes compensation expense that we will recognize for
EchoStar stock awards held by our employees as a result of the Spin-off. This cost is based on an
estimated future forfeiture rate of approximately 4.2% per year and will be recognized over a
weighted-average period of approximately three years. Share-based compensation expense is
recognized based on stock awards ultimately expected to vest and is reduced for estimated
forfeitures. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates. Changes in the
estimated forfeiture rate can have a significant effect on share-based compensation expense since
the effect of adjusting the rate is recognized in the period the forfeiture estimate is changed.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of each stock award for the three and six months ended June 30, 2009 and 2008 was
estimated at the date of the grant using a Black-Scholes option pricing model with the following
assumptions:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>For the Three Months</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>For the Six Months</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Stock Options</b><b></b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk-free interest rate
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">2.86% - 3.19</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">3.42</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">1.97% - 3.19</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">2.74% - 3.42</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Volatility factor
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">31.78% - 33.59</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">21.86</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">29.72% - 33.59</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">19.98% - 21.86</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected term of options in years
</div></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">6.1 - 7.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6.0 </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">6.0 - 7.3</td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">6.0 - 6.1</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted-average fair value of options granted
</div></td>
<td> </td>
<td align="right"> </td>
<td nowrap="nowrap" align="right">$6.19 - $6.53</td>
<td> </td>
<td> </td>
<td align="right"> </td>
<td align="right">$8.72 </td>
<td> </td>
<td> </td>
<td align="right"> </td>
<td nowrap="nowrap" align="right">$3.86 - $6.53</td>
<td> </td>
<td> </td>
<td align="right"> </td>
<td nowrap="nowrap" align="right">$7.64 - $8.72</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We do not currently plan to pay additional dividends on our common stock, and therefore the
dividend yield percentage is set at zero for all periods presented. The Black-Scholes option
valuation model was developed for use in estimating the fair value of traded stock options which
have no vesting restrictions and are fully transferable. Consequently, our estimate of fair value
may differ from other valuation models. Further, the Black-Scholes model requires the input of
highly subjective assumptions. Changes in the subjective input assumptions can materially affect
the fair value estimate. Therefore, we do not believe the existing models provide as reliable a
single measure of the fair value of stock-based compensation awards as a market-based model would.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We will continue to evaluate the assumptions used to derive the estimated fair value of our stock
options as new events or changes in circumstances become known.
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 10 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>10. Commitments and Contingencies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Commitments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have not yet procured a contract for the launch of our EchoStar XV satellite. While the cost of this launch will depend upon the terms and conditions of the contract, we estimate that the cost could range from approximately $90 million to $120 million. We anticipate incurring this cost between the current period and the expected launch of the satellite in late 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Guarantees</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar. We
remain the guarantor under those capital leases for payments totaling approximately $465 million
over the next eight years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, during the first quarter of 2008, EchoStar entered into a satellite transponder
service agreement for Nimiq 5 for a total of $535 million in payments through 2024. We sublease
this capacity from EchoStar and have also guaranteed its obligation under this agreement. As of
June 30, 2009, the remaining obligation under this agreement was $532 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, we have not recorded a liability on the balance sheet for any of these
guarantees.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Contingencies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Spin-off, we entered into a separation agreement with EchoStar, which provides among other things for the division of certain liabilities, including liabilities resulting from litigation. Under the terms of the separation agreement, EchoStar has assumed certain liabilities that relate to its business including certain designated liabilities for acts or omissions prior to the Spin-off. Certain specific
provisions govern intellectual property related claims under which, generally, EchoStar will only be liable for its acts or omissions following the Spin-off and we will indemnify EchoStar for any liabilities or damages resulting from intellectual property claims relating to the period prior to the Spin-off as well as our acts or omissions following the Spin-off.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Acacia</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2004, Acacia Media Technologies (“Acacia”) filed a lawsuit against us and EchoStar in the
United States District Court for the Northern District of California. The suit also named DirecTV,
Comcast, Charter, Cox and a number of smaller cable companies as defendants. Acacia is an entity
that seeks to license an acquired patent portfolio without itself practicing any of the claims
recited therein. The suit alleges infringement of United States Patent Nos. 5,132,992, 5,253,275,
5,550,863, 6,002,720 and 6,144,702, which relate to certain systems and methods for transmission of
digital data. In March 2008, the Court issued an order outlining a schedule for filing dispositive
invalidity motions based on its claim constructions. Acacia has agreed to stipulate to invalidity
based on the Court’s claim constructions in order to proceed immediately to the Federal Circuit on
appeal. The Court, however, has permitted us to file additional invalidity motions, which we have
done. The Court has not yet ruled on those motions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that we
infringe any of the patents, we may be subject to substantial damages, which may include treble
damages, and/or an injunction that could require us to materially modify certain user-friendly
features that we currently offer to consumers. We cannot predict with any degree of certainty the
outcome of the suit or determine the extent of any potential liability or damages.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Broadcast Innovation, L.L.C.</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2001, Broadcast Innovation, L.L.C. (“Broadcast Innovation”) filed a lawsuit against us,
EchoStar, DirecTV, Thomson Consumer Electronics and others in United States District Court in
Denver, Colorado. The suit alleges infringement of United States Patent Nos. 6,076,094 (the ‘094
patent) and 4,992,066 (the ‘066 patent). The ‘094 patent relates to certain methods and devices
for transmitting and receiving data along with specific formatting information for the data. The
‘066 patent relates to certain methods and devices for providing the scrambling circuitry for a pay
television system on removable cards. Subsequently, DirecTV and Thomson settled with Broadcast
Innovation leaving us as the only defendant.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2004, the judge issued an order finding the ‘066 patent invalid. Also in 2004, the Court
found the ‘094 patent invalid in a parallel case filed by Broadcast Innovation against Charter and
Comcast. In 2005, the United States Court of Appeals for the Federal Circuit overturned the ‘094
patent finding of invalidity and remanded the Charter case back to the District Court. During June
2006, Charter filed a reexamination request with the United States Patent and Trademark Office.
The Court has stayed the Charter case pending reexamination, and our case has been stayed pending
resolution of the Charter case.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that we
infringe any of the patents, we may be subject to substantial damages, which may include treble
damages, and/or an injunction that could require us to materially modify certain user-friendly
features that we currently offer to consumers. We cannot predict with any degree of certainty the
outcome of the suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Channel Bundling Class Action</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On September 21, 2007, a purported class of cable and satellite subscribers filed an antitrust
action against us in the United States District Court for the Central District of California. The
suit also names as defendants DirecTV, Comcast, Cablevision, Cox, Charter, Time Warner, Inc., Time
Warner Cable, NBC Universal, Viacom, Fox Entertainment Group, and Walt Disney Company. The suit
alleges, among other things, that the defendants engaged in a conspiracy to provide customers with
access only to bundled channel offerings as opposed to giving customers the ability to purchase
channels on an “a la carte” basis. We filed a motion to dismiss, which the Court denied in July
2008. We intend to vigorously defend this case. We cannot predict with any degree of certainty
the outcome of the suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Enron Commercial Paper Investment</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During October 2001, we received approximately $40 million from the sale of Enron commercial paper
to a third party broker. That commercial paper was ultimately purchased by Enron. During November
2003, an action was commenced in the United States Bankruptcy Court for the Southern District of
New York against approximately 100 defendants, including us, who invested in Enron’s commercial
paper. On April 7, 2009, we settled the litigation for an immaterial amount.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>ESPN</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On January 30, 2008, we filed a lawsuit against ESPN, Inc., ESPN Classic, Inc., ABC Cable
Networks Group, Soapnet L.L.C., and International Family Entertainment (collectively “ESPN”) for
breach of contract in New York State Supreme Court. Our complaint alleges that ESPN failed to
provide us with certain high-definition feeds of the Disney Channel, ESPN News, Toon, and ABC
Family. ESPN asserted a counterclaim, and then filed a motion for summary judgment, alleging that
we owed approximately $35 million under the applicable affiliation agreements. We brought a motion
to amend our complaint to assert that ESPN was in breach of
certain most-favored-nation provisions under the affiliation agreements. On April 15, 2009, the
trial court granted our motion to amend the
complaint, and granted, in part, ESPN’s motion on the counterclaim, finding that we are liable for
some of the amount alleged to be owing but that the actual amount owing is disputed and will have
to be determined at a later date. We will appeal the
partial grant of ESPN’s motion. Since the partial grant of ESPN’s motion, they have amended their
counterclaim to seek an additional $20 million under the
applicable affiliation agreements. We intend to vigorously prosecute and
defend this case. We cannot predict with any degree of certainty the outcome of the suit or
determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Finisar Corporation</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Finisar Corporation (“Finisar”) obtained a $100 million verdict in the United States District Court
for the Eastern District of Texas against DirecTV for patent infringement. Finisar alleged that
DirecTV’s electronic program guide and other elements of its system infringe United States Patent
No. 5,404,505 (the ‘505 patent).
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2006, we and EchoStar, together with NagraStar LLC, filed a Complaint for Declaratory
Judgment in the United States District Court for the District of Delaware against Finisar that asks
the Court to declare that we do not infringe, and have not infringed, any valid claim of the ‘505
patent. During April 2008, the Federal Circuit reversed the judgment against DirecTV and ordered a
new trial. Our case is stayed until the DirecTV action is resolved.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously prosecute this case. In the event that a Court ultimately determines that
we infringe this patent, we may be subject to substantial damages, which may include treble
damages, and/or an injunction that could require us to modify our system architecture. We cannot
predict with any degree of certainty the outcome of the suit or determine the extent of any
potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Global Communications</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During April 2007, Global Communications, Inc. (“Global”) filed a patent infringement action
against us and EchoStar in the United States District Court for the Eastern District of Texas. The
suit alleges infringement of United States Patent No. 6,947,702 (the ‘702 patent), which relates to
satellite reception. In October 2007, the United States Patent and Trademark Office granted our
request for reexamination of the ‘702 patent and issued an Office Action finding that all of the
claims of the ‘702 patent were invalid. At the request of the parties, the District Court stayed
the litigation until the reexamination proceeding is concluded and/or other Global patent
applications issue.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During June 2009, Global filed a patent infringement action against us and EchoStar in the United
States District Court for the Northern District of Florida. The suit alleges infringement of
United States Patent No. 7,542,717 (the ‘717 patent), which relates to satellite reception.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend these cases. In the event that a Court ultimately determines that
we infringe the ‘702 patent and/or the ‘717 patent, we may be subject to substantial damages, which
may include treble damages, and/or an injunction that could require us to materially modify certain
user-friendly features that we currently offer to consumers. We cannot predict with any degree of
certainty the outcome of the suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Guardian Media</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During December 2008, Guardian Media Technologies LTD (“Guardian”) filed suit against us, EchoStar,
EchoStar Technologies L.L.C., DirecTV and several other defendants in the United States District
Court for the Central
District of California alleging infringement of United States Patent Nos. 4,930,158 and 4,930,160.
Both patents are expired and relate to certain parental lock features.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that we
infringe any of the asserted patents, we may be subject to substantial damages, which may include
treble damages. We cannot predict with any degree of certainty the outcome of the suit or
determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Katz Communications</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During June 2007, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a patent infringement
action against us in the United States District Court for the Northern District of California. The
suit alleges infringement of 19 patents owned by Katz. The patents relate to interactive voice
response, or IVR, technology.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that we
infringe any of the asserted patents, we may be subject to substantial damages, which may include
treble damages and/or an injunction that could require us to materially modify certain
user-friendly features that we currently offer to consumers. We cannot predict with any degree of
certainty the outcome of the suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Multimedia Patent Trust</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On February 13, 2009, Multimedia Patent Trust (“MPT”) filed suit against us, EchoStar, DirecTV and
several other defendants in the United States District Court for the Southern District of
California alleging infringement of United States Patent Nos. 4,958,226, 5,227,878, 5,136,377,
5,500,678 and 5,563,593, which relate to video encoding, decoding and compression technology. MPT
is an entity that seeks to license an acquired patent portfolio without itself practicing any of
the claims recited therein.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that
we infringe any of the asserted patents, we may be subject to substantial damages, which may
include treble damages, and/or an injunction that could require us to materially modify certain
user-friendly features that we currently offer to consumers. We cannot predict with any degree
of certainty the outcome of the suit or determine the extent of any potential liability or
damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>NorthPoint Technology</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On July 2, 2009, NorthPoint Technology, Ltd (“Northpoint”) filed suit against us, EchoStar, and
DirecTV in the United States District Court for the Western District of Texas alleging infringement
of United States Patent No. 6,208,636 (“the ‘636 patent”). The ‘636 patent relates to the use of
multiple low-noise block converter feedhorns, or LNBFs, which are antennas used for satellite
reception.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that we
infringe any of the asserted patents, we may be subject to substantial damages, which may include
treble damages, and/or an injunction that could require us to materially modify certain features
that we currently offer to consumers. We cannot predict with any degree of certainty the outcome
of the suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Personalized Media Communications</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In February 2008, Personalized Media Communications, Inc. filed suit against us, EchoStar and
Motorola, Inc. in the United States District Court for the Eastern District of Texas alleging
infringement of United States Patent Nos. 4,694,490, 5,109,414, 4,965,825, 5,233,654, 5,335,277,
and 5,887,243, which relate to satellite signal processing.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that we
infringe any of the asserted patents, we may be subject to substantial damages, which may include
treble damages, and/or an injunction that could require us to materially modify certain
user-friendly features that we currently offer to consumers. We
cannot predict with any degree of
certainty the outcome of the suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Retailer Class Actions</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2000, lawsuits were filed by retailers in Colorado state and federal courts attempting to
certify nationwide classes on behalf of certain of our retailers. The plaintiffs are requesting
the Courts declare certain provisions of, and changes to, alleged agreements between us and the
retailers invalid and unenforceable, and to award damages for lost incentives and payments, charge
backs, and other compensation. We have asserted a variety of counterclaims. The federal court
action has been stayed during the pendency of the state court action. We filed a motion for
summary judgment on all counts and against all plaintiffs. The plaintiffs filed a motion for
additional time to conduct discovery to enable them to respond to our motion. The state court
granted limited discovery which ended during 2004. The plaintiffs claimed we did not provide
adequate disclosure during the discovery process. The state court agreed, and denied our motion
for summary judgment as a result. In April 2008, the state court granted plaintiff’s class
certification motion and in January 2009, the state court entered an order excluding certain
evidence that we can present at trial based on the prior discovery issues. The state court also
denied plaintiffs’ request to dismiss our counterclaims. The final impact of the court’s
evidentiary ruling cannot be fully assessed at this time. In May 2009, plaintiffs filed a motion
for default judgment based on new allegations of discovery misconduct. We intend to vigorously
defend this case. We cannot predict with any degree of certainty the outcome of the lawsuit or
determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Technology Development Licensing</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On January 22, 2009, Technology Development and Licensing LLC (“TechDev”) filed suit against us and
EchoStar in the United States District Court for the Northern District of Illinois alleging
infringement of United States Patent No. 35, 952, which relates to certain favorite channel
features. In July 2009, the Court granted our motion to stay the case pending two re-examination
petitions before the Patent and Trademark Office.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We intend to vigorously defend this case. In the event that a Court ultimately determines that we
infringe any of the asserted patents, we may be subject to substantial damages, which may include
treble damages, and/or an injunction that could require us to materially modify certain
user-friendly features that we currently offer to consumers. We cannot predict with any degree of
certainty the outcome of the suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Tivo Inc.</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During January 2008, the U.S. Court of Appeals for the Federal Circuit affirmed in part and
reversed in part the April 2006 jury verdict concluding that certain of our digital video
recorders, or DVRs, infringed a patent held by Tivo. In accordance with Statement of Financial
Accounting Standards No. 5, “Accounting for Contingencies” (“SFAS 5”), we previously recorded a
total reserve of $132 million on our Condensed Consolidated Balance Sheets to reflect the April
2006 jury verdict, supplemental damages through September 2006 and pre-judgment interest awarded by
the Texas court, together with the estimated cost of potential further software infringement prior to implementation
of our alternative technology, discussed below, plus interest subsequent to entry of the judgment.
In its January 2008 decision, the Federal Circuit affirmed the jury’s verdict of infringement on
Tivo’s “software claims,” and upheld the award of damages from the District Court. The Federal Circuit, however, found that we did not literally
infringe Tivo’s “hardware claims,” and remanded such claims back to the District Court for further
proceedings. On October 6, 2008, the Supreme Court denied our petition for certiorari. As a
result, approximately $105 million of the total $132 million reserve was released from an escrow
account to Tivo.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We also
developed and deployed “next-generation” DVR software. This
improved software was automatically downloaded to our current
customers’ DVRs, and is fully operational (our “original
alternative technology”). The download was completed as of
April 2007. We received
written legal opinions from outside counsel that concluded our original alternative technology
does not infringe, literally or under the doctrine of equivalents, either the hardware or software
claims of Tivo’s patent. Tivo filed a motion for contempt alleging that we are in violation of the
Court’s injunction. We opposed this motion on the grounds that the injunction did not apply to
DVRs that have received our original alternative technology, that our original alternative
technology does not infringe Tivo’s patent, and that we were in compliance with the injunction.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On June 2, 2009, the District Court granted Tivo’s contempt motion, finding that our original
alternative technology was not more than colorably different than the products found by the jury to
infringe Tivo’s patent, that the original alternative technology still infringed the software
claims, and that even if the original alternative technology was “non-infringing,” the original
injunction by its terms required that we disable DVR functionality in all but approximately 192,000
digital set-top boxes in the field. The District Court awarded Tivo $103 million in supplemental
damages and interest for the period from September 2006 to April 2008, based on an assumed $1.25
per subscriber per month royalty rate. We posted a bond to secure that award pending appeal of the
contempt order. In accordance with SFAS 5, during the three months ended June 30, 2009, we
increased the total reserve on our Condensed Statement of Operations and Comprehensive Income
(Loss) by $196 million to reflect the supplemental damages and interest for the period from implementation of our original alternative technology through April 2008 and for the estimated cost
of alleged software infringement for the period from April 2008 through June 2009 plus interest.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On July 1, 2009, the Federal Circuit Court of Appeals granted a permanent stay of the District
Court’s contempt order pending resolution of our appeal. In so doing, the Federal Circuit found,
at a minimum, that we had a substantial case on the merits. The Federal Circuit set an expedited
briefing schedule for the appeal with oral argument possible as early
as November 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The
District Court held a hearing on July 28, 2009 on Tivo’s claims for contempt sanctions,
but has ordered that enforcement of any sanctions award will be stayed pending our appeal of the
contempt order. Tivo is seeking up to $975 million in contempt sanctions for the period from April
2008 to June 2009 based on, among other things, profits Tivo alleges we made from subscribers using
DVRs. We opposed Tivo’s request arguing, among other things, that sanctions are inappropriate
because we made good faith efforts to comply with the Court’s
injunction. We also challenged Tivo’s
calculation of profits.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On August 3, 2009, the Patent and Trademark Office (the “PTO”) issued an initial office action
rejecting the software claims of the ‘389 patent as being invalid in light of two prior patents.
These are the same software claims that we were found to have
infringed and which underlie the contempt ruling now pending on
appeal. We believe that the PTO’s conclusions are relevant to the issues on appeal as well as the
pending sanctions proceedings in the District Court. The PTO’s conclusions
support our position that our original alternative technology is more than colorably different than
the devices found to infringe by the jury; that our original alternative technology does not
infringe; and that we acted in good faith to design around Tivo’s patent.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In light of the District Court’s finding of
contempt, and its description of the manner in which it believes our
original alternative technology infringed the ‘389 patent, we are also developing and testing potential new alternative technology in an
engineering environment.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">If we are unsuccessful in overturning the District Court’s ruling on Tivo’s motion for contempt, we
are not successful in developing and deploying potential new alternative technology and we are
unable to reach a license agreement with Tivo on reasonable terms, we would be required to
eliminate DVR functionality in all but approximately 192,000 digital set-top boxes in the field and
cease distribution of digital set-top boxes with DVR functionality. In that event we would be at a
significant disadvantage to our competitors who could continue offering DVR functionality, which
would likely result in a significant decrease in new subscriber additions as well as a substantial
loss of current subscribers. Furthermore, the inability to offer DVR functionality could cause
certain of our distribution channels to terminate or significantly decrease their marketing of DISH
Network services. The adverse effect on our financial position and results of operations if the
District Court’s contempt order is upheld is likely to be significant. Additionally, the
supplemental damage award of $103 million does not include damages for the period after April 2008
or sanctions for contempt. In the event that we are unsuccessful in our appeal, we could also have
to pay substantial additional damages and contempt sanctions. Depending on the amount of any
additional damage or sanction award or any monetary settlement, we may be required to raise
additional capital at a time and in circumstances in which we would normally not raise capital.
Therefore, any capital we raise may be on terms that are unfavorable to us, which might adversely
affect our financial position and results of operations and might also impair our ability to raise
capital on acceptable terms in the future to fund our own operations and initiatives. We believe
the cost of such capital and its terms and conditions may be substantially less attractive than our
previous financings.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">If we are successful in overturning the District Court’s ruling on Tivo’s motion for contempt, but
unsuccessful in defending against any subsequent claim in a new action that our original
alternative technology or any potential new alternative technology infringes Tivo’s patent, we
could be prohibited from distributing DVRs or could be required to modify or eliminate our
then-current DVR functionality in some or all set-top boxes in the field. In that event we would
be at a significant disadvantage to our competitors who could continue offering DVR functionality
and the adverse effect on our business could be material. We could also have to pay substantial
additional damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Because both we and EchoStar are defendants in the Tivo lawsuit, we and EchoStar are jointly and
severally liable to Tivo for any final damages and sanctions that may be awarded by the Court. We
have determined that we are obligated under the agreements entered into in connection with the
Spin-off to indemnify EchoStar for substantially all liability arising from this lawsuit. EchoStar
has agreed to contribute an amount equal to its $5 million intellectual property liability limit
under the Receiver Agreement. We and EchoStar have further agreed that EchoStar’s $5 million
contribution would not exhaust EchoStar’s liability to us for other intellectual property claims
that may arise under the Receiver Agreement. We and EchoStar also agreed that we would each be
entitled to joint ownership of, and a cross-license to use, any intellectual property developed in
connection with any potential new alternative technology.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Voom</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On May 28, 2008, Voom HD Holdings (“Voom”) filed a complaint against us in New York Supreme Court.
The suit alleges breach of contract arising from our termination of the affiliation agreement we
had with Voom for the carriage of certain Voom HD channels on the DISH Network satellite television
service. In January 2008, Voom sought a preliminary injunction to prevent us from terminating the
agreement. The Court denied Voom’s motion, finding, among other things, that Voom was not likely
to prevail on the merits of its case. Voom is claiming over $1.0 billion in damages. We intend to
vigorously defend this case. We cannot predict with any degree of certainty the outcome of the
suit or determine the extent of any potential liability or damages.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In addition to the above actions, we are subject to various other legal proceedings and claims
which arise in the ordinary course of business, including among other things, disputes with
programmers regarding fees. In our opinion, the amount of ultimate liability with respect to any
of these actions is unlikely to materially affect our financial position, results of operations
or liquidity.
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 11 - dish:DepreciationAndAmortizationExpenseTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11. Depreciation and Amortization Expense</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Depreciation and amortization expense consists of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Three Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Six Months</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14">(In thousands)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Equipment leased to customers
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">207,382</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">209,761</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">399,950</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">422,039</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Satellites
</div></td>
<td> </td>
<td> </td>
<td align="right">22,181</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,564</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">42,064</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">50,015</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Furniture, fixtures, equipment and other
</div></td>
<td> </td>
<td> </td>
<td align="right">14,205</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13,620</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,503</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">41,857</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Identifiable intangible assets subject to amortization
</div></td>
<td> </td>
<td> </td>
<td align="right">291</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">97</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">581</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,428</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Buildings and improvements
</div></td>
<td> </td>
<td> </td>
<td align="right">1,241</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,205</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,495</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,275</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total depreciation and amortization
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">245,300</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">248,247</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">468,593</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">520,614</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Cost of sales and operating expense categories included in our accompanying Condensed
Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation
expense related to satellites or equipment leased to customers.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 12 - us-gaap:RelatedPartyTransactionsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>12. Related Party Transactions with EchoStar</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Following the Spin-off, EchoStar has operated as a separate public company and we have no continued
ownership interest in EchoStar. However, a substantial majority of the voting power of the shares
of both companies is owned beneficially by our Chairman, President and Chief Executive Officer,
Charles W. Ergen.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">EchoStar is our primary supplier of set-top boxes and digital broadcast operations and our key
supplier of transponder leasing. Generally the prices charged for products and services provided
under the agreements entered into in connection with the Spin-off are based on pricing equal to
EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on
the nature of the products and services provided. Prior to the Spin-off, these products were
provided and services were performed internally at cost.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Spin-off, we and EchoStar also entered into certain transitional services
agreements pursuant to which we obtain certain services and rights from EchoStar, EchoStar obtains
certain services and rights from us, and we and EchoStar have indemnified each other against
certain liabilities arising from our respective businesses. Subsequent to the Spin-off, we also
entered into certain agreements with EchoStar and may enter into additional agreements with
EchoStar in the future. The following is a summary of the terms of the principal agreements that
we have entered into with EchoStar that may have an impact on our results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>“Equipment sales — EchoStar”</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Remanufactured Receiver Agreement. </i>We entered into a remanufactured receiver agreement with
EchoStar under which EchoStar has the right to purchase remanufactured receivers and accessories
from us for a two-year period ending, January 1, 2010. In August
2009, we and EchoStar agreed to extend this agreement through January 1, 2011. Under the remanufactured receiver
agreement, EchoStar has the right, but not the obligation, to purchase remanufactured receivers and
accessories from us at cost plus a fixed margin, which varies depending on the nature of the
equipment purchased. EchoStar may terminate the remanufactured receiver agreement for any reason
upon sixty days written notice to us. We may also terminate this agreement if certain entities
acquire us.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>“Transitional services and other revenue — EchoStar”</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Transition Services Agreement. </i>We entered into a transition services agreement with EchoStar
pursuant to which EchoStar has the right, but not the obligation, to receive the following services
from us: finance, information technology, benefits administration, travel and event coordination,
human resources, human resources development (training), program management, internal audit, legal,
accounting and tax, and other support services. The fees for the services provided under the
transition services agreement are cost plus a fixed margin, which varies depending on the nature of
the services provided. The transition services agreement has a term of two years ending on January
1, 2010. EchoStar may terminate the transition services agreement with respect to a particular
service for any reason upon thirty days prior written notice. We and
EchoStar have agreed that following January 1, 2010 EchoStar will continue to have the right, but not the
obligation, to receive from us certain of the services previously provided under the transition services
agreement for a one-year period and for successive one-year
periods thereafter; however, EchoStar may terminate these services upon sixty days prior written notice.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Management Services Agreement. </i>We entered into a management services agreement with EchoStar
pursuant to which we make certain of our officers available to provide services (which are
primarily legal and accounting services) to EchoStar. Specifically, Bernard L. Han, R. Stanton
Dodge and Paul W. Orban remain employed by us, but also serve as EchoStar’s Executive Vice
President and Chief Financial Officer, Executive Vice President and General Counsel, and Senior
Vice President and Controller, respectively. EchoStar makes payments to us based
upon an allocable portion of the personnel costs and expenses incurred by us with respect to such
officers (taking into account wages and fringe benefits). These allocations are based upon the
estimated percentages of time to be spent by our executive officers performing services for
EchoStar under the management services agreement. EchoStar also reimburses us for direct
out-of-pocket costs incurred by us for management services provided to EchoStar. We and EchoStar
evaluate all charges for reasonableness at least annually and make any adjustments to these charges
as we and EchoStar mutually agree upon.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The management services agreement is for a one year period commencing on January 1, 2008, and will
be renewed automatically for successive one-year periods thereafter, unless terminated earlier (i)
by EchoStar at any time upon at least 30 days’ prior written notice, (ii) by us at the end of any
renewal term, upon at least 180 days’ prior notice; or (iii) by us upon written notice to EchoStar,
following certain changes in control.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Real Estate Lease Agreement</i>. During 2008, we subleased space at 185 Varick Street, New York, New
York to EchoStar for a period of approximately seven years. The rent on a per square foot basis
for this sublease was comparable to per square foot rental rates of similar commercial property in
the same geographic area at the time of the sublease, and EchoStar is responsible for its portion
of the taxes, insurance, utilities and maintenance of the premises.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Packout Services Agreement. </i>We entered into a packout services agreement with EchoStar, whereby
EchoStar has the right, but not the obligation, to engage us to package and ship satellite
receivers to customers that are not associated with us. The fees charged by us for the services
provided under the packout services agreement are equal to our cost plus a fixed margin, which
varies depending on the nature of the products and services provided. The original one year term
of the packout services agreement was extended for an additional one year term and expires on
December 31, 2009. EchoStar may terminate this agreement for any reason upon sixty days’ prior
written notice to us. In the event of an early termination of this agreement, EchoStar will be
entitled to a refund of any unearned fees paid to us for the services.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>“Satellite
and transmission expenses — EchoStar”</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Broadcast Agreement. </i>We entered into a broadcast agreement pursuant to which EchoStar provides us
broadcast services, including teleport services such as transmission and downlinking, channel
origination, and channel management services for a two year period ending on January 1, 2010. We
have the right, but not the obligation, to extend the broadcast agreement annually for up to two
years. We have exercised our right to renew this agreement for an additional year. We may
terminate channel origination services and channel management services for any reason and without
any liability upon sixty days written notice to EchoStar. If we terminate teleport services for a
reason other than EchoStar’s breach, we must pay EchoStar the aggregate amount of the remainder of
the expected cost of providing the teleport services.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Satellite Capacity Agreements. </i>We entered into satellite capacity agreements pursuant to which we
lease satellite capacity on satellites owned or leased by EchoStar. The fees for the services to
be provided under the satellite capacity agreements are based on spot market prices for similar
satellite capacity and depend, among other things, upon the orbital location of the satellite and
the frequency on which the satellite provides services. Generally, each satellite capacity
agreement will terminate upon the earlier of: (i) the end of life or replacement of the satellite;
(ii) the date the satellite fails; (iii) the date that the transponder on which service is being
provided under the agreement fails; or (iv) January 1, 2010. We expect to enter into agreements
pursuant to which we will continue to lease satellite capacity on certain satellites owned
or leased by EchoStar after January 1, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Nimiq 5 Lease Agreement. </i>During March 2008, EchoStar entered into a fifteen-year satellite service
agreement with Bell TV, to receive service on 16 DBS transponders on the Nimiq 5 satellite at the
72.7 degree orbital location. The Nimiq 5 satellite is expected to be launched in the second half
of 2009. Bell TV currently has the right to receive service on the entire communications capacity
of the Nimiq 5 satellite pursuant to an agreement with Telesat Canada. During March 2008, EchoStar
also entered into a transponder service agreement (“Nimiq 5 Transponder Agreement”) with us,
pursuant to which we will receive service from EchoStar on all of the DBS transponders covered by
EchoStar’s satellite service agreement with Bell TV. We have guaranteed certain obligations of
EchoStar under the Nimiq 5 Transponder Agreement. See discussions under “Guarantees” in Note 10.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Under the terms of the Nimiq 5 Transponder Agreement, we will make certain monthly payments to
EchoStar commencing when the Nimiq 5 satellite is placed into service and continuing through the
service term. Unless earlier terminated under the terms and conditions of the Nimiq 5 Transponder
Agreement, the service term will expire ten years following the date it is placed in service. Upon
expiration of the initial term we have the option to renew the Nimiq 5 Transponder Agreement on a
year-to-year basis through the end-of-life of the Nimiq 5 satellite.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Upon a launch failure,
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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>QuetzSat-1 Lease Agreement. </i>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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>TT&C Agreement. </i>We entered into a telemetry, tracking and control (“TT&C”) agreement pursuant to
which we receive TT&C services from EchoStar for a two year period ending on January 1, 2010. DISH
Network has the right, but not the obligation, to extend the agreement annually for up to two
years. We have exercised our right to renew this agreement for an 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.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Satellite Procurement Agreement. </i>We entered into a satellite procurement agreement pursuant to
which we have 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 has a two
year term expiring on January 1, 2010. The fees for
the services to be provided under the satellite procurement agreement are cost plus a fixed margin,
which varies depending on the nature of the services provided. We may terminate the satellite
procurement agreement for any reason upon sixty days prior written
notice. We and EchoStar have 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 for a one-year period and for
successive one-year periods thereafter; however, we may
terminate these services
upon sixty days prior written notice.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>“Cost
of sales — subscriber promotion subsidies — EchoStar”</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Receiver Agreement. </i>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 Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss). The remaining amount is included in “Inventories, net” and “Property
and equipment, net” on our Condensed Consolidated Balance Sheets.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Three Months</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>For the Six Months</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(In thousands)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Set-top boxes and other equipment purchased from EchoStar
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">204,284</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">301,039</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">524,603</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">672,733</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Set-top boxes and other equipment purchased from EchoStar included
in “Cost of sales — subscriber promotion subsidies — EchoStar”
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">71,786</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">32,284</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">95,922</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">63,071</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Under our receiver agreement with EchoStar, we have the right but not the obligation to
purchase digital set-top boxes and related accessories, and other equipment from EchoStar for a two
year period ending on January 1, 2010. We also have the right, but not the obligation, to extend
the receiver agreement annually for up to two years. We have exercised our right to renew this
agreement for an additional year. The receiver agreement allows us to
purchase receivers and
accessories from EchoStar at cost plus a fixed margin, which varies depending on the nature of the
equipment purchased. Additionally, EchoStar provides us with standard manufacturer warranties for
the goods sold under the receiver agreement. We may terminate the receiver agreement for any
reason upon sixty days written notice to EchoStar. EchoStar may terminate the receiver agreement
if certain entities were to acquire us. The receiver agreement also includes an indemnification
provision, whereby the parties indemnify each other for certain intellectual property matters.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>“General
and administrative — EchoStar”</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Product Support Agreement. </i>We entered into a product support agreement pursuant to which we have
the right, but not the obligation to receive product support from EchoStar (including certain
engineering and technical support services) for all digital set-top boxes and related accessories
that EchoStar has previously sold and in the future sells to us. The fees for the services
provided under the product support agreement are cost plus a fixed margin, which varies depending
on the nature of the services provided. The term of the product support agreement is the economic
life of such receivers and related accessories, unless terminated earlier. We may terminate the
product support agreement for any reason upon sixty days prior written notice. In the event of an
early termination of this agreement, we are entitled to a refund of any unearned fees paid to
EchoStar for the services.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Real Estate Lease Agreements. </i>We entered into certain lease agreements with EchoStar. The rent on
a per square foot basis for each of the leases is comparable to per square foot rental rates of
similar commercial property in the same geographic area, and EchoStar is responsible for its
portion of the taxes, insurance, utilities and maintenance of the premises. The term of each of
the leases is set forth below:
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><i>Inverness Lease Agreement. </i>The lease for certain space at 90 Inverness Circle East in
Englewood, Colorado, is for a period of two years ending on
January 1, 2010. In August 2009, we and EchoStar agreed to extend this agreement through January 1, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><i>Meridian Lease Agreement. </i>The lease for all of 9601 S. Meridian Blvd. in Englewood,
Colorado, is for a period of two years ending on January 1, 2010 with annual renewal options
for up to three additional years. We have exercised our right to renew this agreement for an additional year.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><i>Santa Fe Lease Agreement. </i>The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado,
is for a period of two years ending on January 1, 2010 with annual renewal options for up to
three additional years. We have exercised our right to renew this agreement for an additional year.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><i>Gilbert Lease Agreement</i>. The lease for certain space at 801 N. DISH Dr. in Gilbert,
Arizona, is for a period of two years ending on January 1, 2010 with annual renewal options
for up to three additional years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><i>EDN Sublease Agreement</i>. The sublease for certain space at 211 Perimeter Center in Atlanta,
Georgia, is for a period of three years, ending on April 30, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Services Agreement. </i>We entered into a services agreement pursuant to which we have the right, but
not the obligation, to receive logistics, procurement and quality assurance services from EchoStar.
The fees for the services provided under this services agreement are cost plus a fixed margin,
which varies depending on the nature of the services provided. This agreement has a term of two
years ending on January 1, 2010. We may terminate the services
agreement with respect to a particular service for any reason upon
sixty days prior written notice. We and EchoStar have agreed that following
January 1, 2010 we will continue to have the right, but not the obligation, to receive from
EchoStar the services previously provided under the services
agreement for a one-year period and for successive
one-year periods thereafter; however, we may terminate
these services upon sixty days prior written notice.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other Agreements — EchoStar</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Tax Sharing Agreement. </i>We entered into a tax sharing agreement with EchoStar which governs our
respective rights, responsibilities and obligations after the Spin-off with respect to taxes for
the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes, including any
taxes that are incurred as a result of restructuring activities undertaken to implement the
Spin-off, will be borne by us, and we will indemnify EchoStar for such taxes. However, we will not
be liable for and will not indemnify EchoStar for any taxes that are incurred as a result of the
Spin-off or certain related transactions failing to qualify as tax-free distributions pursuant to
any provision of Section 355 or Section 361 of the Code because of (i) a direct or indirect
acquisition of any of EchoStar’s stock, stock options or assets, (ii) any action that EchoStar
takes or fails to take or (iii) any action that EchoStar takes that is inconsistent with the
information and representations furnished to the IRS in connection with the request for the private
letter ruling, or to counsel in connection with any opinion being delivered by counsel with respect
to the Spin-off or certain related transactions. In such case, EchoStar will be solely liable for,
and will indemnify us for, any resulting taxes, as well as any losses, claims and expenses. The
tax sharing agreement terminates after the later of the full period of all applicable statutes of
limitations including extensions or once all rights and obligations are fully effectuated or
performed.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Tivo. </i>Because both we and EchoStar are defendants in the Tivo lawsuit, we and EchoStar are jointly
and severally liable to Tivo for any final damages and sanctions that may be awarded by the Court.
We have determined that we are obligated under the agreements entered into in connection with the
Spin-off to indemnify EchoStar for substantially all liability arising from this lawsuit. EchoStar
has agreed to contribute an amount equal to its $5 million intellectual property liability limit
under the Receiver Agreement. We and EchoStar have further agreed that EchoStar’s $5 million
contribution would not exhaust EchoStar’s liability to us for other intellectual property claims
that may arise under the Receiver Agreement. We and EchoStar also agreed that we would each be
entitled to joint ownership of, and a cross-license to use, any intellectual property developed in
connection with any potential new alternative technology.
</div>
</div>
</body>
</html>
false
--12-31
2009-06-30
10-Q
0001001082
208369696
238435208
Yes
Large Accelerated Filer
5900000000
DISH Network Corporation
No
Yes
1020086000
961416000
72086000
47606000
-105000
-62473000
711871000
0
585147000
0
19374000
12198000
53837000
28785000
51483000
19137000
6100000
3462000
5209000
2526000
26440000
12670000
23555000
12413000
951778000
529349000
638142000
138555000
18478000
1874000
577970000
297773000
465731000
248171000
15239000
7575000
15739000
8718000
155950000
77697000
167955000
87198000
63071000
32284000
95922000
71786000
0
0
196405000
196405000
13441000
7163000
9276000
3923000
5814000
0
174216000
233487000
799139000
826148000
21570000
20456000
2432959000
2556766000
-107998000
-57714000
2090527000
2111876000
15207000
13079000
6460047000
7265760000
2097984000
2784350000
4362063000
4481410000
460558000
1208054000
-4523000
0
5455000
7171000
0
130714000
919542000
749885000
98574000
112861000
-169657000
14287000
7972000
8451000
0.01
0.01
0.01
0.01
0.01
0.01
800000000
1600000000
800000000
800000000
1600000000
800000000
0
257117733
238435208
0
258465402
238435208
0
208968052
238435208
0
208367249
238435208
0
2571000
2384000
0
2585000
2384000
548383000
323655000
426388000
129917000
105331000
41359000
118822000
68315000
2765398000
0
25000000
25000000
746372000
371416000
680475000
388272000
2868638000
1423997000
3082154000
1532076000
4633508000
2294282000
4971700000
2640942000
-5018000
-11814000
15207000
29819000
224176000
392379000
830529000
810748000
86331000
110789000
235551000
289700000
520614000
248247000
468593000
245300000
520614000
468593000
297629000
222779000
1.32
0.75
0.84
0.14
1.3
0.73
0.84
0.14
15227000
39687000
1069000
4149000
238082000
122321000
269231000
143466000
251282000
245976000
148747000
0
357310000
193464000
262038000
75135000
106638000
265103000
5372000
5095000
3407000
2412000
1391441000
1391441000
183043000
93231000
175069000
91132000
180783000
177614000
426671000
323104000
27473000
13372000
16046000
11262000
8409153000
8785709000
6460047000
7265760000
2980003000
3024840000
5429150000
5760869000
4969423000
5078790000
13333000
22866000
158296000
94577000
173280000
-28534000
-1684826000
-1203022000
1341889000
1245843000
-174098000
-91359000
-199180000
-124204000
1125876000
620708000
837322000
262759000
619210000
748544000
56394000
182938000
65431000
55735000
-1577000
87000
-106000
274000
-19224000
1999000
-128000
103000
-59209000
-10318000
44807000
59155000
62173000
30359000
67593000
27094000
-18528000
-11500000
-40157000
-44334000
2600000
529000
0
18594000
5033000
0
1574637000
1767305000
528342000
466733000
20978000
8321000
750000000
0
1132729000
1094018000
594468000
335885000
376104000
63420000
2663289000
2794368000
83606000
145289000
-2492804000
-2116700000
5759384000
2914990000
5809022000
2903701000
7801000
7275000
-1949106000
-1519949000
5686006000
2875580000
5743054000
2878115000
1443786000
1462380000
460682000
460853000
448263000
447421000
449263000
449724000
446813000
446752000