EXHIBIT 99.4

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data as of and for each of the five
years ended December 31, 2000 have been derived from, and are qualified by
reference to our Consolidated Financial Statements which have been audited by
Arthur Andersen LLP, independent public accountants. This data should be read in
conjunction with our Consolidated Financial Statements and related Notes thereto
for the three years ended December 31, 2000, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this report.

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1996 1997 1998 1999 2000
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SUBSCRIBERS AND PER SHARE

STATEMENTS OF OPERATIONS DATA DATA)
REVENUE:
DISH Network ................................ $ 60,132 $ 344,250 $ 683,032 $ 1,352,603 $ 2,352,237
DTH equipment sales and integration
services .................................. 78,062 91,637 256,193 184,041 259,830
Satellite services .......................... 5,822 11,135 22,366 41,071 61,105
Other ....................................... 54,885 30,396 21,075 25,126 42,048
------------ ------------ ------------ ------------ ------------
Total revenue ................................. 198,901 477,418 982,666 1,602,841 2,715,220
COSTS AND EXPENSES:
DISH Network operating expenses ............. 42,456 193,274 395,411 732,675 1,265,445
Cost of sales - DTH equipment and
integration services ...................... 76,384 61,992 173,388 148,427 194,963
Cost of sales - other ....................... 42,349 23,909 16,496 17,084 32,992
Marketing expenses .......................... 51,520 179,923 320,521 727,061 1,158,640
General and administrative .................. 52,123 69,315 97,105 150,397 250,425
Non-cash, stock-based compensation .......... -- -- -- 61,060 51,465
Depreciation and amortization ............... 43,414 173,276 102,636 113,228 185,356
------------ ------------ ------------ ------------ ------------
Total costs and expenses ...................... 308,246 701,689 1,105,557 1,949,932 3,139,286
------------ ------------ ------------ ------------ ------------
Operating loss ................................ (109,345) (224,271) (122,891) (347,091) (424,066)
Extraordinary charge for early
retirement of debt, net of tax ............ -- -- -- (268,999) --
============ ============ ============ ============ ============
Net loss ...................................... $ (100,986) $ (312,825) $ (260,882) $ (792,847) $ (650,326)
============ ============ ============ ============ ============
Net loss attributable to common shares ........ $ (102,190) $ (321,267) $ (296,097) $ (800,100) $ (651,472)
============ ============ ============ ============ ============
Weighted-average common shares outstanding .... 324,384 335,344 359,856 416,476 471,023
============ ============ ============ ============ ============
Basic and diluted loss per share (1) .......... $ (0.32) $ (0.96) $ (0.82) $ (1.92) $ (1.38)
============ ============ ============ ============ ============
</Table>

<Table>
<Caption>
AS OF DECEMBER 31,
---------------------------------------------------------------------------
1996 1997 1998 1999 2000
------------ ------------ ------------ ------------ ------------

BALANCE SHEETS DATA
Cash, cash equivalents and
marketable investment securities ...... $ 58,038 $ 420,514 $ 324,100 $ 1,254,175 $ 1,464,175
Cash reserved for satellite
insurance ............................. -- -- -- -- 82,393
Restricted cash and marketable
investment securities ................. 79,291 187,762 77,657 3,000 3,000
Total assets ............................ 1,141,380 1,805,646 1,806,852 3,898,189 4,636,835
Long-term obligations (less current
portion):
1994 Notes ............................ 437,127 499,863 571,674 1,503 --
1996 Notes ............................ 386,165 438,512 497,955 1,097 --
1997 Notes ............................ -- 375,000 375,000 15 --
9 1/4% Seven Year Notes ............... -- -- -- 375,000 375,000
9 3/8% Ten Year Notes ................. -- -- -- 1,625,000 1,625,000
4 7/8% Convertible Notes .............. -- -- -- 1,000,000 1,000,000
10 3/8% Seven Year Notes .............. -- -- -- -- 1,000,000
Mortgages and other notes
payable, net of current portion ..... 51,428 51,846 43,450 27,990 14,812
Series B Preferred Stock ................ -- 199,164 226,038 -- --
Total stockholders' equity (deficit) .... 61,197 (88,961) (371,540) (48,418) (657,383)
</Table>

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1996 1997 1998 1999 2000
---------- ---------- ---------- ---------- ----------

OTHER DATA
DISH Network subscribers .................... 350,000 1,040,000 1,940,000 3,410,000 5,260,000
Average monthly revenue per subscriber ...... $ 35.50 $ 38.50 $ 39.25 $ 42.71 $ 45.33

EBITDA(2) ................................... (65,931) (50,995) (20,255) (172,953) (187,245)
Less amortization of subscriber
acquisition costs ......................... (16,073 (121,735) (18,869) -- --
---------- ---------- ---------- ---------- ----------
EBITDA, as adjusted to exclude
amortization of subscriber acquisition
costs ..................................... (82,004) (172,730) (39,124) (172,953) (187,245)
Net cash flows from:
Operating activities ...................... (27,425) 43 (16,890) (58,513) (118,677)
Investing activities ...................... (287,642) (597,249) (8,048) (62,826) (911,957)
Financing activities ...................... 332,544 703,182 (13,722) 920,091 982,153
</Table>

- ----------

(1) The loss per share amounts for 1996 have been restated as required to comply
with Statement of Financial Accounting Standards ("FAS") No. 128, "Earnings
Per Share." For further discussion of loss per share and the impact of FAS
No. 128, see Note 2 to our Consolidated Financial Statements.

The loss per share amount in 1999 of $(1.92) includes $(1.28) per share
relating to basic and diluted loss per share before extraordinary charges
and $(0.64) per share relating to the extraordinary charge for early
retirement of debt, net of tax.

(2) We believe it is common practice in the telecommunications industry for
investment bankers and others to use various multiples of current or
projected EBITDA (operating income (loss) plus amortization and
depreciation, and non-cash, stock-based compensation) for purposes of
estimating current or prospective enterprise value and as one of many
measures of operating performance. Conceptually, EBITDA measures the amount
of income generated each period that could be used to service debt, because
EBITDA is independent of the actual leverage employed by the business; but
EBITDA ignores funds needed for capital expenditures and expansion. Some
investment analysts track the relationship of EBITDA to total debt as one
measure of financial strength. However, EBITDA does not purport to represent
cash provided or used by operating activities and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.

EBITDA differs significantly from cash flows from operating activities
reflected in the consolidated statement of cash flows. Cash flows from
operating activities is net of interest and taxes paid and is a more
comprehensive determination of periodic income on a cash (vs. accrual)
basis, exclusive of non-cash items of income and expenses such as
depreciation and amortization. In contrast, EBITDA is derived from accrual
basis income and is not reduced for cash invested in working capital.
Consequently, EBITDA is not affected by the timing of receivable collections
or when accrued expenses are paid. We are not aware of any uniform standards
for determining EBITDA and believe presentations of EBITDA may not be
calculated consistently by different entities in the same or similar
businesses. EBITDA is shown before and after amortization of subscriber
acquisition costs, which were deferred through September 1997 and amortized
over one year. EBITDA for 1999 and 2000 also excludes approximately $61
million and $51 million in non-cash, stock-based compensation expense
resulting from significant post-grant appreciation of stock options granted
to employees, respectively.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

All statements contained herein, as well as statements made in press
releases and oral statements that may be made by us or by officers, directors or
employees acting on our behalf, that are not statements of historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could
cause our actual results to be materially different from historical results or
from any future results expressed or implied by such forward-looking statements.
Among the factors that could cause our actual results to differ materially are
the following: a total or partial loss of one or more satellites due to
operational failures, space debris or otherwise; delays in the construction of
our seventh, eighth or ninth satellites; an unsuccessful deployment of future
satellites; inability to settle outstanding claims with insurers; a decrease in
sales of digital equipment and related services to international direct-to-home
service providers; a decrease in DISH Network subscriber growth; an increase in
subscriber turnover; an increase in subscriber acquisition costs; an inability
to obtain certain retransmission consents; our inability to retain necessary
authorizations from the FCC; an inability to obtain patent licenses from holders
of intellectual property or redesign our products to avoid patent infringement;
an increase in competition from cable as a result of digital cable or otherwise,
direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; the introduction of new
technologies and competitors into the subscription television business; a change
in the regulations governing the subscription television service industry; the
outcome of any litigation in which we may be involved; general business and
economic conditions; and other risk factors described from time to time in our
reports and statements filed with the Securities and Exchange Commission. In
addition to statements that explicitly describe such risks and uncertainties,
readers are urged to consider statements that include the terms "believes,"
"belief," "expects," "plans," "anticipates," "intends" or the like to be
uncertain and forward-looking. All cautionary statements made herein should be
read as being applicable to all forward-looking statements wherever they appear.
In this connection, investors should consider the risks described herein and
should not place undue reliance on any forward-looking statements.

RESULTS OF OPERATIONS

Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999.

Revenue. Total revenue for the year ended December 31, 2000 was $2.715
billion, an increase of $1.112 billion compared to total revenue for the year
ended December 31, 1999 of $1.603 billion. The increase in total revenue was
primarily attributable to DISH Network subscriber growth. We expect that our
revenues will continue to increase significantly as the number of DISH Network
subscribers increases.

DISH Network subscription television services revenue totaled $2.347
billion for the year ended December 31, 2000, an increase of $1.003 billion
compared to the same period in 1999. DISH Network subscription television
services revenue principally consists of revenue from basic, premium and
pay-per-view subscription television services. This increase was directly
attributable to the increase in the number of DISH Network subscribers and
higher average revenue per subscriber. DISH Network added approximately 1.85
million net new subscribers for the year ended December 31, 2000, an increase of
approximately 26% compared to approximately 1.47 million net subscriber
additions during 1999. As of December 31, 2000, we had approximately 5.26
million DISH Network subscribers compared to approximately 3.4 million at
December 31, 1999, an increase of 54%. The strong subscriber growth reflects the
impact of aggressive marketing promotions, including our free installation
program, together with increased interest in satellite television resulting from
the availability of local network channels by satellite, and positive momentum
for the DISH Network. DISH Network subscription television services revenue will
continue to increase to the extent we are successful in increasing the number of
DISH Network subscribers and maintaining or increasing revenue per subscriber.
While there can be no assurance, assuming the U.S. economy continues to grow at
a slow pace, we expect to add approximately 1.5 to 2.0 million net new
subscribers during 2001, and to obtain a majority of all net new DBS
subscribers.

Monthly average revenue per subscriber was approximately $45.33 during
the year ended December 31, 2000 and approximately $42.71 during the same period
in 1999. The increase in monthly average revenue per subscriber is primarily
attributable to a $1.00 price increase in America's Top 100 CD, our most popular
programming package, during May 2000, the increased availability of local
channels by satellite together with the earlier successful

introduction of our $39.99 per month America's Top 150 programming package.
During August 2000, we announced a promotion offering consumers free premium
movie channels. Under this promotion, all new subscribers who order either our
America's Top 100 CD or America's Top 150 programming package and any or all of
our four premium movie packages between August 1, 2000 and January 31, 2001,
received those premium movie packages free for three months. This promotion had
a negative impact on monthly average revenue per subscriber since premium movie
package revenue from participating subscribers was deferred until the expiration
of each participating subscriber's free service. While there can be no
assurance, we expect our moderate historical increases in revenue per subscriber
to continue during 2001 and expect to reach monthly average revenue per
subscriber of approximately $50 by the end of December 2001.

For the year ended December 31, 2000, DTH equipment sales and
integration services totaled $260 million, an increase of $76 million compared
to the same period during 1999. DTH equipment sales consist of sales of digital
set-top boxes and other digital satellite broadcasting equipment to
international DTH service operators and sales of DBS accessories. This increase
in DTH equipment sales and integration services revenue was primarily
attributable to an increase in international demand for digital set-top boxes as
compared to the same period during 1999.

A significant portion of DTH equipment sales and integration services
revenues have resulted from sales to two international DTH providers. We
currently have agreements to provide equipment to DTH service operators in Spain
and Canada. Our future revenue from the sale of DTH equipment and integration
services in international markets depends largely on the success of these DTH
operators and continued demand for our digital set-top boxes. Although we
continue to actively pursue additional distribution and integration service
opportunities internationally, no assurance can be given that any such efforts
will be successful.

As previously reported, since 1998, Telefonica's Via Digital, one of
the two DTH service providers described above, has had recurrent discussions and
negotiations for a possible merger with Sogecable's Canal Satelite Digital, one
of its primary competitors. While we are not currently aware of any formal
negotiations between Via Digital and Canal Satelite Digital, there are again
rumors of a potential merger in the marketplace. Although we have binding
purchase orders from Via Digital for deliveries of DTH equipment in 2001, we
cannot predict the impact, if any, eventual consummation of this possible merger
might have on our future sales to Via Digital.

Satellite services revenue totaled $61 million during the year ended
December 31, 2000, an increase of $20 million as compared to the same period
during 1999. These revenues principally include fees charged to content
providers for signal carriage and revenues earned from business television, or
BTV customers. The increase in satellite services revenue was primarily
attributable to the addition of new full-time BTV customers and additional sales
of idle satellite capacity to occasional-use customers. As a greater percentage
of our satellite capacity is utilized during 2001 for local network channels and
other programming designed to drive consumer subscriber acquisitions, satellite
services revenues may decline.

In order, among other things, to commence compliance with the
injunction issued against us in our pending litigation with the four major
broadcast networks and their affiliate groups, we have terminated the delivery
of distant network channels to certain of our subscribers. Additionally, the FCC
recently issued rules which impair our ability to deliver certain superstation
channels to our customers. Those rules will increase the cost of our delivery of
superstations, and could require that we terminate the delivery of certain
superstations to a material portion of our subscriber base. In combination,
these terminations would result in a small reduction in average monthly revenue
per subscriber and could increase subscriber turnover. While there can be no
assurance, any such decreases could be offset by increases in average monthly
revenue per subscriber resulting from the delivery of local network channels by
satellite, and increases in other programming offerings.

DISH Network Operating Expenses. DISH Network operating expenses
totaled $1.265 billion during the year ended December 31, 2000, an increase of
$532 million or 73% compared to the same period in 1999. DISH Network operating
expenses represented 54% and 55% of subscription television services revenue
during the years ended December 31, 2000 and 1999, respectively. The increase in
DISH Network operating expenses in total was consistent with, and primarily
attributable to, the increase in the number of DISH Network subscribers. While
there can be no assurance, we expect that our efforts to control costs and
create operating efficiencies will result in a moderate decrease in operating
expenses as a percentage of subscription television services revenue during
2001.

Subscriber-related expenses totaled $970 million during the year ended
December 31, 2000, an increase of $395 million compared to the same period in
1999. Such expenses, which include programming expenses, copyright royalties,
residuals currently payable to retailers and distributors, and billing, lockbox
and other variable subscriber expenses, represented 41% and 43% of subscription
television services revenues during the years ended December 31, 2000 and 1999,
respectively. Although we do not currently expect subscriber-related expenses as
a percentage of subscription television services revenue to increase materially
in future periods, there can be no assurance this expense to revenue ratio will
not materially increase.

Customer service center and other expenses principally consist of costs
incurred in the operation of our DISH Network customer service centers, such as
personnel and telephone expenses, as well as other operating expenses related to
our service and installation business. Customer service center and other
expenses totaled $251 million during the year ended December 31, 2000, an
increase of $134 million as compared to the same period in 1999. The increase in
customer service center and other expenses primarily resulted from increased
personnel and telephone expenses to support the growth of the DISH Network and
from operating expenses related to the expansion of our installation and service
business. Customer service center and other expenses totaled 11% of subscription
television services revenue during the year ended December 31, 2000, as compared
to 9% during the same period in 1999. The increase in this expense to revenue
ratio primarily resulted from the on-going construction and start-up costs of
our fifth customer service center in Virginia, our sixth customer service center
in West Virginia, and the continued build-out of our installation offices
nationwide. These expenses in total, and as a percentage of subscription
television services revenue, may continue to increase in future periods as we
continue to develop and expand our customer service centers and installation
business to provide additional customer support and help us better accommodate
anticipated subscriber growth, resulting in long term efficiency improvements.
We continue to work to automate simple phone responses, and intend to increase
internet based customer assistance in the future, in order to better manage
customer service costs.

Satellite and transmission expenses include expenses associated with
the operation of our digital broadcast center, contracted satellite telemetry,
tracking and control services, and satellite in-orbit insurance. Satellite and
transmission expenses totaled $44 million during the year ended December 31,
2000, a $3 million increase compared to the same period in 1999. This increase
resulted from higher satellite and other digital broadcast center operating
expenses due to an increase in the number of operational satellites. Satellite
and transmission expenses totaled 2% and 3% of subscription television services
revenue during the years ended December 31, 2000 and 1999, respectively. We
expect satellite and transmission expenses to continue to increase in the future
as additional satellites or digital broadcast centers are placed in service, but
do not expect these expenses to increase as a percentage of subscription
television services revenue.

Cost of sales - DTH equipment and Integration Services. Cost of sales -
DTH equipment and integration services totaled $195 million during the year
ended December 31, 2000, an increase of $47 million compared to the same period
in 1999. Cost of sales - DTH equipment and integration services principally
includes costs associated with digital set-top boxes and related components sold
to international DTH operators and DBS accessories. This increase in cost of
sales - DTH equipment and integration services is consistent with the increase
in DTH equipment sales and integration services revenue. Cost of sales - DTH
equipment and integration services represented 75% and 81% of DTH equipment
revenue, during the years ended December 31, 2000 and 1999, respectively. The
higher margin was principally attributable to a $16.6 million loss provision
recorded during 1999 primarily for component parts and purchase commitments
related to our first generation model 7100 set-top boxes, for which production
was suspended in favor of our second generation model 7200 set-top boxes.

Marketing Expenses. We subsidize the cost and installation of EchoStar
receiver systems in order to attract new DISH Network subscribers. Consequently,
our subscriber acquisition costs are significant. Marketing expenses totaled
$1.159 billion during the year ended December 31, 2000, an increase of $432
million compared to the same period in 1999. The increase in marketing expenses
was primarily attributable to an increase in subscriber promotion subsidies.
Subscriber promotion subsidies - promotional DTH equipment includes the cost
related to EchoStar receiver systems distributed to retailers and other
distributors of our equipment. Subscriber promotion subsidies - other includes
net costs related to our free installation promotion and other promotional
incentives. Advertising and other expenses totaled $139 million and $65 million
during the years ended December 31, 2000 and 1999, respectively.

During the year ended December 31, 2000, our marketing promotions
included our DISH Network One-Rate Plan, C-band bounty program, Great Rewards
program (PrimeStar bounty), Digital Dynamite Plan, cable bounty and a free
installation program. Our subscriber acquisition costs under these programs are
significantly higher than those under our marketing programs historically.

Under the DISH Network One-Rate Plan, consumers were eligible to
receive a rebate of up to $199 on the purchase of certain EchoStar receiver
systems. To be eligible for this rebate, a subscriber must have made a one-year
commitment to subscribe to our America's Top 150 programming or our America's
Top 100 CD programming package plus one premium movie package (or equivalent
additional programming). This promotion expired on January 31, 2001.

Under our bounty programs, current cable customers were eligible to
receive a free base-level EchoStar receiver system and free installation. To be
eligible for this program, a subscriber must have made a one-year commitment to
subscribe to either our America's Top 100 CD programming package plus one
premium movie package (or equivalent additional programming) or our America's
Top 150 programming package and prove that they are a current cable customer.
This promotion expired on January 31, 2001.

During July 2000, we announced the commencement of our new Digital
Dynamite promotion. The Digital Dynamite plans offer four choices to consumers,
ranging from the use of one EchoStar receiver system and our America's Top 100
CD programming package for $35.99 per month, to providing consumers two EchoStar
receiver systems and our America's Top 150 programming package for $49.99 per
month. With each plan, consumers receive in-home-service, must agree to a
one-year commitment and incur a one-time set-up fee of $49.99, which includes
the first month's programming payment.

During February 2001, we announced our Free Now promotion offering all
new subscribers a free base-level EchoStar receiver system and free
installation. To be eligible for this program, a subscriber must provide a valid
major credit card and make a one-year commitment to subscribe to either our
America's Top 150 programming package or our America's Top 100 CD or DISH Latino
Dos programming package plus additional programming totaling at least $39.98 per
month. Although subscriber acquisition costs are materially higher under this
plan compared to historical promotions, customers under this plan generally are
expected to produce materially greater average revenue per subscriber than a
typical DISH Network subscriber. In addition, we believe that these customers
represent lower credit risk and therefore may be marginally less likely to
disconnect their service than other DISH Network subscribers. To the extent that
actual consumer participation levels exceed present expectations, subscriber
acquisition costs may increase. Although there can be no assurance as to the
ultimate duration of the Free Now promotion, we intend to continue it through at
least March 2001.

Under our free installation program all customers who purchase an
EchoStar receiver system from January 2000 through April 2000, from May 24, 2000
to July 31, 2000 and from September 15, 2000 to March 31, 2001, are eligible to
receive a free professional installation. The free installation program was
responsible, in part, for the strong subscriber growth during the first half of
2000.

We subsidize the cost and installation of EchoStar receiver systems in
order to attract new DISH Network subscribers. There is no clear industry
standard used in the calculation of subscriber acquisition costs. Our subscriber
acquisition costs include subscriber promotion subsidies - promotional DTH
equipment, subscriber promotion subsidies - other and DISH Network acquisition
marketing expenses. During the year ended December 31, 2000, our subscriber
acquisition costs totaled approximately $1.155 billion, or approximately $452
per new subscriber activation. Since we retain ownership of the equipment,
amounts capitalized under our Digital Dynamite Plan are not included in our
calculation of these subscriber acquisition costs. Comparatively, our subscriber
acquisition costs during the year ended December 31, 1999 totaled $729 million,
or approximately $385 per new subscriber activation. The increase in our
subscriber acquisition expenses, on a per new subscriber activation basis,
principally resulted from the impact of several marketing promotions to acquire
new subscribers, including most significantly our free installation offer which
was reinstated during September 2000. As a result of continuing competition and
our plans to attempt to continue to drive rapid subscriber growth, we expect our
per subscriber acquisition costs for 2001 will remain in a range consistent with
our 2000 average of approximately $452 per new subscriber activation.

Our subscriber acquisition costs, both in the aggregate and on a per
new subscriber activation basis, may materially increase further to the extent
that we continue or expand our Free Now program, or introduce other more
aggressive promotions if we determine that they are necessary to respond to
competition, or for other reasons.

General and Administrative Expenses. General and administrative
expenses totaled $250 million during the year ended December 31, 2000, an
increase of $100 million as compared to the same period in 1999. The increase in
G&A expenses was principally attributable to increased personnel expenses to
support the growth of the DISH Network. G&A expenses represented 9% of total
revenue during the years ended December 31, 2000 and 1999. Although we expect
G&A expenses as a percentage of total revenue to remain near the current level
or decline modestly in future periods, this expense to revenue ratio could
increase.

Non-cash, Stock-based Compensation. During 1999, we adopted an
incentive plan which provided certain key employees with incentives including
stock options. The payment of these incentives was contingent upon our
achievement of certain financial and other goals. We met certain of these goals
during 1999. Accordingly, during 1999, we recorded approximately $179 million of
deferred compensation related to post-grant appreciation of stock options
granted pursuant to the 1999 incentive plan. The related deferred compensation
will be recognized over the five-year vesting period. Accordingly, during the
years ended December 31, 2000 and 1999 we recognized $51 million and $61
million, respectively, under this performance-based plan.

We report all non-cash compensation based on stock option appreciation
as a single expense category in our accompanying statements of operations. The
following table represents the other expense categories in our statements of
operations that would be affected if non-cash, stock-based compensation was
allocated to the same expense categories as the base compensation for key
employees who participate in the 1999 incentive plan:

<Table>
<Caption>
DECEMBER 31,
1999 2000
-------- --------

Customer service center and other.......................... $ 4,328 $ 1,744
Satellite and transmission................................. 2,308 3,061
General and administrative................................. 54,424 46,660
-------- --------
Total non-cash, stock-based compensation................ $ 61,060 $ 51,465
======== ========
</Table>

Pre-Marketing Cash Flow. Pre-marketing cash flow is comprised of EBITDA
plus total marketing expenses. Pre-marketing cash flow was $971 million during
the year ended December 31, 2000, an increase of 75% compared to the same period
in 1999. Our pre-marketing cash flow as a percentage of total revenue was 36% in
2000 compared to 35% in 1999. We believe that pre-marketing cash flow can be a
useful measure of operating efficiency for companies in the DBS industry. While
there can be no assurance, we expect that pre-marketing cash flow as a
percentage of total revenue will continue to improve, and will approach 40%
during 2001.

Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA
is defined as operating income (loss) plus depreciation and amortization, and
non-cash, stock-based compensation. EBITDA was negative $187 million during the
year ended December 31, 2000 compared to negative $173 million during the same
period in 1999. This decline in EBITDA principally resulted from an increase in
DISH Network marketing expenses primarily resulting from increased subscriber
additions. Our calculation of EBITDA for the years ended December 31, 2000 and
1999 does not include approximately $51 million and $61 million, respectively,
of non-cash compensation expense resulting from post-grant appreciation of
employee stock options. While there can be no assurance, we expect to achieve
positive EBITDA for the year ended December 31, 2001. As previously discussed,
to the extent we expand our current marketing promotions and our subscriber
acquisition costs materially increase, our EBITDA results will be negatively
impacted because subscriber acquisition costs are generally expensed as
incurred.

It is important to note that EBITDA and pre-marketing cash flow do not
represent cash provided or used by operating activities. EBITDA and
pre-marketing cash flow should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles.

Depreciation and Amortization. Depreciation and amortization expenses
aggregated $185 million during the year ended December 31, 2000, a $72 million
increase compared to the same period in 1999. The increase in depreciation and
amortization expenses principally resulted from an increase in depreciation
related to the commencement of operation of EchoStar V in November 1999 and
EchoStar VI in October 2000 and other depreciable assets placed in service
during 2000 and late 1999.

Other Income and Expense. Other expense, net, totaled $226 million
during the year ended December 31, 2000, an increase of $49 million compared to
the same period in 1999. This increase resulted from our equity in the loss of
StarBand, as well as an increase in interest expense as a result of the issuance
of our 10 3/8% Senior Notes due 2007 in September 2000. This increase in
interest expense was partially offset by an increase in interest income.

Year Ended December 31, 1999 compared to the year ended December 31, 1998.

Revenue. Total revenue for the year ended December 31, 1999 was $1.603
billion, an increase of $620 million compared to total revenue for the year
ended December 31, 1998 of $983 million. The increase in total revenue was
primarily attributable to DISH Network subscriber growth.

DISH Network subscription television services revenue totaled $1.344
billion for the year ended December 31, 1999, an increase of $675 million
compared to the same period in 1998. This increase was directly attributable to
the increase in the number of DISH Network subscribers and higher average
revenue per subscriber. Average DISH Network subscribers for the year ended
December 31, 1999 increased approximately 85% compared to the same period in
1998. As of December 31, 1999, we had approximately 3.4 million DISH Network
subscribers compared to 1.9 million at December 31, 1998. Monthly revenue per
subscriber was approximately $42.71 during the year ended December 31, 1999 and
approximated $39.25 during the same period during 1998. DISH Network
subscription television services revenue principally consists of revenue from
basic, premium and pay-per-view subscription television services.

For the year ended December 31, 1999, DTH equipment sales and
integration services totaled $184 million, a decrease of $72 million compared to
the same period during 1998. DTH equipment sales consist of sales of digital
set-top boxes and other digital satellite broadcasting equipment to
international DTH service operators and sales of DBS accessories. This expected
decrease in DTH equipment sales and integration services revenue was primarily
attributable to a decrease in demand combined with a decrease in the sales price
of digital set-top boxes attributable to increased competition.

Satellite services revenue totaled $41 million during 1999, an increase
of $19 million as compared to the same period during 1998. These revenues
principally include fees charged to content providers for signal carriage and
revenues earned from business television, or BTV customers. The increase in
satellite services revenue was primarily attributable to increased BTV revenue
due to the addition of new full-time BTV customers.

DISH Network Operating Expenses. DISH Network operating expenses
totaled $733 million during 1999, an increase of $338 million or 85%, compared
to the same period in 1998. The increase in DISH Network operating expenses was
consistent with, and primarily attributable to, the increase in the number of
DISH Network subscribers. DISH Network operating expenses represented 55% and
59% of subscription television services revenue during the years ended December
31, 1999 and 1998, respectively.

Subscriber-related expenses totaled $575 million during 1999, an
increase of $278 million compared to the same period in 1998. Such expenses,
which include programming expenses, copyright royalties, residuals payable to
retailers and distributors, and billing, lockbox and other variable subscriber
expenses, represented 43% of subscription television services revenues during
the year ended December 31, 1999 compared to 44% during the same period in 1998.

and other expenses resulted from increased personnel and telephone expenses to
support the growth of the DISH Network. Customer service center and other
expenses totaled 9% of subscription television services revenue during 1999, as
compared to 11% during the same period in 1998.

Cost of sales - DTH equipment and Integration Services. Cost of sales -
DTH equipment and integration services totaled $148 million during 1999, a
decrease of $25 million compared to the same period in 1998. Cost of sales - DTH
equipment and integration services principally includes costs associated with
digital set-top boxes and related components sold to international DTH operators
and DBS accessories. Cost of sales - DTH equipment and integration services
represented 81% and 68% of DTH equipment revenue, during the years ended
December 31, 1999 and 1998, respectively. The lower margin was principally
attributable to a $16.6 million loss provision primarily for component parts and
purchase commitments related to our first generation model 7100 set-top boxes,
for which production has been suspended in favor of our second generation model
7200 set-top boxes. The write-off partially offset the expected decrease in cost
of sales - DTH equipment and integration services attributable to a decrease in
demand combined with increased competition.

Marketing Expenses. Marketing expenses totaled $727 million during
1999, an increase of $406 million compared to the same period in 1998. The
increase in marketing expenses was primarily attributable to an increase in
subscriber promotion subsidies. Subscriber promotion subsidies - promotional DTH
equipment includes the cost related to EchoStar receiver systems distributed to
retailers and other distributors of our equipment. Subscriber promotion
subsidies - other includes net costs related to our free installation promotion
and other promotional incentives. Advertising and other expenses totaled $65
million and $48 million during the years ended December 31, 1999 and 1998,
respectively.

During 1999, our total subscriber acquisition costs, inclusive of
acquisition marketing expenses, totaled approximately $729 million, or
approximately $385 per new subscriber activation. Comparatively, our subscriber
acquisition costs during the year ended December 31, 1998, inclusive of
acquisition marketing expenses and deferred subscriber acquisition costs,
totaled $317 million, or approximately $285 per new subscriber activation. The
increase in our subscriber acquisition costs, on a per new subscriber activation
basis, principally resulted from the introduction of several aggressive
marketing promotions to acquire new subscribers.

General and Administrative Expenses. General and administrative
expenses totaled $150 million during 1999, an increase of $53 million as
compared to the same period in 1998. The increase in G&A expenses was
principally attributable to increased personnel expenses to support the growth
of the DISH Network. G&A expenses as a percentage of total revenue increased to
9% during the year ended December 31, 1999 compared to 10% during the same
period in 1998.

Non-cash, Stock-based Compensation. During 1999, we adopted an
incentive plan which provided certain key employees with incentives including
stock options. The payment of these incentives was contingent upon our
achievement of certain financial and other goals. We met certain of these goals
during 1999. Accordingly, during 1999, we recorded approximately $179 million of
deferred compensation related to post-grant appreciation of stock options
granted pursuant to the 1999 incentive plan. The related deferred compensation
will be recognized over the five-year period. Accordingly, during the year ended
December 31, 1999 we recognized $61 million under this performance-based plan.

Pre-Marketing Cash Flow. Pre-marketing cash flow is comprised of EBITDA
plus total marketing expenses. Pre-marketing cash flow was $554 million during
the year ended December 31, 1999, an increase of 85% compared to the same period
in 1998. Our pre-marketing cash flow as a percentage of total revenue was 35% in
1999 compared to 31% in 1998. We believe that pre-marketing cash flow can be a
useful measure of operating efficiency for companies in the DBS industry.

Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA
is defined as operating income (loss) plus depreciation and amortization, and
non-cash, stock-based compensation. EBITDA was negative $173 million during the
year ended December 31, 1999 compared to negative $20 million during the same
period in 1998. EBITDA, as adjusted to exclude amortization of subscriber
acquisition costs, was negative $173 million for the year ended December 31,
1999 compared to negative $39 million for the same period in 1998. This decline
in EBITDA principally resulted from an increase in DISH Network operating and
marketing expenses. Our calculation of EBITDA for the year ended December 31,
1999 does not include approximately $61 million of non-cash compensation expense
resulting from post-grant appreciation of stock options granted to employees.

Depreciation and Amortization. Depreciation and amortization expenses
aggregated $113 million during 1999, a $10 million increase compared to the same
period in 1998, during which subscriber acquisition costs were amortized.
Commencing October 1997, we instead expensed all of these costs at the time of
sale. The increase in depreciation and amortization expenses principally
resulted from an increase in depreciation related to the commencement of
operation of EchoStar IV in August of 1998, the commencement of operation of
EchoStar V in November 1999 and other depreciable assets placed in service
during 1999, partially offset by subscriber acquisition costs becoming fully
amortized during the third quarter of 1998.

Other Income and Expense. Other expense, net totaled $177 million
during 1999, an increase of $39 million compared to the same period in 1998.
This increase resulted from an increase in interest expense. In January 1999, we
refinanced our outstanding 12 1/2% Senior Secured Notes due 2002 issued in June
1997, our 12 7/8% Senior Secured Discount Notes due 2004 issued in 1994, and our
13 1/8% Senior Secured Discount Notes due 2004 issued in 1996 at more favorable
interest rates and terms. In connection with the refinancing, we consummated an
offering of 9 1/4% Senior Notes due 2006 and 9 3/8% Senior Notes due 2009,
referred to herein as the 9 1/4% Seven Year Notes and 9 3/8% Ten Year Notes.
Although the 9 1/4% Seven Year Notes and 9 3/8% Ten Year Notes have lower
interest rates than the debt securities we repurchased, interest expense
increased by approximately $34 million because we raised additional debt to
cover tender premiums and consent and other fees related to the refinancing.

Extraordinary Charge for Early Retirement of Debt. In connection with
the January 1999 refinancing, we recognized an extraordinary loss of $269
million comprised of debt costs, discounts, tender costs, and premiums paid over
the accreted values of the debt retired.

LIQUIDITY AND CAPITAL RESOURCES

Cash Sources

Since inception, we have financed the development of our EchoStar DBS
system and the related commercial introduction of the DISH Network service
primarily through the sale of equity and debt securities and cash from
operations. From May 1994 through December 31, 2000, we have raised total gross
cash proceeds of approximately $249 million from the sale of our equity
securities and as of December 31, 2000, we had approximately $4.0 billion of
outstanding long-term debt (including current portion).

On September 25, 2000, our wholly-owned subsidiary, EchoStar Broadband
Corporation, sold $1 billion principal amount of 10 3/8% Senior Notes due 2007.
The proceeds of these notes will be used primarily by our subsidiaries for the
construction and launch of additional satellites, strategic acquisitions and
other general working capital purposes.

As of December 31, 2000, our unrestricted cash, cash equivalents and
marketable investment securities totaled $1.464 billion compared to $1.254
billion as of December 31, 1999. For the years ended December 31, 2000, 1999 and
1998, we reported net cash flows from operating activities of negative $119
million, negative $59 million and negative $17 million, respectively. The
increase in net cash flow used in operating activities reflects, among other
things, the

significant increase in subscriber acquisition costs associated with our rapid
subscriber growth and our "free installation" promotion.

We expect that our future working capital, capital expenditure and debt
service requirements will be satisfied primarily from existing cash and
investment balances and cash generated from operations. Our ability to generate
positive future operating and net cash flows is dependent upon our ability to
continue to expand our DISH Network subscriber base, retain existing DISH
Network subscribers, and our ability to grow our ETC and Satellite Services
businesses. There can be no assurance that we will be successful in achieving
our goals. The amount of capital required to fund our 2001 working capital and
capital expenditure needs will vary, depending, among other things, on the rate
at which we acquire new subscribers and the cost of subscriber acquisition. Our
working capital and capital expenditure requirements could increase materially
in the event of increased competition for subscription television customers,
significant satellite failures, or in the event of a general economic downturn,
among other factors. These factors could require that we raise additional
capital in the future.

Subscriber Turnover

Our churn for the year ended December 31, 2000 was consistent with our
churn for the same period in 1999. We believe that our percentage churn
continues to be lower than satellite and cable industry averages. While we have
successfully managed churn within a narrow range historically, our maturing
subscriber base, a slowing economy, the effects of rapid growth, bounty programs
offered by competitors and other factors could cause future increases in churn.
Further, impacts from our litigation with the networks in Miami, new FCC rules
governing the delivery of superstations and other factors, could cause us to
terminate delivery of distant network channels and superstations to a material
portion of our subscriber base, which could cause many of those customers to
cancel their subscription to our other services. Any such terminations could
result in a small reduction in average monthly revenue per subscriber and could
result in increased churn. While there can be no assurance, notwithstanding the
issues discussed above we have and expect to be able to continue to manage churn
below industry averages during 2001.

Subscriber Acquisition Costs

As previously described, we subsidize the cost and installation of
EchoStar receiver systems in order to attract new DISH Network subscribers. Our
average subscriber acquisition costs were $452 per new subscriber activation
during the year ended December 31, 2000. Since we retain ownership of the
equipment, amounts capitalized under our Digital Dynamite Plan are not included
in our calculation of these subscriber acquisition costs. As a result of
continuing competition and our plans to attempt to continue to drive rapid
subscriber growth, we expect our per subscriber acquisition costs for 2001 will
remain in a range consistent with our 2000 average of approximately $452 per new
subscriber activation. Our subscriber acquisition costs, both in the aggregate
and on a per new subscriber activation basis, may materially increase to the
extent that we continue or expand our Free Now promotion, or introduce other
more aggressive promotions if we determine that they are necessary to respond to
competition, or for other reasons.

Funds necessary to meet subscriber acquisition costs will be satisfied
from existing cash and investment balances to the extent available. We may,
however, be required to raise additional capital in the future to meet these
requirements. If we were required to raise capital today, a variety of debt and
equity funding sources would likely be available to us. However, there can be no
assurance that additional financing will be available on acceptable terms, or at
all, if needed in the future.

Digital Dynamite

expenditures. Capital expenditures under our Digital Dynamite promotion totaled
approximately $65.4 million for the year ended December 31, 2000.

Conditional Access System

The access control system is central to the security network that
prevents unauthorized viewing of programming. Theft of cable and satellite
programming has been widely reported and our signal encryption has been pirated
and could be further compromised in the future. If other measures are not
successful, it could be necessary to replace the credit card size card that
controls the security of each consumer set top box at a material cost to us.

Intellectual Property

Many entities, including some of our competitors, now have and may in
the future obtain patents and other intellectual property rights that cover or
affect products or services directly or indirectly related to those that we
offer. In general, if a court determines that one or more of our products
infringes on intellectual property held by others, we would be required to cease
developing or marketing those products, to obtain licenses to develop and market
those products from the holders of the intellectual property, or to redesign
those products in such a way as to avoid infringing the patent claims. Various
parties have asserted patent and other intellectual property rights with respect
to components within our direct broadcast satellite system. Certain of these
parties have filed suit against us, including Starsight, Superguide, and IPPV
Enterprises, as previously described. We cannot be certain that these persons do
not own the rights they claim, that our products do not infringe on these
rights, that we would be able to obtain licenses from these persons on
commercially reasonable terms or, if we were unable to obtain such licenses,
that we would be able to redesign our products to avoid infringement.

Obligations and Future Capital Requirements

Semi-annual cash debt service of approximately $94 million related to
our 9 1/4% Senior Notes due 2006 (Seven Year Notes) and our 9 3/8% Senior Notes
due 2009 (Ten Year Notes), is payable in arrears on February 1 and August 1 each
year. Semi-annual cash debt service requirements of approximately $24 million
related to our 4 7/8% Convertible Subordinated Notes due 2007 is payable in
arrears on January 1 and July 1 of each year, commencing July 1, 2000.
Semi-annual cash debt service of approximately $52 million related to our
10 3/8% Senior Notes due 2007 is payable in arrears on April 1 and October 1 of
each year, commencing April 1, 2001. There are no scheduled principal payment or
sinking fund requirements prior to maturity of any of these notes.

The indentures related to our 9 1/4% Senior Notes due 2006 (the "Seven
Year Notes") and our 9 3/8% Senior Notes due 2009 (the "Ten Year Notes")
(collectively, the "Seven and Ten Year Notes Indentures") contain restrictive
covenants that require us to maintain satellite insurance with respect to at
least half of the satellites we own. Insurance coverage is therefore required
for at least three of our six satellites currently in orbit. We have procured
normal and customary launch insurance for EchoStar VI. This launch insurance
policy provides for insurance of $225.0 million. The EchoStar VI launch
insurance policy expires in July 2001. We are currently self-insuring EchoStar
I, EchoStar II, EchoStar III, EchoStar IV and EchoStar V. During 2000, to
satisfy insurance covenants related to the outstanding EchoStar DBS senior
notes, we reclassified the depreciated cost of two of our satellites from cash
and cash equivalents to cash reserved for satellite insurance on our balance
sheet. As of December 31, 2000, cash reserved for satellite insurance totaled
approximately $82 million. The reclassifications will continue until such time,
if ever, as the insurers are again willing to insure our satellites on
commercially reasonable terms.

We utilized $91 million of satellite vendor financing for our first
four satellites. As of December 31, 2000, approximately $25 million of that
satellite vendor financing remained outstanding. The satellite vendor financing
bears interest at 8 1/4% and is payable in equal monthly installments over five
years following launch of the satellite to which it relates. A portion of the
contract price with respect to EchoStar VII is payable over a period of 13 years
following launch with interest at 8%, and a portion of the contract price with
respect to EchoStar VIII and EchoStar IX is payable following launch with
interest at 8%. Those in orbit payments are contingent on the continued health
of the satellite.

Dividends on our 6 3/4% Series C Cumulative Convertible Preferred Stock
began to accrue on November 2, 1999. Holders of the Series C Preferred Stock are
entitled to receive cumulative dividends at an annual rate of 6 3/4% of the
Liquidation Preference of $50 per share. Dividends are payable quarterly in
arrears, commencing February 1, 2000, when, as, and if declared by our Board of
Directors. All accumulated and unpaid dividends may, at our option, be paid in
cash, Class A common stock, or a combination thereof upon conversion or
redemption.

During 2001, we anticipate total capital expenditures of between
$600-$900 million depending upon the strength of the economy and other factors.
We expect approximately 40% of that amount to be utilized for satellite
construction and approximately 60% for EchoStar receiver systems in connection
with our Digital Dynamite Plan and for general corporate expansion. Our
anticipated capital expenditures related to the Digital Dynamite promotion may
materially increase to the extent this promotion is successful and to the extent
that we continue or expand our Digital Dynamite promotion.

In addition to our DBS business plan, we have licenses, or applications
pending with the FCC, for a two satellite FSS Ku-band satellite system, a two
satellite FSS Ka-band satellite system, and a proposed modification thereof and
a 6-satellite Low Earth Orbit Mobile system. We will need to raise additional
capital to fully construct these satellites. During February 2000, we announced
agreements for the construction and delivery of three new satellites. Two of
these satellites, EchoStar VII and EchoStar VIII, will be advanced, high-powered
DBS satellites. The third satellite, EchoStar IX, will be a hybrid Ku/Ka-band
satellite.

During November 2000, one of our wholly owned subsidiaries purchased a
49.9% interest in VisionStar, Inc. VisionStar holds an FCC license, and is
constructing a Ka-band satellite, to launch into the 113 W.L. orbital slot.
Together with VisionStar we have requested FCC approval to acquire control over
VisionStar by increasing our ownership of VisionStar to 90%, for a total
purchase price of approximately $2.8 million. We have also provided loans to
VisionStar totaling less than $10 million to date for the construction of their
satellite and expect to provide additional funding to VisionStar in the future.
We are not obligated to finance the full remaining cost to construct and launch
the VisionStar satellite, but VisionStar's FCC license currently requires
construction of the satellite to be completed by April 30, 2002 or the license
could be revoked. We currently expect to continue to fund loans and equity
contributions for construction of the satellite in the near term from cash on
hand, and expect that we may spend approximately $79.5 million during 2001 for
that purpose subject to, among other things, FCC action. In the future we may
fund construction, launch and insurance of the satellite through cash from
operations, public or private debt or equity financing, joint ventures with
others, or from other sources.

We expect that our future working capital, capital expenditure and debt
service requirements will be satisfied from existing cash and investment
balances, and cash generated from operations. Our ability to generate positive
future operating and net cash flows is dependent, among other things, upon our
ability to retain existing DISH Network subscribers, our ability to manage the
growth of our subscriber base, and our ability to grow our ETC and Satellite
Services businesses. During 2000, subscriber growth was strong. To the extent
future subscriber growth exceeds our expectations, it may be necessary for us to
raise additional capital to fund increased working capital requirements. There
may be a number of other factors, some of which are beyond our control or
ability to predict, that could require us to raise additional capital. These
factors include unexpected increases in operating costs and expenses, a defect
in or the loss of any satellite, or an increase in the cost of acquiring
subscribers due to additional competition, among other things. If cash generated
from our operations is not sufficient to meet our debt service requirements or
other obligations, we would be required to obtain cash from other financing
sources. If we were required to raise capital today a variety of debt and equity
funding sources would likely be available to us. However, there can be no
assurance that such financing would be available on terms acceptable to us, or
if available, that the proceeds of such financing would be sufficient to enable
us to meet all of our obligations.

EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 or SAB 101, "Views on Selected Revenue Recognition
Issues." SAB 101 provides guidance on applying generally accepted accounting
principles to selected revenue recognition issues. The provisions of SAB 101 and
certain related EITF consensuses were required to be adopted in the quarter
ended December 31, 2000 retroactive to January 1, 2000, with any cumulative
effect as of January 1, 2000 reported as the cumulative effect of a change in
accounting principle. Our adoption of SAB 101 resulted in no recognition of a
cumulative effect of a change in accounting principle.

SEASONALITY

Our revenues vary throughout the year. As is typical in the
subscription television service industry, our first half of the year generally
produces lower new subscriber revenues than the second half of the year. Our
operating results in any period may be affected by the incurrence of advertising
and promotion expenses that do not necessarily produce commensurate revenues in
the short-term until the impact of such advertising and promotion is realized in
future periods.

INFLATION

Inflation has not materially affected our operations during the past
three years. We believe that our ability to increase the prices charged for our
products and services in future periods will depend primarily on competitive
pressures. We do not have any material backlog of our products.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

MARKET RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS

As of December 31, 2000, our unrestricted cash, cash equivalents and
marketable investment securities had a fair value of $1.464 billion. Of that
amount, a total of $1.374 billion was invested in: (a) cash; (b) debt
instruments of the U.S. Government and its agencies; (c) commercial paper with
an average maturity of less than one year and rated in one of the four highest
rating categories by at least two nationally recognized statistical rating
organizations; and (d) instruments with similar risk characteristics to the
commercial paper described above. The primary purpose of these investing
activities has been to preserve principal until the cash is required to fund
operations. Consequently, the size of this portfolio fluctuates significantly as
cash is raised and used in our business.

The value of certain of the investments in this portfolio can be
impacted by, among other things, the risk of adverse changes in securities and
economic markets generally, as well as the risks related to the performance of
the companies whose commercial paper and other instruments we hold. However, the
high quality of these investments (as assessed by independent rating agencies),
reduces these risks. The value of these investments can also be impacted by
interest rate fluctuations. At December 31, 2000, all of our investments in this
category were in fixed rate instruments or money market type accounts. While an
increase in interest rates would ordinarily adversely impact the fair value of
fixed rate investments, we normally hold these investments to maturity.
Consequently, neither interest rate fluctuations nor other market risks
typically result in significant gains or losses to this portfolio. A decrease in
interest rates has the effect of reducing our future annual interest income from
this portfolio, since funds would be re-invested at lower rates as the
instruments mature. Over time, any net percentage decrease in interest rates
could be reflected in a corresponding net percentage decrease in our interest
income. During 1999 and 2000, the impact of interest rate fluctuations, changed
business prospects and all other factors did not have a material impact on the
fair value of the portfolio, or on our income derived from this portfolio.

We also invest in debt and equity of public and private companies for
strategic business purposes. We had strategic debt and equity investments
totaling approximately $3.9 million at December 31, 1999. As of December 31,
2000, we held strategic debt and equity investments with a fair value of
approximately $90 million. We acquired stock in one of those companies, OpenTV,
in connection with establishment of a strategic relationship which did not
involve the investment of cash by us. None of these investments accounted for
more than 40% of the total fair value of the portfolio. We may make additional
strategic investments in other debt and equity securities in the future.

The fair value of our strategic debt investments can be impacted by
interest rate fluctuations. Absent the effect of other factors, a hypothetical
10% increase in LIBOR would result in a decrease in the fair value of our
investments in these debt instruments of approximately $2 million. The fair
value of our strategic debt and equity investments can also be significantly
impacted by the risk of adverse changes in securities markets generally, as well
as risks related to the performance of the companies whose securities we have
invested in, risks associated with specific industries, and other factors. These
investments are subject to significant fluctuations in fair market value due to
the volatility of the securities markets and of the underlying businesses. A
hypothetical 30% adverse change in the price of our public strategic debt and
equity investments would result in approximately a $9 million decrease in the
fair value of that portfolio.

In addition to the $1.464 billion, we have made strategic equity
investments in Wildblue Communications, StarBand Communications, VisionStar,
Inc. and Replay TV totaling approximately $110 million. The securities of these
companies are not publicly traded. StarBand recently announced that it was
canceling its planned initial public stock offering. Our ability to create
realizable value for our strategic investments in companies that are not public
is dependent on the success of their business plans. Among other things, there
is relatively greater risk that those companies may not be able to raise
sufficient capital to fully finance their business plans. Since 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 that
we will be able to obtain full value for them.

We currently have accumulated net unrealized losses on certain of our
investments as disclosed on our accompanying balance sheets. There can be no
assurance that the accumulated net unrealized losses will not increase or that
some or all of these losses will not have to be recorded as charges to earnings
in future periods. We have not used derivative financial instruments for
speculative purposes. We have not hedged or otherwise protected against the
risks associated with any of our investing or financing activities.

As of December 31, 2000, we estimated the fair value of our fixed-rate
debt and mortgages and other notes payable to be approximately $3.7 billion
using quoted market prices where available, or discounted cash flow analyses.
The fair value of our fixed rate debt and mortgages is affected by fluctuations
in interest rates. A hypothetical 10% decrease in assumed interest rates would
increase the fair value of our debt by approximately $196 million. To the extent
interest rates increase, our costs of financing would increase at such time as
we are required to refinance our debt.