Dish DBS 8-K Echostar DBS Corporation Unaudited Pro Forma Condensed Consolidated Financial Statements

EXHIBIT 99.1

ECHOSTAR DBS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EchoStar DBS Corporation (“EDBS,” “we,” “us” and/or “our”) is a wholly-owned subsidiary of EchoStar Communications Corporation (“ECC”), a publicly traded company listed on the Nasdaq Global Select Market. Effective January 1, 2008, ECC completed its separation into two companies: ECC, which retains its pay-TV business, DISH Network, and EchoStar Holding Corporation, or EHC, which holds the digital set-top box business, certain satellites, uplink and satellite transmission assets, real estate and other assets and related liabilities formerly held by ECC. Effective on or after January 20, 2008, ECC intends to change its name to “DISH Network Corporation.” In connection with the separation, each shareholder of ECC received for each share of common stock held, 0.20 of a share of the same class of common stock of EHC. Also, in connection with the separation, ECC contributed $1.0 billion in cash to EHC. EHC’s Class A shares began trading on the Nasdaq Global Select Market on January 2, 2008.

The unaudited pro forma condensed consolidated financial statements reported below consist of unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2007 and for the year ended December 31, 2006 and an unaudited pro forma condensed consolidated balance sheet as of September 30, 2007. The unaudited pro forma condensed consolidated financial statements were derived from our historical consolidated financial statements and give effect to the separation of ECC and EHC. The unaudited pro forma condensed consolidated financial statements and accompanying notes should be read together with our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007 and our Annual Report on Form 10-K for the year ended December 31, 2006.

The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2007 and the year ended December 31, 2006 present our results of operations assuming the separation had been completed as of January 1, 2006. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2007 presents our consolidated financial position assuming that the separation had been completed on that date. The unaudited pro forma condensed consolidated financial statements give effect to the following:

• the distribution of the digital set-top box business, certain satellites, uplink and satellite transmission assets, real estate and other assets and related liabilities to EHC;

• the results of operations and other expenses, including depreciation expenses, related to the digital set-top box business, certain satellites, uplink and satellite transmission assets, real estate and other assets and related liabilities contributed to EHC;

• the impact of the transition services and commercial agreements between ECC and EHC;

• the distribution of shares of EHC common stock to ECC’s stockholders, on a pro rata basis and other adjustments resulting from the separation; and

• the impact of the $1.0 billion in cash that we distributed to EHC.

ECC believes the assumptions used and pro forma adjustments derived from such assumptions, are reasonable under the circumstances and are based upon currently available information.

These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of our results of operations or financial condition had the separation been completed on the dates assumed. Additionally, these statements are not necessarily indicative of our future results of operations or financial condition.

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ECHOSTAR DBS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2006
(In thousands, except per share data)
(Unaudited)

				Pro Forma Adjustments
				Activity of
				Businesses
	EDBS			and Assets				Other				EDBS
	Historical			Distributed				Adjustments				Pro Forma
Revenue:
Subscriber-related	$	9,375,516		$	—			$	—			$	9,375,516
Other		437,231			(242,415	)	(a)		65,318		(h)		260,134
Total revenue		9,812,747			(242,415	)			65,318				9,635,650
Costs and Expenses:
Subscriber-related expenses (exclusive of depreciation (b))		4,822,310			—				11,094		(i)		4,833,404
Satellite and transmission expenses (exclusive of depreciation (b))		144,931			293				185,108		(j)		330,332
Cost of sales — other		290,046			(148,348	)	(c)		66,039		(k)		207,737
Subscriber acquisition costs		1,600,912			—				18,265		(l)		1,619,177
General and administrative		539,630			(121,811	)	(d)		16,111		(m)		433,930
Litigation expense		93,969			—				—				93,969
Depreciation and amortization (b)		1,110,385			(235,351	)	(e)		17,725		(n)		892,759
Total costs and expenses		8,602,183			(505,217	)			314,342				8,411,308
Operating income (loss)		1,210,564			262,802				(249,024	)			1,224,342
Other Income (Expense):
Interest income		121,873			(52,705	)	(f)		—				69,168
Interest expense, net of amounts capitalized		(389,993	)		37,705		(g)		—				(352,288	)
Other		(7,923	)		3,085				—				(4,838	)
Total other income (expense)		(276,043	)		(11,915	)			—				(287,958	)
Income (loss) before income taxes		934,521			250,887				(249,024	)			936,384
Income tax (provision) benefit, net		(333,464	)		—		(o)		(16,171	)	(o)		(349,635	)
Net income (loss)	$	601,057		$	250,887			$	(265,195	)		$	586,749

See accompanying notes to pro forma condensed consolidated financial statements.

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ECHOSTAR DBS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2007
(In thousands, except per share data)
(Unaudited)

				Pro Forma Adjustments
				Activity of
				Businesses
	EDBS			and Assets				Other				EDBS
	Historical			Distributed				Adjustments				Pro Forma
Revenue:
Subscriber-related	$	7,914,076		$	—			$	—			$	7,914,076
Other		270,869			(176,445	)	(a)		60,170		(h)		154,594
Total revenue		8,184,945			(176,445	)			60,170				8,068,670
Costs and Expenses:
Subscriber-related expenses (exclusive of depreciation (b))		4,061,150			—				7,764		(i)		4,068,914
Satellite and transmission expenses (exclusive of depreciation (b))		125,301			152				118,568		(j)		244,021
Cost of sales — other		189,952			(98,675	)	(c)		60,625		(k)		151,902
Subscriber acquisition costs		1,182,379			—				11,858		(l)		1,194,237
General and administrative		440,216			(99,927	)	(d)		12,417		(m)		352,706
Depreciation and amortization (b)		1,005,411			(172,930	)	(e)		39,336		(n)		871,817
Total costs and expenses		7,004,409			(371,380	)			250,568				6,883,597
Operating income (loss)		1,180,536			194,935				(190,398	)			1,185,073
Other Income (Expense):
Interest income		75,918			(45,345	)	(f)		—				30,573
Interest expense, net of amounts capitalized		(280,298	)		26,320		(g)		—				(253,978	)
Other		(848	)		7,481				—				6,633
Total other income (expense)		(205,228	)		(11,544	)			—				(216,772	)
Income (loss) before income taxes		975,308			183,391				(190,398	)			968,301
Income tax (provision) benefit, net		(365,187	)		—		(o)		(4,851	)	(o)		(370,038	)
Net income (loss)	$	610,121		$	183,391			$	(195,249	)		$	598,263

See accompanying notes to pro forma condensed consolidated financial statements.

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ECHOSTAR DBS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 2007
(In thousands, except per share data)
(Unaudited)

				Pro Forma Adjustments
				Businesses
	EDBS			and Assets			Other				EDBS
	Historical			Distributed (p)			Adjustments				Pro Forma
ASSETS
Current Assets:
Cash and cash equivalents	$	1,544,047		$	(1,021,816	)	$	—			$	522,231
Marketable investment securities		681,354			—			—				681,354
Trade accounts receivable net of allowance for doubtful accounts		699,183			(39,359	)		—				659,824
Advances to affiliates		40,866			—			—				40,866
Inventories, net		341,405			(5,443	)		—				335,962
Current deferred tax assets		45,408			(8,409	)		23,727		(q)		60,726
Other current assets		148,034			(12,811	)		—				135,223
Total current assets		3,500,297			(1,087,838	)		23,727				2,436,186
Restricted cash and marketable investment securities		154,506			(3,150	)		—				151,356
Property and equipment, net		3,493,972			(1,219,258	)		—				2,274,714
FCC authorizations		705,228			(83,121	)		—				622,107
Intangible assets, net		159,422			(158,360	)		—				1,062
Other noncurrent assets, net		173,996			(21,354	)		—				152,642
Total assets	$	8,187,421		$	(2,573,081	)	$	23,727			$	5,638,067
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
Current Liabilities:
Trade accounts payable	$	314,506		$	(2,813	)	$	—			$	311,693
Advances from affiliates		46,567			—			—				46,567
Deferred revenue and other		837,531			—			—				837,531
Accrued programming		930,550			—			—				930,550
Income taxes payable		191,757			—			(81,727	)	(q)		110,030
Other accrued expenses		517,273			(22,930	)		—				494,343
Current portion of capital lease obligations, mortgages and other notes payable		47,865			(38,136	)		—				9,729
Total current liabilities		2,886,049			(63,879	)		(81,727	)			2,740,443
Long-term obligations, net of current portion:
Long-term debt		5,000,000			—			—				5,000,000
Capital lease obligations, mortgages and other notes payable, net of current portion		560,503			(349,283	)		—				211,220
Deferred tax liabilities		138,312			(186,406	)		129,289		(q)		81,195
Long-term deferred revenue, distribution and carriage payments and other long-term liabilities		259,582			(11,789	)		—				247,793
Total long-term obligations, net of current portion		5,958,397			(547,478	)		129,289				5,540,208
Total liabilities		8,844,446			(611,357	)		47,562				8,280,651
Stockholder’s Equity (Deficit):
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding		—			—			—				—
Additional paid-in capital		1,052,500			—			—				1,052,500
Accumulated other comprehensive income (loss)		(80	)		(527	)		—				(607	)
Accumulated earnings (deficit)		(1,709,445	)		(1,961,197	)		(23,835	)	(q)		(3,694,477	)
Total stockholder’s equity (deficit)		(657,025	)		(1,961,724	)		(23,835	)			(2,642,584	)
Total liabilities and stockholder’s equity (deficit)	$	8,187,421		$	(2,573,081	)	$	23,727			$	5,638,067

See accompanying notes to pro forma condensed consolidated financial statements.

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ECHOSTAR DBS CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Adjustments to Unaudited Pro Forma Condensed Consolidated Statements of Operations:

The pro forma adjustments on the condensed consolidated statements of operations for the spin-off represent the following:

(a)	Represents revenue on digital set-top boxes and accessories and fixed satellite services sold to third-parties related to the activities of the businesses and assets distributed.
(b)	The amounts do not include depreciation and amortization expense. “EDBS Pro Forma” depreciation and amortization expense consists of the following:

	For the Nine		For the
	Months Ended		Year Ended
	September 30,		December 31,
	2007		2006
	(In thousands)
Equipment leased to customers	$	691,558	$	703,850
Satellites		80,129		92,550
Furniture, fixtures, equipment and other		83,910		75,592
Identifiable intangible assets subject to amortization		12,730		17,906
Buildings and improvements		3,490		2,861
Total depreciation and amortization	$	871,817	$	892,759

(c)	Represents the cost of digital set-top boxes and accessories and fixed satellite services sold to third-parties related to the activities of the businesses and assets distributed.
(d)	Represents the general and administrative expenses primarily related to research and development, corporate overhead expenses and related employee benefits associated with the businesses and assets distributed.
(e)	Represents depreciation and amortization expense primarily associated with the set-top box business, satellites, uplink and satellite transmission assets and certain other real estate assets associated with the businesses and assets distributed.
(f)	Represents interest income primarily related to the $1.0 billion of cash distribution to EHC. The amount of interest income was calculated assuming that the $1.0 billion was distributed on January 1, 2006 and earned approximately 5.1% and 5.3%, the weighted-average interest rate earned by ECC’s marketable investment securities portfolio, for the year ended December 31, 2006 and for the nine months ended September 30, 2007, respectively.
(g)	Primarily represents the interest expense on leased satellites accounted for as capital leases which were assumed by EHC.
(h)	Primarily represents revenue for general and administrative services provided to EHC. These services are billed at cost plus an additional amount that is equal to an agreed percentage of our cost, which will vary depending on the services provided. In addition, this amount includes revenue from the sale of remanufactured receivers to EHC. This amount is equal to cost plus an additional amount that is equal to an agreed percentage of our cost, which will vary depending on the nature of the equipment purchased.
(i)	Represents the incremental cost of set-top boxes and accessories, for existing subscribers, purchased from EHC. This incremental cost is equal to an agreed percentage of EHC’s cost, which will vary depending on the nature of the equipment purchased.

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ECHOSTAR DBS CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(j)	Represents the incremental cost of satellite and transmission services purchased from EHC primarily including the leasing of satellite capacity at fees based on spot market prices for similar satellite capacity, and uplink, telemetry, tracking and control services.
(k)	Represents the cost of sales for general and administrative services provided to EHC and the cost of remanufactured receivers sold to EHC. In addition, this amount includes the incremental cost of DBS accessories purchased from EHC that were sold to third-parties. This incremental cost is equal to an agreed percentage of EHC’s cost, which will vary depending on the nature of the equipment purchased.
(l)	Represents the incremental cost of set-top boxes and accessories, for new subscribers, purchased from EHC. This incremental cost is equal to an agreed percentage of EHC’s cost, which will vary depending on the nature of the equipment purchased.
(m)	Primarily represents rental expense related to buildings distributed to EHC and leased back to us at per square foot rental rates comparable to rates of similar commercial property in the same geographic areas, including taxes, insurance and maintenance of the premises.
(n)	Represents additional depreciation expense primarily associated with the incremental cost of the equipment purchased from EHC for our equipment lease programs.
(o)	Represents the tax effect of pro forma adjustments using our blended Federal and state statutory income tax rate adjusted for permanent differences.

Adjustments to Unaudited Pro Forma Condensed Consolidated Balance Sheet:

The pro forma condensed consolidated balance sheet adjustments for the spin-off represent the following:

(p)	Represents the distribution of the digital set-top box business, certain satellites, uplink and satellite transmission assets, real estate and other assets and related liabilities to EHC, including $1.0 billion in cash.
(q)	Represents the tax effect of pro forma adjustments using our pro forma blended Federal and state statutory income tax rate.

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