EX-99.3 5 c74928exv99w3.htm EXHIBIT 99.3 Filed by Bowne Pure Compliance
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The unaudited pro forma condensed financial statements give effect to the acquisition of 30 million common shares of TerreStar Parent and the sale of the company through which we held our 1.4 GHz spectrum to TerreStar Parent, as previously discussed. These statements have been derived in part from the audited financial statements of EchoStar and TerreStar Parent for the year ended December 31, 2007 and from the unaudited financial statements for the six months ended June 30, 2008 for each of EchoStar and TerreStar Parent.
The unaudited pro forma condensed statements of operations for the six months ended June 30, 2008 and for the year ended December 31, 2007 have been prepared as if the transactions described above occurred as of January 1, 2007. The pro forma adjustments are based on available information and assumptions that management believes are reasonable based on our current plans and expectations. The unaudited pro forma condensed financial statements have been prepared for illustrative purposes only and are not necessarily indicative of our future financial position, future results of operations or future cash flows, nor do they reflect what our financial position, results of operations or cash flows would have been had we had increased our investment in TerreStar during the specific periods. The unaudited pro forma condensed financial statements and accompanying notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements and accompanying notes of EchoStar and TerreStar Parent included in the respective annual reports on Form 10-K for the fiscal year ended December 31, 2007 as well as the quarterly reports on Form 10-Q for the quarter ended June 30, 2008. The TerreStar Parent annual and quarterly reports are included in this Form 8-K filing.

 

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ECHOSTAR CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
                         
    For the Year Ended December 31, 2007  
            Pro Forma     Pro Forma  
    Historical     Adjustments     Combined  
Revenue:
                       
Equipment and other sales — DISH Network
  $ 1,294,215     $     $ 1,294,215  
Equipment sales
    249,850             249,850  
 
                 
Total revenue
    1,544,065             1,544,065  
 
                 
 
Costs and Expenses:
                       
Cost of equipment and other sales
    1,451,704             1,451,704  
Marketing and sales
    6,731             6,731  
Research and development
    78,790             78,790  
General and administrative
    83,514             83,514  
Depreciation and amortization
    9,705             9,705  
 
                 
Total costs and expenses
    1,630,444             1,630,444  
 
                 
 
Operating income (loss)
    (86,379 )           (86,379 )
 
                 
 
Other Income (Expense):
                       
Interest income
    10,459             10,459  
Interest expense, net of amounts capitalized
    (796 )           (796 )
Unrealized gains (losses) due to changes in the fair value of certain debt and equity investments, net
          (35,574 )(a)     (35,574 )
Other
    (6,479 )           (6,479 )
 
                 
Total other income (expense)
    3,184       (35,574 )     (32,390 )
 
                 
 
Income (loss) before income taxes
    (83,195 )     (35,574 )     (118,769 )
Income tax (provision) benefit, net
    (2,105 )           (2,105 )
 
                 
Net income (loss)
  $ (85,300 )   $ (35,574 )   $ (120,874 )
 
                 
 
Denominator for basic and diluted net income (loss) per share — Class A and B common stock:
                       
Denominator for basic and diluted net income (loss) per share — weighted-average common shares outstanding
    89,712               89,712  
 
                   
 
Net income (loss) per share — Class A and B common stock:
                       
Basic and diluted net income (loss)
  $ (0.95 )           $ (1.35 )
 
                   

 

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ECHOSTAR CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
                         
    For the Six Months Ended June 30, 2008  
            Pro forma     Pro Forma  
    Historical     Adjustments     Combined  
Revenue:
                       
Equipment sales — DISH Network
  $ 672,733     $     $ 672,733  
Equipment sales — other
    151,773             151,773  
Satellite services, digital broadcast operations and other services — DISH Network
    185,489             185,489  
Satellite and other services — other
    27,916       (9,569 )(b)     18,347  
 
                 
Total revenue
    1,037,911       (9,569 )     1,028,342  
 
                 
 
Costs and Expenses:
                       
Cost of sales — equipment
    699,908             699,908  
Satellite services, digital broadcast operations and other cost of sales
    110,215             110,215  
Research and development expense
    27,565             27,565  
Selling, general and administrative expenses
    51,670             51,670  
General and administrative expenses — DISH Network
    13,296             13,296  
Depreciation and amortization
    123,985             123,985  
 
                 
Total costs and expenses
    1,026,639             1,026,639  
 
                 
 
Operating income (loss)
    11,272       (9,569 )     1,703  
 
                 
 
Other Income (Expense):
                       
Interest income
    40,813             40,813  
Interest expense
    (16,561 )           (16,561 )
Casualty loss expense
    (12,799 )           (12,799 )
Unrealized gains (losses) due to changes in the fair value of certain debt and equity investments, net
    (19,643 )     (30,397 )(a)     (50,040 )
Other
    61,201             61,201  
 
                 
Total other income (expense)
    53,011       (30,397 )     22,614  
 
                 
 
Income (loss) before income taxes
    64,283       (39,966 )     24,317  
Income tax (provision) benefit, net
    (10,758 )     3,435 (b)     (7,323 )
 
                   
Net income (loss)
  $ 53,525     $ (36,531 )   $ 16,994  
 
                 
 
Denominator for basic and diluted net income (loss) per share — Class A and B common stock:
                       
Denominator for basic net income (loss) per share — weighted-average common shares outstanding
    89,795               89,795  
 
                   
Denominator for diluted net income (loss) per share — weighted-average common shares outstanding
    91,285               91,285  
 
                   
 
Net income (loss) per share — Class A and B common stock:
                       
Basic net income (loss)
  $ 0.60             $ 0.19  
 
                   
Diluted net income (loss)
  $ 0.59             $ 0.19  
 
                   

 

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ECHOSTAR CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA
The pro forma adjustments included in the unaudited pro forma condensed financial statements are as follows:
(a)   The recognition of unrealized losses of $36 million and $30 million for the year ended December 31, 2007 and the six months ended June 30, 2008, respectively, due to changes in the fair value of our investments in TerreStar Parent assuming that we had adopted the provisions of Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) as of January 1, 2007.
While our additional investment in TerreStar Parent occurred on June 10, 2008, the unaudited pro forma condensed statements of operations have been prepared as if the transaction occurred on January 1, 2007. The price of TerreStar Parent’s common stock from January 1, 2007 to June 30, 2008 was highly volatile and dropped significantly during this 18-month period. To reflect the pro forma impact of this decline to the common stock pursuant to SFAS 159, we calculated the unrealized losses due to changes in the fair value of this investment by applying the percentage change in the stock price for each period to our common stock investment balance for each of the periods presented. The pro forma adjustment for the June 30, 2008 Statement of Operations reflects the changes in fair value of our investments in TerreStar from January 1, 2008 through June 10, 2008, as the actual changes in the fair value of our investments are included in our historical results due to the application of fair value accounting to our TerreStar investments.
(b)   To remove 1.4GHz spectrum lease revenue and related income tax effect for the period from February 8, 2008 through June 10, 2008.
An unaudited pro forma condensed balance sheet as of the end of the most recent period is not included herein as the transaction is already reflected in our Condensed Consolidated Balance Sheets in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the Securities and Exchange Commission on August 4, 2008.

 

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