Echostar Satellite Broadcasting Corp – ‘424B1’ on 7/1/96

As of:  Monday, 7/1/96   ·   Accession #:  912057-96-13571   ·   File #:  333-03980

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Prospectus   —   Rule 424(b)(1)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus                                           273   1.50M 

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                    Filed pursuant to Rule 424(b)(1)
                           Registration No. 333-3980
PROSPECTUS                                                                      

ECHOSTAR SATELLITE BROADCASTING CORPORATION 

OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF ITS 
13 1/8% SENIOR SECURED DISCOUNT NOTES DUE 2004
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT 
FOR EACH $1,000 IN PRINCIPAL AMOUNT OF ITS
OUTSTANDING 13 1/8% SENIOR SECURED DISCOUNT NOTES DUE 2004

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON JULY 26, 1996, UNLESS EXTENDED.
------------------------

    EchoStar  Satellite  Broadcasting Corporation,  a Colorado  corporation (the
"Issuer"), hereby offers to exchange  (the "Exchange Offer") up to  $580,000,000
in  aggregate principal amount of its new  13 1/8% Senior Secured Discount Notes
due 2004 (the "Exchange  Notes") for up to  $580,000,000 in aggregate  principal
amount  of its outstanding 13  1/8% Senior Secured Discount  Notes due 2004 (the
"Old Notes" and, together with the Exchange Notes, the "Notes") that were issued
and sold in a transaction exempt  from registration under the Securities Act  of
1933, as amended (the "Securities Act").                                        

    The  terms  of the  Exchange  Notes are  substantially  identical (including
principal amount, interest rate, maturity, security and ranking) to the terms of
the Old Notes for which  they may be exchanged  pursuant to the Exchange  Offer,
except  that the Exchange Notes: (i)  are freely transferable by holders thereof
(except as provided below);  and (ii) are not  entitled to certain  registration
rights  and certain  liquidated damages  which are  applicable to  the Old Notes
under the Registration Rights Agreement (as defined). The Exchange Notes will be
issued under the indenture governing the Old Notes. The Notes rank PARI PASSU in
right of  payment with  all senior  indebtedness of  the Issuer.  The Notes  are
guaranteed  on  a  subordinated  basis  by  EchoStar  Communications Corporation
("EchoStar"), the  Issuer's parent,  and are  or  will be  secured by  liens  on
certain  assets of the Issuer, EchoStar  and certain of EchoStar's subsidiaries,
including all of  the outstanding  capital stock  of Dish,  Ltd. ("Dish,  Ltd.")
which currently owns substantially all of EchoStar's operating subsidiaries. See
"Description  of  Exchange Notes  -- Security."  Although  the Notes  are titled
"Senior": (i) the Issuer has not issued,  and does not have any plans to  issue,
any  indebtedness to  which the Notes  would be  senior; and (ii)  the Notes are
effectively subordinated to all liabilities  of EchoStar (except liabilities  to
general  creditors)  and  its  other  subsidiaries  (except  liabilities  of the
Issuer), including  liabilities to  general  creditors. As  of March  31,  1996,
including  the  effect  of  the  offering  of  the  Old  Notes  (the  "Old Notes
Offering"),  the  liabilities  of  EchoStar  and  its  subsidiaries   aggregated
approximately $815.3 million. In addition, the cash flow generated by the assets
and  operations of the  Issuer's subsidiaries will only  be available to satisfy
the Issuer's obligations on the Notes at  any time after payment of all  amounts
due  and  payable  at such  time  under the  1994  Notes  by Dish,  Ltd.  -- See
"Description of  Certain  Indebtedness --  1994  Notes." Concurrently  with  the
closing  of  the Old  Notes Offering,  approximately $177.3  million of  the net
proceeds of the Old Notes Offering were placed in the Escrow Account. Funds  may
be  disbursed from the Escrow  Account only upon satisfaction  of the Escrow and
Disbursement Agreement. The Escrow Account  serves as collateral for the  Notes.
For  a complete description of the terms of the Exchange Notes, see "Description
of Exchange  Notes." There  will be  no cash  proceeds to  the Issuer  from  the
Exchange Offer.                                                                 

                                                        (CONTINUED ON NEXT PAGE)
------------------------

    HOLDERS  OF OLD  NOTES SHOULD  CAREFULLY CONSIDER  THE MATTERS  SET FORTH IN
"RISK FACTORS"  COMMENCING ON  PAGE 20  OF  THIS PROSPECTUS  PRIOR TO  MAKING  A
DECISION WITH RESPECT TO THE EXCHANGE OFFER.                                    
THESE  SECURITIES HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE SECURITIES AND  
EXCHANGE COMMISSION  OR  ANY  STATE SECURITIES  COMMISSION  NOR  HAS  THE   
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION 
PASSED  UPON  THE ACCURACY  OR  ADEQUACY OF  THIS  PROSPECTUS. ANY  
     REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

The date of this Prospectus is June 28, 1996. 

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(COVER PAGE CONTINUED)                                                          

    Interest on the Exchange  Notes will accrete from  March 25, 1996, but  will
not  be payable prior  to March 15,  2000. Thereafter, interest  on the Exchange
Notes will be payable semi-annually on March  15 and September 15 of each  year,
commencing  September 15,  2000. Holders  of the Old  Notes whose  Old Notes are
accepted for exchange will be deemed to  have waived the right to have  interest
accrete,  or to  receive any  payment in  respect of  interest on  the Old Notes
accreted, from March 25, 1996, to the date of issuance of the Exchange Notes.   

    Except as set  forth below,  the Notes are  not redeemable  at the  Issuer's
option prior to March 15, 2000. Thereafter, the Notes are subject to redemption,
at  the option of the Issuer, in whole  or in part, at the redemption prices set
forth herein. In addition, at any time  prior to March 15, 1999, the Issuer  may
redeem  up to one-third of the Notes at  a redemption price equal to 112.125% of
the Accreted Value thereof on the repurchase  date with the net proceeds of  one
public  or private sale of certain Equity Interests of EchoStar. In the event of
a Change of Control, the Issuer is  required to make an offer to repurchase  all
of  the Exchange Notes at  a purchase price equal to  101% of the Accreted Value
thereof on the  date of purchase  (if prior to  March 15, 2000)  or 101% of  the
aggregate  principal amount thereof,  together with accrued  and unpaid interest
thereon to the date of purchase (if on or after March 15, 2000).                

    The Old  Notes were  originally  issued and  sold on  March  25, 1996  in  a
transaction  not  registered  under the  Securities  Act, in  reliance  upon the
exemption provided  in  Section  4(2)  of  the  Securities  Act  and  Rule  144A
promulgated  under the  Securities Act.  Accordingly, the  Old Notes  may not be
reoffered, resold  or  otherwise pledged,  hypothecated  or transferred  in  the
United  States unless so  registered or unless an  applicable exemption from the
registration requirements of  the Securities  Act is available.  Based upon  its
view  of interpretations provided to third parties by the Staff (the "Staff") of
the Securities and Exchange Commission  (the "Commission"), the Issuer  believes
that  the Exchange Notes issued  pursuant to the Exchange  Offer in exchange for
the Old Notes  may be offered  for resale, resold  and otherwise transferred  by
holders  thereof (other  than any holder  which is  : (i) an  "affiliate" of the
Issuer within the meaning of Rule 405 under the Securities Act (an "Affiliate");
(ii) a broker-dealer who acquired Old Notes directly from the Issuer; or (iii) a
broker-dealer who  acquired Old  Notes as  a result  of market  making or  other
trading  activities)  without compliance  with  the registration  and prospectus
delivery provisions of the Securities Act, provided that such Exchange Notes are
acquired in the ordinary course of  such holders' business and such holders  are
not  engaged in,  and do  not intend to  engage in,  and have  no arrangement or
understanding with any person to participate in, a distribution of such Exchange
Notes. Each  broker-dealer that  receives  Exchange Notes  for its  own  account
pursuant  to  the  Exchange  Offer  must  acknowledge  that  it  will  deliver a
prospectus in  connection with  any  resale of  Exchange  Notes. The  Letter  of
Transmittal  that is filed as an exhibit  to the Registration Statement of which
this Prospectus  is a  part (the  "Letter  of Transmittal")  states that  by  so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to  admit that it is an "underwriter"  within the meaning of the Securities Act.
Broker-dealers who acquired  Old Notes  as a result  of market  making or  other
trading  activities  may use  this Prospectus,  as  supplemented or  amended, in
connection with resales of the Exchange Notes. The Issuer has agreed that, for a
period of 180 days after the Registration Statement of which this Prospectus  is
a  part is declared  effective by the  Commission, it will  make this Prospectus
available to any broker-dealer for use  in connection with any such resale.  Any
holder  who tenders in the Exchange Offer  for the purpose of participating in a
distribution of the Exchange  Notes and any other  holder that cannot rely  upon
interpretations must comply with the registration and prospectus requirements of
the Securities Act in connection with a secondary resale transaction.           

    Old  Notes  initially  purchased  by  qualified  institutional  buyers  were
initially represented by three global Notes in registered form, deposited  with,
or on behalf of, The Depository Trust Company (the "Depositary"), and registered
in  the name  of Cede &  Co., as nominee  of the Depositary.  The Exchange Notes
exchanged for Old Notes represented by  the global Notes will be represented  by
one  or more global Exchange Notes in registered form, registered in the name of
the nominee of the Depositary.                                                  

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(COVER PAGE CONTINUED)                                                          
See "Description of Exchange Notes  -- Book-entry, Delivery and Form."  Exchange
Notes  issued to  non-qualified institutional buyers  in exchange  for Old Notes
held by such investors  will be issued only  in certificated, fully  registered,
definitive  form.  Except  as  described herein,  Exchange  Notes  in definitive
certificated form  will not  be issued  in exchange  for the  global Note(s)  or
interests therein.                                                              

    The  Old Notes  and the Exchange  Notes constitute new  issues of securities
with no  established public  trading  market. Any  Old  Notes not  tendered  and
accepted  in the Exchange Offer will remain  outstanding. To the extent that Old
Notes are tendered  and accepted in  the Exchange Offer,  a holder's ability  to
sell  untendered  and  tendered, but  unaccepted,  Old  Notes are  likely  to be
adversely affected. Following consummation of the Exchange Offer, the holders of
any remaining Old Notes will continue to be subject to the existing restrictions
on transfer  thereof and  the Issuer  will have  no further  obligation to  such
holders  to provide  for the  registration under the  Securities Act  of the Old
Notes except  under  certain very  limited  circumstances. See  "Description  of
Exchange  Notes  --  Old  Notes' Registration  Rights;  Liquidated  Damages." No
assurance can be given as to the liquidity of the trading market for either  the
Old Notes or the Exchange Notes.                                                

    The  Exchange Offer is not conditioned  upon any minimum aggregate principal
amount of Old Notes being tendered or accepted for exchange. The Exchange  Offer
will  expire at 5:00 p.m., New York City  time, on Friday, July 26, 1996, unless
extended (the "Expiration Date"). The date of acceptance for exchange of the Old
Notes (the  "Exchange  Date") will  be  the  first business  day  following  the
Expiration  Date, upon surrender of the Old Note. Old Notes tendered pursuant to
the Exchange Offer may be  withdrawn at any time  prior to the Expiration  Date;
otherwise such tenders are irrevocable.                                         

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TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                                              PAGE   
                                                                                                            ---------
                                                                                                                     
Available Information......................................................................................         5
Prospectus Summary.........................................................................................         7
Risk Factors...............................................................................................        20
Use of Proceeds............................................................................................        34
The Exchange Offer.........................................................................................        35
Capitalization.............................................................................................        43
Selected Financial Data....................................................................................        44
Management's Discussion and Analysis of Financial Condition and Results of Operations......................        46
Business...................................................................................................        59
Management.................................................................................................        89
Certain Relationships and Related Transactions.............................................................        95
Security Ownership of Certain Beneficial Owners and Management.............................................        96
Description of Certain Indebtedness........................................................................        98
Description of Exchange Notes..............................................................................       100
Certain United States Federal Income Tax Considerations....................................................       132
Plan of Distribution.......................................................................................       134
Notice to Investors........................................................................................       135
Experts....................................................................................................       138
Legal Matters..............................................................................................       138

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AVAILABLE INFORMATION 

    The  Issuer and the  Guarantors have filed with  the Securities and Exchange
Commission (the "Commission")  a Registration  Statement on  Form S-1  (together
with   all  amendments,   exhibits,  schedules  and   supplements  thereto,  the
"Registration Statement") under the Securities Act with respect to the  Exchange
Notes  being  offered  hereby.  This  Prospectus,  which  forms  a  part  of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which  are omitted as permitted by  the
rules and regulations of the Commission. For further information with respect to
the  Issuer, the Guarantors and the Exchange  Notes, reference is hereby made to
the Registration Statement. Statements  contained in this  Prospectus as to  the
contents  of any  contract or other  document are not  necessarily complete and,
where such  contract  or  other  document is  an  exhibit  to  the  Registration
Statement, each such statement is qualified in all respects by the provisions in
such exhibit, to which reference is hereby made.                                

    The  Issuer, Dish, Ltd. and  Direct Broadcasting Satellite Corporation ("New
DBSC") are  not  currently subject  to  the informational  requirements  of  the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, Dish,
Ltd.  is required by the indenture (the "1994 Indenture") under which Dish, Ltd.
issued its 12  7/8 Senior Secured  Discount Notes due  2004 (the "1994  Notes"),
whether or not it is then subject to Section 13 or 15(d) of the Exchange Act, to
file  with  the Commission  and furnish  to holders  of the  1994 Notes  and the
trustee under the 1994 Indenture copies of the annual reports, quarterly reports
and other periodic  reports which Dish,  Ltd. would have  been required to  file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act if Dish,
Ltd.  were  subject to  such  Sections. EchoStar  Communications  Corporation is
subject to  the  informational  requirements  of  the  Exchange  Act.  Upon  the
effectiveness   of  the  Registration  Statement   or,  if  earlier,  the  Shelf
Registration Statement (as defined herein), pursuant to the 1996 Indenture,  the
Issuer,  Dish, Ltd.  and New  DBSC will file  all reports  and other information
required by the Exchange  Act. The Registration Statement,  as well as  periodic
reports,  proxy statements  and other information  filed by the  Issuer with the
Commission, may be inspected  at the public  reference facilities maintained  by
the  Commission at Room 1024, 450 Fifth  Street, N.W, Washington, D.C. 20549, or
at its regional  offices located at  Citicorp Center, 500  West Madison  Street,
Suite  1400, Chicago, Illinois  60661 and Seven World  Trade Center, Suite 1300,
New York, New  York 10048.  Copies of  such material  can be  obtained from  the
Issuer  upon  request. Any  such  request should  be  addressed to  the Issuer's
principal offices at  90 Inverness Circle  East, Englewood, Colorado  80112-5300
(telephone (303) 799-8222).                                                     

    The  Issuer's,  Dish,  Ltd.'s and  New  DBSC's obligation  to  file periodic
reports with the Commission pursuant to the Exchange Act may be suspended if the
Notes are held  of record  by fewer  than 300 holders  at the  beginning of  any
fiscal  year of the Issuer, other than the fiscal year in which the Registration
Statement or the  Shelf Registration Statement  becomes effective. However,  the
Issuer  has agreed, pursuant  to the indenture  dated as of  March 25, 1996 (the
"1996 Indenture") governing the Notes, that,  whether or not it is then  subject
to Section 13 or 15(d) of the Exchange Act, it will file with the Commission and
furnish  to the holders  of the Notes  and the Trustee  under the 1996 Indenture
(and, if filing such documents with the Commission is prohibited, to prospective
holders of  the Notes  upon request)  copies of  the annual  reports,  quarterly
reports  and other periodic reports which the Issuer would have been required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act  if
the  Issuer were subject to  such Sections, and in  addition, the Issuer and New
DBSC have agreed to also provide all of the foregoing information for the Issuer
and New DBSC taken  as a single  entity. In addition,  the Issuer will  furnish,
upon  the request of any  holder of a Note, such  information as is specified in
paragraph (d)(4) of Rule 144A,  to the holder or  to a prospective purchaser  of
such  Note who the holder reasonably believes is a qualified institutional buyer
within the meaning of Rule  144A, in order to  permit compliance by such  holder
with Rule 144A in connection with the resale of such Note by such holder unless,
at  the time of the request, the Issuer is subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act.                                     

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    UNTIL SEPTEMBER 26, 1996  (90 DAYS AFTER THE  DATE OF THIS PROSPECTUS),  ALL
DEALERS  EFFECTING  TRANSACTIONS IN  THE REGISTERED  SECURITIES, WHETHER  OR NOT
PARTICIPATING IN THIS  DISTRIBUTION, MAY  BE REQUIRED TO  DELIVER A  PROSPECTUS.
THIS  IS IN ADDITION TO  THE OBLIGATION OF DEALERS  TO DELIVER A PROSPECTUS WHEN
ACTING  AS  UNDERWRITERS  AND  WITH  RESPECT  TO  THEIR  UNSOLD  ALLOTMENTS   OR
SUBSCRIPTIONS.                                                                  

NOTICE TO INVESTORS 

    THIS  PROSPECTUS (THE "PROSPECTUS") DOES NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY,  ANY NOTES BY ANY PERSON IN ANY  JURISDICTION
IN  WHICH  IT  IS  UNLAWFUL  FOR  SUCH  PERSON  TO  MAKE  SUCH  AN  OFFERING  OR
SOLICITATION. NEITHER  THE  DELIVERY  OF  THIS  PROSPECTUS  NOR  ANY  SALE  MADE
HEREUNDER  SHALL UNDER  ANY CIRCUMSTANCES IMPLY  THAT THE  INFORMATION HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.                           

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PROSPECTUS SUMMARY

    THE  FOLLOWING SUMMARY  IS QUALIFIED  IN ITS  ENTIRETY BY  THE MORE DETAILED
INFORMATION, INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO, APPEARING
ELSEWHERE IN  THIS PROSPECTUS.  ECHOSTAR SATELLITE  BROADCASTING CORPORATION,  A
COLORADO  CORPORATION, WAS  FORMED FOR  THE PURPOSE OF  THE OFFERING  OF THE OLD
NOTES  (THE  "OLD  NOTES  OFFERING")  BY  ITS  PARENT,  ECHOSTAR  COMMUNICATIONS
CORPORATION,  A NEVADA CORPORATION, THE CLASS A  COMMON STOCK OF WHICH IS QUOTED
ON THE  NASDAQ  NATIONAL  MARKET  UNDER  THE SYMBOL  "DISH."  AS  USED  IN  THIS
PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "ECHOSTAR" REFERS TO ECHOSTAR
COMMUNICATIONS  CORPORATION AND ITS SUBSIDIARIES AND "ISSUER" REFERS TO ECHOSTAR
SATELLITE BROADCASTING CORPORATION AND ITS SUBSIDIARIES.                        

ECHOSTAR COMMUNICATIONS CORPORATION 

    EchoStar, which successfully launched  its first direct broadcast  satellite
("DBS"),  EchoStar I, in December 1995, is one of only two companies with United
States  licensed  operational  capacity  sufficient  to  provide   comprehensive
nationwide  DBS programming service in 1996. Currently, EchoStar offers over 100
channels of high quality digital  video and audio programming. Additionally,  on
March   1,  1996,  EchoStar  received  short-term  authority  from  the  Federal
Communications Commission ("FCC") to  operate approximately 30 additional  video
channels  on EchoStar I for approximately 180  days (the "STA"). The STA expires
August 31, 1996 unless extended. EchoStar's DBS service (the "DISH Network-SM-")
is expected to  expand to  approximately 200  digital video  and audio  channels
following  the successful launch  of a second DBS  satellite this fall. However,
there can be  no assurance that  the launch of  EchoStar's second DBS  satellite
this  fall will be  successful. See "Risk  Factors -- Risk  of Satellite Defect,
Loss or Reduced Performance."                                                   

    EchoStar will target approximately 110 million potential subscribers in  the
continental   United  States,  including  approximately  96  million  television
households.  DISH  Network-SM-  subscribers  can   choose  from  a  variety   of
programming  packages  which  EchoStar  believes  have  a  better price-to-value
relationship than packages currently offered  by most pay television  providers.
For  example, the entry  level DISH Network-SM-  programming package ("America's
Top 40-SM-")  is priced  at $19.99  per  month and  consists of  40 of  the  top
"expanded  basic cable" channels, including  a conventional premium service, The
Disney Channel-Registered Trademark-. EchoStar will also offer various  regional
sports  networks,  numerous  premium  services,  pay-per-view  programming  and,
following the  launch of  a second  satellite, additional  premium services  and
expanded  pay-per-view offerings. EchoStar has negotiated affiliation agreements
with major content providers, giving it the right to broadcast substantially all
of  the  most   popular  programming,   including  ESPN-Registered   Trademark-,
MTV-Registered Trademark-, Nickelodeon-Registered Trademark-,                   
VH-1-Registered  Trademark-, Showtime Network-Registered  Trademark-, The Disney
Channel-Registered Trademark-, USA Network-Registered Trademark-,               
CNN-Registered Trademark-,  Headline  News-Registered Trademark-,  TNT-SM-,  CNN
International-SM-,  Turner Classic  Movies-Registered Trademark-,  The Discovery
Channel-Registered Trademark-, A&E-SM-, HBO-Registered Trademark-,              
Cinemax-Registered   Trademark-,    Lifetime    Television-SM-,    The    Family
Channel-Registered Trademark-, C-Span-Registered Trademark-,                    
CNBC-Registered Trademark- and many other programming services.                 

    EchoStar  believes  that  it will  have  access  to more  U.S.  licensed DBS
frequencies than  any of  its competitors.  EchoStar controls,  or will  control
(subject to certain FCC approvals and findings), as many as 90 such frequencies,
including  21  frequencies  at one  of  the  three U.S.  licensed  orbital slots
currently capable of providing nationwide DBS service. See "Business -- Industry
Overview -- DBS  Industry." EchoStar  believes that access  to this  substantial
amount  of DBS spectrum will enable  it to achieve higher subscriber penetration
and higher revenue per  subscriber than it would  otherwise attain with its  200
channel  service.  EchoStar currently  plans  to use  this  spectrum to  offer a
substantial number of additional video  channels, including alternate time  zone
feeds  of popular  expanded basic  cable programming,  multiplexed premium movie
services, frequent start  pay-per-view, local programming  for the largest  U.S.
television  markets, niche  and foreign  language programming,  professional and
college sporting  events,  high  definition television  ("HDTV"),  business  and
educational programming and high-speed transmission of Internet data.           

    The  introduction of DBS receivers is widely regarded as the most successful
introduction of a consumer electronics  product in U.S. history, surpassing  the
rollout of color televisions, VCRs and                                          

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compact   disc  players.  During   the  18  months   ended  December  31,  1995,
approximately 2.2 million U.S.  households subscribed to digital  direct-to-home
("DTH") satellite service. According to industry estimates, 85% of all consumers
are  satisfied with  DBS picture  quality, compared  to a  consumer satisfaction
level of approximately 47% for cable.                                           

    Of the approximately 96 million television households in the United  States,
it  is estimated that approximately 60 million subscribers pay an average of $33
per month for multichannel programming services. EchoStar believes that there is
significant unsatisfied demand  for high quality,  reasonably priced  television
programming.  Although primary markets for the EchoStar DBS System are likely to
include the approximately 11.0 million households not passed by cable television
systems and the approximately 20.4 million households currently passed by  cable
television  systems  with  relatively limited  channel  capacity,  EchoStar also
expects to  target  cable  subscribers  in urban  and  suburban  areas  who  are
dissatisfied with the quality or price of their cable programming.              

    DISH Network-SM- programming is available to any subscriber who purchases or
leases an EchoStar receiver system, which consists of an 18-inch satellite dish,
a  digital  satellite  receiver,  a  user-friendly  remote  control  and related
components (an "EchoStar  Receiver System").  The suggested retail  price of  an
EchoStar  Receiver  System is  currently  between approximately  $499  and $599,
depending on the  model selected by  the customer, among  other factors.  Dealer
incentives  and EchoStar sponsored  promotions may reduce the  actual cost of an
EchoStar Receiver System below the  suggested retail price. The initial  capital
cost  required to receive DISH Network-SM- programming may reduce the demand for
EchoStar Receiver Systems,  since EchoStar Receiver  Systems must be  purchased,
while  cable  and  certain  of  EchoStar's  satellite  competitors  lease  their
equipment to the consumers with little if any initial hardware payment required.
EchoStar is currently test marketing a special promotion in a limited number  of
markets  pursuant to which customers are  able to purchase a discounted package,
including an annual  programming package for  $300 (which is  comparable to  the
price  for a  similar package  of cable  programming), and  an EchoStar Receiver
System for $199. If  EchoStar elects to expand  the promotion nationwide for  an
extended  period, or if market conditions force it to do so, the initial capital
investment relative to cable will be greatly reduced. In this event,  EchoStar's
subscriber  acquisition costs will increase substantially, potentially resulting
in a significant negative impact on EchoStar's liquidity and net income.        

    The EchoStar  Receiver System  is fully  compatible with  MPEG-2, the  world
digital  standard for computers and  consumer electronics products, and provides
image and sound  quality superior  to current  analog cable  or MMDS  television
services.  EchoStar  intends to  market  EchoStar Receiver  Systems  through its
nationwide  network  of   approximately  3,000   independent  distributors   and
retailers.  EchoStar is  also currently engaged  in discussions  with brand name
consumer electronics equipment manufacturers for the production and distribution
of EchoStar  Receiver Systems  through  national consumer  electronics  retailer
networks.  EchoStar is  also negotiating  with a  number of  mass merchandisers,
direct  sales  organizations  and  consumer  electronics  retailers  for   other
distribution paths for EchoStar Receiver Systems.                               

    EchoStar's  primary objective is  to become one of  the leading providers of
pay television services  in the  United States. EchoStar's  strategy to  achieve
this objective is to:                                                           

    - Provide  subscribers with more  quality programming at  lower price points
than other pay television providers.                                

    - Utilize its large  and established  independent retail  network to  obtain
      substantial  market share in rural areas and areas served by cable systems
with relatively limited channel capacity.                           

    - Employ  world  standard  MPEG-2   digital  technology  to  achieve   lower
      manufacturing  costs  and  assure superior  product  capability, including
compatibility with other consumer electronics products.             

    - Expand consumer electronics retail distribution through relationships with
      major retailers or through licensing arrangements with brand name consumer
electronics manufacturers.                                          

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    - Provide superior  customer  service  by  furnishing  a  single  source  to
      purchase   DISH  Network-SM-  hardware  and   programming  and  to  obtain
financing, installation and customer care.                          

    - Deploy satellites at  additional DBS  orbital slots  to expand  EchoStar's
      product offerings with complementary video, data and interactive products.

    DBS  is the  most efficient, least  capital intensive means  of reaching the
largest number of  U.S. television households.  EchoStar's first two  satellites
will  transmit high quality, digital television to the entire continental United
States for a capital  cost of less  than $500 million,  or approximately $5  per
television  household,  permitting  profitability  with  relatively  low  market
penetration. EchoStar believes that its  strategy, together with the ability  to
exploit  the  more  favorable  cost structure  and  the  lower  invested capital
requirements of  DBS relative  to other  pay television  providers, will  enable
EchoStar to achieve its objectives.                                             

    In  addition  to  the  DBS  business, EchoStar  is  engaged  in  the design,
manufacture,  distribution   and   installation  of   DTH   products,   domestic
distribution  of DTH programming  and consumer financing  of EchoStar's domestic
DTH products  and  services. During  the  six  years ended  December  31,  1995,
EchoStar sold over 1.7 million DTH receivers worldwide.                         

    EchoStar's  principal  offices  are  located at  90  Inverness  Circle East,
Englewood, Colorado 80112-5300, and its telephone number is (303) 799-8222.     

SUMMARY OF RISK FACTORS 

    The deployment and operation  of the EchoStar DBS  System is highly  complex
and involves substantial risks. These risks include the competition from DBS and
other  satellite system  operators and  cable television,  EchoStar's ability to
integrate advanced and unproven  technologies, the potential  loss or damage  to
EchoStar's  satellites  during  launch  or while  in  orbit,  the  potential for
impaired commercial operation resulting from incorrect orbital placement, affect
on cash flow resulting from subscriber acquisition costs, EchoStar's ability  to
obtain  insurance on favorable terms, the  potential for delay and cost overruns
and effects of government regulation  on the communications industry  generally.
The  inability of EchoStar to successfully  deploy the EchoStar DBS System would
adversely affect EchoStar's  operations and would  impair EchoStar's ability  to
make  payments with respect to the Exchange Notes. Risks related to the Exchange
Notes include the fact that there may be  an absence of a public market for  the
Exchange  Notes. Risks  related to  EchoStar include  the fact  that EchoStar is
highly leveraged, which leverage makes EchoStar vulnerable to adverse changes in
the economy generally which  could adversely affect  EchoStar's ability to  make
payments  with respect to the Exchange Notes.  These and certain other risks are
described in more detail under "Risk Factors" commencing on page 20.            

RECENT DEVELOPMENTS 

    During January  1996, the  FCC held  an auction  for 28  frequencies at  the
110 DEG. WL orbital slot and 24 frequencies at the 148 DEG. WL orbital slot (the
"FCC  Auction").  At  the  FCC  Auction, EchoStar  entered  the  winning  bid of
approximately $52.3 million for 24 frequencies at the 148 DEG. WL orbital  slot.
EchoStar  has made the required 20% down payment for these frequencies, and will
be required to remit the remaining $41.8 million upon grant of the  construction
permit,  which could occur as  early as June 1996. Also,  at the FCC Auction MCI
Communications Corp. ("MCI") entered the winning bid of $682.5 million for 28 of
32 frequencies  at  the  110  DEG.  WL  orbital  slot.  EchoStar's  license  for
frequencies  at  119 DEG.  WL,  which were  obtained  at minimal  cost, provides
comprehensive nationwide  DBS  coverage  similar  to  that  available  from  the
110 DEG. WL orbital slot.                                                       

    On  March 1,  1996, EchoStar received  the STA  from the FCC  to operate the
remaining five frequencies  (approximately 30  additional video  channels for  a
total  of approximately 100 video channels) on EchoStar I until August 31, 1996.
There can be no assurance the STA will be extended.                             

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    EchoStar has  entered  into  a  contract  for  the  launch  of  DirectSat  I
("EchoStar  II") with  Arianespace, Inc. ("Arianespace")  during September 1996,
and  a  contract   with  Lockheed  Martin   Commercial  Launch  Services,   Inc.
("Lockheed")  for the launch of  DBSC I ("EchoStar III")  during the period from
September 1997 through November 1997.  Pursuant to the Arianespace contract,  as
of  June 7, 1996, EchoStar has  paid approximately $43.4 million to Arianespace.
Pursuant to the Lockheed contract,  as of June 7,  1996, EchoStar has paid  $5.0
million to Lockheed. Substantial additional payments are expected to be expended
in  1996. See "Management's  Discussion and Analysis  of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."                      

    EchoStar owns approximately 40%  of the outstanding  common stock of  Direct
Broadcasting  Satellite  Corporation,  a  Delaware  corporation  ("DBSC"), whose
stockholders have approved a merger of  DBSC with a subsidiary of EchoStar  (the
"DBSC  Merger").  DBSC  holds  a  conditional  construction  permit  for  11 DBS
frequencies at 61.5 DEG. WL and 11 DBS frequencies at 175 DEG. WL. EchoStar  has
filed  an application with the FCC for approval of the DBSC Merger. The deadline
for filing petitions and oppositions regarding  approval by the FCC of the  DBSC
Merger  passed on March 15, 1996, and  EchoStar is aware of only one opposition,
which was filed by the Consumer Project on Technology ("CPT"). EchoStar believes
that the  FCC has  previously  considered and  rejected  issues similar  to  the
arguments  made in this opposition,  and that filing of  the CPT opposition does
not materially  decrease the  likelihood  that the  FCC  will approve  the  DBSC
Merger.                                                                         

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THE EXCHANGE OFFER

                                                        [Enlarge/Download Table]
                                                                                           
The Exchange Offer................ The  Issuer  is  offering  to  exchange  (the  "Exchange
                                   Offer") up to $580,000,000 aggregate principal amount of
                                   its new 13 1/8% Senior  Secured Discount Notes due  2004
                                   (the  "Exchange Notes") for up to $580,000,000 aggregate
                                   principal amount  of  its  outstanding  13  1/8%  Senior
                                   Secured  Discount Notes  due 2004  that were  issued and
                                   sold in a transaction exempt from registration under the
                                   Securities Act (the "Old  Notes" and, together with  the
                                   Exchange  Notes, the "Notes"). The form and terms of the
                                   Exchange Notes  are substantially  identical  (including
                                   principal  amount, interest rate, maturity, security and
                                   ranking) to  the form  and terms  of the  Old Notes  for
                                   which  they may  be exchanged  pursuant to  the Exchange
                                   Offer,  except  that  the  Exchange  Notes  are   freely
                                   transferable  by  holders  thereof  except  as  provided
                                   herein  (see  "The  Exchange  Offer  --  Terms  of   the
                                   Exchange"  and "-- Terms and Conditions of the Letter of
                                   Transmittal")  and   are   not   entitled   to   certain
                                   registration rights and certain liquidated damages which
                                   are  applicable to  the Old  Notes under  a registration
                                   rights  agreement  dated  as  of  March  25,  1996  (the
                                   "Registration   Rights  Agreement")  among  the  Issuer,
                                   EchoStar,  Dish,   Ltd.  ("Dish,   Ltd."),  and   Direct
                                   Broadcasting  Satellite  Corporation  ("New  DBSC")  and
                                   Donaldson, Lufkin & Jenrette Securities Corporation  and
                                   Smith  Barney Inc., as initial purchasers (collectively,
                                   the "Initial Purchasers").  See Description of  Exchange
                                   Notes  --  Old  Notes'  Registration  Rights; Liquidated
                                   Damages.                                                
                                   Exchange Notes issued pursuant to the Exchange Offer  in
                                   exchange  for the Old  Notes may be  offered for resale,
                                   resold and  otherwise  transferred  by  holders  thereof
                                   (other than any holder which is: (i) an Affiliate of the
                                   Issuer;  (ii)  a  broker-dealer who  acquired  Old Notes
                                   directly from the Issuer;  or (iii) a broker-dealer  who
                                   acquired Old Notes as a result of market-making or other
                                   trading   activities),   without  compliance   with  the
                                   registration and prospectus  delivery provisions of  the
                                   Securities  Act, provided  that such  Exchange Notes are
                                   acquired  in  the  ordinary  course  of  such   holders'
                                   business  and such  holders are  not engaged  in, do not
                                   intend  to  engage  in,  and  have  no  arrangement   or
                                   understanding  with  any  person  to  participate  in, a
                                   distribution of such Exchange Notes.                    
Minimum Condition................. The Exchange Offer is  not conditioned upon any  minimum
                                   aggregate  principal amount of  Old Notes being tendered
                                   or accepted for exchange.                               
Expiration Date................... The Exchange Offer  will expire at  5:00 p.m., New  York
                                   City  time, on  Friday, July  26, 1996,  unless extended
                                   (the "Expiration Date").                                
Exchange Date..................... The first date  of acceptance  for exchange  of the  Old
                                   Notes  will  be  the first  business  day  following the
                                   Expiration Date.                                        
Conditions to the Exchange         The obligation of the Issuer to consummate the  Exchange
Offer............................. Offer   is  subject  to  certain  conditions.  See  "The
                                   Exchange Offer -- Conditions to the Exchange Offer." The
                                   Issuer                                                  

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                                                        [Enlarge/Download Table]
                                                                                           
                                   reserves the right  to terminate or  amend the  Exchange
                                   Offer  at any time prior to the Expiration Date upon the
                                   occurrence of any of those conditions.                  
Withdrawal Rights................. Tenders of Old Notes pursuant to the Exchange Offer  may
                                   be  withdrawn at any time  prior to the Expiration Date.
                                   Any Old  Notes  not  accepted for  any  reason  will  be
                                   returned   without  expense  to  the  tendering  holders
                                   thereof as promptly as practicable after the  expiration
                                   or termination of the Exchange Offer.                   
Procedures for Tendering Old       See "The Exchange Offer -- How to Tender."              
Notes.............................                                                         
Federal Income Tax Consequences... The   exchange  of  Old  Notes  for  Exchange  Notes  by
                                   tendering holders  will not  be a  taxable exchange  for
                                   federal income tax purposes, and such holders should not
                                   recognize  any  taxable  gain or  loss  or  any interest
                                   income as a result of such exchange. See "Certain United
                                   States Federal Income Tax Considerations."              
Use of Proceeds................... There will be no  cash proceeds to  the Issuer from  the
                                   exchange pursuant to the Exchange Offer.                
Effect on Holders of Old Notes.... As  a result of  the making of  this Exchange Offer, and
                                   upon acceptance for exchange of all validly tendered Old
                                   Notes pursuant to the terms of this Exchange Offer,  the
                                   Issuer  will have fulfilled a  covenant contained in the
                                   terms of  the  Old  Notes and  the  Registration  Rights
                                   Agreement,  and,  accordingly,  the holders  of  the Old
                                   Notes will have no further registration or other  rights
                                   under  the Registration  Rights Agreement,  except under
                                   certain  limited  circumstances.  See  "Description   of
                                   Exchange   Notes  --  Old  Notes'  Registration  Rights;
                                   Liquidated Damages." Holders of the Old Notes who do not
                                   tender their  Old  Notes  in  the  Exchange  Offer  will
                                   continue  to hold such Old Notes and will be entitled to
                                   all the rights and limitations applicable thereto  under
                                   the  1996  Indenture. All  untendered, and  tendered but
                                   unaccepted, Old Notes will continue to be subject to the
                                   restrictions on transfer provided  for in the Old  Notes
                                   and the 1996 Indenture. To the extent that Old Notes are
                                   tendered and accepted in the Exchange Offer, the trading
                                   market,  if any,  for the Old  Notes not  so tendered is
                                   likely to be  adversely affected. See  "Risk Factors  --
                                   Consequences of Failure to Exchange Old Notes."         

TERMS OF THE EXCHANGE NOTES 

    The Exchange Offer applies to $580,000,000 aggregate principal amount of Old
Notes.  The form and terms of the  Exchange Notes are substantially identical to
the form and terms of  the Old Notes, except that  the Exchange Notes have  been
registered  under  the  Securities Act  and,  therefore, will  not  bear legends
restricting the transfer thereof. The Exchange Notes will evidence the same debt
as the Old Notes and will be entitled to the benefits of the 1996 Indenture. See
"Description of Exchange Notes."                                                

                                                        [Enlarge/Download Table]
                                                                                           
Securities Offered................ $580,000,000 principal amount of 13 1/8% Senior  Secured
                                   Discount Notes due 2004 (the "Exchange Notes").         
Maturity Date..................... March 15, 2004.                                         

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Interest Payment Dates............ Interest  will accrete from March  25, 1996, the date of
                                   issuance of the  Old Notes,  at the rate  per annum  set
                                   forth  on the cover page of this Prospectus but will not
                                   be payable prior to March 15, 2000. Thereafter, interest
                                   will be payable  semi-annually in cash  on March 15  and
                                   September  15  of  each year,  commencing  September 15,
                                   2000.                                                   
Ranking........................... The Notes will rank  senior in right  of payment to  all
                                   subordinated  indebtedness of the  Issuer and PARI PASSU
                                   in right of payment with all senior indebtedness of  the
                                   Issuer. See "Description of Exchange Notes -- Security."
Optional Redemption............... Except  as  set  forth  below,  the  Notes  will  not be
                                   redeemable at  the Issuer's  option prior  to March  15,
                                   2000.   Thereafter,  the   Notes  will   be  subject  to
                                   redemption at the option of  the Issuer, in whole or  in
                                   part,  at  the redemption  prices  set forth  herein. In
                                   addition, at  any  time prior  to  March 15,  1999,  the
                                   Issuer  may redeem Notes at  a redemption price equal to
                                   112.125% of the  Accreted Value (as  defined herein)  on
                                   the  repurchase date with the net proceeds of one public
                                   or private sale of certain Equity Interests (as  defined
                                   herein)   of  EchoStar,  provided  that:  (a)  at  least
                                   two-thirds  in  aggregate  principal  amount  of   Notes
                                   originally  issued remain  outstanding immediately after
                                   the  occurrence  of  such   redemption;  and  (b)   such
                                   redemption  occurs within  120 days  of the  date of the
                                   closing of any such sale.                               
Change of Control................. Upon the occurrence of a  Change of Control (as  defined
                                   herein), the Issuer will be required to make an offer to
                                   each  holder of Exchange Notes  to repurchase all or any
                                   part of such holder's Notes at a purchase price equal to
                                   101% of  the  Accreted  Value thereof  on  the  date  of
                                   purchase  (if prior  to March 15,  2000) or  101% of the
                                   principal amount  thereof,  together  with  accrued  and
                                   unpaid  interest thereon to the  date of purchase (if on
                                   or after March 15, 2000).                               
Offer to Purchase................. Upon the occurrence  of certain  events described  under
                                   "Description of Exchange Notes -- Offer to Purchase upon
                                   the  Occurrence of  Certain Events," the  Issuer will be
                                   required to offer  to repurchase a  specified amount  of
                                   Notes  at a purchase price equal to 101% of the Accreted
                                   Value thereof on the date of purchase (if prior to March
                                   15, 2000)  or  101%  of the  principal  amount  thereof,
                                   together with accrued and unpaid interest thereon to the
                                   date of purchase (if on or after March 15, 2000).       
Significant Transactions.......... EchoStar  and  its  subsidiaries  will  be  permitted to
                                   engage in certain transactions, notwithstanding the fact
                                   that such  transactions would  otherwise be  prohibited,
                                   PROVIDED that: (i) such transactions are for fair market
                                   value  in the opinion  of an investment  banking firm of
                                   national standing and the  Board of Directors; and  (ii)
                                   prior  to consummation of  such transactions, the Issuer
                                   makes an offer to each holder of Notes to repurchase all
                                   or any part of such  holder's Notes at a purchase  price
                                   equal  to 101% of the Accreted Value thereof on the date
                                   of purchase  (if prior  to March  15, 2000)  or 101%  of

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                                                        [Enlarge/Download Table]
                                                                                           
                                   the  principal amount thereof, together with accrued and
                                   unpaid interest thereon to the  date of purchase (if  on
                                   or  after March 15, 2000).  See "Description of Exchange
                                   Notes -- Significant Transactions."                     
Escrow Account.................... The Issuer has placed the portion (approximately  $177.3
                                   million)  of the net proceeds  of the Old Notes Offering
                                   related to the  purchase of frequencies  at 148 DEG.  WL
                                   and  satellite  construction, launch  and  insurance for
                                   EchoStar III  and EchoStar  IV  in the  Escrow  Account.
                                   Funds may be disbursed from the Escrow Account only upon
                                   satisfaction  of  certain  conditions set  forth  in the
                                   Escrow and Disbursement  Agreement (as defined  herein).
                                   The  Escrow Account serves as  collateral for the Notes.
                                   See "Description of  Exchange Notes  -- Disbursement  of
                                   Funds -- Escrow Account."                               
Security.......................... Initially, the Notes are secured by: (i) a pledge of all
                                   of  the issued and outstanding capital stock of EchoStar
                                   DBS Corporation (which pledge will be released following
                                   consummation of the DBSC  Merger (as defined herein)  or
                                   the  Substitute DBSC Transaction (as defined herein) and
                                   Dish, Ltd.; (ii) a  pledge of all of  the stock of  DBSC
                                   held  by EchoStar;  (iii) a  pledge of  certain notes of
                                   DBSC  held  by  EchoStar;  and  (iv)  a  first  priority
                                   security  interest in  the Escrow  Account. In addition,
                                   upon consummation of the DBSC Merger, the Notes will  be
                                   secured by: (i) a first priority security interest, when
                                   launched,  in EchoStar III; (ii) a collateral assignment
                                   of all contracts  relating to  the construction,  launch
                                   (other  than  with Great  Wall),  insurance and  TT&C of
                                   EchoStar III; and (iii)  a pledge of  all of the  issued
                                   and  outstanding  capital  stock of  DBSC.  If  the DBSC
                                   Merger  is  not  consummated  but  the  Substitute  DBSC
                                   Transaction is consummated, the Notes will be secured by
                                   a  collateral assignment of all contracts and agreements
                                   relating  to  the   Substitute  DBSC  Transaction.   See
                                   "Description of Exchange Notes -- Security."            
Guarantees........................ The  Notes are guaranteed by  EchoStar on a subordinated
                                   basis. On and after the Dish Guarantee Date (as  defined
                                   herein),  the Notes  will be  guaranteed by  Dish, Ltd.,
                                   which guarantee  will rank  PARI PASSU  with all  senior
                                   unsecured  indebtedness of  Dish, Ltd. On  and after the
                                   date upon  which the  DBSC  Merger is  consummated,  the
                                   Notes  will be guaranteed by  DBSC, which guarantee will
                                   RANK PARI passu with  all senior unsecured  indebtedness
                                   of DBSC. See "Description of Exchange Notes -- Affiliate
                                   Guarantees."                                            
Maintenance of Insurance.......... The   Indenture  relating   to  the   Notes  (the  "1996
                                   Indenture")  requires  the   Issuer  to  obtain   Launch
                                   Insurance  (as defined herein) for  EchoStar III (or any
                                   replacement thereof) in  an amount equal  to or  greater
                                   than   the  cost  of  construction  and  launch  of  and
                                   insurance on EchoStar III (or any replacement  thereof).
                                   The  1996 Indenture also requires the Issuer to maintain
                                   In-orbit Insurance (as defined herein) for EchoStar  III
                                   (or  any replacement thereof)  in an amount  equal to or
                                   greater  than  the  cost  of  construction,  launch  and
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                                                        [Enlarge/Download Table]
                                                                                           
Certain Other Covenants........... The  1996 Indenture  restricts, among  other things, the
                                   payment  of  dividends,  the  repurchase  of  stock  and
                                   subordinated  indebtedness of the  Issuer and the making
                                   of  certain  other   Restricted  Payments  (as   defined
                                   herein), the incurrence of indebtedness and the issuance
                                   of preferred stock, certain asset sales, the creation of
                                   certain  liens, certain mergers  and consolidations, and
                                   transactions with Affiliates (as defined herein).       
Registration Rights; Liquidated                                                            
Damages........................... Pursuant  to  the  Registration  Rights  Agreement,  the
                                   Issuer  and  the  Guarantors  agreed:  (i)  to  file the
                                   Registration Statement on  or prior to  April 24,  1996,
                                   with  respect  to the  Exchange Offer;  and (ii)  to use
                                   their best efforts to  cause the Registration  Statement
                                   to  be declared effective by  the Commission on or prior
                                   to June 23, 1996. In certain very limited circumstances,
                                   the Issuer  and  the  Guarantors  will  be  required  to
                                   provide  a  shelf  registration  statement  (the  "Shelf
                                   Registration Statement")  to cover  resales of  the  Old
                                   Notes  by  the holders  thereof. If  the Issuer  and the
                                   Guarantors do not  comply with  their obligations  under
                                   the Registration Rights Agreement, they will be required
                                   to  pay Liquidated Damages to holders of the Notes under
                                   certain  circumstances.  See  "Description  of  Exchange
                                   Notes  --  Old  Notes'  Registration  Rights; Liquidated
                                   Damages."                                               
Transfer Restrictions............. The  Old  Notes  have  not  been  registered  under  the
                                   Securities  Act and are  subject to certain restrictions
                                   on transfer. The Exchange Notes and Old Notes registered
                                   pursuant to  an  effective registration  statement  will
                                   generally   be  freely  transferable.   See  "Notice  to
                                   Investors." The  Issuer does  not  intend to  apply  for
                                   listing  of the Notes on  any securities exchange or for
                                   quotation through the National Association of Securities
                                   Dealers Automated Quotation System.                     

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SUMMARY FINANCIAL DATA

    The Issuer was  formed in  January 1996  for the  purpose of  the Old  Notes
Offering.  EchoStar  contributed all  of the  outstanding  capital stock  of its
wholly owned subsidiary, Dish,  Ltd., to the Issuer.  This transaction has  been
accounted for as a reorganization of entities under common control. Accordingly,
Dish,  Ltd. has been treated as the predecessor to the Issuer and the historical
financial statements of the Issuer are those of Dish, Ltd. The following summary
financial data  and the  selected  financial data  presented elsewhere  in  this
Prospectus  for the  five years  ended December 31,  1995, are  derived from the
Combined and Consolidated Financial Statements  of Dish, Ltd. The data  provided
for  the  three  months ended  March  31, 1995  and  1996 are  derived  from the
supplemental quarterly financial statements and  condensed notes thereto of  the
Issuer,  which includes  the consolidated  accounts of  Dish, Ltd.  Combined and
Consolidated Financial Statements of EchoStar and the Notes thereto are included
elsewhere in  this  Prospectus. In  addition,  condensed parent  only  financial
statements  and financial data  of EchoStar are also  included elsewhere in this
Prospectus, (see  Note  16  of  Notes to  Combined  and  Consolidated  Financial
Statements  of  Dish, Ltd.  as  of December  31,  1995). See  also "Management's
Discussion and Analysis of Financial Condition and Results of Operations."      

                                                        [Enlarge/Download Table]

                                                                                           THREE MONTHS ENDED   
                                                YEAR ENDED DECEMBER 31,                        MARCH 31,        
                                -------------------------------------------------------  ---------------------- 
                                  1991       1992       1993       1994        1995        1995        1996     
                                ---------  ---------  ---------  ---------  -----------  ---------  ----------- 
                                 (IN THOUSANDS, EXCEPT RATIOS AND SATELLITE RECEIVERS         (UNAUDITED)       
                                                         SOLD)                                                  
                                                                                                                
STATEMENT OF INCOME DATA:                                                                                       
  Revenue...................... $ 139,613  $ 165,088  $ 220,941  $ 190,983  $ 163,890    $  40,413  $  41,026   
  Operating income (loss)......     5,406     11,286     18,204     13,216     (7,949)        (698)    (8,908)  
  Net income (loss)............     6,192     10,833     20,118         90    (12,361)      (2,240)    (7,654)  
  Ratio of earnings to fixed                                                                                    
   charges (1).................      4.36x      7.32x      9.63x      1.02x      0.64x        0.70x      0.15x  
  Pro forma net income (2).....     4,468      7,529     12,272                                                 
OTHER DATA:                                                                                                     
  EBITDA (3)................... $  12,818(4) $  12,329 $  19,881 $  15,459  $  (4,891)   $    (335) $  (5,578)  
  Cumulative investment in the                                                                                  
   EchoStar DBS System.........       114      3,345     21,796    139,500    341,232(5)   181,573    368,749(5)
  Satellite receivers sold (in                                                                                  
   units):                                                                                                      
    Domestic...................   113,000    116,000    132,000    114,000    131,000       27,000     45,000   
    International..............    45,000     85,000    203,000    289,000    331,000       85,000     76,000   
                                ---------  ---------  ---------  ---------  -----------  ---------  ----------- 
        Total..................   158,000    201,000    335,000    403,000    462,000      112,000    121,000   
                                ---------  ---------  ---------  ---------  -----------  ---------  ----------- 
                                ---------  ---------  ---------  ---------  -----------  ---------  ----------- 

                                                        [Enlarge/Download Table]

                                                                           AS OF DECEMBER 31, 1995                 
                                                                          -------------------------                
                                                                           ACTUAL    AS ADJUSTED(6)                
                                                                          ---------  --------------   MARCH 31,    
                                                                                                         1996      
                                                                                                     ------------  
                                                                                                     (UNAUDITED)   
                                                                                                                   
BALANCE SHEET DATA:                                                                                                
  Cash, cash equivalents and marketable investment securities............ $ 113,850(7)   $  450,896   $ 438,350(13)
  Working capital........................................................    31,115       368,161       200,577    
  Total assets...........................................................   559,295       896,341       899,357    
  Long-term debt (less current portion)..................................   415,662       765,709       778,644    
  Total stockholders' equity.............................................    92,890        92,891        85,007    

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SUMMARY SATELLITE DATA

                                                        [Enlarge/Download Table]

                                                            ECHOSTAR II       ECHOSTAR III                     
                                             ECHOSTAR I         (8)             (9)(10)        ECHOSTAR IV (10)
                                            -------------  --------------  ------------------  ----------------
                                                                                                               
Expected launch date.......................   Launched       Fall 1996         Fall 1997         Spring 1998   
Orbital slot...............................  119 DEG. WL    119 DEG. WL       61.5 DEG. WL       148 DEG. or   
                                                                                                 175 DEG. WL   
Transponders (11)..........................  16 @ 24 Mhz    16 @ 24 Mhz      16/32 @ 24MHz      16/32 @ 24MHz  
Approximate channel capacity (11).......... 100 channels    100 channels    100/200 channels   100/200 channels
Output power...............................   130 Watts      130 Watts       240/120 Watts      240/120 Watts  
Expected end of commercial life (12).......     2011            2011              2012               2013      
Satellite coverage area.................... Continental U.S. and certain      Eastern and        Western and   
                                                     regions of               Central U.S.       Central U.S.  
                                                  Canada and Mexico                               Alaska and   
                                                                                                    Hawaii     

------------------------------                                                  
(1) For purposes of the ratio of earnings to fixed charges, earnings consist  of
    earnings from continuing operations before income taxes, plus fixed charges.
    Fixed  charges consist of  interest incurred on  all indebtedness and rental
expense under non-cancelable operating leases.                          

(2) Dish,  Ltd.'s subsidiaries  operated under  Subchapter S  of the  Code,  and
    comparable  provisions of applicable  state income tax  laws, until December
    31, 1993. The amounts  shown reflect net  income as if  Dish, Ltd. had  been
    subject to corporate federal and state income taxes during such periods. See
Notes 2 and 7 of Notes to Dish, Ltd.'s Financial Statements.            

(3)  EBITDA represents earnings before interest income, interest expense, net of
    other income  and expenses,  income  taxes, depreciation  and  amortization.
    EBITDA  is  commonly  used  in the  telecommunications  industry  to analyze
    companies on the  basis of  operating performance,  leverage and  liquidity.
    EBITDA  is not intended to  represent cash flows for  the period, nor has it
    been presented as  an alternative  to operating  income as  an indicator  of
    operating  performance and  should not  be considered  in isolation  or as a
    substitute for measures of performance prepared in accordance with generally
    accepted  accounting  principles.  See  Dish,  Ltd.'s  Financial  Statements
contained elsewhere in this Prospectus.                                 

(4) Excludes $6.3 million in non-recurring charges.                             

(5)  Includes approximately  $20.8 million  and $26.6  million paid  by EchoStar
    towards the launch of EchoStar III and EchoStar IV and capitalized  interest
   on these payments as of December 31, 1995 and March 31, 1996, respectively.

(6)  Gives effect to  the Old Notes less  underwriting discounts and commissions
    and estimated  offering  expenses, including  approximately  $177.3  million
initially placed in the Escrow Account.                                 

(7)  Includes $84.7 million of cash restricted under the 1994 Indenture pursuant
    to which Dish, Ltd.  issued the 1994 Notes  and $15.0 million of  restricted
    cash  in an escrow  account related to the  manufacture of EchoStar Receiver
Systems.                                                                

(8) The  conditional  permit for  this  satellite  ("DirectSat I")  is  held  by
    DirectSat Corporation, a wholly-owned subsidiary of Dish, Ltd. The DirectSat
 I satellite is referred to hereinafter in this Prospectus as EchoStar II.

(9)  The  conditional permit  for this  satellite  ("DBSC I")  is held  by DBSC.
    EchoStar owns approximately  40% of  the outstanding common  stock of  DBSC,
    whose  shareholders  have approved  a merger  of DBSC  with a  subsidiary of
    EchoStar. Assuming approval of this merger by the FCC, EchoStar will be  the
    parent  of DBSC. The DBSC  I satellite is referred  to in this Prospectus as
EchoStar III.                                                           

(10) The transponders on each of these satellites can be independently  switched
    to  provide a range from  16 transponders operating at  240 Watts each to 32
transponders operating at 120 Watts each.                               

(11) EchoStar's DBS permits cover: (i) 11 of the 16 transponders  (approximately
    65  of  100 channels)  on EchoStar  I; and  (ii) 10  of the  16 transponders
    (approximately 60 of 100 channels) on EchoStar II. EchoStar also expects  to
    receive FCC authority for: (iii) 11 of the 16 transponders (approximately 65
    of  100  channels) on  EchoStar  III; and  (iv)  24 of  the  32 transponders
    (approximately 150 of 200  channels) on EchoStar IV  (or 32 transponders  if
    the  satellite  is  positioned at  175  DEG.  WL and  certain  approvals are
    obtained). See "Business -- Operation of the EchoStar DBS System -- DBS  and
    Other  Permits." EchoStar has also  received an STA from  the FCC to operate
    the remaining five frequencies (approximately 30 additional video  channels)
    on  EchoStar I for approximately 180 days. There can be no assurance the STA
will be extended.                                                       

(12) The expected end of commercial life of each satellite has been estimated by
    EchoStar based on each  satellite's actual or expected  launch date and  the
    terms  of the construction and launch  contracts. The minimum design life is
12 years.                                                               

(13) Includes  $245.0  million  of  cash restricted  under  the  1994  and  1996
    Indentures pursuant to which Dish, Ltd. and the Issuer issued the 1994 Notes
    and  the Old Notes,  respectively. Also included is  $15.0 million and $15.5
    million of restricted cash in escrow accounts related to the manufacture  of
    EchoStar  Receiver  Systems  and  for the  purpose  of  cash collateralizing
certain standby letters of credit, respectively.                        

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THE ECHOSTAR ORGANIZATION 

    The following chart illustrates where significant DBS assets and rights are,
or are expected to be, held:                                                    

[CHART] 
The Old Notes are, and the Exchange Notes will be, secured by:                  

    - A pledge of the  capital stock of EchoStar  DBS Corporation (which  pledge
      will  be released  following consummation  of the  DBSC Merger)  and Dish,
      Ltd., and in the  event the DBSC Merger  is not consummated, a  substitute
      transaction  which provides similar benefits  to EchoStar (the "Substitute
DBSC Transaction").                                                 

- A pledge of the stock of DBSC held by EchoStar.                       

- A pledge of certain notes of DBSC held by EchoStar.                   

- A first priority security interest in the Escrow Account.             

    Additionally, following consummation of the  DBSC Merger, the Notes will  be
secured by:                                                                     

- A first priority security interest, when launched, in EchoStar III.   

    - A  collateral  assignment of  certain  construction, launch  and insurance
contracts relating to EchoStar III.                                 

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- A pledge of all of the issued and outstanding capital stock of DBSC.  

    In the event that the DBSC Merger is not consummated, following consummation
of the Substitute DBSC Transaction, the Notes will be secured by:               

    - A collateral assignment of  all contracts and  agreements relating to  the
Substitute DBSC Transaction.                                        
------------------------                                                        
 *  Subject  to FCC  approvals and  findings (see  "Summary Satellite  Data" and
"Prospectus Summary -- Recent Developments").                           

**  EchoStar  has also received  an STA  for the remaining  five frequencies  on
    EchoStar  I for approximately 180  days. There can be  no assurance that the
STA will be extended.                                                   

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RISK FACTORS

    HOLDERS  OF THE  OLD NOTES SHOULD  CONSIDER CAREFULLY  THE FOLLOWING FACTORS
WHICH MAY BE GENERALLY APPLICABLE  TO THE OLD NOTES AS  WELL AS TO THE  EXCHANGE
NOTES  BEFORE DECIDING WHETHER TO TENDER THEIR  OLD NOTES FOR THE EXCHANGE NOTES
OFFERED HEREBY:                                                                 

    COMPETITION FROM  DBS  AND  OTHER  SATELLITE  SYSTEM  OPERATORS.    The  pay
television  provider industry is highly  competitive. EchoStar faces competition
from companies  offering  video,  audio,  data,  programming  and  entertainment
services.  Many of  these competitors  have substantially  greater financial and
marketing resources than EchoStar. See "Management's Discussion and Analysis  of
Financial   Condition  and  Results  of  Operations  --  Liquidity  and  Capital
Resources."                                                                     

    EchoStar  competes  with  companies  offering  programming  through  various
satellite  broadcasting systems.  One competitor, DirecTv,  Inc. ("DirecTv") has
launched three DBS satellites. DirecTv and United States Satellite  Broadcasting
Corporation   ("USSB"),  which  owns  five  transponders  on  one  of  DirecTv's
satellites, currently offer over 150 channels of combined DBS video programming.
As of  December 31,  1995, DirecTv  had approximately  1.2 million  subscribers,
approximately one-half of which also subscribed to USSB programming, and expects
to  have  2.5 million  subscribers  by the  end  of 1996.  EchoStar's  first DBS
satellite, which was  launched in  December 1995,  has the  capacity to  provide
approximately  100 channels of video  programming. However, EchoStar's authority
to provide 30 of those channels expires approximately October 1, 1996 unless the
STA is extended, of which  there can be no assurance.  As a result, EchoStar  is
currently  at  a competitive  disadvantage to  DirecTv and  USSB with  regard to
market entry,  programming  and,  possibly,  volume  discounts  for  programming
offerings.  In addition,  in the event  desirable pay-per-view  or other popular
programming is secured by competitors of EchoStar on an exclusive basis, it will
be  unavailable  to  EchoStar's  DISH  Network-SM-.  Currently,  DirecTv  offers
subscribers  the NFL Sunday  Ticket-TM- and USSB offers  Flix-TM-, both of which
are available to  those service providers  on an exclusive  basis. There may  be
additional  sports  and  other  programming  offered  by  other  pay  television
providers that will not be available  on the DISH Network-SM-. See "Business  --
Competition -- DBS Industry -- Other DBS Operators."                            

    AT&T  Corporation ("AT&T") and DirecTv have  an exclusive agreement for AT&T
to market and distribute DirecTv's DBS  service and related equipment to  AT&T's
customer  base. As  part of  the agreement, AT&T  made an  initial investment of
approximately $137.5 million to  acquire 2.5% of the  equity of DirecTv with  an
option  to increase its investment to up  to 30% over five years. This agreement
provides a significant base  of potential customers for  the DirecTv DBS  system
and  allows AT&T and DirecTv  to offer customers a  package of entertainment and
communications services.  As  a  result,  EchoStar  will  be  at  a  competitive
disadvantage marketing to these customers. AT&T and DirecTv also announced plans
to jointly develop new multi-media services for DirecTv under the agreement. The
AT&T  and DirecTv agreement will increase the competition EchoStar encounters in
the overall market for pay television customers.                                

    In the FCC Auction, MCI entered the winning bid of $682.5 million to acquire
the permit for 28  of 32 frequencies at  the 110 DEG. WL  orbital slot. MCI  and
News  Corp. ("News")  have formed  a joint  venture to  build and  operate a DBS
system at  the  110 WL  orbital  location offering  television  programming  and
business  communications  services.  The  license will  give  MCI  and  News the
capacity to offer over 200 channels  of digital video programming. MCI and  News
reportedly  expect that building  and launching the  satellites for their system
will cost approximately an additional $1  billion and that DBS services will  be
offered  to consumers and businesses in approximately two years. However, if MCI
and News acquire satellites which  have already been constructed, service  could
begin  sooner. MCI and  News have substantially  greater resources than EchoStar
and their joint venture will increase the competition EchoStar encounters in the
market for pay television customers.                                            

    PrimeStar Partners ("PrimeStar"),  owned by  a consortium  of several  cable
companies,  including Tele-Communications, Inc. ("TCI"), currently offers medium
power Ku-band programming service to customers using dishes which are  generally
three  feet  in  diameter.  PrimeStar's  earlier  entry  into  the  market,  its
relationship with  cable  programmers  and  its  substantial  resources  provide
PrimeStar with                                                                  

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certain  competitive  advantages.  PrimeStar  currently  has  approximately  one
million subscribers and is expected  to offer medium power programming  services
to  customers using smaller dishes (approximately two feet in diameter) upon the
successful launch of a GE American Communications Inc. ("GE Americom") satellite
later this  year. TCI,  which is  the largest  cable television  company in  the
United  States, owns two satellites that will be ready for launch in 1996. A TCI
subsidiary has a DBS construction permit for 11 frequencies at each of 119  DEG.
WL  and 166 DEG. WL.  PrimeStar has the right  to offer DBS programming services
from these satellites. If PrimeStar does not exercise its right, it is  expected
that  TCI  will  use these  satellites  to  directly enter  the  DBS programming
business, and  may  launch  satellites  capable  of  providing  service  to  the
continental United States during 1996. EchoStar is at a competitive disadvantage
to  PrimeStar with  regard to  market entry,  programming and,  possibly, volume
discounts for programming  offerings, particularly if  PrimeStar aggregates  its
DBS and cable affiliates' customers for volume discounts.                       

    During  March  1996,  Tee-Comm Electronics,  Inc.  ("Tee-Comm"),  a Canadian
company, through  an  affiliate, began  offering  digital video  and  audio  DTH
programming in the United States on a limited basis and intends to expand to 120
channels  later this year, and 200 channels by the end of 1997. The medium power
Ku-band satellite  on  which  Tee-Comm is  leasing  transponders  requires  that
customers use dishes approximately 24 to 36 inches in diameter. See "Business --
Competition -- DBS Industry -- Other DBS Operators."                            

    Certain  of  EchoStar's DBS  competitors subsidize  the  price of  their DBS
receiver systems to increase subscriber penetration. In connection with  certain
special  promotions currently  offered by EchoStar  in a limited  number of test
markets, EchoStar is currently test marketing  a special promotion in a  limited
number  of markets pursuant to which customers are able to purchase a discounted
package, including an  EchoStar Receiver System  and annual programming  package
for  as low  as $499,  which is  approximately $300  below the  suggested retail
price. If  EchoStar  elects  to  expand  the  promotion  nationwide,  subscriber
acquisition  costs will  increase substantially.  EchoStar will  therefore incur
significant additional costs in order to compete effectively.                   

    There are  a  number of  additional  methods  by which  programming  can  be
delivered,  including low power C-band  satellite services, Ka-band, Ku-band and
high power extended Ku-band satellite  services, wireless cable and fiber  optic
cable  and digital compression  over existing telephone  lines. Certain wireless
cable companies may become  more competitive as a  result of recently  announced
affiliations  with telephone  companies. These developments,  among others, will
provide additional competition to EchoStar. See "Business -- Competition."      

    The FCC  has  indicated  that  it intends  to  apply  to  the  International
Telecommunication  Union ("ITU"),  which allocates  spectrum worldwide,  for the
allocation to the United States of  additional orbital locations from which  DBS
service  could be  provided to  the entire  continental United  States. Further,
Canada, Mexico, and other countries hold  the rights to DBS orbital slots  which
are  capable of providing service to the United States. If the FCC moves forward
with this initiative, or if other  countries authorize DBS providers to  utilize
their  orbital slots  to serve  the United  States and  the FCC  authorizes such
service to  be  received  in the  United  States  (which is  likely  to  occur),
additional competition could be created, and EchoStar's frequencies could become
less  valuable.  TeleQuest,  Inc.,  a joint  venture  including  NYNEX  and Bell
Atlantic, have applied to the  FCC for authority to  provide DBS service to  the
United States from a Canadian DBS orbital location at 91 DEG. WL. TCI has made a
similar  application to the FCC to provide DBS service to the United States from
the Canadian  82  DEG.  WL  orbital location.  Both  locations  are  capable  of
providing DBS service to the entire continental United States. TCI has completed
construction  of  two DBS  satellites which  it  intends to  use to  provide DBS
service to the United States from the 82 WL orbital slot. One of the  satellites
is  expected to  be launched in  November 1996 and  the other is  expected to be
launched early  next  year.  The  FCC  has not  acted  on  either  of  TCI's  or
TeleQuest's  applications but a decision  could be made in  the near future. See
"Business--Competition--DBS Industry--Other DBS Operators."                     

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    COMPETITION FROM  CABLE  TELEVISION.   The  EchoStar DBS  System  will  also
encounter  substantial  competition in  the  overall market  for  pay television
households, including cable television. Cable television operators have a large,
established customer base, and many cable operators have significant investments
in, and access to, programming. Cable television service is currently  available
to approximately 90% of the approximately 96 million U.S. television households,
and  approximately  64% of  total television  households currently  subscribe to
cable. EchoStar's  programming will  not be  available to  households lacking  a
clear  line of sight to EchoStar's current orbital location, or to households in
apartment complexes or other multiple dwelling  units that do not facilitate  or
allow the installation of EchoStar Receiver Systems. In addition, subscribers to
the  DISH Network-SM- will  not have access to  certain local broadcast channels
which are otherwise generally available  from cable operators. DISH  Network-SM-
subscribers  desiring  to access  local broadcast  channels  may be  required to
receive such channels via off-air antenna, the quality of which may be  inferior
to  the reception provided  by cable operators.  There can be  no assurance that
EchoStar will be able to establish a substantial subscriber base. See  "Business
-- Competition--DBS Industry -- Cable Television."                              

    LIMITATIONS ON INSURANCE AND WARRANTIES.  Pursuant to satellite construction
contracts  between Martin Marietta  Corporation ("Martin Marietta")  and each of
EchoStar,  DirectSat  Corporation  ("DirectSat")  and  DBSC,  (collectively  the
"Satellite  Contracts"), and  EchoStar's launch services  contracts (the "Launch
Contracts"), EchoStar,  DirectSat  and DBSC  are  the beneficiaries  of  certain
limited warranties on their satellites and launch vehicles. However, the limited
contractual  warranties do not cover a  substantial portion of the risk inherent
in satellite launches or satellite operations.                                  

    Although EchoStar has obtained launch insurance for EchoStar II, it is  also
required  under the indenture pursuant to which  the 1994 Notes were issued (the
"1994 Indenture") to obtain in-orbit insurance  for EchoStar I and EchoStar  II,
and is required under the 1996 Indenture to obtain launch and in-orbit insurance
for EchoStar III. There can be no assurance that EchoStar will be able to obtain
launch  and  in-orbit  insurance  on terms  favorable  to  EchoStar.  The launch
insurance policies  contain (or  are  expected to  contain), and  the  insurance
policies  with respect to  in-orbit operation are  expected to contain, standard
commercial  satellite  insurance   provisions,  including   a  material   change
condition,  which, if  successfully invoked, will  give carriers  the ability to
increase the cost of the insurance (potentially to a commercially  impracticable
level),  require exclusions from coverage which would leave the risks uninsured,
or rescind their coverage commitment entirely. See "Business -- Operation of the
EchoStar DBS System -- Insurance."                                              

    If the launch of any EchoStar satellite is a full or partial failure or  if,
following  launch, any  EchoStar satellite  does not  perform to specifications,
there may be circumstances in which insurance will not fully reimburse  EchoStar
for  its expenditures.  In addition, insurance  will not  reimburse EchoStar for
business interruption, loss  of business  and similar losses  which might  arise
from delay in the launch of any EchoStar satellite. See "Management's Discussion
and  Analysis of Financial Condition and  Results of Operations -- Liquidity and
Capital Resources."                                                             

    RISK OF SIGNAL THEFT.  The delivery of subscription programming requires the
use of  encryption technology.  Historically, signal  theft or  "piracy" in  the
C-band  DTH,  cable  television  and European  DBS  industries  has  been widely
reported. Recent published reports indicate that the DirecTv and USSB encryption
systems have been compromised. There can be no assurance that continued theft of
DirecTv programming will  not adversely affect  EchoStar's operations.  Although
EchoStar has contracted with a vendor to provide an encryption system, there can
be no assurance that the encryption technology to be utilized in connection with
the  EchoStar DBS  System will  be totally  effective. If  EchoStar's encryption
technology  is  compromised  in  a  manner  which  is  not  promptly  corrected,
EchoStar's  revenue and  its ability  to contract  for video  and audio services
provided by programmers would be adversely affected.                            

    EXPECTED OPERATING  AND NET  LOSSES.   Due to  the substantial  expenditures
required  to complete development,  construction and deployment  of the EchoStar
DBS System and the  introduction of its DISH  Network-SM- service to  consumers,
EchoStar    experienced    operating    and    net    losses    in    1995   and

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anticipates that it will  experience operating and net  losses through at  least
1997. There can be no assurance that losses will not continue or that EchoStar's
operations will generate sufficient cash flows to pay its obligations, including
its  obligations on the 1994 Notes and the Notes. In addition, EchoStar recently
began test marketing a special promotion in a limited number of markets pursuant
to which  customers are  able to  purchase a  discounted package,  including  an
EchoStar  Receiver System  and annual  programming package,  for a  low as $499,
which is  currently approximately  $300  below the  suggested retail  price.  If
EchoStar elects to expand the promotion nationwide for an extended period, or if
market  conditions force it to do  so, EchoStar may experience additional losses
and its cash flow  may similarly be affected.  See "Management's Discussion  and
Analysis  of  Financial Condition  and Results  of  Operations --  Liquidity and
Capital Resources."                                                             

    RISK OF  SATELLITE DEFECT,  LOSS  OR REDUCED  PERFORMANCE.   Satellites  are
subject  to  significant  risks, including  satellite  defects,  launch failure,
destruction and damage that may result in incorrect orbital placement or prevent
proper commercial operation. Approximately 15% of all commercial  geosynchronous
satellite  launches have  resulted in  a total  or constructive  total loss. The
failure rate varies by launch vehicle and manufacturer.                         

    Launch delays could  result from  weather conditions  or technical  problems
with  any  EchoStar  satellite or  any  launch  vehicle utilized  by  the launch
providers for EchoStar II, EchoStar III,  or EchoStar IV, or from other  factors
beyond EchoStar's control.                                                      

    EchoStar  II will  be launched  on an  Ariane-4 launch  vehicle. This launch
vehicle has  a  success rate  of  over 90%.  The  first experimental  launch  of
Arianespace's  new Ariane-5 launch vehicle, on June 4, 1996, was not successful.
The unsuccessful launch was the first experimental launch of the Ariane-5 launch
vehicle. The  Ariane-5  launch  vehicle  is  significantly  different  than  the
Ariane-4  launch vehicle. The specific cause  of the Ariane-5 launch failure has
not been determined. If  the failure is determined  to be potentially common  to
Ariane-4  and Ariane-5  vehicles, the  launch of  EchoStar II  could be delayed.
However, any  significant delay  in the  launch  of EchoStar  II would  have  an
adverse  affect on EchoStar. In the event of a launch failure involving EchoStar
II, EchoStar would  be required to  use the proceeds  from any launch  insurance
claims  to make  an offer to  repurchase approximately one-half  of the accreted
value of  the  1994  Notes  from  the holders  thereof.  In  the  event  that  a
substantial number of holders of 1994 Notes accepted that offer, EchoStar's plan
of operations, including its liquidity, would be adversely affected and it would
not  be  possible  to  construct  and  launch  a  replacement  satellite without
obtaining additional  financing. See  "Management's Discussion  and Analysis  of
Financial   Condition  and  Results  of  Operations  --  Liquidity  and  Capital
Resources." In the event  of a launch  failure of EchoStar  III, under the  1996
Indenture  EchoStar  would  be required  to  use  the proceeds  from  any launch
insurance to purchase satellites or, at the Issuer's option, to make an offer to
repurchase the  maximum  amount  of  Notes that  can  be  purchased  with  those
proceeds.                                                                       

    In  addition, a number of satellites constructed by Martin Marietta over the
past three years  have experienced defects  resulting in total  or partial  loss
following  launch. The type  of failures experienced  have varied widely. Martin
Marietta is constructing  EchoStar II  and EchoStar  III. No  assurances can  be
given  that EchoStar I,  EchoStar II or  EchoStar III will  perform according to
specifications.                                                                 

    FCC AUCTION RISKS.   There can be  no assurance that  petitions to deny  the
grant  to EchoStar of the 148 DEG. WL orbital slot permit will not be filed with
the FCC during the period allowed by law or that such petitions to deny will not
delay or prevent the issuance of the FCC permit for this slot to EchoStar.  Even
if  the  FCC  grants  a permit  to  EchoStar,  there can  be  no  assurance that
reconsideration or further FCC review will not be sought or that an appeal  will
not  be filed in the courts seeking to overturn the FCC's grant. There can be no
assurance that the FCC would not grant reconsideration or further review or that
the FCC would prevail in the event of an appeal. Further, appeals are  currently
pending  of the FCC's decision to revoke the construction permit of a former DBS
permittee which resulted in channels  becoming available for auction. The  FCC's
decision to auction those reclaimed                                             

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channels  has also been appealed by EchoStar, DirectSat, DBSC and DirecTv. There
can be no assurance  that the FCC  will prevail in those  court actions. If  the
FCC's  actions are  overturned, EchoStar's purchase  of channels at  148 DEG. WL
would be voided.                                                                

    RESTRICTIONS  ON  EXPORT  OF  TECHNOLOGY  AFFECTING  LAUNCH  OF   ECHOSTAR'S
SATELLITES.   Martin  Marietta must obtain  from the United  States government a
technical data exchange license and a satellite export license necessary for the
launch of EchoStar  II by Arianespace  from Korou, French  Guiana. In  addition,
EchoStar  has contracted with LKE for the launch of a fourth satellite. LKE is a
joint venture between  Lockheed Martin  Corporation and  two Russian  Federation
state  owned  enterprises. The  proposed launch  site is  located in  the Kazakh
Republic in the  former Soviet  Union. In order  for EchoStar  satellites to  be
launched from Kazakhstan, the satellite contractor will similarly need to obtain
a technical data exchange license and a satellite export license from the United
States  government. In  order to timely  launch EchoStar II  from French Guiana,
technical data exchange and hardware export licenses will need to be obtained on
an expedited basis. There can be no assurance those licenses can be obtained  in
a timely manner to avoid a launch delay.                                        

    Given the potential instability of political, economic and social conditions
in the Russian Federation and Kazakhstan, and in light of certain demands by the
United  States regarding  human rights and  arms proliferation, there  can be no
assurance that the United States government will not at some future date  impose
sanctions against Russia or Kazakhstan that would prevent issuance, or result in
revocation, of the technical data license and/or the export license with respect
to  EchoStar  IV. Any  such  action would  prevent  EchoStar from  launching its
satellites as  and when  intended, resulting  in significant  delays that  would
adversely  affect expected  operating results for  the EchoStar  DBS System. See
"Business -- Government Regulation -- Export Regulation."                       

    RISKS OF ADVERSE EFFECTS OF GOVERNMENT  REGULATION.  EchoStar is subject  to
the  regulatory  authority  of the  United  States government  and  the national
communications authorities of the countries  in which it operates. The  business
prospects  of EchoStar could be adversely affected  by the adoption of new laws,
policies or  regulations, or  changes in  the interpretation  or application  of
existing  laws,  policies and  regulations, that  modify the  present regulatory
environment.                                                                    

    The FCC  authorizations  for all  of  EchoStar's satellites  (including  for
purposes  of  this  paragraph,  the  satellites  for  which  EchoStar  Satellite
Corporation ("ESC"), DirectSat,  EchoStar DBS Corporation  ("EchoStar DBS")  and
DBSC  hold or  are expected to  hold authorizations) require  EchoStar to comply
with  all  applicable  Communications  Act  requirements  and  FCC   regulations
including,  specifically, compliance with construction and launch milestones and
periodic filing of progress reports. In the event EchoStar at any time fails  to
comply  with  applicable Communications  Act  requirements and  FCC regulations,
including the FCC  schedule for  construction and  launch of  any of  EchoStar's
satellites  ("Due Diligence Requirements"), the FCC has the authority to revoke,
condition, or decline  to extend or  renew the authorizations  for that and  any
subsequent  satellites and, in  connection with that  action, could exercise its
authority  to  rescind  these  authorizations.  The  FCC  has  granted  EchoStar
conditional  authority  to use  C-band frequencies  for telemetry,  tracking and
control  ("TT&C")  functions   for  EchoStar  I,   stating  that  the   required
coordination process with Canada and Mexico had been completed. However, the FCC
subsequently  received  a  communication from  an  official of  the  Ministry of
Communications and  Transportation  of Mexico  stating  that EchoStar  I's  TT&C
operations  could cause  unacceptable interference to  Mexican satellites. There
can be no assurance that such objections will not subsequently require  EchoStar
to  relinquish  the  use  of  such C-band  frequencies  for  TT&C  purposes. The
inability to  control  the  satellite  would  result in  a  total  loss  of  the
satellite.  Further, EchoStar  has filed  a request with  the FCC  to change the
control frequency for TT&C of EchoStar  II, and this request, which is  pending,
has  been opposed. If the  FCC does not grant  this request, EchoStar will incur
additional  costs  in  obtaining  TT&C  services,  and  substantial  delays   in
completion  of construction and launch of EchoStar II would result. In addition,
EchoStar will  require  further FCC  authorization  to operate,  or  launch  and
operate,  all of EchoStar's satellites. Certain of EchoStar's pending and future
requests  to  the  FCC  for   extensions,  waivers  and  approvals  have   been,

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and  are expected to continue  to be, opposed by third  parties. There can be no
assurance that EchoStar's  requests will be  granted or, if  granted, that  they
will be granted on a timely basis or on terms favorable to EchoStar. The loss of
any of EchoStar's FCC authorizations, the failure to obtain requested extensions
or  waivers or  the imposition of  conditions would  adversely affect EchoStar's
plan  of  operations,  and  its  current  business  plan  could  not  be   fully
implemented. See "Business -- Government Regulation--FCC Permits and Licenses." 

    The  FCC Due Diligence Requirements require that DBS permittees proceed with
diligence to  construct satellites  and commence  operations at  their  assigned
orbital  locations. The FCC has indicated it may revoke DBS permits if there are
delays in the satellite construction schedule submitted by the permittee to  the
FCC.  The schedule submitted by DBSC calls for the completion of construction at
61.5 DEG. WL of EchoStar III by July 31, 1997, and a satellite at 175 DEG. WL by
July 31, 1998. Any delay in this schedule may cause total or partial  revocation
of  DBSC's permits. Likewise, DirectSat may risk loss of its permit for channels
at 175 DEG. WL if its satellite  is not completed by mid-1998. Further, the  FCC
has  not yet completed  its review to determine  whether EchoStar's contract for
the construction of  the western  satellite of its  system meets  the FCC's  Due
Diligence  Requirements. Therefore,  the FCC  has not  yet assigned  to EchoStar
frequencies for that satellite.  While it is possible  that DBSC, DirectSat  and
EchoStar  may construct a  satellite for joint use  by all three  at 175 DEG. WL
(provided that  ESC is  found to  have a  firm contract  and receives  frequency
assignments  at 175 DEG. WL),  EchoStar will still be  required to construct and
launch two  or  more satellites  in  addition to  EchoStar  I, EchoStar  II  and
EchoStar  III  in order  to preserve  all  of its  DBS permits  (plus additional
satellites for the single frequencies at each of the 110 DEG. WL and 166 DEG. WL
orbital slots  in order  to  avoid loss  of  those frequencies).  Finally,  with
respect  to the 24 orbital assignments at the 148 DEG. WL orbital slot, provided
that the FCC approves EchoStar's request for a one-satellite system at that slot
(as opposed to the two-satellite system currently contemplated by  international
regulations), EchoStar must complete contracting for a satellite within one year
of  receiving  the  permit,  must complete  construction  within  four  years of
receiving the permit and must launch and operate a satellite within six years of
receiving  the  permit.  Absent  infusion  of  additional  significant  capital,
EchoStar  will not be able to retain all of its assigned frequencies and orbital
slots. There can be no assurance that  EchoStar will be able to comply with  the
FCC's  Due Diligence Requirements  or that the FCC  will determine that EchoStar
has complied with such Due Diligence Requirements.                              

    OPPOSITION TO, AND RISK OF LOSS OF, DIRECTSAT AUTHORIZATION.  In  connection
with  the merger of DirectSat with a  subsidiary of EchoStar (which was approved
by  the  FCC  in  November  1994),  DirectSat's  authorization  to  utilize  ten
frequencies  at 119 DEG.  WL, the same  orbital location for  which EchoStar has
received authorization, became integral to the EchoStar DBS System.  DirectSat's
first  satellite, EchoStar  II, will  be positioned  at that  location. Dominion
Video Satellite,  Inc.  ("Dominion"),  the  original  permittee  of  DirectSat's
frequencies  at 119 DEG.  WL, has filed  a petition with  the FCC contesting the
revocation of Dominion's orbital slot assignment at 119 DEG. WL and the granting
of DirectSat's authorizations at the  same location. Dominion and several  other
parties   have  challenged   DirectSat's  diligence  in   meeting  its  required
construction schedule. Dominion has also challenged the merger of DirectSat  and
EchoStar  at the  FCC, and  has filed  objections to  the FCC's  approval of the
merger. The  FCC  rejected  Dominion's  petition  for  reconsideration  of  that
revocation,  and Dominion  has appealed  to the  U.S. Court  of Appeals  for the
District of Columbia Circuit. If Dominion were to prevail in its appeal, and  in
any subsequent FCC action or remand, EchoStar believes that DirectSat's easterly
orbital slot assignment would most likely be moved from 119 DEG. WL to 61.5 DEG.
WL, which would have an adverse effect on EchoStar's proposed DBS operations. By
order released January 11, 1996, the FCC's International Bureau extended the DBS
permit  of  DirectSat  to  1999,  subject to  the  condition  that  the  FCC may
reconsider the  extension and  modify or  cancel it,  in whole  or in  part,  if
DirectSat  fails to make  progress toward construction and  operation of its DBS
system substantially in compliance with its promised timetable, or with any more
expedited timetable  ordered  by the  FCC.  In the  same  order the  FCC  denied
reconsideration of its earlier decision to assign channels and orbital locations
to  DirectSat at 119 DEG. WL  and 175 DEG. WL for  its DBS system. PrimeStar has
applied  for  full  FCC  review  of  this  order  and  other  parties  may  seek
reconsideration, full FCC review, and/or judicial review                        

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of  the FCC order. In  addition, in the event  that EchoStar loses the DirectSat
frequencies at 119 DEG.  WL, EchoStar would be  required to offer to  repurchase
one-half of the 1994 Notes and the Notes. In the event that a substantial number
of  holders of the 1994 Notes or  the Notes accepted that offer, EchoStar's plan
of operations, including its liquidity, would be adversely affected and it might
not be possible to implement EchoStar's current business plan without  obtaining
additional financing. See "Business -- Legal Proceedings."                      

    OPPOSITION   TO,  AND  RISK  OF  LOSS   OF,  DBSC  AUTHORIZATIONS.    DBSC's
authorization to construct and operate  two DBS spacecraft initially expired  on
August  15, 1995.  Prior to that  date, DBSC  applied for an  extension of time,
based upon a variety  of factors, including its  initiation of the  construction
period  for its first spacecraft in May  1995. DBSC indicated that it had signed
an amendment  to  the  DBSC Satellite  Contract,  by  which DBSC  ordered  a  32
transponder  spacecraft in lieu of the  previously contracted for 16 transponder
satellite. DBSC filed an application for FCC approval of this minor modification
in spacecraft design. In  December 1995, the FCC  staff approved DBSC's  request
for  an extension of time, giving it  until 1998 to complete construction of its
satellites  subject  to  continued  compliance  with  the  FCC's  Due  Diligence
Requirements. PrimeStar has sought full FCC review of this decision. The FCC has
not  yet ruled on PrimeStar's  petition and no assurances  can be given that the
FCC will sustain the staff's determination. The FCC's staff has declined to rule
on DBSC's  request  for minor  modification  of its  authorization  pending  the
submission  to the FCC of interference data based on the proposed new spacecraft
design. DBSC has not prepared such data and there can be no assurance that  upon
the submission of such data the FCC will grant the modification application.    

    OPPOSITION  TO,  AND RISK  OF  REJECTION OF,  DBSC  MERGER APPLICATION.   In
February 1996,  EchoStar and  New DBSC  filed an  application with  the FCC  for
approval  of the DBSC Merger. A timely objection to the DBSC Merger was filed by
CPT. CPT contended in its objection  that the DBSC Merger would permit  EchoStar
to  acquire a dominant  and anti-competitive position in  the DBS marketplace by
aggregating an excessive number of DBS channels. A letter objecting to the  DBSC
Merger was also filed subsequently by the CPT and another public interest group.
This  letter raises the same issues as the CPT's earlier objection. No assurance
can be given that the FCC will reject these objections and grant the DBSC Merger
application.  If  the  DBSC  Merger   application  is  granted,  CPT  may   seek
reconsideration,  full FCC review  or judicial review  of the grant  of the DBSC
Merger application.                                                             

    POLITICAL RISKS PERTAINING  TO LAUNCH  PROVIDERS.   EchoStar has  contracted
with  LKE  for a  1998 launch.  LKE launches  occur in  the Kazakh  Republic and
require  coordination  with  the  governments  of  Russia  and  Kazakhstan.  Any
political or social instability, such as that currently being experienced in the
former  Soviet  block  countries,  could affect  the  cost,  timing  and overall
advisability of utilizing LKE as launch provider for EchoStar's satellites.  See
"Business -- Operation of the EchoStar DBS System -- Satellite Launches."       

    POTENTIAL  FOR  DELAY  AND  COST  OVERRUNS.    Significant  expenditures are
required to complete  construction and  deployment of the  EchoStar DBS  System.
Funds,  in addition to existing cash balances,  will be required in the event of
delays, cost overruns, increased costs associated with certain potential  change
orders under the Satellite Contracts or the Launch Contracts, a change in launch
provider, material increases in estimated levels of operating cash requirements,
if increases in subscriber acquisition costs occur above current and anticipated
levels,  or to meet other unanticipated expenses. There can be no assurance that
such financing will be available or that, if available, it will be available  on
terms  favorable  to  EchoStar.  See "Management's  Discussion  and  Analysis of
Financial  Condition  and  Results  of  Operations  --  Liquidity  and   Capital
Resources."                                                                     

    A  significant delay  in the  delivery or  launch of  any EchoStar satellite
would adversely affect EchoStar's operations and may result in the  cancellation
of  any of the permits of ESC, DirectSat,  EchoStar DBS and DBSC by the FCC. See
"-- Risk of  Satellite Defect, Loss  or Reduced Performance."  In addition,  any
material delay in the delivery of EchoStar's DBS receivers or related components

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would   negatively  affect   EchoStar's  financial  condition   and  results  of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."                      

    DEPENDENCE ON  SINGLE  MANUFACTURER.    To  date,  only  one  of  EchoStar's
manufacturers  has produced a receiver acceptable to the EchoStar. No assurances
can be given that EchoStar's other current manufacturer will be able to  produce
an  acceptable receiver in  the future. Until the  other manufacturer produces a
receiver acceptable  to EchoStar,  EchoStar is  dependent on  one  manufacturing
source  for  its  receivers.  To  date,  EchoStar  has  paid  the  nonperforming
manufacturer $10.0 million  and has  an additional  $15.0 million  in an  escrow
account  as security for EchoStar's payment  obligations under that contract. If
that manufacturer does not  produce an acceptable receiver  in the near  future,
EchoStar  may terminate that contract, which  would cause longer term dependence
on a single manufacturing source. If EchoStar's sole manufacturer is unable  for
any  reason  to  produce receivers  in  a  quantity sufficient  to  meet demand,
EchoStar's liquidity and results of operations may be adversely affected. If the
contract with  EchoStar's other  manufacturer  is terminated,  there can  be  no
assurance EchoStar would be able to recover all amounts paid the manufacturer or
otherwise held in escrow.                                                       

    SUBSTANTIAL LEVERAGE.  The Issuer's direct subsidiary, Dish, Ltd., is highly
leveraged,  and the Issuer,  as a result of  the issuance of  the Notes, is also
highly leveraged.  This degree  of leverage  could make  EchoStar vulnerable  to
changes in general economic conditions. Substantially all of the assets of Dish,
Ltd.  and its subsidiaries are  pledged as collateral for  the 1994 Notes, and a
substantial portion of the assets of EchoStar's direct subsidiaries are and will
be pledged as collateral  for the Notes.  Thus it is, and  will continue to  be,
difficult to obtain additional debt if required or desired in order to implement
EchoStar's  business strategy.  Dish, Ltd. and  certain of  its subsidiaries are
also parties to  several agreements  (in addition  to the  1994 Indenture)  that
severely  restrict their ability to obtain additional debt financing for working
capital, capital expenditures, and general  corporate purposes. As security  for
the  performance of its obligations under these agreements, certain subsidiaries
of Dish,  Ltd.  have  pledged  substantial assets  as  collateral.  The  Issuer,
including  Dish, Ltd. had outstanding  approximately $783.4 million of long-term
debt (including both the  current and long-term  portion) (including the  Notes,
the  1994 Notes, deferred satellite contract payments on EchoStar I and mortgage
debt) as of March  31, 1996 (excluding approximately  $28.0 million of  deferred
satellite contract payments to be incurred in connection with the manufacture of
EchoStar  II). In addition, because interest on  the 1994 Notes currently is not
payable in cash but accretes through June 1, 1999, liability with respect to the
1994 Notes will increase  by approximately $241.8 million  through that date  to
$624.0  million. Similarly,  interest on  the Notes  accretes through  March 15,
2000, at  which time  liability with  respect to  those notes  will increase  to
$580.0  million. Additional  debt may  be incurred by  Dish, Ltd.  or the Issuer
(subject to  limitations contained  in the  1994 Indenture  and 1996  Indenture,
respectively)   if  unanticipated  costs  or   delays  are  experienced  in  the
construction and completion  of the EchoStar  DBS System. The  ability of  Dish,
Ltd. and the Issuer to meet their respective debt obligations will depend on the
success  of EchoStar's  business strategy,  the success  of which  is subject to
uncertainties and contingencies beyond EchoStar's control.                      

    HOLDING COMPANY STRUCTURE; STRUCTURAL SUBORDINATION.  As of March 31,  1996,
the  liabilities of  EchoStar aggregated approximately  $815.3 million. Although
the Notes are titled "Senior": (i) the Issuer has not issued, and does not  have
any  plans to issue,  any indebtedness to  which the Notes  would be senior; and
(ii) the  Notes are  effectively  subordinated to  all liabilities  of  EchoStar
(except  liabilities to  general creditors)  and its  other subsidiaries (except
liabilities of the Issuer), including liabilities to general creditors.         

    Since all of the Issuer's and Dish, Ltd.'s operations are conducted  through
subsidiaries,  the cash flow of  the Issuer and Dish,  Ltd. and their ability to
service debt, including  the 1994 Notes  and the Notes,  are dependent upon  the
earnings of their subsidiaries and the payment of funds by those subsidiaries to
Dish, Ltd. and the Issuer in the form of loans, dividends or other payments. The
1994  Indenture  contains  restrictions on  the  ability  of Dish,  Ltd.  to pay
dividends to the Issuer. See                                                    

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"Description of  Certain  Indebtedness  --  1994  Notes."  Dish,  Ltd.  and  its
subsidiaries  have no current  obligations, contingent or  otherwise, to pay any
amounts due  pursuant to  the Notes  or to  make any  funds available  therefor,
whether by dividends, loans or other payments, other than the possible guarantee
of  the Notes by Dish, Ltd. which will become effective when and if permitted by
the 1994 Indenture. The  cash flow generated by  Dish, Ltd.'s subsidiaries  will
only be available to satisfy the Issuer's obligations on the Notes after payment
of all amounts then due and payable under the 1994 Notes and then only if and to
the  extent  that  the 1994  Indenture  permits  Dish, Ltd.  to  make  such cash
available to the Issuer in  the form of dividends,  loans or other payments.  In
addition,  Dish, Ltd. generally may pay  dividends on its equity securities only
if: (i) no default exits under the 1994 Indenture; and (ii) after giving  effect
to  such dividends, Dish, Ltd.'s ratio of  total indebtedness to cash flow would
not exceed 4.0 to 1. Moreover, the aggregate amount of such dividends  generally
may  not exceed the sum of 50% of  Dish, Ltd.'s consolidated net income from the
date of the 1994  Indenture, plus 100%  of the aggregate  net proceeds to  Dish,
Ltd.  from the sale  and issuance of  certain equity interests  of Dish, Ltd. If
available cash flows of Dish Ltd.'s  subsidiaries are not sufficient to  service
the  Notes, the Issuer would be required to obtain cash from other sources, such
as sales  of  assets  or  equity  or debt  securities  by  EchoStar  or  capital
contributions  or loans made by EchoStar from proceeds thereof or cash otherwise
available to  EchoStar  or  its  other direct  subsidiaries.  There  can  be  no
assurance  that those  alternative sources  would be  sufficient to  service the
Notes.                                                                          

    UNCERTAINTY OF  SPRINGING  GUARANTEES.    Initially,  the  Issuer's  payment
obligations  under the  Notes are only  guaranteed (on a  subordinated basis) by
EchoStar. On and after the Dish Guarantee Date, the Issuer's payment obligations
under the  Notes will  be guaranteed  (on a  PARI PASSU  basis with  all  senior
unsecured  debt of Dish,  Ltd.) by Dish,  Ltd. (the "Dish  Guarantee"). The Dish
Guarantee will not be  effected until the  earlier of: (i)  the first date  upon
which  Dish, Ltd. is permitted, pursuant to  the terms of the 1994 Indenture, to
guarantee  the   Issuer's   total  payment   obligations   under  all   of   the
then-outstanding Notes; and (ii) the first date upon which the 1994 Notes are no
longer  outstanding or have been defeased. Dish, Ltd. may not incur or guarantee
debt, subject to certain limited exceptions, unless, giving effect to such  debt
or  guarantee, its Indebtedness to  Cash Flow Ratio would be  less than 5.0 to 1
(if prior to June 1, 1998)  or 4.0 to 1 (if on  or after June 1, 1998). For  the
year  ended December  31, 1995,  Dish, Ltd.  had negative  cash flow. Therefore,
there can be no assurance that the Dish Guarantee will be effected at any  time.
In  addition,  upon  consummation  of  the  DBSC  Merger,  the  Issuer's payment
obligations under the Notes will be guaranteed  (on a PARI PASSU basis with  all
senior  unsecured debt of DBSC) by DBSC.  If the DBSC Merger is not consummated,
DBSC will not  guarantee the  Notes. There  can be  no assurance  that the  DBSC
Merger  will  be  approved  by the  FCC  or  that it  will  be  consummated. See
"Description of Exchange Notes -- Affiliate Guarantees."                        

    CONTINGENT COLLATERAL.   The Notes  are expected  to be  secured by  certain
Collateral relating to DBSC and EchoStar III. Following consummation of the DBSC
Merger (as defined in "Description of Exchange Notes") the Notes will be secured
by: (i) a first priority security interest, when launched, in EchoStar III; (ii)
a collateral assignment of all contracts relating to construction, launch (other
than  the Launch Contract with Great Wall),  insurance and TT&C of EchoStar III;
and (iii) a pledge of all of  the issued and outstanding capital stock of  DBSC.
In  the event that  the DBSC Merger  is not consummated  but the Substitute DBSC
Transaction (as defined in "Description of Exchange Notes") is consummated,  the
Notes will be secured by a collateral assignment of all contracts and agreements
relating  to the Substitute DBSC Transaction.  The deadline for filing petitions
and oppositions regarding approval by the FCC of the DBSC Merger passed on March
15, 1996, and EchoStar is aware of only one opposition, which was filed by  CPT.
EchoStar  believes that  the FCC has  previously considered  and rejected issues
similar to the  arguments made in  the opposition,  and that filing  of the  CPT
opposition does not materially decrease the likelihood that the FCC will approve
the  DBSC Merger. See "--  Opposition to, and Risk  of Rejection of, DBSC Merger
Application." In  the event  neither the  DBSC Merger  nor the  Substitute  DBSC
Transaction  is consummated, no additional Collateral will be provided to secure
the Notes, and the Issuer  will be required to make  an offer to each holder  of
Notes  to  repurchase  a portion  of  the  holder's Notes.  See  "Description of
Exchange Notes -- Security" and                                                 

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"Description of  Exchange Notes  -- Offer  to Purchase  upon the  Occurrence  of
Certain  Events." There can be  no assurance that the  FCC will approve the DBSC
Merger or  that the  DBSC Merger  or  the Substitute  DBSC Transaction  will  be
consummated.                                                                    

    NEED FOR ADDITIONAL CAPITAL.  EchoStar will require additional funds for the
construction and launch of a third, fourth and fifth DBS satellite. In addition,
it  will  require  additional funds  for  EchoStar Receiver  System  rebates and
subscriber acquisition  costs which  may be  necessary to  competitively  market
programming  packages offered on the DISH  Network-SM-. Further, EchoStar has an
application pending  with the  FCC for  a two  satellite Ku-band  system, a  two
satellite  extended Ku-band system  and a six satellite  low earth orbit ("LEO")
satellite system; and has been granted a conditional license for a two-satellite
fixed satellite  service ("FSS")  Ka-band system.  EchoStar will  need to  raise
additional  funds for the  foregoing purposes. See  "Management's Discussion and
Analysis of  Financial Condition  and  Results of  Operations --  Liquidity  and
Capital Resources."                                                             

    RESTRICTIVE  COVENANTS.   The 1996 Indenture  contains restrictive covenants
that, among other things, limit the  ability of the Issuer and its  subsidiaries
to:  (i) incur additional  indebtedness; (ii) issue  preferred stock; (iii) sell
assets; (iv)  create, incur  or  assume liens;  (v)  create dividend  and  other
repayment  restrictions with respect  to the Issuer's  subsidiaries; (vi) merge,
consolidate or  sell assets;  (vii) incur  subordinated or  junior debt;  (viii)
enter  into  transactions  with affiliates;  and  (ix) pay  dividends.  The 1994
Indenture contains restrictive  covenants that,  among other  things, limit  the
ability   of  Dish,  Ltd.   and  its  subsidiaries   to:  (i)  incur  additional
indebtedness; (ii) issue preferred stock; (iii) sell assets; (iv) create,  incur
or  assume  liens; (v)  create dividend  and  other repayment  restrictions with
respect to Dish, Ltd.'s  subsidiaries; (vi) merge,  consolidate or sell  assets;
(vii)  incur subordinated  or junior debt;  (viii) enter  into transactions with
affiliates; and (ix)  pay dividends. These  restrictions may inhibit  EchoStar's
ability  to  manage its  business and  to react  to changing  market conditions.
EchoStar does not intend to pay  dividends in the near future. See  "Description
of Certain Indebtedness -- 1994 Notes."                                         

    RESTRICTIONS IMPOSED BY AND EXPIRATION OF CREDIT FACILITY.  Certain of Dish,
Ltd.'s  operating subsidiaries entered  into a credit  facility which contains a
number of negative covenants  that limit the ability  of those subsidiaries  to,
among  other things: (i) incur indebtedness;  (ii) create liens on assets; (iii)
provide guarantees; (iv) enter into merger or consolidation transactions; or (v)
dispose of any assets outside of  the ordinary course of business. In  addition,
except  in certain circumstances, those  subsidiaries are prohibited from paying
dividends to Dish,  Ltd. in an  amount exceeding  50% of excess  cash flow.  The
credit  facility expired in May  1996 and EchoStar does  not currently intend to
arrange a replacement credit facility. Instead, EchoStar is using available cash
to collateralize its letter  of credit obligations,  which historically was  the
only  significant use of the credit facility. At May 31, 1996, EchoStar had cash
collateralized $15.5  million of  certain standby  letters of  credit for  trade
purchases.                                                                      

    DECLINE  IN DOMESTIC C-BAND  DTH PRODUCT SALES.   Historically, EchoStar has
sold C-band DTH products in the United States. The recent growth of DBS  service
and  equipment sales has and will continue to have a material negative impact on
EchoStar's domestic sales of C-band DTH products. The significant growth of  DBS
is  at least  partially attributable to  the lower  cost to the  consumer of DBS
systems compared to that for C-band DTH systems and the smaller size of the  DBS
dish  compared to the C-band dish. There  can be no assurance that EchoStar will
not have to sell C-band DTH inventory at prices below cost.                     

    LIMITED LIFE OF  SATELLITES.  Each  EchoStar satellite will  have a  limited
useful life. A number of factors will affect the useful lives of the satellites,
including  the quality of their construction,  the durability of their component
parts, the longevity of  their orbits and the  launch vehicle used. The  minimum
design  life of each  of EchoStar I, EchoStar  II and EchoStar  III is 12 years.
There can be no  assurance, however, as  to the useful  life of the  satellites.
EchoStar's operating results would be adversely affected in the event the useful
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12 years.  The Satellite  Contracts contain  no  warranties in  the event  of  a
failure  of  EchoStar  I, EchoStar  II  or  EchoStar III  following  launch. See
"Business -- Operation of the EchoStar DBS System -- The Satellites."           

    DEPENDENCE ON SATELLITES AND SINGLE DIGITAL BROADCAST CENTER.  Prior to  the
end  of the anticipated useful lives  of EchoStar satellites, EchoStar will need
to  obtain  replacement  satellites.  There  can  be  no  assurance  that  those
replacements will be available when required or, if available, that they will be
available  on  terms  acceptable to  EchoStar.  Various FCC  approvals  would be
required with respect to replacement  satellites, including but not limited  to,
renewal  of EchoStar's ten year license. There is no assurance that the FCC will
grant the approvals.                                                            

    EchoStar also relies upon  a single digital  broadcast center, in  Cheyenne,
Wyoming, for key operations such as reception of programming signals, encryption
and  compression. If a  natural or other disaster  damaged the digital broadcast
center, there can be  no assurance that  EchoStar would be  able to continue  to
provide programming services to its customers.                                  

    RISKS  OF FAILURE OF COMPLEX TECHNOLOGY.   The EchoStar DBS System is highly
complex. Final  development,  manufacture  and  integration  of  technologically
diverse  and  advanced  components is  not  yet complete.  New  applications and
adaptations of existing and  new technology (including compression,  conditional
access,   on  screen  guides  and   other  matters),  and  significant  software
development, are integral to the EchoStar DBS System. As a result, the  EchoStar
DBS System may not function as expected.                                        

    Technology in the satellite television industry is in a rapid and continuing
state  of change as  new technologies develop.  Although the digital compression
technology utilized in  connection with  the EchoStar  DBS System  is the  world
standard,  the  integration  and  implementation  of  that  technology  is  also
undergoing rapid  change.  There can  be  no  assurance that  EchoStar  and  its
suppliers  will  be  able  to  keep  pace  with  technological  developments. In
addition, delays in the delivery of  components or other unforeseen problems  in
the  EchoStar DBS System may occur that could adversely affect performance, cost
or timely deployment and operation of the EchoStar DBS System and could have  an
adverse  affect on EchoStar. Further, in  the event that a competitive satellite
receiver technology  becomes commonly  accepted as  the standard  for  satellite
receivers in the United States, EchoStar would be at a significant technological
disadvantage. See "Business -- Operation of the EchoStar DBS System."           

    EFFECT  OF LOSS OF KEY PERSONNEL.  EchoStar believes that its future success
will depend to a significant extent upon the performance of certain individuals,
particularly Charles W. Ergen, Chairman,  Chief Executive Officer and  President
of EchoStar, R. Scott Zimmer, President of EIC, James DeFranco, President of HTS
and  EAC,  and Carl  E.  Vogel, EchoStar's  Executive  Vice President  and Chief
Operating Officer  and the  President of  ESC. The  loss of  any of  these  four
individuals  could have an adverse affect  on EchoStar's business. EchoStar does
not maintain "key man" insurance with respect to any such individuals and, other
than  Mr.  Vogel,  it  has  not  negotiated  employment  agreements  with   such
individuals.                                                                    

    CONTROL  OF ECHOSTAR BY  PRINCIPAL STOCKHOLDER.   Although Charles W. Ergen,
the Chairman, Chief Executive Officer and President of EchoStar, currently  owns
73.6%  of the total equity securities of EchoStar (assuming exercise of employee
stock options), he currently possesses  approximately 96.1% of the total  voting
power.  Thus, Mr. Ergen has,  and after the Offering  will continue to have, the
ability to elect  a majority of  the directors  of EchoStar and  to control  all
other  matters requiring the approval  of EchoStar's stockholders. See "Security
Ownership of Certain Beneficial  Owners and Management."  For Mr. Ergen's  total
voting power in EchoStar to be reduced to below 51%, his percentage ownership of
the equity securities of EchoStar would have to be reduced to below 10%.        

    DEPENDENCE  ON  THIRD PARTY  PROGRAMMERS.   EchoStar  is dependent  on third
parties to provide EchoStar with programming. EchoStar's programming  agreements
have  remaining terms ranging from one to  ten years and contain various renewal
and cancellation provisions. There can be no                                    

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assurance  that any of these agreements will be renewed or will not be cancelled
prior to  expiration  of  their  original  term. In  the  event  that  any  such
agreements are not renewed or are cancelled, there is no assurance that EchoStar
would  be  able  to  obtain  or develop  substitute  programming,  or  that such
substitute programming  would be  comparable in  quality or  cost to  EchoStar's
existing  programming. EchoStar's competitors  currently offer substantially the
same programming as EchoStar.  The ability of  EchoStar to compete  successfully
will  depend on EchoStar's  ability to continue  to obtain desirable programming
and attractively  package  it  to  its  customers  at  competitive  prices.  See
"Business -- Products and Services -- DBS and Related Services--Programming."   

    Pursuant  to the Cable Television Consumer Protection and Competition Act of
1992  (the  "Cable  Act"),   programming  developed  by  vertically   integrated
cable-affiliated  programmers generally must be  offered to all potential buyers
on fair  and reasonable  terms. EchoStar  anticipates purchasing  a  substantial
percentage  of its programming from cable-affiliated programmers. Certain of the
restrictions on cable-affiliated programmers will expire in 2002 unless the  FCC
extends  them. As a  result, any expiration of,  amendment to, or interpretation
of, the Cable Act that permits the cable industry to discriminate in the sale of
programming against  competing  businesses,  such as  that  of  EchoStar,  could
adversely   affect  EchoStar's   ability  to  acquire   programming  or  acquire
programming on a cost-effective basis. Regulation and the need to obtain certain
retransmission consents and copyright licenses may limit the ability of EchoStar
to implement a local programming strategy in multiple markets.                  

    RISK OF INABILITY  TO MANAGE  RAPIDLY EXPANDING OPERATIONS.   EchoStar  must
expand  its operations  rapidly to achieve  its business  objectives. Several of
EchoStar's key  activities,  including  satellite  in-orbit  control,  satellite
receiver  manufacturing, billing  and subscriber  management are  out-sourced to
third party vendors. To manage its growth effectively, EchoStar must continue to
develop,  install  and  improve  its  operating  and  information  systems   and
coordinate  efforts with  its third  party vendors.  EchoStar will  also need to
continue to  expand, train  and manage  its employee  base, and  its  management
personnel  will be required to assume  even greater levels of responsibility. If
EchoStar is unable  to manage  its growth effectively,  EchoStar's business  and
results of operations could be materially adversely affected.                   

    RISKS  OF INFRINGEMENT OF PATENTS AND PROPRIETARY RIGHTS.  EchoStar does not
believe that patents and other intellectual property rights are material to  its
business,  although many  of EchoStar's  competitors have  obtained, and  may be
expected to  obtain in  the future,  patents that  cover or  affect products  or
services  directly or indirectly related to those offered by EchoStar. There can
be no assurance that EchoStar  is aware of all  patents that may potentially  be
infringed by its products. In addition, patent applications in the United States
are  confidential until  a patent  is issued  and, accordingly,  EchoStar cannot
evaluate the  extent to  which its  products may  infringe claims  contained  in
pending patent applications. EchoStar has been notified that certain features of
the  EchoStar Receiver System allegedly infringe  on patents held by others, and
that royalties are therefore required to be paid. If it were determined that the
features at issue or any other  EchoStar's products infringe on patents held  by
others,  EchoStar  would  be required  to  cease developing  or  marketing those
products, to  obtain licenses  to develop  and market  those products  from  the
holders  of the patents or to redesign those  products in such a way as to avoid
infringing the patent claims.  The extent to which  EchoStar may be required  in
the  future to obtain  licenses with respect  to patents held  by others and the
availability and cost of any such licenses is currently unknown. There can be no
assurance that EchoStar would  be able to obtain  such licenses on  commercially
reasonable terms or, if it were unable to obtain such licenses, that it would be
able  to redesign its products to avoid  infringement. In the event EchoStar was
not able to obtain such licenses on commercially reasonable terms, or if it  was
unable  to obtain such licenses and it could not otherwise redesign its products
to avoid infringement, EchoStar's  business and results  of operations could  be
materially adversely affected.                                                  

    RISK  THAT  INITIAL  CAPITAL COSTS  WILL  LIMIT DEMAND  OF  DISH NETWORK-SM-
PROGRAMMING.   The suggested  retail price  of an  EchoStar Receiver  System  is
currently  between approximately $499 and $599,  depending on the model selected
by   the    customer,   among    other    factors.   Dealer    incentives    and

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EchoStar sponsored promotions may reduce the actual cost of an EchoStar Receiver
System  below the suggested  retail price. The initial  capital cost required to
receive DISH Network-SM- programming may reduce the demand for EchoStar Receiver
Systems.                                                                        

    CONSEQUENCE OF ORIGINAL  ISSUE DISCOUNT.   The Notes have  been issued at  a
substantial  discount from  their principal amount.  Consequently, purchasers of
the Notes generally  will be  required to include  amounts in  gross income  for
federal  income tax purposes in advance of receipt of the cash payments to which
the income is attributable. See "Certain Federal Income Tax Considerations"  for
a  more detailed discussion of the federal income tax consequences to purchasers
of the Notes.                                                                   

    If a bankruptcy petition is filed by or against the Issuer under the  United
States Bankruptcy Code after the issuance of the Notes, the claim of a holder of
Notes  with respect to the principal amount  thereof may be limited to an amount
equal to the sum of: (i) the initial offering price for the Notes; and (ii) that
portion of  the  original  issue  discount that  is  not  deemed  to  constitute
"unmatured  interest" within the  meaning of the  United States Bankruptcy Code.
Any original issue  discount that was  not amortized as  of any such  bankruptcy
filing would constitute "unmatured interest."                                   

    RISK  OF  INABILITY  TO REALIZE  UPON  SECURITY  INTERESTS.   The  Notes are
intended to  be secured  by  liens on  certain  assets of  EchoStar,  collateral
assignments   of  certain   contracts  and   insurance  proceeds   and,  pending
disbursements of a portion of the proceeds  of the Old Notes Offering, a  pledge
of  such proceeds. See "Description of Exchange Notes -- Security." The security
interests will be perfected in accordance with practices frequently utilized  in
the  satellite industry, and financing statements will be filed in jurisdictions
considered appropriate. The ability of the  Trustee under the 1996 Indenture  to
foreclose  on such  collateral upon  the occurrence of  an Event  of Default (as
defined herein), however, will be subject to perfection and priority issues  and
to practical problems associated with realization upon the security interest. In
particular,  unlike  most  other  forms  of  collateral,  there  is  no  clearly
established system for granting or perfecting security interests in  satellites.
No  assurance can be given that the holders of the Notes will obtain the benefit
of a valid or perfected security interest in the satellites.                    

    If an Event of Default occurs with respect to the Notes, whether prior to or
after completion of the EchoStar DBS System, there can be no assurance that  the
liquidation  of the collateral  securing the Notes would  produce proceeds in an
amount sufficient to pay the principal, premium, if any, and accrued interest on
the Notes.                                                                      

    In any foreclosure sale of the assets  of the Issuer, the purchaser of  such
assets  (including the Trustee if it purchased  and chose not, or was unable, to
resell such assets) would need to be authorized by the FCC in advance to operate
the EchoStar  DBS  System. Since  potential  bidders  who wish  to  operate  the
EchoStar DBS System must be authorized in advance by the FCC (which, among other
things,  may restrict foreign  ownership), the number of  potential bidders in a
foreclosure sale  could  be smaller  than  in  foreclosures of  other  types  of
facilities,  and  such requirements  may delay  the sale  of, and  may adversely
affect the  sales  price for,  the  EchoStar DBS  System.  The ability  to  take
possession and dispose of the collateral securing the Notes upon acceleration is
likely to be significantly impaired or delayed by applicable bankruptcy law if a
bankruptcy action were to be commenced by or against the Issuer.                

    ABSENCE   OF  PUBLIC  MARKET   FOR  THE  EXCHANGE   NOTES;  RESTRICTIONS  ON
TRANSFERS.  The  Exchange Notes  are being  offered to  the holders  of the  Old
Notes.  The Old Notes were offered  and sold in March 1996  to a small number of
institutional and  accredited investors  and  are eligible  for trading  in  the
Private  offerings,  Resale  and  Trading  through  Automatic  Linkages (PORTAL)
Market.                                                                         

    The Exchange Notes will  constitute a new issue  of securities, and none  of
the  Exchange Notes has an established trading  market. If a trading market does
not develop or is not maintained,  holders of the Exchange Notes may  experience
difficulty in reselling the Exchange Notes or may be unable to sell them at all.
If  a market for the Exchange Notes  develops, the Exchange Notes could trade at
prices that may be  lower than the initial  market values thereof, depending  on
many factors, including                                                         

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prevailing  interest rates, the  markets for similar  services and the financial
performance of the Issuer, or any such  market may be discontinued at any  time.
The  Initial Purchasers have made  a market in the  Old Notes. Although there is
currently no market for the Exchange Notes, the Initial Purchasers have  advised
the  Issuer that they currently  intend to make a  market in the Exchange Notes.
However, they  are not  obligated to  do so,  and any  such market  making  with
respect  to the Old Notes and the Exchange Notes may be discontinued at any time
without notice. In addition, such market making activity will be subject to  the
limits imposed by the Securities Act and the Securities Exchange Act of 1934, as
amended  (the "Exchange Act"), and may be  limited during the Exchange Offer and
the pendency of any applicable shelf registration statement. See "Description of
Exchange  Notes  --  Old   Notes'  Registration  Rights;  Liquidated   Damages."
Accordingly, there can be no assurance as to the development or liquidity of any
market  for the Old Notes and the Exchange  Notes. The Issuer does not intend to
apply for listing of any of the Exchange Notes on any securities exchange or for
quotation through  the  National  Association of  Securities  Dealers  Automated
Quotation System.                                                               

    The  liquidity of, and  trading market for,  the Exchange Notes  also may be
adversely affected by  general declines  in the market  for similar  securities.
Such   a  decline  may  adversely  affect  such  liquidity  and  trading  market
independent of the financial performance of, and prospects for, the Issuer.     

    RISK OF SATELLITE DAMAGE OR LOSS  FROM ACTS OF WAR, ELECTROSTATIC STORM  AND
SPACE  DEBRIS.  The loss, damage or  destruction of any EchoStar satellites as a
result of military actions or acts of war, anti-satellite devices, electrostatic
storm or collision  with space debris  would have a  material adverse effect  on
EchoStar.  EchoStar's insurance policies include customary exclusions including:
(i) military  or  similar  actions;  (ii)  laser,  directed  energy  or  nuclear
anti-satellite  devices; and (iii) insurrection and similar acts or governmental
action.                                                                         

    CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES.  Holders of Old Notes who  do
not  exchange their Old Notes for Exchange  Notes pursuant to the Exchange Offer
will continue to be subject to the  restrictions on transfer of such Old  Notes,
as  set forth in the legend thereon, as a consequence of the issuance of the Old
Notes pursuant  to exemptions  from,  or in  transactions  not subject  to,  the
registration  requirements of the Securities Act and applicable state securities
laws. In general, the Old Notes may  not be offered, sold, pledged or  otherwise
transferred,  unless registered  under the  Securities Act  and applicable state
securities laws, or  pursuant to  an exemption therefrom.  Except under  certain
limited  circumstances, the  Issuer does  not intend  to register  the Old Notes
under the Securities Act. In  addition, any holder of  Old Notes who tenders  in
the  Exchange Offer for  the purpose of  participating in a  distribution of the
Exchange Notes may be deemed to have received restricted securities and, if  so,
will  be  required  to  comply with  the  registration  and  prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent  Old Notes  are tendered  and  accepted in  the Exchange  Offer,  the
trading  market, if any,  for the Old  Notes not so  tendered could be adversely
affected. See "The  Exchange Offer" and  "Description of Exchange  Notes --  Old
Notes' Registration Rights; Liquidated Damages."                                

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USE OF PROCEEDS 

    There  will be no cash  proceeds to the Issuer  from the Exchange Offer. The
gross proceeds to  the Issuer  from the  Old Notes  Offering were  approximately
$350.0  million. The net  proceeds from the  Old Notes Offering  will be applied
toward the construction, launch and insurance  of EchoStar III and EchoStar  IV,
to  marketing and operating expenses (including, but not limited to, a financing
program for  EchoStar Receiver  Systems), to  fund the  winning bid  at the  FCC
Auction  and  related expenses,  to partially  fund  additional launch  costs of
EchoStar II and  for general  corporate purposes.  Pending these  uses, the  net
proceeds  for the purchase of  the frequencies at 148  DEG. WL, and for EchoStar
III and EchoStar IV  construction, launch and insurance,  will be maintained  in
the  Escrow  Account and  will serve  as collateral  for the  Old Notes  and the
Exchange Notes. See "Description of Exchange  Notes -- Disbursement of Funds  --
Escrow  Account." Although the estimates set  forth under "Uses" below represent
EchoStar's best estimate of the intended use of the proceeds from the Old  Notes
Offering,  the specific  amounts allocated to  each use may  change depending on
such factors as  unanticipated costs or  requirements necessary for  development
and operation of the EchoStar DBS System.                                       

                                                        [Enlarge/Download Table]

                                                                                                         (IN     
                                                                                                      MILLIONS)  
                                                                                                                 
SOURCES:                                                                                                         
  Net proceeds from the Old Notes Offering (1)......................................................  $    337.0 
                                                                                                     ------------
                                                                                                     ------------
USES:                                                                                                            
  EchoStar III and IV construction, launch and insurance............................................  $    125.0 
  Introduction, product marketing and operating expenses for the DISH Network-SM-...................        95.0 
  Purchase of 24 frequencies at 148 DEG. WL orbital slot............................................        52.3 
  Additional EchoStar II launch costs...............................................................        35.0 
  General corporate purposes........................................................................        29.7 
                                                                                                     ------------
    Total uses......................................................................................  $    337.0 
                                                                                                     ------------
                                                                                                     ------------

------------------------                                                        
(1)  Net  proceeds from  the  Old Notes  Offering are  net  of $13.0  million of
estimated transaction expenses.                                         

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THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER                                                   

    The sole purpose of the Exchange Offer is to fulfill the obligations of  the
Issuer and the Guarantors with respect to the registration of the Old Notes.    

    The  Old Notes were originally issued and sold on March 25, 1996 (the "Issue
Date"). Such sales were not registered under the Securities Act in reliance upon
the exemption  provided by  Section 4(2)  of the  Securities Act  and Rule  144A
promulgated  under the Securities  Act. In connection  with the sale  of the Old
Notes, the Issuer agreed  to file with the  Commission a registration  statement
relating to the Exchange Offer (the "Registration Statement"), pursuant to which
the Exchange Notes, consisting of another series of senior subordinated notes of
the  Issuer covered by such  Registration Statement and containing substantially
identical terms to the Old Notes, except as set forth in this Prospectus,  would
be  offered in  exchange for  Old Notes  tendered at  the option  of the holders
thereof. If: (i) the Issuer is  not required to file the Registration  Statement
or  permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy; or (ii) any holder of Transfer
Restricted Notes notifies the Issuer within the specified time period that:  (A)
it  is prohibited by law or Commission policy from participating in the Exchange
Offer; (B) that  it may  not resell  the Exchange Notes  acquired by  it in  the
Exchange  Offer to the public without delivering a prospectus and the prospectus
contained in the Registration Statement is not appropriate or available for such
resales; or (C) that it is a broker-dealer and owns Old Notes acquired  directly
from  the Issuer or  an affiliate of  the Issuer, the  Issuer and the Guarantors
will file with the Commission a registration statement (the "Shelf  Registration
Statement") to cover resales of the Old Notes by the holders thereof who satisfy
certain  conditions relating to the provisions of information in connection with
the Shelf  Registration  Statement. For  purposes  of the  foregoing,  "Transfer
Restricted Notes" means each Old Note until: (i) the date on which such Old Note
has  been exchanged by a person other  than a broker-dealer for an Exchange Note
in the Exchange  Offer; (ii) following  the exchange by  a broker-dealer in  the
Exchange  Offer of a Note for an Exchange  Note, the date on which such Exchange
Note is sold to a purchaser who receives from such broker-dealer on or prior  to
the  date of such  sale a copy  of the prospectus  contained in the Registration
Statement; (iii) the date on which such Old Note has been effectively registered
under  the  Securities  Act  and  disposed  of  in  accordance  with  the  Shelf
Registration  Statement; or (iv) the date on  which such Old Note is distributed
to the public pursuant  to Rule 144 under  the Act. If: (a)  the Issuer and  the
Guarantors  fail  to file  any of  the Registration  Statements required  by the
Registration Rights Agreement on or before  the date specified for such  filing;
(b)  any  of  such Registration  Statements  is  not declared  effective  by the
Commission on  or  prior to  the  date  specified for  such  effectiveness  (the
"Effectiveness  Target  Date");  (c)  the  Issuer  and  the  Guarantors  fail to
consummate the  Exchange Offer  within  30 business  days of  the  Effectiveness
Target  Date  with  respect to  the  Registration  Statement; or  (d)  the Shelf
Registration Statement or the Registration  Statement is declared effective  but
thereafter  ceases  to be  effective  or usable  in  connection with  resales of
Transfer Restricted  Notes  during the  periods  specified in  the  Registration
Rights Agreement (each such event referred to in clauses (a) through (d) above a
"Registration  Default"),  then  the  Issuer  and  the  Guarantors  jointly  and
severally agree to  pay liquidated  damages to each  holder of  Old Notes,  with
respect  to the first 90-day period immediately following the occurrence of such
Registration Default in an  amount equal to $.05  per week per $1,000  principal
amount  of Old Notes held  by such holder ("Liquidated  Damages"). The amount of
the Liquidated Damages will increase by  an additional $.05 per week per  $1,000
principal  amount of  Old Notes  with respect  to each  subsequent 90-day period
until all  Registration Defaults  have been  cured, up  to a  maximum amount  of
Liquidated  Damages of $.40  per week per  $1,000 principal amount  of Old Notes
constituting Transfer Restricted Notes. All  accrued Liquidated Damages will  be
paid  by the Issuer on  each damages payment date to  the Global Note Holder (as
defined) by wire transfer to the accounts specified by them or by mailing checks
to their registered addresses if no such accounts have been specified. Following
the cure of all  Registration Defaults, the accrual  of Liquidated Damages  will
cease.  See "Description  of Exchange Notes  -- Old  Notes' Registration Rights;
Liquidated Damages."                                                            

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    Holders of Old Notes will be required to make certain representations to the
Issuer  (as  described  in  the  Registration  Rights  Agreement)  in  order  to
participate in the Exchange Offer and will be required to deliver information to
be  used  in connection  with the  Shelf Registration  Statement and  to provide
comments on the Shelf Registration Statement  within the time periods set  forth
in  the Registration Rights Agreement in order  to have their Old Notes included
in the Shelf Registration  Statement and benefit  from the provisions  regarding
Liquidated Damages set forth above.                                             

TERMS OF THE EXCHANGE                                                           

    The  Issuer hereby  offers to  exchange, upon the  terms and  subject to the
conditions set forth herein and in  the Letter of Transmittal accompanying  this
Prospectus (the "Letter of Transmittal"), $1,000 in principal amount of Exchange
Notes  for  each $1,000  in  principal amount  of Old  Notes.  The terms  of the
Exchange Notes are  substantially identical to  the terms of  the Old Notes  for
which  they may be  exchanged pursuant to  this Exchange Offer,  except that the
Exchange Notes will generally be freely transferable by holders thereof, and the
holders of the Exchange Notes  (as well as remaining  holders of any Old  Notes)
are  not entitled to certain registration  rights and certain liquidated damages
provisions which are applicable to the  Old Notes under the Registration  Rights
Agreement.  The Exchange Notes will evidence the  same debt as the Old Notes and
will be entitled  to the  benefits of the  1996 Indenture.  See "Description  of
Exchange Notes."                                                                

    The  Exchange Offer is not conditioned  upon any minimum aggregate principal
amount of Old Notes being tendered or accepted for exchange.                    

    Based on its view of interpretations  set forth in no-action letters  issued
by  the Staff to third  parties, the Issuer believes  that Exchange Notes issued
pursuant to the Exchange Offer in exchange for the Old Notes may be offered  for
resale,  resold and  otherwise transferred  by holders  thereof (other  than any
holder which  is  (i) an  Affiliate  of the  Issuer,  (ii) a  broker-dealer  who
acquired  Old  Notes  directly from  the  Issuer  or (iii)  a  broker-dealer who
acquired Old Notes  as a result  of market making  or other trading  activities)
without  compliance with the registration  and prospectus delivery provisions of
the Securities  Act, provided  that  such Exchange  Notes  are acquired  in  the
ordinary  course of such holders' business, and such holders are not engaged in,
and do not intend to  engage in, and have  no arrangement or understanding  with
any  person  to  participate in,  a  distribution  of such  Exchange  Notes. Any
broker-dealer that resells Exchange Notes that  were received by it for its  own
account   pursuant  to  the  Exchange  Offer  and  any  broker  or  dealer  that
participates in a distribution  of such Exchange  Notes may be  deemed to be  an
"underwriter"  within the meaning  of the Securities  Act and any  profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the  Securities
Act. Broker-dealers who acquired Old Notes as a result of market making or other
trading  activities  may use  this Prospectus,  as  supplemented or  amended, in
connection with resales of the Exchange Notes. The Issuer has agreed that, for a
period of 180 days after the Registration Statement is declared effective,  they
will  make this Prospectus available to  any broker-dealer for use in connection
with any such  resale. Any  holder who  tenders in  the Exchange  Offer for  the
purpose  of participating in a  distribution of the Exchange  Notes or any other
holder  that  cannot  rely  upon  such  interpretations  must  comply  with  the
registration  and  prospectus delivery  requirements  of the  Securities  Act in
connection with a secondary resale transaction.                                 

    Tendering holders  of  Old Notes  will  not  be required  to  pay  brokerage
commissions   or  fees  or,  subject  to  the  instructions  in  the  Letter  of
Transmittal, transfer  taxes with  respect  to the  exchange  of the  Old  Notes
pursuant to the Exchange Offer.                                                 

    The  Exchange Notes will bear  interest from March 25,  1996. Holders of Old
Notes whose Old Notes are  accepted for exchange will  be deemed to have  waived
the  right to  have interest accrete,  or to  receive any payment  in respect of
interest, on the  Old Notes  accreted from  March 25, 1996  to the  date of  the
issuance  of  the Exchange  Notes.  Interest on  the  Exchange Notes  is payable
semiannually in arrears on  March 15 and September  15 of each year,  commencing
September 15, 2000, accruing from March 25, 1996 at a rate of 13 1/8% per annum.

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EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS                            

    The  Exchange Offer  expires on  the Expiration  Date. The  term "Expiration
Date" means 5:00 p.m., New York City time, on July 26, 1996 unless the Issuer in
its sole discretion extends the period during which the Exchange Offer is  open,
in  which event  the term "Expiration  Date" means  the latest time  and date on
which the Exchange  Offer, as  so extended by  the Issuer,  expires. The  Issuer
reserves  the right to  extend the Exchange Offer  at any time  and from time to
time prior  to the  Expiration Date  by  giving written  notice to  First  Trust
National  Association (the "Exchange  Agent") and by  timely public announcement
communicated by no later than 5:00 p.m.  on the next business day following  the
Expiration  Date, unless otherwise required by  applicable law or regulation, by
making a release  to the Dow  Jones News  Service. During any  extension of  the
Exchange Offer, all Old Notes previously tendered pursuant to the Exchange Offer
will remain subject to the Exchange Offer.                                      

    The  initial  Exchange Date  will be  the first  business day  following the
Expiration Date. The Issuer  expressly reserves the right  to (i) terminate  the
Exchange  Offer  and not  accept  for exchange  any  Old Notes  for  any reason,
including if any of the events set forth below under "Conditions to the Exchange
Offer" shall have occurred and shall not have been waived by the Issuer and (ii)
amend the terms of the Exchange Offer in any manner, whether before or after any
tender of the Old Notes. If any such termination or amendment occurs, the Issuer
will notify the Exchange Agent in writing and will either issue a press  release
or  give  written  notice  to  the  holders of  the  Old  Notes  as  promptly as
practicable. Unless the Issuer terminates the Exchange Offer prior to 5:00 p.m.,
New York  City  time, on  the  Expiration Date,  the  Issuer will  exchange  the
Exchange Notes for Old Notes on the Exchange Date.                              

    This  Prospectus and  the related Letter  of Transmittal  and other relevant
materials will be mailed by the Issuer  to record holders of Old Notes and  will
be  furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear  on the lists  of holders for  subsequent transmittal  to
beneficial owners of Old Notes.                                                 

HOW TO TENDER                                                                   

    The tender to the Issuer of Old Notes by a holder thereof pursuant to one of
the  procedures set forth below will constitute an agreement between such holder
and the Issuer in accordance  with the terms and  subject to the conditions  set
forth herein and in the Letter of Transmittal.                                  

GENERAL PROCEDURES                                                      

    A  holder of an Old Note may tender  the same by (i) properly completing and
signing the Letter of Transmittal or a facsimile thereof (all references in this
Prospectus to the Letter of Transmittal  shall be deemed to include a  facsimile
thereof)  and delivering the same, together with the certificate or certificates
representing the Old Notes being tendered and any required signature  guarantees
(or a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation")
pursuant to the procedure described below), to the Exchange Agent at its address
set  forth on the  back cover of this  Prospectus on or  prior to the Expiration
Date or (ii) complying with the guaranteed delivery procedures described below. 

    If tendered Old Notes are registered in the name of the signer of the Letter
of Transmittal and the Exchange Notes to  be issued in exchange therefor are  to
be  issued (and any untendered Old Notes are  to be reissued) in the name of the
registered holder, the signature of such  signer need not be guaranteed. In  any
other  case, the tendered Old  Notes must be endorsed  or accompanied by written
instruments of transfer in form satisfactory to the Issuer and duly executed  by
the  registered holder  and the  signature on  the endorsement  or instrument of
transfer must be  guaranteed by a  bank, broker, dealer,  credit union,  savings
association,   clearing  agency   or  other   institution  (each   an  "Eligible
Institution") that is  a member  of a recognized  signature guarantee  medallion
program  within  the meaning  of Rule  17Ad-15  under the  Exchange Act.  If the
Exchange Notes and/or Old Notes not exchanged are to be delivered to an  address
other  than that of the registered holder appearing on the note register for the
Old Notes, the signature on the Letter  of Transmittal must be guaranteed by  an
Eligible Institution.                                                           

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    Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
Old Notes should contact such holder promptly and instruct such holder to tender
Old  Notes on such beneficial owner's behalf. If such beneficial owner wishes to
tender such Old Notes himself, such  beneficial owner must, prior to  completing
and  executing the Letter  of Transmittal and delivering  such Old Notes, either
make appropriate arrangements  to register ownership  of the Old  Notes in  such
beneficial  owner's name or  follow the procedures  described in the immediately
preceding paragraph.  The transfer  of record  ownership may  take  considerable
time.                                                                           

BOOK-ENTRY TRANSFER                                                     

    The  Exchange Agent will make a request to establish an account with respect
to the  Old Notes  at The  Depository Trust  Company (the  "Book-Entry  Transfer
Facility")  for purposes  of the Exchange  Offer within two  business days after
receipt of this Prospectus, and any financial institution that is a  participant
in  the Book-Entry Transfer  Facility's systems may  make book-entry delivery of
Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes
into the  Exchange  Agent's  account  at the  Book-Entry  Transfer  Facility  in
accordance  with  the Book-Entry  Transfer  Facility's procedures  for transfer.
However, although  delivery of  Old  Notes may  be effected  through  book-entry
transfer  at the Book-Entry  Transfer Facility, the  Letter of Transmittal, with
any required signature guarantees and any other required documents, must, in any
case, be  transmitted to  and received  by  the Exchange  Agent at  the  address
specified  on the back  cover of this  Prospectus on or  prior to the Expiration
Date or  the guaranteed  delivery procedures  described below  must be  complied
with.                                                                           

    THE  METHOD  OF DELIVERY  OF OLD  NOTES AND  ALL OTHER  DOCUMENTS IS  AT THE
ELECTION AND  RISK OF  THE  HOLDER. IF  SENT BY  MAIL,  IT IS  RECOMMENDED  THAT
REGISTERED  MAIL,  RETURN  RECEIPT  REQUESTED,  BE  USED,  PROPER  INSURANCE  BE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE
TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.      

    Unless an  exemption  applies  under  the  applicable  law  and  regulations
concerning  "backup withholding" of federal income  tax, the Exchange Agent will
be required to withhold, and will withhold, 31% of the gross proceeds  otherwise
payable  to  a holder  pursuant to  the Exchange  Offer if  the holder  does not
provide his taxpayer identification number  (social security number or  employer
identification  number, as applicable) and certify  that such number is correct.
Each tendering holder should complete and  sign the main signature form and  the
Substitute  Form W-9  included as part  of the  Letter of Transmittal,  so as to
provide the information and certification necessary to avoid backup withholding,
unless an applicable exemption exists and is proved in a manner satisfactory  to
the Issuer and the Exchange Agent.                                              

GUARANTEED DELIVERY PROCEDURES                                          

    If  a holder desires to accept the Exchange Offer and time will not permit a
Letter of  Transmittal or  Old Notes  to  reach the  Exchange Agent  before  the
Expiration  Date, a tender may be effected if the Exchange Agent has received at
its office listed on  the Letter of  Transmittal on or  prior to the  Expiration
Date  a letter, telegram or facsimile  transmission from an Eligible Institution
setting forth the name and address of the tendering holder, the principal amount
of the Old Notes being tendered, the names in which the Old Notes are registered
and, if possible, the certificate numbers of  the Old Notes to be tendered,  and
stating  that the tender is being made thereby and guaranteeing that within five
New York Stock Exchange trading days after the date of execution of such letter,
telegram or facsimile transmission by  the Eligible Institution, the Old  Notes,
in  proper form  for transfer,  will be  delivered by  such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal  (and
any  other required  documents). Unless Old  Notes being tendered  by the above-
described method (or a  timely Book-Entry Confirmation)  are deposited with  the
Exchange  Agent within the time period  set forth above (accompanied or preceded
by a properly completed Letter of Transmittal and any other required documents),
the Issuer  may,  at its  option,  reject the  tender.  Copies of  a  Notice  of
Guaranteed  Delivery which may be used by Eligible Institutions for the purposes
described in this paragraph are available from the Exchange Agent.              

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    A tender  will be  deemed to  have been  received as  of the  date when  the
tendering  holder's  properly completed  and duly  signed Letter  of Transmittal
accompanied by the Old Notes (or  a timely Book-Entry Confirmation) is  received
by  the Exchange Agent.  Issuances of Exchange  Notes in exchange  for Old Notes
tendered pursuant to  a Notice  of Guaranteed  Delivery or  letter, telegram  or
facsimile  transmission to  similar effect  (as provided  above) by  an Eligible
Institution will be made only against deposit of the Letter of Transmittal  (and
any other required documents) and the tendered Old Notes (or a timely Book-Entry
Confirmation).                                                                  

    All  questions  as to  the validity,  form,  eligibility (including  time of
receipt) and  acceptance  for  exchange of  any  tender  of Old  Notes  will  be
determined  by the  Issuer, whose determination  will be final  and binding. The
Issuer reserves the absolute right  to reject any or  all tenders not in  proper
form  or the acceptances for exchange of which may, in the opinion of counsel to
the Issuer, be unlawful.  The Issuer also reserves  the absolute right to  waive
any  of the conditions of the Exchange  Offer or any defect or irregularities in
tenders  of  any   particular  holder   whether  or  not   similar  defects   or
irregularities  are waived in the case of other holders. Neither the Issuer, the
Exchange Agent nor any other person will be under any duty to give  notification
of  any defects or  irregularities in tenders  or shall incur  any liability for
failure to give any such notification. The Issuer's interpretation of the  terms
and  conditions of the  Exchange Offer (including the  Letter of Transmittal and
the instructions thereto) will be final and binding.                            

TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL                               

    The Letter of Transmittal contains, among other things, the following  terms
and conditions, which are part of the Exchange Offer.                           

    The  party tendering  Old Notes  for exchange  (the "Transferor") exchanges,
assigns and transfers the  Old Notes to the  Issuer and irrevocably  constitutes
and  appoints the Exchange Agent as  the Transferor's agent and attorney-in-fact
to cause the Old Notes to be assigned, transferred and exchanged. The Transferor
represents and  warrants  that  it  has full  power  and  authority  to  tender,
exchange,  assign  and transfer  the  Old Notes  and  to acquire  Exchange Notes
issuable upon the exchange of such tendered  Old Notes, and that, when the  same
are  accepted for exchange, the Issuer  will acquire good and unencumbered title
to the tendered Old  Notes, free and clear  of all liens, restrictions,  charges
and  encumbrances  and not  subject to  any adverse  claim. The  Transferor also
warrants that  it  will,  upon  request,  execute  and  deliver  any  additional
documents  deemed by  the Issuer  to be necessary  or desirable  to complete the
exchange, assignment and transfer of tendered Old Notes. The Transferor  further
agrees  that acceptance of any tendered Old Notes by the Issuer and the issuance
of Exchange Notes in exchange therefor  shall constitute performance in full  by
the  Issuer of its obligations under  the Registration Rights Agreement and that
the Issuer shall have no  further obligations or liabilities thereunder  (except
in  certain limited  circumstances). All  authority conferred  by the Transferor
will survive the death or incapacity  of the Transferor and every obligation  of
the   Transferor  shall  be  binding  upon  the  heirs,  legal  representatives,
successors, assigns, executors and administrators of such Transferor.           

    By tendering  Old  Notes  and  executing  the  Letter  of  Transmittal,  the
Transferor  certifies that (a) it is not an  Affiliate of the Issuer, that it is
not a broker-dealer that owns Old Notes acquired directly from the Issuer or  an
Affiliate  of the Issuer, that it is acquiring the Exchange Notes offered hereby
in the ordinary course  of such Transferor's business  and that such  transferor
has  no arrangement with any  person to participate in  the distribution of such
Exchange Notes or (b) that  it is an Affiliate of  the Issuer or of the  Initial
Purchasers  of the Old Notes  in the Old Notes Offering  and that it will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable to it.                                                 

WITHDRAWAL RIGHTS                                                               

    Old Notes tendered pursuant  to the Exchange Offer  may be withdrawn at  any
time prior to the Expiration Date.                                              

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    For a withdrawal to be effective, a written or facsimile transmission notice
of  withdrawal must be timely received by  the Exchange Agent at its address set
forth on the back  cover of this  Prospectus prior to  the Expiration Date.  Any
such  notice  of withdrawal  must  specify the  person  named in  the  Letter of
Transmittal as  having  tendered Old  Notes  to be  withdrawn,  the  certificate
numbers  of Old Notes to  be withdrawn, the principal amount  of Old Notes to be
withdrawn, a statement that such holder is withdrawing his election to have such
Old Notes exchanged, and the  name of the registered  holder of such Old  Notes,
and must be signed by the holder in the same manner as the original signature on
the  Letter of Transmittal  (including any required  signature guarantees) or be
accompanied by evidence satisfactory to  the Issuer that the person  withdrawing
the  tender has  succeeded to  the beneficial ownership  of the  Old Notes being
withdrawn. The  Exchange Agent  will  return the  properly withdrawn  Old  Notes
promptly  following receipt  of notice  of withdrawal.  All questions  as to the
validity  of  notices  of  withdrawals,  including  time  of  receipt,  will  be
determined  by the Issuer, and  such determination will be  final and binding on
all parties.                                                                    

ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES                

    Upon the terms  and subject  to the conditions  of the  Exchange Offer,  the
acceptance  for exchange of Old Notes validly tendered and not withdrawn and the
issuance of the Exchange Notes will be made on the Exchange Date.               

    The Exchange Agent will act as agent for the tendering holders of Old  Notes
for the purposes of receiving Exchange Notes from the Issuer and causing the Old
Notes  to be assigned, transferred and exchanged.  Upon the terms and subject to
conditions of the  Exchange Offer, delivery  of Exchange Notes  to be issued  in
exchange  for accepted  Old Notes  will be made  by the  Exchange Agent promptly
after acceptance of the tendered Old Notes. Old Notes not accepted for  exchange
by  the Issuer will be returned without  expense to the tendering holders (or in
the case of Old Notes tendered by book-entry transfer into the Exchange  Agent's
account at the Book-Entry Transfer Facility pursuant to the procedures described
above,  such non-exchanged Old  Notes will be credited  to an account maintained
with such Book-Entry Transfer Facility)  promptly following the Expiration  Date
or,  if the Issuer terminates  the Exchange Offer prior  to the Expiration Date,
promptly after the Exchange Offer is so terminated.                             

CONDITIONS TO THE EXCHANGE OFFER                                                

    Notwithstanding any other provision of the Exchange Offer, or any  extension
of  the Exchange Offer, the Issuer will  not be required to issue Exchange Notes
in respect of any  properly tendered Old Notes  not previously accepted and  may
terminate  the Exchange Offer (by  oral or written notice  to the Exchange Agent
and by timely public announcement communicated by no later than 5:00 p.m. on the
next business day following  the Expiration Date,  unless otherwise required  by
applicable law or regulation, by making a release to the Dow Jones News Service)
or,  at its option, modify or otherwise  amend the Exchange Offer, if: (a) there
shall be threatened, instituted or pending  any action or proceeding before,  or
any  injunction,  order  or decree  shall  have  been issued  by,  any  court or
governmental agency or other governmental regulatory or administrative agency or
commission, (i) seeking to  restrain or prohibit the  making or consummation  of
the  Exchange Offer or any other transaction contemplated by the Exchange Offer,
(ii) assessing or seeking any damages as a result thereof or (iii) resulting  in
a material delay in the ability of the Issuer to accept for exchange some or all
of  the  Old  Notes pursuant  to  the  Exchange Offer;  (b)  any  statute, rule,
regulation, order or injunction shall be sought, proposed, introduced,  enacted,
promulgated   or  deemed  applicable  to  the  Exchange  Offer  or  any  of  the
transactions  contemplated  by   the  Exchange  Offer   by  any  government   or
governmental  authority,  domestic or  foreign, or  any  action shall  have been
taken, proposed or threatened, by any government, governmental authority, agency
or court, domestic or foreign,  that in the sole  judgment of the Issuer,  might
directly  or indirectly result in any of the consequences referred to in clauses
(a)(i) or (ii) above or, in the sole judgment of the Issuer, might result in the
holders of  Exchange  Notes  having  obligations with  respect  to  resales  and
transfers  of  Exchange Notes  which  are greater  than  those described  in the
interpretations of the Staff referred to  on the cover page of this  Prospectus,
or                                                                              

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would otherwise make it inadvisable to proceed with the Exchange Offer; or (c) a
material   adverse  change  shall  have  occurred  in  the  business,  condition
(financial or otherwise), operations, or prospects of the Issuer.               

    The foregoing conditions are for the sole  benefit of the Issuer and may  be
asserted  by  it  with respect  to  all or  any  portion of  the  Exchange Offer
regardless of the circumstances (including any action or inaction by the Issuer)
giving rise to such condition or may be waived by the Issuer in whole or in part
at any time  or from time  to time in  its sole discretion.  The failure by  the
Issuer  at any time to exercise any of the foregoing rights will not be deemed a
waiver of any such right, and each  right will be deemed an ongoing right  which
may  be asserted at any time  or from time to time.  In addition, the Issuer has
reserved the right, notwithstanding  the satisfaction of  each of the  foregoing
conditions, to terminate or amend the Exchange Offer.                           

    Any determination by the Issuer concerning the fulfillment or nonfulfillment
of any conditions will be final and binding upon all parties.                   

    In addition, the Issuer will not accept for exchange any Old Notes tendered,
and  no Exchange Notes will be issued in  exchange for any such Old Notes, if at
such time any stop order  shall be threatened or in  effect with respect to  the
Registration   Statement  of  which  this   Prospectus  constitutes  a  part  or
qualification of the 1996  Indenture under the Trust  Indenture Act of 1939,  as
amended (the "Trust Indenture Act").                                            

EXCHANGE AGENT                                                                  

    First  Trust National Association (the  "Exchange Agent") has been appointed
as the Exchange  Agent for the  Exchange Offer. Letters  of Transmittal must  be
addressed to the Exchange Agent at:                                             

First Trust National Association                                  
180 East Fifth Street                                             
St. Paul, Minnesota 55101                                         
Telephone: (612) 244-1197                                         
Facsimile: (612) 244-1537                                         
Attention: Phyllis Meath, Specialized Finance Group               

    Delivery  to an address other than as  set forth herein, or transmissions of
instructions via  a facsimile  or telex  number other  than the  ones set  forth
herein, will not constitute a valid delivery.                                   

SOLICITATION OF TENDERS; EXPENSES                                               

    The  Issuer  has  not  retained  any  dealer-manager  or  similar  agent  in
connection with the Exchange  Offer and will not  make any payments to  brokers,
dealers  or others for soliciting acceptances  of the Exchange Offer. The Issuer
will, however, pay  the Exchange  Agent reasonable  and customary  fees for  its
services  and  will  reimburse  it  for  reasonable  out-of-pocket  expenses  in
connection therewith.  The  Issuer will  also  pay brokerage  houses  and  other
custodians,  nominees  and  fiduciaries  the  reasonable  out-of-pocket expenses
incurred by them in forwarding tenders  for their customers. The expenses to  be
incurred  in connection with the Exchange Offer, including the fees and expenses
of the Exchange  Agent and  printing, accounting, investment  banking and  legal
fees, will be paid by the Issuer and are estimated to be approximately $250,000.

    No  person  has been  authorized to  given  any information  or to  make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Issuer. Neither the delivery
of  this  Prospectus  nor   any  exchange  made   hereunder  shall,  under   any
circumstances,  create  any implication  that there  has been  no change  in the
affairs of the  Issuer since  the respective dates  as of  which information  is
given  herein. The  Exchange Offer  is not  being made  to (nor  will tenders be
accepted from or on behalf of) holders of Old Notes in any jurisdiction in which
the making of  the Exchange  Offer or  the acceptance  thereof would  not be  in
compliance  with the laws of such jurisdiction.  However, the Issuer may, at its
discretion, take such action as it may deem necessary                           

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to make the  Exchange Offer  in any such  jurisdiction and  extend the  Exchange
Offer  to holders  of Old  Notes in such  jurisdiction. In  any jurisdiction the
securities laws or blue sky laws of which require the Exchange Offer to be  made
by  a licensed broker or  dealer, the Exchange Offer is  being made on behalf of
the Issuer by one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.                                                  

DISSENTER AND APPRAISAL RIGHTS                                                  

    HOLDERS OF OLD NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL RIGHTS IN
CONNECTION WITH THE EXCHANGE OFFER.                                             

FEDERAL INCOME TAX CONSEQUENCES                                                 

    The exchange of Old Notes for  Exchange Notes by tendering holders will  not
be  a taxable exchange for federal income  tax purposes, and such holders should
not recognize any taxable  gain or loss  or any interest income  as a result  of
such exchange. See "Certain United States Federal Income Tax Considerations."   

OTHER                                                                           

    Participation  in the Exchange  Offer is voluntary and  holders of Old Notes
should carefully consider whether  to accept the  terms and conditions  thereof.
Holders  of the Old Notes are urged  to consult their financial and tax advisors
in making  their own  decisions  on what  action to  take  with respect  to  the
Exchange Offer.                                                                 

    As a result of the making of and upon acceptance for exchange of all validly
tendered Old Notes pursuant to the terms of this Exchange Offer, the Issuer will
have  fulfilled  a covenant  contained in  the terms  of the  Old Notes  and the
Registration Rights Agreement. Holders of the Old Notes who do not tender  their
Old Notes in the Exchange Offer will continue to hold such Old Notes and will be
entitled  to all the  rights, and limitations applicable  thereto under the 1996
Indenture, except for any  such rights under  the Registration Rights  Agreement
which  by their terms terminate  or cease to have further  effect as a result of
the making of  this Exchange  Offer. See  "Description of  Exchange Notes."  All
untendered  Old Notes will continue to be subject to the restriction on transfer
set forth in the 1996 Indenture. To  the extent that Old Notes are tendered  and
accepted  in the Exchange Offer,  the trading market, if  any, for any remaining
Old Notes could  be adversely  affected. See  "Risk Factors  -- Consequences  of
Failure to Exchange Old Notes."                                                 

    The  Issuer may in the  future seek to acquire  untendered Old Notes in open
market or privately negotiated transactions, through subsequent exchange  offers
or  otherwise. The Issuer has no present plan to acquire any Old Notes which are
not tendered in the Exchange Offer.                                             

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CAPITALIZATION

    The following table sets forth: (i) the consolidated capitalization of Dish,
Ltd.,  the Issuer's predecessor, on a historical  basis as of December 31, 1995;
(ii) the pro forma consolidated capitalization of the Issuer after giving effect
to the Old Notes Offering  and the contribution by  EchoStar of all the  capital
stock  of  Dish, Ltd.  to the  Issuer as  of  December 31,  1995; and  (iii) the
unaudited consolidated capitalization of  the Issuer as of  March 31, 1996.  The
historical information in this table as of December 31, 1995 is derived from the
Combined  and Consolidated Financial Statements of Dish, Ltd., audited by Arthur
Andersen LLP, independent public accountants, and should be read in  conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Combined and Consolidated Financial Statements and the Notes
thereto   included  elsewhere  in  this  Prospectus.  The  unaudited  historical
information in this table as of March 31, 1996 is derived from the  Consolidated
Financial  Statements  of the  Issuer  and should  be  read in  conjunction with
"Management's Discussion  and Analysis  of Financial  Condition and  Results  of
Operations" and the Supplemental Consolidated Financial Statements and the Notes
thereto included elsewhere in this Prospectus.                                  

    The  total capitalization of the Issuer as  of January 24, 1996 (the date of
formation of the Issuer) was $1,000.                                            

                                                        [Enlarge/Download Table]

                                                                                                      MARCH 31,   
                                                                              DECEMBER 31, 1995         1996      
                                                                           ------------------------  -----------  
                                                                             ACTUAL     AS ADJUSTED  (UNAUDITED)  
                                                                           -----------  -----------  -----------  
                                                                                                                  
Cash, cash equivalents and marketable securities (1)...................... $   113,850  $   450,896   $ 438,350(2)
Long-term obligations (excluding current portion):                                                                
  Mortgages and note payable.............................................. $    33,444  $    33,444   $  32,421   
  1994 Notes, net.........................................................     382,218      382,218     395,333   
  Old Notes...............................................................     --           350,047     350,890   
                                                                           -----------  -----------  -----------  
    Total long-term obligations...........................................     415,662      765,709     778,644   
                                                                           -----------  -----------  -----------  
Stockholders' equity: (3)                                                                                         
  Preferred Stock of Dish, Ltd., including accrued dividends of                                                   
   $1,555,000, $0 and $0, respectively....................................      16,607      --           --       
  Class A Common Stock, Class B Common Stock, and additional paid-in                                              
   capital of Dish, Ltd. (4)..............................................      89,858      --           --       
  Common Stock of Issuer ($.01 par value) 1,000 shares authorized, 1,000                                          
   shares issued and outstanding..........................................     --           --           --       
  Additional paid-in capital..............................................     --           106,466     106,466   
    Unrealized holding gains on available-for-sale securities, net........         251          251          21   
  Retained earnings (deficit).............................................     (13,826)     (13,826)    (21,480)  
                                                                           -----------  -----------  -----------  
    Total stockholders' equity............................................      92,890       92,891      85,007   
                                                                           -----------  -----------  -----------  
      Total capitalization................................................ $   508,552  $   858,600   $ 863,651   
                                                                           -----------  -----------  -----------  
                                                                           -----------  -----------  -----------  

------------------------                                                        
(1) Includes $84.7 million of cash restricted under the 1994 Indenture  pursuant
    to  which Dish, Ltd. issued  its 1994 Notes and  $15.0 million of restricted
    cash held  in an  escrow  account related  to  the manufacture  of  EchoStar
Receiver Systems as of December 31, 1995.                               

(2)  Includes  $245.0  million  of  cash  restricted  under  the  1994  and 1996
    Indentures pursuant to which Dish, Ltd. and the Issuer issued the 1994 Notes
    and the Old Notes,  respectively. Also included is  $15.0 million and  $15.5
    million  of restricted cash in escrow accounts related to the manufacture of
    EchoStar Receiver  Systems  and  for the  purpose  of  cash  collateralizing
certain standby letters of credit, respectively.                        

(3)  All outstanding preferred  and common stock  of Dish, Ltd.  is owned by the
Issuer.                                                                 

(4) Includes $26.1 million  related to warrants for  the purchase of Dish,  Ltd.
    Class A Common Stock which became exercisable for shares of EchoStar Class A
    Common  Stock effective with  the merger of  Dish, Ltd. with  a wholly owned
    subsidiary of  EchoStar  in  December  1995 (see  Note  1  to  Combined  and
Consolidated Financial Statements -- "Exchange and Merger").            

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SELECTED FINANCIAL DATA 

    The  Issuer was formed on January 24, 1996  for the purpose of the Old Notes
Offering. EchoStar contributed  all of  the outstanding capital  stock of  Dish,
Ltd.  to the Issuer, thus making Dish,  Ltd. a direct wholly owned subsidiary of
the Issuer. The following selected financial data  as of and for the five  years
ended December 31, 1995 are derived from the financial statements of Dish, Ltd.,
and  the predecessor  entities of  Dish, Ltd.,  audited by  Arthur Andersen LLP,
independent public accountants.  The following selected  financial data for  the
three  months  ended March  31, 1995  and  1996 are  derived from  the unaudited
financial statements of the  Issuer and, in the  opinion of the Issuer,  include
all adjustments necessary for a fair presentation of such information. Operating
results for the three months ended March 31, 1996 are not necessarily indicative
of  the results that may  be achieved for the year  ended December 31, 1996. The
data set forth in  this table should be  read in conjunction with  "Management's
Discussion and Analysis of Financial Condition and Results of Operations," Dish,
Ltd.'s  Combined and Consolidated Financial Statements and the Notes thereto and
the other financial information included elsewhere in this Prospectus. The  data
provided for the three months ended March 31, 1995 and 1996 are derived from the
supplemental  quarterly financial statements and  condensed Notes thereto of the
Issuer, which includes the consolidated accounts of Dish, Ltd.                  

                                                        [Enlarge/Download Table]

                                                                                            THREE MONTHS ENDED   
                                                  YEAR ENDED DECEMBER 31,                        MARCH 31,       
                                  -------------------------------------------------------  --------------------- 
                                     1991        1992       1993       1994       1995        1995       1996    
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 
                                   (IN THOUSANDS, EXCEPT RATIOS AND SATELLITE RECEIVERS         (UNAUDITED)      
                                                           SOLD)                                                 
                                                                                                                 
STATEMENT OF INCOME DATA:                                                                                        
  Revenue:                                                                                                       
    DTH products:                                                                                                
      Domestic................... $ 103,510    $ 122,433  $ 152,818  $ 111,815  $  87,274  $   20,548  $  23,968 
      International..............    31,605       35,040     53,493     60,938     59,578      15,729     12,773 
    Programming..................     3,890        6,436     10,770     14,540     15,096       3,871      3,913 
    Loan origination and                                                                                         
     participation income........       608        1,179      3,860      3,690      1,942         265        372 
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 
      Total revenue..............   139,613      165,088    220,941    190,983    163,890      40,413     41,026 
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 
  Expenses:                                                                                                      
    DTH products.................   102,810      120,826    161,447    133,635    120,178      29,445     32,750 
    Programming..................     3,549        6,225      9,378     11,670     13,610       3,432      3,283 
    Selling, general and                                                                                         
     administrative..............    26,736       25,708     30,235     30,219     34,993       7,871     10,571 
    Depreciation and                                                                                             
     amortization................     1,112        1,043      1,677      2,243      3,058         363      3,330 
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 
      Total expenses.............   134,207      153,802    202,737    177,767    171,839      41,111     49,934 
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 
  Operating income (loss)........     5,406       11,286     18,204     13,216     (7,949)       (698)    (8,908)
  Net income (loss).............. $   6,192    $  10,833  $  20,118  $      90  $ (12,361) $   (2,240) $  (7,654)
  Ratio of earnings to fixed                                                                                     
   charges (1)...................      4.36x        7.32x      9.63x      1.02x      0.64x       0.70x      0.15x
  Pro forma (unaudited):                                                                                         
    Pro forma net income (2)..... $   4,468    $   7,529  $  12,272                                              
OTHER DATA:                                                                                                      
  EBITDA (3)..................... $  12,818  (4) $  12,329 $  19,881 $  15,459  $  (4,891) $     (335) $  (5,578)
  Satellite receivers sold (in                                                                                   
   units):                                                                                                       
    Domestic.....................   113,000      116,000    132,000    114,000    131,000      27,000     45,000 
    International................    45,000       85,000    203,000    289,000    331,000      85,000     76,000 
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 
      Total......................   158,000      201,000    335,000    403,000    462,000     112,000    121,000 
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 
                                  -----------  ---------  ---------  ---------  ---------  ----------  --------- 

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                                                        [Enlarge/Download Table]

                                                            YEAR ENDED DECEMBER 31,                    AT MARCH   
                                           ---------------------------------------------------------      31,     
                                             1991       1992       1993        1994         1995         1996     
                                           ---------  ---------  ---------  -----------  -----------  ----------- 
                                                                (IN THOUSANDS)                        (UNAUDITED) 
                                                                                                                  
BALANCE SHEET DATA:                                                                                               
  Cash, cash equivalents and marketable                                                                           
   investment securities.................. $  20,359  $  22,031  $  27,232  $ 245,375(5) $ 113,850(5) $ 438,350(5)
  Working capital.........................    38,597     44,268     35,563     52,711       31,115      200,577   
  Total assets............................    72,547     88,529    106,476    472,492      559,295      899,357   
  Long-term obligations (less current                                                                             
   portion):                                                                                                      
    1994 Notes, net.......................    --         --         --        334,206      382,218      395,333   
    1996 Notes, net.......................    --         --         --          --           --         350,890   
    Notes payable to stockholder..........       234      2,274     14,725      --           --           --      
    Other long-term debt..................     5,028      4,876      4,702      5,393       33,444       32,421   

------------------------------                                                  
(1) For purposes of the ratio of earnings to fixed charges, earnings consist  of
    earnings from continuing operations before income taxes, plus fixed charges.
    Fixed  charges consist of  interest incurred on  all indebtedness and rental
expense under non-cancelable operating leases.                          

(2) Dish,  Ltd.'s subsidiaries  operated  under Subchapter  S  of the  Code  and
    comparable provisions of applicable state income tax laws until December 31,
    1993. The amounts shown reflect net income as if Dish, Ltd. had been subject
    to corporate federal and state income taxes during such periods. See Notes 2
    and  7  of  Notes  to  Dish,  Ltd.'s  Combined  and  Consolidated  Financial
Statements as of December 31, 1995.                                     

(3) EBITDA represents earnings before interest income, interest expense, net  of
    other  income  and expenses,  income  taxes, depreciation  and amortization.
    EBITDA is  commonly  used  in the  telecommunications  industry  to  analyze
    companies  on the  basis of  operating performance,  leverage and liquidity.
    EBITDA is not intended to  represent cash flows for  the period, nor has  it
    been  presented as  an alternative  to operating  income as  an indicator of
    operating performance and  should not  be considered  in isolation  or as  a
    substitute for measures of performance prepared in accordance with generally
    accepted  accounting principles. See Dish,  Ltd.'s Combined and Consolidated
    Statements of Cash Flows in Dish, Ltd.'s Combined and Consolidated Financial
Statements contained elsewhere in this Prospectus.                      

(4) Excludes $6.3 million in non-recurring charges.                             

(5) Includes Restricted Cash and Marketable Investment Securities.              

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    THE  FOLLOWING DISCUSSION AND ANALYSIS RELATES TO THE CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF  OPERATIONS OF THE  ISSUER, INCLUDING ITS  PREDECESSOR,
DISH,  LTD., AND SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS. ECHOSTAR CONTRIBUTED ALL OF
THE OUTSTANDING CAPITAL STOCK OF DISH, LTD.  TO THE ISSUER PRIOR TO THE  CLOSING
OF  THE  OLD  NOTES OFFERING.  THIS  TRANSACTION  HAS BEEN  ACCOUNTED  FOR  AS A
REORGANIZATION OF ENTITIES  UNDER COMMON  CONTROL. ACCORDINGLY,  DISH, LTD.  HAS
BEEN  TREATED  AS THE  PREDECESSOR TO  THE ISSUER  AND THE  HISTORICAL FINANCIAL
STATEMENTS OF THE ISSUER ARE THOSE OF DISH, LTD.                                

OVERVIEW                                                                        

    The Issuer currently operates four related businesses: (i) operation of  the
DISH  Network-SM- and  continued development  of the  EchoStar DBS  System; (ii)
design, manufacture, marketing,  installation and distribution  of DTH  products
worldwide;  (iii) domestic  distribution of  DTH programming;  and (iv) consumer
financing of the  Issuer's domestic  products and  services. The  growth of  DBS
service  and  equipment sales  has  had and  will  continue to  have  a material
negative impact on the Issuer's  international DTH products and domestic  C-band
DTH  products sales. On March 4, 1996  the Issuer began broadcasting and selling
programming packages  available  on the  DISH  Network-SM- service.  The  Issuer
expects to derive its revenue principally from monthly fees from subscribers for
DISH  Network-SM- programming and, to a lesser extent, from the sale of EchoStar
Receiver Systems. As sales of  EchoStar DBS programming and receivers  increase,
the  Issuer expects the decline in its  sales of domestic C-band DTH products to
continue at an accelerated rate.                                                

    The Issuer will generally bill for DISH Network-SM- programming periodically
in advance and will recognize revenue as service is provided. Revenue will be  a
function  of the number of subscribers, the mix of programming packages selected
and the  rates  charged, and  transaction  fees for  ancillary  programming  and
transponder  leasing  activities. From  time to  time the  Issuer may  engage in
promotional activities that include discounted rates for limited periods,  which
will  result in lower average revenue per subscriber for the applicable periods.
The Issuer is currently test marketing  a special promotion in a limited  number
of  markets  pursuant  to which  customers  are  able to  purchase  a discounted
package, including an EchoStar Receiver  System and annual programming  package,
for  as low  as $499,  which is  approximately $300  below the  suggested retail
price. DBS  programming  costs  will  generally be  based  upon  the  number  of
subscribers  to each  programming offering. Since  the DISH  Network-SM- did not
commence operations until  March 1996,  its operating activities  had a  minimal
effect  on the Issuer's results  of operations for the  three month period ended
March 31, 1996.                                                                 

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RESULTS OF OPERATIONS                                                           

    The following table sets forth, for the periods indicated, the percentage of
total revenues represented by certain revenue and expense items in the  Issuer's
Statements of Income.                                                           

                                                        [Enlarge/Download Table]

                                                                                                         THREE MONTHS      
                                                                   YEAR ENDED DECEMBER 31,             ENDED MARCH 31,     
                                                            -------------------------------------  ------------------------
                                                               1993         1994         1995         1995         1996    
                                                            -----------  -----------  -----------  -----------  -----------
                                                                                                                           
                                                                                                         (UNAUDITED)       
STATEMENT OF INCOME DATA:                                                                                                  
  Revenue:                                                                                                                 
    DTH products:                                                                                                          
      Domestic.............................................        69%          58%          54%          51%          58% 
      International........................................        24           32           36           39           31  
      Programming..........................................         5            8            9            9           10  
      Loan origination and participation income............         2            2            1            1            1  
                                                                -----        -----        -----        -----        -----  
        Total revenue                                             100          100          100          100          100  
                                                                -----        -----        -----        -----        -----  
  Expenses:                                                                                                                
    DTH products...........................................        73           70           73           73           80  
    Programming............................................         4            6            8            9            8  
    Selling, general and administrative....................        14           16           22           19           26  
    Depreciation...........................................         1            1            2            1            8  
                                                                -----        -----        -----        -----        -----  
        Total expenses.....................................        92           93          105          102          122  
                                                                -----        -----        -----        -----        -----  
    Operating income (loss)................................         8%           7%         (5)%         (2)%        (22)% 
                                                                -----        -----        -----        -----        -----  
                                                                -----        -----        -----        -----        -----  
    Net income (loss)......................................         9%           0%         (8)%         (6)%        (19)% 
OTHER DATA:                                                                                                                
  EBITDA...................................................         9%           8%         (3)%         (1)%        (14)% 

RESULTS OF OPERATIONS                                                           

  THREE MONTH PERIOD ENDED MARCH 31, 1996 COMPARED TO THREE MONTH PERIOD ENDED
MARCH 31, 1995                                                          

    REVENUE.   Total revenue for the three month period ended March 31, 1996 was
$41.0 million, an increase of $613,000, or 2%, as compared to the same period in
1995 of $40.4 million. Revenue from domestic sales of DTH products for the three
month period  ended  March 31,  1996  was $24.0  million,  an increase  of  $3.4
million,  or  17%, as  compared  to the  same period  in  1995. The  increase in
domestic revenue was primarily due to $8.2  million in revenue from the sale  of
EchoStar  Receiver Systems during  the three month period  ended March 31, 1996.
There were no  EchoStar Receiver System  sales during the  comparable period  in
1995.  Approximately $922,000 of the increase  in domestic revenue for the three
month period  ended March  31, 1996  was due  to an  increase in  the number  of
satellite  receivers  sold  for  a  competitor's  DBS  system  ("Competitor  DBS
Receivers"). Revenue from Competitor DBS Receiver sales was $7.7 million for the
three month period ended  March 31, 1996,  as compared to  $6.8 million for  the
same  period in 1995. The increases  in domestic revenue were principally offset
by a decrease of $4.7 million, or 47%, in revenue from sales of C-band satellite
receivers and related accessories, during the three month period ended March 31,
1996, as compared to the same period in 1995. The increases in domestic  revenue
were  also partially offset  by a decrease  of $1.2 million,  or 42%, in revenue
from sales of non-proprietary descrambler modules, during the three month period
ended March 31,  1996, as  compared to  the same  period in  1995. The  domestic
market  for  C-band DTH  products continued  to decline  during the  three month
period ended March 31, 1996, and this  decline will continue with the growth  of
DBS service and equipment sales. This decline had been expected by the Issuer as
described below.                                                                

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    Domestically,  the Issuer  sold approximately 45,000  satellite receivers in
the three month period ended March 31,  1996, an increase of 67% as compared  to
approximately  27,000 receivers for the same  period in 1995. Although there was
an increase in the  number of satellite  receivers sold in  1996 as compared  to
1995,  overall  revenue  did  not  increase proportionately  as  a  result  of a
substantial shift  in product  mix to  lower priced  DBS receivers  and  related
accessories,  and an approximate  23% reduction in the  average selling price of
C-band receivers. Included  in the number  of satellite receivers  sold for  the
three  month  period  ended March  31,  1996 are  approximately  17,000 EchoStar
Receiver Systems. EchoStar Receiver System revenue represented approximately 20%
of total revenue for the three month period ended March 31, 1996.               

    Also included in the number of satellite receivers sold for the three  month
period ended March 31, 1996 are approximately 18,000 Competitor DBS Receivers as
compared  to 11,000 for the  same period in 1995.  During the three month period
ended March 31, 1996, the Competitor  DBS Receivers were sold at an  approximate
30%  reduction in the  average selling price  as compared to  the same period in
1995. Competitor DBS  Receiver revenue was  19% of total  revenue for the  three
month  period  ended  March  31,  1996.  The  Issuer's  agreement  to distribute
Competitor DBS Receiver systems terminated on  December 31, 1995 and during  the
first quarter of 1996, the Issuer sold the majority of its existing inventory of
Competitor  DBS Receivers. The elimination  of Competitor DBS Receiver inventory
will be  offset by  a substantial  increase in  inventory of  EchoStar  Receiver
Systems  and related  components, the  sale of which  is expected  to offset the
elimination of revenue derived from the sale of Competitor DBS Receivers.       

    The Issuer markets its current  C-band DTH products by offering  competitive
pricing  and consumer  financing in  order to  minimize the  decline in domestic
C-band DTH sales resulting  from the increased popularity  of DBS equipment  and
programming.  Additionally, during all of 1995  and through the first quarter of
1996, the  Issuer  sold Competitor  DBS  Receivers which  partially  offset  the
decline  in domestic C-band sales  in 1995. During the  three month period ended
March 31, 1996 the decline in sales of C-band DTH products was more than  offset
by  sales of  Competitor DBS  Receiver and  EchoStar Receiver  Systems. With the
elimination of Competitor DBS Receiver  inventory, domestic DTH product  revenue
in  subsequent quarters will be substantially  derived from the sale of EchoStar
Receiver Systems which, although no  assurances can be given, should  accelerate
in  the second quarter as demand for DISH Network-SM- programming increases as a
result of heightened advertising and marketing efforts.                         

    Loan origination and participation income  for the three month period  ended
March  31, 1996 was $372,000,  an increase of $107,000,  or 40%, compared to the
same period in 1995. The increase  in loan origination and participation  income
for  the three month period ended March  31, 1996 was primarily due to increased
finance volume, including  the financing  of EchoStar Receiver  Systems. In  the
first  quarter of 1996, EchoStar formed  a wholly owned subsidiary, Dish Network
Credit  Corporation,  for  the  purpose  of  providing  consumer  financing  for
EchoStar's  domestic  DTH  products and  services.  At that  time,  the Issuer's
subsidiary that previously provided these  services ceased new loan  origination
activities.  In future periods, revenue  from loan origination and participation
income will decline.                                                            

    Programming revenue for the three month period ended March 31, 1996 was $3.9
million, an increase of $42,000, or 1%, as compared to the same period in  1995.
The  increase  was primarily  due to  DISH  Network-SM- consumer  and commercial
programming revenue of $464,000  generated during the  three month period  ended
March  31,  1996.  The  increase  in  revenue  derived  from  the  sale  of DISH
Network-SM- programming  was offset  by  a decrease  in C-band  DTH  programming
revenue.  The  industry-wide  decline  in domestic  C-band  equipment  sales has
resulted, and is  expected to  continue to  result in  a decline  in C-band  DTH
programming revenue. The Issuer believes that the expected decline in C-band DTH
programming  revenue  in  1996  will  be  more  than  offset  by  sales  of DISH
Network-SM- programming.                                                        

    Revenue from international sales of DTH products for the three month  period
ended  March 31, 1996 was $12.8 million, a  decrease of $3.0 million, or 19%, as
compared to the same period in 1995.                                            

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This decrease  during the  three month  period ended  March 31,  1996,  resulted
principally  from reduced  sales to the  Middle East where  the Issuer's largest
international DTH customer  is based, and  an approximate 20%  reduction in  the
average  selling price of analog satellite receivers. This decline was partially
offset by increased sales in Africa. Revenue  from sales of DTH products in  the
Middle  East  suffered beginning  in  August 1995  as  a result  of restrictions
against imports, and  may not return  to historic analog  levels even as  import
restrictions  are eased. Historic analog sales levels may not be reached because
of new digital service planned for  the Middle East which is currently  expected
to  begin  in the  third quarter  of 1996.  Overall, the  Issuer's international
markets for analog  DTH products declined  during the three  month period  ended
March  31, 1996  as anticipation for  new digital services  increased. Also, the
decrease discussed  above was  partially  offset by  an  increase in  other  DTH
product  revenue. Internationally,  the Issuer sold  approximately 76,000 analog
satellite receivers  during the  three  month period  ended  March 31,  1996,  a
decrease  of 11%,  compared to approximately  85,000 units sold  during the same
period in 1995. The decrease  was principally due to international  anticipation
of  new digital services as discussed above. The Issuer is currently negotiating
with digital service providers to distribute their proprietary receivers in  the
Issuer's international markets.                                                 

    OPERATING  EXPENSES.  Costs of DTH products  sold were $32.8 million for the
three month period ended March 31, 1996, an increase of $3.3 million, or 11%, as
compared to the same period in 1995. The increase in DTH operating expenses  for
1996  resulted primarily from  the increase in sales  of DTH products. Operating
expenses for DTH products as  a percentage of DTH  product revenue were 89%  and
81%  for the three month period ended March 31, 1996 and 1995, respectively. The
increase was principally  the result  of declining  sales prices  of C-band  DTH
products and Competitor DBS Receivers as described above, during the three month
period ended March 31, 1996 as compared to the same period in 1995.             

    Operating  expenses for  programming were $3.3  million for  the three month
period ended March 31, 1996, a decrease  of $149,000, or 4%, as compared to  the
same  period  in 1995.  Operating expenses  for programming  as a  percentage of
programming revenue for the three month period ended March 31, 1996 were 84%  as
compared  to 89% for the same period in 1995. The decrease in operating expenses
for programming  as a  percentage of  programming revenue  for the  three  month
period  ended March 31, 1996 was primarily  a result of higher margins earned on
DISH Network-SM-programming  partially offset  by  declining margins  on  C-band
programming.                                                                    

    SELLING,   GENERAL  AND  ADMINISTRATIVE  EXPENSES.    Selling,  general  and
administrative expenses  were $10.6  million for  the three  month period  ended
March  31, 1996, an  increase of $2.7 million,  or 34%, as  compared to the same
period in 1995. Selling, general and administrative expenses as a percentage  of
total  revenue increased to 26% for the  three month period ended March 31, 1996
as compared to 19% for  the same period in  1995. This increase was  principally
due  to: (i)  marketing and  advertising prior  to and  in conjunction  with the
introduction of DISH Network-SM- service; (ii) increased personnel in all  areas
of  the organization to support the DISH Network-SM-; and (iii) costs related to
the Digital Broadcast Center, which commenced operations in the third quarter of
1995.                                                                           

    Research and  development costs  totaled $1.2  million for  the three  month
period  ended March 31, 1996, as compared to $1.3 million for the same period in
1995. The decrease was principally due to the reduction in research necessary to
provide C-band receivers to domestic and international markets, partially offset
by increased research  and development  costs related to  digital DBS  satellite
receivers.                                                                      

    EBITDA.    EBITDA for  the three  month period  ended March  31, 1996  was a
negative $5.6 million, a decrease of $5.3 million compared to the same period in
1995. The  decrease resulted  from the  factors affecting  revenue and  expenses
discussed  above. EBITDA  represents earnings  before interest  income, interest
expense net of other income, income taxes, depreciation and amortization. EBITDA
is commonly used in the telecommunications industry to analyze companies on  the
basis  of operating performance, leverage and  liquidity. EBITDA is not intended
to represent cash flows for the                                                 

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period, nor has it been  presented as an alternative  to operating income as  an
indicator  of operating performance and should not be considered in isolation or
as a  substitute  for  measures  of  performance  prepared  in  accordance  with
generally accepted accounting principles.                                       

    DEPRECIATION.   Depreciation for the three month period ended March 31, 1996
was $3.3 million, an increase of $3.0 million, or 817%, as compared to the  same
period in 1995. The overall increase primarily resulted from depreciation on the
Digital  Broadcast Center and EchoStar I which were placed in service during the
fourth quarter of 1995 and the first quarter of 1996, respectively.             

    OTHER INCOME AND EXPENSE.   Other expense for  the three month period  ended
March  31, 1996 was $3.8 million, an increase  of $914,000 or 32% as compared to
the same period  in 1995.  The increase  in other  expense for  the three  month
period  ending March  31, 1996 resulted  primarily from a  reduction in interest
income due  to an  overall decrease  for the  period in  the 1994  Notes  Escrow
Account, cash and marketable investment securities. This was partially offset by
a decrease in interest expense resulting from additional interest capitalized in
1996 as compared to the same period in 1995.                                    

    PROVISION  FOR INCOME TAXES.  Income tax  benefit for the three month period
ended March 31, 1996 was $5.1 million  compared to $1.4 million during the  same
period in 1995. This increase is principally the result of changes in components
of income and expenses discussed above during the three month period ended March
31, 1996. The Issuer's deferred tax assets (approximately $17.1 million at March
31,  1996)  relate  principally  to temporary  differences  for  amortization of
original issue discount on the 1994 and 1996 Notes and various accrued  expenses
which  are not deductible  until paid. No valuation  allowance has been provided
because the Issuer  currently believes  it is more  likely than  not that  these
deferred  assets will ultimately be realized. If future operating results differ
materially and adversely  from the Issuer's  current expectations, its  judgment
regarding the need for a valuation allowance may change.                        

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994   

    REVENUE.   Total revenue  for 1995 was  $163.9 million, a  decrease of $27.1
million, or  14%, as  compared to  total  revenue for  1994 of  $191.0  million.
Revenue  from  domestic sales  of DTH  products  for 1995  was $87.3  million, a
decrease of  $24.5  million, or  22%,  as compared  to  1994. This  decrease  in
domestic  revenues was primarily due to an expected decline of $26.9 million, or
24%, in  revenue from  sales  of satellite  receivers and  related  accessories,
during 1995, as compared to 1994. The decrease in domestic revenues for 1995 was
partially  offset  by  $12.5  million in  sales  of  non-proprietary descrambler
modules compared to $11.0  million in 1994. The  domestic market for C-band  DTH
products  continued  to decline  during  1995 and  this  decline is  expected to
continue. The decline had  been expected by the  Issuer as described below.  The
Issuer  also  decreased  its  emphasis  on  relatively  high  cost,  low  margin
descrambler modules beginning in the second quarter of 1994.                    

    Domestically, the Issuer sold  approximately 131,000 satellite receivers  in
1995,  an increase of 15% as compared to approximately 114,000 receivers sold in
1994. Although there was an increase  in the number of satellite receivers  sold
in  1995 as compared to 1994, overall revenues  declined as a result of a change
in product mix resulting from the introduction of lower priced DBS receivers and
related accessories, and  an approximate  23% reduction in  the average  selling
price  of C-band receivers.  Included in the number  of satellite receivers sold
are those  sold  for a  competitor's  DBS system  ("Competitor  DBS  Receivers")
manufactured  and  supplied  by  a  third  party  manufacturer  ("Competing  DBS
Manufacturer") which  totaled  approximately 67,000  for  1995, as  compared  to
21,000  for 1994. Competitor DBS Receiver  revenues were $34.0 million for 1995,
as compared to $15.0 million for 1994. Competitor DBS Receiver revenues were 21%
of total revenues for 1995.                                                     

    In the second half of 1994 and throughout 1995, an increasing percentage  of
domestic  DTH  satellite retailers  relied on  attractive financing  packages to
generate sales. During most of 1994, certain of the Issuer's competitors offered
consumer financing  that retailers  considered  more attractive  than  financing
offered  by  the  Issuer.  This  competitive  financing  advantage  resulted  in
retailers selling  competing  products  rather  than  Issuer  products  and  was
partially responsible for the decline in                                        

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C-band  DTH unit sales and revenue. The  Issuer has entered into agreements with
two national consumer  finance groups  permitting the  Issuer to  offer what  it
currently  believes to be competitive financing  terms. However, once a retailer
chooses an  alternative financing  source,  it is  difficult to  recapture  that
business.  While volume  and participation  payments increased  throughout 1995,
loan origination and participation payments  are not expected to reach  historic
levels in the short term.                                                       

    Commencing  in  1995,  the Issuer  stopped  receiving  monthly participation
payments from Household Retail  Services, Inc. ("HRSI")  on its loan  portfolio,
contributing  to a  decrease in loan  origination and  participation income from
1994. Loan origination  and participation income  for 1995 was  $1.9 million,  a
decrease  of $1.7 million, or  47%, compared to 1994.  The Issuer has filed suit
against HRSI for nonpayment of participation revenue, among other things.       

    The Issuer aggressively markets its current offering of C-band DTH  products
by  offering competitive pricing and financing  in order to minimize the decline
in domestic C-band DTH sales resulting  from the increased popularity of  "small
dish"  equipment.  Additionally,  the  Issuer  currently  sells  Competitor  DBS
Receivers for  reception  of programming  offered  by other  service  providers.
Competitor  DBS Receiver sales  partially offset the  decline in domestic C-band
sales in  1995. The  decline is  also  expected to  be offset  by sales  of  the
Issuer's  proprietary DBS products commencing in 1996. The Issuer's agreement to
distribute Competitor DBS Receivers terminated on December 31, 1995.            

    Programming revenue for 1995 was $15.1 million, an increase of $556,000,  or
4%,  as compared to 1994. The increase  was primarily due to additional sales of
programming packages through retailers and, to a lesser extent, the renewal  and
retention  of existing customers as a result of more attractive pricing and more
effective marketing.  While the  Issuer began  to more  aggressively market  its
services  in the second  quarter of 1995, the  industry-wide decline in domestic
C-band equipment  sales  is  expected to  result  in  a decline  in  C-band  DTH
programming  revenues as well over time. The Issuer believes that the decline in
C-band DTH programming revenues  will be fully offset  by sales of the  Issuer's
DBS programming in 1996.                                                        

    Revenue from international sales of DTH products for 1995 was $59.6 million,
a  decrease of $1.4 million,  or 2%, as compared to  1994. The decrease for 1995
resulted principally from reduced  sales to the Middle  East where the  Issuer's
largest  international DTH customer is based.  This decline was partially offset
by increased sales in Africa. Revenue from  sales of DTH products in the  Middle
East  suffered  beginning in  August 1995  as a  result of  recently implemented
restrictions against imports, and may not  return to historic levels even  after
import regulations are lifted, the timing of which cannot be predicted. Historic
sales  levels may not be reached because  of new digital service planned for the
Middle East beginning in the first quarter of 1996. Internationally, the  Issuer
sold  approximately 331,000  satellite receivers  in 1995,  an increase  of 15%,
compared to  approximately 289,000  units  sold during  1994. The  increase  was
primarily  due to a continued emphasis by the Issuer on lower priced products in
1995 to meet marketplace demands. For 1995, the effects of volume increases were
offset by a 17% decrease in the average selling price as compared to 1994.      

    OPERATING EXPENSES.   Costs of  DTH products  sold were  $120.2 million  for
1995,  a decrease of $13.5 million, or 10%, as compared to 1994. The decrease in
DTH operating expenses for 1995 resulted primarily from the decrease in sales of
DTH products. Operating expenses for DTH products as a percentage of DTH product
revenue were  82% for  1995,  as compared  to 77%  for  1994. The  increase  was
principally  the  result of  declining sales  prices of  C-band DTH  products as
described above, during  1995 as compared  to 1994 and  the cost of  promotional
campaigns.                                                                      

    Operating  expenses for programming were $13.6 million for 1995, an increase
of $1.9 million, or 17%, as compared to 1994. Operating expenses for programming
as a percentage of programming revenue were 90% for 1995 as compared to 80%  for
1994.  Programming  expenses  increased at  a  greater rate  than  revenues from
programming principally because the prior  periods included the flow through  of
certain volume discounts. Additionally, the C-band program packaging business is
extremely  competitive,  which  restricts  the  ability  to  pass  on contracted
affiliation agreement cost increases to consumers.                              

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    SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES.    Selling,  general   and
administrative  expenses  were  $35.0  million for  1995,  an  increase  of $4.8
million, or  16%,  as compared  to  1994. Selling,  general  and  administrative
expenses  as a percentage of total revenue increased to 22% for 1995 as compared
to 16% for  1994. The  change was  principally the  result of  the reduction  of
revenues  from domestic  sales of DTH  products and increased  costs to support,
among other things, expansion of  the Issuer's DTH product installation  network
and administrative costs associated with development of the DISH Network-SM-. In
addition,  $1.1  million of  compensation expense  was  recorded with  regard to
55,000 shares of  Class A  Common Stock  contributed by  EchoStar to  EchoStar's
401(k) plan.                                                                    

    Research  and development costs totaled $5.0 million for 1995 as compared to
$5.9 million for  1994. The  decrease was principally  due to  the reduction  in
research  necessary to  provide C-band  receivers to  domestic and international
markets, partially offset by increased research and development costs related to
digital DBS satellite receivers.                                                

    EBITDA.  EBITDA for 1995  was a negative $4.9  million, a decrease of  $20.4
million,  or 132%, as compared  to 1994. The decrease  resulted from the factors
affecting revenue  and  expenses  discussed above.  EBITDA  represents  earnings
before  interest income,  interest expense  net of  other income,  income taxes,
depreciation and amortization. EBITDA is commonly used in the telecommunications
industry to analyze companies  on the basis  of operating performance,  leverage
and  liquidity. EBITDA is not  intended to represent cash  flows for the period,
nor has it been presented as an alternative to operating income as an  indicator
of  operating performance  and should  not be  considered in  isolation or  as a
substitute for measures  of performance  prepared in  accordance with  generally
accepted accounting principles.                                                 

    DEPRECIATION.    Depreciation  for 1995  was  $3.1 million,  an  increase of
$815,000, or 36%, as compared to  1994. The overall increase primarily  resulted
from  depreciation  on assets  placed  in service  during  the third  and fourth
quarters of 1995.                                                               

    OTHER INCOME  AND EXPENSE.   Other  expense for  1995 was  $10.6 million,  a
decrease  of $2.1 million, or 17%, as  compared to 1994. The difference in other
income and  expense  for 1995  compared  to  1994 resulted  primarily  from  the
amortization  of original  issue discount  and deferred  debt issuance  costs of
$23.5 million, in 1995, and $20.7 million, in 1994, net of capitalized interest,
on the 1994 Notes,  which were issued  on June 7, 1994.  Other expense has  been
reduced by investment income on monies deposited in an escrow account (the "1994
Escrow  Account") of $8.8 million for 1995,  and $6.5 million for 1994. Interest
capitalized relating to  development of  the EchoStar  DBS System  for 1995  was
$25.0 million as compared to $5.7 million for 1994.                             

    PROVISION FOR INCOME TAXES.  Income tax benefit for 1995 was $6.2 million as
compared  to  the income  tax provision  for  1994 of  $399,000. This  change is
principally the result of changes in components of income and expenses discussed
above during  1995 and  1994,  respectively. The  Issuer's deferred  tax  assets
(approximately  $13.9  million  at  December  31,  1995)  relate  principally to
temporary differences for amortization  of original issue  discount on the  1994
Notes  and  various accrued  expenses which  are not  deductible until  paid. No
valuation allowance has been provided  because the Issuer currently believes  it
is  more likely than not that these assets will be realized. If future operating
results differ materially and adversely from the Issuer's current  expectations,
its judgment regarding the need for a valuation allowance may change.           

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993   

    REVENUE.   Total  revenue in  1994 was $191.0  million, a  decrease of $30.0
million, or 14%, as compared to total revenue in 1993 of $221.0 million. Revenue
from domestic sales of DTH  products in 1994 was  $111.8 million, a decrease  of
$41.0 million, or 27%, as compared to 1993. Approximately $22.8 million, or 56%,
of  the decrease was due to a decline in the number of satellite receivers sold,
reduced sales of equipment  and accessories typically  sold in conjunction  with
receivers  and  lower  selling  prices  for  that  equipment.  The  Issuer  also
experienced a decrease of $18.2 million in non-                                 

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proprietary descrambler  module sales  during 1994,  as compared  to 1993.  This
decrease in 1994 reflects the impact of higher than normal bulk sales of modules
to  customers during 1993. The  Issuer decreased its emphasis  on sales of these
high cost, low margin products during 1994.                                     

    Domestically, the Issuer sold 114,000 receivers  in 1994, a decline of  14%,
as  compared to  1993. Two  of the  most important  factors responsible  for the
decline in  the Issuer's  satellite receiver  sales were  the unavailability  of
competitive  financing and a reduction in inventory  as a result of the Issuer's
expectation of a decrease in DTH  product sales resulting from the  introduction
of DBS.                                                                         

    In 1994, an increasing percentage of domestic DTH satellite retailers relied
on attractive financing packages to generate sales. During most of 1994, certain
of  the Issuer's competitors offered consumer financing that satellite retailers
considered  more  attractive  than  financing   offered  by  the  Issuer.   This
competitive   financing  advantage  resulted   in  satellite  retailers  selling
competing products  to  their  customers  rather  than  the  Issuer's  products.
EchoStar has entered into agreements with two national banks permitting EchoStar
to offer what it presently believes to be competitive financing terms.          

    Loan  origination  and participation  income for  1994  was $3.7  million, a
decrease of $170,000, or 4%, as compared  to 1993. The decrease resulted from  a
decline  in loan originations due to the Issuer's competitors offering retailers
financing considered  more attractive  than financing  offered through  EchoStar
prior  to the new financing  agreements entered into by  the Issuer. The decline
was partially  offset  by revenue  received  from participation  in  outstanding
balances  of the Issuer's financing portfolio  during all of 1994. Commencing in
1995, the Issuer stopped  receiving monthly participation  payments on the  loan
portfolio.  See "Business  -- Legal  Proceedings." Although  the Issuer believes
that it has entered into competitive financing arrangements, the Issuer  expects
loan  origination and  participation income to  be substantially  reduced in the
near term.                                                                      

    The Issuer intends to aggressively market its current offering of C-band DTH
products by offering competitive pricing and financing in order to minimize  the
decline  in domestic C-band DTH sales. Although  no assurances can be given, the
Issuer expects to offset the decline in domestic C-band sales with sales of  its
proprietary DBS products upon commencement of its DBS service in early 1996.    

    Programming revenue for 1994 was $14.5 million, an increase of $3.7 million,
or  34%, as compared to 1993. The  increase was primarily due to increased sales
of programming packages through satellite retailers and, to a lesser extent, the
renewal and  retention of  existing customers  as a  result of  more  attractive
pricing and more effective marketing.                                           

    Revenue  from  international DTH  products for  1994  was $60.9  million, an
increase of  $7.4 million,  or 14%,  as compared  to 1993.  Such increases  were
primarily  the result  of an increase  in international consumer  demand for DTH
products, especially in  the Middle  East and the  Pacific Rim,  in response  to
growth  in available satellite  television programming. The  Issuer sold 289,000
satellite receivers internationally during 1994, an increase of 43%, as compared
to 1993. The effects of volume increases were partially offset by a 17% decrease
in the average selling  price, as compared  to 1993, due to  an emphasis by  the
Issuer on lower priced products in 1994 to meet marketplace demands.            

    Although  comparative revenues from domestic  sales of DTH products declined
in 1994, fourth  quarter 1994  total DTH revenues  increased approximately  $3.3
million,  or 7%, over third  quarter 1994 revenues, which  were $6.0 million, or
16% higher than second quarter revenues. As a result of sales of Competitor  DBS
Receivers  and  increased international  sales, fourth  quarter DTH  revenues of
$47.6 million were higher than any  other quarter during 1994. This increase  is
primarily  due to an increase in domestic receiver sales to 66,000 in the second
half of 1994 compared to  48,000 in the first half  of 1994, which reflects  the
typically  higher sales  volumes during the  fall season and  increased sales of
Competitor DBS Receivers.                                                       

    OPERATING EXPENSES.   Costs of  DTH products  sold were  $133.6 million  for
1994,  a  decrease of  $27.8 million,  or  17%, as  compared to  1993. Operating
expenses for DTH products as a percentage of                                    

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DTH product  revenue were  77% and  78%  for 1994  and 1993,  respectively.  The
decrease  in  DTH operating  expenses in  1994 resulted  primarily from  the 42%
decrease in non-proprietary descrambler module  sales, which sell at  relatively
low gross margins.                                                              

    Operating  expenses for programming were $11.7 million for 1994, an increase
of $2.3 million, or 25%, as compared to 1993. Operating expenses for programming
as a percentage of programming  revenue in 1994 were 80%  as compared to 87%  in
1993.  Programming revenue increased  at a greater  rate than operating expenses
for  programming  principally  because  of  discounts  available  on   wholesale
programming prices as a result of the increased number of subscribers and better
pricing  as a result of more favorable programming contracts entered into during
1994.                                                                           

    SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES.    Selling,  general   and
administrative  expenses were $30.2  million in 1994  and 1993. Selling, general
and administrative expenses as  a percentage of total  revenue increased to  16%
for 1994 compared to 14% for 1993. The increase as a percent of total revenue is
principally the result of the reduction of domestic sales of DTH products.      

    Research and development costs totaled $5.9 million for 1994, as compared to
$5.1  million in  1993. The increase  is principally due  to additional research
necessary to provide  receivers to  more international markets  and the  initial
development  of the Issuer's  DBS receivers. The  Issuer's expenses research and
development costs as incurred  and includes such costs  in selling, general  and
administrative expenses.                                                        

    EBITDA.   EBITDA for 1994 was $15.5  million, a decrease of $4.4 million, or
22%, compared to 1993. EBITDA was 8%  of total revenue for 1994, as compared  to
9%  of total revenue for 1993. Such decrease resulted from the factors affecting
revenue and expenses discussed above.                                           

    DEPRECIATION.   Depreciation  in  1994  was $2.2  million,  an  increase  of
$566,000,  or 34%,  as compared  to 1993.  The increase  primarily resulted from
purchases of manufacturing equipment and tooling  during 1994 and a full  year's
depreciation on equipment and tooling purchased throughout 1993.                

    OTHER  INCOME AND  EXPENSE.   Other expense  in 1994  was $12.7  million, an
increase of $13.3 million, as compared  to 1993. The difference in other  income
and  expense  compared  to  1993 resulted  primarily  from  the  amortization of
original issue discount  and deferred  debt issuance costs  which totaled  $26.4
million  on the 1994  Notes which were issued  on June 7,  1994. This amount was
partially offset by $6.5 million of investment income in the 1994 Escrow Account
and capitalized interest  of $5.7  million relating  to the  development of  the
EchoStar DBS System.                                                            

    PROVISION  FOR  INCOME  TAXES.   Provision  for  income taxes  for  1994 was
$399,000, an increase  of $1.8 million,  as compared to  1993. This increase  is
principally the result of the Issuer's subsidiaries (other than ESC) terminating
their  Subchapter S corporation status effective  December 31, 1993. This change
in tax status was recognized  by establishing a net  deferred tax asset of  $1.9
million  on that  date for temporary  differences between tax  basis and amounts
reported in the Issuer's Financial Statements. The 1994 increase in the  current
and  long term deferred tax asset was $7.3 million, which relates principally to
the deferred deductibility of interest related to the 1994 Notes. ESC terminated
its Subchapter S corporation  status effective January 1,  1994. This change  in
tax status resulted in the Issuer recognizing federal and state corporate income
taxes for all of 1994.                                                          

LIQUIDITY AND CAPITAL RESOURCES                                                 

    Cash flows used by operations were $138,000 for the three month period ended
March  31, 1996  as compared  to $3.8  million used  by operations  for the same
period in 1995. Cash used by operations  for the three month period ended  March
31,  1996 was  mainly a  result of advances  to affiliates  for construction and
launch of EchoStar III partially offset by deferred programming revenue received
related to the DISH Network-SM- and the  sale of the majority of Competitor  DBS
Receiver inventory. The Issuer expects any declines in inventory to be offset by
substantial   increases  in  EchoStar  Receiver  System  inventory  and  related
components.   The   anticipated   increase   in   inventory   is   expected   to

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negatively  affect cash flow in the short  term. However, as EchoStar builds its
DISH Network-SM- subscriber  base, the negative  affect on cash  flow should  be
offset  by an  increase in  revenue attributable  to sales  of EchoStar Receiver
Systems and DISH  Network-SM- programming.  In the event  subscriptions to  DISH
Network-SM-  programming do not meet anticipated  levels, the negative affect on
cash flow will continue.                                                        

    Cash flows used by operations were  $21.9 million for 1995. Cash flows  were
used  primarily for  purchases of  inventory and  a $10.0  million DBS inventory
deposit. The increase of  approximately $19.7 million  in inventory during  1995
principally  represents:  (i)  purchase  of  integral  components  for  EchoStar
Receiver Systems;  (ii)  a  planned  increase in  inventory  of  Competitor  DBS
Receivers;  and (iii) an increase in international inventory to support expected
international demand. Funds  necessary to increase  these inventories came  from
cash reserves.                                                                  

    Cash  flows provided by operations were  $24.2 million and $30.2 million for
1994 and 1993, respectively.  Cash flows were mainly  expended for purchases  of
property  and  equipment  in  1994  and  1993,  principally  in  connection with
development of the EchoStar DBS System and for distributions to stockholders  of
the Issuer's subsidiaries in 1993. Distributions to stockholders of the Issuer's
subsidiaries were made to pay taxes on S corporation taxable income in 1993. The
Issuer  is prohibited from making further dividend  payments by the terms of its
debt agreements, except in certain limited circumstances. Cash flows provided by
operations in  1994  were  invested in  short-term  interest-bearing  marketable
securities or segregated as restricted cash and marketable securities.          

    Certain  subsidiaries of  EchoStar were  parties to  a credit  facility (the
"Credit Facility") with Bank of America Illinois. The Credit Facility expired in
May 1996 and EchoStar does not currently intend to arrange a replacement  credit
facility.  Instead, EchoStar is using available cash to collateralize its letter
of credit obligations, which  historically was the only  significant use of  the
Credit  Facility.  At March  31, 1996,  EchoStar  had cash  collateralized $15.5
million of  certain standby  letters  of credit  for  trade purchases  which  is
included  in  restricted  cash  and marketable  securities  in  the accompanying
supplemental quarterly financial information  of EchoStar included elsewhere  in
this Prospectus.                                                                

    During  June  1994, Dish,  Ltd. issued  624,000  units consisting  of $624.0
million principal amount of the 1994 Notes and 3,744,000 Warrants  (representing
2,808,000 shares of EchoStar Class A Common Stock) for aggregate net proceeds of
approximately  $323.3 million,  which were  placed in  the 1994  Escrow Account.
Through March 31, 1996, $276.8 million  had been withdrawn from the 1994  Escrow
Account.  Of that amount, $28.3  million was to reimburse  the Issuer for monies
expended for the construction and launch of EchoStar I and EchoStar II prior  to
June  7, 1994, and will be reinvested in development of the EchoStar DBS System.
At March  31, 1996,  approximately $251.9  million of  these proceeds  had  been
applied  to  development  and  construction  of  the  EchoStar  DBS  System  and
approximately $24.9 million  had been  applied to  other permitted  uses. As  of
March 31, 1996, approximately $63.6 million remained in the 1994 Escrow Account,
which included investment earnings.                                             

    In March 1996, the Issuer consummated a private placement of the 1996 Notes.
The  Issuer  was  formed in  January  1996 for  the  purpose of  the  1996 Notes
Offering. EchoStar has contributed all of  the outstanding capital stock of  its
wholly  owned subsidiary, Dish,  Ltd., to the Issuer.  The Issuer issued 580,000
notes consisting  of $580.0  million  principal amount  of  the 1996  Notes  for
aggregate  net proceeds of approximately $337.0  million of which $177.3 million
was placed  in the  1996 Escrow  Account  and the  remaining $159.7  million  is
included  in cash  and cash equivalents  in the  Issuer's supplemental quarterly
financial  information  as  of  March  31,  1996,  included  elsewhere  in  this
Prospectus.  Through March  31, 1996, $7.5  million had been  withdrawn from the
1996 Escrow Account for development and construction of the EchoStar DBS System.
As of March 31, 1996, approximately  $170.0 million remained in the 1996  Escrow
Account,  which included investment earnings. Total  cash on hand and marketable
investment securities at March 31, 1996 were approximately $162.9 million.      

    Based upon  existing  cash  resources and  expected  revenue  and  expenses,
exclusive of DISH Network-SM- marketing expenses, EchoStar anticipates requiring
an additional $40.0 million in working                                          

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capital  in 1996 related to  operations and the development  of the EchoStar DBS
System. This cash  requirement could increase  if subscribers are  not added  as
planned  or  expenses, including  subscriber  acquisition costs,  exceed present
levels and estimates. Additionally, in 1996, EchoStar has expended or expects to
expend: (i)  approximately  $125.3 million  in  connection with  the  launch  of
EchoStar  II  and  EchoStar III;  (ii)  approximately $46.7  million  for launch
insurance on EchoStar II and EchoStar III; (iii) approximately $52.5 million for
construction of EchoStar III  and EchoStar IV;  (iv) approximately $8.0  million
for  in-orbit payments  to Martin  Marietta on EchoStar  I and  EchoStar II; (v)
approximately $52.3 million for the purchase of DBS frequencies at 148 DEG.  WL;
(vi)  $10.4  million  for  other 1994  Escrow  related  expenditures  related to
development of the EchoStar DBS  System; and (vii) up  to $95.0 million for  the
introduction,  product  marketing  and  other operating  expenses  for  the DISH
Network-SM-. Funds  for these  expenditures, as  well as  proposed  expenditures
beyond  1996 related  to costs  expected to be  incurred in  connection with the
construction and launch of EchoStar's  first four satellites, in an  approximate
amount  of  $235.0 million,  are expected  to  come from  the 1996  Notes Escrow
Account, the  1994  Notes  Escrow  Account and  available  cash  and  marketable
investment  securities. However, in  order to continue  development of the third
and fourth satellites beyond the second quarter in 1997, additional capital will
be required. There are no assurances that additional capital will be  available,
or, if available, that it will be available on terms favorable to EchoStar.     

    In  addition to the commitments described above, the Issuer has entered into
agreements to purchase DBS  satellite receivers and  related components for  the
EchoStar  DBS  System. As  of March  31, 1996  those purchase  order commitments
totaled as  much  as  $622.2 million.  At  March  31, 1996,  the  total  of  all
outstanding  purchase order commitments with  domestic and foreign suppliers was
as much as $641.3 million. All but approximately $85.9 million of the  purchases
related  to  these commitments  are  expected to  be  made during  1996  and the
remainder is expected to be made during 1997. EchoStar expects to finance  these
commitments  from available cash, marketable  investment securities and sales of
inventory, including the sale of EchoStar Receiver Systems and related products.

    In the event price and marketing competition intensifies among DBS and other
"small dish"  operators, EchoStar  may be  at a  competitive disadvantage  as  a
result  of its limited financial resources. EchoStar is currently test marketing
a special promotion in a limited  number of markets pursuant to which  customers
are able to purchase a discounted package, including an EchoStar Receiver System
and  annual  programming  package,  for below  the  suggested  retail  price. If
EchoStar elects to expand the promotion nationwide for an extended period, or if
market conditions force  it to  do so, EchoStar's  subscriber acquisition  costs
will  increase  substantially  resulting  in a  significant  negative  impact on
EchoStar's liquidity and net income. EchoStar may therefore be required to raise
additional capital during 1996. There can be no assurance that EchoStar will  be
successful  raising additional capital, or whether such capital can be raised on
terms favorable to EchoStar.                                                    

    EchoStar had outstanding  $415.7 million  and $778.6 million  of long  -term
debt (including the 1994 and 1996 Notes, deferred satellite contract payments on
EchoStar  I  and mortgage  debt) as  of December  31, 1995  and March  31, 1996,
respectively. In addition,  because interest on  the 1994 Notes  is not  payable
currently  in  cash but  accretes  through June  1,  1999, the  1994  Notes will
increase by $241.8 million through that date. Also, because interest on the 1996
Notes is not payable in cash but accretes through March 15, 2000, the 1996 Notes
will increase by $230.0 million through that date. Contractor financing of $28.0
million is available for EchoStar II. Interest on the contractor financing is at
the prime rate and principal payments are payable in equal monthly  installments
over five years following the launch of the satellite.                          

AVAILABILITY OF OPERATING CASH FLOW TO THE ISSUER                               

    The  1996 Indenture, the 1994 Indenture,  and Dish, Ltd.'s short-term credit
facility impose various restrictions on the transfer of funds among EchoStar and
its subsidiaries, including the Issuer. Subject to these restrictions,  EchoStar
intends  to cause its subsidiaries to execute various intercompany agreements to
effect the sharing  of personnel  and assets, including  satellites and  license
rights,                                                                         

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that  form an  integral part  of the EchoStar  DBS System.  These agreements are
expected to take the  form of management agreements  (for use of personnel)  and
lease  agreements (for use of  assets) which will have  a principal objective of
effecting  an  equitable  allocation  of  revenues  and  costs  associated  with
operating the DISH Network-SM-.                                                 

    Although  the Notes are collateralized by the stock of Dish, Ltd., the stock
of a direct subsidiary of EchoStar, various assets expected to form an  integral
part  of  the EchoStar  DBS System  (and  not otherwise  encumbered by  the 1994
Indenture), and guarantees of  EchoStar and certain  of its other  subsidiaries,
the  Issuer's ability to fund interest and  principal payments on the Notes will
depend on successful  operation of the  DISH Network-SM- and  the Issuer  having
access  to  available cash  flows  generated by  the  DISH Network-SM-.  If cash
available to the Issuer is not  sufficient to service the Notes, EchoStar  would
be  required to obtain cash from other  sources such as asset sales, issuance of
equity securities,  or new  borrowings. There  can be  no assurance  that  those
alternative  sources would  be available,  or available  on favorable  terms, or
sufficient to meet debt service requirements on the 1996 Notes.                 

ASSETS OF PRINCIPAL GUARANTORS                                                  

    EchoStar guarantees  the  1996 Notes  on  a subordinated  basis.  EchoStar's
initial  public offering of  Class A Common  Stock in June  1995 resulted in net
proceeds of approximately  $63.0 million.  EchoStar's assets at  March 31,  1996
included assets purchased with those proceeds and cash remaining from the Equity
Offering.  Substantially all of the proceeds from the Equity Offering were used:
(i) to  secure launches  for a  third  and fourth  satellite; (ii)  to  support,
through loans to DBSC, construction of a third satellite; (iii) to purchase, for
$4.0  million, convertible subordinated secured  debentures from DBS Industries,
Inc.; and (iv) for general corporate  purposes, including the down payment,  for
DBS  frequencies purchased at  148 DEG. WL  at the FCC  Auction in January 1996,
which will be reimbursed with the proceeds of the 1996 Notes Offering.          

OTHER                                                                           

1994 AND 1996 NOTES                                                     

    EchoStar I was successfully launched by Great Wall in December 1995. In  the
event  of a launch  failure of EchoStar  II, Dish, Ltd.  would first be required
under the 1994 Notes Indenture  to make an offer  to repurchase one-half of  the
then  accreted value of the 1994 Notes. In the event that EchoStar does not have
the right  to use  orbital slot  authorizations granted  by the  FCC covering  a
minimum  of 21 transponders at a single  full CONUS orbital slot, the Issuer and
Dish, Ltd. will be required to make an  offer to repurchase all or a portion  of
the  outstanding 1996 Notes  and 1994 Notes,  respectively. Additionally, in the
event that  EchoStar DBS  Corporation, a  wholly owned  subsidiary of  EchoStar,
fails  to obtain authorization from the FCC for frequencies purchased at the FCC
Auction in January 1996, or in the  event that such authorization is revoked  or
rescinded,  the  Issuer  will be  required  under  the 1996  Notes  Indenture to
repurchase the maximum principal amount of the 1996 Notes that may be  purchased
with the proceeds of any refund received from the FCC.                          

    If  the DBSC Merger or similar transaction does not occur on or before March
1, 1997,  the Issuer  will be  required  to repurchase  at least  $83.0  million
principal  amount of the 1996 Notes. Further,  in the event that EchoStar incurs
more than $7.8 million in expenses (as  defined in the 1996 Notes Indenture)  in
connection  with the DBSC Merger, the Issuer will be required to apply an amount
equal to such expenses minus $7.8 million to an offer to repurchase the  maximum
principal amount of the 1996 Notes that may be purchased out of such proceeds.  

    If  any of  the above  described events  were to  occur, EchoStar's  plan of
operations, including its liquidity, would be adversely affected and its current
business plan could  not be  fully implemented.  Further, EchoStar's  short-term
liquidity  would be adversely affected in the event of: (i) significant delay in
the delivery of certain  products and equipment necessary  for operation of  the
EchoStar  DBS  System; (ii)  shortfalls in  estimated  levels of  operating cash
flows; or (iii)  unanticipated expenses  in connection with  development of  the
EchoStar DBS System.                                                            

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RECEIVER MANUFACTURERS                                                  

    EchoStar  has agreements with two manufacturers  to supply DBS receivers for
EchoStar. To  date,  only one  of  the  manufacturers has  produced  a  receiver
acceptable  to EchoStar. That manufacturer  is presently manufacturing receivers
in quantities sufficient  to meet expected  demand. No assurances  can be  given
that  EchoStar's  other  manufacturer  will be  able  to  produce  an acceptable
receiver in  the  future.  Until  the other  manufacturer  produces  a  receiver
acceptable  to EchoStar, EchoStar  is dependent on  one manufacturing source for
its receivers. To date, EchoStar  has paid the nonperforming manufacturer  $10.0
million and has an additional $15.0 million in an escrow account as security for
EchoStar's  payment obligations under  that contract. If  that manufacturer does
not produce an acceptable  receiver in the near  future, EchoStar may  terminate
that   contract,  which  would   cause  longer  term   dependence  on  a  single
manufacturing source. If EchoStar's sole  manufacturer is unable for any  reason
to  produce  receivers  in  a quantity  sufficient  to  meet  demand, EchoStar's
liquidity and results of operations may  be adversely affected. If the  contract
with  EchoStar's other  manufacturer is  terminated, there  can be  no assurance
EchoStar would be able to recover all amounts paid the manufacturer.            

EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                    

    The Financial  Accounting  Standards  Board  ("FASB")  issued  Statement  of
Financial Accounting Standards No. 121, "Accounting for Impairment Of Long-Lived
Assets  and for Long-Lived Assets to Be  Disposed Of" ("SFAS No. 121"). EchoStar
has adopted SFAS No. 121 in the first  quarter of 1996 and its adoption has  not
had a material impact on EchoStar's financial position, results of operations or
cash flows.                                                                     

    Statement   of  Financial  Accounting  Standards  No.  123  "Accounting  for
Stock-Based Compensation" ("SFAS No. 123"), issued  by FASB in October 1995  and
effective  for fiscal years  beginning after December  15, 1995, encourages, but
does not require,  a fair value  based method of  accounting for employee  stock
options  or similar  equity instruments.  It also allows  an entity  to elect to
continue to measure compensation cost under Accounting Principles Board  Opinion
No.  25, "Accounting for Stock Issued to Employees" ("APB No. 25"), but requires
pro forma disclosures of net income and earnings per share as if the fair  value
based  method of accounting had been applied.  EchoStar has adopted SFAS No. 123
in the first quarter of 1996 and has elected to continue to measure compensation
cost under APB No. 25 and to comply with the pro forma disclosure  requirements.
Therefore, this statement has had no impact on EchoStar's results of operations.

IMPACT OF INFLATION; BACKLOG                                            

    Inflation  has not materially affected EchoStar's operations during the past
three years. EchoStar believes that its ability to increase charges for products
and services in future periods  will depend primarily on competitive  pressures.
EchoStar does not have any material backlog of its products.                    

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BUSINESS

GENERAL                                                                         

    EchoStar  was  incorporated  in  Nevada during  1995  in  connection  with a
reorganization of  a group  of businesses  under common  control, the  first  of
which,  Echosphere Corporation  ("Echosphere"), was incorporated  in 1980. Since
its incorporation, Echosphere, directly or  indirectly, has been engaged in  the
design,  manufacture, distribution  and installation  of DTH  products, domestic
distribution of DTH  programming and consumer  financing of EchoStar's  domestic
DTH  products and services.  A subsidiary of EchoStar  was granted a conditional
satellite construction permit, a specific orbital slot assignment and  frequency
assignments by the FCC in 1989 to provide DBS service.                          

    EchoStar  successfully  launched its  first  DBS satellite,  EchoStar  I, in
December 1995. EchoStar is one of only two companies with United States licensed
operational  capacity  sufficient  to   provide  comprehensive  nationwide   DBS
programming  service in  1996. Currently, EchoStar  offers over  100 channels of
high quality  digital video  and  audio programming  to the  entire  continental
United  States. EchoStar's  DISH Network-SM-  service is  expected to  expand to
approximately 200  digital video  and audio  channels following  the  successful
launch of its second DBS satellite this fall.                                   

    EchoStar  will target approximately 110 million potential subscribers in the
continental  United  States,  including  approximately  96  million   television
households.   DISH  Network-SM-  subscribers  can   choose  from  a  variety  of
programming packages which EchoStar believes  will have a better  price-to-value
relationship  than packages currently offered  by most pay television providers.
For example, the entry level programming package America's Top 40-SM- is  priced
at  $19.99  per month  and  consists of  40 of  the  top "expanded  basic cable"
channels,   including    a   conventional    premium   service,    The    Disney
Channel-Registered  Trademark-. EchoStar will also offer various regional sports
networks numerous premium services, pay-per-view programming and, following  the
launch   of  a  second  satellite,  additional  premium  services  and  expanded
pay-per-view offerings.  EchoStar  has negotiated  affiliation  agreements  with
major  content providers, giving it the  right to broadcast substantially all of
the   most   popular   programming,   including   ESPN-Registered    Trademark-,
MTV-Registered Trademark-, Nickelodeon-Registered Trademark-,                   
VH-1-Registered  Trademark-, Showtime Network-Registered  Trademark-, The Disney
Channel-Registered Trademark-, USA Network-Registered Trademark-,               
CNN-Registered Trademark-,  Headline  News-Registered Trademark-,  TNT-SM-,  CNN
International-SM-,  Turner Classic  Movies-Registered Trademark-,  The Discovery
Channel-Registered Trademark-, A&E-SM-, HBO-Registered Trademark-,              
Cinemax-Registered   Trademark-,    Lifetime    Television-SM-,    The    Family
Channel-Registered Trademark-, C-Span-Registered Trademark-,                    
CNBC-Registered  Trademark-, and many other  programming services. EchoStar also
provides a user-friendly on screen programming guide, or navigator, facilitating
the management of current and future program offerings by consumers.            

    EchoStar believes  that  it will  have  access  to more  U.S.  licensed  DBS
frequencies  than any  of its  competitors. EchoStar  controls, or  will control
(subject to certain FCC approvals and findings) as many as 90 such  frequencies,
including  21  frequencies  at one  of  the  three U.S.  licensed  orbital slots
currently capable of providing nationwide  DBS service. See " Industry  Overview
DBS  Industry." EchoStar believes that access  to this substantial amount of DBS
spectrum will  enable it  to achieve  higher subscriber  penetration and  higher
revenue  per  subscriber than  would otherwise  be possible.  EchoStar currently
plans to use  this spectrum to  offer a substantial  number of additional  video
channels,  including alternate time  zone feeds of  popular expanded basic cable
programming, multiplexed premium  movie services,  frequent start  pay-per-view,
local  programming  for the  largest local  U.S.  television markets,  niche and
foreign language programming,  professional and college  sporting events,  HDTV,
business  and educational  programming and  high-speed transmission  of Internet
data.                                                                           

    The introduction of DBS receivers is widely regarded as the most  successful
introduction  of a consumer electronics product  in U.S. history, surpassing the
rollout of  color televisions,  VCRs and  compact disc  players. During  the  18
months  ended  December  31,  1995, approximately  2.2  million  U.S. households
subscribed to DTH satellite  service. According to  an industry study  performed
during  late 1995, 85% of all consumers  are satisfied with DBS picture quality,
compared to a consumer satisfaction level of approximately 47% for cable.       

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    Of the approximately 96 million television households in the United  States,
it  is estimated that approximately 60 million subscribers pay an average of $33
per month for multichannel programming services. EchoStar believes that there is
significant unsatisfied demand  for high quality,  reasonably priced  television
programming.  Although primary markets for the EchoStar DBS System are likely to
include the approximately 11.0 million households not passed by cable television
systems and the approximately 20.4 million households currently passed by  cable
television  systems  with  relatively limited  channel  capacity,  EchoStar also
expects to  target  cable  subscribers  in urban  and  suburban  areas  who  are
dissatisfied with the quality or price of their cable programming.              

    DISH Network-SM- programming is available to any subscriber who purchases or
leases  an EchoStar receiver system, which includes an 18-inch satellite dish, a
digital  satellite  receiver,  a   user-friendly  remote  control  and   related
components  (an "EchoStar  Receiver System"). The  suggested retail  price of an
EchoStar Receiver  System  is currently  between  approximately $499  and  $599,
depending  on the  model selected by  the customer, among  other factors. Dealer
incentives and EchoStar sponsored  promotions may reduce the  actual cost of  an
EchoStar  Receiver System below the suggested  retail price. The initial capital
cost required to receive DISH Network-SM- programming may reduce the demand  for
EchoStar  Receiver Systems, since  EchoStar Receiver Systems  must be purchased,
while cable and certain of EchoStar satellite competitors lease their  equipment
to  the consumer with little if  any initial hardware payment required. EchoStar
is currently test marketing a special  promotion in a limited number of  markets
pursuant to which customers are able to purchase a discounted package, including
an  annual programming package for $300 (which  is comparable to the price for a
similar package of cable programming), and EchoStar Receiver System for $199. If
EchoStar elects to expand the promotion nationwide for an extended period, or if
market conditions force it to do so, the initial capital investment relative  to
cable  will be greatly reduced. In this event, EchoStar's subscriber acquisition
costs will  increase  substantially,  potentially  resulting  in  a  significant
negative impact on EchoStar's liquidity and net income.                         

    The  EchoStar Receiver  System is  fully compatible  with MPEG-2,  the world
digital standard for computers and  consumer electronics products, and  provides
image  and sound  quality superior  to current  analog cable  or MMDS television
services. EchoStar  intends  to market  EchoStar  Receiver Systems  through  its
nationwide   network  of   approximately  3,000   independent  distributors  and
retailers. EchoStar is  also currently  engaged in discussions  with brand  name
consumer electronics equipment manufacturers for the production and distribution
of  EchoStar  Receiver Systems  through  national consumer  electronics retailer
networks. EchoStar  is also  negotiating with  a number  of mass  merchandisers,
direct   sales  organizations  and  consumer  electronics  retailers  for  other
distribution paths for EchoStar Receiver Systems.                               

STRATEGY                                                                        

    EchoStar's primary objective is  to become one of  the leading providers  of
pay  television services  in the United  States. EchoStar's  strategy to achieve
this objective is to:                                                           

    - Provide subscribers with  more quality programming  at lower price  points
than other pay television providers.                                

    - Utilize  its large  and established  independent retail  network to obtain
      substantial market share in rural areas and areas served by cable  systems
with relatively limited channel capacity.                           

    - Employ   world  standard  MPEG-2  digital   technology  to  achieve  lower
      manufacturing costs  and  assure superior  product  capability,  including
compatibility with other consumer electronics products.             

    - Expand consumer electronics retail distribution through relationships with
      major retailers or through licensing arrangements with brand name consumer
electronics manufacturers.                                          

    - Provide  superior  customer  service  by  furnishing  a  single  source to
      purchase  DISH  Network-SM-  hardware   and  programming  and  to   obtain
financing, installation and customer care.                          

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    - Deploy  satellites at  additional DBS  orbital slots  to expand EchoStar's
      product offerings with complementary video, data and interactive products.

    DBS is the  most efficient, least  capital intensive means  of reaching  the
largest  number of U.S.  television households. EchoStar's  first two satellites
will transmit high quality, digital television to the entire continental  United
States  for a capital  cost of less  than $500 million,  or approximately $5 per
television  household,  permitting  profitability  with  relatively  low  market
penetration.  EchoStar believes that its strategy,  together with the ability to
exploit the  more  favorable  cost  structure and  the  lower  invested  capital
requirements  of DBS  relative to  other pay  television providers,  will enable
EchoStar to achieve its objectives.                                             

    In addition  to  the  DBS  business, EchoStar  is  engaged  in  the  design,
manufacture,   distribution   and   installation  of   DTH   products,  domestic
distribution of DTH  programming and consumer  financing of EchoStar's  domestic
DTH  products  and  services. During  the  six  years ended  December  31, 1995,
EchoStar sold over 1.7 million DTH receivers worldwide.                         

The elements of EchoStar's strategy are discussed below.                

LOWER PRICED PROGRAMMING PACKAGES                                               

    As a result of the generally lower invested capital required of digital  DBS
operators  relative  to  cable  television operators,  EchoStar  believes  it is
currently one  of  the  lowest  cost  providers  of  nationwide  pay  television
programming.  Unlike cable  television, DBS  does not  require access  to public
rights-of-way, multiple origination facilities (commonly known as head-ends)  or
ground construction to install, maintain or upgrade services, thus eliminating a
major  portion of the significant capital  required to operate a technologically
advanced cable  television  system. Cable  industry  trade groups  and  research
associations  report that significant capital expenditures would be necessary to
upgrade existing analog coaxial cable television systems to digital fiber  optic
technology. These expenditures are estimated to exceed $900 per subscriber. As a
result,  EchoStar  believes that  DISH Network-SM-  services are  generally less
expensive than  cable television  subscriptions,  while providing  better  video
quality,  access to  more channels and  greater choice  in programming packages.
EchoStar believes that cable companies generally will be unable or unwilling  to
lower  their  prices  to  subscribers  given the  higher  implicit  cost  of the
infrastructure necessary to deliver programming  to their customers as  compared
to DBS programming.                                                             

    While  wireless  cable operators  currently provide  an analog  signal, with
limited capacity and  inferior image and  sound quality compared  to DBS, it  is
expected  that most large  market operators backed  by local telephone companies
will upgrade to  digital technology  over the next  several years.  In order  to
implement  this  upgrade those  operators will  be  required to  install digital
decoders in each customer's home at a cost comparable to the cost of an EchoStar
DBS receiver and  make certain modifications  to their transmission  facilities.
The  cost  of this  digital  upgrade will  be significant  and  will have  to be
amortized over a smaller base of potential customers.                           

    EchoStar's low cost infrastructure and high channel capacity due to  digital
compression  enables the DISH Network-SM- to offer a wide variety of programming
packages at attractive price  points. The DISH Network-SM-  offers a variety  of
programming  packages including popular cable television networks. The America's
Top 40-SM- programming package, which  includes a conventional premium  service,
The  Disney Channel-Registered Trademark-,  is priced at  $19.99 per month. This
package includes a diverse range of programming including news, sports,  general
entertainment,  movies, and family programming  and will represent a competitive
value. The  America's Top  40 Premium  Plus-SM- package,  priced at  $29.99  per
month,  and the America's Top  40 Deluxe Plus-SM- package,  priced at $39.99 per
month, includes  the America's  Top 40-SM-  package combined  with one  and  two
multiplexed premium services, respectively, including HBO-Registered Trademark-,
Cinemax-Registered  Trademark- and Showtime-Registered  Trademark-. According to
industry reports and  trade press, multiplexed  premium services, which  include
three  to five channels  per service for  the same retail  price as one service,
have proven to be popular  with consumers. Additional packages and  combinations
are  expected, including superstations, network  programming and regional sports
offerings. The DISH                                                             

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Network-SM- offers pay-per-view  movies and niche  services on an  "a la  carte"
basis.  EchoStar plans to  package its EchoStar  Receiver System and programming
and  offer  discounts  to  customers   who  purchase  packages  during   certain
promotions. EchoStar's pay-per-view strategy focuses on the premier movie titles
which  generate substantial  viewer interest and,  consequently, higher revenues
and margins.                                                                    

ESTABLISHED INDEPENDENT RETAIL NETWORK                                          

    EchoStar has  an  established  nationwide  network  of  approximately  3,000
independent  full-service distributors  and retailers  of DTH  and DBS satellite
products and services that has been developed  over the past 15 years. Based  on
its  relationships  with  these  retailers  and  its  knowledge  of distribution
channels from marketing  DTH products  and competitor's  DBS products,  EchoStar
believes  that  it  has a  competitive  advantage  over other  DBS  providers in
marketing the DISH Network-SM-.  EchoStar offers a  commission program based  on
sales  of  hardware  and  programming  that  it  believes  is  competitive  with
commissions programs offered by  other DTH operators.  In addition to  utilizing
this  retailer  network,  EchoStar  will  target  other  distribution  channels,
including national consumer electronic  outlets, direct sales organizations  and
mass merchandisers.                                                             

ADOPT SECOND GENERATION DIGITAL TECHNOLOGY                                      

    The  EchoStar DBS System is fully compatible with MPEG-2 digital compression
technology, the world  standard for computers  and digital consumer  electronics
and  products. MPEG-2 compatibility  gives EchoStar the  advantage of seamlessly
interfacing with future digital consumer electronics and computer products. This
compatibility will  generally  result  in  lower  costs  to  consumers  as  more
manufacturers use common components to design their products.                   

DEVELOP CONSUMER ELECTRONICS RETAIL DISTRIBUTION                                

    EchoStar  is  currently  in  discussions  with  large  brand  name  consumer
electronics companies to manufacture and provide greater retail distribution  of
EchoStar Receiver Systems. EchoStar believes that these companies are interested
in manufacturing EchoStar DBS compatible equipment because of the opportunity to
package the receiver with an array of new digital consumer electronics products,
including HDTV, audio and video playback equipment and personal computers. These
manufacturers  may also augment EchoStar's distribution through channels such as
consumer electronics outlets and mass merchandisers.                            

    EchoStar is also actively pursuing, and has entered into several  agreements
with,  mass merchants, discount clubs and  certain major retailers to distribute
EchoStar  Receiver  Systems  and   DISH  Network-SM-  programming.  From   these
discussions,  EchoStar  believes  that  these  retailers  have  an  interest  in
retailing EchoStar Receiver Systems due to its differentiated program offerings.
EchoStar currently has agreements  with SCI Systems,  Inc. ("SCI") (the  world's
largest  electronics contract manufacturer)  and Sagem Group  ("Sagem") (a major
European  consumer  electronics  equipment  manufacturer)  to  manufacture   DBS
receivers  to be distributed through  its retail network. To  date, only SCI has
produced a receiver acceptable to  EchoStar, and SCI is presently  manufacturing
receivers  in sufficient quantities to meet expected demand. No assurance can be
given that Sagem will be able to  produce an acceptable receiver in the  future.
Until Sagem produces a receiver acceptable to EchoStar, EchoStar is dependent on
one  manufacturing source for its receivers. If  SCI is unable for any reason to
produce receivers in a quantity sufficient to meet demand, EchoStar's  liquidity
and results of operations may be adversely affected.                            

INTEGRATED CUSTOMER SERVICE                                                     

    EchoStar  provides customer service competitive  with other DTH operators by
offering integrated customer care through a single point of contact. By  calling
1-800-333-DISH,  customers  can  purchase  hardware  and  programming,  schedule
installation, obtain technical support, make inquiries regarding their  accounts
and  receive information  about the DISH  Network-SM-. In order  to maximize its
customer service,  EchoStar will  maintain  its own  call  center and  has  also
contracted with industry leader Electronic Data Systems Inc. ("EDS"), to provide
call center services. In contrast, DirecTv and                                  

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USSB  subscribers must make two separate telephone calls to subscribe to typical
popular programming combinations (one for  DirecTv programming and one for  USSB
programming), and a separate call for hardware customer service.                

DEPLOY SATELLITES TO EXPAND PRODUCT OFFERINGS                                   

    EchoStar  expects to utilize its substantial  DBS capacity to offer expanded
product offerings  to  its customers,  including  video, data,  and  interactive
products.  EchoStar  currently  plans  to  launch  three  additional satellites,
EchoStar II, EchoStar III, and EchoStar IV, by 1998. EchoStar currently plans to
use this capacity to  offer a substantial number  of additional video  channels,
including   basic  and   premium  cable,  frequent   start  pay-per-view,  local
programming to the largest U.S.  television markets, niche and foreign  language
programming,  extensive professional  and college sports  events, HDTV, business
and educational programming and high-speed transmission of Internet data.       

INDUSTRY OVERVIEW                                                               
DBS INDUSTRY                                                                    

    DBS, as used in this Prospectus, describes a high power satellite  broadcast
service  in  the Ku  frequency band  which by  international agreement  has been
assigned  unique  nine   degree  orbital  spacing   permitting  higher   powered
transmissions  which can  be received  on an  18-inch satellite  dish. Other DTH
services include  FSS,  which describes  low  power (C-band)  and  medium  power
(Ku-band)  satellite  services.  Small dish  size  generally  increases consumer
acceptance and  provides  a substantial  competitive  advantage over  other  DTH
services.                                                                       

    Although  the  concept of  DBS was  introduced  in 1982,  it did  not become
commercially viable until  the last  several years  because available  satellite
technology  did not allow for the power required to transmit to small dishes and
digital compression technology  had not  been adequately  developed. Today,  DBS
provides  the most  cost efficient  national point  to multi-point  transport of
video, audio and data services. The advent of high powered satellites allows for
18-inch dishes and digital compression technology permits the broadcast of up to
ten channels of programming per transponder.                                    

    Eight DBS orbital  slots, each  with 32 frequencies,  have been  or will  be
allocated  by the FCC for  use by domestic DBS  providers. The FCC has indicated
its belief that only the 101 DEG. WL, 110 DEG. WL and 119 DEG. WL slots  provide
full  CONUS coverage and,  therefore, these three slots  are considered the most
strategic. With respect to a fourth orbital position, 61.5 DEG. WL, difficulties
with "look angles," among  other factors, may make  full CONUS DBS service  from
that orbital position commercially impractical.                                 

    The  FCC has issued or is expected to issue licenses or construction permits
for DBS orbital locations as follows.                                           

                                                        [Enlarge/Download Table]

                                                                FREQUENCY ALLOCATIONS FOR U.S. DBS ORBITAL SLOTS               
                                       TOTAL     ------------------------------------------------------------------------------
                                    FREQUENCIES  61.5 DEG. 101 DEG.  110 DEG.  119 DEG.  148 DEG.  157 DEG.  166 DEG.  175 DEG.
                                    -----------                                                                                
                                                                                                                               
EchoStar (1).......................       90          11                   1        21        24                   1        32 
DirecTv............................       54                    27                                      27                     
MCI................................       28                              28                                                   
Continental........................       22          11                                                          11           
Tempo..............................       22                                        11                            11           
Dominion (2).......................       16           8                                                           8           
USSB...............................       16                     5         3                   8                               
Unassigned.........................        8           2                                                 5         1           
                                                      --        --        --        --        --        --        --        -- 
                                         ---                                                                                   
    Totals.........................      256          32        32        32        32        32        32        32        32 
                                                      --        --        --        --        --        --        --        -- 
                                                      --        --        --        --        --        --        --        -- 
                                         ---                                                                                   
                                         ---                                                                                   

------------------------                                                        
(1) Includes one frequency at 110 DEG. WL, 10 frequencies at 119 DEG. WL and  11
    frequencies  at 175 DEG. WL  as a result of  EchoStar's December 1994 merger
    with DirectSat.  Excludes the  five frequencies  at 119  DEG. WL  for  which
    EchoStar  has an STA.  Also includes 11  frequencies at 61.5  DEG. WL and 11
    frequencies at  175  DEG. WL  controlled  by  DBSC. EchoStar  has  filed  an
    application requesting FCC approval for the merger of DBSC with a subsidiary
    of  EchoStar. In January 1996,  EchoStar entered the winning  bid in the FCC
    Auction for  24  frequencies  at  148 DEG.  WL.  See  "Prospectus  Summary--

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    Recent Developments." EchoStar believes it will be assigned an additional 10
    frequencies  at 175  DEG. WL and  one frequency at  166 DEG. WL,  if the FCC
    finds that EchoStar has a firm satellite construction contract, but there is
    no assurance in this regard. EchoStar has not yet developed a business  plan
    for  the 175 DEG. WL orbital slot,  which has limited utility for service to
the continental U.S.                                                    

(2) Dominion  has  appealed  the  FCC's  decision  refusing  to  reconsider  the
    cancellation  of Dominion's  claim to eight  frequencies at the  119 DEG. WL
    orbital slot. In  the event  Dominion's FCC appeal  is successful,  Dominion
would forego any rights to frequencies at 61.5 DEG. WL.                 

    In  the event  EchoStar is unable  to raise  substantial additional capital,
EchoStar may not be able to retain  all of the licenses or construction  permits
granted  to it by  the FCC. There  can be no  assurances that additional capital
will be available, or if available that it will be available on terms  favorable
to EchoStar.                                                                    

    As  of  the  date  of  this  Prospectus,  only  EchoStar  and  DirecTv  have
authorizations for  more than  11  frequencies in  the strategic  U.S.  licensed
orbital  slots which provide  for full CONUS  coverage. In the  FCC Auction, MCI
entered the winning bid to  acquire the permit for 28  of 32 frequencies at  the
110  DEG. WL orbital  slot. Issuance of  the permit is  subject to FCC approval.
EchoStar presently expects that MCI will be able to offer DBS services from this
slot  within   approximately   two  years   or   possibly  sooner.   See   "Risk
Factors--Competitive   Nature   of   the   Industry"   and   "--Competition--DBS
Industry--Other DBS Operators."                                                 

    Programming for DBS is generally available from the majority of  programmers
on  the same terms as are offered to  cable operators. The Cable Act, subject to
certain  exceptions,  requires  programmers   controlled  by  integrated   cable
companies  to offer programming  to all potential buyers  on fair and reasonable
terms. Additionally, although  not required  by law,  in EchoStar's  experience,
substantially all unaffiliated programmers have made their programming available
on  fair and reasonable terms. Pay-per-view  programming has also generally been
made available to DBS providers on  substantially the same terms and  conditions
as are available to cable operators. See "Risk Factors--Risks of Adverse Effects
of Government Regulation."                                                      

    As  of June 10, 1996, EchoStar  had approximately 50,000 subscribers to DISH
Network-SM- programming.                                                        

C-BAND/DTH INDUSTRY                                                             

    The DTH  industry  provides  satellite  television  products  and  services,
including  hardware and software  for the reception  and decryption of satellite
television programming.  Currently, the  majority  of satellite  programming  is
transmitted  at the C-band radio frequency,  which typically requires dish sizes
ranging from six  to 12 feet  in diameter, depending  upon geographic  location.
This   large  dish  compensates  for  a  relatively  low  (under  20  Watts  per
transponder) power signal. As  of December 31,  1995, approximately 4.2  million
C-band  systems had been sold  in the United States at  an average price of over
$2,000.                                                                         

THE MARKET                                                                      
GENERAL                                                                         

    EchoStar believes that there  is a significant  unsatisfied demand for  high
quality,  reasonably  priced television  programming and  that the  domestic and
international markets  for satellite  products  and services  are growing  as  a
result  of  the  following  continuing  fundamental  characteristics:  (i) cable
infrastructure is either weak or non-existent in many domestic and international
areas; (ii)  a  high  percentage  of  current  pay  television  subscribers  are
dissatisfied  with their current programming  choices, service or pricing; (iii)
distribution of television programming  to national, regional and  international
audiences  is increasing;  and (iv)  technological advancements,  such as higher
powered satellites and digital compression, have continued. Although many  cable
operators are expected to commit significant capital to upgrade their systems to
a competitive digital configuration, EchoStar believes that cable operators will
focus   upgrades  on  the  nation's  top  twenty  to  fifty  television  markets

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and will  largely ignore  the rural  areas which  are among  EchoStar's  primary
target  markets. Although EchoStar believes major upgrade programs will occur in
the top television  markets, many  of those markets  have a  divergent group  of
cable  operators  with  varying strategic  initiatives.  EchoStar  believes this
fragmentation will work in EchoStar's favor as it attempts to gain market  share
in  these  areas.  Additionally,  to match  the  digital  offerings  expected by
EchoStar, cable operators  or customers  must make  an investment  in a  digital
receiver similar to the receiver to be offered by EchoStar.                     

    EchoStar  believes that the demand for  satellite television services in the
U.S. has grown and will continue to grow and that the DISH Network-SM-  provides
the  most attractive alternative to cable. While the high-power DBS share of the
U.S. television  market  is currently  small  compared  to cable,  it  has  been
steadily  increasing.  Industry studies  indicate that  a substantial  number of
consumers are dissatisfied with cable television, that former cable  subscribers
who  subscribe  to a  DBS system  are more  satisfied with  it than  cable. This
research also indicates that the most  likely DBS customers are homeowners  with
families  who currently have or have had  cable, subscribed to the premium cable
channels and consider television a significant component of their  entertainment
activities.  EchoStar  believes,  based  on this  research,  that  the following
factors will contribute to the market growth of the DISH Network-SM-.           

    DEMAND FOR MORE CHOICE IN TELEVISION PROGRAMMING AND BETTER QUALITY  PICTURE
AND  SOUND. Prior to the growth of cable television services, television viewers
were offered a relatively limited number of channels. As the number of  channels
increased, consumer demand for more programming choices also increased. EchoStar
expects  this  trend will  continue  and that  consumers  will desire  even more
programming  choices  than  are  available  through  cable.  EchoStar   believes
consumers  are also increasingly demanding  improved picture quality compared to
what has historically been offered by over-the-air VHF and UHF broadcasters  and
by  cable. EchoStar believes that the  EchoStar DBS System is well-positioned to
benefit from these growing demands.                                             

    WEAK CABLE INFRASTRUCTURE.  There are many rural areas of the United  States
with  either limited capacity  of less than  39 channels or  no cable television
availability. Of the approximately  11,000 cable systems  in the United  States,
many are located in rural areas outside significant population centers. The cost
to  upgrade these systems would be  significant and, in many cases, economically
unfeasible in  a  competitive  environment.  Since DTH  satellite  is  the  most
economical  way  to  deliver  programming, EchoStar  believes  that  rural areas
provide a prime market for its satellite television products and services.      

    DISSATISFIED CABLE SUBSCRIBERS.  EchoStar believes that a substantial number
of current cable subscribers  are dissatisfied with the  quality of picture  and
sound,  limited channel  capability, complicated  multi-tier packaging,  cost of
service, and level of customer service provided by their cable systems. Industry
research has indicated that  the number of  cable subscribers dissatisfied  with
cable  television is significant. EchoStar believes that those cable subscribers
represent a substantial market opportunity and will potentially be attracted  to
its DBS service.                                                                

    INCREASED  DISTRIBUTION OF  TELEVISION PROGRAMMING.   The  global television
market is  experiencing significant  growth,  both in  terms  of the  number  of
broadcasters  creating  programming  and  the number  of  channels  available to
viewers.  Within  the  United  States,  the  number  of  television  programming
providers  grew from  three in  1970 to in  excess of  200 currently. Similarly,
deregulation in  other countries  has  fostered the  entry  into the  market  of
additional  television  broadcasters.  The  number  of  television  channels and
viewing alternatives available to United  States and international audiences  is
expected to continue to grow dramatically.                                      

    EchoStar  believes that  national broadcasters  and other  service providers
will expand  their use  of  satellites to  distribute programming  to  national,
regional  and  international  audiences.  Major  United  States  programmers are
undertaking efforts to transition from their current limited international roles
to  global  entertainment  providers.   In  addition,  EchoStar  believes   that
international  broadcasters will  expand their  use of  satellites to distribute
programming to domestic audiences of similar                                    

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ethnic, linguistic  or  cultural heritage,  a  cornerstone of  EchoStar's  niche
programming   strategy.  This  programming  is  provided  more  economically  by
utilizing satellite  television  systems  rather  than  local  cable  and  other
programming delivery systems.                                                   

    Likewise,  consumer demand for additional  programming choices has increased
as the availability of channels has increased. EchoStar believes that this trend
will continue  and consumers  will demand  more programming  choices than  those
offered by their cable systems.                                                 

    CONTINUING  TECHNOLOGICAL ADVANCEMENTS.   Recent technological advancements,
such as the advent of high powered satellites (which made possible the reduction
in the size  of satellite  dishes) and  the development  of digital  compression
technology, have increased signal transmission capacity and lowered costs.      

THE MARKET FOR DBS                                                              

    EchoStar  believes that the potential United  States DBS market includes the
approximately  96  million  households  with  television  sets,  together   with
approximately 8.0 million businesses, 4.8 million commercial trucks, 3.0 million
recreational vehicles and 200,000 schools, libraries and other institutions that
desire  access to  high quality  video, audio  and data  programming. Based upon
recent statistics approximately 64% of  the 96 million United States  households
with  television  sets  currently  pay for  programming.  Given  the anticipated
relative low  cost and  greater programming  choices of  EchoStar's DBS  service
compared  to  cable, EchoStar  believes  that it  will  be able  to successfully
penetrate its target markets.                                                   

    EchoStar also believes  that, as  a result of  the large  base of  potential
customers,  the EchoStar DBS System will be commercially viable even if only low
market penetration levels are achieved in any particular target market. EchoStar
has identified the  following specific  market segments as  primary targets  for
DBS:                                                                            

    NON-PASSED  HOUSEHOLDS.    One of  the  primary targets  for  EchoStar's DBS
services will be  United States  households with  television sets  that are  not
presently  passed by  cable --  a total  of approximately  11 million  homes. Of
these, in excess of  2 million are former  cable subscribers who have  relocated
and do not currently subscribe because cable is unavailable to them at their new
residences.  The subscribers who are unserved  by cable are generally located in
sparsely populated rural  and remote areas  beyond the economic  reach of  cable
systems.  These households  also include second  homes. This  market presents an
opportunity for DBS providers  because, unlike cable  service, the economics  of
delivering DBS service are not affected by population density or remoteness, and
the  same service can be provided to subscribers in such areas on the same basis
as  provided  in  densely  populated  urban  areas.  Although  C-band  satellite
television services are available throughout the country, EchoStar believes that
many  non-passed households  settle for local  broadcasting due to  the size and
cost of C-band  satellite dishes. EchoStar  believes that non-passed  households
will  respond favorably to the  availability of programming services, especially
to economically priced DBS services and reception equipment.                    

    HOUSEHOLDS PASSED BY CABLE.  EchoStar also intends to target the 85  million
households  that  are passed  by cable  television,  including the  20.4 million
households that are passed  by cable systems  offering limited channel  capacity
(less  than 39  channels). Although  programming offerings  of cable  systems in
major metropolitan  areas are  significant, most  cable systems  have a  typical
analog  capacity of 30 to 80 channels. In order to expand their capacity to that
to be offered  by the  DISH Network-SM-,  EchoStar believes  that cable  systems
would  have to  upgrade their  analog networks  to fiber-based  digital service.
Fiber upgrade implementation  is in progress  in a few  cable systems in  select
metropolitan  markets, with a resultant increase of channel capacity anticipated
to be available in five to ten years. Due to the substantial capital  investment
required  for  widescale  deployment  of  fiber-based  services,  several  cable
companies  have   pushed   back   originally-announced   deployment   schedules.

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EchoStar  believes that consumers will continue to demand the improved audio and
video quality, and expanded programming offerings, that are currently  available
with   DBS  technology,  but  not  available   from  over-the-air  VHF  and  UHF
broadcasters or from cable.                                                     

    INTERNATIONAL AND CULTURAL  MARKETS.   There are  approximately 8.0  million
households headed by persons of foreign nationality living in the United States,
encompassing  22.6 million  foreign born  persons living  in the  United States.
Generally, it  is  not cost  effective  for traditional  broadcasters  or  cable
companies  to  provide  targeted  programming to  these  households  due  to the
generally low number  of such niche  customers in any  particular local  market.
These   customers,   along  with   other   customers  interested   in  receiving
international and other cultural programming, will be an important target market
for EchoStar. EchoStar's incremental  cost to provide multicultural  programming
is  relatively insignificant given the ability of digital DBS service to utilize
a national delivery  system for  all mainstream  and multicultural  programming.
EchoStar believes that, by directly marketing international programming to these
customers, it will also sell more of its most popular programming.              

    MOBILE,  COMMERCIAL AND INSTITUTIONAL MARKETS.  Other target markets for DBS
services include  mobile, commercial  and institutional  markets. Already,  many
recreational  vehicle owners have purchased  C-band satellite dishes. Management
believes that lower equipment prices and the smaller dish size will attract many
more recreational  vehicle  owners  to  DBS  service,  similar  to  the  current
experience   in  Europe.   EchoStar  also  believes   that  businesses,  hotels,
restaurants, schools, libraries,  apartment buildings and  other commercial  and
institutional   organizations  will  purchase  EchoStar's  DBS  programming  and
equipment in order to receive educational, foreign language and niche video  and
audio programming. EchoStar also intends to market its DBS service to the marine
and other mobile markets requiring actuated systems.                            

    BUSINESS   COMMUNICATION  NETWORKS.     EchoStar  also   intends  to  target
professional  and  related  business  groups   as  potential  markets  for   its
programming  services. Such  groups include  multi-level marketing organizations
and legal, medical, accounting and real estate professionals, among others.     

CURRENT EXPERIENCE OF DIGITAL DTH OPERATORS                                     

    The digital  DTH satellite  business in  the United  States has  experienced
tremendous  consumer  acceptance. The  introduction of  DBS receivers  is widely
regarded as the most successful  introduction of a consumer electronics  product
in  U.S. history, surpassing the roll out of color televisions, VCRs and compact
disc players. During the 18 month period ended December 31, 1995,  approximately
2.2  million U.S.  households subscribed to  digital DTH  satellite service. DBS
providers have been successful penetrating households both passed and not passed
by  traditional  cable  operators.  According  to  one  DBS  service   provider,
approximately  50% of its subscribers are passed by traditional cable operators.
Approximately 50% of those were actually  subscribing to cable at the time  they
chose  to subscribe.  EchoStar has  also been  encouraged by  the willingness of
early  DBS  subscribers  to  pay  relatively  high  monthly  programming   fees.
Subscribers  are currently paying an average  of approximately $50 per month for
DBS programming, as  compared to  approximately $33  per month  for the  average
cable  subscription. According to  industry estimates, 85%  of all consumers are
satisfied with DBS  picture quality compared  to a consumer  acceptance rate  of
approximately 47% for cable.                                                    

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DBS AND RELATED SERVICES                                                        
PROGRAMMING                                                                     

    EchoStar  currently  offers over  100 channels  of  digital video  and audio
programming directly to its subscriber base  including, but not limited to,  the
following:                                                                      

EXPANDED BASIC CABLE CHANNELS                                                   

                                                                [Download Table]
                                                                                   
USA                       Original series, movies, high profile sports and animated
                          children's programming.                                  
TBS                       Movies, documentaries, comedies, children's shows and    
                          sports, including the NBA and Atlanta Braves baseball.   
TNT                       Classic and original movies, NFL and comprehensive NBA   
                          schedule.                                                
ESPN                      Wide variety of sports programming including the NFL, NHL
                          and MLB.                                                 
CARTOON NETWORK           Programming from the Hanna Barbera cartoon library.      
NICKELODEON               Top rated children's programming.                        
A&E                       Cultural and entertainment programming.                  
LIFETIME                  Movies, specials and feature films targeted to women.    
CNN                       In-depth news and commentary.                            
THE DISCOVERY CHANNEL     Non-fiction entertainment and documentaries.             
THE FAMILY CHANNEL        Family-oriented entertainment.                           
MTV                       Music video and entertainment network.                   
SCI-FI CHANNEL            Science fiction, fantasy, classic horror and factual     
                          science programming.                                     
THE LEARNING CHANNEL      Diverse mix of how-to, cooking, science, history and     
                          educational shows.                                       
CNBC                      Late breaking market news and personal finance           
                          information.                                             
COURT TV                  News from courtrooms around the world.                   
C-SPAN                    Coverage of U.S. congressional events and public affairs.
ESPN2                     Differentiated sports programming targeting younger      
                          viewers, including the NHL.                              
HEADLINE NEWS             Concise, fast-paced 30 minute news updates.              
CNN FN                    Comprehensive business and financial news.               
CNN INTERNATIONAL         International news, sports and weather.                  
TURNER CLASSIC MOVIES     Movies, special features and entertainment.              
E!                        Programming from the world of celebrities and            
                          entertainment.                                           
THE WEATHER CHANNEL       Local, national and international weather.               
THE TRAVEL CHANNEL        Video visits and travel information and advice.          
VH-1                      Music videos for adults and cultural programming.        
COUNTRY MUSIC TELEVISION  Contemporary country music hits.                         
EWTN                      Continuous family-oriented and religious programming.    

PREMIUM CHANNELS                                                                   
DISNEY CHANNEL*           Animated Disney classics, original series, entertainment 
                          specials and movies.                                     
HBO                       Five channels of first run movies including award winning
                          originals, high profile sports and special events and    
                          concerts.                                                
CINEMAX                   Three channels of popular movies.                        
SHOWTIME                  Three channels of first run and original movies.         
THE MOVIE CHANNEL         Two channels of first run movies.                        

------------------------                                                        
* Included  in all DISH Network-SM- programming packages which include America's
Top 40-SM-.                                                                 

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    EchoStar offers a variety of value oriented programming packages. EchoStar's
America's  Top 40-SM-  programming package is  priced at $19.99  per month. This
service level  will include  news, sports,  general entertainment,  movies,  and
family  programming, including The Disney  Channel-Registered Trademark-, and is
attractively priced in  relation to  its competition. For  price points  ranging
from  $29.99  to $39.99  per  month, EchoStar  offers  its America's  Top 40-SM-
package   with   one   or   more   multiplexed   premium   services   such    as
HBO-Registered    Trademark-,    Cinemax-Registered   Trademark-,    The   Movie
Channel-Registered Trademark-  and  Showtime-Registered  Trademark-.  Additional
packages   and  combinations  include  superstations,  network  programming  and
regional sports  offerings.  EchoStar plans  to  package its  EchoStar  Receiver
System  and programming and  offer discounts to  customers who purchase packages
during certain promotions.                                                      

    To subscribe  to the  full complement  of services  offered by  current  DBS
service  providers, including DirecTv and USSB,  a consumer would be required to
pay approximately  $65 per  month. DirecTv  predominately markets  a package  of
services available at a price point of $29.95 per month, although other packages
are  available, including a more limited selection of "basic cable" channels for
$19.95. USSB predominately markets  a tier of popular  basic services for  $7.95
per  month and premium service packages ranging from $10.95 to $34.95 per month.
EchoStar's America's  Top  40-SM-  programming  package  includes  the  best  of
DirecTv's and USSB's basic programming, plus The Disney                         
Channel-Registered  Trademark-,  for less  than $20  per month.  EchoStar offers
comparable  programming  for  less  than  $50  per  month.  In  addition,   DISH
Network-SM- subscribers receive a single bill for all programming services while
subscribers  to DirecTv  and USSB receive  two bills.  Currently, DirecTv offers
subscribers the NFL Sunday  Ticket-TM- and USSB  offers Flix-TM-, both  channels
which  are  available to  those  service providers  on  an exclusive  basis. The
suggested retail price to the consumer of satellite receiver systems offered  by
EchoStar  and  DirecTv  generally  are  comparable.  See  "--  EchoStar Receiver
Systems."                                                                       

    EchoStar's program offerings also include additional channels with  regional
sports,  niche  programming,  educational  and  cultural  programming,  shopping
services, pay-per-view options and  certain subscriber selected programming.  In
addition  to  these  offerings,  The  DISH  Network-SM-  service  includes:  (i)
"Superstations," such as KTLA, WGN and WPIX; and (ii) network feeds of ABC,  NBC
and  CBS from various time  zones plus Fox and PBS.  With the launch of EchoStar
II, EchoStar expects to further expand its DISH Network-SM- program offerings to
include: (i) additional multiplexed  premium services; (ii) additional  regional
sports   services;  (iii)  expanded  pay-per-view  options;  (iv)  out-of-market
professional and  college sports  programming; (v)  international programs;  and
(vi)  niche programming, including business  programming. EchoStar is finalizing
agreements with major  production studios, including  Disney, Paramount,  Warner
Brothers,  Columbia TriStar, Sony and Universal Studios, to provide pay-per-view
movies and events. EchoStar has  dedicated six channels for pay-per-view  movies
on  EchoStar I, and expects  to expand to 20 to  40 channels upon the successful
deployment of EchoStar II.  Pay-per-view options may  include first run  movies,
live  sporting and entertainment events.  These video offerings are complemented
with compact disc quality audio programming provided by Muzak as well as library
and other data services, such as financial and weather information.             

ECHOSTAR RECEIVER SYSTEMS                                                       

    DISH Network-SM- programming is available to any subscriber who purchases or
leases an EchoStar Receiver System. A typical EchoStar Receiver System  includes
an  18-inch satellite receiver dish, a receiver, which processes and descrambles
signals for television  viewing, a  remote control and  related components.  The
EchoStar  Receiver System is also fully compatible with local broadcast signals.
The EchoStar Receiver System  is generally available in  a standard and  premium
model.  The premium model includes a  universal UHF remote, an expanded favorite
channel list and  a high  speed data  port, all  features not  available on  the
standard model.                                                                 

    Households  can receive local  broadcast signals, either  through a standard
television antenna (a traditional rooftop or set-top antenna) or by  subscribing
to  basic cable and  can also switch  between DBS signals  and local programming
signals   using    the   remote    control.    According   to    the    industry

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research,   approximately  76%   of  DBS  households   currently  receive  local
programming signals from standard television  antennas. Following the launch  of
EchoStar  II, EchoStar also expects to make  available a system that will permit
subscribers to watch different channels on multiple televisions  simultaneously.
The  suggested retail price for an EchoStar Receiver System is currently between
$499 and $599,  depending on  the model  selected, among  other factors.  Dealer
incentives  and EchoStar sponsored  promotions may reduce the  actual cost of an
EchoStar Receiver System below the  suggested retail price. The initial  capital
cost  required to receive DISH Network-SM- programming may reduce the demand for
EchoStar Receiver Systems,  since EchoStar Receiver  Systems must be  purchased,
while  cable  and  certain  of  EchoStar's  satellite  competitors  lease  their
equipment to the consumer with little if any initial hardware payment  required.
EchoStar  is currently test marketing a special promotion in a limited number of
markets pursuant to which customers are  able to purchase a discounted  package,
including  an annual  programming package for  $300 (which is  comparable to the
price for a  similar package  of cable  programming), and  an EchoStar  Receiver
System for $199. EchoStar believes the suggested retail price of a DSS satellite
receiver  system for DirecTv programming is currently between approximately $499
and $799, although  special dealer  incentives and promotions  may decrease  the
cost to the customer. Both service providers currently offer system financing to
the consumer.                                                                   

    Authorization  information for  subscription programming  is expected  to be
stored on microchips placed  on a credit card-sized  access, or smart card.  The
smart  card, which can easily  be updated or replaced  periodically at low cost,
provides a simple and effective method to authorize and deauthorize subscription
programming. If  the  receiver's  smart  card is  authorized  for  a  particular
channel,  the data is decrypted and passed on for audio and video decompression.
After decompression, the digital audio  and video are reconstructed into  analog
format for display on a standard television set.                                

    The  EchoStar  DBS System  integrates  a number  of  technological advances,
including digital audio and video compression. The combination of these elements
in the EchoStar DBS System is  intended to provide the consumer with  affordable
access  to a  broad spectrum of  entertainment and  informational products, home
shopping and similar services, educational services and databases.              

    EchoStar does not  manufacture EchoStar Receiver  Systems directly.  Instead
EchoStar  has contracted for  the manufacture of  EchoStar Receiver Systems with
high-volume  contract  electronics  manufacturers.  EchoStar  has  entered  into
agreements  with SCI and Sagem to manufacture MPEG-2 DBS receivers in quantities
which EchoStar believes will be adequate to meet anticipated demand during 1996.
EchoStar is also in  negotiations with several  brand name consumer  electronics
manufacturers to produce receivers for use with the DISH Network.               

    EchoStar also acted as an agent for the sale of DBS programming offered by a
current  DBS  competitor through  the  end of  1995.  EchoStar will  continue to
distribute satellite  receivers manufactured  for that  competitor's DBS  system
("Competitor DBS Receivers") in 18 states until all current inventory is sold or
returned.                                                                       

FINANCING                                                                       

    EchoStar offers consumers the opportunity to lease or finance their EchoStar
Receiver Systems, including installation costs and certain programming packages,
on competitive terms. EchoStar has agreements with major consumer finance groups
to  make consumer credit available to EchoStar customers. All EchoStar financing
is provided by third  parties and is generally  non-recourse to EchoStar.  Under
EchoStar's  revolving charge plan,  customers are issued  a DISHTM private label
credit card allowing them to increase service levels at any time.               

INSTALLATION                                                                    

    During  1994,  EchoStar  began  increasing  its  presence  in  the  DTH  and
commercial  satellite receiver installation business. Approximately 35 employees
were hired  during 1995,  and  more are  expected to  be  hired during  1996  if
anticipated  demand  for dependable  high  volume DTH  and  commercial satellite
installations materializes, and  the number of  experienced satellite  retailers
continues  to decline. By offering local  satellite retailers the opportunity to
become associated with a nationwide installation group,                         

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EchoStar intends to make installation business available to retailers that  they
would not otherwise have the ability to obtain. Similarly, based on its industry
strength,  EchoStar expects  that businesses with  nationwide installation needs
will select EchoStar for installation services.                                 

OTHER COMPONENTS                                                                

    SUBSCRIBER MANAGEMENT.  EchoStar  has entered into  an agreement with  Cable
Services  Group,  Inc. ("CSG")  to  provide subscriber  management,  billing and
remittance services for  Dish Network-SM-  subscribers. Under the  terms of  the
agreement,  EchoStar is  also provided  with access  to a  subscriber management
system maintained  by  CSG which  facilitates  the authorization  of  particular
programming  and the issuance  of updated access  cards, and coordinates billing
and renewal functions.                                                          

    CUSTOMER CARE CALL CENTER.  EchoStar has entered into an agreement with  EDS
to  provide customer call  center operations. These  operations complement those
currently  managed  by  EchoStar,  while  greatly  expanding  service  capacity.
Potential  and existing  subscribers can call  a single phone  number to receive
assistance for hardware, programming, installation or service.                  

    DIGITAL BROADCAST  CENTER.   The first  step in  the delivery  of  satellite
programming  to the customer is the uplink of that programming to the satellite.
Uplink is the process by which signals are received from either the  programming
originator  or  distributor and  transmitted to  a satellite.  EchoStar recently
constructed a  digital  broadcast  center  in  Cheyenne,  Wyoming  that  uplinks
programming  to  EchoStar's satellites.  The  digital broadcast  center contains
fiber optic lines and downlink antennas to receive programming and other data at
the center, as well  as a number  of large uplink  antennas and other  equipment
necessary  to  modulate and  demodulate the  programming  and data  signals. The
compression and encryption of the programming signals will also be done at  this
center.                                                                         

    The  real estate  underlying the  digital broadcast  center was  deeded to a
subsidiary of EchoStar by a  quasi-governmental economic development entity  for
nominal consideration.                                                          

    CONDITIONAL  ACCESS SYSTEM.  EchoStar has  contracted with Nagra Plus, SA to
provide access control systems, as well  as smart cards used with each  EchoStar
Receiver  System necessary to receive the authorization code. The access control
system is central to the security network that prevents unauthorized viewing  of
programming.  In  the event  the  equipment or  access  control systems  fail to
perform as intended, EchoStar's plan of operations would be adversely  affected.
EchoStar  believes  the  vendor  it  has chosen  is  highly  qualified,  and has
confidence that the access control  system will adequately prevent  unauthorized
access  to  programming.  Further,  the  receiver  has  been  designed  with the
flexibility to completely  change the access  control system in  the event of  a
security  breach. However, the technology is still relatively new and success is
not an absolute certainty. In  the event that such  systems or products fail  to
operate  as intended,  EchoStar's business  would be  adversely affected  if the
vendors could not rapidly implement corrective measures.                        

    COMPRESSION SYSTEM.  EchoStar  has entered into  an agreement with  DiviCom,
Inc.  to provide the  necessary equipment to digitize,  compress and encrypt the
analog signals  transmitted  by  programmers  to  EchoStar's  digital  broadcast
center.  Digitized signals  are then  multiplexed and  modulated into  an MPEG-2
transport stream for transmission to EchoStar's satellites. Once a customer  has
ordered  programming from EchoStar, an authorization  code is transmitted to the
customer's satellite receiver, allowing the customer to receive the  programming
within seconds after placing the order.                                         

    TRACKING,  TELEMETRY  AND  CONTROL  OF  SATELLITES  AFTER  LAUNCH.    Once a
satellite is placed at  its orbital location, ground  stations control it  until
the  end of its in-orbit  lifetime. EchoStar has entered  into an agreement with
AT&T to  provide TT&C  services with  respect  to EchoStar  I and  EchoStar  II,
including  orbital analysis and satellite  engineering. The agreement terminates
upon the later to occur of  December 31, 2005 or the  end of the useful life  of
EchoStar  II.  The  agreement limits  the  liability  of AT&T  in  the  event it
negligently performs its  services under the  agreement or otherwise  terminates
the  agreement prior  to the expiration  of its  term. It is  expected that such
risks will be covered by in-orbit insurance; however, no assurances can be given
that such insurance can be obtained on commercially reasonable terms.           

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    While TT&C services have not yet been procured for EchoStar III or  EchoStar
IV,  EchoStar believes that these services can  be timely obtained from a number
of vendors.                                                                     

DBS AND OTHER PERMITS                                                           

    EchoStar's subsidiaries have been  assigned 21 DBS  frequencies at 119  DEG.
WL,  one  of the  three  U.S. licensed  orbital  slots that  provide  full CONUS
coverage.  Of  these  frequencies,  eleven   are  held  by  EchoStar   Satellite
Corporation  ("ESC").  Eleven  of the  16  transponders  on EchoStar  I  will be
utilized to operate those frequencies. Ten frequencies were acquired as a result
of  a  merger  between  DirectSat  and  a  subsidiary  of  EchoStar,  which  was
consummated  in December  1994. Ten of  the sixteen transponders  on EchoStar II
will be  utilized  to  operate  these frequencies.  In  addition,  EchoStar  has
received  an  STA  from  the  FCC  to  operate  the  remaining  five frequencies
(approximately 30 additional  video channels  for a total  of approximately  100
video  channels) on EchoStar I. The STA expires August 31, 1996 unless extended.
There can  be  no assurance  that  EchoStar will  be  permitted to  operate  the
additional five transponders after that period.                                 

    In  addition to its frequencies at 119  DEG. WL, DirectSat has been assigned
11 frequencies at 175 DEG. WL, and EchoStar expects to be assigned an additional
ten frequencies  at 175  DEG. WL  provided the  FCC finds  that ESC  has a  firm
contract for the construction of a satellite at this orbital slot, but there can
be  no assurance  in this regard.  While a firm  business plan has  not yet been
finalized, these frequencies could be used  to provide a high power DBS  service
to  the  Western  continental  U.S.,  Hawaii  and  Alaska,  and  could  also  be
potentially valuable as  a link  for the  provision of  programming between  the
United States and the Pacific Rim, if FCC and ITU coordination can be arranged. 

    EchoStar currently owns approximately 40% of the outstanding common stock of
DBSC,  which  holds a  conditional  satellite construction  permit  and specific
orbital slot assignments for eleven DBS frequencies at each of 61.5 DEG. WL  and
175  DEG. WL.  EchoStar expects  to acquire  100% of  DBSC pursuant  to the DBSC
Merger. The DBSC Merger has been  approved by DBSC's shareholders. FCC  Approval
of  the DBSC Merger is also required, and has been applied for. The deadline for
filing oppositions to the DBSC Merger with the FCC was March 15, 1996.  EchoStar
is  aware of only one opposition, which  was filed by the CPT. EchoStar believes
that the  FCC has  previously  considered and  rejected  issues similar  to  the
arguments  raised by  CPT and  that the  filing of  the CPT  opposition does not
materially decrease the likelihood that the FCC will approve the DBSC Merger.   

    Assuming FCC approval and  consummation of the  Merger, EchoStar will  hold,
through  its DBSC subsidiary,  the construction permit  and slot assignments for
these frequencies. In connection with the DBSC Merger, EchoStar expects to issue
approximately 658,000 shares of its Class A Common Stock to DBSC shareholders in
exchange for all of the DBSC stock that it does not already own.                

    ESC's,  DirectSat's  and  DBSC's  permits  are  subject  to  continuing  due
diligence  requirements imposed by the  FCC. See "--Governmental Regulation--FCC
Permits and Licenses." Each company's  applications to extend their DBS  permits
have  been conditionally approved by the FCC  and are subject to further FCC and
appellate review, but there can be no  assurance that the FCC will determine  in
the  future that  ESC, DirectSat  or DBSC have  complied with  the due diligence
requirements. Failure to comply with due diligence requirements could result  in
the revocation of DBS permits.                                                  

    During  January 1996,  the FCC  held an  auction for  28 frequencies  at the
110 DEG. WL orbital slot and 24 frequencies at the 148 DEG. WL orbital slot.  At
the FCC Auction, EchoStar entered the high bid of $52.3 million to acquire a DBS
construction  permit for the  use of 24  frequencies at the  148 DEG. WL orbital
slot. To participate  in the FCC  Auction, EchoStar deposited  $12 million  with
FCC. If the construction permit is granted, EchoStar will be required to pay the
remainder  of the purchase price for the 148 DEG. WL orbital slot. EchoStar will
be required to complete construction of that satellite within four years of  the
permit  grant, and the  satellite must be  in operation within  six years of the
grant.                                                                          

    EchoStar has an application pending before the FCC for a two satellite  U.S.
FSS  Ka-band  system  and a  two  satellite extended  Ku-band  satellite system.
EchoStar has been granted a license for a two                                   

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satellite FSS  Ku-band  system,  which  is conditioned  on  EchoStar  making  an
additional  financial showing. There  can be no assurance  the FCC will consider
EchoStar's additional showing to  be adequate. If  the pending applications  are
granted, and EchoStar successfully constructs and launches FSS, extended Ku-band
and  Ka-band satellites, those  satellites might be  used to complement EchoStar
DBS System programming, or for a variety of other uses. It is possible that  the
unique  FSS  Ku-band and  Ka-band orbital  locations  requested by  EchoStar and
others could permit construction  of satellites with  sufficient power to  allow
dish  sizes comparable to  DBS. All of these  projects are in  an early stage of
development and  there is  no  assurance that  EchoStar's applications  will  be
granted  by the FCC or that, if  granted, EchoStar will successfully exploit the
resulting business opportunities. All of these applications are currently  being
challenged by several companies with interests adverse to EchoStar's.           

    An 80% owned subsidiary of EchoStar has applied for construction permits and
authorizations  to operate  a six  satellite low  earth orbit  satellite system.
While primary applications for that system are unrelated to DBS, it is  possible
that  the system could serve as a  path for wireless communication with EchoStar
DBS customers,  particularly  for periodic  polling  of units  for  pay-per-view
purchases  and  relative rapid  feedback on  viewer  pay-per-view buy  rates and
preferences. This project is in  an early stage of  development and there is  no
assurance  that EchoStar's application  will be granted  by the FCC  or that, if
granted, EchoStar will successfully exploit the resulting business opportunity. 

THE SATELLITES                                                                  

    EchoStar I  and  EchoStar II  are  Martin Marietta  Series  7000  satellites
equipped   with  16  Ku-band  transponders,  each   with  130  Watts  of  power,
approximately eight times the power of typical C-band transponders. EchoStar III
is a Marietta Series 2100AX satellite  equipped with 3,840 Watts of power  which
can  be divided among  16 to 32  Ku-band transponders. Each  transponder will be
capable of handling analog video channels  or multiple digital video, audio  and
data  channels. The  satellites have a  minimum design  life of 12  years and an
estimated orbital life of 15 years or more if optimally deployed. The  Satellite
Contracts provide for the construction and delivery of multiple high powered DBS
satellites and related services.                                                

    All  pre-launch payments due  to Martin Marietta with  respect to EchoStar I
and EchoStar II  were made. The  remainder of the  aggregate purchase price  for
each  satellite is required to be paid, with  interest at the prime rate, over a
period of  five years  after the  delivery  and launch  of each  satellite  (the
"Deferred  Payments"); provided, however, if EchoStar  II is not launched within
180 days  after delivery  by Martin  Marietta, EchoStar  is required  under  the
Satellite  Contracts to begin making the  Deferred Payments. The majority of the
purchase price  for EchoStar  III is  required to  be paid  in monthly  payments
during  construction. Deferred Payments in an  amount approximately equal to 20%
of the aggregate  Deferred Payments  for EchoStar I  and EchoStar  II, are  also
available for EchoStar III on similar terms.                                    

    The  contracts  for  construction for  EchoStar  I and  EchoStar  II contain
clauses providing for  penalties for  late delivery  by Martin  Marietta of  the
satellites.  EchoStar  is  currently  negotiating  the  contract  provisions  to
determine what, if any, penalties will be  paid by Martin Marietta for any  late
delivery.                                                                       

    Except  under  limited circumstances,  Martin  Marietta generally  owns each
satellite it  constructs for  EchoStar, and  the components  thereof, until  the
launch  of each satellite. As security for  the portion of the Deferred Payments
due to Martin Marietta with  respect to EchoStar I  and EchoStar II, Dish,  Ltd.
has:  (i) granted  to Martin Marietta  a security interest  in substantially all
assets of  Dish,  Ltd.  and  its  subsidiaries, other  than  the  stock  of  the
subsidiaries  and proceeds derived from the  sale of the 1994 Notes, subordinate
to the first security interest in the assets of ESC granted to the Trustee under
the 1994  Indenture, and  to the  liens  granted to  any commercial  bank  which
provides  a revolving credit  facility to Dish, Ltd.,  except that such security
interest ranks  pari passu  with the  security  interest in  the assets  of  ESC
granted  for the benefit of the holders of  the 1994 Notes with respect to $30.0
million  of  the  Deferred  Payments;  and  (ii)  caused  Dish,  Ltd.  and   its
subsidiaries  to guarantee payment  in full of  the Deferred Payments. Following
any default on the Deferred Payments, Martin Marietta is                        

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prohibited from realizing on any of the collateral for a period of at least five
years following consummation of  the 1994 Notes Offering,  and in any event  for
180 days following such default. Martin Marietta also has a security interest in
certain  assets  of EchoStar's  subsidiaries other  than  ESC, which  lien ranks
senior to the lien on such assets granted for the benefit of the holders of  the
1994 Notes.                                                                     

    Thirty  days  prior to  launch, EchoStar  will also  be required  to provide
Martin Marietta with adequate security for the EchoStar III Deferred Payments.  

SATELLITE LAUNCHES                                                              

    EchoStar has entered into a contract  for Arianespace to launch EchoStar  II
from  Korou, French Guiana  in September 1996  (the "Arianespace Contract"). The
Arianespace Contract  also provides  the potential  for the  EchoStar launch  to
occur  during  August  1996 if  earlier  scheduled launches  are  accelerated or
delayed. The Arianespace Contract contains provisions entitling either party  to
delay  the launch in limited circumstances,  subject to the payment of penalties
in some  cases.  Pursuant to  the  Arianespace Contract,  as  of June  7,  1996,
EchoStar has paid approximately $43.4 million to Arianespace.                   

    EchoStar has the right, in its sole discretion, to terminate the Arianespace
Contract  at  any  time  subject  to  forfeiture  of  certain  amounts  paid  to
Arianespace. In addition, EchoStar  has the right  to terminate the  Arianespace
Contract  and receive a  full refund of  all amounts paid  to Arianespace if the
total launch delays caused  by Arianespace exceed  certain periods specified  in
the Arianespace Contract.                                                       

    The  launch is nominally  scheduled to be performed  on a dedicated Ariane-4
launch vehicle.  Ariane  is  generally perceived  by  the  international  launch
insurance  community as being among the most reliable launch providers today and
the success  rate for  Ariane-4 launches  is higher  than industry  norms.  This
launch  vehicle has a success rate of  over 90%. The launch of Arianespace's new
Ariane-5 launch  vehicle, on  June 4,  1996, was  not successful.  The  Ariane-5
launch  vehicle  is significantly  different than  the Ariane-4  launch vehicle.
Although the  specific  cause  of  the Ariane-5  launch  failure  has  not  been
determined,  if  it  is  determined  that the  launch  failure  is  unrelated to
Ariane-4, EchoStar does  not believe  that the  launch failure  of the  Ariane-5
launch  vehicle will delay  the launch of EchoStar  II. However, any significant
delay in the launch of EchoStar II would have an adverse affect on EchoStar.    

    EchoStar II was originally schedule to be launched by Great Wall. EchoStar I
was successfully launched by  Great Wall in December  1995. The total price  for
the Great Wall launch was approximately 60% of the Ariane launch price. Payments
will  be due monthly, and in contrast to  the Great Wall launch, all payments to
Ariane will be due prior to the launch date.                                    

    EchoStar notified Great  Wall of  its decision  to terminate  the launch  of
EchoStar  II with  Great Wall.  EchoStar applied  $15.0 million  previously paid
Great Wall in connection with this launch to the final $15.0 million owed  Great
Wall  related to  the launch  of EchoStar  I. In  May 1996,  EchoStar received a
refund of the remaining  $4.5 million previously paid  Great Wall in  connection
with the second launch.                                                         

    EchoStar  has entered into a contract  for launch services with Lockheed for
the launch of EchoStar III from  Cape Canaveral Air Station, Florida during  the
period  of  September  1997  through  November  of  1997,  subject  to  delay or
acceleration in certain  circumstances (the "Lockheed  Contract"). The  Lockheed
Contract  provides for  launch of the  satellite utilizing an  Atlas IIAS launch
vehicle. As of  June 7,  1996, EchoStar  has made  the initial  payment of  $5.0
million  and the remaining  price is payable in  installments in accordance with
the payment schedule set  forth in the Lockheed  Contract. Under that  schedule,
substantially all of the price is required to be paid before the launch.        

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    EchoStar  has the right,  in its sole discretion,  to terminate the Lockheed
Contract at any time subject to forfeiture of certain amounts paid to  Lockheed.
In addition, EchoStar has a right to terminate the Lockheed Contract and receive
a  full  refund for  all amounts  paid to  Lockheed if  the total  launch delays
(except certain excusable delays) caused by Lockheed exceed 12 months.          

    EchoStar has contracted with LKE for  the launch of an additional  satellite
during  1998 from the Kazakh  Republic, a territory of  the former Soviet Union,
utilizing a  Proton launch  vehicle. Either  party may  request a  delay in  the
relevant  launch period, subject to the payment of penalties based on the length
of the delay and the proximity of the request to the launch date.               

    EchoStar has  the  right, in  its  sole  discretion, to  terminate  the  LKE
Contract  at any time, subject to the forfeiture of certain amounts paid to LKE.
In addition, EchoStar has the right to terminate the LKE Contract and receive  a
full  refund of all amounts paid to LKE in certain circumstances, including: (i)
a launch delay caused by LKE which exceeds nine months from the last day of  the
original  launch period; (ii) an  increase in the price  or change in payment or
other terms necessitated  by compliance  with, or implementation  of, the  trade
agreement  between the United  States and Russia;  (iii) EchoStar's inability to
obtain necessary export licenses;  (iv) the failure  of Proton launch  vehicles;
and  (v)  EchoStar's  inability  to  procure  launch  insurance  on commercially
reasonable terms. In the event termination of the LKE Contract is caused by  the
failure  of Proton launch vehicles, however, LKE  would be entitled to retain up
to $15.0 million, depending  on the number and  proximity of Proton failures  to
EchoStar's scheduled launch.                                                    

    EchoStar expects to launch on a Proton D-le four stage launch vehicle. Astra
1F,  the first commercial launch on a  Proton D-le, was successfully launched on
March 27, 1996. LKE currently has contracts providing for the launch of at least
five non-EchoStar western satellites through 1997.                              

INSURANCE                                                                       

    Under the terms of the Satellite  Contracts, Martin Marietta bears the  risk
of  loss of the EchoStar satellites during  the construction phase up to launch.
At launch, title and  risk of loss  pass to EchoStar, at  which time the  launch
insurance  becomes operative. EchoStar contracted  for launch insurance coverage
for each of  EchoStar I and  EchoStar II in  the amount of  $219.3 million  and,
together  with the cash segregated and  reserved on its balance sheet, satisfied
its current insurance obligations under the  1994 Indenture. While there can  be
no  assurance, EchoStar believes its launch insurers will permit substitution of
Arianespace for Great Wall as the launch provider for EchoStar II.              

    Thirty days prior  to the  launch of EchoStar  II, EchoStar  is required  to
certify  to the Trustee under  the 1994 Indenture that  it has launch insurance,
cash and  cash equivalents  in  an amount  at least  equal  to one-half  of  the
accreted  value of the 1994  Notes then outstanding plus  the amount of Deferred
Payments with respect to the satellite.                                         

    The launch  insurance  policy  covers  the  period  between  launch  through
completion  of  testing and  commencement of  commercial operations.  The policy
protects against losses resulting from the failure of a satellite to achieve its
proper orbit  parameters  or  to  perform in  accordance  with  the  satellite's
operational  performance parameters.  The 1994 Indenture  also requires in-orbit
insurance to  be kept  in force  for EchoStar  I and  EchoStar II  in  specified
amounts.                                                                        

    The  launch insurance policy contains, and the insurance policy with respect
to in-orbit  operation is  expected to  contain, standard  commercial  satellite
insurance  provisions, including a material  change condition, that would result
in the cancellation of insurance or alter the effective rate depending upon  the
success  or failure of other launches  by Arianespace, and customary exclusions,
including for: (i) military or similar actions; (ii) laser, directed energy,  or
nuclear  anti-satellite  devices;  (iii)  insurrection  and  similar  acts; (iv)
governmental confiscation; (v) nuclear reaction or radiation contamination; (vi)
willful or  intentional acts  of  EchoStar or  its  contractors; (vii)  loss  of
market,  loss of revenue, extra  expenses, incidental and consequential damages;
and (viii) third-party claims against EchoStar.                                 

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    EchoStar has procured insurance for the  launch of EchoStar III or  EchoStar
IV.  The  1996  Indenture requires  EchoStar  to obtain  in-orbit  insurance for
EchoStar III, in an  amount equal to  the cost to  construct, launch and  insure
EchoStar  III (in the  case of in-orbit  insurance with a  deductible no greater
than 20%).                                                                      

OTHER PRODUCTS AND RELATED SERVICES                                             

    EchoStar currently offers a broad range of products, from approximately $250
DTH systems in Europe that can receive  signals from only one or two  co-located
satellites,  to  approximately  $3,000 systems  at  retail that  are  capable of
receiving signals from 20  or more satellites.  Principal product lines  include
EchoStar-Registered Trademark-, HTS Premier-TM- and HTS Tracker-TM- name brands,
with  good, better and best  options typically available for  each line and each
geographic  reception  area.  EchoStar  sold  approximately  462,000   satellite
receivers  worldwide  in 1995.  EchoStar's sales  of  DTH products  are somewhat
seasonal, with higher domestic sales normally  occurring in the late summer  and
fall  months in advance of increased consumer programming demand during the fall
and winter months.                                                              

DOMESTIC                                                                        

    Satellite retailers have historically  sold large C-band satellite  receiver
systems  to consumers  in rural areas  through store fronts  or small home-based
businesses. The decline in the number of conventional satellite retailers in the
United States,  which  form the  core  of EchoStar's  distribution  system,  was
significant  during 1995  and is  expected to  continue in  1996 as  a result of
competition from the sale  of DBS systems  through consumer electronic  outlets.
Those   satellite  retailers  which  are  not   marketing  DBS  systems  may  be
particularly vulnerable. However, new satellite retailers continue to enter  the
market, which partially offsets the decline.                                    

INTERNATIONAL                                                                   

    EchoStar's  international product  line includes  a broad  range of  DTH and
commercial satellite equipment and  accessories, including satellite  receivers,
integrated  receiver decoders, antennas, actuators, feeds and LNBs. During 1995,
the equipment was distributed, primarily with the EchoStar-Registered Trademark-
brand name,  through EchoStar's  distribution centers.  EchoStar's products  are
tailored  to each country's standard  television formats. In addition, on-screen
instructions  and  pre-programmed  channels  are  available  in  a  variety   of
languages.  EchoStar's international  receivers can  process C-band  and Ku-band
signals with both  110- and  240-volt power sources  and have  been designed  to
withstand the fluctuating power sources often found in developing countries.    

PROGRAMMING                                                                     

    Since 1986, EchoStar has acquired programming directly from top programmers,
and  packaged and distributed  that programming throughout  the United States to
C-band system users  through EchoStar's independent  retailer network.  EchoStar
has  nonexclusive  affiliation  agreements  for  the  distribution  of  most top
programming available from domestic satellites, including                       
CNN-Registered Trademark-, USA-Registered Trademark-,                           
ESPN-Registered Trademark-, TBS-TM-, The Discovery                              
Channel-Registered Trademark-, TNT-TM-, HBO-Registered Trademark-,              
Showtime-Registered Trademark-, MTV-Registered Trademark-,                      
A&E-Registered Trademark-,  The Disney  Channel-Registered Trademark-,  national
networks, "Superstations" and other "best of cable" programming.                

FINANCING                                                                       

    Through  financing arranged by EchoStar, consumers are able to finance their
DTH-related product  and  service  home  entertainment  purchases  in  a  single
package.  Credit  approval  is often  granted  while  customers are  still  in a
dealer's showroom,  and funds  are customarily  forwarded to  dealers within  24
hours  of receiving the  original completed loan  documents. EchoStar's consumer
financing arrangement allows "one-stop shopping" for equipment, programming  and
installation  services, while avoiding  many of the  risks inherent in financing
consumer receivables.                                                           

    EchoStar also offers an  option to lease DTH-related  equipment for up to  a
seventy-two  month period, and to obtain  programming during the lease term, for
one fixed monthly payment. The leases contain an annual purchase option allowing
the customer to  purchase the equipment  for a predetermined  amount. The  lease
program  helps EchoStar compete more effectively  and thereby increase sales and
customer loyalty.                                                               

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SALES AND MARKETING                                                             

DBS                                                                             

    EchoStar has  developed  a  comprehensive  marketing  strategy  designed  to
promote  the  EchoStar DBS  System  under the  DISH  Network-SM- brand  name and
distinguish itself from cable  and other DBS providers.  The first phase of  the
strategy  is  designed  to  build  market  awareness  of  the  DISH Network-SM-,
reinforce EchoStar's historical presence in the satellite industry and focus the
market's attention on EchoStar's goal of "A Dish in Every Home."                

    EchoStar's marketing strategy includes  national and regional broadcast  and
print  advertising, promoting the  benefits of the  DISH Network-SM-, to support
the  initial  nationwide  product  rollout.  EchoStar  has  engaged  a  national
advertising agency to develop, produce and place all radio, television and print
advertising  spots. The media campaign is  expected to begin during mid-1996. In
addition, comprehensive  dealer  guides  describing  all  aspects  of  the  DISH
Network-SM-  and its integrated product  lines (programming, hardware, financing
and  installation)  will   be  delivered  to   distributors  during   nationwide
educational  seminars. EchoStar  will continue offering  a high  level of retail
support, and  will  provide  comprehensive point  of  sale  literature,  product
displays,  demonstration kiosks  and signage  for retail  outlets. EchoStar also
provides a  promotional  channel  as  well as  a  programming  subscription  for
in-store  viewing. EchoStar's mobile sales and  marketing team will visit retail
outlets on a regular basis to reinforce training and ensure point-of-sale  needs
are  quickly  fulfilled.  A  DISH Network  merchandise  catalogue  will  also be
available for distributors to add to their promotional materials.               

    EchoStar offers a commission  program that it  believes is competitive  with
that offered by other DTH operators. The program pays qualified distributors and
retailers  a percentage of programming revenues generated by subscribers to whom
they sell EchoStar Receiver Systems. Commissions will be earned by  distributors
and retailers over an extended period and will be paid regularly.               

    Following  the initial nationwide launch  of service, EchoStar will continue
to place  national  and regional  broadcast  and print  advertisements,  provide
retail  support, and offer co-operative marketing campaigns with distributors on
an ongoing basis. One channel of programming is provided on the DISH Network-SM-
to educate subscribers on additional services and promotions.                   

    EchoStar intends to utilize its existing nationwide network of approximately
3,000 independent distributors and retailers  to market and distribute  EchoStar
Receiver  Systems and programming services to  its target markets. EchoStar also
intends to  distribute EchoStar  Receiver Systems  through consumer  electronics
outlets  in conjunction with  brand name consumer  electronics manufacturers, or
under its  own brand  name. EchoStar  also intends  to expand  into other,  less
traditional  distribution channels. Based on its knowledge of these distribution
channels from its  marketing of  C-band DTH products  and services  domestically
over  the last  15 years  and its marketing  of DBS  products in  Europe and the
United States, EchoStar believes  it will be able  to optimize the marketing  of
its DBS products and services to distinguish itself from other DBS suppliers.   

    Considerable  consumer education was required to  develop the market for DBS
service. The initial  entrants into the  DBS market have  incurred the  greatest
educational burden because they introduced DBS to consumers.                    

OTHER PRODUCTS AND SERVICES                                                     

    EchoStar's  DTH  sales  and  marketing  efforts  are  concentrated  in three
geographic regions:  the  Americas, Europe  and  Asia. The  corporate  marketing
department, located at EchoStar's corporate headquarters in Englewood, Colorado,
supports   regional  efforts  by  coordinating  research,  strategy,  promotion,
pricing, advertising and new product development. EchoStar focuses on  marketing
and  distributing  its  DTH  products  and  services,  programming  services and
consumer financing services through  its independent retailer network.  EchoStar
also  provides its independent  retailer network with  marketing support ranging
from cooperative advertising funds to customized advertising campaigns.         

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RESEARCH AND DEVELOPMENT AND MANUFACTURING                                      

    Satellite receivers designed  by EchoStar's research  and development  group
have   won  numerous   awards  from   dealers,  retailers   and  industry  trade
publications. EchoStar's research and development personnel focus on shaping the
EchoStar and HTS product  lines to meet specific  consumer needs and to  compete
effectively  against  products  designed  and  manufactured  by  larger consumer
electronics companies.  In addition  to overseeing  the manufacture  of its  own
products,  EchoStar has  also acted  as the  original equipment  manufacturer of
satellite receivers  for other  large  retailers and  manufacturers.  EchoStar's
quality  assurance  standards require  all  EchoStar product  models  to undergo
extensive testing. EchoStar also  sets and enforces  product design and  quality
assurance  requirements at  non-EchoStar manufacturing facilities  in the United
States, France, Hong Kong, Korea, China, Malaysia, India and the Philippines.   

COMPETITION                                                                     

    Each of the  businesses in  which EchoStar operates  is highly  competitive.
EchoStar's  existing  and  potential  competitors  comprise  a  broad  range  of
companies offering video, audio,  data, programming and entertainment  services.
EchoStar  also faces competition  from companies offering  products and services
that perform similar  functions, including companies  that offer hardwire  cable
television  products  and services,  wireless cable  products and  services, DTH
products  and  services,  as  well  as  DBS  programming  and  other   satellite
programming,  and  companies  developing new  technologies.  Many  of EchoStar's
competitors have substantially  greater financial and  marketing resources  than
EchoStar.  EchoStar expects that quality and  variety of programming, quality of
picture and service and  cost will be  the key bases  of competition. See  "Risk
Factors -- Competitive Nature of the Industry."                                 

DBS INDUSTRY                                                                    

    CABLE  TELEVISION.    Cable  television service  is  currently  available to
approximately 90% of  the approximately 96  million U.S. television  households.
The   cable  television   industry  in   the  United   States  currently  serves
approximately 61  million subscribers,  representing approximately  64% of  U.S.
television   households.  As  an  established  provider  of  programming,  cable
television is a formidable competitor for many programming services, offering 30
to 80 channels at  an average monthly subscription  price of approximately  $33.
While  cable  companies  service  a majority  of  the  United  States television
households today, EchoStar believes the cost to cable companies to upgrade their
coaxial systems to offer expanded digital video and audio programming similar to
that to be offered  by DBS operators  will be at least  $500 per subscriber,  or
approximately  $30.5 billion nationwide. Upgrading  those systems to fiber optic
technology could require a substantially  greater investment. Such upgrades,  if
undertaken, are expected to take five to ten years to complete industry-wide. As
a  result, EchoStar believes that there will be a substantial delay before cable
systems can  offer  programming  services  equivalent  to  satellite  television
providers on a national basis and that many cable systems may never be upgraded.
EchoStar intends to specifically target markets served by such systems.         

    The  DISH Network-SM- will encounter a number of difficulties competing with
cable television  technology  and substantial  competition  is expected  in  the
overall  market for  television households.  Cable television  has an entrenched
position  in  the   domestic  consumer  marketplace.   EchoStar  believes   that
anticipated  advances of  cable television,  such as  interactivity and expanded
channel capacity, may not be widely available  in the near term at a  reasonable
cost  to the consumer. If the substantial  capital costs of those advances, when
available, are  passed  on to  the  consumer,  it will  ultimately  enhance  the
attractiveness of low cost DBS programming.                                     

    Up-front  costs are also a potential  disadvantage of a DBS system. Although
the initial retail  price of an  EchoStar Receiver System  is currently  between
approximately $499 and $599, depending on the features selected by the customer,
among  other factors, EchoStar  believes that technological  advances and market
growth of DBS will eventually reduce the retail cost of DBS receiving equipment.
EchoStar intends to  mitigate this  disadvantage by offering  lease and  finance
options structured to produce                                                   

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minimum  monthly  payments competitive  with  cable rates.  In  addition, dealer
incentives and EchoStar sponsored  promotions may reduce the  actual cost of  an
EchoStar  Receiver System  below the  suggested retail  price. The  initial cost
required to  receive Dish  Network-SM-  programming may  reduce the  demand  for
EchoStar  Receiver Systems, since  EchoStar Receiver Systems  must be purchased,
while  cable  and  certain  of  EchoStar's  satellite  competitors  lease  their
equipment  to the consumer with little if any initial hardware payment required.
EchoStar is currently test marketing a special promotion in a limited number  of
markets  pursuant to which customers are  able to purchase a discounted package,
including an annual  programming package for  $300 (which is  comparable to  the
price  for a  similar package  of cable  programming), and  an EchoStar Receiver
System for $199. If  EchoStar elects to expand  the promotion nationwide for  an
extended  period, or if market conditions force it to do so, the initial capital
investment relative to cable will be greatly reduced, but EchoStar's  subscriber
acquisition costs will substantially increase.                                  

    Since  reception of DBS signals requires line  of sight to the satellite, it
may not be possible for some households served by cable to receive DBS  signals.
In  addition,  the  DISH Network-SM-  will  not  be available  to  households in
apartment complexes, or other multiple dwelling units that do not facilitate  or
allow the installation of the EchoStar Receiver System.                         

    Many  of the largest cable systems in the United States have announced plans
to offer access to  telephony services through  their existing cable  equipment,
and have entered into agreements with major telephony providers to further these
efforts. In some cases, certain cable systems have actually commenced trials. If
these  trials are successful, many  consumers may find cable  service to be more
attractive than DBS for the reception of programming.                           

    OTHER DBS OPERATORS.  In addition to EchoStar, several other companies  have
DBS  authorizations  and  are  positioned  to  compete  with  EchoStar  for home
satellite subscribers. DirecTv has channel assignments at what is recognized  as
a  strategic orbital slot  due to its  position over the  central United States.
DirecTv successfully  launched its  first DBS  satellite in  December 1993,  its
second  satellite  in August  1994  and a  third satellite  in  June 1995  as an
in-orbit spare. That  satellite might  also be  operated by  DirecTv to  provide
additional  capacity,  thereby  making  DirecTv  more  attractive  to  potential
consumers. USSB owns five transponders on DirecTv's first satellite and offers a
programming service  separate  from  DirecTv's  service,  with  programming  not
available  from  DirecTv. Affiliates  of  the National  Rural Telecommunications
Cooperative have acquired  territories in rural  areas of the  United States  as
distributors of DirecTv programming.                                            

    AT&T  and  DirecTv  have  an  exclusive agreement  for  AT&T  to  market and
distribute DirecTv's DBS service. As part of the agreement, AT&T made an initial
investment of approximately  $137.5 million  to acquire  2.5% of  the equity  of
DirecTv  with an option to increase its investment to up to 30% over five years.
This agreement  provides  a significant  base  of potential  customers  for  the
DirecTv  DBS system and allows AT&T and  DirecTv to offer customers a package of
digital entertainment and communications services. As a result, EchoStar is at a
competitive disadvantage marketing  to these  customers. AT&T  and DirecTv  also
announced  plans to jointly  develop new multi-media  services for DirecTv under
the agreement.  The AT&T  and DirecTv  agreement will  increase the  competition
EchoStar encounters in the overall market for pay television customers.         

    In the FCC Auction, MCI entered the winning bid of $682.5 million to acquire
the  permit for 28  of 32 frequencies at  the 110 DEG. WL  orbital slot. MCI and
News announced that they have formed a joint venture to build and operate a  DBS
system  at 110 DEG. WL. The permit will  give MCI and News the capacity to offer
over 200  channels  of  digital  video programming.  MCI  is  expected  to  take
responsibility  for  developing  business  communication  services  and  News is
expected to  be responsible  for consumer  services. MCI  and News  expect  that
building  and launching the satellites for  their system will cost an additional
$1 billion and that DBS services will be offered to consumers and businesses  in
approximately  two years. However, if MCI and News acquire satellites which have
already been  constructed,  service  could  begin  sooner.  MCI  and  News  have
substantially  greater  resources than  EchoStar  and their  joint  venture will
increase the  competition EchoStar  encounters  in the  overall market  for  pay
television customers.                                                           

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    PrimeStar  currently  offers  medium power  Ku-band  programming  service to
customers using  dishes  approximately  three feet  in  diameter.  In  addition,
PrimeStar  is believed to be the programming operator that will utilize existing
DBS authorizations of Tempo DBS, Inc. ("Tempo"). TCI, which is the largest cable
television  company  in  the  United  States,  is  currently  constructing   two
satellites  that will be ready  for launch in 1996 and  either of which could be
utilized to  offer  DBS  service from  Tempo's  orbital  slot at  119  DEG.  WL.
PrimeStar has the right to offer DBS programming services from these satellites.
Alternatively, PrimeStar may offer FSS service via its satellites provided by GE
Americom  or others. In mid-1994,  TCI and Tempo entered  into an agreement with
Advanced Communications Corporation  ("Advanced") whereby  Tempo would  purchase
Advanced's  FCC permit at 110 DEG. WL and lease the capacity available under the
permit to PrimeStar. In October 1995, however, the FCC revoked Advanced's permit
and announced its intention to auction Advanced's DBS channels in January  1996.
Appeals  are  currently pending  relating to  the FCC's  action and  EchoStar is
unable to predict  the outcome of  such litigation. It  is possible Advanced  or
other  parties may  prevail in their  appeals challenging the  FCC's decision to
reclaim Advanced's frequencies at 110 DEG. WL  and 148 DEG. WL and, if they  do,
any  award  of  a  construction permit  by  virtue  of the  FCC  Auction  may be
rescinded. If PrimeStar  successfully launches  a high-power  DBS satellite,  it
will become a more significant competitor, as it would have the ability to offer
its programming through a high-power DBS system similar to that to be offered by
EchoStar. If PrimeStar does not exercise its right, it is expected that TCI will
use  these satellites  to directly enter  the DBS programming  business, and may
launch satellites capable of providing service to the continental United  States
during  1996. EchoStar is at a competitive disadvantage to PrimeStar with regard
to market entry,  programming and,  possibly, volume  discounts for  programming
offerings,   particularly  if  programming  vendors  aggregate  PrimeStar's  DBS
customers and  cable  customers  of  the PrimeStar  partners  to  obtain  volume
discounts from programming vendors.                                             

    DirecTv, USSB and PrimeStar have instituted aggressive promotional campaigns
marketing their respective DBS and Ku-band service. Their marketing efforts have
focused  on the breadth of popular programming  and cost of service. In the case
of DirecTv and USSB, their marketing efforts have been joined by AT&T, RCA, Sony
Electronics, Inc. and other manufacturers which market DBS receivers and related
components. Several  other manufacturers  have begun  or are  expected to  begin
manufacturing  such equipment,  including Uniden America  Corp., Toshiba America
Consumer Products, Inc.  and Hughes  Network Systems,  Inc. PrimeStar  currently
offers  a lease program  whereby consumers can  lease a PrimeStar  system for as
little as approximately $1.00 per  day (including approximately thirty  channels
of  programming). PrimeStar's  lease program is  widely credited  for the recent
success of PrimeStar's Ku-band  service. EchoStar currently  expects to offer  a
comparable program to finance or lease an EchoStar Receiver System.             

    DirecTv  and USSB together offer over 150 channels of DBS video programming.
EchoStar currently has  the capacity  to provide approximately  100 channels  of
video  programming increasing to  at least 125 channels  of video programming at
the time EchoStar II  is fully operational. Due  to their substantially  greater
resources,  earlier  market  entry, greater  number  of  channels, manufacturing
alliances with  low  cost, high  volume  manufacturers with  established  retail
distribution,  possible volume discounts for  programming offerings, and, in the
case of  PrimeStar,  relationship  with  cable programmers,  EchoStar  is  at  a
competitive  disadvantage to DirecTv, USSB and PrimeStar. EchoStar believes that
it can  successfully compete  with these  companies given,  among other  things,
EchoStar's:   (i)  lower  cost  structure;   (ii)  programming  strategy;  (iii)
established dealer  network; (iv)  second generation  digital technology,  which
incorporates  world standard full  MPEG-2 technology; and  (v) intent to license
the manufacture of EchoStar Receiver Systems to multiple manufacturers.         

    According to  trade  publications,  as  of December  31,  1995  DirecTv  had
approximately 1.2 million subscribers, approximately one-half of whom subscribed
to USSB programming, and PrimeStar had approximately 1.0 million subscribers. As
a  result  of  the success  achieved  by  each of  these  programming providers,
EchoStar may find it  difficult to successfully  compete and attract  sufficient
subscribers to achieve profitability.                                           

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    During  March 1996, AlphaStar Television Network which is owned by Tee-Comm,
began offering DTH  programming in  the United States  on a  limited basis,  and
intends  to expand to 120 channels later this  year, and 200 channels by the end
of 1997. The service uses  MPEG-2/DVB digital compression technology to  receive
medium  power Ku-band signals via 24 to 36 inch dishes. Although compliance with
certain regulatory requirements is necessary for the commencement of service  by
a  Canadian company, the entry of an additional programming provider will result
in additional competition for subscribers.                                      

    The FCC indicated that it intends to apply to the ITU for additional orbital
locations for use to  provide DBS service to  the United States. Canada,  Mexico
and  other countries hold the  rights to DBS orbital  slots which are capable of
providing service  to the  United States.  If the  FCC moves  forward with  this
initiative  or  if  other countries  authorize  DBS providers  to  utilize their
orbital slots  to  serve the  United  States, additional  competition  could  be
created,  and  EchoStar's spectrum  could become  less  valuable. At  this time,
EchoStar cannot predict whether the FCC will move forward with this  initiative,
whether  other countries will  authorize DBS providers  to utilize their orbital
slots to serve the United States or whether the FCC initiative or authorizations
by other  countries will  ultimately result  in any  additional service  to  the
United States.                                                                  

    The  FCC  on January  22,  1996, announced  its  decision to  authorize U.S.
licensed FSS operators which currently operate internationally to provide wholly
domestic service in the United States.  The FCC also announced its intention  to
address at a later date issues relating to the provision of wholly domestic U.S.
service  by  signals  originating  in foreign  countries,  whether  via  U.S. or
non-U.S. satellites. In the  event U.S. licensed  FSS operators which  currently
operate  internationally  decide to  provide  programming wholly  in  the United
States or that non-U.S. licensed operators are permitted to provide  programming
to  the United  States, the  number of competitors  offering DTH  service in the
United States may increase.                                                     

    WIRELESS CABLE AND  OTHER MICROWAVE  SYSTEMS.  There  are approximately  180
wireless  cable systems presently operating in the United States. Wireless cable
served approximately 710,000 subscribers  at the end  of 1995. Typically,  these
systems  offer  20  to  40  channels of  programming,  which  may  include local
programming; however, these systems will  require large capital expenditures  to
upgrade  to  digital compression  technology  to compete  effectively  with DBS.
Wireless cable  also requires  direct line  of sight  from the  receiver to  the
transmitter tower, which creates the potential for substantial interference from
terrain,  buildings and  foliage in  the line  of sight.  Certain wireless cable
companies may  become  more  competitive  as  a  result  of  recently  announced
affiliations  with  telephone  companies. Bell  Atlantic  Corporation  and NYNEX
Corporation have  invested $100  million  in CAI  Wireless Systems,  Inc.  Also,
Pacific  Telesis  Group  has  purchased  100% of  the  equity  of  Cross Country
Wireless.                                                                       

    TELEPHONE COMPANIES.   Certain  regional telephone  operating companies  and
long  distance telephone companies  could become significant  competitors in the
future, as they have expressed  an interest in becoming subscription  television
and  information providers. The legislation  recently passed by Congress permits
these local telephone companies to provide high-power DBS service, although  any
telephone  company desiring to  become a high-power  DBS broadcaster would still
need to  obtain  an FCC  license  for  an available  orbital  location.  Certain
telephone  companies have received  authorization to begin  test marketing video
and other services to  their customers in limited  geographic areas using  fiber
optic   cable  and  digital  compression  over  existing  telephone  lines.  The
legislation  recently  passed  by  Congress  removes  barriers  to  entry  which
previously  inhibited, or  made it  more difficult,  for telephone  companies to
compete in the provision of video programming and information services. As  more
telephone companies begin to provide cable programming and other information and
communications  services to their  customers, additional significant competition
for subscribers will develop.  Among other things,  telephone companies have  an
existing  relationship with substantially every household in their service area,
substantial economic resources, and an  existing infrastructure and may be  able
to  subsidize the  delivery of  programming through  their position  as the sole
source of telephone service to the home.                                        

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    VHF/UHF BROADCASTERS.   Most  areas  of the  United  States are  covered  by
traditional  terrestrial VHF/UHF  broadcasts that  typically offer  three to ten
channels. These broadcasters  are often  low to  medium power  operators with  a
limited coverage area and provide local, network and syndicated programming. The
local  content nature of the  programming may be important  to the consumer, and
VHF/UHF programming  is  typically  free  of charge.  Congress  is  expected  to
consider   the  release  of  additional  digital   spectrum  for  use  by  these
broadcasters later this year.                                                   

DTH INDUSTRY                                                                    

    DTH PRODUCTS.  EchoStar faces competition in the sale of satellite receivers
in North America from other manufacturers and from other distributors. The North
American market is  dominated by  EchoStar, General  Instrument Corporation  and
Uniden America Corp.                                                            

    Most  major manufacturers  of satellite receivers  in North  America offer a
variety of models, from relatively low priced units to more expensive  receivers
with  a greater  number of  features. There are  few patented  components in DTH
systems. Competition in the  sale of DTH products  occurs primarily on  quality,
price,  service,  marketing and  features. EchoStar  believes that  it generally
competes effectively  in all  of  these areas.  In  recent years,  EchoStar  has
consistently been highly rated in most of these categories by polls conducted by
industry trade publications.                                                    

    EchoStar  also faces  competition in  the distribution  of DTH  systems from
approximately 30 distributors in North America. The large number of distributors
creates intense competition, primarily on price, marketing and service. EchoStar
responds to that  competition by  offering 24-hour turnaround  time on  repairs,
same  day order fulfillment and what it believes  to be one of the top satellite
retailer incentive programs in the industry.                                    

    In addition,  EchoStar  competes against  DBS  technology and  medium  power
Ku-band  DTH  systems.  DBS  and medium  power  Ku-band  satellites  use Ku-band
frequencies that  can  be received  by  significantly smaller  dishes  and  less
expensive systems than C-band satellite systems. As a result of the smaller dish
size,  DBS and medium power Ku-band systems are more widely accepted than C-band
systems, particularly in urban areas.  DBS and medium power Ku-band  competition
have  negatively affected, and will continue to negatively affect, C-band sales.
However, EchoStar  believes  that  many  consumers may  continue  to  choose  to
purchase  C-band systems  for the  next several  years because  of the remaining
orbital  life  of  existing  C-band  satellites,  the  amount  and  quality   of
programming  available and the  continuing marketing efforts  by programmers and
others designed to attract and  retain C-band subscribers, among other  factors.
The  decline in the number  of C-band sales by  EchoStar was partially offset in
1994  and  1995  by  the  sale  of  Competitor  DBS  Receivers,  which  EchoStar
distributed in 18 states.                                                       

    Internationally,  EchoStar competes  against a variety  of manufacturers and
distributors in different countries.  In certain regions,  EchoStar has a  small
market  share, while in others, such as  Africa, EchoStar believes that it has a
larger market  share than  any of  its competitors.  In some  markets,  EchoStar
cannot  effectively compete due  to local restrictions  on foreign companies and
due to the necessity of using  proprietary products for which EchoStar does  not
hold licenses.                                                                  

    DTH  PROGRAMMING.  EchoStar  competes with many  large DTH program packages,
some of whom are affiliated with well known, large program originators, and some
of whom  are affiliated  with  cable operators.  EchoStar competes  by  offering
promotional  programming packages in conjunction with  its sales of DTH systems.
Since a  significant  portion  of EchoStar's  programming  sales  are  generated
through  DTH retailers, EchoStar also competes for retailer relationships on the
basis of commission rates and quality of service offered to the retailer and its
customers. In  addition, the  programming market  faces competition  from  cable
television  as well as emerging technologies such as DBS services, multichannel,
multipoint distribution systems and others. The largest competitors of  EchoStar
in  programming  distribution  include  NetLink  Satellite  USA,  owned  by TCI,
SuperStar                                                                       

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Satellite  Entertainment, National  Programming Service,  Turner Home Satellite,
Inc., HBO Direct, Inc. and  Showtime Satellite Networks. These competitors  have
substantially greater financial resources than EchoStar, have substantially more
subscribers,  and  are  therefore able  to  obtain more  favorable  pricing from
programmers compared to EchoStar.                                               

    DTH FINANCING AND LEASING.  EchoStar currently offers financing and  leasing
options  in  conjunction with  its DTH  products  and services.  Other equipment
manufacturers and distributors  also offer financing  to consumers who  purchase
their  products and services.  At times, certain  of EchoStar's competitors have
offered consumers longer amortizations of their loans than EchoStar has offered.
Long amortizations  are popular  with  DTH retailers,  who  can then  offer  the
consumer  a  lower monthly  payment, or  a  more expensive  system for  the same
payment. EchoStar has experienced a  decline in financing revenue due  partially
to the longer loan amortizations offered by some of EchoStar's competitors. With
its   new  financing  arrangements  with  two   national  banks  and  a  leasing
organization, EchoStar is able to make available financing which it believes  is
competitive   with  that  available  from  its  competitors.  See  "Management's
Discussion and Analysis of Financial Condition and Results of Operations."      

GOVERNMENT REGULATION                                                           
GENERAL                                                                         

    Authorizations and permits issued by the FCC and foreign regulatory agencies
performing similar functions are  required for the  operation of satellites  and
other components of the EchoStar DBS System, and the sale of satellite receivers
and  other EchoStar products in the United States and certain foreign countries.
In addition, as  the prospective  operator of  a privately  owned United  States
satellite system, EchoStar is subject to the regulatory authority of the FCC and
the  International Radio Regulations promulgated by the ITU. As a distributor of
television  programming,  EchoStar  is  also  affected  by  numerous  laws   and
regulations, including the Communications Act. EchoStar believes that it remains
free  to  set prices  and serve  customers according  to its  business judgment,
without rate  regulation or  the  statutory obligation  under  Title II  of  the
Communications  Act to avoid undue  discrimination among customers, but pursuant
to  the  recently  passed   telecommunications  legislation,  EchoStar  may   be
classified  as a telecommunications carrier subject  to Title II. While EchoStar
believes  that  it  is  unlikely  that  such  reclassification  would   increase
substantially  the regulatory  burdens imposed  on EchoStar  or have  an adverse
impact on EchoStar's DBS operations, there  can be no assurance in this  regard.
EchoStar  also requires import and general destination export licenses issued by
the United States Department  of Commerce for the  delivery of its  manufactured
products  to  overseas destinations.  Finally,  because EchoStar  has  engaged a
foreign launch provider for the EchoStar II satellite, and may engage a  foreign
launch  provider for the  EchoStar III or EchoStar  IV satellites, United States
export regulations  apply to  the delivery  of the  satellite and  to  providing
related technical information to the launch provider.                           

    While  EchoStar has  generally been  successful to  date in  connection with
regulatory compliance  matters, there  can be  no assurance  that EchoStar  will
succeed  in obtaining or maintaining all  requisite regulatory approvals for its
operations, or  that it  will do  so  without the  imposition of  conditions  or
restrictions on EchoStar.                                                       

FCC PERMITS AND LICENSES                                                        

    As the operator of a DBS system, EchoStar is subject to FCC jurisdiction and
review  primarily for: (i) authorization of individual satellites (i.e., meeting
minimum financial,  legal  and technical  standards)  and earth  stations;  (ii)
avoiding  interference with other radio frequency emitters; (iii) complying with
rules the FCC  has established specifically  for holders of  U.S. DBS  satellite
authorizations  and receivers; and (iv)  complying with applicable provisions of
the Communications Act. The FCC has granted a conditional satellite construction
permit to  EchoStar  for  two  satellites.  It  has  assigned  eleven  specified
frequencies  for  EchoStar I  at  an orbital  slot  at 119  DEG.  WL. EchoStar's
subsidiary DirectSat has a conditional permit for ten additional frequencies  at
the  same orbital location, one frequency at  110 DEG. WL and eleven frequencies
at 175 DEG. WL. These permits are conditioned                                   

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on satisfaction of ongoing construction and related obligations. There can be no
assurance that EchoStar and DirectSat will be able to comply with the FCC's  due
diligence  obligations or  that the FCC  will determine that  they have complied
with such  due diligence  obligations. DirectSat's  and EchoStar's  permits  and
extension requests have been and may continue to be contested in FCC proceedings
and in court by Dominion, PrimeStar, Advanced, Tempo, MCI, DirecTv and others.  

    In November 1994, the FCC approved a merger of DirectSat with a wholly owned
subsidiary  of  EchoStar.  While  Dominion  filed  what  it  styled  as comments
objecting to  the merger,  the FCC  issued  an order  approving the  merger  and
EchoStar  believes  that the  likelihood of  unfavorable reconsideration  of the
order approving the merger is unlikely.                                         

    The FCC's DBS rules require, among  other diligence obligations, that a  DBS
permittee place its satellite system in operation within six years following the
initial  grant of a  construction permit (originally  by August 15,  1995 in the
case of EchoStar and  DirectSat). EchoStar and  DirectSat timely filed  requests
with the FCC for extensions of these authorizations to conform to EchoStar's and
DirectSat's  anticipated launch schedules for EchoStar  I and EchoStar II. There
can be no assurance that EchoStar and DirectSat will be able to comply with  the
FCC's  due diligence obligations or  that the FCC will  determine that they have
complied with such due diligence obligations.                                   

    By an  Order released  January  11, 1996  in  File No.  129-SAT-EXT-95,  the
International  Bureau of  the FCC granted  an extension of  EchoStar's permit to
August 15, 1996 with respect  to the 119 DEG.  WL orbital location. It  deferred
decision  on EchoStar's  request for  an extension of  time with  respect to its
western satellite pending the  FCC's analysis of  EchoStar's 1992 due  diligence
showing for that location. By separate Order released January 11, 1996, File No.
DBS-88-1,  the FCC's International Bureau  conditionally granted EchoStar launch
and positioning authority for EchoStar I.  On February 12, 1996, EchoStar  filed
an  application for a license to operate EchoStar I. EchoStar certified that the
in-orbit operations of  the satellite  fully conform to  the specifications  set
forth  in its application as modified and  in the FCC launch authorization, with
only one exception: the satellite is currently located at 119.0 DEG. WL  instead
of  119.2 DEG. WL. By order of  the International Bureau released March 4, 1996,
EchoStar was granted  special temporary  authority to operate  at that  location
until  the launch of EchoStar II or until August 31, 1996, whichever is earlier,
subject to  the  condition  that  it cause  no  harmful  interference  to  other
satellites.  By order  of the  International Bureau  released on  the same date,
EchoStar was  also  granted  special  temporary  authority  to  operate  all  16
transponders  on  EchoStar  I,  until  August  31,  1996,  subject  to  the same
non-interference condition.  While  the  FCC has  granted  EchoStar  conditional
authority  to use C-band frequencies for  TT&C functions for EchoStar I, stating
that  the  required  coordination  process  with  Canada  and  Mexico  has  been
completed, the FCC subsequently received a communication from an official of the
Ministry  of Communications and  Transportation of Mexico  stating that EchoStar
I's TT&C operations could cause unacceptable interference to Mexican satellites.
While EchoStar  believes that  it is  unlikely that  the FCC  will  subsequently
require EchoStar to relinquish use of such C-band frequencies for TT&C purposes,
there  can be no  assurances that such objections  will not subsequently require
EchoStar to relinquish the use of such C-band frequencies for TT&C purposes.    

    Among other  regulatory  requirements,  the  DBS  systems  of  EchoStar  and
DirectSat  are required to  conform to the  ITU Region 2  Plan for the Broadcast
Satellite Service ("BSS Plan"). Any operations that are not consistent with  the
BSS  Plan (including,  among other  things, digital  transmission), can  only be
authorized on a  non-interference basis pending  successful modification of  the
BSS  Plan. Accordingly, unless and until the BSS Plan is modified to include the
technical parameters of  a DBS applicant's  operations, non-standard  satellites
must  not cause harmful electrical interference to,  and are not entitled to any
protection  from,  interference  caused  by   other  assignments  that  are   in
conformance with the BSS Plan.                                                  

    By  a separate Order  released January 11, 1996  in File No. 131-SAT-EXT-95,
the International Bureau extended the construction permit of DirectSat to August
15,  1999.  This  grant  was  subject  to  the  condition  that  DirectSat  make
significant   progress   toward   construction   and   operation   of   its  DBS

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system substantially  in compliance  with the  timetable submitted  pursuant  to
Amendment  No. 7 of its satellite construction contract, dated June 17, 1995, or
with a more expedited timetable.  The International Bureau also urged  DirectSat
to expedite construction and launch of additional satellites for its DBS system.
PrimeStar  has filed an  application for review requesting  that the FCC reverse
the International Bureau's decision  to extend DirectSat's construction  permit.
See  "-- Operation of the EchoStar DBS System  -- DBS and Other Permits" and "--
Legal Proceedings."                                                             

    The FCC has  also declared that  it will carefully  monitor the  semi-annual
reports required to be filed by DBS permittees. Failure of EchoStar or DirectSat
to  file  adequate  semi-annual  reports  or  to  demonstrate  progress  in  the
construction of their DBS systems may result in cancellation of their permits.  

    With respect to DirectSat, a request for launch authority, as well as for  a
minor modification to DirectSat's construction permit and removal of conditions,
was filed with the FCC prior to the merger with EchoStar and remains pending. An
application to change frequencies for TT&C services is also pending and has been
opposed  by Advanced and  Dominion. Additional technical  amendments may also be
required to be filed with the  FCC. While opposition to these applications  have
been  filed, and will be filed in the future in the event of further amendments,
EchoStar expects that  the necessary approvals  for EchoStar II  will be  timely
obtained.  EchoStar also intends to file an application for a license to operate
EchoStar II in orbit once EchoStar II is launched successfully.                 

    EchoStar currently owns approximately 40% of the outstanding common stock of
DBSC, which  holds  a conditional  satellite  construction permit  and  specific
orbital  slot assignments for eleven DBS frequencies at each of 61.5 DEG. WL and
175 DEG. WL.  EchoStar expects  to acquire  100% of  DBSC pursuant  to the  DBSC
Merger.  The DBSC Merger has been  approved by DBSC's shareholders. FCC Approval
of the DBSC Merger is also required, and has been applied for. The deadline  for
filing  oppositions to the DBSC Merger with the FCC was March 15, 1996. EchoStar
is aware of only one opposition, which  was filed by the CPT. EchoStar  believes
that  the  FCC has  previously  considered and  rejected  issues similar  to the
arguments raised by  CPT and  that the  filing of  the CPT  opposition does  not
materially  decrease the likelihood  that the FCC will  approve the DBSC Merger.
Assuming FCC  approval  and consummation  of  the Merger,  EchoStar  will  hold,
through  its DBSC subsidiary,  the construction permit  and slot assignments for
these frequencies. See "-- DBS and Related Services -- DBS and Other Permits."  

    The licenses  which the  FCC issues  for an  operational DBS  system to  use
frequencies  at a specified orbital location are for a term of ten years. At the
expiration of  the  initial  license  term, the  FCC  may  renew  the  satellite
operator's  license or authorize the operator to operate for a period of time on
special authority,  but  there is  no  assurance that  the  FCC will  take  such
actions.  EchoStar  also  requires  FCC  authority  to  operate  earth stations,
including the earth stations necessary to uplink programming to its satellites. 

FCC AUCTION RULES                                                               

    EchoStar submitted the winning bid for  the 148 DEG. WL frequencies and  has
paid  the  required $10.5  million  down payment.  EchoStar  has also  filed the
"long-form" application  for  a  construction permit  required  of  the  winning
bidder.  EchoStar's application  was placed on  public notice on  March 6, 1996,
triggering a  filing window  of 30  days for  members of  the public,  including
EchoStar's competitors, to file petitions to dismiss or deny the application. No
parties  have objected to the  application, but to date  the FCC has not granted
the application.  EchoStar  must submit  the  balance  of its  bid  within  five
business  days of  the grant of  its application by  the FCC. If  the FCC grants
EchoStar's application, parties  may seek FCC  review or reconsideration  and/or
judicial review of the FCC's action.                                            

    The  FCC has  imposed stringent disclosure  obligations on  a winning bidder
that seeks to transfer a DBS license acquired through competitive bidding within
six years of  the initial permit  grant. Together with  its application  seeking
approval  of such a transfer,  the winning bidder must  submit all contracts and
related  documents  and  full  information  on  all  agreed-upon   consideration
negotiated with the purchase.                                                   

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DBS RULES                                                                       

The FCC has also promulgated the following new rules:                   

- The term of DBS licenses has been extended from 5 to 10 years;

 - In  addition  to  the pre-existing  construction  and operation
   milestones, holders of new  permits must complete  construction
   of  the first  satellite in their  system within  four years of
authorization and their entire systems within six years;    

 - The holders of new authorizations  must provide DBS service  to
   Alaska  and Hawaii  where such service  is technically feasible
   from the  acquired orbital  locations  (service to  Alaska  and
Hawaii from 148 DEG. WL is presumed feasible);              

 - Those holding DBS permits as of the effective date of the rules
   must  either provide  DBS service to  Hawaii or  Alaska from at
   least one  of  their  orbital  locations  or  relinquish  their
western assignments; and                                    

 - A  DBS licensee must begin DBS  operations within five years of
   receipt of its license, but may otherwise make unrestricted use
   of the spectrum  for non-DBS purposes  during that time.  After
   the  first  five years,  the licensee  may continue  to provide
   non-DBS service so long as at least half of its total  capacity
at a given orbital location is used each day for DBS.       

PENDING APPEALS                                                                 

    Several parties, including EchoStar, DBSC and DirectSat, have petitioned the
U.S. Court of Appeals for the D.C. Circuit to review on a variety of grounds the
FCC's  Report & Order which determined to auction frequencies at 110 DEG. WL and
148 DEG. WL. Several other parties have also appealed a related Order where  the
FCC  reclaimed  the channels  that were  auctioned  from another  DBS permittee,
Advanced, for  failing to  construct its  satellites in  a timely  manner.  Such
review  may result in  invalidation of the FCC  Auction in whole  or in part. In
such a case,  the FCC may  be compelled to  conduct a new  auction, rescind  the
construction   permits  for  the  channels  which  were  auctioned  or  consider
alternative means of assigning available DBS channels.                          

    An opposition to the DBSC Merger was filed with the FCC by CPT on March  15,
1996,  the deadline for  filing petitions and  oppositions regarding approval by
the FCC  of the  DBSC Merger.  EchoStar  believes that  the FCC  has  previously
considered  and rejected issues similar to the arguments made in the oppositions
and that  the filing  of the  CPT opposition  does not  materially decrease  the
likelihood  that the FCC  will approve the  DBSC Merger. CPT  and another public
interest organization subsequently filed a  joint letter at the FCC  challenging
the Merger. This letter raises the same issues as CPT's earlier objection.      

THE CABLE ACT                                                                   

    In  addition  to regulating  pricing  practices and  competition  within the
franchise cable television industry, the Cable Act was intended to establish and
support existing and new multi-channel video services, such as "wireless"  cable
and DBS, to provide television programming.                                     

    Although EchoStar can provide no assurance as to the impact of the Cable Act
and  amendments thereto  on its businesses,  EchoStar believes  that the overall
effects on  its  present operations  and  its  proposed DBS  operation  will  be
positive.  EchoStar expects to benefit from  the programming access provision of
the Cable Act in that it will  be able to gain access to previously  unavailable
programming  services  and  may  obtain reduced  costs  for  certain programming
services. Any amendment to, or interpretation of, the Cable Act that permits the
cable companies  or entities  affiliated with  cable companies  to  discriminate
against  competitors  such as  EchoStar  in making  available  programming could
adversely affect EchoStar's ability to  acquire programming on a  cost-effective
basis.  Certain of the restrictions on  cable affiliated programmers will expire
in 2002 unless the FCC extends them.                                            

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EXPORT REGULATION                                                               

    From time to time, EchoStar requires import licenses and general destination
export licenses to receive and deliver components of DTH systems. Also, EchoStar
has contracted with Arianespace for the launch of EchoStar II, and with LKE  for
the  launch of a satellite  from the Kazakh Republic,  a territory of the former
Soviet Union.  Export  licenses  will  be  required  to  be  obtained  from  the
Department  of Commerce  for the  transport of  any satellites  to Korou, French
Guiana and to the  Kazakh Republic. Martin Marietta  will be required to  obtain
technical  data exchange licenses from the Department of Commerce permitting the
exchange between  Martin  Marietta and  Arianespace  and LKE,  respectively,  of
certain   information  necessary  to  prepare  the  satellites  for  launch.  No
assurances can  be given  that the  data  exchange or  export licenses  will  be
granted,  or  that implementation  of the  Trade  Agreement will  not negatively
affect EchoStar's ability to launch EchoStar IV on a Proton launch vehicle.  LKE
has  advised  EchoStar, however,  that,  while no  assurances  can be  given, it
believes the  necessary  technical data  and  hardware export  licenses  can  be
obtained  in time for the first scheduled launch of an EchoStar satellite. There
can be no assurance those licenses can be obtained in a timely manner to avoid a
launch delay.                                                                   

PATENTS AND TRADEMARKS                                                          

    EchoStar uses  a  number  of  trademarks  for  its  products  and  services,
including "EchoStar-Registered Trademark-," "DISH                               
Network-Registered  Trademark-," "DISH Network-SM-," "America's Top 40-SM-," and
others.  Many  of  these  trademarks  are  registered  by  EchoStar,  and  those
trademarks  that are  not registered are  generally protected by  common law and
state unfair competition laws. Although EchoStar believes that these  trademarks
are  not essential to EchoStar's business,  EchoStar has taken affirmative legal
steps to protect  its trademarks  in the past  and intends  to actively  protect
these trademarks in the future.                                                 

    EchoStar  is  the  assignee  of certain  patents  for  products  and product
components manufactured and sold by  EchoStar, none of which EchoStar  considers
to  be  significant  to its  continuing  operations. In  addition,  EchoStar has
obtained and, although no assurances can  be given, expects to obtain,  licenses
for certain patents necessary to the manufacture and sale by EchoStar and others
of DBS receivers and related components. EchoStar has been notified that certain
features  of the EchoStar Receiver System  allegedly infringe on patents held by
others, and  that royalties  are therefore  required to  be paid.  EchoStar  has
rejected  the  allegations  of  infringement and  intends  to  vigorously defend
against any suit filed by the parties.                                          

EMPLOYEES                                                                       

    EchoStar had approximately  710 employees at  March 31, 1996,  approximately
620  of whom  worked in EchoStar's  domestic operations and  approximately 90 of
whom worked in EchoStar's international operations.  EchoStar is not a party  to
any  collective  bargaining  agreement  and  considers  its  relations  with its
employees to be good. Additional personnel  will be hired to manage and  operate
the EchoStar DBS System.                                                        

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PROPERTIES                                                                      

    EchoStar  owns its corporate headquarters,  its uplink facility in Cheyenne,
Wyoming and three additional locations.  The following table sets forth  certain
information concerning EchoStar's properties.                                   

                                                        [Enlarge/Download Table]

                                                                               APPROXIMATE              
                                                                                  SQUARE      OWNED OR  
               DESCRIPTION/USE                            LOCATION               FOOTAGE       LEASED   
---------------------------------------------  ------------------------------  ------------  -----------
                                                                                                        
Corporate Headquarters and Warehouse                                                                    
 Distribution Center                                Englewood, Colorado            155,000        Owned 
Office and Distribution Center                     Sacramento, California           78,500        Owned 
Digital Broadcast Center                             Cheyenne, Wyoming              55,000        Owned 
European Headquarters and Warehouse               Almelo, The Netherlands           53,800        Owned 
Warehouse Facility                                    Denver, Colorado              40,000        Owned 
Office and Distribution Center                     Bensenville, Illinois            19,000       Leased 
Office and Distribution Center                         Miami, Florida               16,500       Leased 
Office and Distribution Center                       Norcross, Georgia              16,000       Leased 
Office and Distribution Center                         Dallas, Texas                11,200       Leased 
Office and Distribution Center                       Columbia, Maryland             13,400       Leased 
Office and Distribution Center                        Phoenix, Arizona              10,000       Leased 
Asian Distribution Center                                Singapore                   7,000       Leased 
Office and Distribution Center                      Anaheim, California              4,300       Leased 
Office                                                 Madrid, Spain                 2,100       Leased 
Asian Headquarters                                       Singapore                   1,900       Leased 
Office                                                Bangalore, India               1,200       Leased 
Office                                                 Beijing, China                1,000       Leased 

LEGAL PROCEEDINGS                                                               

    EchoStar  is a  party to certain  legal proceedings arising  in the ordinary
course of its business. EchoStar does not believe that any of these  proceedings
will have a material adverse affect on EchoStar's financial position, results of
operations or liquidity.                                                        

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MANAGEMENT

DIRECTORS AND OFFICERS                                                          

    The following table sets forth information concerning the executive officers
and directors of EchoStar Communications Corporation. The executive officers and
directors  of the Issuer, Dish, Ltd., and New DBSC are the same as the executive
officers and directors of EchoStar Communications Corporation, except that  Alan
M.  Angelich and Raymond  C. Friedlob do  not serve as  directors of the Issuer,
Dish, Ltd., and New DBSC.                                                       

                                                                [Download Table]

            NAME              AGE                       POSITION                   
----------------------------  ---     ---------------------------------------------
                                                                                   
Charles W. Ergen                  43  Chairman, Chief Executive Officer, President 
                                       and Director                                
Alan M. Angelich                  52  Director                                     
Raymond L. Friedlob               51  Director                                     
Carl E. Vogel                     38  Chief Operating Officer and Executive Vice   
                                       President                                   
James DeFranco                    43  Executive Vice President and Director        
R. Scott Zimmer                   39  Vice President and Director                  
David K. Moskowitz                38  Senior Vice President, General Counsel and   
                                       Secretary                                   
Steven B. Schaver                 42  Chief Financial Officer                      
J. Allen Fears                    39  Vice President, Treasurer and Controller     

    CHARLES W. ERGEN.  Mr.  Ergen has been Chairman  of the Board of  Directors,
Chief  Executive  Officer and  President of  EchoStar  since its  formation and,
during  the  past  five  years,  has  held  various  positions  with  EchoStar's
subsidiaries,  including President  and Chief  Executive Officer  of Echosphere,
Echonet Business  Network, Inc.  ("EBN") and  ESC, and  Director of  Echosphere,
Houston  Tracker  Systems,  Inc.  ("HTS"),  EchoStar  International  Corporation
("EIC"), ESC and EBN. Mr. Ergen, along with his spouse and James DeFranco, was a
co-founder of EchoStar in 1980. Commencing in March 1995, Mr. Ergen also  became
a  director of SSE Telecom, Inc. ("SSET"),  a company principally engaged in the
manufacture and sale of satellite telecommunications equipment.                 

    ALAN M. ANGELICH.  Mr. Angelich has been a director of EchoStar and a member
of its  Audit and  Executive  Compensation Committees  since October  1995.  Mr.
Angelich  is  presently a  principal with  Janco  Partners, Inc.,  an investment
banking firm specializing in the  telecommunications industry. From May 1982  to
October  1993, Mr.  Angelich served in  various executive  capacities with Jones
Intercable, Inc.,  including  Vice  Chairman  of its  Board  of  Directors  from
December  1988 to October 1993.  From August 1990 to  October 1993, Mr. Angelich
was also the Chief Executive Officer of Jones Capital Markets, Inc.             

    RAYMOND L. FRIEDLOB.   Mr. Friedlob has  been a director  of EchoStar and  a
member  of its Audit  and Executive Compensation  Committees since October 1995.
Mr. Friedlob  is presently  a member  of the  law firm  of Friedlob,  Sanderson,
Raskin,  Paulson & Tourtillot, LLC. Prior to 1995, Mr. Friedlob was a partner of
Raskin & Friedlob, where he had  practiced since 1970. Mr. Friedlob  specializes
in  federal securities law,  corporate law, leveraged  acquisitions, mergers and
taxation.                                                                       

    CARL E.  VOGEL.   Mr. Vogel  was named  President of  EchoStar Satellite  in
November  1995  and  has  been EchoStar's  Executive  Vice  President  and Chief
Operating Officer, and the  President of Satellite  Source, Inc. ("SSI"),  since
April  1994. Prior to joining EchoStar, Mr.  Vogel served as the Chief Executive
Officer of Jones Programming  Services, Inc., a  company engaged principally  in
the acquisition and packaging of cable programming services for distribution via
cable television systems, from                                                  

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January  1990 to April  1994, and the  Group Vice President  of Finance of Jones
International,  Ltd.  and  certain   of  its  subsidiaries,  companies   engaged
principally in the cable television industry, from February 1983 to April 1994. 

    JAMES DEFRANCO.  Mr. DeFranco is an Executive Vice President of EchoStar and
has  been a Vice President  and a Director of  EchoStar since its formation and,
during  the  past  five  years,  has  held  various  positions  with  EchoStar's
subsidiaries,  including President  of HTS, EAC  and HT  Ventures, Inc. ("HTV"),
Executive Vice President of  ESC, Senior Vice President  of Echosphere and  EBN,
and Director of SSI, Echosphere, HTS, EAC, EBN and HTV. Mr. DeFranco, along with
Mr. Ergen and Mr. Ergen's spouse, was a co-founder of EchoStar in 1980.         

    R.  SCOTT ZIMMER.   Mr. Zimmer has been  a Vice President  and a Director of
EchoStar since its formation.  For the past five  years, Mr. Zimmer has  managed
the international operations of EchoStar and its subsidiaries.                  

    DAVID  K. MOSKOWITZ.  Mr. Moskowitz  is the Senior Vice President, Secretary
and General Counsel of  EchoStar. Mr. Moskowitz joined  EchoStar in March  1990.
Mr.  Moskowitz  is  responsible  for  all  legal  affairs  of  EchoStar  and its
subsidiaries.                                                                   

    STEVEN B. SCHAVER.  Mr. Schaver was named Vice President and Chief Financial
Officer of EchoStar in February 1996.  From November 1993 to February 1996,  Mr.
Schaver  was the Vice  President of EchoStar's  European and African operations.
From July 1992  to November  1993, Mr.  Schaver was  the Director  of Sales  and
Marketing   for   EchoStar's   largest   Spanish   customer,   Internacional  de
Telecomunicaciones, S.A. in Madrid, Spain. Prior to July 1992 and since  joining
EchoStar  in 1984, he has held  various positions with subsidiaries of EchoStar,
including Vice President of European  operations. Prior to joining EchoStar  Mr.
Schaver was a Banking Officer with Continental Illinois National Bank.          

    J.  ALLEN  FEARS.   Mr. Fears  has  been the  Vice President,  Treasurer and
Controller of EchoStar since  December 1992. Prior thereto  Mr. Fears served  as
Controller of all of EchoStar's subsidiaries from January 1988 to December 1992,
and  as Assistant Controller  of a subsidiary  of EchoStar from  October 1985 to
January 1988. Mr.  Fears is  responsible for  the finance,  accounting, tax  and
budgeting systems of EchoStar and its subsidiaries.                             

    The  Board of Directors of EchoStar currently  has an Audit Committee and an
Executive Compensation  Committee, both  of which  were established  in  October
1995. The present members of the Audit and Executive Compensation Committees are
Messrs.  Angelich and Friedlob.  The principal functions  of the Audit Committee
are: (i) to  recommend to the  Board of Directors  the selection of  independent
public  accountants;  (ii)  review  management's  plan  for  engaging EchoStar's
independent public accountants during the year to perform non-audit services and
consider what  effect  these services  will  have  on the  independence  of  the
accountants;  (iii) review the  annual financial statements  and other financial
reports which  require approval  by  the Board  of  Directors; (iv)  review  the
adequacy  of EchoStar's system  of internal accounting  controls; and (v) review
the scope of the independent public accountants' audit plans and the results  of
the  audit. The principal function of the Executive Compensation Committee is to
award grants under and administer EchoStar's Stock Incentive Plan.              

    The Board of Directors of the Issuer consists of Messrs. Ergen, DeFranco and
Zimmer. The Board of  Directors of the Issuer  has no committees. The  executive
officers of the Issuer are the same as the executive officers of EchoStar.      

    There are no family relationships among the executive officers and directors
of  EchoStar or arrangements or understandings between any executive officer and
any other person pursuant to which  any executive officer was selected as  such.
Pursuant  to the Bylaws of EchoStar, executive officers serve at the pleasure of
the Board of Directors. Executive officers  of EchoStar are elected annually  to
serve until their respective successors are elected and qualified.              

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EXECUTIVE COMPENSATION                                                          

    Executive  officers are compensated  by certain subsidiaries  of the Issuer.
The following table sets forth the cash and non-cash compensation for the fiscal
years ended December 31, 1995, 1994 and  1993 of the Chief Executive Officer  of
EchoStar  and  the  next  four most  highly  compensated  executive  officers of
EchoStar (collectively, the "Named Executive Officers").                        

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                                       NUMBER OF                   
                                                                      OTHER ANNUAL      OPTIONS       ALL OTHER    
NAME AND PRINCIPAL POSITION        YEAR       SALARY       BONUS    COMPENSATION (1)    GRANTED    COMPENSATION (2)
-------------------------------  ---------  -----------  ---------  ----------------  -----------  ----------------
                                                                                                                   
Charles W. Ergen...............       1995  $   190,000  $  --         $   --             14,705      $   15,158   
  Chairman, President,                1994      177,578     --             --             53,568             888   
  and Chief Executive Officer         1993      156,000     --             --             --              10,557   

R. Scott Zimmer................       1995      160,000     --             88,229         14,705          32,390   
  Vice President                      1994      148,006     --             74,396         42,855          18,990   
                                      1993      132,000     95,452         71,458         --              19,195   

James DeFranco.................       1995      156,923     --             --             11,764          15,158   
  Vice President                      1994      154,461     --             --             42,855           1,000   
                                      1993      144,000     55,778         --             --              10,117   

Carl E. Vogel..................       1995      150,000     --             --             21,641          11,346   
  Chief Operating Officer             1994      107,308     --             --            375,776             500   
  and Executive Vice President        1993      --          --             --             --              --       

David K. Moskowitz.............       1995      130,000     10,000         --             28,048          13,270   
  Senior Vice President,              1994      125,384     --             --             53,568           1,000   
  Secretary and General Counsel       1993      115,000     41,833         --             --               6,497   

------------------------                                                        
(1) With respect to Mr. Zimmer, "Other Annual Compensation" includes housing and
    car allowances related to Mr. Zimmer's overseas assignment. While each Named
    Executive Officer enjoys certain other perquisites, such perquisites do  not
exceed the lesser of $50,000 or 10% of each officer's salary and bonus. 

(2)  "All Other Compensation" includes  amounts contributed to EchoStar's 401(k)
    plan and premiums paid on health insurance on behalf of the Named  Executive
    Officers.  With respect to Mr. Zimmer "All Other Compensation" also includes
home leave and education allowances related to his overseas assignment. 

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    The following table  provides information  concerning grants  of options  to
purchase  Class A Common Stock  of EchoStar made in  1995 to the Named Executive
Officers.                                                                       

OPTION GRANTS IN LAST FISCAL YEAR 

                                                        [Enlarge/Download Table]

                                                                                                 POTENTIAL REALIZABLE  
                                                                                                VALUE AT ASSUMED RATES 
                                         NUMBER OF     PERCENT OF                                   OF STOCK PRICE     
                                        SECURITIES    TOTAL OPTIONS                            APPRECIATION FOR OPTION 
                                        UNDERLYING     GRANTED TO      EXERCISE                          TERM          
                                          OPTIONS     EXECUTIVE IN     PRICE PER   EXPIRATION  ------------------------
NAME                                      GRANTED         1995           SHARE        DATE         5%           10%    
--------------------------------------  -----------  ---------------  -----------  ----------  -----------  -----------
                                                                                                                       
Charles W. Ergen......................     14,705(1)         3.2%      $   17.00     06-20-05  $   407,199  $   648,397
R. Scott Zimmer.......................     14,705(1)         3.2%          17.00     06-20-05      407,199      648,397
James DeFranco........................     11,764(1)         2.6%          17.00     06-20-05      325,759      518,717
Carl E. Vogel.........................     11,764(1)         2.6%          17.00     06-20-05      325,759      518,717
Carl E. Vogel.........................      9,877(2)         2.2%          20.25     12-22-05      325,794      518,772
David K. Moskowitz....................     13,234(1)         2.9%          17.00     06-20-05      366,466      583,535
David K. Moskowitz....................     14,814(2)         3.3%          20.25     12-22-05      488,642      778,079

------------------------                                                        
(1) In June  1995, EchoStar  granted options  to the  Named Executive  Officers,
    among  other key employees, to purchase shares  of Class A Common Stock. The
    options vest 20%  on June 20,  1996, and  20% thereafter on  June 20,  1997,
    1998,  1999  and 2000.  See "--  Executive  Compensation --  Stock Incentive
    Plan." The options expire five years from the date on which each portion  of
    the  option  first  becomes  exercisable, subject  to  early  termination in
certain circumstances.                                                  

(2) In December 1995, EchoStar granted options to the Named Executive  Officers,
    among  other key employees, to purchase shares  of Class A Common Stock. The
    options vest 20% on  December 22, 1996, and  20% thereafter on December  22,
    1997, 1998, 1999 and 2000. See "-- Stock Incentive Plan." The options expire
    five  years from the date on which  each portion of the option first becomes
exercisable, subject to early termination in certain circumstances.     

    The following table provides information as of December 31, 1995, concerning
unexercised options  to  purchase  Class  A Common  Stock.  None  of  the  Named
Executive Officers exercised any stock options during 1995.                     

FISCAL YEAR END OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                            NUMBER OF SECURITIES                                 
                                                                 UNDERLYING              VALUE OF UNEXERCISED    
                                                           UNEXERCISED OPTIONS AT      IN-THE-MONEY OPTIONS AT   
                                                             DECEMBER 31, 1995          DECEMBER 31, 1995 (1)    
                                                         --------------------------  ----------------------------
NAME                                                     EXERCISABLE  UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
                                                         -----------  -------------  -------------  -------------
                                                                                                                 
Charles W. Ergen........................................     10,714        57,559    $     159,821   $   745,864 
R. Scott Zimmer.........................................      8,571        48,989          127,854       618,025 
James DeFranco..........................................      8,571        46,048          127,854       596,703 
Carl E. Vogel...........................................    332,922        64,495        6,973,231       764,050 
David K. Moskowitz......................................     10,714        70,902          159,821       794,455 

------------------------                                                        
(1) The dollar value of each exercisable and unexercisable option was calculated
    by  multiplying the number of shares of  Class A Common Stock underlying the
    option by the difference  between the exercise price  of the option and  the
    closing  price (as quoted in the Nasdaq National Market) of a share of Class
A Common Stock on December 31, 1995.                                    

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    COMPENSATION  COMMITTEE  INTERLOCKS  AND INSIDER  PARTICIPATION.    Prior to
October 1995, EchoStar did not have  a Compensation Committee, and its Board  of
Directors determined all matters concerning executive compensation.             

    DIRECTOR  COMPENSATION.   Directors of EchoStar  who are  not also executive
officers of EchoStar  receive $500 for  each meeting of  the Board of  Directors
attended and are reimbursed for reasonable travel expenses related to attendance
at   Board  meetings.  Directors  of  EchoStar   are  elected  annually  by  the
stockholders of EchoStar. Directors of the Issuer are not compensated for  their
services as directors. Directors of the Issuer are elected annually by EchoStar.

    The  Board  of Directors  of EchoStar  has  approved the  Non-Employee Stock
Option Incentive Plan (the "Director Plan") pursuant to which directors who  are
not  also employees of EchoStar  are granted options to  acquire 1,000 shares of
Class A Common Stock of EchoStar upon  election to the Board. The Director  Plan
is  being submitted to shareholders of EchoStar  for approval at the 1996 Annual
Meeting of Shareholders. Subject to  such approval, the Board approved  issuance
of  options to  Messrs. Angelich  and Friedlob  as of  December 22,  1995. These
options are 100% vested  upon issuance with  an exercise price  of $20.25 and  a
term of five years.                                                             

    EMPLOYMENT  AGREEMENT.  In  March 1994, EchoStar  entered into an employment
agreement with Carl E. Vogel, pursuant to which Mr. Vogel acts as Executive Vice
President and Chief Operating Officer of EchoStar and receives an annual  salary
of  $150,000. EchoStar  has no employment  agreements with any  of its executive
officers other than Mr. Vogel.                                                  

    EchoStar may terminate Mr. Vogel's employment  at any time, with or  without
cause,  but  will be  required to  compensate  Mr. Vogel  a specified  amount if
EchoStar terminates his employment prior  to January 1, 1997. Such  compensation
will  depend on the duration of Mr. Vogel's employment with EchoStar. Similarly,
Mr. Vogel may voluntarily terminate his employment with EchoStar at any time and
receive severance  compensation  in an  amount  based  on the  duration  of  his
employment with EchoStar at the time of such termination. On or after January 1,
1997,  Mr. Vogel will  have no right  to receive any  compensation from EchoStar
upon termination. For a period of one year following termination of Mr.  Vogel's
employment with EchoStar, Mr. Vogel may not compete against EchoStar by working,
or  acting in any other  capacity, for a company in  the DBS industry. Mr. Vogel
may, however, work for an affiliate of a company in the DBS industry, in a  role
unrelated  to that industry.  Mr. Vogel also  has an option  to purchase 322,208
shares of Class  A Common  Stock of  EchoStar for  $3.10 per  share (the  "Vogel
Option").                                                                       

    STOCK  INCENTIVE PLAN.   EchoStar  has adopted  a stock  incentive plan (the
"Incentive Plan") to provide incentives to attract and retain officers and other
key employees.  EchoStar's  Executive  Compensation  Committee  administers  the
Incentive Plan. Key employees are eligible to receive awards under the Incentive
Plan, in the Committee's discretion.                                            

    Awards available under the Incentive Plan include: (i) common stock purchase
options;  (ii) stock appreciation rights;  (iii) restricted stock and restricted
stock units; (iv) performance awards;  (v) dividend equivalents; and (vi)  other
stock-based  awards. EchoStar has reserved  up to ten million  shares of Class A
Common Stock for granting  awards under the Incentive  Plan. Under the terms  of
the Incentive Plan, the Committee retains discretion, subject to plan limits, to
modify the terms of outstanding awards and to reprice awards.                   

    EchoStar  has granted to officers and  other key employees options under the
Incentive Plan for  a total of  1,164,357 shares  of Class A  Common Stock.  The
options  generally vest at the rate of 20% per year commencing one year from the
date of grant and 20% thereafter on  each anniversary of the date of grant.  The
exercise prices of these options range between $9.33 and $20.25 per share.      

    LAUNCH  BONUS  PLAN.    Effective  December  16,  1995,  EchoStar  granted a
performance award  of  10 shares  of  Class A  Common  Stock to  all  full  time
employees with more than 90 days service. The total number of shares granted was
approximately 4,870 shares.                                                     

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    401(K) PLAN.  In 1983, EchoStar adopted a defined-contribution tax-qualified
401(k)  plan. EchoStar employees become eligible for participation in the 401(k)
plan upon completing one-half year of service with EchoStar and reaching age 21.
The 401(k) plan participants may contribute an amount equal to not less than  1%
and  not  more  than 15%  of  their  compensation in  each  contribution period.
EchoStar may make  a 50% matching  contribution up  to a maximum  of $1,000  per
participant  per calendar year.  EchoStar may also  make an annual discretionary
profit sharing  or employer  stock  contribution to  the  401(k) plan  with  the
approval of the Board of Directors.                                             

    The  401(k)  plan participants  are  immediately vested  in  their voluntary
contributions, plus actual earnings thereon. The  balance of the vesting in  the
401(k)  plan participants' accounts is based  on years of service. A participant
becomes 10% vested  after one year  of service,  20% vested after  two years  of
service, 30% vested after three years of service, 40% vested after four years of
service,  60% vested after five years of  service, 80% vested after six years of
service and 100% vested after seven years of service.                           

    Effective December 22, 1995, EchoStar  contributed 55,000 shares of Class  A
Common  Stock to the 401(k) plan as a discretionary employer stock contribution.
EchoStar recognized expense,  and an addition  to its paid-in  capital, for  the
fair  value (approximately $1.1  million) of the  EchoStar shares contributed to
the Plan. No employee  has voting or  any other interest in  the Class A  Common
Stock  unless still  employed by  EchoStar on December  31, 1996.  Shares of the
Class A Common Stock have been allocated to the 401(k) accounts of the following
executive officers  of EchoStar  in accordance  with the  Plan: (i)  Charles  W.
Ergen,  699 shares; (ii) R. Scott Zimmer,  699 shares; (iii) James DeFranco, 699
shares; (iv) Carl E. Vogel, 511 shares; (v) David K. Moskowitz, 605 shares;  and
(vi) all officers and directors as a group, 5,272 shares.                       

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Certain  subsidiaries of EchoStar have agreed to indemnify Charles W. Ergen,
Chief Executive  Officer  and President  of  EchoStar, James  DeFranco,  a  Vice
President of EchoStar, R. Scott Zimmer, a Vice President of EchoStar, and Cantey
M.  Ergen, a former Director of HTS and  the spouse of Charles W. Ergen, for any
adjustments to such individuals' federal, state or local income taxes  resulting
from adjustments to EchoStar's subsidiaries' taxable income or loss, tax credits
or   tax  credit  recapture  for  years   during  which  such  individuals  were
stockholders of such subsidiaries and such  subsidiaries elected to be taxed  as
Subchapter  S  corporations.  This  indemnity  agreement  also  covers interest,
penalties and  additions  to  tax,  as well  as  fees  and  expenses,  including
attorneys' and accountants' fees, if any.                                       

    Charles  W.  Ergen  beneficially owns  10%  of  the stock  of  Wright Travel
Corporation ("Wright Travel"),  a privately  held travel  agency which  EchoStar
uses  for its travel  arrangements and which leases  office space from EchoStar.
For the year ended  December 31, 1995, EchoStar  paid approximately $769,000  to
Wright  Travel. These payments were primarily  related to travel expenses, large
events and seminars that were contracted with Wright Travel at rates  comparable
to  those obtainable  from independent third  parties. In  1995, EchoStar earned
approximately $27,000  from the  lease by  Wright Travel  of office  space  from
EchoStar,  which  amount  was offset  by  approximately $10,000  required  to be
credited by EchoStar to Wright Travel for the exclusive services of an  employee
of Wright Travel.                                                               

    EchoStar  issued a long-term  promissory note (the  "Ergen Note") payable to
Charles W. Ergen in  the principal amount  of $14.7 million  as of December  31,
1993.  The proceeds  of the  Ergen Note  were used  to make  payments toward the
construction and  launch  of EchoStar  I  (see Note  6  of Notes  to  EchoStar's
Financial  Statements). In connection  with the 1994  Notes Offering, Dish, Ltd.
exchanged shares of its Series A Preferred Stock for the Ergen Note and  accrued
interest  thereon at the rate of 10%  per annum. Subsequent to the exchange, Mr.
Ergen sold five percent of his Series  A Preferred Stock of Dish, Ltd. to  James
DeFranco  for $753,000. In 1995, Series A Preferred Stock of EchoStar was issued
in exchange for  Series A Preferred  Stock of  Dish, Ltd. Pursuant  to the  1994
Indenture,  dividends may be  paid on the  Series A Preferred  Stock of EchoStar
only  if  certain  conditions  are   satisfied.  See  "Description  of   Certain
Indebtedness--1994 Notes." As of December 31, 1995, dividends accrued but unpaid
on  the Dish, Ltd. Series A Preferred Stock  and the Series A Preferred Stock of
EchoStar to Mr. Ergen  and Mr. DeFranco,  respectively, aggregated $2.0  million
and $107,000.                                                                   

    Since March 1995, Mr. Ergen has served on the Board of Directors of SSET. In
1994,  EchoStar  provided  SSET  with $8.75  million  of  financing  through the
issuance by SSET to  EchoStar of its  seven-year, 6.5% subordinated  convertible
non-recourse  debentures, which are convertible into approximately 12% of SSET's
outstanding common stock,  based on the  number of shares  of SSET common  stock
outstanding  at December 31,  1995. As of  December, 31, 1995,  the total amount
owed by SSET to EchoStar under the convertible debentures was approximately $9.6
million, including  accrued  interest. EchoStar  also  purchased all  of  SSET's
minority interest in DBSC and certain notes and accounts payable by DBSC to SSET
for  $1.25 million.  In connection with  these transactions,  Mr. Ergen advanced
$4.0 million  to  EchoStar,  all  of which  was  used  to  purchase  convertible
debentures  and certain  assets of  SSET. These  advances were  represented by a
promissory note bearing interest at  8% per annum and  were repaid in June  1994
from the proceeds of the 1994 Notes Offering.                                   

    In  December 1994, DirectSat, a subsidiary of SSET, was merged with a wholly
owned subsidiary of EchoStar. As a result of this merger, SSET acquired  800,780
shares of EchoStar's Class A Common Stock.                                      

    EchoStar  believes  that each  of the  transactions described  above between
EchoStar and its affiliates were on  terms comparable to those which would  have
been obtainable from unaffiliated third parties.                                

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The  following  table  and  the  accompanying  notes  set  forth information
concerning the beneficial ownership  of EchoStar's equity  securities as of  May
31, 1996. The information is presented for: (i) each person known by EchoStar to
be  the beneficial owner  of more than  five percent of  any class of EchoStar's
capital stock;  (ii)  each director  of  EchoStar; (iii)  each  Named  Executive
Officer;  and (iv) all  directors and executive  officers as a  group. Except as
otherwise indicated,  each person  listed in  the following  table has  informed
EchoStar  that such person has sole voting  and investment power with respect to
such person's shares of capital stock.                                          

                                                        [Enlarge/Download Table]

                                                                                                    PERCENTAGE OF         
NAME (1)                                                                       NUMBER OF SHARES         CLASS             
                                                                               -----------------  -----------------       
                                                                                                                          
8% Series A Cumulative Preferred Stock                                                                                    
  Charles W. Ergen............................................................      1,535,847(2)       95.0%              
  James DeFranco..............................................................         80,834           5.0%              
  All Directors and Executive Officers as a Group (twelve persons)............      1,616,681         100.0%              
Class A Common Stock                                                                                                      
  Charles W. Ergen............................................................     31,425,449(3)       73.6%(4)(5)        
  James DeFranco..............................................................      1,712,588(6)        4.0%(4)           
  R. Scott Zimmer.............................................................        827,917(7)        1.9%(4)           
  SSE Telecom, Inc............................................................        912,717(8)        2.1%(4)           
  Carl E. Vogel...............................................................        346,245(9)          *               
  David K. Moskowitz..........................................................         28,692(10)         *               
  All Directors and Executive Officers as a Group (twelve persons)............      34,405,683   11)        80.6      %(4)
Class B Common Stock                                                                                                      
  Charles W. Ergen............................................................      29,804,401          100.0      %      
  All Directors and Executive Officers as a Group (twelve persons)............      29,804,401          100.0      %      

------------------------                                                        
*Less than 1%                                                                   

(1) Except as otherwise noted, the address  of each such person is 90  Inverness
Circle East, Englewood, Colorado 80112.                                 

(2)  Includes 1,125,000 shares of Series A Preferred Stock held in trust for the
    benefit of Mr. Ergen's minor children  and other members of his family.  Mr.
    Ergen's  spouse is the trustee for that trust. All of the Series A Preferred
    Stock is  pledged to  Martin Marietta  as security  for the  performance  of
certain of ESC's obligations under the Satellite Contracts.             

(3)  Includes: (i) 24,368 shares  of Class A Common  Stock issuable to Mr. Ergen
    upon exercise of employee stock options;  (ii) 29,804,401 shares of Class  A
    Common  Stock issuable upon conversion of  Mr. Ergen's Class B Common Stock;
    (iii) 410,847 shares of Class A Common Stock issuable upon conversion of Mr.
    Ergen's Series A Preferred  Stock; (iv) 1,125,000 shares  of Class A  Common
    Stock issuable upon conversion of Series A Preferred Stock held in trust for
    the  benefit of Mr. Ergen's minor children  and other members of his family;
    and (v)  55,000  shares  of  Class  A Common  Stock  held  by  the  EchoStar
Communications Corporation 401(k) Plan, of which Mr. Ergen is a trustee.

(4)  The  beneficial ownership  percentage was  calculated assuming  exercise or
    conversion of  all  Class B  Common  Stock, Preferred  Stock,  Warrants  and
    employee  stock options ("Derivative Securities")  into Class A Common Stock
    by  all  holders  of  such  Derivative  Securities.  Assuming  exercise   or
    conversion of Derivative Securities by such person, and only by such person,
    the  beneficial ownership of Class  A Common Stock would  be as follows: Mr.
    Ergen, 74.8%; Mr. DeFranco,  16.2%; Mr. Zimmer, 8.1%;  Mr. Vogel, 3.6%;  and
all officers and directors as a group,                                  

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    81.0%.  SSE Telecom, Inc. does not own any Derivative Securities. If none of
    the holders of  Derivative Securities exercise  or convert such  securities,
    SSE  Telecom, Inc.  would beneficially own  8.6% of the  outstanding Class A
Common Stock.                                                           

(5) The percentage  of total  voting power  held by  Mr. Ergen  is 96.1%,  after
    giving  effect  to  the exercise  of  the  Warrants and  the  employee stock
options.                                                                

(6) Includes: (i) 19,494 shares of Class A Common Stock issuable to Mr. DeFranco
    upon exercise  of employee  stock options;  (ii) 80,834  shares of  Class  A
    Common  Stock issuable upon conversion of  Mr. DeFranco's Series A Preferred
    Stock; (iii) 751 shares of  Class A Common Stock  held as custodian for  his
    minor  children; and (iv) 375,000 shares  of Class A Common Stock controlled
by Mr. DeFranco as general partner of a partnership.                    

(7) Includes: (i) 20,083 shares of Class  A Common Stock issuable to Mr.  Zimmer
    upon exercise of employee stock options; (ii) 2,300 shares of Class A Common
    Stock  owned jointly with members of his family; and (iii) 100,000 shares of
    Class A Common Stock held in trust for the benefit of Mr. Zimmer's  children
    and other members of his family. Mr. Zimmer's spouse is the trustee for that
trust.                                                                  

(8)   Includes  111,937  shares  of  Class  A  Common  Stock  owned  by  EchoSat
    Corporation, a wholly owned subsidiary of  SSE Telecom, Inc. The address  of
   SSE Telecom, Inc. is 8230 Leesburg Pike, Suite 710, Vienna, Virginia 22182.

(9)  Includes: (i) 345,988 shares of Class  A Common Stock issuable to Mr. Vogel
    upon exercise of  employee stock  options; and (ii)  247 shares  of Class  A
Common Stock owned jointly with Mr. Vogel's spouse.                     

(10)  Includes:  (i) 24,074  shares  of Class  A  Common Stock  issuable  to Mr.
    Moskowitz upon  exercise of  employee stock  options; (ii)  3,000 shares  of
    Class  A Common Stock owned  by Mr. Moskowitz's spouse;  (iii) 166 shares of
    Class A Common  Stock held  as custodian for  his minor  children; and  (iv)
    1,023  shares  of Class  A  Common Stock  held  as trustee  for  Mr. Ergen's
children.                                                               

(11) Includes: (i) 176,334 shares of Class A Common Stock issuable upon exercise
    of employee stock options; (ii) 55,000 shares held by the 401(k) plan; (iii)
    375,000 shares of Class A Common  Stock held in a partnership; (iv)  322,208
    shares  of Class A Common Stock issuable  upon exercise of the Vogel Option;
    (v) 1,616,681 shares  of Class A  Common Stock issuable  upon conversion  of
    Series  A Preferred  Stock; (vi) 29,804,401  shares of Class  A Common Stock
    issuable upon conversion of  Class B Common Stock;  (vii) 101,941 shares  of
    Class  A Common Stock held  in the name of, or  in trust for, minor children
    and other family members;  and (viii) 5,753 shares  of Class A Common  Stock
owned by or jointly with family members.                                

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DESCRIPTION OF CERTAIN INDEBTEDNESS 

    Set  forth below is a summary of certain indebtedness to which the Issuer is
subject. This summary describes all  material elements of such indebtedness  but
does not purport to be complete and is qualified in its entirety by reference to
the  applicable agreements  filed as exhibits  to the  Registration Statement of
which this Prospectus is a part.                                                

1994 NOTES                                                                      

    In June  1994, Dish,  Ltd.  issued the  1994  Notes, which  generated  gross
proceeds  of approximately $335.1 million. Interest on the 1994 Notes accrues at
the rate of 12 7/8% per annum, but is not payable in cash prior to June 1, 1999.
Thereafter, interest will accrue at  the same rate and  will be payable in  cash
semi-annually on June 1 and December 1 of each year. Principal of the 1994 Notes
accretes  to $624 million in  1999, and matures on June  1, 2004. The 1994 Notes
are secured  by, among  other things:  (i) a  pledge of  all of  the issued  and
outstanding  capital stock of  certain of EchoStar's  subsidiaries; (ii) a first
priority security interest  in the assets  of ESC  (subject to the  terms of  an
intercreditor  agreement  with,  among  others, Martin  Marietta  and  the Bank)
including a first priority security interest  in EchoStar I and, when  launched,
EchoStar II; (iii) a first priority security interest in the 1994 Escrow Account
and  Dish, Ltd.'s customer lists  and related rights with  respect to EchoStar I
and EchoStar  II;  (iv) a  collateral  assignment,  insofar as  they  relate  to
EchoStar  I and EchoStar  II, of the Satellite  Contracts, the Launch Contracts,
all programming contracts, all TT&C contracts and each other contract  necessary
for  the operation of EchoStar I and EchoStar  II; and (v) a subordinate lien on
the assets of the Credit Agreement Borrowers.                                   

    Except as set forth below, the 1994 Notes are not redeemable at Dish, Ltd.'s
option prior  to  June  1, 1999.  Thereafter,  the  1994 Notes  are  subject  to
redemption  at the option of Dish, Ltd., in  whole or in part, at the redemption
prices set forth in the 1994 Indenture.  In addition, at any time prior to  June
1,  1997, Dish, Ltd.  may redeem the 1994  Notes at a  redemption price equal to
111.5% of  the  accreted value  thereof  on the  repurchase  date with  the  net
proceeds  of one  public or  private sale of  certain equity  interests of Dish,
Ltd.,  provided  that:  (i)  at  least  two-thirds  of  the  1994  Notes  remain
outstanding  immediately after the occurrence of  such redemption; and (ii) such
redemption occurs within 120 days of the  date of the closing of any such  sale.
On  each of June 1, 2002 and June 1,  2003, Dish, Ltd. is required to redeem 25%
of the original  aggregate principal amount  of the 1994  Notes at a  redemption
price  equal to 100% of the principal  amount thereof, together with accrued and
unpaid interest to the redemption date.                                         

    The 1994 Indenture  provides that  in the event  of a  "Change of  Control,"
Dish,  Ltd. is required to make  an offer to purchase all  1994 Notes at 101% of
the accreted value thereof (if prior to  June 1, 1999) or 101% of the  principal
amount  thereof (if on or after June  1, 1999), plus accrued and unpaid interest
to the date of payment. "Change of Control" means: (i) any transaction or series
of transactions, the result  of which is that  the Principals and their  Related
Parties  (as such terms are hereinafter defined), or an entity controlled by the
Principals and their Related  Parties, cease to be  the "beneficial owners"  (as
defined  in Rule  13d-3 under  the Exchange Act)  of at  least 30%  of the total
equity interests of Dish, Ltd. and to have the voting power to elect at least  a
majority of the Board of Directors of Dish, Ltd.; or (ii) the first day on which
a  majority of  the members  of the  Board of  Directors of  Dish, Ltd.  are not
Continuing  Directors.  "Continuing   Director"  means   as  of   any  date   of
determination, any member of the Board of Directors of Dish, Ltd. who: (a) was a
member  of such Board of Directors on the date of the 1994 Indenture; or (b) was
nominated  for  election  or  elected  to  such  Board  of  Directors  with  the
affirmative  vote of a majority of the  Continuing Directors who were members of
such Board  at the  time  of such  nomination  or election.  "Principals"  means
Messrs.  Ergen, DeFranco, Zimmer, Vogel,  Fears and Moskowitz. "Related Parties"
means, with respect to any Principal:  (y) the spouse and each immediate  family
member  of such Principal; and (z) each trust, corporation, partnership or other
entity of which  such Principal beneficially  holds an 80%  or more  controlling
interest.                                                                       

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    The  1994 Indenture contains restrictive covenants that, among other things,
impose limitations on  Dish, Ltd.  and its  subsidiaries with  respect to  their
ability to: (i) incur additional indebtedness; (ii) issue preferred stock; (iii)
apply  the proceeds of certain asset sales;  (iv) create, incur or assume liens;
(v) create dividend and other payment restrictions with respect to Dish,  Ltd.'s
subsidiaries;  (vi) merge, consolidate or  sell assets; (vii) incur subordinated
or junior debt; and (viii) enter into transactions with affiliates. In addition,
Dish, Ltd., may pay dividends on its  equity securities only if: (y) no  default
is  continuing under  the 1994  Indenture; and (z)  after giving  effect to such
dividend, Dish, Ltd.'s ratio of total  indebtedness to cash flow (calculated  in
accordance  with the 1994  Indenture) would not  exceed 4.0 to  1. Moreover, the
aggregate amount of such dividends  generally may not exceed  the sum of 50%  of
Dish,  Ltd.'s consolidated  net income (calculated  in accordance  with the 1994
Indenture) from  the date  of  issuance of  the 1994  Notes,  plus 100%  of  the
aggregate  net proceeds  to Dish,  Ltd. from  the issuance  and sale  of certain
equity interests of Dish, Ltd. (including common stock).                        

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DESCRIPTION OF EXCHANGE NOTES 

    The following summary of certain provisions of: (i) the 1996 Indenture;  and
(ii)  the Registration Rights Agreement  does not purport to  be complete and is
qualified  in  its  entirety  by  reference  to  the  1996  Indenture  and   the
Registration  Rights Agreement. All material elements  of the 1996 Indenture and
the Registration  Rights  Agreement are  set  forth below.  The  definitions  of
certain terms used in the following summary are set forth below under "--Certain
Definitions."   In  the   following  summary,  "EchoStar"   refers  to  EchoStar
Communications  Corporation  only,  not   including  its  direct  and   indirect
subsidiaries.  Unless the context  otherwise requires, all  references herein to
the "Notes" shall include the Old Notes and the Exchange Notes.                 

GENERAL                                                                         

    The Exchange Notes will be issued,  and the Old Notes were issued,  pursuant
to  the 1996 Indenture among the Issuer,  the Guarantors, EchoStar DBS and First
Trust National  Association,  as  trustee  (the "Trustee").  The  terms  of  the
Exchange  Notes  are  the  same in  all  respects  (including  principal amount,
interest rate, maturity, security and ranking) as the terms of the Old Notes for
which they may  be exchanged  pursuant to the  Exchange Offer,  except that  the
Exchange  Notes  (1)  are freely  transferrable  by holders  thereof  (except as
provided below) and  (ii) are not  entitled to certain  registration rights  and
certain  liquidated damages  provisions which  are applicable  to the  Old Notes
under the Registration Rights Agreement. The Exchange Notes will be issued under
the 1996 Indenture governing  the Old Notes. The  Exchange Notes are subject  to
all  such terms, and holders of Notes are referred to the 1996 Indenture and the
Trust Indenture Act for a statement thereof.                                    

    The Notes rank PARI PASSU in  right of payment with all senior  indebtedness
of  the Issuer. Although the  Notes are titled "Senior":  (i) the Issuer has not
issued, and does  not have any  plans to  issue, any indebtedness  to which  the
Notes  would be senior; and  (ii) the Notes are  effectively subordinated to all
liabilities of  EchoStar  (except  liabilities to  general  creditors)  and  its
Subsidiaries  (except  liabilities  of  the  Issuer),  including  liabilities to
general creditors. As of December 31, 1995, the liabilities of EchoStar and  its
Subsidiaries aggregated approximately $466.4 million. In addition, the cash flow
generated by the assets and operations of the Issuer's Subsidiaries will only be
available  to satisfy the  Issuer's obligations on  the Notes at  any time after
payment of all  amounts due and  payable at such  time under the  1994 Notes  by
Dish,  Ltd. The Notes are  secured by liens on certain  assets of the Issuer and
its Affiliates and  will be  guaranteed on  a senior  unsecured or  subordinated
basis,  from  time  to  time,  by certain  Affiliates  of  the  Issuer.  See "--
Security," "-- Affiliate Guarantees," "Risk Factors -- Springing Guarantees" and
"Risk Factors -- Contingent Collateral."                                        

PRINCIPAL, MATURITY AND INTEREST                                                

    The Old  Notes were  issued  in the  aggregate  principal amount  of  $580.0
million  which  was  sufficient to  generate  gross  proceeds to  the  Issuer of
approximately  $350.0  million.  The  Notes  will  mature  on  March  15,  2004.
Commencing on March 15, 2000, interest will accrue at the rate of 13 % per annum
and  will be payable  semi-annually in cash  on each March  15 and September 15,
commencing September 15, 2000, to holders of record on the immediately preceding
March 1 and September 1. Interest will accrue from the most recent date to which
interest has been paid or,  if no interest has been  paid, from March 15,  2000.
Interest  will  be computed  on the  basis of  a 360-day  year of  twelve 30-day
months. The Exchange Notes  will bear interest from  March 25, 1996. Holders  of
the  Old Notes whose Old Notes are accepted  for exchange will be deemed to have
waived the right to have interest accrete, or to receive any payment in  respect
of  interest on  the Old  Notes accreted, from  March 25,  1996, to  the date of
issuance of the Exchange Notes.                                                 

    The Notes will be payable both as to principal and interest at the office or
agency of  the Issuer  maintained for  such purpose  or, at  the option  of  the
Issuer,  payment of interest may  be made by check mailed  to the holders of the
Notes at their  respective addresses  set forth in  the register  of holders  of
Notes.  Until otherwise designated by the  Issuer, the Issuer's office or agency
will be the  office of  the Trustee maintained  for such  purpose. The  Exchange
Notes  will be issued  in registered form, without  coupons, in denominations of
$1,000 and integral multiples thereof.                                          

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OPTIONAL REDEMPTION                                                             

    Except as provided in the next  paragraph, the Notes will not be  redeemable
at  the Issuer's option prior  to March 15, 2000.  Thereafter, the Notes will be
subject to redemption at the option of the Issuer, in whole or in part, upon not
less than 30 nor more than 60 days' notice, at the redemption prices  (expressed
as  percentages of principal amount) set  forth below, together with accrued and
unpaid interest thereon to  the applicable redemption  date, if redeemed  during
the 12-month period beginning on March 15 of the years indicated below:         

                                                                [Download Table]

YEAR                                                          PERCENTAGE  
                                                             -------------
                                                                          
2000.......................................................     106.5625% 
2001.......................................................     104.3750% 
2002.......................................................     102.1875% 
2003.......................................................     100.0000% 

    Notwithstanding  the foregoing,  at any  time prior  to March  15, 1999, the
Issuer may redeem Notes at a redemption price equal to 112.125% of the  Accreted
Value  thereof on  the repurchase date  with the  net proceeds of  one public or
private sale of  Equity Interests  (other than Disqualified  Stock) of  EchoStar
(other  than  to EchoStar  and  its Subsidiaries);  PROVIDED  that (a)  at least
two-thirds in aggregate principal amount  of the Notes originally issued  remain
outstanding  immediately after  the occurrence of  such redemption  and (b) such
redemption occurs within 120 days of the date of the closing of any such sale.  

SELECTION AND NOTICE                                                            

    If less than all of the Notes are  to be redeemed at any time, selection  of
Notes  for  redemption  will be  made  by  the Trustee  in  compliance  with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or by such other method as the Trustee deems fair and appropriate, PROVIDED that
no Notes with a principal  amount of $1,000 or less  shall be redeemed in  part.
Notice  of redemption shall  be mailed by first  class mail at  least 30 but not
more than 60  days before  the redemption  date to each  holder of  Notes to  be
redeemed  at its registered address. If any Note is to be redeemed in part only,
the notice of redemption that  relates to such Note  shall state the portion  of
the  principal amount  thereof to  be redeemed. A  new Note  in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation  of the  original Note.  On and  after the  redemption
date,  interest will  cease to  accrete or accrue  on Notes  or portions thereof
called for redemption.                                                          

OFFER TO PURCHASE UPON CHANGE OF CONTROL                                        

    Upon the occurrence of a Change of  Control, the Issuer will be required  to
make  an  offer  (a  "Change of  Control  Offer")  to each  holder  of  Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof)  of
such  holder's Notes  at a purchase  price equal  to 101% of  the Accreted Value
thereof on the  date of purchase  (if prior to  March 15, 2000)  or 101% of  the
aggregate  principal amount thereof,  together with accrued  and unpaid interest
thereon to the date of purchase (if on or after March 15, 2000) (in either case,
the "Change  of  Control Payment").  Within  15  days following  any  Change  of
Control, the Issuer shall mail a notice to each holder stating:                 

        (a)  that the  Change of  Control Offer  is being  made pursuant  to the
covenant entitled "Change of Control";                                  

        (b) the purchase price and the purchase date, which shall be no  earlier
    than  30 days nor  later than 40 days  after the date  such notice is mailed
(the "Change of Control Payment Date");                                 

        (c) that any  Notes not  tendered will  continue to  accrete and  accrue
interest in accordance with the terms of the 1996 Indenture;            

        (d)  that, unless the  Issuer defaults in  the payment of  the Change of
    Control Payment, all Notes  accepted for payment pursuant  to the Change  of
    Control  Offer shall cease to accrete or accrue interest after the Change of
Control Payment Date;                                                   

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        (e) that holders  will be  entitled to  withdraw their  election if  the
    Paying  Agent receives, not later  than the close of  business on the second
    Business Day  preceding the  Change  of Control  Payment Date,  a  telegram,
    telex,  facsimile  transmission  or letter  setting  forth the  name  of the
    holder, the  principal  amount  of  Notes  delivered  for  purchase,  and  a
    statement  that such holder  is withdrawing his election  to have such Notes
purchased;                                                              

        (f) that holders whose  Notes are being purchased  only in part will  be
    issued new Notes equal in principal amount to the unpurchased portion of the
    Notes  surrendered, which  unpurchased portion  must be  equal to  $1,000 in
principal amount or an integral multiple thereof; and                   

        (g) any other information material  to such holder's decision to  tender
Notes.                                                                  

    The  Issuer  will  comply with  the  requirements  of Rule  14e-1  under the
Exchange Act and  any other securities  laws and regulations  thereunder to  the
extent  such  laws  and  regulations  are  applicable  in  connection  with  the
repurchase of the  Notes in  connection with  a Change  of Control.  Due to  the
highly  leveraged  structure  of the  Issuer,  the  Issuer may  not  be  able to
repurchase all  of the  Notes tendered  for purchase  upon the  occurrence of  a
Change  of Control. If the Issuer fails  to repurchase all of the Senior Secured
Notes tendered for  purchase upon the  occurrence of a  Change of Control,  such
failure  will constitute  an Event  of Default.  See "--  Events of  Default and
Remedies."                                                                      

    Except as described  above with  respect to a  Change of  Control, the  1996
Indenture  does not contain provisions  that permit the holders  of the Notes to
require that  the Issuer  repurchase  or redeem  the Notes  in  the event  of  a
takeover, recapitalization or similar transaction.                              

OFFER TO PURCHASE UPON THE OCCURRENCE OF CERTAIN EVENTS                         

In the event that:                                                      

        (a)  EchoStar and its Subsidiaries do not  have the right to use orbital
    slot authorizations granted by the FCC covering a minimum of 21 transponders
at a single full CONUS orbital slot;                                    

        (b) EchoStar and its Subsidiaries at  any time fail to timely obtain  or
    maintain  any  material  license  or permit  that  is  necessary  to operate
    EchoStar I or EchoStar II in the  manner and in accordance with the plan  of
    operations  described in this Prospectus (unless: (i) EchoStar or any of its
    Subsidiaries is contesting the loss of such license or permit in good  faith
    at  the FCC and has not exhausted its remedies at the FCC; and (ii) EchoStar
    (together with  any Subsidiary)  continue  to have  the  right to  use  such
license or permit if previously obtained);                              

the  Issuer will be required  to make an offer (an  "Offer to Purchase") to each
holder of Notes to repurchase  all or any part (equal  to $1,000 or an  integral
multiple  thereof) of such holder's  Notes at a purchase  price equal to 101% of
the Accreted Value thereof on the date of purchase (if prior to March 15,  2000)
or  101% of  the aggregate principal  amount thereof, together  with accrued and
unpaid interest thereon to the date of purchase (if on or after March 15, 2000).

In addition, in the event that:                                         

        (a) EchoStar DBS Corporation fails to obtain authorization from the  FCC
    for  frequencies at the 148 WL orbital slot purchased at the FCC Auction, or
    in the event  that such authorization  is revoked or  rescinded, the  Issuer
    will  be required to apply the proceeds  of any refund of the purchase price
    for such frequencies from the FCC to an offer to all holders of the Notes to
    purchase the maximum principal amount of Notes that may be purchased out  of
such proceeds;                                                          

        (b)  on or before  March 1, 1997,  DBSC has not  either: (i) been merged
    with a Subsidiary  of EchoStar (the  "DBSC Merger"); or  (ii) consummated  a
    transaction  or series  of transactions (the  "Substitute DBSC Transaction")
    which, in the opinion of a majority of the Board of Directors of EchoStar as
    evidenced by  an  Officers' Certificate  delivered  to the  Trustee  and  an
    investment banking firm of national standing selected by the Issuer: (A) has
    the effect of providing EchoStar and its Subsidiaries substantially the same
benefits (without materially greater obligations) that                  

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    would have accrued to EchoStar and its Subsidiaries had the DBSC Merger been
    consummated;  and (B)  provides cash flow  to EchoStar  and its Subsidiaries
    with substantially similar  timing to the  cash flows that  would have  been
    generated  had the DBSC Merger been consummated, the Issuer will be required
    to apply the  greater of: (i)  $83.0 million;  and (ii) an  amount equal  to
    Investments  by EchoStar and its Subsidiaries  in DBSC Notes, since the date
    of the 1996 Indenture, to an offer  to all holders of the Notes to  purchase
    the  maximum principal  amount of  Notes that may  be purchased  out of such
amount;                                                                 

        (c) EchoStar and its Subsidiaries, at any time after the DBSC Merger  is
    consummated,  fail  to  timely  obtain  or  maintain  any  material  license
    necessary to operate EchoStar III in  the manner and in accordance with  the
    plan of operations described in this Prospectus (unless: (i) EchoStar or any
    of its Subsidiaries is contesting the loss of such license or permit in good
    faith  at the FCC  and has not exhausted  its remedies at  the FCC; and (ii)
    EchoStar (together with any subsidiary) continues  to have the right to  use
    such  license or permit if previously obtained), the Issuer will be required
    to apply  $83.0  million, minus  the  total  amount of  all  Offer  Payments
    previously  made pursuant to this paragraph (c),  to an offer to all holders
    of the Notes to purchase the maximum  principal amount of Notes that may  be
purchased out of such amount; or                                        

        (d)  EchoStar  and  its Subsidiaries  incur  more than  $7.8  million of
    expenses (including, without  limitation, dissenters'  appraisal rights  and
    purchases  of fractional shares) in connection with the DBSC Merger, as soon
    as the DBSC Merger  has been consummated and  the final appraisal rights  of
    any dissenters have been determined, the Issuer will be required to apply an
    amount  equal  to such  expenses, minus  $7.8  million, to  an offer  to all
    holders of the Notes to purchase the maximum principal amount of Notes  that
may be purchased out of such proceeds;                                  

in  any case, at a purchase  price of 101% of the  Accreted Value thereof on the
date of purchase (if prior to March 15, 2000) or 101% of the aggregate principal
amount thereof, together with accrued and unpaid interest thereon to the date of
purchase (if on or after March 15, 2000) (in any case described in this sentence
or the prior sentence, the "Offer Payment").                                    

    Within 15 days following any event described above, the Issuer shall mail  a
notice to each holder stating, among other things:                              

        (i)  that the Offer to  Purchase is being made  pursuant to the covenant
entitled "Offer to Purchase upon the Occurrence of Certain Events";     

        (ii) the purchase price and the purchase date, which shall be no earlier
    than 30 days nor  later than 40  days after the date  such notice is  mailed
(the "Offer Payment Date");                                             

       (iii)  that any  Notes not tendered  will continue to  accrete and accrue
interest in accordance with the terms of the 1996 Indenture;            

       (iv) that,  unless  the Issuer  defaults  in  the payment  of  the  Offer
    Payment,  all Notes accepted  for payment pursuant to  the Offer to Purchase
   shall cease to accrete and/or accrue interest after the Offer Payment Date;

        (v) that holders  will be  entitled to  withdraw their  election if  the
    Paying  Agent receives, not later  than the close of  business on the second
    Business Day preceding the Offer Payment Date, a telegram, telex,  facsimile
    transmission  or letter setting forth the  name of the holder, the principal
    amount of Notes delivered for purchase, and a statement that such holder  is
withdrawing his election to have such Notes purchased;                  

       (vi)  that holders whose Notes  are being purchased only  in part will be
    issued new Notes equal in principal amount to the unpurchased portion of the
    Notes surrendered,  which unpurchased  portion must  be equal  to $1,000  in
principal amount or an integral multiple thereof; and                   

       (vii)  any other information material to such holder's decision to tender
Notes.                                                                  

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    The  Issuer  will  comply with  the  requirements  of Rule  14e-1  under the
Exchange Act and  any other securities  laws and regulations  thereunder to  the
extent  such  laws  and  regulations  are  applicable  in  connection  with  the
repurchase of the  Notes in connection  with an  Offer to Purchase.  Due to  the
highly  leveraged  structure  of the  Issuer,  the  Issuer may  not  be  able to
repurchase all of the Notes required to be purchased by it in connection with an
Offer to Purchase. If the Issuer fails  to repurchase all of the Notes  required
to be purchased by it in connection with an Offer to Purchase, such failure will
constitute an Event of Default. See "Events of Default and Remedies."           

SIGNIFICANT TRANSACTIONS                                                        

    EchoStar  or  any of  its Subsidiaries  will  be permitted  to enter  into a
transaction or series of transactions (a "Significant Transaction") with another
entity (a "Strategic Partner"), notwithstanding  the fact that such  Significant
Transaction would otherwise be prohibited under the terms of the 1996 Indenture,
in  which it:  (i) sells, leases,  conveys or  otherwise disposes of  any of its
assets (including by way of a sale-and-leaseback transaction) to such  Strategic
Partner; or (ii) makes an Investment in such Strategic Partner; PROVIDED that:  

        (i)  EchoStar  or such  Subsidiary receives  fair  market value  for any
    property or  assets  transferred  in such  Significant  Transaction  in  the
    opinion  of a majority of the Board of Directors of EchoStar as evidenced by
    an Officers' Certificate delivered to the Trustee and an investment  banking
firm of national standing selected by the Issuer; and                   

        (ii)  prior  to the  consummation of  such Significant  Transaction, the
    Issuer makes an  offer (a  "Special Offer to  Purchase") to  each holder  of
    Notes  to  repurchase, within  15 days  following  the consummation  of such
    Significant Transaction, all  or any part  (equal to $1,000  or an  integral
    multiple  thereof) of such holder's Notes at  a purchase price equal to 101%
    of the Accreted Value thereof on the date of purchase (if prior to March 15,
    2000) or  101% of  the  aggregate principal  amount thereof,  together  with
    accrued  and unpaid interest thereon to the date of purchase (if on or after
    March 15, 2000) (in either case,  the "Special Offer Payment"). At least  30
    days  prior to the consummation of  such Significant Transaction, the Issuer
shall mail a notice to each holder stating:                             

           (a) that the Special Offer to Purchase is being made pursuant to  the
covenant entitled "Significant Transactions";                     

           (b)  the  purchase price  and the  purchase date,  which shall  be no
       earlier than 30 days nor later than 60 days after the date such notice is
mailed (the "Special Offer Payment Date");                        

           (c) that any  Notes tendered will  only be repurchased  in the  event
that such Significant Transaction is consummated;                 

           (d)  that any Notes not tendered  or not repurchased will continue to
       accrete and accrue  interest in  accordance with  the terms  of the  1996
Indenture;                                                        

           (e)  that, if such Significant Transaction is consummated, unless the
       Issuer defaults in the  payment of the Special  Offer Payment, all  Notes
       accepted  for payment  pursuant to  the Special  Offer to  Purchase shall
       cease to accrete or accrue interest after the Special Offer Payment Date;

           (f) that holders will be entitled  to withdraw their election if  the
       Paying Agent receives, not later than the close of business on the second
       Business Day preceding the Special Offer Payment Date, a telegram, telex,
       facsimile  transmission or letter  setting forth the  name of the holder,
       the principal amount  of Notes  delivered for purchase,  and a  statement
       that  such  holder  is  withdrawing  his  election  to  have  such  Notes
purchased;                                                        

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           (g) that holders whose Notes are being purchased only in part will be
       issued new Notes equal in principal amount to the unpurchased portion  of
       the  Notes surrendered, which unpurchased portion must be equal to $1,000
in principal amount or an integral multiple thereof; and          

           (h) a description  of such  Significant Transaction, as  well as  any
   other information material to such holder's decision to tender Notes.

    The  Issuer  will  comply with  the  requirements  of Rule  14e-1  under the
Exchange Act and  any other securities  laws and regulations  thereunder to  the
extent  such  laws  and  regulations  are  applicable  in  connection  with  the
repurchase of the  Notes pursuant to  a Special  Offer to Purchase.  Due to  the
highly  leveraged  structure  of the  Issuer,  the  Issuer may  not  be  able to
repurchase all of the Notes tendered  for purchase in connection with a  Special
Offer  to Purchase. If  a Significant Transaction is  consummated and the Issuer
fails to repurchase all  of the Notes tendered  for purchase, such failure  will
constitute an Event of Default. See "-- Events of Default and Remedies."        

    In  the event that EchoStar  or any of its  Subsidiaries sells, transfers or
disposes of any  of the Collateral  in a Significant  Transaction, the  Issuer's
payment obligations under the Notes will be secured by a first priority security
interest  in  the pro  rata  portion of  the  net proceeds  of  such Significant
Transaction attributable  to such  Collateral, as  determined by  an  investment
banking firm of national standing selected by the Issuer.                       

DISBURSEMENT OF FUNDS -- ESCROW ACCOUNT                                         

    The 1996 Indenture provides that the Issuer initially place such proceeds of
the  Offering as  are designated in  "Use of  Proceeds" in the  Prospectus to be
applied for  purchase  of  the frequencies  at  the  148 DEG.  WL  orbital  slot
purchased  at  the  FCC Auction  or  for  construction, launch  or  insurance of
EchoStar III and EchoStar IV in the Escrow Account held by the Escrow Agent  for
the  benefit of the holders  of the Senior Secured  Notes. The Issuer will enter
into the  Escrow and  Disbursement Agreement,  which will  provide, among  other
things,  that  funds  may  be  disbursed  from  the  Escrow  Account  only  upon
satisfaction of  certain conditions  set forth  in the  Escrow and  Disbursement
Agreement.  The purchase price  of frequencies at  the 148 DEG.  WL orbital slot
(and related costs) in the amount of  $52.3 million will not be disbursed  until
the Issuer delivers an Officers' Certificate to the Trustee and the Escrow Agent
certifying  that the purchase price for  the conditional construction permit for
use of 24 channels at the 148 DEG. WL orbital slot purchased in the FCC  Auction
is  due and  payable within  five or fewer  days. The  Escrow Agent  will not be
permitted to  disburse any  proceeds of  the Offering  from the  Escrow  Account
towards  costs related to construction, launch and insurance of EchoStar III and
EchoStar IV, unless the Issuer delivers an Officers' Certificate, prior to  such
disbursement,  to the  Trustee and the  Escrow Agent certifying  that such funds
will be applied toward required payments under the Satellite Contracts or Launch
Contracts relating to EchoStar III  or EchoStar IV or  toward a down payment  on
Launch Insurance or In-Orbit Insurance for EchoStar III or EchoStar IV.         

    Pending  the disbursement of funds from  the Escrow Account, the Issuer will
cause such funds to be invested in Marketable Securities. The Notes are  secured
by,  among  other  things, a  first  priority  security interest  in  the Escrow
Account.                                                                        

CERTAIN COVENANTS                                                               

    RESTRICTED PAYMENTS.  The 1996 Indenture provides that neither EchoStar  nor
any of its Subsidiaries may, directly or indirectly:                            

        (a)  declare or pay any dividend or  make any distribution on account of
    any Equity Interests  of EchoStar  or any  of its  Subsidiaries, other  than
    dividends   or  distributions  payable  in   Equity  Interests  (other  than
    Disqualified Stock) of EchoStar or dividends or distributions payable to any
    Wholly Owned Subsidiary of EchoStar (other than Unrestricted Subsidiaries of
the Issuer);                                                            

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        (b) purchase,  redeem  or otherwise  acquire  or retire  for  value  any
    outstanding  Equity Interests  of EchoStar, any  of its  Subsidiaries or any
    other Affiliate of EchoStar, other than  any such Equity Interests owned  by
    EchoStar  or any of  its Wholly Owned  Subsidiaries (other than Unrestricted
Subsidiaries of the Issuer);                                            

        (c) voluntarily purchase, redeem, defease or otherwise acquire or retire
    for value  any  Indebtedness that  is  expressly subordinated  in  right  of
    payment  to the  Notes, except  in accordance  with the  scheduled mandatory
    redemption or repayment provisions set  forth in the original  documentation
governing such Indebtedness; or                                         

(d) make any Restricted Investment                              

(all  such payments and other actions set forth in clauses (a) through (d) above
being collectively referred to as "Restricted Payments"), unless, at the time of
such Restricted Payment:                                                        

        (i) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;                                

        (ii) after giving effect to  such Restricted Payment and the  incurrence
    of  any Indebtedness  the net  proceeds of  which are  used to  finance such
    Restricted Payment, the Indebtedness  to Cash Flow Ratio  of the Issuer  (if
    before  the date upon which the DBSC Merger is consummated) or of the Issuer
    and DBSC, taken as a single entity (if  on or after the date upon which  the
DBSC Merger is consummated), would not have exceeded 5.0 to 1; and      

       (iii)  such Restricted Payment, together with  the aggregate of all other
    Restricted Payments made by the Issuer after the date of the 1996 Indenture,
    is less than the sum of: (A) 50% of the Consolidated Net Income of  EchoStar
    for  the period (taken as one accounting period) from January 1, 1996 to the
    end of  EchoStar's most  recently ended  fiscal quarter  for which  internal
    financial  statements are available  at the time  of such Restricted Payment
    (or, if such  Consolidated Net Income  for such period  is a deficit,  minus
    100% of such deficit); plus (B) an amount equal to 100% of the aggregate net
    cash  proceeds received by  EchoStar and its Subsidiaries  from the issue or
    sale of Equity Interests (other than Disqualified Stock) of EchoStar  (other
    than  Equity  Interests sold  to  a Subsidiary  of  EchoStar and  other than
Disqualified Stock), since the date of the 1996 Indenture.              

The foregoing provisions will not prohibit:                             

        (1) the  payment  of any  dividend  within 60  days  after the  date  of
    declaration  thereof, if at such date of declaration such payment would have
complied with the provisions of the 1996 Indenture;                     

        (2) the redemption, repurchase, retirement  or other acquisition of  any
    Equity  Interests of EchoStar or  the Issuer in exchange  for, or out of the
    net proceeds  of,  the  substantially  concurrent  sale  (other  than  to  a
    Subsidiary  of EchoStar) of other Equity Interests of EchoStar or the Issuer
(other than Disqualified Stock);                                        

        (3) the payment of  dividends on, or the  redemption of, Dish  Preferred
Stock;                                                                  

        (4)  Investments  in  an aggregate  amount  not to  exceed  $20 million;
    provided that such Investments are in businesses of the type described under
"-- Activities of EchoStar";                                            

        (5) Investments  as the  result of  financing activity  of EAC  or  Dish
    Network  Credit  Corporation  in  the ordinary  course  of  their respective
businesses;                                                             

        (6) the  purchase of  employee stock  options, or  capital stock  issued
    pursuant  to the exercise of employee  stock options, in an aggregate amount
    not to exceed $2 million in any calendar year and in an aggregate amount not
to exceed $10 million since the date of the 1996 Indenture;             

        (7) a  Permitted Refinancing  (as  defined below  in "--  Incurrence  of
Indebtedness and Issuance of Preferred Stock");                         

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        (8)  Investments  in an  amount equal  to the  net proceeds  received by
    EchoStar from the issue and sale of Equity Interests of EchoStar (other than
    Equity  Interests  sold  to  a   Subsidiary  of  EchoStar  and  other   than
Disqualified Stock), since the date of the 1996 Indenture;              

        (9)  expenses incurred  in connection  with the  DBSC Merger (including,
    without limitation, dissenters' appraisal rights and purchases of fractional
shares);                                                                

        (10) the purchase  of odd-lots of  Equity Interests of  EchoStar, in  an
amount not to exceed $1 million in the aggregate; or                    

(11) Investments in DBSC Notes.                                 

Restricted  Payments made pursuant to  clauses (1) and (8)  shall be included as
Restricted Payments in any computation made pursuant to clause (iii) above.     

    Not later than the date of  making any Restricted Payment, the Issuer  shall
deliver  to the  Trustee an Officers'  Certificate stating  that such Restricted
Payment is permitted  and setting forth  the basis upon  which the  calculations
required by the covenant "Restricted Payments" were computed, which calculations
shall be based upon the Issuer's latest available financial statements.         

    INCURRENCE  OF  INDEBTEDNESS  AND ISSUANCE  OF  PREFERRED STOCK.    The 1996
Indenture provides that:                                                        

        (a) none of  DBSC (on  or after  the date on  which the  DBSC Merger  is
    consummated),  the Issuer  or any Restricted  Subsidiary of  the Issuer may,
    directly or indirectly, create, incur, issue, assume, guaranty or  otherwise
    become directly or indirectly liable with respect to (collectively, "incur")
any Indebtedness (including Acquired Debt); and                         

        (b)  none of  DBSC (on  or after the  date on  which the  DBSC Merger is
    consummated), the  Issuer or  any Restricted  Subsidiary of  the Issuer  may
issue any Disqualified Stock or any shares of preferred stock;          

PROVIDED,  HOWEVER, that: (i) if prior to the date upon which the DBSC Merger is
consummated, the  Issuer  and each  of  its Restricted  Subsidiaries  may  incur
Indebtedness  or issue shares of preferred stock  if, after giving effect to the
incurrence of such Indebtedness or the issuance of such preferred stock and  the
application  of the  proceeds thereof,  the Issuer's  Indebtedness to  Cash Flow
Ratio would not have  exceeded 5.0 to 1;  or (ii) if on  or after the date  upon
which  the  DBSC  Merger  is  consummated, DBSC,  the  Issuer  and  each  of its
Restricted Subsidiaries  may incur  Indebtedness or  issue shares  of  preferred
stock  if, after  giving effect  to the incurrence  of such  Indebtedness or the
issuance of such preferred  stock and the application  of the proceeds  thereof,
the  Indebtedness to Cash Flow  Ratio of the Issuer and  DBSC, taken as a single
entity, would not have exceeded 5.0 to 1.                                       

The foregoing limitation will not apply to:                             

        (i) the incurrence of the Deferred  Payments and letters of credit  with
respect thereto;                                                        

(ii) the incurrence of Bank Debt;                               

       (iii) the incurrence of Indebtedness in an aggregate amount not to exceed
    $15  million upon a finding by the  Issuer (evidenced by a resolution of the
    Board of  Directors  of  EchoStar  set forth  in  an  Officers'  Certificate
    delivered  to the  Trustee) that such  Indebtedness is  necessary to finance
    costs in connection with the development, construction, launch or  insurance
    of  EchoStar II (or any permitted  replacements thereof), PROVIDED that such
    Indebtedness is  subordinated by  its terms  in right  and priority  to  the
Notes;                                                                  

       (iv) Indebtedness between and among the Issuer and each of its Restricted
Subsidiaries;                                                           

        (v) Acquired Debt of a person incurred prior to the date upon which such
    person  was acquired  by the  Issuer or  any of  its Subsidiaries (excluding
    Indebtedness incurred by such  entity other than in  the ordinary course  of
    its  business in connection with, or  in contemplation of, such entity being
    so acquired) in  an aggregate principal  amount not to  exceed $15  million,
PROVIDED                                                                

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    that  such Indebtedness  and the  holders thereof  do not  at any  time have
    direct or indirect recourse to any property  or assets of the Issuer or  any
    of  its Subsidiaries  other than  the property  and assets  of such acquired
entity and its Subsidiaries;                                            

(vi) Existing Indebtedness;                                       

       (vii) additional Indebtedness in  an aggregate amount  not to exceed  $15
million at any one time outstanding;                                    

      (viii)  the incurrence of Purchase Money Indebtedness by the Issuer or any
    Restricted Subsidiary in an  aggregate amount not to  exceed $20 million  at
any one time outstanding; or                                            

       (ix)  the  incurrence  by  the  Issuer  or  any  of  its  Subsidiaries of
    Indebtedness issued in exchange  for, or the proceeds  of which are used  to
    extend,  refinance, renew,  replace, or  refund Indebtedness  referred to in
    clauses  (i),  (iii),  (v),  (vi),  (vii)  and  (viii)  above  ("Refinancing
    Indebtedness");  PROVIDED, HOWEVER, that:  (A) the principal  amount of such
    Refinancing Indebtedness shall not exceed  the principal amount and  accrued
    interest  of the  Indebtedness so  extended, refinanced,  renewed, replaced,
    substituted or refunded; (B) the Refinancing Indebtedness shall have a final
    maturity later than,  and a Weighted  Average Life to  Maturity equal to  or
    greater  than, the final  maturity and Weighted Average  Life to Maturity of
    the Indebtedness being extended, refinanced, renewed, replaced or  refunded;
    and  (C)  the Refinancing  Indebtedness shall  be  subordinated in  right of
    payment to the  Notes, if  at all,  on terms at  least as  favorable to  the
    holders  of  Notes as  those contained  in  the documentation  governing the
    Indebtedness being extended,  refinanced, renewed, replaced  or refunded  (a
"Permitted Refinancing").                                               

    ASSET  SALES.  If  DBSC (on or  after the date  on which the  DBSC Merger is
consummated), the Issuer or any Restricted Subsidiary of the Issuer, in a single
transaction or a series of related transactions:                                

        (a) sells, leases, conveys  or otherwise disposes of  any of its  assets
    (including  by  way of  a sale-and-leaseback  transaction), other  than: (i)
    sales of inventory  in the ordinary  course of business;  (ii) sales to  the
    Issuer  or  a  Wholly  Owned  Restricted Subsidiary  of  the  Issuer  by any
    Restricted Subsidiary of the Issuer;  (iii) sales of accounts receivable  by
    EAC  for cash in an amount  at least equal to the  fair market value of such
    accounts  receivable;  and  (iv)  sales  of  rights  to  satellite  launches
    (PROVIDED  that the sale,  lease, conveyance or other  disposition of all or
    substantially all  of the  assets of  the Issuer  shall be  governed by  the
    provisions  of the 1996 Indenture described below under the caption "Merger,
Consolidation, or Sale of Assets"); or                                  

      (b) issues or sells equity securities of any Subsidiary of the Issuer,

in either case,  which assets or  securities: (i)  have a fair  market value  in
excess  of $10 million (as determined in good faith by the Board of Directors of
EchoStar evidenced by a resolution of the Board of Directors of EchoStar and set
forth in an Officers' Certificate  delivered to the Trustee; PROVIDED,  HOWEVER,
that  if the  fair market  value of  such assets  exceeds $20  million, the fair
market value  shall be  determined by  an investment  banking firm  of  national
standing  selected by the Issuer); or (ii) are sold or otherwise disposed of for
net proceeds in excess of $10 million (each of the foregoing, an "Asset  Sale"),
then:                                                                           

        (A)  DBSC, the Issuer or such Restricted Subsidiary, as the case may be,
    must receive consideration at the time of such Asset Sale at least equal  to
    the fair market value (as determined in good faith by the Board of Directors
    of  EchoStar evidenced by a resolution of the Board of Directors of EchoStar
    and set  forth  in  an  Officers'  Certificate  delivered  to  the  Trustee;
    PROVIDED,  HOWEVER, that if the fair market value of such assets exceeds $20
    million, the fair market value shall be determined by an investment  banking
    firm  of national  standing selected  by the Issuer)  of the  assets sold or
otherwise disposed of; and                                              

        (B) at least  80% of the  consideration therefor received  by DBSC,  the
    Issuer  or such Subsidiary, as the case may  be, must be in the form of cash
or Cash Equivalents; PROVIDED, HOWEVER, that                            

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    up to $15 million of non-cash assets at any one time may be considered to be
    cash for purposes of  this clause (B), PROVIDED  that the provisions of  the
    next  paragraph are complied  with as such non-cash  assets are converted to
cash.                                                                   

    The 1996 Indenture also provides that the Net Proceeds from such Asset  Sale
shall  be placed in the Escrow Account, and shall be disbursed only: (i) to make
Receiver Subsidies, to buy or lease satellite frequencies at orbital slots or to
purchase tangible assets  to be used  in the business  of EchoStar as  described
under  "-- Activities of EchoStar," or if the Issuer sells any of its satellites
after launch, only to purchase a replacement satellite; or (ii) as set forth  in
the  next sentence. Any Net Proceeds from any Asset Sale that are not applied or
invested as provided in the preceding sentence within 180 days after such  Asset
Sale,  and not applied to an offer to repurchase 1994 Notes required by the 1994
Indenture, shall constitute "Excess Proceeds" and  shall be applied to an  offer
to purchase Notes as set forth under "-- Excess Proceeds Offer."                

    Notwithstanding  the foregoing provisions,  DBSC may transfer  its right and
interest in any  permits and licenses  relating to  the use of  channels at  the
175  DEG.  WL  orbital slot,  or  any  portions thereof,  without  receiving any
consideration.                                                                  

    LIENS.  The 1996  Indenture provides that none  of EchoStar DBS  Corporation
(at any time at which the Notes are secured by a pledge of all of its issued and
outstanding  Capital Stock), DBSC (on or after the date on which the DBSC Merger
or a Substitute DBSC Transaction is  consummated), the Issuer or any  Restricted
Subsidiary  of the  Issuer may directly  or indirectly create,  incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired, or on any
income or profits  therefrom or  assign or convey  any right  to receive  income
therefrom, except Permitted Liens.                                              

MAINTENANCE OF INSURANCE.  The 1996 Indenture provides that:            

        (a)  prior to the  launch of EchoStar III  (or any permitted replacement
    thereof), the Issuer will obtain or  cause to be obtained, Launch  Insurance
with respect to each such satellite; and                                

        (b) at all times subsequent to 180 days following the launch of EchoStar
    III  (and  any  permitted  replacement thereof),  the  Issuer  will maintain
In-Orbit Insurance with respect to such satellite.                      

The 1996 Indenture provides that EchoStar  III (or any replacement thereof)  may
not be launched unless Launch Insurance has been obtained.                      

    In the event that the Trustee receives proceeds from any Launch Insurance or
In-Orbit Insurance covering EchoStar III (or any replacement thereof), or in the
event  that the  Issuer or  any of its  Subsidiaries receives  proceeds from any
insurance maintained by Martin Marietta or any launch provider covering EchoStar
III, all such  proceeds (including  any cash or  Cash Equivalents  deemed to  be
proceeds  of Launch Insurance  or In-Orbit Insurance  pursuant to the respective
definition thereof) shall be placed in the Escrow Account and shall be disbursed
only: (i) to purchase a replacement satellite, provided that if such replacement
satellite is of lesser  value compared to the  insured satellite, any  insurance
proceeds  remaining after purchase of such replacement satellite must be applied
to the construction,  launch and insurance  of a satellite  of equal or  greater
value  as compared to the insured satellite  (or in accordance with (ii) below);
or (ii) to the extent that such  proceeds are not: (A) applied or  contractually
committed to be applied as described in (i) above within 180 days of the receipt
of such proceeds or (B) applied to an offer to repurchase 1994 Notes required by
the  1994 Indenture, as "Excess Proceeds" to  be applied to an offer to purchase
Notes as set forth under "-- Excess Proceeds Offer."                            

    The 1996 Indenture provides that the  holders of the Notes will be  granted:
(i)  a first priority security interest  in each satellite constructed, launched
or insured with  any portion  of the proceeds  of Launch  or In-Orbit  Insurance
covering  EchoStar  III  (or any  replacement  thereof); and  (ii)  a collateral
assignment of all contracts relating to the construction, launch, insurance  and
TT&C of each such satellite.                                                    

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    TRANSFER  OF ORBITAL SLOTS.  The 1996 Indenture provides that for as long as
the Notes are secured by a pledge  of all of the issued and outstanding  Capital
Stock  of EchoStar DBS  Corporation, EchoStar DBS  Corporation may not transfer,
sell, assign or otherwise dispose of any of its right or interest in the permits
and licenses relating to the  use of channels at the  148 DEG. WL orbital  slot,
PROVIDED,  HOWEVER, that the foregoing shall  not prohibit transfers to a Wholly
Owned Subsidiary  of EchoStar  (other than  an Unrestricted  Subsidiary) all  of
whose issued and outstanding stock is pledged to secure the Notes.              

    In  addition, the 1996 Indenture provides that on or after the date that the
DBSC Merger is  consummated, DBSC may  not transfer, sell,  assign or  otherwise
dispose  of any of its right or interest in the permits and licenses relating to
the use of channels at  the 61.5 DEG. WL  orbital slot, PROVIDED, HOWEVER,  that
the  foregoing  shall not  prohibit transfers  to a  Wholly Owned  Subsidiary of
EchoStar (other  than  an  Unrestricted  Subsidiary) all  of  whose  issued  and
outstanding stock is pledged to secure the Notes.                               

    CONSTRUCTION OF ECHOSTAR III.  The 1996 Indenture provides that EchoStar and
the  Issuer will  cause the  construction and  launch of  EchoStar III  (and any
replacements thereof) to be prosecuted with  diligence and continuity in a  good
and workmanlike manner in accordance with the Satellite Contracts and the Launch
Contracts.                                                                      

    ACTIVITIES  OF ECHOSTAR.  The 1996  Indenture provides that neither EchoStar
nor any of its  Subsidiaries may engage in  any business other than  developing,
owning, engaging in and dealing with all or any part of the business of domestic
and  international satellite  communications, and  reasonably related extensions
thereof, including  but  not  limited to  the  purchase,  ownership,  operation,
leasing  and  selling  of,  and  generally  dealing  in  or  with,  one  or more
communications  satellites  and  the  transponders  thereon,  the   acquisition,
transmission, broadcast, production and other provision of programming therewith
and  the  manufacturing,  distribution  and  financing  of  equipment (including
consumer electronic equipment) relating thereto.                                

    ADDITIONAL SUBSIDIARY GUARANTEES.  The  1996 Indenture provides that if  the
Issuer  or any  Guarantor transfers  or causes  to be  transferred, in  one or a
series  of  related  transactions,   property  or  assets  (including,   without
limitation,  businesses, divisions, real property, assets or equipment) having a
fair market value  (as determined in  good faith  by the Board  of Directors  of
EchoStar evidenced by a resolution of the Board of Directors of EchoStar and set
forth  in an Officers' Certificate delivered  to the Trustee; PROVIDED, HOWEVER,
that if the fair market value exceeds  $10 million, the fair market value  shall
be determined by an investment banking firm of national standing selected by the
Issuer)  exceeding $500,000 to  any Subsidiary of  the Issuer that  is neither a
Subsidiary of  Dish, Ltd.  nor a  Guarantor, or  if such  Subsidiary incurs  any
Indebtedness  or issues any preferred stock,  EchoStar shall, or shall cause the
owner of such  Subsidiary to:  (a) enter  into a  pledge agreement  in order  to
pledge  all of the  issued and outstanding  Capital Stock of  such Subsidiary as
Security to the Trustee  for the benefit  of the holders of  the Notes; and  (b)
cause  such Subsidiary to: (i) execute and deliver to the Trustee a supplemental
indenture in form and substance reasonably satisfactory to the Trustee  pursuant
to  which such  Subsidiary shall unconditionally  Guarantee all  of the Issuer's
obligations under the Notes on  the terms set forth  in the 1996 Indenture;  and
(ii) deliver to the Trustee an Opinion of Counsel reasonably satisfactory to the
Trustee  that such  pledge agreement and  such supplemental  indenture have been
duly authorized, executed and delivered by and are valid and binding obligations
of such Subsidiary or such  owner, as the case  may be; PROVIDED, HOWEVER,  that
the  foregoing provisions  shall not  apply to  transfers of  property or assets
(other than cash) by the  Issuer or any Guarantor in  exchange for cash or  Cash
Equivalents  in an amount equal to the  fair market value (as determined in good
faith by the Board  of Directors of  EchoStar evidenced by  a resolution of  the
Board  of  Directors  of EchoStar  and  set  forth in  an  Officers' Certificate
delivered to  the Trustee;  PROVIDED, HOWEVER,  that if  the fair  market  value
exceeds  $10 million, the fair market value shall be determined by an investment
banking firm of national  standing selected by the  Issuer) of such property  or
assets.                                                                         

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    DIVIDEND  AND OTHER PAYMENT  RESTRICTIONS AFFECTING SUBSIDIARIES.   The 1996
Indenture provides that the  Issuer shall not,  and will not  permit any of  its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer  to  exist or  become  effective any  encumbrance  or restriction  on the
ability of any Restricted Subsidiary to:                                        

        (a) pay dividends or make any other distribution to the Issuer or any of
    its Restricted Subsidiaries  on its  Capital Stock  or with  respect to  any
    other  interest or participation in, or measured by, its profits, or pay any
Indebtedness owed to the Issuer or any of its Subsidiaries;             

       (b) make loans or advances to the Issuer or any of its Subsidiaries; or

        (c) transfer any of its properties or assets to the Issuer or any of its
    Subsidiaries; except for such encumbrances or restrictions existing under or
by reasons of:                                                          

           (i) Existing Indebtedness and existing agreements as in effect on the
date of the 1996 Indenture;                                       

           (ii) the  Credit Agreement  as in  effect  on the  date of  the  1996
       Indenture,   and  any  amendments,  extensions,  refinancings,  renewals,
       restatements,  replacements  or  refundings  thereof  that  are  no  more
       restrictive  with respect to the provisions set forth in clauses (a), (b)
       and (c) above than the Credit Agreement  as in effect on the date of  the
1996 Indenture;                                                   

(iii) applicable law or regulation;                         

          (iv)  any instrument governing Acquired Debt  as in effect at the time
       of acquisition (except to  the extent such  Indebtedness was incurred  in
       connection  with,  or  in  contemplation  of,  such  acquisition),  which
       encumbrance or  restriction  is not  applicable  to any  person,  or  the
       properties  or  assets  of any  person,  other  than the  person,  or the
       property or  assets  of  the  person,  so  acquired,  PROVIDED  that  the
       Consolidated  Cash Flow of such person shall not be taken into account in
       determining whether such acquisition  was permitted by  the terms of  the
1996 Indenture;                                                   

           (v)  by  reason  of  customary  non-assignment  provisions  in leases
       entered into in the ordinary course of business and consistent with  past
practices; or                                                     

          (vi)  Refinancing  Indebtedness  (as  defined  in  "--  Incurrence  of
       Indebtedness  and  Issuance  of  Preferred  Stock"),  PROVIDED  that  the
       restrictions  contained  in  the  agreements  governing  such Refinancing
       Indebtedness  are  no  more  restrictive  than  those  contained  in  the
agreements governing the Indebtedness being refinanced.           

    MERGER,  CONSOLIDATION, OR SALE OF ASSETS.  The 1996 Indenture provides that
the Issuer may not consolidate or merge with or into (whether or not the  Issuer
is  the surviving entity), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of  its properties or assets in one or  more
related transactions to, another person unless:                                 

        (a)  the  Issuer is  the surviving  person  or the  person formed  by or
    surviving any such consolidation or merger (if other than the Issuer) or  to
    which   such  sale,   assignment,  transfer,  lease,   conveyance  or  other
    disposition shall  have been  made is  a corporation  organized or  existing
    under  the laws of the  United States, any state  thereof or the District of
Columbia;                                                               

        (b) the person formed by or  surviving any such consolidation or  merger
    (if  other than the  Issuer) or the  person to which  such sale, assignment,
    transfer, lease, conveyance or other disposition will have been made assumes
    all the obligations of the Issuer,  pursuant to a supplemental indenture  in
    form  reasonably satisfactory to  the Trustee, under the  Notes and the 1996
Indenture;                                                              

        (c) immediately after such transaction,  no Default or Event of  Default
exists; and                                                             

        (d)   the  Issuer  or  the  person  formed  by  or  surviving  any  such
    consolidation or merger (if  other than the Issuer)  or to which such  sale,
assignment, transfer, lease, conveyance or other                        

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    disposition  will  have  been made:  (i)  will have  Consolidated  Net Worth
    immediately after  the transaction  (but prior  to any  purchase  accounting
    adjustments  or  accrual  of  deferred tax  liabilities  resulting  from the
    transaction) not  less  than  the  Consolidated  Net  Worth  of  the  Issuer
    immediately  preceding the transaction; and (ii)  would, at the time of such
    transaction after giving pro forma effect thereto as if such transaction had
    occurred  at  the  beginning  of  the  applicable  four-quarter  period,  be
    permitted to incur at least $1.00 of additional Indebtedness pursuant to the
    Indebtedness  to Cash  Flow Ratio  test set  forth in  the covenant entitled
"Incurrence of Indebtedness and Issuance of Preferred Stock."           

   Notwithstanding the foregoing, the Issuer may merge with another person if:

(a) the Issuer is the surviving person;                         

        (b) the  consideration issued  or  paid by  the  Issuer in  such  merger
    consists  solely of Equity Interests (other  than Disqualified Stock) of the
Issuer; and                                                             

        (c) immediately  after  giving  effect  to  such  merger,  the  Issuer's
    Indebtedness to Cash Flow Ratio does not exceed the Issuer's Indebtedness to
Cash Flow Ratio, immediately prior to such merger.                      

    TRANSACTIONS  WITH  AFFILIATES.   The 1996  Indenture provides  that neither
EchoStar nor any  of its  Subsidiaries may  sell, lease,  transfer or  otherwise
dispose  of any  of its  properties or  assets to,  or purchase  any property or
assets from, or enter into any contract, agreement, understanding, loan, advance
or guarantee  with,  or  for  the  benefit  of,  any  Affiliate  (including  any
Unrestricted  Subsidiary) (each  of the foregoing,  an "Affiliate Transaction"),
unless:                                                                         

        (a) such Affiliate Transaction is on terms that are no less favorable to
    EchoStar or such Subsidiary  than those that would  have been obtained in  a
    comparable  transaction  by EchoStar  or such  Subsidiary with  an unrelated
person;                                                                 

        (b) if such Affiliate Transaction involves aggregate payments in  excess
    of  $500,000 the Issuer delivers to the Trustee a resolution of the Board of
    Directors of EchoStar set forth in an Officers' Certificate certifying  that
    such Affiliate Transaction complies with clause (a) above and such Affiliate
    Transaction  is approved by  a majority of the  disinterested members of the
Board of Directors of EchoStar; and                                     

        (c) if such Affiliate Transaction involves aggregate payments in  excess
    of  $15 million,  the Issuer delivers  to the  Trustee an opinion  as to the
    fairness to EchoStar or  such Subsidiary from a  financial point of view  of
    such  Affiliate Transaction issued by an investment banking firm of national
standing:                                                               

    PROVIDED, HOWEVER, that: (i)  the payment of  compensation to directors  and
    management  of EchoStar in amounts approved by the Compensation Committee of
    the Board of  Directors of EchoStar  (which shall consist  of a majority  of
    outside  directors); (ii) the payment of dividends on, or the redemption of,
    the Dish  Preferred Stock  to the  extent otherwise  permitted by  the  1996
    Indenture; (iii) transactions between or among EchoStar and its Wholly Owned
    Subsidiaries  (other than Unrestricted Subsidiaries of the Issuer); (iv) the
    transfer of rights and interests in any permits or licenses relating to  the
    use  of  channels at  the 175  DEG.  WL orbital  slot; and  (v) transactions
    permitted by the provisions of the 1996 Indenture described above under  the
  covenant "Restricted Payments" shall not be deemed Affiliate Transactions.

    REPORTS.    Whether or  not required  by  the rules  and regulations  of the
Securities and Exchange Commission (the "Commission"), so long as any Notes  are
outstanding, the Issuer will file with the Commission and furnish to the holders
of  Notes all quarterly and annual  financial information that would be required
to be contained in a  filing with the Commission on  Forms 10-Q and 10-K if  the
Issuer  were required to  file such forms,  including a "Management's Discussion
and Analysis of                                                                 

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Financial Condition and Results of Operations"  and, with respect to the  annual
information only, a report thereon by the Issuer's certified public accountants.
In addition, such information will be provided for the Issuer and DBSC, taken as
a single entity.                                                                

    PAYMENTS  FOR CONSENT.   Neither EchoStar  nor any of  its Subsidiaries may,
directly or indirectly, pay  or cause to be  paid any consideration, whether  by
way  of  interest, fee  or otherwise,  to  any holder  of a  Note  for or  as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the 1996 Indenture or  the Notes unless such  consideration is offered to  be
paid  or agreed to  be paid to all  holders of the Notes  that consent, waive or
agree to  amend  in the  time  frame set  forth  in the  solicitation  documents
relating to such consent, waiver or agreement.                                  

    EXCESS  PROCEEDS OFFER.  When the  cumulative amount of Excess Proceeds that
have not been applied  in accordance with the  covenants entitled "Asset  Sales"
and  "Maintenance of Insurance" or this paragraph exceeds $5 million, the Issuer
will be obligated  to make  an offer  to all holders  of the  Notes (an  "Excess
Proceeds  Offer") to purchase the maximum principal  amount of Notes that may be
purchased out of such  Excess Proceeds at  an offer price in  cash in an  amount
equal to 101% of the Accreted Value thereof on the date fixed for the closing of
such offer (if prior to March 15, 2000) or 101% of the principal amount thereof,
together  with accrued and unpaid interest to  the date fixed for the closing of
such offer (if on or  after March 15, 2000), in  either case in accordance  with
the  procedures set forth in the 1996 Indenture. If the aggregate Accreted Value
or principal amount, as the case may be, of Notes surrendered by holders thereof
exceeds the amount of such Excess  Proceeds, the Trustee shall select the  Notes
to  be purchased on a pro rata basis.  To the extent that the aggregate Accreted
Value or principal amount, as the case may be, of Notes tendered pursuant to  an
Excess  Proceeds Offer  is less  than the  amount of  such Excess  Proceeds, the
Issuer may use  any remaining  Excess Proceeds for  general corporate  purposes.
Upon completion of an Excess Proceeds Offer, the amount of Excess Proceeds shall
be reset at zero.                                                               

SECURITY                                                                        

    Initially, the Notes have been secured by: (i) a pledge of all of the issued
and  outstanding Capital Stock  of EchoStar DBS Corporation  (which Lien will be
released at such time as the DBSC Merger or the Substitute DBSC Transaction  has
been  consummated and all security interests, collateral assignments and pledges
required to be granted in connection  with such consummation have been  granted)
and  Dish, Ltd.;  (ii) a  pledge of  all of  the Capital  Stock of  DBSC held by
EchoStar or any of its Subsidiaries  (including any such Capital Stock  acquired
subsequent  to the date of the 1996 Indenture); (iii) a pledge of all DBSC Notes
held by EchoStar or  any Subsidiary of EchoStar  (including DBSC Notes  executed
subsequent  to  the date  of  the 1996  Indenture);  and (iv)  a  first priority
security interest  in  the  Escrow  Account  (collectively,  together  with  any
additional security described in the second, sixth and eighth paragraphs of this
section, the "Collateral").                                                     

    In addition, the Notes may be secured by certain Collateral relating to DBSC
and  EchoStar III as  further described in this  paragraph. Upon consummation of
the DBSC Merger, the  Notes will be  secured by: (i)  a first priority  security
interest,  when launched, in EchoStar III; (ii) a collateral assignment (as soon
as practicable, but  no more than  60 days after  the date upon  which the  DBSC
Merger  is consummated), of  all contracts relating  to the construction, launch
(other than the  Launch Contract  with Great Wall,  PROVIDED that  at least  one
other  contract has been entered into for launch of EchoStar III), insurance and
TT&C of EchoStar III; and  (iii) a pledge of all  of the issued and  outstanding
Capital  Stock of DBSC. In the event that the DBSC Merger is not consummated and
the Substitute DBSC Transaction  is consummated the Notes  will be secured by  a
collateral assignment of all contracts and agreements relating to the Substitute
DBSC  Transaction. In the event that neither  the DBSC Merger nor the Substitute
DBSC Transaction is consummated,  no additional Collateral  will be provided  to
secure  the Notes, however, the Issuer will be required to apply the greater of:
(i) $83.0 million; and (ii) an amount  equal to Investments by EchoStar and  its
Subsidiaries in DBSC Notes, since the date of the 1996 Indenture, to an offer to
all  holders of the Notes to purchase the maximum principal amount of Notes that
may  be  purchased  out  of  such  amount.  See  "--  Offer  to  Purchase   upon

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the  Occurrence of Certain Events." There can  be no assurance that the FCC will
approve the  DBSC  Merger  or  that  the DBSC  Merger  or  the  Substitute  DBSC
Transaction will be consummated. See "Risk Factors -- Contingent Collateral."   

    The  Issuer and  certain of  its Affiliates  have entered  into one  or more
pledge agreements (the "Pledge Agreements") and one or more security  agreements
(the  "Security  Agreements") providing  for the  grant by  the Issuer  and such
Affiliates to the Trustee, as collateral agent for the holders of the Notes,  of
security  interests in the  Collateral. All such  security interests will secure
the payment and performance  when due of  all of the  Obligations of the  Issuer
under the Notes and the 1996 Indenture.                                         

    Martin  Marietta may, after launch,  have a PARI PASSU  lien on, and will be
entitled, upon disposition, to share ratably in the proceeds of EchoStar III, up
to an  aggregate of  $20  million. There  can be  no  assurance that,  upon  any
disposition  of  such  Collateral,  such  Collateral  will  generate  sufficient
proceeds to satisfy all amounts due with respect to the Notes.                  

    EchoStar and its Subsidiaries may not sell, transfer or dispose of  EchoStar
III  after it is launched,  unless, prior to such  sale transfer or disposition,
the holders of the Notes are granted: (i) a first priority security interest  in
an  operational  substitute  satellite,  in geosynchronous  orbit,  of  equal or
greater value; and (ii) a collateral assignment of all contracts relating to the
construction, launch, insurance or TT&C of such Substitute Satellite.           

    EchoStar and its  Subsidiaries may  not incur or  suffer to  exist Liens  on
EchoStar III (or any replacement thereof), except: (i) prior to launch, Liens in
favor  of  satellite contractors;  (ii) after  launch, Liens  not to  exceed $20
million securing the  Deferred Payments, ranking  PARI PASSU with  the Liens  on
EchoStar  III (or such  replacement) in favor  of the holders  of the Notes; and
(iii) additional Liens securing the Deferred Payments, subordinated to the Liens
on EchoStar III (or such replacement) in favor of the holders of the Notes.     

    In the event that the proceeds of Launch Insurance or In-Orbit Insurance are
applied to the purchase of one or more replacement satellites in accordance with
the covenant entitled "Maintenance of Insurance," the Notes will be secured  by:
(i)  a first priority security interest  in each such replacement satellite; and
(ii) a collateral  assignment, of  all contracts relating  to the  construction,
launch, insurance or TT&C of each such replacement satellite.                   

    Upon  the occurrence and during the continuance  of an Event of Default: (i)
all rights  of  EchoStar  and  its Subsidiaries  to  exercise  voting  or  other
consensual  rights with respect to  any stock pledged to  secure the Notes shall
cease, and all such  rights shall become  vested in the  Trustee, which, to  the
extent  permitted by law, shall have the  sole right to exercise such voting and
other consensual rights;  (ii) all rights  of EchoStar and  its Subsidiaries  to
receive cash dividends, interest and other payments made upon or with respect to
such  pledged  stock shall  cease and  such cash  dividends, interest  and other
payments shall  be paid  to the  Trustee; and  (iii) the  Trustee may  sell  the
Collateral  or  any part  thereof in  accordance  with the  terms of  the Pledge
Agreements and the Security Agreements.  All funds distributed under the  Pledge
Agreements, the Security Agreements or the Escrow and Disbursement Agreement and
received  by the Trustee  for the benefit of  the holders of  the Notes shall be
distributed by  the  Trustee in  accordance  with  the provisions  of  the  1996
Indenture.                                                                      

    Under  the terms of  the Pledge Agreements and  the Security Agreements, the
Trustee will  determine the  circumstances and  manner in  which the  Collateral
shall  be  disposed of,  including,  but not  limited  to, the  determination of
whether to release all or any portion  of the Collateral from the Liens  created
by  the Pledge Agreements or the Security Agreements and whether to foreclose on
the Collateral following an Event of Default. Moreover, upon the full and  final
payment and performance of all Obligations of the Issuer under the Notes and the
1996  Indenture, or upon defeasance of the  Notes, the Pledge Agreements and the
Security Agreements shall  terminate and  the Collateral shall  be released.  In
addition,  in the event that any Collateral is sold and the Net Proceeds thereof
are applied in accordance with the terms of the covenant entitled "Asset Sales,"
the Trustee shall release                                                       

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the Liens in favor of the Trustee in the assets sold; PROVIDED, that the Trustee
shall have received from the Issuer  an Officers' Certificate and an Opinion  of
Counsel that such Net Proceeds have been or will be so applied.                 

    In  the event that EchoStar  or any of its  Subsidiaries sells, transfers or
disposes of any of  the Collateral, which sale,  transfer or disposition is  not
otherwise  provided for above, the Issuer's  payment obligations under the Notes
will be secured by a first priority security interest in the pro rata portion of
the net proceeds  of such  sale, transfer  or disposition  attributable to  such
Collateral,  as determined  by an investment  banking firm  of national standing
selected by the Issuer.                                                         

AFFILIATE GUARANTEES                                                            

    Initially, the  Issuer's  payment  obligations under  the  Notes  have  been
guaranteed on a subordinated basis by EchoStar.                                 

    On and after the Dish Guarantee Date, the Issuer's payment obligations under
the  Notes and the  1996 Indenture will  be guaranteed by  Dish, Ltd. (the "Dish
Guarantee"), which  Guarantee will  rank PARI  PASSU with  all senior  unsecured
Indebtedness  of Dish, Ltd.  The Dish Guarantee  will not be  effected until the
earlier of: (i) the first  date upon which Dish  Ltd. is permitted, pursuant  to
the  terms  of  the  1994  Indenture to  Guarantee  the  Issuer's  total payment
obligations under all  of the then-outstanding  Notes; and (ii)  the first  date
upon which the 1994 Notes are no longer outstanding or have been defeased. There
can  be no  assurance that such  conditions will  be satisfied at  any time. See
"Risk Factors -- Springing Guarantees."                                         

    On and  after  the date  upon  which the  DBSC  Merger is  consummated,  the
Issuer's  payment obligations  under the  Notes and  the 1996  Indenture will be
guaranteed by  DBSC,  which guarantee  will  rank  PARI PASSU  with  all  senior
unsecured  Indebtedness of DBSC. There can be  no assurance that the DBSC Merger
will be  approved by  the FCC  or consummated.  See "Risk  Factors --  Springing
Guarantees."                                                                    

    The  obligations of each  Guarantor under its Guarantee  will be limited, if
necessary, to such amount as will  not constitute a fraudulent conveyance  under
applicable  law. Investors should note that the assets and equity represented by
Dish, Ltd.  currently  constitute substantially  all  of the  total  assets  and
substantially  all of the total equity of  the Issuer and its Subsidiaries taken
as a whole.                                                                     

    The 1996  Indenture  provides  that,  subject  to  the  next  paragraph,  no
Guarantor  may consolidate or merge with or  into (whether or not such Guarantor
is the surviving entity), or sell, assign, transfer, lease, convey or  otherwise
dispose  of all or substantially all of its  properties or assets in one or more
related transactions to, another person unless:                                 

        (a) such Guarantor is  the surviving person or  the person formed by  or
    surviving any such consolidation or merger (if other than such Guarantor) or
    to  which  such  sale,  assignment,  transfer,  lease,  conveyance  or other
    disposition shall  have been  made is  a corporation  organized or  existing
    under  the laws of the  United States, any state  thereof or the District of
Columbia;                                                               

        (b) the person formed by or  surviving any such consolidation or  merger
    (if other than such Guarantor) or the person to which such sale, assignment,
    transfer, lease, conveyance or other disposition will have been made assumes
    all  the obligations of such Guarantor, pursuant to a supplemental indenture
    in form reasonably satisfactory to the Trustee, under the Notes and the 1996
Indenture;                                                              

        (c) immediately after such transaction,  no Default or Event of  Default
exists; and                                                             

        (d)  such  Guarantor  or the  person  formed  by or  surviving  any such
    consolidation or merger, or to which such sale, assignment, transfer, lease,
    conveyance  or  other  disposition  will  have  been  made:  (i)  will  have
    Consolidated  Net Worth immediately after the  transaction (but prior to any
    purchase accounting  adjustments  or  accrual of  deferred  tax  liabilities
    resulting  from the transaction) not less than the Consolidated Net Worth of
such Guarantor immediately preceding the                                

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    transaction;  and  (ii)  will  have  an  Indebtedness  to  Cash  Flow  Ratio
    immediately  after  the transaction  that does  not exceed  such Guarantor's
Indebtedness to Cash Flow Ratio immediately preceding the transaction.  

    Except as set forth  in the provisions entitled  "-- Certain Covenants"  and
"--  Merger, Consolidation,  or Sale of  Assets," nothing contained  in the 1996
Indenture shall prevent any consolidation or merger of a Guarantor with or  into
the  Issuer  or  shall prevent  any  sale or  conveyance  of the  property  of a
Guarantor as an entirety or substantially as an entirety to the Issuer.         

    The 1996 Indenture provides that in the event of a sale or other disposition
of all  of the  assets of  any Guarantor,  by way  of merger,  consolidation  or
otherwise,  or a sale  or other disposition of  all of the  capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition,  by
way of such a merger, consolidation or otherwise, of all of the capital stock of
such  Guarantor) or the person acquiring the property (in the event of a sale or
other disposition of all of the assets  of such Guarantor) will be released  and
relieved  of any obligations under its Guarantee, PROVIDED that the Net Proceeds
of such sale or other disposition are applied in accordance with the  provisions
described under "-- Certain Covenants -- Asset Sales."                          

    The  Guarantee executed by  Dish, Ltd. will  provide that prior  to the Dish
Guarantee Date:                                                                 

        (a) neither Dish,  Ltd. nor  any of  its Subsidiaries  may, directly  or
    indirectly,  create,  incur,  issue, assume,  guaranty  or  otherwise become
    directly or indirectly  liable with respect  to (collectively, "incur")  any
Indebtedness (including Acquired Debt);                                 

(b) Dish, Ltd. may not issue any Disqualified Stock; and        

        (c)  none of Dish, Ltd.'s Subsidiaries may issue any shares of preferred
stock.                                                                  

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    The  foregoing limitation will not apply  to: (i) any Permitted Refinancing;
or (ii) the incurrence of any Indebtedness by Dish, Ltd. that would be permitted
under the  terms of  the 1994  Indenture, notwithstanding  the fact  that  Dish,
Ltd.'s  Indebtedness to Cash Flow Ratio exceeded  5.0 to 1 (before June 1, 1998)
or 4.0 to 1 (on or after June 1, 1998).                                         

EVENTS OF DEFAULT AND REMEDIES                                                  

    The 1996 Indenture provides that each of the following constitutes an  Event
of  Default (unless the provisions described under "-- Significant Transactions"
are applicable and the Issuer complies with such provisions):                   

        (a) default for  30 days  in the  payment when  due of  interest on  the
Notes;                                                                  

        (b)  default in payment when due of  principal on the Notes at maturity,
upon redemption or otherwise;                                           

        (c) failure to comply with the  provisions described under "-- Offer  to
    Purchase  upon Change of Control," "-- Offer to Purchase upon the Occurrence
    of Certain Events," "-- Significant Transactions," "-- Certain Covenants  --
    Maintenance  of  Insurance,"  "--  Certain  Covenants  --  Transactions with
    Affiliates," "-- Disbursement  of Funds  -- Escrow Account"  or "--  Certain
    Covenants  -- Asset Sales" or  the failure by the  Issuer to comply with the
third paragraph under "-- Security";                                    

        (d) default under the provisions  described under "-- Certain  Covenants
    --   Restricted  Payments"  or  "--   Certain  Covenants  --  Incurrence  of
    Indebtedness and Issuance of Preferred Stock" or under any of the Collateral
    Documents, which default remains uncured for  15 days, or the breach of  any
    representation  or warranty, or  the making of any  untrue statement, in any
    certificate delivered by the  Issuer pursuant to the  1996 Indenture or  the
Collateral Documents;                                                   

        (e)  failure by the Issuer for 60  days after notice from the Trustee or
    the holders  of  at  least  25%  in  principal  amount  of  the  Notes  then
    outstanding to comply with its other agreements in the 1996 Indenture or the
Notes;                                                                  

        (f) a continuing default after expiration of any applicable grace period
    by  the Issuer or any of its Affiliates under any of the Satellite Contracts
    or the Launch Contracts, which default  would permit a party other than  the
  Issuer or its Affiliates to terminate its obligations under such contract;

        (g)  default  under any  mortgage, indenture  or instrument  under which
    there may  be issued  or by  which there  may be  secured or  evidenced  any
    Indebtedness  for money borrowed by EchoStar  or any of its Subsidiaries (or
    the payment of which is guaranteed by EchoStar or any of its  Subsidiaries),
    other than the Credit Agreement, which default is caused by a failure to pay
    when  due principal or interest on such Indebtedness within the grace period
    provided in  such  Indebtedness (a  "Payment  Default"), and  the  principal
    amount  of any such Indebtedness, together  with the principal amount of any
    other such  Indebtedness  under which  there  has been  a  Payment  Default,
aggregates $5 million or more;                                          

        (h)  default  under any  mortgage, indenture  or instrument  under which
    there may  be issued  or by  which there  may be  secured or  evidenced  any
    Indebtedness  for money borrowed by EchoStar  or any of its Subsidiaries (or
    the payment of which is guaranteed by EchoStar or any of its  Subsidiaries),
    other  than Credit Agreement,  which default results  in the acceleration of
    such Indebtedness prior to its express maturity and the principal amount  of
    any  such Indebtedness, together with the principal amount of any other such
    Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5 million or more;           

        (i) failure by EchoStar, EchoStar DBS Corporation (at any time at  which
    the  Notes are  secured by  a pledge  of all  of its  issued and outstanding
Capital Stock), DBSC (on or after the date                              

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    of the DBSC Merger), the Issuer or  any of the Issuer's Subsidiaries to  pay
    final  judgments (other than any judgment  as to which a reputable insurance
    company has accepted full  liability) aggregating in  excess of $2  million,
which judgments are not stayed within 60 days after their entry;        

        (j)  certain events of bankruptcy or insolvency with respect to EchoStar
    or  certain of its  Subsidiaries (including the filing  of a voluntary case,
    the consent to an order of relief in an involuntary case, the consent to the
    appointment of  a  custodian,  a  general  assignment  for  the  benefit  of
    creditors  or  an  order of  a  court  for relief  in  an  involuntary case,
    appointing a custodian or ordering liquidation, which order remains unstayed
for 60 days); and                                                       

        (k) any Guarantee of the Notes shall be held in a judicial proceeding to
    be unenforceable or  invalid or shall  cease for  any reason to  be in  full
    force  and effect, or any  Guarantor, or any person  acting on behalf of any
    Guarantor, shall deny or  disaffirm its obligations  under its Guarantee  of
any Notes.                                                              

    If any Event of Default occurs and is continuing, the Trustee or the holders
of  at least 25% in  principal amount of the  then outstanding Notes may declare
all the Notes to be due and payable  immediately (plus, in the case of an  Event
of  Default  that  is  the  result  of an  action  by  EchoStar  or  any  of its
Subsidiaries  intended  to  avoid  restrictions   on  or  premiums  related   to
redemptions of the Notes contained in the 1996 Indenture or the Notes, an amount
of premium that would have been applicable pursuant to the Notes or as set forth
in  the 1996 Indenture). Notwithstanding the foregoing,  in the case of an Event
of Default arising from the events  of bankruptcy or insolvency with respect  to
or  any of its Subsidiaries  described in (j) above,  all outstanding Notes will
become due and payable  without further action or  notice. Holders of the  Notes
may  not enforce the 1996 Indenture or the  Notes except as provided in the 1996
Indenture. Subject to  certain limitation,  holders of a  majority in  principal
amount  of the then outstanding Notes may  direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to  the  payment  of  principal or  interest)  if  it  determines  that
withholding notice is in such holders' interest.                                

    The  holders of a majority  in aggregate principal amount  of the Notes then
outstanding, by notice to the  Trustee, may on behalf of  the holders of all  of
the  Notes waive any existing  Default or Event of  Default and its consequences
under the 1996 Indenture, except a continuing Default or Event of Default in the
payment of interest or premium on, or principal of, the Notes.                  

    The Issuer  is required  to  deliver to  the  Trustee annually  a  statement
regarding  compliance with the  1996 Indenture, and the  Issuer is required upon
becoming aware of any Default  or Event of Default to  deliver to the Trustee  a
statement specifying such Default or Event of Default.                          

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATOR AND       
STOCKHOLDERS                                                                    

    No  director, officer, employee, incorporator  or stockholder of EchoStar or
any of its Affiliates, as such, shall have any liability for any obligations  of
EchoStar  or any of its Affiliates under the  Notes or the 1996 Indenture or for
any claim based on, in  respect of, or by reason  of, such obligations or  their
creation.  Each holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance  of
the  Notes. Such  waiver may  not be  effective to  waive liabilities  under the
federal securities laws and it is the view of the Commission that such a  waiver
is against public policy.                                                       

LEGAL DEFEASANCE AND COVENANT DEFEASANCE                                        

    The Issuer may, at its option and at any time, elect to have all obligations
discharged  with  respect to  the outstanding  Notes ("Legal  Defeasance"). Such
legal defeasance  means  that  the  Issuer  will be  deemed  to  have  paid  and
discharged  the entire indebtedness represented by the outstanding Notes, except
for: (a)  the rights  of holders  of outstanding  Notes to  receive payments  in
respect  of the principal  of, premium, if  any, and interest  on the Notes when
such payments are due, or  on the redemption date, as  the case may be; (b)  the
Issuer's  obligations  with respect  to the  Notes concerning  issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an                                                               

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office or agency for payment and money for security payments held in trust;  (c)
the  rights,  powers,  trust, duties  and  immunities  of the  Trustee,  and the
Issuer's obligations  in  connection therewith;  and  (d) the  Legal  Defeasance
provisions of the 1996 Indenture. In addition, the Issuer may, at its option and
at  any time,  elect to  have all obligations  released with  respect to certain
covenants that are described in  the 1996 Indenture ("Covenant Defeasance")  and
thereafter  any omission to comply with  such obligations shall not constitute a
Default or Event of  Default with respect  to the Notes.  In the event  Covenant
Defeasance  occurs,  certain  events  (not  including  non-payment,  bankruptcy,
receivership, rehabilitation and insolvency  events) described under "--  Events
of  Default and  Remedies" will  no longer constitute  an Event  of Default with
respect to the Notes.                                                           

    In order to exercise either Legal Defeasance or Covenant Defeasance: (i) the
Issuer must irrevocably deposit with the  Trustee, in trust, for the benefit  of
the  holders of  the Notes, cash  in U.S. dollars,  non-callable U.S. government
obligations, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a  nationally recognized firm  of independent public  accountants
selected  by the Trustee, to pay the principal of, premium, if any, and interest
on the outstanding Notes  on the stated maturity  or on the applicable  optional
redemption  date, as the case may be; (ii)  in the case of Legal Defeasance, the
Issuer shall have delivered to the Trustee  an opinion of counsel in the  United
States  reasonably acceptable to the Trustee  confirming that (A) the Issuer has
received from, or there  has been published by  the Internal Revenue Service,  a
ruling  or (B) since the date of the  1996 Indenture, there has been a change in
the applicable Federal  income tax law,  in each  case to the  effect that,  and
based  thereon such opinion of  counsel shall confirm that,  the holders of such
Notes will not recognize income, gain or loss for Federal income tax purposes as
a result of such Legal Defeasance, and will be subject to Federal income tax  in
the same amount, in the same manner and at the same times as would have been the
case  if such Legal Defeasance  had not occurred; (iii)  in the case of Covenant
Defeasance, the Issuer shall have delivered to the Trustee an opinion of counsel
in the United States reasonably acceptable  to such Trustee confirming that  the
holders of such Notes will not recognize income, gain or loss for federal income
tax  purposes as  a result of  such Covenant  Defeasance and will  be subject to
federal income on the same amounts, in the same manner and at the same times  as
would  have been the case if such  Covenant Defeasance had not occurred; (iv) no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit  or insofar  as Events  of Default  from bankruptcy  or  insolvency
events are concerned, at any time in the period ending on the 91st day after the
date  of deposit;  (v) such  Legal Defeasance  or Covenant  Defeasance shall not
result in a  breach or  violation of,  or constitute  a default  under the  1996
Indenture  or any other material agreement or  instrument to which the Issuer or
any of  its  Subsidiaries  is a  party  or  by  which EchoStar  or  any  of  its
Subsidiaries  is bound; (vi) the  Issuer shall have delivered  to the Trustee an
Officers' Certificate stating that the deposit  was not made by the Issuer  with
the  intent of preferring the Holders of  such Notes over any other creditors of
the Issuer or with  the intent of defeating,  hindering, delaying or  defrauding
any  other creditors of  the Issuer or  others; and (vii)  the Issuer shall have
delivered to the Trustee  an Officers' Certificate  stating that all  conditions
precedent  provided  for or  relating to  the Legal  Defeasance or  the Covenant
Defeasance have been complied with.                                             

AMENDMENT, SUPPLEMENT AND WAIVER                                                

    Except as provided in the next paragraph, the 1996 Indenture, the Notes  and
the  Collateral Documents may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for Notes), and  any existing default  or compliance with  any provision of  the
1996  Indenture or the Notes may be waived  with the consent of the holders of a
majority in principal amount of  the then outstanding Notes (including  consents
obtained in connection with a tender offer or exchange offer for Notes).        

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    Without the consent of each holder affected, however, an amendment or waiver
may not (with respect to any Note held by a non-consenting holder):             

        (a)  reduce the principal amount of  Notes whose holders must consent to
an amendment, supplement or waiver;                                     

        (b) reduce the principal of or change the fixed maturity of any Note  or
alter the provisions with respect to the redemption of the Notes;       

        (c) reduce the rate of or change the time for payment of interest on any
Notes;                                                                  

        (d)  waive a Default or Event of  Default in the payment of principal of
    or premium,  if  any, or  interest  on the  Notes  (except a  rescission  of
    acceleration of the Notes by the holders of at least a majority in aggregate
    principal  amount of  the Notes  and a  waiver of  the payment  default that
resulted from such acceleration);                                       

       (e) make any Note payable in money other than that stated in the Notes;

        (f) make any change in the provisions of the 1996 Indenture relating  to
    waivers  of  past Defaults  or the  rights  of holders  of Notes  to receive
payments of principal of or interest on the Notes;                      

(g) waive a redemption payment with respect to any Note; or     

     (h) make any change in the foregoing amendment and waiver provisions.

    In addition, without  the consent  of at  least 66  2/3% of  the Notes  then
outstanding,  an amendment or a waiver may  not make any change to the covenants
in the  1996 Indenture  entitled "Offer  to Purchase  upon Change  of  Control,"
"Offer  to Purchase  upon the Occurrence  of Certain Events,"  "Asset Sales" and
"Excess Proceeds Offer" (including, in each case, the related definitions).     

    Notwithstanding the foregoing, without the  consent of any holder of  Notes,
the  Issuer and  the Trustee  may amend  or supplement  the 1996  Indenture, the
Notes,  the  Pledge  Agreement,  the  Security  Agreement  or  the  Escrow   and
Disbursement  Agreement  to  cure  any ambiguity,  defect  or  inconsistency, to
provide for uncertificated  Notes in  addition to  or in  place of  certificated
Notes,  to provide for the assumption of  the Issuer's obligations to holders of
the Notes in  the case of  a merger or  consolidation, to make  any change  that
would  provide any additional rights or benefits  to the holders of the Notes or
that does not adversely affect the legal rights under the 1996 Indenture of  any
such holder, or to comply with requirements of the Commission in order to effect
or  maintain the qualification  of the 1996 Indenture  under the Trust Indenture
Act.                                                                            

CONCERNING THE TRUSTEE                                                          

    The 1996  Indenture  contains  certain  limitations on  the  rights  of  the
Trustee,  should the Trustee become a creditor  of the Issuer, to obtain payment
of claims  in certain  cases, or  to  realize on  certain property  received  in
respect  of  any  such claim  as  security  or otherwise.  The  Trustee  will be
permitted to  engage in  other transactions  with the  Issuer; however,  if  the
Trustee  acquires  any conflicting  interest,  it must  eliminate  such conflict
within 90 days, apply to the Commission for permission to continue as Trustee or
resign.                                                                         

    The holders of a majority in principal amount of the then outstanding  Notes
will  have the  right to  direct the  time, method  and place  of conducting any
proceeding for  exercising  any remedy  available  to the  Trustee,  subject  to
certain exceptions. The 1996 Indenture provides that in case an Event of Default
shall  occur (which shall  not be cured),  the Trustee will  be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. The  Trustee will not be  relieved from liabilities for  its
own  negligent  action, its  own negligent  failure  to act  or its  own willful
misconduct, except  that:  (i)  this  sentence shall  not  limit  the  preceding
sentence  of this paragraph; (ii) the Trustee  shall not be liable for any error
of judgment  made in  good  faith, unless  it is  proved  that the  Trustee  was
negligent  in ascertaining the pertinent facts;  and (iii) the Trustee shall not
be liable                                                                       

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with respect to any action it takes or omits to take in good faith in accordance
with a  direction  received  by  it  pursuant to  the  first  sentence  of  this
paragraph.  Subject to such provisions, the  Trustee will be under no obligation
to exercise any of its rights or powers under the 1996 Indenture at the  request
of  any holder of  Notes, unless such  holder shall have  offered to the Trustee
security and  indemnity  satisfactory  to  it against  any  loss,  liability  or
expense.                                                                        

NOTES BOOK-ENTRY, DELIVERY AND FORM                                             

    Old  Notes  initially  purchased  by  qualified  institutional  buyers  were
initially issued in the form of  [three] global Notes (collectively the  "Global
Old  Note") and was deposited on the date of  the closing of the sale of the Old
Notes offered hereby (the "Closing Date") with, or on behalf of, The  Depository
Trust  Company (the "Depositary") and  registered in the name  of Cede & Co., as
nominee of the  Depositary (such nominee  being referred to  herein the  "Global
Note  Holder"). Except as  set forth in  the next paragraph,  the Exchange Notes
exchanged for Old Notes represented by  the Global Old Note will be  represented
by  one  or more  global Exchange  Notes in  registered form  (collectively, the
"Global Exchange  Note" and,  together with  the Global  Old Note,  the  "Global
Note"),  deposited with the Depositary and registered  in the name of the Global
Noteholder.                                                                     

    Exchange Notes that  are issued  as described below  under "--  Certificated
Notes"  will be  issued in the  form of registered  definitive certificates (the
"Certificated Notes"). Such Certificated Notes  may, unless the Global Note  has
previously  been exchanged for Certificated Notes,  be exchanged for an interest
in the Global  Note representing the  principal amount of  Exchange Notes  being
transferred.                                                                    

    The  Depositary is a limited-purpose trust  company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") that  clear through or maintain a  custodial
relationship  with a Participant, either directly or indirectly. Persons who are
not Participants may  beneficially own securities  held by or  on behalf of  the
Depositary  only  through  the  Depositary's  Participants  or  the Depositary's
Indirect Participants.                                                          

    The  Issuer  expects  that  pursuant   to  procedures  established  by   the
Depositary:  (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by  the Initial Purchasers with portions  of
the  principal amount  of the  Global Note; and  (ii) ownership  of the Exchange
Notes evidenced  by the  Global  Note will  be shown  on,  and the  transfer  of
ownership  thereof  will be  effected only  through,  records maintained  by the
Depositary (with respect to the interests in the Depositary's Participants), the
Depositary's  Participants   and   the   Depositary's   Indirect   Participants.
Prospective  purchasers are  advised that the  laws of some  states require that
certain persons take  physical delivery  in definitive form  of securities  that
they  own. Consequently, the ability to transfer Exchange Notes evidenced by the
Global Note will be limited to such extent.                                     

    So long as the Global  Note Holder is the  registered owner of any  Exchange
Notes,  the Global Note Holder will be considered the sole holder under the 1996
Indenture of any Exchange Notes evidenced by the Global Note. Beneficial  owners
of Exchange Notes evidenced by the Global Note will not be considered the owners
or  holders thereof  under the  1996 Indenture  for any  purpose, including with
respect to the giving of any responsibility  or liability for any aspect of  the
records  of  the Depositary  or for  maintaining,  supervising or  reviewing any
records of the Depositary relating to the Exchange Notes.                       

    Payments in respect of the principal of, premium, if any, and interest,  and
Liquidated  Damages, if any, on  any Notes registered in  the name of the Global
Note Holder on the applicable record date  will be payable by the Trustee to  or
at  the direction of  the Global Note  Holder in its  capacity as the registered
holder under the  1996 Indenture.  Under the terms  of the  1996 Indenture,  the
Issuer and the Trustee may treat the persons in whose names Notes, including the
Global  Note, are registered as the owners  thereof for the purpose of receiving
such payments. Consequently, neither the Issuer nor the Trustee has or will have
any responsibility or liability  for the payment of  such amounts to  beneficial
owners  of Notes. The Issuer believes, however,  that it is currently the policy
of  the  Depositary  to  immediately   credit  the  accounts  of  the   relevant
Participants with such payments, in amounts                                     

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proportionate  to  their  respective  holders  of  beneficial  interests  in the
relevant security as  shown on the  records of the  Depositary. Payments by  the
Depositary's  Participants  and the  Depositary's  Indirect Participants  to the
beneficial owners  of  Notes  will  be governed  by  standing  instructions  and
customary   practice  and  will  be   the  responsibility  of  the  Depositary's
Participants or the Depositary's Indirect Participants.                         

CERTIFICATED NOTES                                                      

    Subject to certain conditions,  any person having  a beneficial interest  in
the  Global  Note may,  upon request  to the  Trustee, exchange  such beneficial
interest for Exchange  Notes in the  form of Certificated  Notes. Upon any  such
issuance,  the Trustee  is required to  register such Certificated  Notes in the
name of, and cause the same to be  delivered to, such person or persons (or  the
nominee of any thereof). In addition, if: (i) the Issuer notifies the Trustee in
writing  that the Depositary is no longer willing or able to act as a depository
and the Issuer is unable to locate a qualified successor within 90 days; or (ii)
The Issuer, at its  option, notifies the  Trustee in writing  that it elects  to
cause the issuance of Exchange Notes in the form of Certificated Notes under the
1996  Indenture, then, upon  surrender by the  Global Note Holder  of its Global
Note, Exchange Notes in such form will be issued to each person that the  Global
Note  Holder and the  Depositary identify as  being the beneficial  owner of the
related Exchange Notes.                                                         

    Neither the Issuer  nor the  Trustee will  be liable  for any  delay by  the
Global Note Holder or the Depositary in identifying the beneficial owners of the
Exchange Notes and the Issuer and the Trustee may conclusively rely on, and will
be  protected in  relying on,  instructions from the  Global Note  Holder or the
Depositary for all purposes.                                                    

SAME-DAY SETTLEMENT AND PAYMENT                                         

    The 1996 Indenture requires that payments  in respect of the Exchange  Notes
represented  by the Global Note (including  principal, premium, if any, interest
and Liquidated  Damages,  if  any)  be made  by  wire  transfer  of  immediately
available  funds to the accounts  specified by the Global  Note. With respect to
Certificated Notes, the Issuer will make all payments of principal, premium,  if
any,  interest and Liquidated  Damages, if any) by  wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no  such
account  is  specified, by  mailing  a check  to  each such  holder's registered
address. Secondary  trading  in  long-term notes  and  debentures  of  corporate
issuers  is generally settled  in clearinghouse or  next-day funds. In contrast,
the Notes  represented  by  the  Global  Note  are  expected  to  trade  in  the
Depositary's  Same-Day  Funds  Settlement System,  and  any  permitted secondary
market trading  activity in  such  Notes will,  therefore,  be required  by  the
Depositary to be settled in immediately available funds.                        

ADDITIONAL INFORMATION                                                          

    Anyone  who receives this Prospectus may obtain a copy of the 1996 Indenture
without charge by writing  to the Issuer, 90  Inverness Circle East,  Englewood,
Colorado 80112, attention David K. Moskowitz, facsimile (303) 799-0354.         

OLD NOTES' REGISTRATION RIGHTS; LIQUIDATED DAMAGES                              

    The  Issuer,  the  Guarantors  and the  Initial  Purchasers  entered  into a
registration rights agreement  dated March  25, 1996  (the "Registration  Rights
Agreement").  Pursuant to the Registration Rights  Agreement, the Issuer and the
Guarantors agreed to file  with the Commission  the Registration Statement  with
respect  to this Exchange Offer for the Exchange Notes. Pursuant to the Exchange
Offer, the Issuer  and the Guarantors  are offering to  the holders of  Transfer
Restricted Notes who are able to make certain representations the opportunity to
exchange  their Transfer Restricted Notes for Exchange Notes. If: (i) the Issuer
is not permitted to consummate the Exchange Offer because the Exchange Offer  is
not  permitted by  applicable law  or Commission policy;  or (ii)  any holder of
Transfer Restricted Notes notifies the  Issuer within the specified time  period
that: (A) it is prohibited by law or Commission policy from participating in the
Exchange  Offer; (B) that it may not resell the Exchange Notes acquired by it in
the Exchange  Offer  to the  public  without  delivering a  prospectus  and  the

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prospectus  contained  in  the  Exchange  Offer  Registration  Statement  is not
appropriate or available for such resales; or (C) that it is a broker-dealer and
owns Old Notes acquired directly from the Issuer or an affiliate of the  Issuer,
the Issuer and the Guarantors will file with the Commission a shelf registration
statement (the "Shelf Registration Statement") to cover resales of the Old Notes
by the holders thereof who satisfy certain conditions relating to the provisions
of  information in connection with the  Shelf Registration Statement. The Issuer
and the  Guarantors  will  use  their  best  efforts  to  cause  the  applicable
registration  statement to be declared effective  as promptly as possible by the
Commission. For purposes  of the  foregoing, "Transfer  Restricted Notes"  means
each Old Note until: (i) the date on which such Old Note has been exchanged by a
person  other than a broker-dealer  for an Exchange Note  in the Exchange Offer;
(ii) following the exchange by a broker-dealer  in the Exchange Offer of an  Old
Note  for an Exchange  Note, the date on  which such Exchange Note  is sold to a
purchaser who receives from such broker-dealer on  or prior to the date of  such
sale a copy of the prospectus contained in the Registration Statement; (iii) the
date on which such Old Note has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement; or (iv)
the  date on which such  Old Note is distributed to  the public pursuant to Rule
144 under the Act.                                                              

    The Registration  Rights Agreement  provides that:  (i) the  Issuer and  the
Guarantors  will file the Registration Statement with the Commission on or prior
to April  24, 1996;  (ii) the  Issuer and  the Guarantors  will use  their  best
efforts  to have the Registration Statement declared effective by the Commission
on or prior  to June  23, 1996;  (iii) unless the  Exchange Offer  would not  be
permitted  by applicable law or Commission policy, the Issuer and the Guarantors
will commence the  Exchange Offer and  use their  best efforts to  issue, on  or
prior to 30 business days after the date on which the Registration Statement was
declared  effective by  the Commission, Exchange  Notes in exchange  for all Old
Notes tendered prior  thereto in the  Exchange Offer; and  (iv) if obligated  to
file  the Shelf Registration  Statement, the Issuer and  the Guarantors will use
their best efforts to file the Shelf Registration Statement with the  Commission
on  or prior to 30 days after such filing obligation arises (and in any event on
or before  June  23,  1996, and  to  use  their best  efforts  cause  the  Shelf
Registration Statement to be declared effective by the Commission on or prior to
90 days after such obligation arises. If: (a) the Issuer and the Guarantors fail
to  file any of the Registration  Statements required by the Registration Rights
Agreement on or  before the  date specified  for such  filing; (b)  any of  such
Registration  Statements is not declared effective by the Commission on or prior
to the date specified for such effectiveness (the "Effectiveness Target  Date");
(c)  the Issuer and the Guarantors fail  to consummate the Exchange Offer within
30  business  days  of  the  Effectiveness  Target  Date  with  respect  to  the
Registration   Statement;  or  (d)  the  Shelf  Registration  Statement  or  the
Registration Statement  is  declared  effective  but  thereafter  ceases  to  be
effective  or usable  in connection  with resales  of Transfer  Restricted Notes
during the periods  specified in  the Registration Rights  Agreement (each  such
event  referred to in  clauses (a) through (d)  above a "Registration Default"),
then the Issuer and the Guarantors jointly and severally agree to pay liquidated
damages to each holder  of Old Notes,  with respect to  the first 90-day  period
immediately  following the occurrence of such  Registration Default in an amount
equal to $.05 per  week per $1,000  principal amount of Old  Notes held by  such
holder  ("Liquidated  Damages").  The  amount  of  the  Liquidated  Damages will
increase by an additional $.05 per week per $1,000 principal amount of Old Notes
with respect to each  subsequent 90-day period  until all Registration  Defaults
have  been cured, up to a maximum amount  of Liquidated Damages of $.40 per week
per $1,000 principal amount of Old Notes constituting Transfer Restricted Notes.
All accrued  Liquidated Damages  will be  paid  by the  Issuer on  each  Damages
Payment  Date  to  the Global  Note  Holder  by wire  transfer  to  the accounts
specified by them or by mailing checks to their registered addresses if no  such
accounts  have been specified. Following the  cure of all Registration Defaults,
the accrual of Liquidated Damages will cease.                                   

    Holders of Old Notes will be required to make certain representations to the
Issuer  (as  described  in  the  Registration  Rights  Agreement)  in  order  to
participate in the Exchange Offer and will be required to deliver information to
be   used  in   connection  with  the   Shelf  Registration   Statement  and  to

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provide comments on the Shelf Registration Statement within the time periods set
forth in the  Registration Rights  Agreement in order  to have  their Old  Notes
included  in the  Shelf Registration Statement  and benefit  from the provisions
regarding Liquidated Damages set forth above.                                   

CERTAIN DEFINITIONS                                                             

    Set forth  below are  certain  defined terms  used  in the  1996  Indenture.
Reference is made to the 1996 Indenture for a full disclosure of all such terms,
as  well as any other  capitalized terms used herein  for which no definition is
provided.                                                                       

    "ACCRETED VALUE" means, as of any  date of determination prior to March  15,
2000,  the sum  of: (a)  the initial offering  price of  each Note;  and (b) the
portion of the excess  of the principal  amount of each  Note over such  initial
offering  price which shall  have been accreted thereon  through such date, such
amount to be so accreted on a daily basis at the rate per annum disclosed on the
cover page  of  the Prospectus  of  the initial  offering  price of  the  Notes,
compounded  semi-annually on  each March  15 and September  15 from  the date of
issuance of the Notes through the date of determination.                        

    "ACQUIRED DEBT" means, with respect to any specified person, Indebtedness of
any other person existing at the time  such other person merges with or into  or
becomes  a Subsidiary of such specified person, or Indebtedness incurred by such
person in  connection with  the acquisition  of assets,  including  Indebtedness
incurred  in connection with, or in  contemplation of, such other person merging
with or  into  or  becoming  a  Subsidiary  of  such  specified  person  or  the
acquisition of such assets, as the case may be.                                 

    "AFFILIATE"  of  any specified  person means  any  other person  directly or
indirectly controlling  or controlled  by  or under  direct or  indirect  common
control  with such specified person. For  purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled  by"
and "under common control with"), as used with respect to any person, shall mean
the  possession, directly  or indirectly,  of the power  to direct  or cause the
direction of the  management or  policies of  such person,  whether through  the
ownership  of voting securities,  by agreement or  otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10%  or more of the  voting securities of a  person
shall be deemed to be control; PROVIDED FURTHER that no individual, other than a
director  of EchoStar or an  officer of EchoStar with  a policy making function,
shall be deemed an Affiliate of EchoStar  or any of its Subsidiaries, solely  by
reason  of such individual's employment, position or responsibilities by or with
respect to EchoStar or any of its Subsidiaries.                                 

    "BANK DEBT" means Indebtedness incurred pursuant to the Credit Agreement  in
an  aggregate amount not to exceed 90%  of the accounts receivable of the Credit
Agreement Borrowers  eligible for  inclusion  in the  borrowing base  under  the
Credit  Agreement, plus 75%  of the inventory of  the Credit Agreement Borrowers
eligible for inclusion in  the borrowing base under  the Credit Agreement,  plus
100%  of the cash  collateral and marketable securities  of the Credit Agreement
Borrowers eligible  for  inclusion  in  the  borrowing  base  under  the  Credit
Agreement.                                                                      

    "CAPITAL  LEASE OBLIGATION" means, at the  time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be so required to be capitalized on the balance sheet in accordance
with GAAP.                                                                      

    "CAPITAL STOCK" means any and all shares, interests, participations,  rights
or  other  equivalents (however  designated) of  corporate stock  or partnership
interests, whether common or preferred.                                         

    "CASH EQUIVALENTS"  means:  (a)  U.S.  dollars;  (b)  securities  issued  or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality  thereof having maturities of not  more than six months from the
date of acquisition; (c)  certificates of deposit  and eurodollar time  deposits
with  maturities of six  months or less  from the date  of acquisition, bankers'
acceptances  with  maturities  not  exceeding  six  months  and  overnight  bank
deposits,  in each  case with  any domestic  commercial bank  having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and                                                                         

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(c) entered  into  with any  financial  institution meeting  the  qualifications
specified  in clause (c) above;  and (e) commercial paper  rated P-1, A-1 or the
equivalent thereof  by Moody's  Investors  Service, Inc.  or Standard  &  Poor's
Corporation, respectively, and in each case maturing within six months after the
date of acquisition.                                                            

    "CHANGE  OF CONTROL"  means: (a) any  transaction or  series of transactions
(including, without limitation,  a tender  offer, merger  or consolidation)  the
result  of which is that  the Principals and their  Related Parties or an entity
controlled by  the  Principals  and  their  Related  Parties  cease  to  be  the
"beneficial  owners" (as defined in Rule 13(d)(3)  under the Exchange Act) of at
least 30% of the total Equity Interests in EchoStar and to have the voting power
to elect at  least a majority  of the Board  of Directors of  EchoStar; (b)  the
first  day on  which a  majority of  the members  of the  Board of  Directors of
EchoStar are  not  Continuing  Directors;  (c)  any  transaction  or  series  of
transactions   (including,  without  limitation,  a   tender  offer,  merger  or
consolidation) the result  of which  is that  the Principals  and their  Related
Parties  or an  entity controlled  by the  Principals and  their Related Parties
cease to  be the  "beneficial owners"  (as defined  in Rule  13(d)(3) under  the
Exchange Act) of at least 30% of the total Equity Interests in the Issuer and to
have  the voting power to elect at least a majority of the Board of Directors of
the Issuer; or (d) the first day on which a majority of the members of the Board
of Directors of the Issuer are not Continuing Directors.                        

    "COLLATERAL DOCUMENTS"  means the  Escrow  and Disbursement  Agreement,  the
Pledge Agreements and the Security Agreements.                                  

    "CONSOLIDATED  CASH FLOW" means, with respect  to any person for any period,
the Consolidated Net Income of such person for such period, plus, to the  extent
deducted  in computing Consolidated Net Income: (a) provision for taxes based on
income or profits;  (b) consolidated interest  expense of such  person for  such
period,  whether  paid  or  accrued (including  amortization  of  original issue
discount and  deferred  financing  costs, non-cash  interest  payments  and  the
interest   component  of  Capital  Lease   Obligations);  (c)  depreciation  and
amortization (including amortization of goodwill and other intangibles) of  such
person for such period; and (d) any extraordinary loss and any net loss realized
in  connection  with any  Asset  Sale, in  each  case, on  a  consolidated basis
determined in accordance with GAAP,  provided that Consolidated Cash Flow  shall
not include interest income derived from the net proceeds of the Offering.      

    "CONSOLIDATED  NET INCOME" means, with respect to any person for any period,
the aggregate of the  Net Income of  such person and  its Subsidiaries for  such
period,  on a consolidated basis, determined  in accordance with GAAP; PROVIDED,
HOWEVER, that: (a) the Net Income of any person that is not a Subsidiary or that
is accounted for by the  equity method of accounting  shall be included only  to
the  extent of  the amount  of dividends or  distributions paid  to the referent
person, in the case of  a gain, or to the  extent of any contributions or  other
payments  by the referent person, in  the case of a loss;  (b) the Net Income of
any person that is a Subsidiary that  is not a Wholly Owned Subsidiary shall  be
included  only to the extent of the amount of dividends or distributions paid to
the referent person; (c) the Net Income  of any person acquired in a pooling  of
interests transaction for any period prior to the date of such acquisition shall
be  excluded;  (d) the  Net Income  of any  Subsidiary of  such person  shall be
excluded to the extent that the  declaration or payment of dividends or  similar
distributions  is not  at the time  permitted by  operation of the  terms of its
charter or bylaws or any  other agreement, instrument, judgment, decree,  order,
statute,  rule or  government regulation  to which  it is  subject; and  (e) the
cumulative effect of a change in accounting principles shall be excluded.       

    "CONSOLIDATED NET WORTH" means the sum  of: (a) the stockholders' equity  of
such  person; plus (b) the amount reported  on such person's most recent balance
sheet with respect  to any series  of preferred stock  (other than  Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless such
dividends  may be declared and  paid only out of net  earnings in respect of the
year of  such declaration  and  payment, but  only to  the  extent of  any  cash
received  by such person  upon issuance of  such preferred stock,  less: (i) all
write-ups (other than write-ups resulting from foreign currency translations and
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months  after the acquisition  of such business)  subsequent to the  date of the
1996 Indenture  in the  book  value of  any  asset owned  by  such person  or  a
consolidated  Subsidiary of such person; and  (ii) all unamortized debt discount
and expense and unamortized deferred charges, all of the foregoing determined in
accordance with GAAP.                                                           

    "CONTINUING DIRECTOR" means, as of any date of determination, any member  of
the  Board of Directors of EchoStar or the  Issuer, as the case may be, who: (a)
was a member of such  Board of Directors on the  date of the 1996 Indenture;  or
(b)  was nominated for election  or elected to such  Board of Directors with the
affirmative vote of a majority of  the Continuing Directors who were members  of
such Board at the time of such nomination or election.                          

    "CREDIT  AGREEMENT"  means the  Credit  Agreement dated  as  of May  6, 1994
between Bank of America Illinois and certain of the Credit Agreement  Borrowers,
as  such  agreement may  be  amended, extended,  refinanced,  renewed, restated,
replaced or refunded from time to time,  PROVIDED that the lenders party to  the
Credit Agreement may not be Affiliates of EchoStar.                             

    "CREDIT  AGREEMENT BORROWERS" means  Echo Acceptance Corporation, Echosphere
Corporation, EchoStar International Corporation, Houston Tracker Systems,  Inc.,
Satellite  Source, Inc, Dish  Network Credit Corporation  and EchoStar Satellite
Corporation.                                                                    

    "DBSC" means Direct  Broadcasting Satellite Corporation  and its  successors
and assigns, as appropriate under the circumstances.                            

    "DBSC  NOTES" means notes  of DBSC representing  Indebtedness to EchoStar or
any of  its  Subsidiaries  for  amounts  applied  to  construction,  launch  and
insurance of EchoStar III and no more than $2 million of other expenses.        

    "DEFAULT"  means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.                                 

    "DEFERRED PAYMENTS" means Indebtedness to satellite contractors incurred  in
connection with the construction and launch of EchoStar I, EchoStar II, EchoStar
III and EchoStar IV in an amount not to exceed $108 million.                    

    "DISH  GUARANTEE DATE" means the  earlier of: (i) the  first date upon which
Dish Ltd.  is  permitted,  pursuant to  the  terms  of the  1994  Indenture,  to
Guarantee   the   Issuer's  total   payment   obligations  under   all   of  the
then-outstanding Notes; and (ii) the first date upon which the 1994 Notes are no
longer outstanding or have been defeased.                                       

    "DISH PREFERRED STOCK" means  Dish Ltd.'s 8%  Series A Cumulative  Preferred
Stock having an aggregate liquidation preference not in excess of $15.1 million.

    "DISQUALIFIED  STOCK" means any Capital Stock which, by its terms (or by the
terms of  any  security  into  which  it is  convertible  or  for  which  it  is
exchangeable),  or upon  the happening of  any event, matures  or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof,  in whole or in part,  on or prior to date  on
which the Notes mature.                                                         

    "ELIGIBLE  INSTITUTION"  means  a commercial  banking  institution  that has
combined capital and surplus of not less than $500 million or its equivalent  in
foreign  currency, whose debt is rated Investment  Grade at the time as of which
any investment or rollover therein is made.                                     

    "EQUITY INTERESTS" means Capital  Stock and all  warrants, options or  other
rights  to  acquire  Capital Stock  (but  excluding  any debt  security  that is
convertible into, or exchangeable for, Capital Stock).                          

    "EXISTING INDEBTEDNESS" means the  Notes and any  other Indebtedness of  the
Issuer and its Subsidiaries in existence on the date of the 1996 Indenture until
such amounts are repaid.                                                        

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    "GAAP"  means  generally accepted  accounting  principles set  forth  in the
opinions and pronouncements of the  Accounting Principles Board of the  American
Institute  of Certified Public Accountants  and statements and pronouncements of
the Financial Accounting  Standards Board or  in such other  statements by  such
other  entity as  may be  approved by  a significant  segment of  the accounting
profession of  the  United  States, which  are  applicable  as of  the  date  of
determination;  PROVIDED,  HOWEVER, that  these definitions  and all  ratios and
calculations contained in  the covenants "Restricted  Payments," "Incurrence  of
Indebtedness  and Issuance of Preferred Stock,"  "Asset Sales" and "Dividend and
Other Payment  Restrictions  Affecting  Subsidiaries"  shall  be  determined  in
accordance  with GAAP as in effect and  applied by EchoStar and its Subsidiaries
on the date of the 1996 Indenture, consistently applied; PROVIDED, FURTHER, that
in the event of any change  in GAAP or in any change  by EchoStar or any of  its
Subsidiaries  in GAAP applied that would result  in any change in any such ratio
or calculation, the  Issuer shall  deliver to the  Trustee, each  time any  such
ratio  or  calculation  is  required  to be  determined  or  made,  an Officers'
Certificate setting forth the computations showing the effect of such change  or
application on such ratio or calculation.                                       

    "GOVERNMENT   SECURITIES"  means  direct   obligations  of,  or  obligations
guaranteed by, the United States of  America for the payment of which  guarantee
or obligations the full faith and credit of the United States is pledged.       

    "GUARANTEE"  means  a guarantee  (other  than by  endorsement  of negotiable
instruments for  collection  in the  ordinary  course of  business),  direct  or
indirect,  in any manner  (including, without limitation,  letters of credit and
reimbursement agreements  in  respect  thereof),  of all  or  any  part  of  any
Indebtedness.                                                                   

    "GUARANTOR"  means EchoStar,  Dish, Ltd. and  (from and after  the date upon
which the DBSC Merger is consummated) DBSC, and any other entity that executes a
Guarantee of the obligations of the Issuer under the Notes, and their respective
successors and assigns.                                                         

    "HEDGING OBLIGATIONS" means, with respect to any person, the obligations  of
such  person  under:  (a)  interest  rate  swap  agreements,  interest  rate cap
agreements and  interest rate  collar agreements;  and (b)  other agreements  or
arrangements  designed to protect  such person against  fluctuations in interest
rates.                                                                          

    "IN-ORBIT INSURANCE" means, with respect to a satellite, In-Orbit  insurance
providing  coverage beginning 180 days after the  launch of such satellite in an
amount which, together with  cash and Cash Equivalents  (not including cash  and
Cash  Equivalents in the Escrow Account)  segregated and reserved on the balance
sheet of the Issuer,  for the duration  of the useful life  of the satellite  or
until   applied  in  accordance  with  the  covenant  entitled  "Maintenance  of
Insurance," in an  amount equal  to or greater  than the  cost of  construction,
launch  and insurance of such satellite,  which insurance shall provide pro rata
benefits to the insured  upon a loss of  more than 20% of  the capacity of  such
satellite  and shall compensate the insured for a total loss upon a loss of more
than 50% of the capacity of such satellite. For purposes of the 1996  Indenture,
the  proceeds of any In-Orbit Insurance shall be deemed to include the amount of
cash and Cash Equivalents segregated and reserved by the Issuer for purposes  of
the preceding sentence.                                                         

    "INDEBTEDNESS"  means, with respect to any  person, any indebtedness of such
person, whether or not contingent, in respect of borrowed money or evidenced  by
bonds,  notes,  debentures  or  similar instruments  or  letters  of  credit (or
reimbursement  agreements  in  respect  thereof)  or  representing  the  balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases) or representing any Hedging Obligations, except any such balance
that  constitutes an accrued expense or trade  payable, if and to the extent any
of the foregoing (other  than Hedging Obligations) would  appear as a  liability
upon  a balance sheet of such person  prepared in accordance with GAAP, and also
includes, to the  extent not  otherwise included,  the Guarantee  of items  that
would be included within this definition.                                       

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    "INDEBTEDNESS  TO CASH  FLOW RATIO" means,  with respect to  any person, the
ratio of: (a) the Indebtedness of such Person and its Subsidiaries as of end  of
the  most recently  ended fiscal  quarter, plus  the amount  of any Indebtedness
incurred subsequent to  the end  of such fiscal  quarter; to  (b) such  person's
Consolidated Cash Flow for the most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on  which such event for  which such calculation is  being made shall occur (the
"Measurement Period"); PROVIDED, HOWEVER, that: (i) in making such  computation,
Indebtedness  shall include the total amount  of funds outstanding and available
under any revolving credit facilities; and (ii) in the event that the Issuer  or
any  of its Subsidiaries consummates a material  acquisition or an Asset Sale or
other disposition of assets  subsequent to the  commencement of the  Measurement
Period  but prior to the event for  which the calculation of the Indebtedness to
Cash Flow Ratio  is made,  then the  Indebtedness to  Cash Flow  Ratio shall  be
calculated giving pro forma effect to such material acquisition or Asset Sale or
other disposition of assets, as if the same had occurred at the beginning of the
applicable period.                                                              

    "INVESTMENT  GRADE" means with respect to  a security, that such security is
rated, by at least two  nationally recognized statistical rating  organizations,
in one of each such organization's four highest generic rating categories.      

    "INVESTMENTS"  means, with  respect to any  person, all  investments by such
person in other persons (including Affiliates) in the forms of loans  (including
Guarantees), advances or capital contributions (excluding commission, travel and
similar  advances  to officers  and  employees made  in  the ordinary  course of
business), purchases or  other acquisitions for  consideration of  Indebtedness,
Equity  Interests or other securities  and all other items  that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.  

    "LAUNCH INSURANCE"  means, with  respect to  a satellite,  launch  insurance
(including,  at the option  of the Issuer,  reflight coverage for  any launch by
Arianespace or Lockheed Martin, PROVIDED  that such coverage permits  assignment
of  the right to any subsequent launch,  without consent of the launch provider)
covering the period  of the  launch of  such satellite  to 180  days after  such
launch  in an amount  which, together with cash  and Cash Equivalents segregated
and reserved on the balance sheet of  the Issuer until the successful launch  of
such  satellite  or  until  applied in  accordance  with  the  covenant entitled
"Maintenance  of  Insurance,"  is  equal  to   or  greater  than  the  cost   of
construction,  launch  and insurance  of such  satellite, which  insurance shall
provide pro rata benefits  to the insured upon  a loss of more  than 20% of  the
capacity  of such satellite  and shall compensate  the insured for  a total loss
upon a  loss of  more than  50% of  the capacity  of such  satellite;  PROVIDED,
HOWEVER,  that the amount of  cash and Cash Equivalents that  may be used by the
Issuer for purposes  of this definition  may include cash  and Cash  Equivalents
contained  in  the Escrow  Account only  for purposes  of Launch  Insurance with
respect to EchoStar III, but only to the extent that the Issuer certifies, in an
Officer's Certificate  delivered  to  the  Trustee,  that  such  cash  and  Cash
Equivalents  are reasonably not  expected to be necessary  for the completion of
the development, construction, launch and  operation of the relevant  satellite.
For  purposes of the 1996 Indenture, the  proceeds of any Launch Insurance shall
be deemed to  include the  amount of cash  and Cash  Equivalents segregated  and
reserved by the Issuer for purposes of the preceding sentence.                  

    "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security  interest or encumbrance of any kind  in respect of such asset, whether
or not filed, recorded  or otherwise perfected  under applicable law  (including
any conditional sale or other title retention agreement, any lease in the nature
thereof,  any option or other  agreement to sell or  give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent status) of any jurisdiction).                    

    "MARKETABLE  SECURITIES"   means:  (a)   Government  Securities;   (b)   any
certificate  of  deposit maturing  not  more than  270  days after  the  date of
acquisition issued  by,  or  time  deposit  of,  an  Eligible  Institution;  (c)
commercial  paper maturing not more than 270  days after the date of acquisition
issued by  a  corporation  (other than  an  Affiliate  of the  Issuer)  with  an
Investment Grade rating, at the time as                                         

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of  which  any investment  therein is  made,  issued or  offered by  an Eligible
Institution; (d) any bankers acceptances or money market deposit accounts issued
or offered by an Eligible Institution; and (e) any fund investing exclusively in
investments of the types described in clauses (a) through (d) above.            

    "NET INCOME" means,  with respect to  any person, the  net income (loss)  of
such  person, determined in  accordance with GAAP,  excluding, however, any gain
(but not loss), together with any related provision for taxes on such gain  (but
not  loss),  realized  in connection  with  any Asset  Sale  (including, without
limitation, dispositions  pursuant  to  sale and  leaseback  transactions),  and
excluding  any  extraordinary gain  (but not  loss),  together with  any related
provision for taxes on such extraordinary gain (but not loss).                  

    "NET PROCEEDS"  means the  aggregate  cash proceeds  received by  DBSC,  the
Issuer  or any of its Restricted Subsidiaries, as the case may be, in respect of
any Asset Sale, net of the direct costs relating to such Asset Sale  (including,
without  limitation, legal,  accounting and  investment banking  fees, and sales
commissions) and any relocation  expenses incurred, as  a result thereof,  taxes
paid or payable as a result thereof (after taking into account any available tax
credits  or deductions and any tax sharing arrangements), amounts required to be
applied to the  repayment of  Indebtedness secured  by a  Lien on  the asset  or
assets that are the subject of such Asset Sale and any reserve for adjustment in
respect  of the sale price  of such asset or  assets. Net Proceeds shall exclude
any non-cash  proceeds received  from any  Asset Sale,  but shall  include  such
proceeds  when and as  converted by the  Issuer or any  Restricted Subsidiary to
cash.                                                                           

"1994 INDENTURE" means the Indenture relating to the 1994 Notes.        

    "1994 NOTES" means  the 12 7/8%  Senior Secured Discount  Notes due 2004  of
Dish, Ltd.                                                                      

    "NON-RECOURSE  INDEBTEDNESS" of any person means Indebtedness of such person
that: (i)  is  not  guaranteed  by  any other  person  (except  a  Wholly  Owned
Subsidiary  of  the referent  person);  (ii) is  not  recourse to  and  does not
obligate any other  person (except  a Wholly  Owned Subsidiary  of the  referent
person)  in any way; (iii) does not subject  any property or assets of any other
person (except a Wholly  Owned Subsidiary of the  referent person), directly  or
indirectly,  contingently or otherwise, to the satisfaction thereof; and (iv) is
not required by GAAP to  be reflected on the  financial statements of any  other
person  (other than a Subsidiary of  the referent person) prepared in accordance
with GAAP.                                                                      

    "OBLIGATIONS"   means    any   principal,    interest,   penalties,    fees,
indemnifications,  reimbursements, damages  and other  liabilities payable under
the documentation governing any Indebtedness.                                   

    "PERMITTED INVESTMENTS" means: (a)  Investments in EchoStar  or in a  Wholly
Owned  Subsidiary  of  EchoStar,  other than  Unrestricted  Subsidiaries  of the
Issuer; (b)  Investments  in Cash  Equivalents  and Marketable  Securities;  (c)
conversion  of  debentures  of  SSET  and  DBS  Industries,  Inc.  ("DBSI"),  in
accordance with their  terms, into Equity  Interests of SSET  and DBSI; and  (d)
Investments  by EchoStar  or any  Subsidiary of  EchoStar in  a person  if, as a
result of such  Investment: (i) such  person becomes a  Wholly Owned  Restricted
Subsidiary  of the Issuer or a Wholly Owned Subsidiary of EchoStar that is not a
Subsidiary of  the  Issuer; or  (ii)  such  person is  merged,  consolidated  or
amalgamated  with  or into,  or transfers  or conveys  substantially all  of its
assets to,  or is  liquidated into,  EchoStar or  a Wholly  Owned Subsidiary  of
EchoStar that is not an Unrestricted Subsidiary of the Issuer.                  

    "PERMITTED  LIENS" means: (a)  Liens securing the  Notes; (b) Liens securing
the Deferred Payments; (c) Liens on  EchoStar III to the extent permitted  under
"--  Security";  (d) Liens  securing the  Bank  Debt on  assets of  the Issuer's
Restricted Subsidiaries; (e) Liens securing  the 1994 Notes; (f) Liens  securing
Purchase Money Indebtedness, PROVIDED that such Indebtedness was permitted to be
incurred  by the terms of the 1996 Indenture and such Liens do not extend to any
assets of the  Issuer or its  Restricted Subsidiaries other  than the assets  so
acquired;  (g) Liens  securing Indebtedness  the proceeds  of which  are used to
develop, construct,  launch or  insure  any satellites  other than  EchoStar  I,
EchoStar  II or EchoStar  III (or any  permitted replacements thereof), PROVIDED
that such Indebtedness was  permitted to be  incurred by the  terms of the  1996
Indenture and such Liens do not                                                 

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extend  to any assets of  DBSC, the Issuer or  its Restricted Subsidiaries other
than such satellites being  developed, constructed, launched  or insured and  to
the  related licenses, permits and construction,  launch and TT&C contracts; (h)
Liens on orbital  slots, licenses  and other assets  and rights  of the  Issuer,
PROVIDED  that such orbital  slots, licenses and other  assets and rights relate
solely to the satellites referred to in clause (g) of this definition; (i) Liens
on property of  a person  existing at  the time such  person is  merged into  or
consolidated  with DBSC, the Issuer or  any Restricted Subsidiary of the Issuer,
PROVIDED,  that  such  Liens  were  not  incurred  in  connection  with,  or  in
contemplation  of,  such merger  or consolidation,  other  than in  the ordinary
course of business; (j) Liens on  property of an Unrestricted Subsidiary at  the
time that it is designated as a Restricted Subsidiary pursuant to the definition
of  "Unrestricted Subsidiary,"  PROVIDED that  such liens  were not  incurred in
connection with, or contemplation  of, such designation;  (k) Liens on  property
existing  at  the  time  of  acquisition thereof  by  DBSC,  the  Issuer  or any
Restricted Subsidiary of the Issuer; PROVIDED that such Liens were not  incurred
in  connection with, or in contemplation of,  such acquisition and do not extend
to any assets of DBSC,  the Issuer or any  of its Restricted Subsidiaries  other
than  the property so acquired; (l) Liens to secure the performance of statutory
obligations, surety  or  appeal  bonds  or  performance  bonds,  or  landlords',
carriers',  warehousemen's, mechanics', suppliers',  materialmen's or other like
Liens, in any case incurred in the ordinary course of business and with  respect
to  amounts not yet delinquent  or being contested in  good faith by appropriate
process of law,  if a  reserve or  other appropriate  provision, if  any, as  is
required  by GAAP shall have been made therefore; (m) Liens existing on the date
of the 1996 Indenture; (n) Liens for taxes, assessments or governmental  charges
or  claims that are not yet delinquent or that are being contested in good faith
by  appropriate  proceedings  promptly  instituted  and  diligently   concluded;
PROVIDED that any reserve or other appropriate provision as shall be required in
conformity  with GAAP shall have  been made therefor; (o)  Liens incurred in the
ordinary course of business of DBSC, the Issuer or any Restricted Subsidiary  of
the  Issuer  (including,  without  limitation,  Liens  securing  Purchase  Money
Indebtedness) with  respect to  obligations that  do not  exceed $2  million  in
principal  amount  in  the  aggregate  at  any  one  time  outstanding;  and (p)
extensions, renewals  or refundings  of any  Liens referred  to in  clauses  (a)
through  (o) above, provided that any  such extension, renewal or refunding does
not extend to any assets or secure  any Indebtedness not securing or secured  by
the Liens being extended, renewed or refinanced.                                

    "PRINCIPALS"  means Charles W. Ergen, James  DeFranco, R. Scott Zimmer, Carl
E. Vogel, Steven B. Schaver, J. Allen Fears and David K. Moskowitz.             

    "PURCHASE MONEY INDEBTEDNESS" means indebtedness of the Issuer or any of its
Restricted Subsidiaries incurred (within 180  days of such purchase) to  finance
the  purchase of any assets of the Issuer or any of its Restricted Subsidiaries:
(a) to the extent the amount of  Indebtedness thereunder does not exceed 80%  of
the  purchase cost of such  assets; (b) to the extent  the purchase cost of such
assets is or should be included in "additions to property, plant and  equipment"
in  accordance  with GAAP;  (c)  to the  extent  that such  Indebtedness  is not
recourse to the Issuer  or any of  its Restricted Subsidiaries  or any of  their
respective  assets, other than the assets so  purchased; and (d) if the purchase
of such assets is not part of an acquisition of any Person.                     

    "RECEIVER SUBSIDY"  means a  subsidy,  rebate or  other similar  payment  by
EchoStar  or any  of its  Subsidiaries, in the  ordinary course  of business, to
subscribers, vendors or distributors, relating  to an EchoStar Receiver  System,
not  to exceed the cost of such EchoStar Receiver System, together with the cost
of installation of such EchoStar Receiver System.                               

    "RELATED PARTY" means,  with respect to  any Principal, (a)  the spouse  and
each  immediate family member of such Principal and (b) each trust, corporation,
partnership or other entity of which such Principal beneficially holds an 80% or
more controlling interest.                                                      

    "RESTRICTED  INVESTMENT"   means   an  Investment   other   than   Permitted
Investments.                                                                    

    "RESTRICTED   SUBSIDIARY"  means,  any  corporation,  association  or  other
business entity of which more  than 50% of the total  voting power of shares  of
Capital Stock entitled (without regard to the                                   

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occurrence of any contingency) to vote in the election of directors, managers or
trustees  thereof is at the time owned or controlled, directly or indirectly, by
the Issuer or one or more Subsidiaries  of the Issuer or a combination  thereof,
other than Unrestricted Subsidiaries.                                           

    "SUBSIDIARY" means, with respect to any person, any corporation, association
or  other business entity  of which more than  50% of the  total voting power of
shares of  Capital Stock  entitled  (without regard  to  the occurrence  of  any
contingency)  to vote in the election of directors, managers or trustees thereof
is at the time owned  or controlled, directly or  indirectly, by such person  or
one or more of the other Subsidiaries of such person or a combination thereof.  

    "UNRESTRICTED  SUBSIDIARY"  means;  (A)  EchoStar  Real  Estate Corporation,
EchoStar International (Mauritius) Ltd., EchoStar Manufacturing and Distribution
Pvt. Ltd.  and Satrec  Mauritius Ltd.;  and  (B) any  Subsidiary of  the  Issuer
designated  as  an  Unrestricted Subsidiary  in  a  resolution of  the  Board of
Directors of  the  Issuer: (a)  no  portion of  the  Indebtedness or  any  other
obligation  (contingent or otherwise) of which, at the time of such designation:
(i) is guaranteed by  the Issuer or  any other Subsidiary  of the Issuer  (other
than  another Unrestricted  Subsidiary); (ii)  is recourse  to or  obligates the
Issuer or any other  Subsidiary of the Issuer  (other than another  Unrestricted
Subsidiary) in any way; or (iii) subjects any property or asset of the Issuer or
any other Subsidiary of the Issuer (other than another Unrestricted Subsidiary),
directly  or indirectly, contingently or otherwise, to satisfaction thereof; (b)
with which neither the Issuer nor any other Subsidiary of the Issuer (other than
another Unrestricted  Subsidiary)  has  any  contract,  agreement,  arrangement,
understanding or is subject to an obligation of any kind, written or oral, other
than  on terms  no less favorable  to the  Issuer or such  other Subsidiary than
those that might be obtained at the time from persons who are not Affiliates  of
the  Issuer; and (c) with  which neither the Issuer  nor any other Subsidiary of
the Issuer (other than another Unrestricted Subsidiary) has any obligation:  (i)
to  subscribe for additional  shares of Capital Stock  or other equity interests
therein; or (ii) to maintain  or preserve such Subsidiary's financial  condition
or  to  cause such  Subsidiary to  achieve certain  levels of  operating results
PROVIDED, HOWEVER,  that none  of Dish,  Ltd., EchoStar  Satellite  Corporation,
DirectSat  Corporation,  Echo Acceptance  Corporation, Houston  Tracker Systems,
Inc., EchoStar  International  Corporation  and Echosphere  Corporation  may  be
designated  as Unrestricted Subsidiaries. At the time that the Issuer designates
a Subsidiary as an  Unrestricted Subsidiary, the Issuer  will be deemed to  have
made  a Restricted Investment  in an amount  equal to the  fair market value (as
determined in good faith by the Board of Directors of the Issuer evidenced by  a
resolution of the Board of Directors of the Issuer and set forth in an Officers'
Certificate delivered to the Trustee; PROVIDED, HOWEVER, that if the fair market
value  of such Subsidiary  exceeds $10 million,  the fair market  value shall be
determined by an investment  banking firm of national  standing selected by  the
Issuer)  of such Subsidiary.  An Unrestricted Subsidiary may  be designated as a
Restricted Subsidiary of the  Issuer if, at the  time of such designation  after
giving  pro forma  effect thereto  as if  such designation  had occurred  at the
beginning of the applicable four-quarter  period, the Issuer would be  permitted
to  incur at least  $1.00 of additional  Indebtedness pursuant to  the Cash Flow
Ratio test set forth in the covenant entitled "-- Incurrence of Indebtedness and
Issuance of Preferred Stock."                                                   

    "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any  Indebtedness
at  any date, the number of years  obtained by dividing (a) the then outstanding
principal amount of such Indebtedness into (b) the total of the product obtained
by multiplying (i) the amount of each then remaining installment, sinking  fund,
serial  maturity or other  required payments of  principal, including payment at
final maturity, in respect thereof, by  (ii) the number of years (calculated  to
the  nearest one-twelfth) that will  elapse between such date  and the making of
such payment.                                                                   

    "WHOLLY OWNED RESTRICTED SUBSIDIARY" means a Wholly Owned Subsidiary of  the
Issuer that is a Restricted Subsidiary of the Issuer.                           

    "WHOLLY  OWNED SUBSIDIARY" means, with respect to any person, any Subsidiary
all of the outstanding voting stock (other than directors' qualifying shares) of
which is owned by such person, directly or indirectly.                          

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS 

    The  following summary describes the  principal United States federal income
tax consequences of  the ownership  and disposition  of Notes.  This summary  is
based  on the Internal Revenue Code of 1986,  as amended to the date hereof (the
"Code"), administrative  pronouncements,  judicial decisions  and  existing  and
proposed  Treasury Regulations, changes  to any of which  subsequent to the date
hereof may affect the tax  consequences described below. This summary  addresses
only  initial holders of Notes who acquire such Notes at their "issue price," as
defined below,  and discusses  only  Notes held  as  capital assets  within  the
meaning  of  Section 1221  of  the Code.  It  does not  discuss  all of  the tax
consequences that  may  be  relevant to  a  holder  in light  of  such  holder's
particular circumstances or to holders subject to special rules, such as certain
financial  institutions, insurance  companies, dealers in  securities or persons
holding the Notes as part of a straddle or a hedging arrangement.               

    HOLDERS OF  NOTES SHOULD  CONSULT  THEIR TAX  ADVISORS  WITH REGARD  TO  THE
APPLICATION  OF THE  UNITED STATED FEDERAL  INCOME TAX LAWS  TO THEIR PARTICULAR
SITUATIONS, AS WELL  AS WITH REGARD  TO ANY TAX  CONSEQUENCES ARISING UNDER  THE
LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION.                               

ORIGINAL ISSUE DISCOUNT                                                         

    The  Old Notes were,  and the Exchange  Notes will be,  issued with original
issue discount ("OID") equal to the  difference between their "issue price"  and
their  "stated redemption price at  maturity", as such terms  are defined in the
Code and Treasury Regulations.  The "issue price"  of a Note  will be the  first
price at which a substantial amount of the Notes is sold to the public. For this
purpose,  the public does not include bond houses, brokers or similar persons or
organizations acting  in  the  capacity of  underwriters,  placement  agents  or
wholesalers.                                                                    

    The "stated redemption price at maturity" of a Note will be equal to the sum
of all payments required under the Note other than payments of "qualified stated
interest"  within the  meaning of the  Treasury Regulations.  To have "qualified
stated interest," an instrument must, among other requirements, pay interest  at
least  annually during the entire term of  the Notes. Because the Notes will not
pay interest until September 15, 2000, none of the interest on the Notes will be
qualified stated interest. As a result,  all payments made under the Notes  will
be  treated as part of the stated redemption price at maturity and interest paid
on the Notes will not be taxable upon receipt, but the OID rules described below
will apply. The total OID on a Note will be equal to the difference between  the
sum of all payments required under the Note and the issue price of the Note.    

    A holder of Notes will be required to include OID in income for U.S. federal
income  tax purposes as it accrues, whether  or not such holder uses the accrual
method of accounting. OID will accrue in accordance with a constant yield method
based on a compounding of interest. Under this method, holders of Notes will  be
required  to include in income increasingly greater amounts of OID in successive
accrual periods. OID allocable to any  accrual period will equal the product  of
the  "adjusted issue price" of the Notes as  of the beginning of such period and
the Notes' yield to maturity. The "adjusted issue price" of the Notes as of  the
beginning  of  any  accrual period  will  equal  the issue  price  of  the Notes
increased by OID previously includable in  income and decreased by any  payments
under  the Notes. Because OID  will accrue and be  includable in income at least
annually and no payments will be made under the Notes until September 15,  2000,
the  adjusted issue price of  the Notes will increase  until March 15, 2000. OID
includable in income will  therefore increase during  each accrual period  until
March  15, 2000. Thereafter, OID includable in income for each six-month accrual
period will approximate  the amount  of cash  interest due  at the  end of  such
period.                                                                         

APPLICABLE HIGH YIELD DISCOUNT RULES                                            

    The  Old Notes are, and  the Exchange Notes will  be, "applicable high yield
discount obligations"  ("AHYDOs"),  as defined  in  the Code.  Under  the  rules
applicable to AHYDOs, because the yield to maturity of the Notes will exceed the
"applicable  federal rate" in effect  at the time of  their issuance (the "AFR")
plus six percentage points, a portion of the OID that accrues on the Notes  will
not be                                                                          

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deductible by the Issuer at any time. The non-deductible portion of the OID will
be  an amount that  bears the same  ratio to such  OID as (i)  the excess of the
yield to maturity of the Notes over the AFR plus six percentage points bears  to
(ii)  the yield to maturity of the  Notes. To the extent that the non-deductible
portion of OID would have been treated as a dividend if it had been  distributed
with  respect to the Issuer's  stock, it will be treated  for some purposes as a
dividend to  holders of  the Notes.  Amounts  of OID  treated as  dividends  may
qualify  for the  dividends received deduction  for corporate  holders. OID that
accrues on the Notes  and for which the  Issuer's deductions are allowable  (the
OID  portion equal to or less than the  AFR plus six percentage points) will not
be  deductible  by  the  Issuer  until  cash  interest  payments  are  made   to
Noteholders.                                                                    

EXCHANGE OFFER                                                                  

    The  exchange of Exchange Notes for Old Notes pursuant to the Exchange Offer
will not  be treated  as a  taxable  exchange for  federal income  tax  purposes
because  the terms of the  Exchange Notes will be identical  to the terms of the
Old Notes other than the fact that the Exchange Notes will be registered.       

SALE, EXCHANGE OR RETIREMENT OF THE NOTES                                       

    Upon the sale,  exchange or retirement  of a Note,  a holder will  recognize
taxable  gain or loss equal to the difference between the amount realized on the
sale, exchange or retirement and such holder's adjusted tax basis in the Note. A
holder's adjusted tax basis in  a Note will equal the  initial tax basis of  the
Note,  increased by the amounts of any  OID previously included in income by the
holder with respect to such Note and  reduced by the amounts of any payments  on
the Note received by such holder.                                               

    Gain  or loss realized on the sale, exchange or retirement of a Note will be
capital gain or loss and will be  long-term capital gain or loss if the  holding
period  of the Note  exceeds one year  as of the  date of the  sale, exchange or
retirement. Under current law,  the excess of net  long-term capital gains  over
net  short-term capital losses is taxed at a lower rate than ordinary income for
certain non-corporate taxpayers.  The distinction between  capital gain or  loss
and  ordinary  income or  loss is  also  relevant for  purposes of,  among other
things, limitation on the deductibility of capital losses.                      

BACKUP WITHHOLDING AND INFORMATION REPORTING                                    

    Certain noncorporate holders may be subject to backup withholding at a  rate
of 31% on payments of principal and interest (including OID) and premium on, and
the  proceeds of disposition of,  a Note. Backup withholding  will apply only if
the holder:  (i) fails  to furnish  its Taxpayer  Identification Number  ("TIN")
which,  for an  individual, would  be his  or her  Social Security  number; (ii)
furnishes an incorrect  TIN; (iii) is  notified by  the IRS that  it has  failed
properly  to report  payments of interest  and dividends; or  (iv) under certain
circumstances, fails to certify, under penalty of perjury, that it has furnished
a correct TIN and has not been notified by the IRS that it is subject to  backup
withholding for failure to report interest and dividend payments. Holders of the
Notes  should  consult  their  tax advisors  regarding  their  qualification for
exemption from  backup  withholding and  the  procedure for  obtaining  such  an
exemption, if applicable.                                                       

    The  amount of any backup  withholding from a payment to  a holder of a Note
will be allowed as  a credit against the  holder's United States federal  income
tax liability and may entitle the holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.                       

OTHER TAX CONSEQUENCES                                                          

    In  addition  to  the  federal income  tax  considerations  described above,
holders of  Notes should  consider potential  state, local,  income,  franchise,
personal property and other taxation in any state or locality and the tax effect
of  ownership, sale, exchange, or retirement of  Notes in any state or locality.
Holders of Notes are advised to consult  their own tax advisors with respect  to
any   state  or  local  income,  franchise,   personal  property  or  other  tax
consequences arising out of their ownership of Notes.                           

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    THE FOREGOING DISCUSSION IS FOR GENERAL  INFORMATION AND IS NOT TAX  ADVICE.
ACCORDINGLY,  EACH HOLDER OF NOTES SHOULD CONSULT  HIS OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO HIM OF HOLDING, EXCHANGING OR SELLING THE  NOTES,
INCLUDING  THE APPLICABILITY AND  EFFECT OF ANY STATE,  LOCAL, OR FOREIGN INCOME
TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.          

PLAN OF DISTRIBUTION

    Based on interpretation by the Staff  set forth in no-action letters  issued
to third parties, the Issuer believes that Exchange Notes issued pursuant to the
Exchange  Offer in exchange for the Old  Notes may be offered for resale, resold
and otherwise transferred by holders thereof (other than any holder which is (i)
an affiliate of the Issuer, (ii) a broker-dealer who acquired Old Notes directly
from the Issuer or (iii) a broker-dealer  who acquired Old Notes as a result  of
market-making   or  other  trading  activities)   without  compliance  with  the
registration and prospectus delivery provisions  of the Securities Act  provided
that  such Exchange Notes are  acquired in the ordinary  course of such holders'
business, and such holders are not engaged  in, and do not intend to engage  in,
and  have no arrangement or  understanding with any person  to participate in, a
distribution   of   such   Exchange   Notes;   provided   that    broker-dealers
("Participating  Broker-Dealers") receiving Exchange Notes in the Exchange Offer
will be subject to a prospectus delivery requirement with respect to resales  of
such   Exchange  Notes.  To  date,  the   Staff  has  taken  the  position  that
Participating Broker-Dealers may fulfill their prospectus delivery  requirements
with  respect to  transactions involving an  exchange of securities  such as the
exchange pursuant  to the  Exchange Offer  (other  than a  resale of  an  unsold
allotment  from the sale  of the Old  Notes to the  Initial Purchasers) with the
prospectus contained in the Registration Statement. Pursuant to the Registration
Rights Agreement, the Issuer has  agreed to permit Participating Broker  Dealers
and  other persons, if any, subject  to similar prospectus delivery requirements
to use this Prospectus in connection with the resale of such Exchange Notes. The
Issuer has agreed that,  for a period  of 180 days after  the Exchange Date,  it
will  make this Prospectus, and any  amendment or supplement to this Prospectus,
available to any  broker-dealer that requests  such documents in  the Letter  of
Transmittal.                                                                    

    Each  holder  of the  Old Notes  who wishes  to exchange  its Old  Notes for
Exchange  Notes  in  the  Exchange  Offer  will  be  required  to  make  certain
representations  to the Issuer as set forth  in "The Exchange Offer -- Terms and
Conditions of the  Letter of  Transmittal." In addition,  each holder  who is  a
broker-dealer  and who receives  Exchange Notes for its  own account in exchange
for Old Notes that were acquired by  it as a result of market-making  activities
or other trading activities will be required to acknowledge that it will deliver
a prospectus in connection with any resale by it of such Exchange Notes.        

    The  Issuer will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own  account
pursuant  to the Exchange  Offer may be  sold from time  to time in  one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related  to
such  prevailing market prices or  at negotiated prices. Any  such resale may be
made directly to purchasers or to or through brokers or dealers who may  receive
compensation   in  the  form  of  commissions   or  concessions  from  any  such
broker-dealer  and/or  the   purchasers  of   any  such   Exchange  Notes.   Any
broker-dealer  that resells Exchange Notes that were  received by it for its own
account  pursuant  to  the  Exchange  Offer  and  any  broker  or  dealer   that
participates  in a distribution  of such Exchange  Notes may be  deemed to be an
"underwriter" within the  meaning of the  Securities Act and  any profit on  any
such resale of Exchange Notes and any commissions or concessions received by any
such  persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.                

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    The Issuer has agreed to pay  all expenses incidental to the Exchange  Offer
other  than  commissions  and concession  of  any  brokers or  dealers  and will
indemnify holders of the Notes  (including any brokers-dealers) against  certain
liabilities, including liabilities under the Securities Act, as set forth in the
Registration Rights Agreement.                                                  

NOTICE TO INVESTORS 

    Because  the  following instructions  will apply  to any  Old Notes  held by
holders who do not participate in the  Exchange Offer, holders of the Old  Notes
are  advised to consult legal counsel prior  to making any offer, resale, pledge
or transfer of any of the Old Notes.                                            

    The Old Notes have not been registered under the Securities Act and may  not
be offered or sold within the United States or to U.S. Persons (as such terms as
defined  under the Securities Act) except pursuant to an exemption from, or in a
transaction not subject to the registration requirements of the Securities  Act.
Accordingly, the Old Notes were offered only to "qualified institutional buyers"
(as  defined in Rule 144A under the Securities Act) in reliance on the exemption
from the registration requirements of the Securities Act provided by Rule  144A,
and  to  a limited  number of  institutional  "accredited investors"  within the
meaning of Rule 501(a)(1), (2), (3) and (7) under the Securities Act.           

    Each purchaser of Old  Notes purchased in  a sale made  in reliance on  Rule
144A  has been deemed to  have represented and agreed  as follows (terms used in
this paragraph  that  are  defined in  Rule  144A  are used  herein  as  defined
therein):                                                                       

        (1)  The purchaser is either (A)  a qualified institutional buyer and is
    aware that the sale to it is being  made in reliance on Rule 144A, and  such
    qualified  institutional  buyer  has acquired  such  Old Notes  for  its own
    account or for the account of another qualified institutional buyer or,  (B)
    an  "accredited investor" within the meaning  of Rule 501(a)(1), (2), (3) or
    (7) under the Securities Act (an  "accredited investor") or, (C) if the  Old
    Notes are to be purchased for one or more accounts ("investor accounts") for
    which it is acting as fiduciary or agent, each such account is an accredited
investor on a like basis.                                               

        (2)  The  purchaser understands  that the  Old Notes  were offered  in a
    transaction not involving any  public offering in  the United States  within
    the  meaning  of  the Securities  Act,  that  the Old  Notes  have  not been
    registered under  the Securities  Act and  that: (A)  the Old  Notes may  be
    offered,  resold, pledged or otherwise transferred only: (i) to a person who
    the seller  reasonably believes  is  a qualified  institutional buyer  in  a
    transaction  meeting the requirements of Rule 144A, in a transaction meeting
    the requirements of Rule  144 under the Securities  Act, outside the  United
    States  to a foreign person in a transaction meeting the requirement of Rule
    904 under the Securities  Act or in accordance  with another exemption  from
    the  registration  requirements of  the Securities  Act  (and based  upon an
    opinion of counsel if the Issuer so requests); (ii) to the Issuer; or  (iii)
    pursuant  to  an effective  registration statement,  and,  in each  case, in
    accordance with any applicable  securities laws of any  State of the  United
    States or any other applicable jurisdiction; and (B) the purchaser will, and
    each  subsequent holder is required to, notify any subsequent purchaser from
it of the resale restrictions set forth in (A) above.                   

        (3) The purchaser understands that  the certificates evidencing the  Old
    Notes  bear,  and  if not  exchanged  pursuant  to the  Exchange  Offer will
    continue to  bear, a  legend substantially  to the  following effect  unless
otherwise agreed by the Issuer and the holder thereof:                  

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS  AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED  STATES OR TO, OR  FOR THE ACCOUNT OR  BENEFIT
OF,  U.S. PERSONS EXCEPT AS SET FORTH  IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION  HEREOF,  THE  HOLDER  (1)  REPRESENTS  THAT  (A)  IT  IS  A
"QUALIFIED  INSTITUTIONAL  BUYER" (AS  DEFINED  IN RULE  144A  UNDER THE
SECURITIES ACT)  OR (B)  IT IS  AN INSTITUTIONAL  "ACCREDITED  INVESTOR"

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(AS  DEFINED IN RULE 501(a)(1),  (2), (3), OR (7)  OF REGULATION D UNDER
THE SECURITIES ACT) (AN "INSTITUTIONAL  ACCREDITED INVESTOR") OR (C)  IT
IS  NOT  A  U.S.  PERSON  AND IS  ACQUIRING  THIS  NOTE  IN  AN OFFSHORE
TRANSACTION IN COMPLIANCE  WITH REGULATION S  UNDER THE SECURITIES  ACT,
(2)  AGREES THAT IT WILL NOT, WITHIN  THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS NOTE OR THE  LAST DATE ON WHICH THIS NOTE  WAS
HELD  BY AN AFFILIATE OF THE  COMPANY, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER  THE SECURITIES  ACT,  (C) INSIDE  THE  UNITED STATES  TO  AN
INSTITUTIONAL   ACCREDITED  INVESTOR  THAT,   PRIOR  TO  SUCH  TRANSFER,
FURNISHES  TO   THE  TRUSTEE   A   SIGNED  LETTER   CONTAINING   CERTAIN
REPRESENTATIONS  AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE)
AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT  OF
NOTES  AT THE  TIME OF  TRANSFER OF  LESS THAN  $250,000, AN  OPINION OF
COUNSEL ACCEPTABLE TO THE  COMPANY THAT SUCH  TRANSFER IS IN  COMPLIANCE
WITH  THE SECURITIES ACT,  (D) OUTSIDE THE UNITED  STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH  RULE 904 UNDER  THE SECURITIES ACT,  (E)
PURSUANT  TO THE EXEMPTION FROM REGISTRATION  PROVIDED BY RULE 144 UNDER
THE SECURITIES  ACT  (IF AVAILABLE)  OR  (F) PURSUANT  TO  AN  EFFECTIVE
REGISTRATION  STATEMENT UNDER THE SECURITIES ACT  AND (3) AGREES THAT IT
WILL DELIVER TO EACH  PERSON TO WHOM THIS  NOTE IS TRANSFERRED A  NOTICE
SUBSTANTIALLY  TO THE EFFECT OF THIS  LEGEND. IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO  SUCH
TRANSFER,  FURNISH TO THE  TRUSTEE AND THE  COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR  OTHER INFORMATION  AS EITHER OF  THEM MAY  REASONABLY
REQUIRE  TO  CONFIRM THAT  SUCH TRANSFER  IS BEING  MADE PURSUANT  TO AN
EXEMPTION FROM, OR  IN A  TRANSACTION NOT SUBJECT  TO, THE  REGISTRATION
REQUIREMENTS  OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS  GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS
A  PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.                   

        (4) The  purchaser acknowledged  that none  of the  Issuer, the  Initial
    Purchasers  or any person representing the  Issuer or the Initial Purchasers
    made any representations to it with respect to the Issuer or the offering or
    sale of the Old Notes, other than the information contained in the  Offering
    Memorandum,  dated March 19, 1996, relating  to the Old Notes (the "Offering
    Memorandum"), which was delivered to it  and upon which it relied in  making
    its  investment decision  with respect to  the Old Notes.  The purchaser had
    access to such financial and other information concerning the Issuer and the
    Old Notes as it deemed necessary in connection with its decision to purchase
    the Old Notes,  including an  opportunity to  ask questions  of and  request
information from the Issuer and the Initial Purchasers.                 

        (5)   The  purchaser  acknowledged  that  the  Issuer  and  the  Initial
    Purchasers and others relied  upon the truth and  accuracy of the  foregoing
    acknowledgements,  representations and agreements and agrees that, if any of
    the foregoing acknowledgements, representations or agreements deemed to have
    been made by it are no longer accurate, it shall promptly notify the Initial
    Purchasers. If such purchaser acquired Old Notes as a fiduciary or agent for
one or more investor                                                    

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    accounts, such purchaser represented that it has sole investment  discretion
    with  respect to each  such account and that  it has full  power to make the
    foregoing acknowledgements, representations and agreements on behalf of each
such account.                                                           

    Each purchaser of  Old Notes  that is an  institutional accredited  investor
executed  and  delivered a  purchaser's letter  for the  benefit of  the Initial
Purchasers and the Issuer, substantially in  the form included as Appendix A  to
the  Offering  Memorandum, whereby  such  institutional accredited  investor (a)
agreed to  the restrictions  on transfer  set  forth in  clause (2)  above,  (b)
confirmed  that it: (i) acquired Old Notes having a minimum purchase price of at
least $100,000 for its own account and for each separate account for which it is
acting; (ii)  acquired  such  Old Notes  for  its  own account  or  for  certain
qualified  institutional  accounts,  as  specified therein;  and  (iii)  did not
acquire the Notes  with a  view to distribution  thereof in  a transaction  that
would  violate the  Securities Act or  the securities  laws of any  State of the
United States or any  other applicable jurisdiction;  and (c) acknowledged  that
the  registrar and  transfer agent  for the  Old Notes  will not  be required to
accept for registration of transfer any Old Notes acquired by them, except  upon
presentation  of evidence  satisfactory to the  Issuer that  the restrictions on
transfer set forth in  clause (2) above  have been complied  with, and that  any
such  Old Notes will be in the  form of definitive physical certificates bearing
the legend set forth in clause (3) above.                                       

    The Old Notes may not be sold or transferred to, and each purchaser, by  its
purchase  of the Old  Notes has been  deemed to have  represented and covenanted
that it did not acquire the Old Notes for or on behalf of, and will not transfer
the Old Notes to, any  pension or welfare plan (as  defined in Section 3 of  the
Employee  Retirement Income  Security Act of  1974; "ERISA") except  that such a
purchase for or on behalf of a pension or welfare plan shall be permitted:      

        (1) to  the extent  such purchase  is made  by or  on behalf  of a  bank
    collective  investment fund  maintained by  the purchaser  in which  no plan
    (together with any other plans maintained  by the same employer or  employee
    organization)  has an interest in excess of  10% of the total assets in such
    collective investment fund and the  conditions of Section III of  Prohibited
    Transaction  Class Exemption  91-38 issued  by the  Department of  Labor are
satisfied;                                                              

        (2) to the extent such purchase is made by or on behalf of an  insurance
    company pooled separate account maintained by the purchaser in which, at any
    time  while the Old Notes are outstanding,  no plan (together with any other
    plans maintained  by the  same  employer or  employee organization)  has  an
    interest in excess of 10% of the total of all assets in such pooled separate
    account  and the conditions  of Section III  of Prohibited Transaction Class
Exemption 90-1 issued by the Department of Labor are satisfied;         

        (3) to the extent such purchase is made  on behalf of a plan by: (i)  an
    investment advisor registered under the Investment Advisers Act of 1940 that
    had as of the last day of its most recent fiscal year total assets under its
    management  and control  in excess of  $50 million and  had stockholders' or
    partners' equity in  excess of $0.75  million, as shown  in its most  recent
    balance  sheet  prepared in  accordance  with generally  accepted accounting
    principles; or (ii) a bank as defined in Section 202(a)(2) of the Investment
    Advisers Act of 1940 with equity capital  in excess of $1 million as of  the
    last day of its most recent fiscal year; or (iii) an insurance company which
    is  qualified under the  laws of more  than one state  to manage, acquire or
    dispose of any assets of a plan, which insurance company has as of the  last
    day  of its most recent  fiscal year, net worth in  excess of $1 million and
    which is subject to supervision and examination by a state authority  having
    supervision  over  insurance companies  and,  in any  case,  such investment
    advisor, bank or  insurance company  is otherwise  a qualified  professional
    asset  manager,  as  such  term  is  used  in  Prohibited  Transaction Class
    Exemption 84-14 issued by  the Department of Labor,  and the assets of  such
    plan  when combined with the assets of other plans established or maintained
    by the same  employer (or  affiliate thereof) or  employee organization  and
managed by such investment advisor,                                     

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    bank  or insurance  company, do  not represent  more than  20% of  the total
    client assets managed by such investment advisor, bank or insurance company,
    and the conditions of Section I  of such exemption are otherwise  satisfied;
or                                                                      

        (4)  to  the extent  such plan  is  a governmental  plan (as  defined in
    Section 3 of ERISA)  which is not  subject to the provisions  of Title I  of
ERISA of Section 401 of the Internal Revenue Code.                      

EXPERTS 

    The  audited financial  statements of Dish,  Ltd., the  Issuer, EchoStar DBS
Corporation, and Direct Broadcasting  Satellite Corporation (Colorado)  included
in  this Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as  indicated  in  their  reports with  respect  thereto,  and  are
included herein in reliance upon the authority of such firm as experts in giving
such reports.                                                                   

LEGAL MATTERS 

    The  validity of  the Notes will  be passed upon  for the Issuer  by Baker &
Hostetler, Cleveland, Ohio.                                                     

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INDEX TO FINANCIAL STATEMENTS 

                                                        [Enlarge/Download Table]

                                                                                                             PAGE   
                                                                                                           ---------
                                                                                                                    
DISH, LTD.                                                                                                          
---------------------------------------------------------------------------------------------------------           
Report of Independent Public Accountants.................................................................        F-3
Consolidated Balance Sheets at December 31, 1994 and 1995................................................        F-4
Combined and Consolidated Statements of Income for the Years Ended December 31, 1993, 1994 and 1995......        F-5
Combined and Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1993, 1994            
 and 1995................................................................................................        F-6
Combined and Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and                  
 1995....................................................................................................        F-7
Notes to Combined and Consolidated Financial Statements..................................................        F-9



ECHOSTAR COMMUNICATIONS CORPORATION                                                                                 
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Report of Independent Public Accountants.................................................................       F-35
Consolidated Balance Sheets at December 31, 1994 and 1995................................................       F-36
Combined and Consolidated Statements of Income for the Years Ended December 31, 1993,1994 and 1995.......       F-37
Combined and Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1993, 1994            
 and 1995................................................................................................       F-38
Combined and Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and                  
 1995....................................................................................................       F-39
Notes to Combined and Consolidated Financial Statements..................................................       F-41


ECHOSTAR SATELLITE BROADCASTING CORPORATION                                                                         
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Report of Independent Public Accountants.................................................................       F-66
Balance Sheet at January 24, 1996........................................................................       F-67


ECHOSTAR DBS CORPORATION                                                                                            
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Report of Independent Public Accountants.................................................................       F-68
Balance Sheet at January 19, 1996........................................................................       F-69


DIRECT BROADCASTING SATELLITE CORPORATION (COLORADO)                                                                
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Report of Independent Public Accountants.................................................................       F-70
Balance Sheet at December 31, 1995.......................................................................       F-71


DIRECT BROADCASTING SATELLITE CORPORATION (DELAWARE)                                                                
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Report of Independent Public Accountants.................................................................       F-73
Balance Sheets at March 31, 1995 and December 31, 1995...................................................       F-74
Statements of Income for the Years Ended March 31, 1994 and 1995, and the nine months ended December 31,            
 1995....................................................................................................       F-75
Statements of Stockholders' Equity for the Five Years ended March 31, 1995, and the nine months ended               
 December 31, 1995.......................................................................................       F-76
Statements of Cash Flows for the Years Ended March 31, 1994 and 1995, and the nine months ended December            
 31, 1995................................................................................................       F-77
Notes to Financial Statements............................................................................       F-78

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INDEX TO FINANCIAL STATEMENTS (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                                                                             PAGE   
                                                                                                           ---------
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION                                                                        
                                                                                                                    
DISH, LTD.                                                                                                          
---------------------------------------------------------------------------------------------------------           
Consolidated Balance Sheets at December 31, 1995 and March 31, 1996 (Unaudited)..........................       F-83
Consolidated Statements of Income for the three months ended March 31, 1995 and 1996 (Unaudited).........       F-84
Consolidated Statement of Stockholder's Equity for the three months ended March 31, 1996 (Unaudited).....       F-85
Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1996 (Unaudited).....       F-86
Condensed Notes to Consolidated Financial Statements (Unaudited).........................................       F-88


ECHOSTAR COMMUNICATIONS CORPORATION                                                                                 
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Consolidated Balance Sheets at December 31, 1995 and March 31, 1996 (Unaudited)..........................       F-97
Consolidated Statements of Income for the three months ended March 31, 1995 and 1996 (Unaudited).........       F-98
Consolidated Statement of Stockholders' Equity for the three months ended March 31, 1996 (Unaudited).....       F-99
Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1996 (Unaudited).....      F-100
Condensed Notes to Consolidated Financial Statements (Unaudited).........................................      F-102


ECHOSTAR SATELLITE BROADCASTING CORPORATION                                                                         
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Consolidated Balance Sheets at December 31, 1995 and March 31, 1996 (Unaudited)..........................      F-112
Consolidated Statements of Income for the three months ended March 31, 1995 and 1996 (Unaudited).........      F-113
Consolidated Statement of Stockholder's Equity for the three months ended March 31, 1996 (Unaudited).....      F-114
Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1996 (Unaudited).....      F-115
Condensed Notes to Consolidated Financial Statements (Unaudited).........................................      F-117


DIRECT BROADCASTING SATELLITE CORPORATION (DELAWARE)                                                                
---------------------------------------------------------------------------------------------------------           
                                                                                                                    
Balance Sheets at December 31, 1995 and March 31, 1996 (Unaudited).......................................      F-127
Statements of Income for the three months ended March 31, 1995 and 1996 (Unaudited)......................      F-128
Consolidated Statement of Stockholders' Equity for the three months ended March 31, 1996 (Unaudited).....      F-129
Statements of Cash Flows for the three months ended March 31, 1995 and 1996 (Unaudited)..................      F-130
Condensed Notes to Financial Statements (Unaudited)......................................................      F-131

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Dish, Ltd:                                                                   

    We  have audited the accompanying consolidated  balance sheets of DISH, LTD.
(a Nevada corporation  and wholly  owned subsidiary  of EchoStar  Communications
Corporation)  and affiliates  and subsidiaries,  as described  in Note  1, as of
December 31, 1994 and 1995, and the related combined and consolidated statements
of income, stockholders' equity and  cash flows for each  of the three years  in
the  period  ended  December  31,  1995.  These  financial  statements  are  the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these financial statements based on our audits.                      

    We conducted  our  audits in  accordance  with generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the  amounts and disclosures in the financial statements. An audit also includes
assessing the  accounting  principles used  and  significant estimates  made  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.          

    In our opinion, the financial  statements referred to above present  fairly,
in  all material respects, the consolidated  financial position of the Companies
as of December 31, 1994 and 1995,  and the combined and consolidated results  of
their  operations and their cash flows for each of the three years in the period
ended December  31,  1995,  in conformity  with  generally  accepted  accounting
principles.                                                                     

                       ARTHUR ANDERSEN LLP

Denver, Colorado,                                                               
February 23, 1996.                                                              

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DISH, LTD. AND AFFILIATES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
DECEMBER 31, 1994, AND 1995 

    ASSETS

                                                        [Enlarge/Download Table]

                                                                                             1994         1995     
                                                                                          -----------  ----------- 
                                                                                               (IN THOUSANDS)      
                                                                                                                   
CURRENT ASSETS:                                                                                                    
  Cash and cash equivalents.............................................................  $    17,506  $    13,949 
  Marketable investment securities......................................................       31,038          210 
  Trade accounts receivable, net........................................................        8,097       10,435 
  Inventories...........................................................................       20,327       38,769 
  Income tax receivable.................................................................      --             3,870 
  Deferred tax assets...................................................................        1,840        1,834 
  Other current assets..................................................................        2,573       12,791 
                                                                                          -----------  ----------- 
    Total current assets................................................................       81,381       81,858 
RESTRICTED CASH AND MARKETABLE SECURITIES:                                                                         
  Escrow................................................................................      185,431       73,291 
  Other.................................................................................       11,400       26,400 
PROPERTY AND EQUIPMENT, net.............................................................      151,240      333,199 
OTHER NONCURRENT ASSETS.................................................................       43,040       44,547 
                                                                                          -----------  ----------- 
    Total assets........................................................................  $   472,492  $   559,295 
                                                                                          -----------  ----------- 
                                                                                          -----------  ----------- 

                                       LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                                                               
  Trade accounts payable................................................................  $    14,895  $    19,063 
  Deferred programming revenue..........................................................        6,572        5,563 
  Accrued expenses and other current liabilities........................................        6,965       21,335 
  Notes payable and current portion of long-term debt...................................          238        4,782 
                                                                                          -----------  ----------- 
    Total current liabilities...........................................................       28,670       50,743 
1994 NOTES, net.........................................................................      334,206      382,218 
LONG-TERM MORTGAGE DEBT AND NOTE PAYABLE, excluding current portion.....................        5,393       33,444 
OTHER LONG-TERM LIABILITIES.............................................................          415      --      
                                                                                          -----------  ----------- 
    Total liabilities...................................................................      368,684      466,405 
                                                                                          -----------  ----------- 

COMMITMENTS AND CONTINGENCIES (Notes 1 and 11)                                                                     

STOCKHOLDERS' EQUITY:                                                                                              
  Preferred Stock, 20,000,000 shares authorized, 1,616,681 shares of Series A Cumulative                           
   Preferred Stock issued and outstanding, including accrued dividends of $938,000 and                             
   $1,555,000, respectively.............................................................       15,990       16,607 
  Class A Common Stock, $.01 par value, 200,000,000 shares authorized, 3,739,400 and                               
   6,470,599 shares issued and outstanding, respectively................................           38           65 
  Class B Common Stock, $.01 par value, 100,000,000 shares authorized, 29,804,401 shares                           
   issued and outstanding...............................................................          298          298 
  Common Stock Purchase Warrants........................................................       26,133      --      
  Additional paid-in capital............................................................       62,197       89,495 
  Unrealized holding gains on available-for-sale securities, net of deferred taxes......      --               251 
  Retained earnings (deficit)...........................................................         (848)     (13,826)
                                                                                          -----------  ----------- 
    Total stockholders' equity..........................................................      103,808       92,890 
                                                                                          -----------  ----------- 
    Total liabilities and stockholders' equity..........................................  $   472,492  $   559,295 
                                                                                          -----------  ----------- 
                                                                                          -----------  ----------- 

The accompanying notes to combined and consolidated financial 
statements are an integral part of these balance sheets.

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DISH, LTD. AND AFFILIATES AND SUBSIDIARIES
COMBINED AND CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

                                                        [Enlarge/Download Table]

                                                                               1993         1994         1995     
                                                                            -----------  -----------  ----------- 
                                                                                       (IN THOUSANDS)             
                                                                                                                  
REVENUE:                                                                                                          
  DTH products and technical services...................................... $   206,311  $   172,753  $   146,852 
  Programming..............................................................      10,770       14,540       15,096 
  Loan origination and participation income................................       3,860        3,690        1,942 
                                                                            -----------  -----------  ----------- 
    Total revenue..........................................................     220,941      190,983      163,890 
                                                                            -----------  -----------  ----------- 

EXPENSES:                                                                                                         
  DTH products and technical services......................................     161,447      133,635      120,178 
  Programming..............................................................       9,378       11,670       13,610 
  Selling, general and administrative......................................      30,235       30,219       34,993 
  Depreciation.............................................................       1,677        2,243        3,058 
                                                                            -----------  -----------  ----------- 
    Total expenses.........................................................     202,737      177,767      171,839 
                                                                            -----------  -----------  ----------- 

OPERATING INCOME (LOSS)....................................................      18,204       13,216       (7,949)
                                                                            -----------  -----------  ----------- 

OTHER INCOME (EXPENSE):                                                                                           
  Interest income..........................................................       1,173        8,420       12,545 
  Interest expense, net of amounts capitalized.............................        (632)     (21,408)     (23,985)
  Losses on investments in joint ventures..................................         (50)        (492)     --      
  Minority interest in loss of consolidated joint venture and other........          39          753          837 
                                                                            -----------  -----------  ----------- 
    Total other income (expense)...........................................         530      (12,727)     (10,603)
                                                                            -----------  -----------  ----------- 
NET INCOME (LOSS) BEFORE INCOME TAXES......................................      18,734          489      (18,552)
BENEFIT (PROVISION) FOR INCOME TAXES.......................................       1,384         (399)       6,191 
                                                                            -----------  -----------  ----------- 
NET INCOME (LOSS).......................................................... $    20,118  $        90  $   (12,361)
                                                                            -----------  -----------  ----------- 
                                                                            -----------  -----------  ----------- 
PRO FORMA (UNAUDITED) NET INCOME (Note 7)                                                                         
  Historical net income before income taxes................................ $    18,734                           
  Historical (provision) benefit for income taxes..........................       1,384                           
  Pro forma income tax effects.............................................      (7,846)                          
                                                                            -----------                           
  Pro forma net income..................................................... $    12,272                           
                                                                            -----------                           
                                                                            -----------                           

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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DISH, LTD. AND AFFILIATES AND SUBSIDIARIES
COMBINED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

                                                        [Enlarge/Download Table]

                                                                                   COMMON STOCK                                
                                                                                        OF                                     
                                                                                   SUBSIDIARIES     RETAINED                   
                                                                         COMMON        AND          EARNINGS                   
                                      SHARES OF                          STOCK      ADDITIONAL    (DEFICIT) AND       TOTAL    
                                    COMMON STOCK    PREFERRED  COMMON   PURCHASE     PAID-IN       UNREALIZED     STOCKHOLDERS'
                                     OUTSTANDING      STOCK     STOCK   WARRANTS     CAPITAL      HOLDING GAINS      EQUITY    
                                   ---------------  ---------  -------  --------   ------------  ---------------  -------------
                                   (NOTES 1 AND 9)                          (IN THOUSANDS)                                     
                                                                                                                               
BALANCES, at December 31, 1992...                                                    $ 6,881        $ 45,447        $ 52,328   
  Cash contributions to                                                                                                        
   capital.......................                                                      2,497                           2,497   
  Dividends declared.............                                                                    (25,243)        (25,243)  
  Net income.....................                                                                     20,118          20,118   
  Reorganization effective                                                                                                     
   December 31, 1993 --                                                                                                        
    Class A Common Stock.........       2,417                  $   24                    (24)                         --       
    Class B Common Stock.........      29,804                     298                   (298)                         --       
  Termination of Subchapter S                                                                                                  
   Status of subsidiaries........                                                     40,322         (40,322)         --       
                                      -------       ---------  -------  --------   ------------  ---------------  -------------
BALANCES, at December 31, 1993...      32,221          --         322     --          49,378         --               49,700   
  Issuance of Class A Common                                                                                                   
   Stock:                                                                                                                      
    For acquisition of DirectSat,                                                                                              
     Inc.........................         999                      11                  8,989                           9,000   
    For cash.....................         324                       3                  3,830                           3,833   
  Issuance of 1,616,681 shares of                                                                                              
   8% Series A Cumulative                                                                                                      
   Preferred Stock...............                    $15,052                                                          15,052   
  Issuance of Common Stock                                                                                                     
   Purchase Warrants.............                                       $26,133                                       26,133   
  Series A Cumulative Preferred                                                                                                
   Stock dividends...............                        938                                            (938)         --       
  Net income.....................                                                                         90              90   
                                      -------       ---------  -------  --------   ------------  ---------------  -------------
BALANCES, at December 31, 1994...      33,544         15,990      336    26,133       62,197            (848)        103,808   
  Series A Cumulative Preferred                                                                                                
   Stock dividends...............                        617                                            (617)         --       
  Common Stock Purchase Warrants                                                                                               
   exercised.....................       2,731                      27   (25,419)      25,392                          --       
  Common Stock Purchase Warrants                                                                                               
   exchanged for ECC Warrants....                                          (714)         714                          --       
  Employee Savings Plan                                                                                                        
   Contribution and Launch                                                                                                     
   Bonuses Funded by Issuance of                                                                                               
   ECC Common Stock..............                                                      1,192                           1,192   
  Unrealized holding gains on                                                                                                  
   available-for-sale securities,                                                                                              
   net...........................                                                                        251             251   
  Net loss.......................                                                                    (12,361)        (12,361)  
                                      -------       ---------  -------  --------   ------------  ---------------  -------------
BALANCES, at December 31, 1995...      36,275        $16,607   $  363   $ --         $89,495        $(13,575)       $ 92,890   
                                      -------       ---------  -------  --------   ------------  ---------------  -------------
                                      -------       ---------  -------  --------   ------------  ---------------  -------------

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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DISH, LTD. AND AFFILIATES AND SUBSIDIARIES
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

                                                        [Enlarge/Download Table]

                                                                                1993        1994         1995     
                                                                             ----------  -----------  ----------- 
                                                                                        (IN THOUSANDS)            
                                                                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                             
  Net income (loss)......................................................... $   20,118  $        90  $   (12,361)
  Adjustments to reconcile net income (loss) to net cash flows from                                               
   operating activities --                                                                                        
    Depreciation............................................................      1,677        2,243        3,058 
    Provision for doubtful accounts.........................................        254         (160)         920 
    Benefit for deferred taxes..............................................     (1,941)      (7,330)      (4,825)
    Amortization of deferred debt issuance costs............................     --              719        1,279 
    Amortization of discount on 1994 Notes, net of amounts capitalized......     --            9,943       22,249 
    Equity in losses in joint ventures......................................     --              492      --      
    Employee benefits funded with ECC Stock.................................     --          --             1,192 
    Loss on dispositions of fixed assets....................................     --              133      --      
    Change in reserve for excess and obsolete inventory.....................        (22)         502        1,212 
    Other, net..............................................................        (30)        (941)        (528)
    Changes in working capital items--                                                                            
      Trade accounts receivable.............................................     (3,439)         532       (2,456)
      Inventories...........................................................     14,919        3,049      (19,654)
      Income tax receivable.................................................     --          --            (3,870)
      Other current assets..................................................     (1,659)        (183)      10,218)
      Liability under cash management program...............................     (4,018)      (2,310)         (57)
      Trade accounts payable................................................      1,156        4,958        4,168 
      Deferred programming revenue..........................................      1,795          564       (1,009)
      Accrued expenses......................................................      1,637          611       (1,232)
      Reserve for warranty costs............................................       (250)          50         (387)
      Other current liabilities.............................................         18        1,009          631 
      Other, net............................................................     --              234      --      
                                                                             ----------  -----------  ----------- 
        Net cash flows from operating activities............................     30,215       24,205      (21,888)
                                                                             ----------  -----------  ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                             
  Purchases of marketable investment securities.............................    (18,227)     (15,100)      (3,004)
  Sales of marketable investment securities.................................     16,132        4,439       33,816 
  Purchases of restricted marketable investment securities..................     --          (11,400)     (15,000)
  Purchases of property and equipment.......................................    (19,225)      (4,030)      (4,077)
  Proceeds from sale of property and equipment..............................        383          523           29 
  Offering proceeds and investment earnings placed in escrow................     --         (329,831)      (9,589)
  Funds released from escrow account........................................     --          144,400      122,149 
  Accrued satellite contract costs..........................................     --           (3,700)     --      
  Investment in SSET........................................................     --           (8,750)     --      
  Investment in DBSC........................................................     --           (4,210)       4,210 
  Investments in joint ventures.............................................        (65)       1,614      --      
  Expenditures for satellite system under construction......................     --         (112,052)    (109,507)
  Expenditures from escrow for FCC authorization............................     --             (159)     --      
  Expenditures for FCC authorizations.......................................     --          --              (458)
  Other.....................................................................         92         (309)     --      
                                                                             ----------  -----------  ----------- 
        Net cash flows from investing activities............................    (20,910)    (338,565)      18,569 
                                                                             ----------  -----------  ----------- 

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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DISH, LTD. AND AFFILIATES AND SUBSIDIARIES
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

                                                        [Enlarge/Download Table]

                                                                                1993        1994         1995     
                                                                             ----------  -----------  ----------- 
                                                                                        (IN THOUSANDS)            
                                                                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                             
  Short-term loans from banks............................................... $    6,000  $   --       $   --      
  Repayments of short-term loans from banks.................................     (7,256)     --           --      
  Minority investor investment in and loan to consolidated joint venture....      2,504        1,000      --      
  Net proceeds from issuance of 1994 Notes                                                                        
   and Common Stock Purchase Warrants.......................................     --          323,325      --      
  Expenditures from escrow for offering costs...............................     --             (837)     --      
  Proceeds from refinancing of mortgage indebtedness........................     --            4,200      --      
  Repayments of mortgage indebtedness.......................................       (152)      (3,435)        (238)
  Loans from stockholder, net...............................................     12,451        4,000      --      
  Repayment of loans from stockholders......................................     --           (4,075)     --      
  Net proceeds from issuance of Class A Common Stock........................     --            3,833      --      
  Capital contributions.....................................................      2,497      --           --      
  Dividends paid............................................................    (22,243)       3,000)     --      
                                                                             ----------  -----------  ----------- 
    Net cash flows from financing activities................................     (6,199)     325,011         (238)
                                                                             ----------  -----------  ----------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................      3,106       10,651       (3,557)
CASH AND CASH EQUIVALENTS, beginning of period..............................      3,749        6,855       17,506 
                                                                             ----------  -----------  ----------- 
CASH AND CASH EQUIVALENTS, end of period.................................... $    6,855  $    17,506  $    13,949 
                                                                             ----------  -----------  ----------- 
                                                                             ----------  -----------  ----------- 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                
  Cash paid for interest, net of amounts capitalized........................ $      633  $       436  $       461 
  Cash paid for income taxes................................................        251        7,140        3,203 
  Cumulative Series A Preferred Stock dividends.............................     --              938          617 
  Dividends declared but not paid until 1994................................      3,000      --           --      
  Accrued satellite contract costs..........................................      3,700      --            15,000 
  Exchange of note payable to stockholder, and interest thereon, for Series                                       
   A Preferred Stock........................................................     --           15,052      --      
  Issuance of Class A Common Stock to acquire investment in DirectSat                                             
   Corporation..............................................................     --            9,000      --      
  Property and equipment acquired under capital leases......................     --              934      --      
  Note payable issued for deferred satellite construction payments..........     --          --            32,833 
  Employee Savings Plan Contribution and launch bonuses funded by issuance                                        
   of ECC Common Stock......................................................     --          --             1,192 

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 1993, 1994 AND 1995

(1) ORGANIZATION AND BUSINESS ACTIVITIES                                        
    Certain copmanies principally owned and controlled by Mr. Charles Ergen were
reorganized  in 1993 into Dish, Ltd.,  formerly known as EchoStar Communications
Corporation (together with its subsidiaries, "Dish, Ltd.").                     

    The principal reorganized entities, Echosphere Corporation (formed in  1980)
and  Houston Tracker Systems, Inc. (acquired  in 1986), are primarily engaged in
the design, assembly,  marketing and  worldwide distribution of  direct to  home
("DTH")  satellite  television products.  Satellite  Source, Inc.  contracts for
rights to  purchase satellite  delivered television  programming for  resale  to
consumers  and other DTH retailers. Echo Acceptance Corporation ("EAC") arranges
nationwide consumer financing for purchasers of DTH systems and programming. The
FCC has granted EchoStar Satellite  Corporation ("ESC") a conditional  satellite
construction   permit   and  frequency   assignments  for   eleven  odd-numbered
frequencies at  119  DEG. West  Longitude  ("WL"). The  reorganized  group  also
includes  other  less  significant  domestic  enterprises  and  several  foreign
entities involved in related activities outside the United States.              

    In January 1994, Dish, Ltd. announced its intention to merge a subsidiary of
Dish, Ltd. with DirectSat Corporation ("DirectSat"), an approximately 80%  owned
subsidiary  of SSE Telecom, Inc. ("SSET") at  that time. The merger was approved
by the FCC and consummated in December 1994. DirectSat stockholders received  an
approximate  3% equity interest in Dish, Ltd. in exchange for all of DirectSat's
outstanding stock.  DirectSat's principal  assets  are a  conditional  satellite
construction  permit and frequency assignments for ten even-numbered frequencies
at 119 DEG. WL granted by the FCC.                                              

    Dish, Ltd. has contracted for the construction and launch of  communications
satellites.  EchoStar I, a high powered  direct broadcast satellite ("DBS"), was
launched on December 28, 1995. EchoStar  II is currently under construction  and
scheduled for launch during 1996.                                               

    In  June 1994, Dish,  Ltd. completed an  offering of 12  7/8% Senior Secured
Discount Notes due 2004  (the "1994 Notes") (Note  5) and Common Stock  Purchase
Warrants  (the "Warrants")  (collectively, the "Notes  Offering"), receiving net
proceeds of approximately $323.3  million. Dish, Ltd.  and its subsidiaries  are
subject  to the terms and conditions of  the Indenture related to the 1994 Notes
(the "1994 Indenture").                                                         

EXCHANGE AND MERGER                                                             

    In April 1995, a new company, EchoStar Communications Corporation (same name
as the original name of Dish, Ltd.), was formed to conduct a public offering  of
its  Class A Common  Stock and to become  the parent of  Dish, Ltd. as described
below. The  new  company  is  described  below  as  "ECC".  Elsewhere  in  these
footnotes, unless otherwise indicated, "EchoStar" or the "Company" refers to ECC
and  its subsidiaries, including  Dish, Ltd. The  assets of ECC,  other than its
investment in  Dish, Ltd.,  are not  subject to  the 1994  Indenture (Note  16).
Further,  the 1994 Indenture  places significant restrictions  on the payment of
dividends or other transfers by Dish, Ltd. to ECC.                              

    ECC completed an offering of its Class A Common Stock on June 26, 1995,  and
received  net proceeds of approximately  $63.0 million. Concurrently, Charles W.
Ergen, President  and  Chief Executive  Officer  of  both ECC  and  Dish,  Ltd.,
exchanged all of his shares of Class B Common Stock and Series A Preferred Stock
of  Dish, Ltd.  for like  shares of ECC  (the "Exchange")  in the  ratio of 0.75
shares of ECC for each share of Dish, Ltd. capital stock (the "Exchange Ratio").
All employee stock options of Dish, Ltd. were also assumed by ECC, adjusted  for
the  Exchange Ratio. In December 1995, ECC merged Dish, Ltd. with a wholly owned
subsidiary of ECC (the "Merger") and all                                        

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(1) ORGANIZATION AND BUSINESS ACTIVITIES (CONTINUED)                            
outstanding shares of  Dish, Ltd. Class  A Common Stock  and Series A  Preferred
Stock (other than those held by ECC) were automatically converted into the right
to  receive  like shares  of ECC  in  accordance with  the Exchange  Ratio. Also
effective with the Merger,  all outstanding Warrants for  the purchase of  Dish,
Ltd.  Class A Common Stock automatically  became exercisable for shares of ECC's
Class A Common Stock, adjusted for the Exchange Ratio (Note 16).                

    As the result of the Exchange and Merger, ECC owns all outstanding shares of
Dish, Ltd.  capital stock.  All  share information  included  in the  Dish  Ltd.
financial  statements is presented on the basis of the number of ECC shares into
which the  Dish,  Ltd.  shares  were  converted.  Additionally,  the  change  in
authorized  capital, the stock  splits and the redesignation  of common stock as
Class A and Class B shares described in Note 9 have been retroactively reflected
in the accompanying combined and consolidated financial statements.             

    The accompanying combined and consolidated financial statements include only
the accounts of  Dish, Ltd.  and its subsidiaries  and exclude  all accounts  of
Dish,  Ltd.'s parent, ECC. Separate parent only financial information for ECC is
supplementally provided in Note 16.                                             

SIGNIFICANT RISKS AND UNCERTAINTIES                                             

    Execution of its business strategy to launch and operate DBS satellites  has
dramatically  changed the Company's operating results and financial position. At
December 31, 1993, Dish, Ltd.'s long-term debt, exclusive of amounts related  to
its  DBS projects, consisted of less  than $5.0 million in mortgage indebtedness
and its  investments  in  property  and  equipment,  other  than  DBS  satellite
payments,  aggregated less than $20.0 million. At December 31, 1995, the Company
is committed to expend approximately $450 million to build and launch its  first
two  satellites and has  completed the sale  of the 1994  Notes for that purpose
(Notes 5 and 11). Annual interest expense on the 1994 Notes and depreciation  of
the  investment in  the first two  satellites will  each be of  a magnitude that
exceeds historical levels of  income before taxes and  the Company has  reported
significant  net losses beginning in 1995 and expects net losses to continue for
the foreseeable future. The  Company's plans also  include the construction  and
launch  of  additional  satellites and  marketing  programs to  promote  its DBS
products and services.  The Company  will need to  raise significant  additional
funds for those purposes and there can be no assurance that necessary funds will
be  available or,  if available,  available on  terms favorable  to the Company.
However, management believes,  but has  no assurance,  that demand  for its  DBS
products  and  services will  develop  to provide  cash  flow from  operation of
EchoStar's DISH Network-SM- which, together with other sources of capital,  will
be  sufficient  to satisfy  future planned  expenditures. Significant  delays in
commencing operations  of the  EchoStar  DBS System,  or significant  delays  or
mission  failures in  the Company's  satellite launch  program, may  subject the
Company to significant  monetary penalties  and would  have significant  adverse
consequences to its operating results and financial condition.                  

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted accounting  principles requires  the use  of management  estimates  and
assumptions  that  affect the  reported amounts  of  assets and  liabilities and
disclosure of contingent  assets and liabilities  at the date  of the  financial
statements  and the reported amounts of revenues and expenses for each reporting
period. Actual results could differ from those estimates.                       

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

PRINCIPLES OF COMBINATION AND CONSOLIDATION                                     

    The accompanying financial statements combine the historical cost  financial
statements  of  all  reorganized entities  for  all periods  presented  and such
entities are consolidated in the balance sheet as of December 31, 1994 and 1995.
All significant intercompany transactions have  been eliminated in the  combined
and consolidated financial statements.                                          

    Effective  June 1993, the Company acquired a fifty-one percent joint venture
interest in FlexTracker Sdn. Bhd. ("FlexTracker"), a Malaysian limited liability
company. A  Singapore electronics  manufacturing  company owned  the  forty-nine
percent  minority interest. FlexTracker  manufactured integrated and stand-alone
receivers and positioners  exclusively for  the Company. In  December 1994,  the
Company  terminated  the  FlexTracker  joint venture  and  effectively  sold its
interest in the  joint venture's net  assets to the  Singapore company for  $1.8
million.  The Company's share of FlexTracker's losses for 1993 and 1994 amounted
to approximately  $50,000  and $1.3  million,  respectively, and  an  additional
$492,000  of  loss was  recognized upon  sale of  the net  assets. FlexTracker's
financial statements have  been consolidated  in the  accompanying combined  and
consolidated  financial statements from the date of acquisition through the date
of disposition.                                                                 

    The Company accounts for investments in fifty percent or less owned entities
using the equity method. At December  31, 1994 and 1995, these investments  were
not  material  to  the combined  and  consolidated financial  statements  of the
Company.                                                                        

FOREIGN CURRENCY TRANSACTION GAINS AND LOSSES                                   

    The functional currency of  the Company's foreign  subsidiaries is the  U.S.
dollar  because their sales and purchases  are predominantly denominated in that
currency. Transactions denominated  in currencies  other than  U.S. dollars  are
recorded based on exchange rates at the time such transactions arise. Subsequent
changes  in  exchange rates  result in  transaction gains  and losses  which are
reflected in income as unrealized (based on period end translation) or  realized
(upon  settlement of the transaction). Net  transaction gains (losses) for 1993,
1994 and 1995 were $19,000, $40,000 and $70,000 respectively.                   

CASH AND CASH EQUIVALENTS                                                       

    The Company  considers all  liquid investments  purchased with  an  original
maturity  of ninety days or less to  be cash equivalents. Cash equivalents as of
December 31, 1994 and  1995 consist of money  market funds, corporate notes  and
commercial paper stated at cost which equates to market value.                  

MARKETABLE INVESTMENT SECURITIES AND RESTRICTED CASH AND MARKETABLE SECURITIES  

    At  December 31, 1994 marketable investment  securities were recorded in the
financial statements at amortized cost and  were generally held to maturity.  At
December  31,  1995,  the  Company  has  classified  all  marketable  investment
securities as available-for-sale. Accordingly,  these investments are  reflected
at  market value  based on  quoted market  prices. Related  unrealized gains and
losses are reported  as a  separate component  of stockholders'  equity, net  of
related deferred income taxes of                                                

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
$153,000  at December  31, 1995. The  specific identification method  is used to
determine cost in computing realized gains  and losses. The major components  of
marketable investment securities as of December 31, 1994 and 1995 are as follows
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31, 1995           
                                              DECEMBER 31, 1994     ---------------------------------------
                                            ----------------------                UNREALIZED               
                                             AMORTIZED    MARKET     AMORTIZED   HOLDING GAIN     MARKET   
                                               COST        VALUE       COST         (LOSS)         VALUE   
                                            -----------  ---------  -----------  -------------  -----------
                                                                                                           
Commercial paper...........................  $  19,976   $  20,233   $  --         $  --         $  --     
Corporate notes............................     10,992      10,987      --            --            --     
Municipal bonds............................         70          70      --            --            --     
Government bonds...........................     --          --              38        --                38 
Mutual funds...............................     --          --             188           (16)          172 
                                            -----------  ---------       -----           ---         ----- 
                                             $  31,038   $  31,290   $     226     $     (16)    $     210 
                                            -----------  ---------       -----           ---         ----- 
                                            -----------  ---------       -----           ---         ----- 

    Restricted  Cash and  Marketable Securities  in Escrow  as reflected  on the
accompanying balance  sheets  represent net  proceeds  received from  the  Notes
Offering, plus interest earned, less amounts expended to date in connection with
the  development, construction  and launch  of EchoStar's  DISH Network-SM-. The
escrow funds are held by  an escrow agent in  an account (the "Escrow  Account")
for  the benefit of  the holders of the  1994 Notes and  are invested in certain
debt and other marketable securities, as permitted by the 1994 Indenture,  until
disbursed  for the express purposes identified in the Notes Offering prospectus.
The major components of Restricted Cash and Marketable Securities as of December
31, 1994 and 1995 are as follows (in thousands):                                

                                                        [Enlarge/Download Table]

                                                                           DECEMBER 31, 1995         
                                           DECEMBER 31, 1994      -----------------------------------
                                        ------------------------               UNREALIZED            
                                         AMORTIZED     MARKET      AMORTIZED     HOLDING     MARKET  
                                           COST         VALUE        COST         GAIN        VALUE  
                                        -----------  -----------  -----------  -----------  ---------
                                                                                                     
Commercial paper....................... $    94,315  $    94,909   $  66,214    $  --       $  66,214
Corporate notes........................       8,954        8,954      --           --          --    
Government bonds.......................     --           --           32,904          420      33,324
Municipal bonds........................      92,513       93,010      --           --          --    
Accrued interest.......................       1,049        1,049         153       --             153
                                        -----------  -----------  -----------       -----   ---------
                                        $   196,831  $   197,922   $  99,271    $     420   $  99,691
                                        -----------  -----------  -----------       -----   ---------
                                        -----------  -----------  -----------       -----   ---------

    Other Restricted Cash  includes $11.4 million  to satisfy certain  covenants
regarding  launch  insurance  required by  the  1994 Indenture.  The  Company is
required to  maintain  launch  insurance and  restricted  cash  totaling  $225.0
million  for each of EchoStar I and EchoStar II. The Company has obtained $219.3
million of  launch insurance  on each  satellite, and,  together with  the  cash
segregated  and reserved on  the accompanying balance  sheets, has satisfied its
insurance obligations under the 1994 Indenture. In addition, as of December  31,
1995,  $15.0  million  was  in  an  escrow  account  established  pursuant  to a
manufacturing contract for payment to the manufacturer as certain milestones are
reached.                                                                        

REVENUE RECOGNITION AND TRADE ACCOUNTS RECEIVABLE                               

    Revenue from sales of DTH products is recognized upon shipment to customers.
The Company maintains a reserve for potential losses in collection of its  trade
accounts  receivable  based upon  estimates of  amounts  that may  ultimately be
uncollectible. The allowance for doubtful accounts was $186,000 and $1.1 million
as of December 31, 1994 and 1995, respectively.                                 

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
INVENTORIES                                                                     

    Inventories are  stated  at the  lower  of cost  or  market value.  Cost  is
determined  using the first-in, first-out  ("FIFO") method. Proprietary products
are manufactured by outside suppliers to the Company's specifications;  however,
final  testing  and  assembly is  performed  by  the Company.  The  Company also
distributes  non-proprietary  products   purchased  from  other   manufacturers.
Manufactured  inventories include  materials, labor  and manufacturing overhead.
Cost of  other inventories  includes  parts, contract  manufacturers'  delivered
price,  assembly and testing labor, and related overhead, including handling and
storage costs. The major components of inventory were as follows (in thousands):

                                                        [Enlarge/Download Table]

                                                                                      DECEMBER 31,     
                                                                                  -------------------- 
                                                                                    1994       1995    
                                                                                  ---------  --------- 
                                                                                                       
DBS receiver components.......................................................... $  --      $   9,615 
Spare parts......................................................................     2,759      2,089 
Competitor DBS Receivers.........................................................     2,207      9,404 
Finished goods...................................................................    16,946     20,458 
Reserve for excess and obsolete inventory........................................    (1,585)    (2,797)
                                                                                  ---------  --------- 
                                                                                  $  20,327  $  38,769 
                                                                                  ---------  --------- 
                                                                                  ---------  --------- 

OTHER CURRENT ASSETS                                                            

Other current assets consisted of the following (in thousands):         

                                                        [Enlarge/Download Table]

                                                                                       DECEMBER 31,    
                                                                                   --------------------
                                                                                     1994       1995   
                                                                                   ---------  ---------
                                                                                                       
DBS inventory deposit............................................................. $  --      $  10,000
Receivables for funded loans......................................................       257        437
Other.............................................................................     2,316      2,354
                                                                                   ---------  ---------
                                                                                   $   2,573  $  12,791
                                                                                   ---------  ---------
                                                                                   ---------  ---------

    In conjunction  with its  commitments to  purchase DBS  satellite  receivers
(Note  11),  the Company  has paid  a deposit  of  $10.0 million  to one  of its
manufacturers. The deposit will be applied  towards future payments for the  DBS
satellite receivers as they are delivered during 1996.                          

    Other  current assets include  receivables for consumer  loans funded by EAC
but expected to be  reimbursed to EAC  on a nonrecourse  basis by two  unrelated
finance  companies,  normally  within  two business  days  after  the  credit is
accepted by those companies. Unreimbursed fundings were $257,000 and $437,000 as
of December 31,  1994 and  1995, respectively,  all of  which were  subsequently
reimbursed.  Total loans sourced  by EAC during  1993, 1994 and  1995 were $85.6
million, $64.7 million and $50.1 million, respectively. In addition, EAC sourced
$8.6 million of leases in 1995.                                                 

    Loan origination fees charged to  the applicable DTH dealers are  recognized
in income upon receipt of funding reimbursement from the purchaser of the loans.
EAC  also  receives  a  percentage  of monthly  finance  charges  billed  by the
purchaser of the loans which is recognized in income as it becomes due to EAC.  

FCC AUTHORIZATIONS AND ORGANIZATIONAL COSTS                                     

    FCC authorizations and  organizational costs  are recorded at  cost and  are
amortized   using  the  straight-line  method.   Amortization  periods  for  FCC
authorization costs are determined at the time                                  

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
the  services  related  to  the   applicable  FCC  authorization  commence,   or
capitalized  costs are written off  at the time efforts  to provide services are
abandoned. FCC  authorization  costs are  expected  to  have a  useful  life  of
approximately  12  years. Organizational  costs  are being  amortized  over five
years.                                                                          

DEFERRED DEBT ISSUANCE COSTS AND DEBT DISCOUNT                                  

    Costs of completing the Notes Offering  have been deferred (Note 4) and  are
being   amortized  to  interest  expense  over  the  term  of  the  1994  Notes.
Amortization of the original issue discount related to the Notes Offering  (Note
5)  is also  being amortized  and included  in interest  cost incurred  so as to
reflect a constant rate of interest on the accreted balance of the 1994 Notes.  

DEFERRED PROGRAMMING REVENUE                                                    

    Deferred programming revenue  consists of payments  received from  consumers
and  dealers for satellite television programming to be provided. The revenue is
recognized on a straight-line basis over the period the programming is provided,
which generally does not exceed one year.                                       

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                                  

    The composition  of accrued  expenses and  other current  liabilities is  as
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                                       DECEMBER 31,    
                                                                                   --------------------
                                                                                     1994       1995   
                                                                                   ---------  ---------
                                                                                                       
Accrued satellite contract costs.................................................. $  --      $  15,000
Liability under cash management program                                                   57     --    
Accrued expenses..................................................................     4,667      3,850
Reserve for warranty costs........................................................     1,400      1,013
Other.............................................................................       841      1,472
                                                                                   ---------  ---------
                                                                                   $   6,965  $  21,335
                                                                                   ---------  ---------
                                                                                   ---------  ---------

    The  liability under cash  management program represents  checks written and
released in  excess of  balances presently  on deposit  with certain  banks.  As
checks clear these bank accounts, the resulting overdrafts are funded daily from
funds available in a concentration account at another bank.                     

    The  Company's proprietary  products are  under warranty  against defects in
material and workmanship for one year from the date of original retail purchase.
The reserve for warranty costs is based upon historical units sold and  expected
repair costs.                                                                   

ADVERTISING COSTS                                                               

    Advertising  costs are expensed  as incurred and  totaled $3.2 million, $2.3
million and $1.9 million for the years  ended December 31, 1993, 1994 and  1995,
respectively.                                                                   

RESEARCH AND DEVELOPMENT COSTS                                                  

    Research  and  development  costs  are expensed  as  incurred.  Research and
development costs totaled $5.1  million, $5.9 million and  $5.0 million for  the
years ended December 31, 1993, 1994 and 1995, respectively.                     

INCOME TAXES                                                                    

    Prior  to  the  December 31,  1993  reorganization (Note  1),  the principal
combined entities were Subchapter S corporations and their income was taxable to
the stockholders  rather than  the  companies. The  provision for  income  taxes
reflected  only amounts payable to states and foreign tax jurisdictions that did
not recognize Subchapter  S status.  Effective December 31,  1993, Subchapter  S
status terminated and the Company will prospectively file consolidated corporate
federal  and state  income tax  returns. As  required by  Statement of Financial
Accounting Standards No. 109, "Accounting for                                   

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
Income Taxes" ("SFAS  No. 109"),  this change in  tax status  was recognized  by
establishing  deferred  tax  assets and  liabilities  for  temporary differences
between the tax  basis and  amounts reported  in the  accompanying combined  and
consolidated balance sheets (Note 7).                                           

    Under SFAS No. 109, the current provision for income taxes represents actual
or  estimated amounts payable or refundable on  tax returns filed or to be filed
for each  year.  Deferred  tax  assets and  liabilities  are  recorded  for  the
estimated future tax effects of: (a) temporary differences between the tax basis
of  assets and liabilities and amounts reported in the combined and consolidated
balance sheets,  and (b)  operating  loss and  tax  credit carry  forwards.  The
overall  change in deferred  tax assets and liabilities  for the period measures
the deferred tax expense for the period. Effects of changes in enacted tax  laws
on  deferred  tax assets  and liabilities  are reflected  as adjustments  to tax
expense in the period of enactment.  The measurement of deferred tax assets  may
be  reduced by a valuation allowance based on judgmental assessment of available
evidence if deemed more  likely than not  that some or all  of the deferred  tax
assets will not be realized.                                                    

EARNINGS PER SHARE                                                              

    Earnings  per  share  information  is  not  presented  in  the  combined and
consolidated financial statements of Dish, Ltd. because, as described in Note 1,
Dish, Ltd. is a wholly owned subsidiary of ECC. The Class A Common Stock of  ECC
is quoted on the NASDAQ National Market. Earnings per share and weighted average
shares outstanding for ECC is presented in Note 16.                             

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                                       

    The  Financial Accounting Standards  Board ("FASB") has  issued Statement of
Financial Accounting Standards No. 121, "Accounting for Impairment of Long-Lived
Assets and  for Long-Lived  Assets to  Be  Disposed Of"  ("SFAS No.  121").  The
Company  will be  required to adopt  SFAS No. 121  in 1996 and  expects that its
ultimate adoption will not have a significant impact on the Company's  financial
position, results of operations or cash flows.                                  

    Statement  of  Financial  Accounting  Standards  No.  123,  "Accounting  for
Stock-Based Compensation" ("SFAS No. 123"), issued  by the FASB in October  1995
and  effective for fiscal  years beginning after  December 15, 1995, encourages,
but does not require, a fair value based method of accounting for employee stock
options or similar  equity instruments.  It also allows  an entity  to elect  to
continue  to measure compensation cost under Accounting Principles Board Opinion
No. 25 "Accounting for Stock Issued  to Employees" ("APB No. 25"), but  requires
pro  forma disclosures of net income and earnings per share as if the fair value
based method of accounting had been  applied. The Company expects to adopt  SFAS
No.  123  in  1996. While  the  Company is  still  evaluating SFAS  No.  123, it
currently expects to  elect to measure  compensation cost under  APB No. 25  and
comply  with the  pro forma disclosure  requirements. If the  Company makes this
election, this  statement  will have  no  impact  on the  Company's  results  of
operations.                                                                     

RECLASSIFICATIONS                                                               

    Certain  reclassifications  have been  made  to the  prior  year's financial
statements to conform to the current year's financial statement presentation.   

(3) PROPERTY AND EQUIPMENT                                                      
    Property and equipment  are stated  at cost  less accumulated  depreciation.
Cost  includes interest capitalized of $370,000,  $5.7 million and $25.0 million
during the years ended December 31, 1993,                                       

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(3) PROPERTY AND EQUIPMENT (CONTINUED)                                          
1994 and 1995, respectively  on the EchoStar DBS  System during construction  at
the  Company's effective  borrowing rate. The  major components  of property and
equipment were as follows (in thousands):                                       

                                                        [Enlarge/Download Table]

                                                                    ESTIMATED          DECEMBER 31,       
                                                                   USEFUL LIFE   ------------------------ 
                                                                   (IN YEARS)       1994         1995     
                                                                  -------------  -----------  ----------- 
                                                                                                          
Construction in progress.........................................      --        $   139,500  $   282,373 
Land.............................................................      --              1,613        1,613 
Buildings and improvements.......................................     7-40             8,936       21,006 
Furniture, fixtures and equipment................................     2-12             6,081       17,163 
Vehicles.........................................................       7                992        1,310 
Tooling..........................................................       2              1,339        2,039 
Furniture and equipment held for sale............................                    --            17,062 
Computer equipment held for sale.................................                    --               902 
                                                                                 -----------  ----------- 
Total property and equipment.....................................                    158,461      343,468 
Less-Accumulated depreciation....................................                     (7,221)     (10,269)
                                                                                 -----------  ----------- 
    Net property and equipment...................................                $   151,240  $   333,199 
                                                                                 -----------  ----------- 
                                                                                 -----------  ----------- 

    Construction  in  progress  includes   capitalized  costs  related  to   the
construction  and launch  (Note 11)  of EchoStar I,  which was  launched in late
December 1995, and EchoStar II, which is  scheduled for launch prior to the  end
of 1996.                                                                        

Construction in progress consisted of the following (in thousands):     

                                                        [Enlarge/Download Table]

                                                                                     DECEMBER 31,      
                                                                               ------------------------
                                                                                  1994         1995    
                                                                               -----------  -----------
                                                                                                       
Progress amounts for satellite construction and launch, capitalized interest,                          
 launch insurance, launch and in-orbit tracking, telemetry and control                                 
 services:                                                                                             
    EchoStar I................................................................ $    75,613  $   193,629
    EchoStar II...............................................................      62,438       88,634
    Uplink facility...........................................................       1,449      --     
    Other.....................................................................     --               110
                                                                               -----------  -----------
                                                                               $   139,500  $   282,373
                                                                               -----------  -----------
                                                                               -----------  -----------

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(4) OTHER NONCURRENT ASSETS                                                     
    The  major  components  of  other  noncurrent  assets  were  as  follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                                      DECEMBER 31,    
                                                                                  --------------------
                                                                                    1994       1995   
                                                                                  ---------  ---------
                                                                                                      
Deferred debt issuance costs, net of amortization................................ $  11,891  $  10,622
FCC authorizations...............................................................     9,519     11,309
SSET convertible subordinated debentures and accrued interest....................     9,029      9,610
Deferred tax assets, net.........................................................     7,431     12,109
Investment in DBSC...............................................................     4,210     --    
Warehousing bond.................................................................       432        468
Prepaid travel...................................................................       315        293
Other............................................................................       213        136
                                                                                  ---------  ---------
                                                                                  $  43,040  $  44,547
                                                                                  ---------  ---------
                                                                                  ---------  ---------

    The merger  with  DirectSat described  in  Note 1  was  accounted for  as  a
purchase.  DirectSat's assets were valued at $9.0  million by the Company at the
time of the merger and are included in FCC authorizations in the above  summary.
DirectSat has been granted a conditional satellite construction permit, specific
orbital  slot assignments  and frequency assignments  by the  FCC. The DirectSat
permits conditionally authorize DirectSat to provide DBS service utilizing:  (i)
ten  even-numbered channels at 119  DEG. WL, the same  orbital location that has
been assigned to ESC; (ii) one channel at 110 DEG. WL; and (iii) 11 odd-numbered
channels at  175  DEG. WL.  The  Company  expects to  use  DirectSat's  approved
frequencies at 119 DEG. WL for the EchoStar II satellite.                       

    The  Company  also  purchased  $8.75  million  of  SSET's  6.5%  convertible
subordinated debentures which, if converted, would represent approximately 11.6%
of SSET's common  stock, based  on the  number of  shares of  SSET common  stock
outstanding  at December 31,  1995. Management estimates that  the fair value of
the SSET  debentures  approximates  their carrying  value  in  the  accompanying
financial statements based on current interest rates and the conversion features
contained  in the debentures.  SSET is a reporting  company under the Securities
Exchange  Act  of  1934  engaged  in  the  manufacture  and  sale  of  satellite
telecommunications  equipment. In March 1994, SSET  also sold to the Company for
$1.25 million  an approximate  6%  ownership interest  in  the stock  of  Direct
Broadcasting  Satellite  Corporation  ("DBSC") and  certain  notes  and accounts
receivable from DBSC.                                                           

    In November 1994, the Company resolved a suit brought by the Company against
DBSC  regarding  enforceability  of  the  notes  and  accounts  receivable.  The
receivables  were  exchanged for  shares of  DBSC common  stock and  the Company
purchased additional  DBSC shares  for  $2,960,000 so  that, together  with  the
shares  of DBSC acquired from SSET, the Company presently owns approximately 40%
of the outstanding common stock of DBSC. DBSC's principal assets include an  FCC
conditional  satellite construction permit and specific orbital slot assignments
for eleven  DBS  frequencies at  61.5  DEG. WL  and  eleven DBS  frequencies  at
175 DEG. WL.                                                                    

    In   December  1995,  ECC  acquired  Dish,   Ltd.'s  interest  in  DBSC  for
approximately $4.2 million, representing  the cost of the  DBSC shares to  Dish,
Ltd.  The merger  of DBSC  with a subsidiary  of ECC  has been  approved by DBSC
shareholders but may  not be completed  until the FCC  has approved the  merger.
Assuming  FCC approval for  consummation of this merger,  ECC will hold, through
its DBSC subsidiary, the permit and  slot assignments for these frequencies.  In
connection with the merger, ECC expects to issue approximately 675,000 shares of
its Class A Common Stock to DBSC shareholders in exchange for all remaining DBSC
stock.                                                                          

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(5) SENIOR SECURED NOTES                                                        
    On  June 7, 1994, Dish,  Ltd. completed the Notes  Offering of 624,000 units
consisting of $624  million aggregate  principal amount  of the  12 7/8%  Senior
Secured  Notes (the  "1994 Notes")  and 3,744,000  Warrants for  the purchase of
Dish, Ltd.  Class A  Common Stock.  Effective with  the Merger  (Note 1),  these
Warrants  became exercisable for 2,808,000 Shares  of ECC's Class A Common Stock
(Note 9). The Notes Offering  resulted in net proceeds  to Dish, Ltd. of  $323.3
million.  At December 31, 1994,  the 1994 Notes were  reflected in the financial
statements at $334.2 million, net of unamortized discount of $289.8 million.  At
December  31, 1995,  the 1994 Notes  totaled $382.2 million,  net of unamortized
discount of $241.8 million. A limited trading market exists for the 1994  Notes.
However,  based on information  available to the Company,  the 1994 Notes traded
for approximately $690 per bond near December 31, 1995. This suggests a  current
aggregate market value of the 1994 Notes of approximately $430.6 million.       

    The  1994  Notes  rank  senior  in  right  of  payment  to  all subordinated
indebtedness of Dish, Ltd.  and PARI PASSU  in right of  payment with all  other
senior  indebtedness of  Dish, Ltd.,  subject to  the terms  of an Intercreditor
Agreement between Dish, Ltd., certain of its principal subsidiaries and  certain
creditors  thereof. The  1994 Notes  are secured by  liens on  certain assets of
Dish, Ltd., including EchoStar I and EchoStar II and all other components of the
EchoStar DBS System owned by Dish, Ltd. and its subsidiaries. The 1994 Notes are
guaranteed by each material direct subsidiary of Dish, Ltd. (Note 12).  Although
the  1994 Notes are titled "Senior": (i) Dish, Ltd. has not issued, and does not
have any current arrangements  to issue, any  significant indebtedness to  which
the  1994 Notes would be senior, however, Senior Secured Notes being offered for
sale subsequent  to  December  31,  1995,  by  EchoStar  Satellite  Broadcasting
Corporation,  another  wholly  owned  subsidiary  of  ECC,  will  effectively be
subordinated to the 1994 Notes and all  other liabilities of Dish, Ltd. and  its
subsidiaries;  and  (ii) at  December 31,  1994  and 1995,  the 1994  Notes were
effectively subordinated  to  approximately $5.6  million  and $5.4  million  of
mortgage  indebtedness, respectively,  with respect  to certain  assets of Dish,
Ltd.'s subsidiaries, not including  the EchoStar DBS  System. Further, the  1994
Notes  are subordinate to advances under the  Credit Facility (Note 6), and will
be ranked PARI PASSU with the  security interest of approximately $30.0  million
of contractor financing.                                                        

    Interest  on the  1994 Notes  currently is not  payable in  cash but accrues
through June 1, 1999, with  the 1994 Notes accreting  to $624.0 million by  that
date.   Thereafter,  interest  on  the  1994  Notes  will  be  payable  in  cash
semi-annually on June  1 and  December 1 of  each year,  commencing December  1,
1999.  Except under certain circumstances  requiring prepayment premiums, and in
other limited circumstances, the 1994 Notes  are not redeemable at Dish,  Ltd.'s
option  prior to  June 1, 1999.  Thereafter, the  1994 Notes will  be subject to
redemption, at the  option of Dish,  Ltd., in  whole or in  part, at  redemption
prices  ranging from 104.828% during the year commencing June 1, 1999 to 100% on
or after June 1,  2002 of principal, together  with accrued and unpaid  interest
thereon  to the redemption date. On each of June 1, 2002 and June 1, 2003, Dish,
Ltd. will be required to redeem  25% of the original aggregate principal  amount
of  1994  Notes at  a redemption  price equal  to 100%  of the  principal amount
thereof, together with  accrued and  unpaid interest thereon  to the  redemption
date. The remaining principal of the 1994 Notes will mature on June 1, 2004.    

    In the event of a change of control and upon the occurrence of certain other
events,  as described in the 1994 Indenture, Dish, Ltd. will be required to make
an offer to  each holder of  1994 Notes to  repurchase all or  any part of  such
holder's  1994 Notes  at a purchase  price equal  to 101% of  the accreted value
thereof on the  date of  purchase, if  prior to  June 1,  1999, or  101% of  the
aggregate  principal amount thereof,  together with accrued  and unpaid interest
thereon to the date of purchase, if on or after June 1, 1999.                   

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(5) SENIOR SECURED NOTES (CONTINUED)                                            
    The 1994 Indenture contains restrictive covenants that, among other  things,
impose  limitations on  Dish, Ltd.  and its  subsidiaries with  respect to their
ability to: (i) incur additional indebtedness; (ii) issue preferred stock; (iii)
apply the proceeds of certain asset  sales; (iv) create, incur or assume  liens;
(v)  create dividend and other payment restrictions with respect to Dish, Ltd.'s
subsidiaries; (vi) merge, consolidate or  sell assets; (vii) incur  subordinated
or junior debt; and (viii) enter into transactions with affiliates. In addition,
Dish, Ltd., may pay dividends on its equity securities only if (1) no default is
continuing  under  the  1994 Indenture;  and  (2)  after giving  effect  to such
dividend, Dish, Ltd.'s ratio of total  indebtedness to cash flow (calculated  in
accordance  with the 1994  Indenture) would not  exceed 4.0 to  1. Moreover, the
aggregate amount of such dividends  generally may not exceed  the sum of 50%  of
Dish,  Ltd.'s consolidated  net income (calculated  in accordance  with the 1994
Indenture) from  the date  of  issuance of  the 1994  Notes,  plus 100%  of  the
aggregate  net proceeds  to Dish,  Ltd. from  the issuance  and sale  of certain
equity interests of Dish, Ltd. (including common stock).                        

(6) SHORT-TERM AND LONG-TERM DEBT                                               

LONG-TERM MORTGAGE DEBT                                                         

    In addition  to the  1994 Notes  (Note 5),  long-term debt  consists of  the
following as of December 31, 1994 and 1995 (in thousands):                      

                                                        [Enlarge/Download Table]

                                                                                      1994       1995    
                                                                                    ---------  --------- 
                                                                                                         
8.75% note payable for deferred satellite contract payments due in equal monthly                         
 installments of $677,590, including interest, through February 2001; secured by                         
 substantially all assets of Dish, Ltd., and Dish, Ltd.'s subsidiaries............  $  --      $  32,833 
8.0% mortgage note payable due in equal monthly installments of $41,635, including                       
 interest, through May 2008; secured by land and office building..................      4,088      3,909 
10.5% mortgage note payable due in equal monthly installments of $9,442, including                       
 interest, through November 1998; final payment of $854,000 due November 1998;                           
 secured by land and warehouse building...........................................        927        910 
9.9375% mortgage note payable due in equal quarterly principal installments of                           
 $10,625, plus interest, through April 2009; secured by land and office                                  
 building.........................................................................        616        574 
                                                                                    ---------  --------- 
Total long-term debt, excluding the 1994 Notes....................................      5,631     38,226 
Less current installments.........................................................       (238)    (4,782)
                                                                                    ---------  --------- 
Long-term debt, excluding current installments....................................  $   5,393  $  33,444 
                                                                                    ---------  --------- 
                                                                                    ---------  --------- 

    Aggregate  maturities of the  above long-term mortgage  debt are as follows:
1996, $4.8 million; 1997, $6.2 million; 1998, $7.6 million; 1999, $7.3  million;
2000,  $8.0  million;  and  thereafter, $4.3  million.  In  addition, contractor
financing of  $28.0 million  at the  prime  rate is  available for  EchoStar  II
payable in installments over five years following the launch (Note 11).         

DEFERRED SATELLITE CONTRACT PAYMENTS                                            

    The majority of the purchase price for the satellites is required to be paid
in  progress payments, with the remainder  payable in the form of non-contingent
payments deferred until EchoStar I and  EchoStar II are in orbit, with  interest
at   the  prime  rate   over  a  period   of  five  years   after  the  delivery

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(6) SHORT-TERM AND LONG-TERM DEBT (CONTINUED)                                   
and launch of each such satellite (the "Deferred Payments"). As security for the
portion of the Deferred Payments due to the contractor (Martin Marietta),  Dish,
Ltd.  has: (i) granted a security interest  in substantially all assets of Dish,
Ltd. and Dish, Ltd.'s subsidiaries  (the "Dish, Ltd. subsidiaries"), other  than
the stock of the EchoStar subsidiaries and the proceeds derived from the sale of
the  1994 Notes, subordinate to the first security interest in the assets of ESC
granted to the  Trustee under  the 1994  Indenture (Note  5), and  to the  liens
granted  to any  commercial bank which  provides a revolving  credit facility to
Dish, Ltd.,  except  that such  security  interest  ranks PARI  PASSU  with  the
security interest in the assets of ESC granted for the benefit of the holders of
the  1994 Notes with respect to $30.0 million of the Deferred Payments; and (ii)
caused Dish, Ltd.  and its  subsidiaries to guarantee  payment in  full of  such
Deferred Payments.                                                              

    Martin  Marietta has a  security interest in the  EchoStar DBS System which,
with respect to $30.0  million of the Deferred  Payments, ranks PARI PASSU  with
the  lien on  such assets  granted for the  benefit of  the holders  of the 1994
Notes, and,  with  respect  to  the  remainder  of  the  Deferred  Payments,  is
subordinated  to the lien on such assets  granted for the benefit of the holders
of the 1994  Notes. However,  following any  default on  the Deferred  Payments,
Martin  Marietta is prohibited  from realizing on  any of such  collateral for a
period of at least five years following consummation of the Notes Offering,  and
in  any event for  180 days following  such default. Martin  Marietta also has a
security interest in the  assets of the Dish,  Ltd. subsidiaries other than  ESC
which   lien,  with  respect  to  the  assets  of  certain  of  the  Dish,  Ltd.
subsidiaries, ranks senior to the lien on such assets granted for the benefit of
the holders of the 1994 Notes.                                                  

LONG-TERM NOTES PAYABLE TO STOCKHOLDER                                          

    As of December 31, 1993, ESC had  a long-term note payable to its  principal
stockholder,  including cumulative accrued interest  at prime, of $14.7 million.
The loan  proceeds were  used to  make payments  due pursuant  to the  satellite
construction  project (Note 11). The note accrued interest at 10% per annum from
January 1, 1994 to March 21,  1994. The stockholder exchanged the note  together
with  accrued but unpaid  interest for Series  A Preferred Stock  on May 6, 1994
(Note 16). The principal stockholder also  advanced $4.0 million to EchoStar  in
1994 used to fund transactions with SSET (Note 4) which was repaid from proceeds
of the 1994 Notes.                                                              

    The  Company also  had a noninterest-bearing  note payable  to its principal
stockholder at December 31, 1993 of $75,000 which was repaid in January 1994.   

BANK CREDIT FACILITY                                                            

    On May 6, 1994,  the principal subsidiaries of  Dish, Ltd., except ESC  (the
"Borrowers"),  entered  into an  agreement with  Bank  of America  Illinois (the
"Bank"), to  provide a  revolving credit  facility (the  "Credit Facility")  for
working  capital  advances and  for letters  of  credit necessary  for inventory
purchases and satellite construction payments.  The maximum amount available  to
the  Borrowers under the Credit  Facility is the lesser  of the "Borrowing Base"
(as defined in the Credit Facility) or $17.0 million, if prior to March 6, 1996,
or $14.5 million,  if on or  after March  6, 1996. The  Borrowing Base  includes
specified   percentages  of  eligible   receivables,  inventory  and  marketable
investment securities. At December  31, 1995 the  Borrowing Base exceeded  $17.0
million.  Advances under  the Credit Facility  bear interest at:  (i) the Bank's
Reference Rate (as defined in the Credit Facility); (ii) Eurodollar rate plus 2%
per annum  or (iii)  the secondary  CD bid  rate plus  2.25% per  annum, at  the
Borrowers'  choice.  Advances pursuant  to the  Credit  Facility are  secured by
substantially all of the assets of the Borrowers. At December 31, 1995,  standby
letters  of credit totaled $15.5 million,  and there were no documentary letters
of credit or advances outstanding.                                              

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(6) SHORT-TERM AND LONG-TERM DEBT (CONTINUED)                                   
    The  Credit  Facility  contains  customary  representations,  covenants  and
conditions  to borrowing. The Credit Facility also contains a number of negative
covenants that  restrict  the  Borrowers from,  among  other  things,  incurring
additional  indebtedness, creating liens on  their assets, providing guarantees,
entering into merger or consolidation transactions, or disposing of their assets
outside the  ordinary  course  of  business.  Except  in  certain  circumstances
specified  in the Credit  Facility, the Borrowers  are able to  pay dividends to
Dish, Ltd. in an amount not to exceed 50% of excess cash flow (as defined in the
Credit Facility) in 1995 and 1996.                                              

(7) INCOME TAXES                                                                
    As stated in  Note 2, the  combined entities terminated  their Subchapter  S
status  on  December 31,  1993.  This change  in  tax status  was  recognized by
establishing a net deferred tax asset of $1.9 million on that date for temporary
differences between tax basis and amounts reported in the accompanying  combined
and  consolidated balance sheet. The current provision for income taxes for 1993
reflects only amounts payable  to certain states  and foreign tax  jurisdictions
that  do not recognize Subchapter  S status. Beginning in  1994, the group filed
consolidated corporate federal and state income tax returns.                    

    The components of the  (provision) benefit for income  taxes are as  follows
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                                             YEAR ENDED DECEMBER 31,     
                                                                         ------------------------------- 
                                                                           1993       1994       1995    
                                                                         ---------  ---------  --------- 
                                                                                                         
Current (provision) benefit                                                                              
    Federal............................................................. $  --      $  (5,951) $   1,711 
    State...............................................................      (128)      (853)       (44)
    Foreign.............................................................      (429)      (925)      (301)
                                                                         ---------  ---------  --------- 
                                                                              (557)    (7,729)     1,366 
                                                                         ---------  ---------  --------- 

Deferred benefit                                                                                         
    Federal.............................................................     1,686      6,342      4,440 
    State...............................................................       255        988        385 
                                                                         ---------  ---------  --------- 
                                                                             1,941      7,330      4,825 
                                                                         ---------  ---------  --------- 
        Total benefit (provision)....................................... $   1,384  $    (399) $   6,191 
                                                                         ---------  ---------  --------- 
                                                                         ---------  ---------  --------- 

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(7) INCOME TAXES (CONTINUED)                                                    
    The  types of temporary differences that  give rise to a significant portion
of net deferred tax assets and their approximate tax effects as of December  31,
1994 and 1995 are as follows (in thousands):                                    

                                                        [Enlarge/Download Table]

                                                                                     1994       1995    
                                                                                   ---------  --------- 
                                                                                                        
Current deferred tax assets                                                                             
  Inventory reserves and cost methods............................................. $     438  $     834 
  Reserve for warranty costs......................................................       532        385 
  Accrued customer incentives.....................................................       234     --     
  Accrued employee incentives.....................................................       418        168 
  Allowance for doubtful accounts.................................................       106        456 
  Unrealized holding gain on marketable investment securities.....................    --           (153)
  Other...........................................................................       112        144 
                                                                                   ---------  --------- 
        Net current deferred tax assets...........................................     1,840      1,834 
                                                                                   ---------  --------- 

Noncurrent deferred tax assets                                                                          
  Amortization of original issue discount (included in other noncurrent assets)...     7,431     15,439 
  Other...........................................................................    --              7 
                                                                                   ---------  --------- 
                                                                                       7,431     15,446 
                                                                                   ---------  --------- 

Noncurrent deferred tax liabilities                                                                     
  Capitalized costs deducted for tax..............................................    --         (2,351)
  Depreciation....................................................................    --           (986)
                                                                                   ---------  --------- 
                                                                                      --         (3,337)
                                                                                   ---------  --------- 
        Noncurrent net deferred tax assets........................................     7,431     12,109 
                                                                                   ---------  --------- 
        Net deferred tax assets................................................... $   9,271  $  13,943 
                                                                                   ---------  --------- 
                                                                                   ---------  --------- 

    No  valuation allowance has been provided  for the above deferred tax assets
because the Company  currently believes it  is more likely  than not that  these
assets  will  be realized.  If future  operating  results differ  materially and
adversely from the  Company's current expectations,  its judgment regarding  the
need for a valuation allowance may change.                                      

PRO FORMA TAX EFFECTS                                                           

    The  combined and consolidated statements of income present, on an unaudited
pro forma basis, net income for 1993 as if the Company had filed consolidated  C
Corporation  federal and state income  tax returns for that  year. The pro forma
tax effects assume foreign taxes paid  would have been fully creditable  against
United States federal taxes payable and that the deferred tax assets established
on  December 31, 1993  as described above,  would have been  provided for as the
related temporary differences arose. The  pro forma provisions for income  taxes
for  1993 and the actual tax provisions for  1994 and 1995 are reconciled to the
amounts computed by  applying the statutory  federal tax rate  to income  before
taxes as follows (amounts in thousands).                                        

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                              1993                    1994                    1995         
                                                     ----------------------  ----------------------  ----------------------
                                                      AMOUNT      PERCENT     AMOUNT      PERCENT     AMOUNT      PERCENT  
                                                     ---------  -----------  ---------  -----------  ---------  -----------
                                                                                                                           
Statutory rate...................................... $  (6,557)      (35.0)% $    (166)      (34.0)% $   6,493        35.0%
State income taxes, net of federal benefit..........      (450)       (2.4)        (88)      (18.0)        222         1.2 
Tax exempt interest income..........................       350         1.9          60        12.3          10         0.1 
Research and development credits....................       195         1.0         156        31.9          31         0.2 
Non-deductible interest expense.....................    --          --            (258)      (52.7)       (293)       (1.7)
Other...............................................    --          --            (103)      (21.1)       (272)       (1.4)
                                                     ---------       -----   ---------       -----   ---------       ----- 
  Total (provision) benefit for income taxes (pro                                                                          
   forma in 1993)...................................    (6,462)      (34.5)% $    (399)      (81.6)% $   6,191        33.4%
                                                                     -----   ---------       -----   ---------       ----- 
                                                                     -----   ---------       -----   ---------       ----- 
Less: Historical benefit for income taxes...........     1,384                                                             
                                                     ---------                                                             
Pro forma tax effects............................... $  (7,846)                                                            
                                                     ---------                                                             
                                                     ---------                                                             

(8) EMPLOYEE BENEFIT PLAN AND EXECUTIVE INCENTIVE BONUS PLANS                   
    The  Company  has a  401(k) Employee  Savings Plan  (the "401(k)  Plan") for
eligible employees. Voluntary employee contributions  to the 401(k) Plan may  be
matched  50% by  the Company,  subject to a  maximum annual  contribution by the
Company  of  $1,000  per  employee.  The   Company  may  also  make  an   annual
discretionary  contribution to the plan with  approval by the Company's Board of
Directors, subject  to the  maximum deductible  limit provided  by the  Internal
Revenue  Code of 1986, as amended. The Company's total cash contributions to the
401(k) Plan  were $572,000,  $170,000  and $177,000  for  1993, 1994  and  1995,
respectively.  For 1995,  ECC contributed  55,000 shares  of its  Class A Common
Stock to the 401(k) Plan as a discretionary contribution. Dish, Ltd.  recognized
expense,   and  an  addition  to  its  paid  in  capital,  for  the  fair  value
(approximately $1.1 million) of the ECC shares contributed to the 401(k) Plan by
ECC.                                                                            

    During the years ended December 31, 1993, 1994 and 1995, the Company's Board
of Directors  declared discretionary  bonuses  totaling $834,000,  $711,000  and
$75,000  respectively. ECC also funded a launch  bonus award of 10 shares of ECC
Class A Common Stock to all full  time employees with more than 90 days  service
as  of December 16, 1995. Dish, Ltd.  recognized expense, and an addition to its
paid in capital, for  the fair value (approximately  $78,000) of the ECC  shares
issued to employees.                                                            

(9) STOCKHOLDERS' EQUITY                                                        
    Ownership  of each of the subsidiaries was  generally uniform at the time of
formation of  Dish, Ltd.  described in  Note 1.  As of  December 31,  1993,  the
stockholders  contributed their shares  in the subsidiaries  for an aggregate of
7,500 shares of Common Stock of Dish,  Ltd. Retained earnings that had not  been
distributed  prior to the reorganization and related termination of Subchapter S
status were constructively  distributed to the  stockholders and contributed  to
Dish, Ltd. as additional paid-in capital.                                       

    Effective  March 10, 1994,  the stockholders approved  measures necessary to
increase the authorized capital of Dish,  Ltd. to include 200 million shares  of
Class A Common Stock, 100 million shares of Class B Common Stock, and 20 million
shares  of Preferred  Stock and  determined to  split all  outstanding shares of
common stock on the basis of approximately 4,296 to 1.                          

    Dividends declared and paid during the three years ended December 31,  1994,
included  amounts to allow the stockholders to  pay taxes on Subchapter S income
and for investment in and advances to ESC related to construction of EchoStar  I
and EchoStar II (Notes 2, 3 and 6).                                             

    All  accrued  dividends payable  to Mr.  Ergen  on his  Dish, Ltd.  Series A
Preferred Stock through the date of the Exchange ($1.4 million), and all accrued
dividends payable to the remaining holder of Dish,                              

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(9) STOCKHOLDERS' EQUITY (CONTINUED)                                            
Ltd. Series A Preferred  Stock through the date  of the Merger ($107,000),  will
remain obligations of Dish, Ltd. (Note 1); however, no additional dividends will
accrue  with  respect to  the  Dish, Ltd.  Series  A Preferred  Stock.  The 1994
Indenture places significant  restrictions on  payment of  those dividends,  and
dividends  are  not  expected to  be  paid  in the  foreseeable  future. Through
December 31, 1995, additional accrued dividends  payable to Mr. Ergen by ECC  on
the ECC Series A Preferred Stock totaled $588,000.                              

(10) STOCK OPTIONS                                                              
    In  April  1994, the  Company  adopted a  stock  incentive plan  (the "Stock
Incentive Plan") to provide incentive to attract and retain officers,  directors
and key employees. ECC assumed all outstanding options for the purchase of Dish,
Ltd.  common stock effective with the Exchange and Merger and has reserved up to
10.0 million shares of its  Class A Common Stock  for granting awards under  the
Stock  Incentive Plan. Awards available under  the Stock Incentive Plan include:
(i) common  stock  purchase  options;  (ii)  stock  appreciation  rights;  (iii)
restricted  stock  and  restricted  stock units;  (iv)  performance  awards; (v)
dividend equivalents; and  (vi) other  stock-based awards.  All options  granted
through  December 31, 1995 have included exercise  prices not less than the fair
market value of the Shares  at the date of grant  and vest as determined by  the
Company's Board of Directors, generally at the rate of 20% per year.            

    The  following summarizes  the activity  relating to  options for  the years
ended December 31, 1994 and 1995:                                               

                                                        [Enlarge/Download Table]

                                                                                                     1994        1995      
                                                                                                     -----  ---------------
                                                                                                      (IN THOUSANDS EXCEPT 
                                                                                                      FOR PER SHARE DATA)  
                                                                                                                           
Incentive stock options --                                                                                                 
  Options outstanding at beginning of year..........................................................  --                745
  Granted...........................................................................................   745              420
  Exercised.........................................................................................  --                (4)
  Terminated........................................................................................  --               (44)
                                                                                                     -----  ---------------
  Options outstanding at end of year................................................................   745            1,117
                                                                                                     -----  ---------------
                                                                                                     -----  ---------------
  Options exercisable at end of year................................................................  --                141
                                                                                                     -----  ---------------
                                                                                                     -----  ---------------
  Price of granted options.......................................................................... $9.33  $11.87 - $20.25
                                                                                                     -----  ---------------
                                                                                                     -----  ---------------
  Price range of outstanding options................................................................ $9.33   $9.33 - $20.25
                                                                                                     -----  ---------------
                                                                                                     -----  ---------------
  Price of terminated options....................................................................... $--     $9.33 - $17.00
                                                                                                     -----  ---------------
                                                                                                     -----  ---------------

    In March 1994, the Company entered into an employment agreement with one  of
its  executive officers. The  officer was granted  an option, containing certain
conditions to vesting, to purchase 322,208 shares of Class A Common Stock of the
Company for $1.0  million at any  time prior  to December 31,  1999, subject  to
certain  limitations. One-half of this option became exercisable on December 31,
1994 and the remainder became exercisable  on December 31, 1995. The option  was
not granted pursuant to the Stock Incentive Plan.                               

    Effective  March 1995,  the Company  granted an  additional option  to a key
employee to purchase 33,000 shares of Class  A Common Stock, which vests 50%  in
March  1996 and 50% in March 1997. The  exercise price for each share of Class A
Common Stock is $11.87  per share. The  option was not  granted pursuant to  the
Stock Incentive Plan.                                                           

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(11) OTHER COMMITMENTS AND CONTINGENCIES                                        

SATELLITE CONTRACTS                                                             

    The  Company  has  contracted  with  Martin  Marietta  Corporation  ("Martin
Marietta") for the construction and delivery of high powered DBS satellites, and
for related services. EchoStar I was shipped  to China on November 16, 1995  and
EchoStar  II is expected to be delivered in  the summer of 1996. Penalties of up
to $5.0 million are  payable by Martin  Marietta in the event  of delays in  the
delivery  of  EchoStar I  by Martin  Marietta.  As of  December 31,  1995, those
penalties totaled  $3.2  million,  which  amount  has  been  deducted  from  the
Company's deferred satellite payment obligation (Note 6).                       

    The  Company also has  contracts with China  Great Wall Industry Corporation
("Great Wall") for the launch  of up to seven  satellites, using LM-2E or  LM-3C
launch  vehicles,  from a  launch  base in  China.  EchoStar I  was  launched on
December 28, 1995. The  EchoStar I and EchoStar  II launch contract (the  "Great
Wall  Launch Contract") calls for the launch  of EchoStar II during July through
September 1996.                                                                 

    A significant delay in the delivery or launch of EchoStar II would adversely
affect the  Company's  operations.  In  June 1995,  another  subsidiary  of  ECC
contracted  with Lockheed-Khrunichev-Energia-International, Inc. ("LKE") for the
launch of a satellite, using a Proton launch vehicle, from a launch base in  the
Russian Federation.                                                             

    The   Company  has  filed  applications   with  the  Federal  Communications
Commission ("FCC") for authorization to construct, launch and operate a domestic
fixed satellite  service  system ("FSS  System")  and a  two  satellite  Ka-band
satellite  system. No assurances can be given that the Company applications will
be approved  by the  FCC or  that, if  approved, the  Company will  successfully
develop  the FSS  System or the  Ka-band satellite system.  The Company believes
that establishment of  the FSS System  or the Ka-band  system would enhance  its
competitive  position in  the DTH  industry. In the  event the  Company's FSS or
Ka-band satellite system applications are approved by the FCC, or if the Company
commits to a third launch with  Great Wall, additional debt or equity  financing
would  be  required.  Financing  alternatives related  to  the  FSS  and Ka-band
satellite systems are currently being pursued by the Company. No assurances  can
be given that financing will be available, or that it will be available on terms
favorable to the Company.                                                       

LEASES                                                                          

    Future  minimum lease  payments under  noncancelable operating  leases as of
December 31, 1995, are as follows (in thousands):                               

                                                                [Download Table]

Year ending December 31 --                                                
                                                                          
  1996.........................................................  $   1,061
  1997.........................................................        686
  1998.........................................................        275
  1999.........................................................        147
  2000.........................................................         24
  Thereafter...................................................          2
                                                                 ---------
    Total minimum lease payments...............................  $   2,195
                                                                 ---------
                                                                 ---------

    Total rental expense  for operating leases  was $1.2 million  in 1993,  $1.4
million in 1994 and $1.2 million in 1995.                                       

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(11) OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)                            
PURCHASE COMMITMENTS                                                            

    The  Company  has  entered  into agreements  with  various  manufacturers to
purchase DBS satellite  receivers and related  components manufactured based  on
Dish,  Ltd.  supplied specifications  and necessary  to receive  DBS programming
proposed to  be  offered by  the  Company  upon commencement  of  operations  of
EchoStar's  DISH Network-SM-. As of December 31, 1995, the remaining commitments
total approximately  $502.9 million.  At December  31, 1995,  the total  of  all
outstanding  purchase order commitments with  domestic and foreign suppliers was
$515.8 million.  All  but  $11.1  million of  the  purchases  related  to  these
commitments are expected to be made during 1996 and the remainder is expected to
be  made  during  1997. The  Company  expects  to finance  these  purchases from
available cash  and sales  of  inventory, including  the  sale of  DBS  receiver
systems and related products.                                                   

OTHER RISKS AND CONTINGENCIES                                                   

    Equipment   sold  by  the  Company   includes,  as  an  integral  component,
descrambler modules  purchased from  an unrelated  entity under  a  nonexclusive
right and license which expires in 2001.                                        

    The  Company has agreed to indemnify its stockholders for any adjustments to
their individual income tax returns resulting from adjustments to taxable income
or tax credits for years  prior to 1994 during which  the Company elected to  be
taxed  as Subchapter  S corporations.  The indemnities  cover additions  to tax,
interest and  penalties,  as  well  as  attorneys'  and  accountants'  fees  and
expenses, if any.                                                               

    The  Company is subject to other legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect  the
financial position, results of operations or liquidity of the Company.          

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(12) SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS                    
    The  1994  Notes  are  fully,  unconditionally  and  jointly  and  severally
guaranteed by all subsidiaries of Dish, Ltd., except FlexTracker and certain  de
minimis  domestic and foreign subsidiaries. Summarized financial information for
Dish, Ltd. and the subsidiary guarantors is as follows (in thousands):          

                                                        [Enlarge/Download Table]

                                                                                   YEAR ENDED DECEMBER 31,        
                                                                            ------------------------------------- 
                                                                               1993         1994         1995     
                                                                            -----------  -----------  ----------- 
                                                                                                                  
Income Statement Data --                                                                                          
  Revenue.................................................................. $   217,360  $   187,044  $   163,228 
  Expenses.................................................................     199,398      174,164      171,646 
                                                                            -----------  -----------  ----------- 
  Operating income (loss)..................................................      17,962       12,880       (8,418)
  Other income (expense)...................................................         543      (12,707)      (9,911)
                                                                            -----------  -----------  ----------- 
  Net income (loss) before income taxes....................................      18,505          173      (18,329)
  (Provision) benefit for income taxes.....................................       1,384         (433)       6,182 
                                                                            -----------  -----------  ----------- 
    Net income (loss)...................................................... $    19,889  $      (260) $   (12,147)
                                                                            -----------  -----------  ----------- 
                                                                            -----------  -----------  ----------- 

                                                        [Enlarge/Download Table]

                                                                                DECEMBER 31,  DECEMBER 31,
                                                                                    1994          1995    
                                                                                ------------  ------------
                                                                                                          
Balance Sheet Data --                                                                                     
  Current assets...............................................................  $   80,914    $   81,959 
  Property and equipment, net..................................................     151,211       333,160 
  Other noncurrent assets......................................................     239,560       143,866 
                                                                                ------------  ------------
  Total assets.................................................................  $  471,685    $  558,985 
                                                                                ------------  ------------
                                                                                ------------  ------------
  Current liabilities..........................................................  $   28,094    $   50,710 
  Long-term liabilities........................................................     340,014       415,662 
  Stockholders' equity.........................................................     103,577        92,613 
                                                                                ------------  ------------
  Total liabilities and stockholders' equity...................................  $  471,685    $  558,985 
                                                                                ------------  ------------
                                                                                ------------  ------------

    Upon consummation of the merger with DirectSat, DirectSat became, by  virtue
of  the merger, a guarantor of the 1994 Notes on a full, unconditional and joint
and several basis, in addition to the guarantees of the previous subsidiaries.  

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(13) OPERATIONS IN GEOGRAPHIC AREAS                                             
    The Company sells  its products  on a  worldwide basis  and has  established
operations  in  Europe  and the  Pacific  Rim. Information  about  the Company's
operations in different geographic areas as of December 31, 1993, 1994 and  1995
and for the years then ended, were as follows (in thousands):                   

                                                        [Enlarge/Download Table]

                                                                  UNITED                   OTHER                 
                             1993                                 STATES      EUROPE    INTERNATIONAL    TOTAL   
--------------------------------------------------------------  -----------  ---------  ------------  -----------
                                                                                                                 
Total revenue.................................................  $   175,453  $  25,825   $   19,663   $   220,941
                                                                -----------  ---------  ------------  -----------
                                                                -----------  ---------  ------------  -----------
Export sales..................................................  $     8,005                                      
                                                                -----------                                      
                                                                -----------                                      
Operating income..............................................  $    16,551  $      96   $    1,557   $    18,204
                                                                -----------  ---------  ------------             
                                                                -----------  ---------  ------------             
Other income (expense), net...................................                                                530
                                                                                                      -----------
Net income before income taxes................................                                        $    18,734
                                                                                                      -----------
                                                                                                      -----------
Identifiable assets...........................................  $    84,656  $   7,272   $   10,478   $   102,406
                                                                -----------  ---------  ------------             
                                                                -----------  ---------  ------------             
Corporate assets..............................................                                              4,070
                                                                                                      -----------
Total assets..................................................                                        $   106,476
                                                                                                      -----------
                                                                                                      -----------

                                                        [Enlarge/Download Table]

                             1994                                                                                 
--------------------------------------------------------------                                                    
                                                                                                                  
Total revenue.................................................  $   137,233  $  24,072   $   29,678   $   190,983 
                                                                -----------  ---------  ------------  ----------- 
                                                                -----------  ---------  ------------  ----------- 
Export sales..................................................  $     7,188                                       
                                                                -----------                                       
                                                                -----------                                       
Operating income..............................................  $    10,811  $   1,244   $    1,161   $    13,216 
                                                                -----------  ---------  ------------              
                                                                -----------  ---------  ------------              
Other income (expense), net...................................                                            (12,727)
                                                                                                      ----------- 
Net income before income taxes................................                                        $       489 
                                                                                                      ----------- 
                                                                                                      ----------- 
Identifiable assets...........................................  $    77,172  $   6,397   $    2,359   $    85,928 
                                                                -----------  ---------  ------------              
                                                                -----------  ---------  ------------              
Corporate assets..............................................                                            386,564 
                                                                                                      ----------- 
Total assets..................................................                                        $   472,492 
                                                                                                      ----------- 
                                                                                                      ----------- 

                                                        [Enlarge/Download Table]

                             1995                                                                                 
--------------------------------------------------------------                                                    
                                                                                                                  
Total revenue.................................................  $   110,629  $  31,351   $   21,910   $   163,890 
                                                                -----------  ---------  ------------  ----------- 
                                                                -----------  ---------  ------------  ----------- 
Export sales..................................................  $     6,317                                       
                                                                -----------                                       
                                                                -----------                                       
Operating income (loss).......................................  $    (7,838) $     146   $     (257)  $    (7,949)
                                                                -----------  ---------  ------------              
                                                                -----------  ---------  ------------              
Other income (expense), net...................................                                            (10,603)
                                                                                                      ----------- 
Net income before income taxes................................                                        $   (18,552)
                                                                                                      ----------- 
                                                                                                      ----------- 
Identifiable assets...........................................  $    63,136  $  10,088   $    3,788   $    77,012 
                                                                -----------  ---------  ------------              
                                                                -----------  ---------  ------------              
Corporate assets..............................................                                            482,283 
                                                                                                      ----------- 
Total assets..................................................                                        $   559,295 
                                                                                                      ----------- 
                                                                                                      ----------- 

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(14) VALUATION AND QUALIFYING ACCOUNTS                                          
    The  Company's valuation  and qualifying accounts  as of  December 31, 1993,
1994 and 1995 are as follows (in thousands):                                    

                                                        [Enlarge/Download Table]

                                                                        ADDITIONS                                   
                                                                --------------------------                          
                                                   BALANCE AT   CHARGED TO    CHARGED TO                            
                                                  BEGINNING OF   COSTS AND       OTHER                   BALANCE AT 
                                                      YEAR       EXPENSES      ACCOUNTS     DEDUCTIONS   END OF YEAR
                                                  ------------  -----------  -------------  -----------  -----------
                                                                                                                    
Year ended December 31, 1993:                                                                                       
  Assets:                                                                                                           
    Allowance for doubtful accounts..............  $       92    $     305     $  --         $     (51)   $     346 
    Loan loss reserve............................          25           52            29           (56)          50 
    Reserve for inventory........................       1,425          136        --              (158)       1,403 
  Liabilities:                                                                                                      
    Reserve for warranty costs...................       1,600          326        --              (576)       1,350 
    Other reserves...............................         110       --            --               (17)          93 
Year ended December 31, 1994:                                                                                       
  Assets:                                                                                                           
    Allowance for doubtful accounts..............  $      346    $       8     $  --         $    (168)   $     186 
    Loan loss reserve............................          50           75        --               (30)          95 
    Reserve for inventory........................       1,403          329        --              (147)       1,585 
  Liabilities:                                                                                                      
    Reserve for warranty costs...................       1,350          508        --              (458)       1,400 
    Other reserves...............................          93       --            --            --               93 
Year ended December 31, 1995:                                                                                       
  Assets:                                                                                                           
    Allowance for doubtful accounts..............  $      186    $   1,160     $  --         $    (240)   $   1,106 
    Loan loss reserve............................          95           19        --               (36)          78 
    Reserve for inventory........................       1,585        1,511        --              (299)       2,797 
  Liabilities:                                                                                                      
    Reserve for warranty costs...................       1,400          562        --              (949)       1,013 
    Other reserves...............................          93       --            --                (1)          92 

(15) QUARTERLY FINANCIAL DATA (UNAUDITED)                                       
    The Company's quarterly results of operations are summarized as follows  (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                                QUARTER ENDED                   
                                                             ---------------------------------------------------
                                                              MARCH 31,   JUNE 30,   SEPTEMBER 30,  DECEMBER 31,
                                                                1994        1994         1994           1994    
                                                             -----------  ---------  -------------  ------------
                                                                                                                
Total revenue...............................................  $  46,993   $  42,748   $    48,958    $   52,284 
Operating income............................................      4,359       2,573         3,481         2,803 
Net income (loss)...........................................      2,893         678        (1,619)       (1,862)

                                                        [Enlarge/Download Table]

                                                                                QUARTER ENDED                   
                                                             ---------------------------------------------------
                                                              MARCH 31,   JUNE 30,   SEPTEMBER 30,  DECEMBER 31,
                                                                1995        1995         1995           1995    
                                                             -----------  ---------  -------------  ------------
                                                                                                                
Total revenue...............................................  $  40,413   $  39,252   $    43,606    $   40,619 
Operating (loss) income.....................................       (698)        768           341        (8,360)
Net loss....................................................     (2,240)     (1,813)         (916)       (7,392)

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(15) QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)                           
    In the fourth quarter of 1995, the Company incurred operating and net losses
principally  as  a result  of expenses  incurred related  to development  of the
EchoStar DBS  System and  lower  sales volumes  at  reduced gross  margins.  The
Company  also  increased  reserves  related  to  inventory  and  trade  accounts
receivable in the fourth quarter of 1995.                                       

(16) PARENT ONLY FINANCIAL INFORMATION                                          
    The following  financial  information  reflects the  condensed  parent  only
balance  sheets, statements  of income  and cash  flows for  ECC, reflecting the
assumed consummation of the Exchange and Merger retroactive to January 1,  1993.
The   Exchange  and  Merger  described  in  Note   1  was  accounted  for  as  a
reorganization of entities under common control.                                

                                                        [Enlarge/Download Table]

                                                                                   YEAR ENDED DECEMBER 31,      
                                                                               -------------------------------- 
                                                                                 1993       1994        1995    
                                                                               ---------  ---------  ---------- 
                                                                               (IN THOUSANDS, EXCEPT SHARES AND 
                                                                                       PER SHARE DATA)          
                                                                                                                
Income Statement Data --                                                                                        
  Equity in earnings (losses) of subsidiaries................................. $  20,118  $      90  $  (12,361)
  Other income................................................................    --         --           1,321 
                                                                               ---------  ---------  ---------- 
  Net income (loss) before income taxes.......................................    20,118         90     (11,040)
  Provision for income taxes..................................................    --         --            (446)
                                                                               ---------  ---------  ---------- 
    Net income (loss)......................................................... $  20,118  $      90  $  (11,486)
                                                                               ---------  ---------  ---------- 
                                                                               ---------  ---------  ---------- 
Loss Attributable to Common Shares............................................            $    (848) $  (12,691)
                                                                                          ---------  ---------- 
                                                                                          ---------  ---------- 
Weighted Average Common Shares Outstanding....................................               32,442      35,562 
                                                                                          ---------  ---------- 
                                                                                          ---------  ---------- 
Loss Per Common and Common Equivalent Share...................................            $   (0.03) $    (0.36)
                                                                                          ---------  ---------- 
                                                                                          ---------  ---------- 
Pro Forma (Unaudited) Net Income and Earnings Per Common Share (Note 7)                                         
  Historical net income before income taxes................................... $  20,118                        
    Pro forma income tax effects..............................................    (7,846)                       
                                                                               ---------                        
    Pro forma net income...................................................... $  12,272                        
                                                                               ---------                        
                                                                               ---------                        
    Pro forma common shares outstanding.......................................    32,221                        
                                                                               ---------                        
                                                                               ---------                        
    Pro forma earnings per common share....................................... $    0.38                        
                                                                               ---------                        
                                                                               ---------                        

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(16) PARENT ONLY FINANCIAL INFORMATION (CONTINUED)                              

                                                        [Enlarge/Download Table]

                                                                                         DECEMBER 31,       
                                                                                   ------------------------ 
                                                                                      1994         1995     
                                                                                   -----------  ----------- 
                                                                                        (IN THOUSANDS)      
                                                                                                            
Balance Sheet Data --                                                                                       
Current assets:                                                                                             
  Cash and cash equivalents....................................................... $   --       $     7,802 
  Marketable investment securities................................................     --            15,460 
  Advances to affiliates..........................................................     --            19,545 
  Other current assets............................................................     --               191 
                                                                                   -----------  ----------- 
    Total current assets..........................................................     --            42,998 
                                                                                   -----------  ----------- 
Investments in subsidiaries:                                                                                
  Restricted (Note 12)............................................................     103,577       92,613 
  Unrestricted....................................................................         231          280 
                                                                                   -----------  ----------- 
                                                                                       103,808       92,893 
Other non current assets..........................................................     --            21,111 
                                                                                   -----------  ----------- 
    Total assets.................................................................. $   103,808  $   157,002 
                                                                                   -----------  ----------- 
                                                                                   -----------  ----------- 
Current liabilities............................................................... $   --       $       316 

Stockholders' Equity:                                                                                       
  Preferred Stock, 20,000,000 shares authorized, 1,616,681 shares of Series A                               
   Cumulative Preferred Stock issued and outstanding, including accrued dividends                           
   of $938,000 and $2,143,000, respectively.......................................      15,990       17,195 
  Class A Common Stock, $.01 par value, 200,000,000 shares authorized, 3,739,400                            
   and 10,535,003 shares issued and outstanding, respectively.....................          38          105 
  Class B Common Stock, $.01 par value, 100,000,000 shares authorized, 29,804,401                           
   shares issued and outstanding..................................................         298          298 
  Class C Common Stock, $.01 par value, 100,000,000 shares authorized, none                                 
   outstanding....................................................................     --           --      
  Common Stock Purchase Warrants..................................................      26,133          714 
  Additional paid-in capital......................................................      62,197      151,674 
  Unrealized holding gain on available-for-sale securities, net...................     --               239 
  Retained earnings (deficit).....................................................        (848)     (13,539)
                                                                                   -----------  ----------- 
    Total stockholders' equity....................................................     103,808      156,686 
                                                                                   -----------  ----------- 
    Total liabilities and stockholders' equity.................................... $   103,808  $   157,002 
                                                                                   -----------  ----------- 
                                                                                   -----------  ----------- 

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(16) PARENT ONLY FINANCIAL INFORMATION (CONTINUED)                              

                                                        [Enlarge/Download Table]

                                                                                    YEAR ENDED DECEMBER 31,      
                                                                                -------------------------------- 
                                                                                  1993       1994        1995    
                                                                                ---------  ---------  ---------- 
                                                                                                                 
Cash Flows Data --                                                                                               
  Cash flows from operating activities:                                                                          
    Net income (loss).......................................................... $  20,118  $      90  $  (11,486)
    Adjustments -                                                                                                
      Equity in (earnings) losses of subsidiaries..............................   (20,118)       (90)     12,361 
      Changes in -                                                                                               
        Other current assets...................................................    --         --            (191)
        Current liabilities....................................................    --         --             316 
                                                                                ---------  ---------  ---------- 
          Net cash flows from operating activities.............................    --         --           1,000 
                                                                                ---------  ---------  ---------- 
  Cash flows from investing activities:                                                                          
    Advances to affiliates.....................................................    --         --         (19,545)
    Purchases of marketable investment securities, net.........................    --         --         (15,475)
    Increase in noncurrent assets..............................................    --         --         (21,111)
                                                                                ---------  ---------  ---------- 
          Net cash flows from investing activities.............................    --         --         (56,131)
                                                                                ---------  ---------  ---------- 
  Cash flows from financing activities:                                                                          
    Net proceeds from issuance of Class A Common Stock.........................    --         --          62,933 
                                                                                ---------  ---------  ---------- 
  NET INCREASE IN CASH AND CASH EQUIVALENTS....................................    --         --           7,802 
  CASH AND CASH EQUIVALENTS, beginning of period...............................    --         --          --     
                                                                                ---------  ---------  ---------- 
  CASH AND CASH EQUIVALENTS, end of period..................................... $  --      $  --      $    7,802 
                                                                                ---------  ---------  ---------- 
                                                                                ---------  ---------  ---------- 

EARNINGS PER SHARE                                                              

    Earnings per share has been calculated based on the weighted average  number
of  shares of ECC common  stock issued and outstanding  and, if dilutive, common
stock equivalents (warrants and employee  stock options) during the years  ended
December  31, 1994  and 1995  and net  income has  been adjusted  for cumulative
dividends on the 8% Series A Cumulative Preferred Stock (the "Series A Preferred
Stock"). Earnings  per share  for the  year  ended December  31, 1993  has  been
calculated  and presented on a pro forma basis as if the shares issued to effect
the December  31, 1993  reorganization  (Note 1)  were outstanding  during  each
period.                                                                         

ECC COMMON STOCK                                                                

    The Class A, Class B and Class C Common Stock are equivalent in all respects
except  voting rights. Holders of Class A  and Class C Common Stock are entitled
to one vote per share  and holders of Class B  Common Stock are entitled to  ten
votes  per share. Each share of Class B and Class C Common Stock is convertible,
at the option  of the holder,  into one share  of Class A  Common Stock. Upon  a
change  in control of ECC,  each holder of outstanding  shares of Class C Common
Stock is entitled to ten  votes for each share of  Class C Common Stock held  by
the  holder. ECC's  principal stockholder  owns all  outstanding Class  B Common
Stock and all other stockholders own Class A Common Stock.                      

ECC SERIES A PREFERRED STOCK                                                    

    On May 6,  1994, the  Company exchanged  1,616,681 shares  of its  Preferred
Stock  with its principal stockholder in consideration for the cancellation of a
note, plus  accrued and  unpaid interest  thereon. Approximately  5%, or  80,834
shares, of the Preferred Stock were subsequently sold to another stockholder and
officer  of  the  Company. The  principal  stockholder  has pledged  all  of his
Preferred Stock  to  Martin  Marietta  as  collateral  security  for  contractor
financing (Note 6).                                                             

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(16) PARENT ONLY FINANCIAL INFORMATION (CONTINUED)                              
    Each  share of  the Preferred  Stock is  convertible, at  the option  of the
holder, into one share of Class A Common Stock, subject to adjustment from  time
to  time upon the  occurrence of certain events,  including, among other things:
(i) dividends or distributions on Class A Common Stock payable in Class A Common
Stock or certain other capital stock; (ii) subdivisions, combinations or certain
reclassifications of Class A Common Stock; and (iii) issuances of Class A Common
Stock or rights, warrants or options to purchase Class A Common Stock at a price
per share less than the  liquidation preference per share.  In the event of  the
liquidation,  dissolution or  winding up of  EchoStar, the  holders of Preferred
Stock would be entitled to receive  an amount equal to approximately $10.64  per
share as of December 31, 1995.                                                  

    The  aggregate liquidation preference for all outstanding shares of Series A
Preferred Stock is limited to the principal amount represented by the note, plus
accrued and unpaid dividends thereon. Each share of Series A Preferred Stock  is
entitled  to receive dividends equal  to eight percent per  annum of the initial
liquidation preference for such  share. Each share of  Series A Preferred  Stock
automatically converts into shares of Class A Common Stock in the event they are
transferred  to  any  person other  than  certain permitted  transferees  and is
entitled to the equivalent of ten votes  for each share of Class A Common  Stock
into  which it is convertible.  Except as otherwise required  by law, holders of
Series A Preferred Stock vote together with  the holders of Class A and Class  B
Common Stock as a single class. Cumulative but unpaid dividends totaled $938,000
and  approximately $2.1  million at  December 31,  1994 and  1995, respectively,
including amounts which remain the obligation of Dish, Ltd. (Note 9).           

WARRANTS                                                                        

    The Warrants issued  in connection with  the Notes Offering  were valued  at
$26.1  million. The 1994  Notes and the  Warrants became separately transferable
and exercisable effective December 1, 1994.                                     

    Each Warrant  entitles  the  registered holder  thereof,  at  such  holder's
option,  to purchase from  ECC one share of  Class A Common  Stock at a purchase
price of $0.01 per share (the "Exercise Price"). The Exercise Price with respect
to all of the Warrants was paid in advance and, therefore, no additional amounts
are payable upon exercise of the Warrants.                                      

    Effective with  the Merger  (Note  1), or  subsequently, all  Warrants  were
exercised  and 2,808,000  Shares (as adjusted  for the Exchange  Ratio) of ECC's
Class A Common Stock were issued.                                               

SUBSEQUENT EVENTS                                                               

    In March  1996, ECC  announced  that its  wholly owned  subsidiary  EchoStar
Satellite  Broadcasting Corporation  ("ESB"), is considering  a private offering
(the "Offering")  pursuant to  Rule 144A  under the  Securities Act  of 1933  of
Senior  Secured Discount Notes due 2004 (the "Senior Secured Notes") expected to
provide net proceeds to  ESB of $250.0  million. ESB was  formed on January  24,
1996,  for  the  purpose  of  the  Offering.  ECC  will  contribute  all  of the
outstanding capital stock of its wholly owned subsidiary, Dish, Ltd., to ESB.   

    EchoStar DBS Corporation ("EDC")  was formed under  Colorado law in  January
1996  for  purposes  of  participating in  a  Federal  Communications Commission
auction ("FCC Auction")  held on January  24 through January  26, 1996. EDC  was
required  to post a $10.0 million deposit  to participate in the FCC Auction for
28 DBS frequencies at 110 DEG. WL and post a $2.0 million deposit to participate
in the FCC Auction for 24 DBS frequencies at 148 DEG. WL. EDC is a wholly  owned
subsidiary of ECC.                                                              

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DISH, LTD. AND AFFILIATES AND SUBSIDIARIES

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

(16) PARENT ONLY FINANCIAL INFORMATION (CONTINUED)                              
    On  January 26, 1996, EDC submitted the winning bid of $52.3 million dollars
for 24 DBS frequencies at 148 DEG. WL. Previous deposits made with the FCC  were
applied  to satisfy the 20%  down payment. The balance of  the bid price must be
remitted to the FCC upon grant of the construction permit, which could occur  as
early as April 1996.                                                            

    Funds  necessary to pay the balance of the purchase price are expected to be
provided by ECC from the proceeds of the Senior Secured Notes.                  

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To EchoStar Communications Corporation:                                         

    We  have audited  the accompanying  consolidated balance  sheets of EchoStar
Communications  Corporation   (a   Nevada  corporation)   and   affiliates   and
subsidiaries,  as described in Note 1, as of December 31, 1994 and 1995, and the
related combined and consolidated statements of income, stockholders' equity and
cash flows for each of  the three years in the  period ended December 31,  1995.
These  financial statements are the responsibility of the Companies' management.
Our responsibility is to express an opinion on these financial statements  based
on our audits.                                                                  

    We  conducted  our audits  in  accordance with  generally  accepted auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well as evaluating the overall financial statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.          

    In  our opinion, the financial statements  referred to above present fairly,
in all material respects, the  consolidated financial position of the  Companies
as  of December 31, 1994 and 1995,  and the combined and consolidated results of
their operations and their cash flows for each of the three years in the  period
ended  December  31,  1995,  in conformity  with  generally  accepted accounting
principles.                                                                     

                       ARTHUR ANDERSEN LLP

Denver, Colorado,                                                               
February 23, 1996.                                                              

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS 

DECEMBER 31, 1994, AND 1995 

(IN THOUSANDS)

ASSETS

                                                        [Enlarge/Download Table]

                                                                                                1994        1995    
                                                                                             ----------  ---------- 
                                                                                                                    
CURRENT ASSETS:                                                                                                     
  Cash and cash equivalents................................................................. $   17,506  $   21,754 
  Marketable investment securities..........................................................     31,038      15,670 
  Trade accounts receivable, net............................................................      8,097       9,179 
  Inventories...............................................................................     20,327      38,769 
  Income tax receivable.....................................................................     --           3,554 
  Deferred tax assets.......................................................................      1,840       1,779 
  Other current assets......................................................................      2,573      13,037 
                                                                                             ----------  ---------- 
      Total current assets..................................................................     81,381     103,742 
RESTRICTED CASH AND MARKETABLE SECURITIES:                                                                          
  Escrow....................................................................................    185,431      73,291 
  Other.....................................................................................     11,400      26,400 
PROPERTY AND EQUIPMENT, net.................................................................    151,240     354,000 
OTHER NONCURRENT ASSETS.....................................................................     43,040      65,658 
                                                                                             ----------  ---------- 
      Total assets.......................................................................... $  472,492  $  623,091 
                                                                                             ----------  ---------- 
                                                                                             ----------  ---------- 

                                        LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                                                                
  Trade accounts payable.................................................................... $   14,895  $   19,063 
  Deferred programming revenue..............................................................      6,572       5,563 
  Accrued expenses and other current liabilities............................................      6,965      21,335 
  Notes payable and current portion of long-term debt.......................................        238       4,782 
                                                                                             ----------  ---------- 
      Total current liabilities.............................................................     28,670      50,743 
1994 NOTES, net.............................................................................    334,206     382,218 
LONG-TERM MORTGAGE DEBT AND NOTE PAYABLE, excluding current portion.........................      5,393      33,444 
OTHER LONG-TERM LIABILITIES.................................................................        415      --     
                                                                                             ----------  ---------- 
      Total liabilities.....................................................................    368,684     466,405 
                                                                                             ----------  ---------- 
COMMITMENTS AND CONTINGENCIES (Notes 1 and 11)                                                                      

STOCKHOLDERS' EQUITY:                                                                                               
  Preferred Stock, 20,000,000 shares authorized, 1,616,681 shares of Series A Cumulative                            
   Preferred Stock issued and outstanding, including accrued dividends of $938,000 and                              
   $2,143,000, respectively.................................................................     15,990      17,195 
  Class A Common Stock, $.01 par value, 200,000,000 shares authorized, 3,739,400 and                                
   10,535,003 shares issued and outstanding, respectively...................................         38         105 
  Class B Common Stock, $.01 par value, 100,000,000 shares authorized, 29,804,401 shares                            
   issued and outstanding...................................................................        298         298 
  Common Stock Purchase Warrants............................................................     26,133         714 
  Class C Common Stock, 100,000,000 shares authorized, none outstanding.....................     --          --     
  Additional paid-in capital................................................................     62,197     151,674 
  Unrealized holding gains on available-for-sale securities, net of deferred taxes..........     --             239 
  Retained earnings (deficit)...............................................................       (848)    (13,539)
                                                                                             ----------  ---------- 
      Total stockholders' equity............................................................    103,808     156,686 
                                                                                             ----------  ---------- 
      Total liabilities and stockholders' equity............................................ $  472,492  $  623,091 
                                                                                             ----------  ---------- 
                                                                                             ----------  ---------- 

The accompanying notes to combined and consolidated financial 
statements are an integral part of these balance sheets.

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

COMBINED AND CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                               1993         1994         1995     
                                                                            -----------  -----------  ----------- 
                                                                                                                  
REVENUE:                                                                                                          
  DTH products and technical services...................................... $   206,311  $   172,753  $   146,852 
  Programming..............................................................      10,770       14,540       15,096 
  Loan origination and participation income................................       3,860        3,690        1,942 
                                                                            -----------  -----------  ----------- 
      Total revenue........................................................     220,941      190,983      163,890 
                                                                            -----------  -----------  ----------- 
EXPENSES:                                                                                                         
  DTH products and technical services......................................     161,447      133,635      120,178 
  Programming..............................................................       9,378       11,670       13,610 
  Selling, general and administrative......................................      30,235       30,219       35,015 
  Depreciation.............................................................       1,677        2,243        3,058 
                                                                            -----------  -----------  ----------- 
      Total expenses.......................................................     202,737      177,767      171,861 
                                                                            -----------  -----------  ----------- 
OPERATING INCOME (LOSS)....................................................      18,204       13,216       (7,971)
                                                                            -----------  -----------  ----------- 
OTHER INCOME (EXPENSE):                                                                                           
  Interest income..........................................................       1,173        8,420       14,059 
  Interest expense, net of amounts capitalized.............................        (632)     (21,408)     (23,985)
  Losses on investments in joint ventures..................................         (50)        (492)     --      
  Minority interest in loss of consolidated joint venture and other........          39          753          666 
                                                                            -----------  -----------  ----------- 
      Total other income (expense).........................................         530      (12,727)      (9,260)
                                                                            -----------  -----------  ----------- 
NET INCOME (LOSS) BEFORE INCOME TAXES......................................      18,734          489      (17,231)
BENEFIT (PROVISION) FOR INCOME TAXES.......................................       1,384         (399)       5,745 
                                                                            -----------  -----------  ----------- 
NET INCOME (LOSS).......................................................... $    20,118  $        90  $   (11,486)
                                                                            -----------  -----------  ----------- 
                                                                            -----------  -----------  ----------- 
NET LOSS ATTRIBUTABLE TO COMMON SHARES.....................................              $      (848) $   (12,691)
                                                                                         -----------  ----------- 
                                                                                         -----------  ----------- 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING.................................                   32,442       35,562 
                                                                                         -----------  ----------- 
                                                                                         -----------  ----------- 
LOSS PER COMMON AND COMMON EQUIVALENT SHARE................................              $     (0.03) $     (0.36)
                                                                                         -----------  ----------- 
                                                                                         -----------  ----------- 
PRO FORMA (UNAUDITED) NET INCOME (Note 7)                                                                         
  Historical net income before income taxes................................ $    18,734                           
  Historical (provision) benefit for income taxes..........................       1,384                           
  Pro forma income tax effects.............................................      (7,846)                          
                                                                            -----------                           
  Pro forma net income..................................................... $    12,272                           
                                                                            -----------                           
                                                                            -----------                           
  Pro forma common shares outstanding......................................      32,221                           
                                                                            -----------                           
                                                                            -----------                           
  Pro forma earnings per common share...................................... $      0.38                           
                                                                            -----------                           
                                                                            -----------                           

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

COMBINED AND CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                     COMMON STOCK                              
                                                                                          OF                                   
                                                                                     SUBSIDIARIES    RETAINED                  
                                                                            COMMON       AND         EARNINGS                  
                                          SHARES OF                         STOCK     ADDITIONAL   (DEFICIT) AND      TOTAL    
                                        COMMON STOCK    PREFERRED  COMMON  PURCHASE    PAID-IN      UNREALIZED    STOCKHOLDERS'
                                         OUTSTANDING      STOCK    STOCK   WARRANTS    CAPITAL     HOLDING GAINS     EQUITY    
                                       ---------------  ---------  ------  --------  ------------  -------------  -------------
                                       (NOTES 1 AND 9)                                                                         
                                                                                                                               
BALANCES, at December 31, 1992.......                                                  $  6,881      $ 45,447       $ 52,328   
  Cash contributions to capital......                                                     2,497                        2,497   
  Dividends declared.................                                                                 (25,243)       (25,243)  
  Net income.........................                                                                  20,118         20,118   
  Reorganization effective December                                                                                            
   31, 1993 --                                                                                                                 
    Class A Common Stock.............        2,417                 $  24                    (24)                      --       
    Class B Common Stock.............       29,804                   298                   (298)                      --       
  Termination of Subchapter S Status                                                                                           
   of subsidiaries...................                                                    40,322       (40,322)        --       
                                       ---------------  ---------  ------  --------  ------------  -------------  -------------
BALANCES, at December 31, 1993.......       32,221         --        322     --          49,378        --             49,700   
  Issuance of Class A Common Stock:                                                                                            
    For acquisition of DirectSat,                                                                                              
     Inc.............................          999                    11                  8,989                        9,000   
    For cash.........................          324                     3                  3,830                        3,833   
  Issuance of 1,616,681 shares of 8%                                                                                           
   Series A Cumulative Preferred                                                                                               
   Stock.............................                    $15,052                                                      15,052   
  Issuance of Common Stock Purchase                                                                                            
   Warrants..........................                                      $26,133                                    26,133   
  Series A Cumulative Preferred Stock                                                                                          
   dividends.........................                        938                                         (938)        --       
  Net income.........................                                                                      90             90   
                                       ---------------  ---------  ------  --------  ------------  -------------  -------------
BALANCES, at December 31, 1994.......       33,544        15,990     336    26,133       62,197          (848)       103,808   
  Series A Cumulative Preferred Stock                                                                                          
   dividends.........................                      1,205                                       (1,205)        --       
  Issuance of Class A Common Stock...        4,004                    40                 62,893                       62,933   
  Common Stock Purchase Warrants                                                                                               
   exercised.........................        2,731                    26   (25,419 )     25,393                       --       
  Employee Savings Plan Contribution                                                                                           
   and Launch Bonuses Funded by                                                                                                
   Issuance of Class A Common                                                                                                  
   Stock.............................           60                     1                  1,191                        1,192   
  Unrealized holding gains on                                                                                                  
   available-for-sale securities,                                                                                              
   net...............................                                                                     239            239   
  Net loss...........................                                                                 (11,486)       (11,486)  
                                       ---------------  ---------  ------  --------  ------------  -------------  -------------
BALANCES, at December 31, 1995.......       40,339       $17,195   $ 403   $   714     $151,674      $(13,300)      $156,686   
                                       ---------------  ---------  ------  --------  ------------  -------------  -------------
                                       ---------------  ---------  ------  --------  ------------  -------------  -------------

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                   1993       1994       1995    
                                                                                 ---------  ---------  --------- 
                                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                            
  Net income (loss)............................................................. $  20,118  $      90  $ (11,486)
  Adjustments to reconcile net income (loss) to net cash flows from operating                                    
   activities --                                                                                                 
    Depreciation................................................................     1,677      2,243      3,058 
    Provision for doubtful accounts.............................................       254       (160)       920 
    Benefit for deferred taxes..................................................    (1,941)    (7,330)    (4,763)
    Amortization of deferred debt issuance costs................................    --            719      1,279 
    Amortization of discount on 1994 Notes, net of amounts capitalized..........    --         19,943     22,249 
    Equity in losses in joint ventures..........................................    --            492         99 
    Employee benefits funded with Class A Common Stock..........................    --         --          1,192 
    Loss on dispositions of fixed assets........................................    --            133     --     
    Change in reserve for excess and obsolete inventory.........................       (22)       502      1,212 
    Other, net..................................................................       (30)      (941)      (528)
    Changes in working capital items --                                                                          
      Trade accounts receivable.................................................    (3,439)       532     (2,002)
      Inventories...............................................................    14,919      3,049    (19,654)
      Income tax receivable.....................................................    --         --         (3,554)
      Other current assets......................................................    (1,659)      (183)   (10,464)
      Liability under cash management program...................................    (4,018)    (2,310)       (57)
      Trade accounts payable....................................................     1,156      4,958      4,168 
      Deferred programming revenue..............................................     1,795        564     (1,009)
      Accrued expenses..........................................................     1,637        611     (1,232)
      Reserve for warranty costs................................................      (250)        50       (387)
      Other current liabilities.................................................        18      1,009        631 
      Other, net................................................................    --            234     --     
                                                                                 ---------  ---------  --------- 
        Net cash flows from operating activities................................    30,215     24,205    (20,328)
                                                                                 ---------  ---------  --------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                            
  Purchases of marketable investment securities.................................   (18,227)   (15,100)   (25,230)
  Sales of marketable investment securities.....................................    16,132      4,439     40,563 
  Purchases of restricted marketable investment securities......................    --        (11,400)   (15,000)
  Purchases of property and equipment...........................................   (19,225)    (4,030)    (4,077)
  Proceeds from sale of property and equipment..................................       383        523         29 
  Offering proceeds and investment earnings placed in escrow....................    --       (329,831)    (9,589)
  Funds released from escrow account............................................    --        144,400    122,149 
  Accrued satellite contract cost...............................................    --         (3,700)    --     
  Investment in SSET............................................................    --         (8,750)    --     
  Investment in DBSC............................................................    --         (4,210)    --     
  Investment in DBSI............................................................    --         --         (1,000)
  Long-term note receivable from DBSC...........................................    --         --        (16,000)
  Investments in joint ventures.................................................       (65)     1,614     --     
  Expenditures for satellite system under construction..........................    --       (112,052)  (129,506)
  Expenditures from escrow for FCC authorization................................    --           (159)    --     
  Expenditures for FCC authorizations...........................................    --         --           (458)
  Other.........................................................................        92       (309)    --     
                                                                                 ---------  ---------  --------- 
        Net cash flows from investing activities................................   (20,910)  (338,565)   (38,119)
                                                                                 ---------  ---------  --------- 

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                  1993        1994        1995    
                                                                               ----------  -----------  --------- 
                                                                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                             
  Short-term loans from banks................................................  $    6,000  $   --       $  --     
  Repayments of short-term loans from banks..................................      (7,256)     --          --     
  Minority investor investment in and loan to consolidated joint venture.....       2,504        1,000     --     
  Net proceeds from issuance of 1994 Notes and Common Stock Purchase                                              
   Warrants..................................................................      --          323,325     --     
  Expenditures from escrow for offering costs................................      --             (837)    --     
  Proceeds from refinancing of mortgage indebtedness.........................      --            4,200     --     
  Repayments of mortgage indebtedness........................................        (152)      (3,435)      (238)
  Loans from stockholder, net................................................      12,451        4,000     --     
  Repayment of loans from stockholders.......................................      --           (4,075)    --     
  Net proceeds from issuance of Class A Common Stock.........................      --            3,833     62,933 
  Capital contributions......................................................       2,497      --          --     
  Dividends paid.............................................................     (22,243)      (3,000)    --     
                                                                               ----------  -----------  --------- 
    Net cash flows from financing activities.................................      (6,199)     325,011     62,695 
                                                                               ----------  -----------  --------- 
NET INCREASE IN CASH AND CASH EQUIVALENTS....................................       3,106       10,651      4,248 
CASH AND CASH EQUIVALENTS, beginning of period...............................       3,749        6,855     17,506 
                                                                               ----------  -----------  --------- 
CASH AND CASH EQUIVALENTS, end of period.....................................  $    6,855  $    17,506  $  21,754 
                                                                               ----------  -----------  --------- 
                                                                               ----------  -----------  --------- 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                
  Cash paid for interest, net of amounts capitalized.........................  $      633  $       436  $     461 
  Cash paid for income taxes.................................................         251        7,140      3,203 
  Cumulative Series A Preferred Stock dividends..............................      --              938      1,205 
  Dividends declared but not paid until 1994.................................       3,000      --          --     
  Accrued satellite contract costs...........................................       3,700      --          15,000 
  Exchange of note payable to stockholder, and interest thereon, for Series A                                     
   Preferred Stock...........................................................      --           15,052     --     
  Issuance of Class A Common Stock to acquire investment in DirectSat                                             
   Corporation...............................................................      --            9,000     --     
  Property and equipment acquired under capital leases.......................      --              934     --     
  Note payable issued for deferred satellite construction payments...........      --          --          32,833 
  Employee Savings Plan Contribution and launch bonuses funded by issuance of                                     
   Class A Common Stock......................................................      --          --           1,192 

The accompanying notes to combined and consolidated financial 
statements are an integral part of these statements.

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 1993, 1994 AND 1995

(1) ORGANIZATION AND BUSINESS ACTIVITIES                                        
    Certain companies principally owned and controlled by Mr. Charles Ergen were
reorganized  in 1993 into Dish, Ltd.,  formerly known as EchoStar Communications
Corporation (together with its subsidiaries, "Dish, Ltd.").                     

    The principal reorganized entities, Echosphere Corporation (formed in  1980)
and  Houston Tracker Systems, Inc. (acquired  in 1986), are primarily engaged in
the design, assembly,  marketing and  worldwide distribution of  direct to  home
("DTH")  satellite  television products.  Satellite  Source, Inc.  contracts for
rights to  purchase satellite  delivered television  programming for  resale  to
consumers  and other DTH retailers. Echo Acceptance Corporation ("EAC") arranges
nationwide consumer financing for purchasers of DTH systems and programming. The
FCC has granted EchoStar Satellite  Corporation ("ESC") a conditional  satellite
construction   permit   and  frequency   assignments  for   eleven  odd-numbered
frequencies at  119  DEG. West  Longitude  ("WL"). The  reorganized  group  also
includes  other  less  significant  domestic  enterprises  and  several  foreign
entities involved in related activities outside the United States.              

    In January 1994, Dish, Ltd. announced its intention to merge a subsidiary of
Dish, Ltd. with DirectSat Corporation ("DirectSat"), an approximately 80%  owned
subsidiary  of SSE Telecom, Inc. ("SSET") at  that time. The merger was approved
by the FCC and consummated in December 1994. DirectSat stockholders received  an
approximate  3% equity interest in Dish, Ltd. in exchange for all of DirectSat's
outstanding stock.  DirectSat's principal  assets  are a  conditional  satellite
construction  permit and frequency assignments for ten even-numbered frequencies
at 119 DEG. WL granted by the FCC.                                              

    Dish, Ltd. has contracted for the construction and launch of  communications
satellites.  EchoStar I, a high powered  direct broadcast satellite ("DBS"), was
launched on December 28, 1995. EchoStar  II is currently under construction  and
scheduled for launch during 1996.                                               

    In  June 1994, Dish,  Ltd. completed an  offering of 12  7/8% Senior Secured
Discount Notes due 2004  (the "1994 Notes") (Note  5) and Common Stock  Purchase
Warrants  (the "Warrants")  (collectively, the "Notes  Offering"), receiving net
proceeds of approximately $323.3  million. Dish, Ltd.  and its subsidiaries  are
subject  to the terms and conditions of  the Indenture related to the 1994 Notes
(the "1994 Indenture").                                                         

EXCHANGE AND MERGER                                                             

    In April 1995, a new company, EchoStar Communications Corporation (same name
as the original name of Dish, Ltd.), was formed to conduct a public offering  of
its  Class A Common  Stock and to become  the parent of  Dish, Ltd. as described
below. The  new  company  is  described  below  as  "ECC".  Elsewhere  in  these
footnotes, unless otherwise indicated, "EchoStar" or the "Company" refers to ECC
and  its subsidiaries, including  Dish, Ltd. The  assets of ECC,  other than its
investment in Dish, Ltd., are not subject to the 1994 Indenture. Separate parent
only financial  information  for ECC  is  supplementally provided  in  Note  16.
Further,  the 1994 Indenture  places significant restrictions  on the payment of
dividends or other transfers by Dish, Ltd. to ECC.                              

    ECC completed an offering of its Class A Common Stock on June 26, 1995,  and
received  net proceeds of approximately  $63.0 million. Concurrently, Charles W.
Ergen, President  and  Chief Executive  Officer  of  both ECC  and  Dish,  Ltd.,
exchanged all of his shares of Class B Common Stock and Series A Preferred Stock
of  Dish, Ltd.  for like  shares of ECC  (the "Exchange")  in the  ratio of 0.75
shares of ECC for each share of Dish, Ltd. capital stock (the "Exchange Ratio").
All employee stock options of Dish, Ltd. were also assumed by ECC, adjusted  for
the Exchange Ratio. In December 1995,                                           

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(1) ORGANIZATION AND BUSINESS ACTIVITIES (CONTINUED)                            
ECC  merged Dish, Ltd. with a wholly  owned subsidiary of ECC (the "Merger") and
all outstanding shares of Dish, Ltd. Class A Common Stock and Series A Preferred
Stock (other than those held by ECC) were automatically converted into the right
to receive  like shares  of ECC  in  accordance with  the Exchange  Ratio.  Also
effective  with the Merger,  all outstanding Warrants for  the purchase of Dish,
Ltd. Class A Common Stock automatically  became exercisable for shares of  ECC's
Class  A Common  Stock, adjusted for  the Exchange  Ratio. As the  result of the
Exchange and  Merger, ECC  owns all  outstanding shares  of Dish,  Ltd.  capital
stock.                                                                          

SIGNIFICANT RISKS AND UNCERTAINTIES                                             

    Execution  of its business strategy to launch and operate DBS satellites has
dramatically changed the Company's operating results and financial position.  At
December  31, 1993, Dish, Ltd.'s long-term debt, exclusive of amounts related to
its DBS projects, consisted of less  than $5.0 million in mortgage  indebtedness
and  its  investments  in  property  and  equipment,  other  than  DBS satellite
payments, aggregated less than $20.0 million. At December 31, 1995, the  Company
is  committed to expend approximately $450 million to build and launch its first
two satellites and has  completed the sale  of the 1994  Notes for that  purpose
(Notes  5 and 11). Annual interest expense on the 1994 Notes and depreciation of
the investment in  the first two  satellites will  each be of  a magnitude  that
exceeds  historical levels of  income before taxes and  the Company has reported
net losses  beginning  in  1995 and  expects  net  losses to  continue  for  the
foreseeable future. The Company's plans also include the construction and launch
of  additional satellites and marketing programs to promote its DBS products and
services. The Company will need to raise significant additional funds for  those
purposes  and there can be  no assurance that necessary  funds will be available
or, if  available,  available  on  terms  favorable  to  the  Company.  However,
management  believes, but has no assurance, that demand for its DBS products and
services will develop  to provide cash  flow from operation  of EchoStar's  Dish
Network-SM- which, together with other sources of capital, will be sufficient to
satisfy future planned expenditures. Significant delays in commencing operations
of  the EchoStar DBS  System, or significant  delays or mission  failures in the
Company's satellite  launch  program, may  subject  the Company  to  significant
monetary  penalties  and  would  have significant  adverse  consequences  to its
operating results and financial condition.                                      

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles requires  the use  of management  estimates and
assumptions that  affect the  reported  amounts of  assets and  liabilities  and
disclosure  of contingent  assets and liabilities  at the date  of the financial
statements and the reported amounts of revenues and expenses for each  reporting
period. Actual results could differ from those estimates.                       

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

PRINCIPLES OF COMBINATION AND CONSOLIDATION                                     

    The  accompanying financial statements for  1993 combine the historical cost
financial statements of all reorganized  entities. The financial statements  for
1994  and  1995 present  the consolidation  of Dish,  Ltd. and  its subsidiaries
through the date of the Exchange (Note  1) and the consolidation of ECC and  its
subsidiaries,  including  Dish, Ltd,  thereafter.  The Exchange  and  Merger was
accounted for  as a  reorganization of  entities under  common control  and  the
historical cost basis of consolidated assets and liabilities was not affected by
the  transaction. All significant intercompany transactions have been eliminated
in the combined and consolidated financial statements.                          

    Effective June 1993, the Company acquired a fifty-one percent joint  venture
interest in FlexTracker Sdn. Bhd. ("FlexTracker"), a Malaysian limited liability
company. A Singapore electronics                                                

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
manufacturing   company   owned  the   forty-nine  percent   minority  interest.
FlexTracker manufactured integrated  and stand-alone  receivers and  positioners
exclusively  for  the  Company. In  December  1994, the  Company  terminated the
FlexTracker joint  venture  and  effectively  sold its  interest  in  the  joint
venture's  net assets to  the Singapore company for  $1.8 million. The Company's
share of  FlexTracker's  losses for  1993  and 1994  amounted  to  approximately
$50,000  and $1.3 million, respectively, and  an additional $492,000 of loss was
recognized upon sale of the net assets. FlexTracker's financial statements  have
been  consolidated  in  the  accompanying  combined  and  consolidated financial
statements from the date of acquisition through the date of disposition.        

    The Company accounts for investments in fifty percent or less owned entities
using the equity method. At December  31, 1994 and 1995, these investments  were
not  material  to  the combined  and  consolidated financial  statements  of the
Company.                                                                        

FOREIGN CURRENCY TRANSACTION GAINS AND LOSSES                                   

    The functional currency of  the Company's foreign  subsidiaries is the  U.S.
dollar  because their sales and purchases  are predominantly denominated in that
currency. Transactions denominated  in currencies  other than  U.S. dollars  are
recorded based on exchange rates at the time such transactions arise. Subsequent
changes  in  exchange rates  result in  transaction gains  and losses  which are
reflected in income as unrealized (based on period end translation) or  realized
(upon  settlement of the transaction). Net  transaction gains (losses) for 1993,
1994 and 1995 were $19,000, $40,000 and $70,000 respectively.                   

CASH AND CASH EQUIVALENTS                                                       

    The Company  considers all  liquid investments  purchased with  an  original
maturity  of ninety days or less to  be cash equivalents. Cash equivalents as of
December 31, 1994 and  1995 consist of money  market funds, corporate notes  and
commercial paper stated at cost which equates to market value.                  

MARKETABLE INVESTMENT SECURITIES AND RESTRICTED CASH AND MARKETABLE SECURITIES  

    At  December 31, 1994 marketable investment  securities were recorded in the
financial statements at amortized cost and  were generally held to maturity.  At
December  31,  1995,  the  Company  has  classified  all  marketable  investment
securities as available-for-sale. Accordingly,  these investments are  reflected
at  market value  based on  quoted market  prices. Related  unrealized gains and
losses are reported  as a  separate component  of stockholders'  equity, net  of
related  deferred income  taxes of $146,000  at December 31,  1995. The specific
identification method is used to determine cost in computing realized gains  and
losses.  The major components of marketable investment securities as of December
31, 1994 and 1995 are as follows (in thousands):                                

                                                        [Enlarge/Download Table]

                                                                             DECEMBER 31, 1995         
                                              DECEMBER 31, 1994     -----------------------------------
                                            ----------------------               UNREALIZED            
                                             AMORTIZED    MARKET     AMORTIZED     HOLDING     MARKET  
                                               COST        VALUE       COST      GAIN (LOSS)    VALUE  
                                            -----------  ---------  -----------  -----------  ---------
                                                                                                       
Commercial paper...........................  $  19,976   $  20,233   $   1,126    $  --       $   1,126
Corporate notes............................     10,992      10,987      12,353          (19)     12,334
Municipal bonds............................         70          70      --           --          --    
Government bonds...........................     --          --           2,038       --           2,038
Mutual funds...............................     --          --             188          (16)        172
                                            -----------  ---------  -----------  -----------  ---------
                                             $  31,038   $  31,290   $  15,705    $     (35)  $  15,670
                                            -----------  ---------  -----------  -----------  ---------
                                            -----------  ---------  -----------  -----------  ---------

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
    Restricted Cash  and Marketable  Securities in  Escrow as  reflected on  the
accompanying  balance  sheets represent  net  proceeds received  from  the Notes
Offering, plus interest earned, less amounts expended to date in connection with
the development, construction  and launch  of EchoStar's  Dish Network-SM-.  The
escrow  funds are held by  an escrow agent in  an account (the "Escrow Account")
for the benefit of  the holders of  the 1994 Notes and  are invested in  certain
debt  and other marketable securities, as permitted by the 1994 Indenture, until
disbursed for the express purposes identified in the Notes Offering  prospectus.
The major components of Restricted Cash and Marketable Securities as of December
31, 1994 and 1995 are as follows (in thousands):                                

                                                        [Enlarge/Download Table]

                                                                              DECEMBER 31, 1995         
                                              DECEMBER 31, 1994      -----------------------------------
                                           ------------------------               UNREALIZED            
                                            AMORTIZED     MARKET      AMORTIZED     HOLDING     MARKET  
                                              COST         VALUE        COST         GAIN        VALUE  
                                           -----------  -----------  -----------  -----------  ---------
                                                                                                        
Commercial paper.......................... $    94,315  $    94,909   $  66,214    $  --       $  66,214
Corporate notes...........................       8,954        8,954      --           --          --    
Government bonds..........................     --           --           32,904          420      33,324
Municipal bonds...........................      92,513       93,010      --           --          --    
Accrued interest..........................       1,049        1,049         153       --             153
                                           -----------  -----------  -----------       -----   ---------
                                           $   196,831  $   197,922   $  99,271    $     420   $  99,691
                                           -----------  -----------  -----------       -----   ---------
                                           -----------  -----------  -----------       -----   ---------

    Other  Restricted Cash includes  $11.4 million to  satisfy certain covenants
regarding launch  insurance  required by  the  1994 Indenture.  The  Company  is
required  to  maintain  launch  insurance and  restricted  cash  totaling $225.0
million for each of EchoStar I and EchoStar II. The Company has obtained  $219.3
million  of  launch insurance  on each  satellite, and,  together with  the cash
segregated and reserved on  the accompanying balance  sheets, has satisfied  its
insurance  obligations under the 1994 Indenture. In addition, as of December 31,
1995, $15.0  million  was  in  an  escrow  account  established  pursuant  to  a
manufacturing contract for payment to the manufacturer as certain milestones are
reached.                                                                        

REVENUE RECOGNITION AND TRADE ACCOUNTS RECEIVABLE                               

    Revenue from sales of DTH products is recognized upon shipment to customers.
The  Company maintains a reserve for potential losses in collection of its trade
accounts receivable  based upon  estimates  of amounts  that may  ultimately  be
uncollectible. The allowance for doubtful accounts was $186,000 and $1.1 million
as of December 31, 1994 and 1995, respectively.                                 

INVENTORIES                                                                     

    Inventories  are  stated at  the  lower of  cost  or market  value.  Cost is
determined using the first-in,  first-out ("FIFO") method. Proprietary  products
are  manufactured by outside suppliers to the Company's specifications; however,
final  testing  and  assembly   is  performed  by   the  Company.  The   Company

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
also  distributes non-proprietary  products purchased  from other manufacturers.
Manufactured inventories include  materials, labor  and manufacturing  overhead.
Cost  of  other inventories  includes  parts, contract  manufacturers' delivered
price, assembly and testing labor, and related overhead, including handling  and
storage costs. The major components of inventory were as follows (in thousands):

                                                        [Enlarge/Download Table]

                                                                                   DECEMBER 31,     
                                                                               -------------------- 
                                                                                 1994       1995    
                                                                               ---------  --------- 
                                                                                                    
DBS receiver components....................................................... $  --      $   9,615 
Spare parts...................................................................     2,759      2,089 
Competitor DBS Receivers......................................................     2,207      9,404 
Finished goods................................................................    16,946     20,458 
Reserve for excess and obsolete inventory.....................................    (1,585)    (2,797)
                                                                               ---------  --------- 
                                                                               $  20,327  $  38,769 
                                                                               ---------  --------- 
                                                                               ---------  --------- 

OTHER CURRENT ASSETS                                                            

Other current assets consisted of the following (in thousands):         

                                                        [Enlarge/Download Table]

                                                                                   DECEMBER 31,    
                                                                               --------------------
                                                                                 1994       1995   
                                                                               ---------  ---------
                                                                                                   
DBS inventory deposit......................................................... $  --      $  10,000
Receivables for funded loans..................................................       257        437
Other.........................................................................     2,316      2,600
                                                                               ---------  ---------
                                                                               $   2,573  $  13,037
                                                                               ---------  ---------
                                                                               ---------  ---------

    In  conjunction  with its  commitments to  purchase DBS  satellite receivers
(Note 11),  the Company  has paid  a  deposit of  $10.0 million  to one  of  its
manufacturers.  The deposit will be applied  towards future payments for the DBS
satellite receivers as they are delivered during 1996.                          

    Other current assets include  receivables for consumer  loans funded by  EAC
but  expected to be  reimbursed to EAC  on a nonrecourse  basis by two unrelated
finance companies,  normally  within  two  business days  after  the  credit  is
accepted by those companies. Unreimbursed fundings were $257,000 and $437,000 as
of  December 31,  1994 and  1995, respectively,  all of  which were subsequently
reimbursed. Total loans  sourced by EAC  during 1993, 1994  and 1995 were  $85.6
million, $64.7 million and $50.1 million, respectively. In addition, EAC sourced
$8.6 million of leases in 1995.                                                 

    Loan  origination fees charged to the  applicable DTH dealers are recognized
in income upon receipt of funding reimbursement from the purchaser of the loans.
EAC also  receives  a  percentage  of monthly  finance  charges  billed  by  the
purchaser of the loans which is recognized in income as it becomes due to EAC.  

FCC AUTHORIZATIONS AND ORGANIZATIONAL COSTS                                     

    FCC  authorizations and  organizational costs are  recorded at  cost and are
amortized  using  the  straight-line   method.  Amortization  periods  for   FCC
authorization  costs  are determined  at the  time the  services related  to the
applicable FCC authorization commences, or capitalized costs are written off  at
the  time efforts to provide services are abandoned. FCC authorization costs are
expected to have a useful life  of approximately 12 years. Organizational  costs
are being amortized over five years.                                            

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
DEFERRED DEBT ISSUANCE COSTS AND DEBT DISCOUNT                                  

    Costs  of completing the Notes Offering have  been deferred (Note 4) and are
being  amortized  to  interest  expense  over  the  term  of  the  1994   Notes.
Amortization  of the original issue discount related to the Notes Offering (Note
5) is also  being amortized  and included  in interest  cost incurred  so as  to
reflect a constant rate of interest on the accredited balance of the 1994 Notes.

DEFERRED PROGRAMMING REVENUE                                                    

    Deferred  programming revenue  consists of payments  received from consumers
and dealers for satellite television programming to be provided. The revenue  is
recognized on a straight-line basis over the period the programming is provided,
which generally does not exceed one year.                                       

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                                  

    The  composition of  accrued expenses  and other  current liabilities  is as
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                                    DECEMBER 31,    
                                                                                --------------------
                                                                                  1994       1995   
                                                                                ---------  ---------
                                                                                                    
Accrued satellite contract costs............................................... $  --      $  15,000
Liability under cash management program........................................        57     --    
Accrued expenses...............................................................     4,667      3,850
Reserve for warranty costs.....................................................     1,400      1,013
Other..........................................................................       841      1,472
                                                                                ---------  ---------
                                                                                $   6,965  $  21,335
                                                                                ---------  ---------
                                                                                ---------  ---------

    The liability under  cash management program  represents checks written  and
released  in  excess of  balances presently  on deposit  with certain  banks. As
checks clear these bank accounts, the resulting overdrafts are funded daily from
funds available in a concentration account at another bank.                     

    The Company's proprietary  products are  under warranty  against defects  in
material and workmanship for one year from the date of original retail purchase.
The  reserve for warranty costs is based upon historical units sold and expected
repair costs.                                                                   

ADVERTISING COSTS                                                               

    Advertising costs are expensed  as incurred and  totaled $3.2 million,  $2.3
million  and $1.9 million for the years  ended December 31, 1993, 1994 and 1995,
respectively.                                                                   

RESEARCH AND DEVELOPMENT COSTS                                                  

    Research and  development  costs  are expensed  as  incurred.  Research  and
development  costs totaled $5.1  million, $5.9 million and  $5.0 million for the
years ended December 31, 1993, 1994 and 1995, respectively.                     

INCOME TAXES                                                                    

    Prior to  the  December 31,  1993  reorganization (Note  1),  the  principal
combined entities were Subchapter S corporations and their income was taxable to
the  stockholders  rather than  the companies.  The  provision for  income taxes
reflected only amounts payable to states and foreign tax jurisdictions that  did
not  recognize Subchapter  S status. Effective  December 31,  1993, Subchapter S
status terminated and the Company will prospectively file consolidated corporate
federal and state  income tax  returns. As  required by  Statement of  Financial
Accounting Standards No. 109, "Accounting for                                   

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                      
Income  Taxes" ("SFAS  No. 109"),  this change in  tax status  was recognized by
establishing deferred  tax  assets  and liabilities  for  temporary  differences
between  the tax  basis and  amounts reported  in the  accompanying combined and
consolidated balance sheets (Note 7).                                           

    Under SFAS No. 109, the current provision for income taxes represents actual
or estimated amounts payable or refundable on  tax returns filed or to be  filed
for  each  year.  Deferred  tax  assets and  liabilities  are  recorded  for the
estimated future tax effects of: (a) temporary differences between the tax basis
of assets and liabilities and amounts reported in the combined and  consolidated
balance  sheets,  and (b)  operating  loss and  tax  credit carry  forwards. The
overall change in deferred  tax assets and liabilities  for the period  measures
the  deferred tax expense for the period. Effects of changes in enacted tax laws
on deferred  tax assets  and liabilities  are reflected  as adjustments  to  tax
expense  in the period of enactment. The  measurement of deferred tax assets may
be reduced by a valuation allowance based on judgmental assessment of  available
evidence  if deemed more  likely than not that  some or all  of the deferred tax
assets will not be realized.                                                    

EARNINGS PER SHARE                                                              

    Earnings per share has been calculated based on the weighted average  number
of  shares of common stock issued and outstanding and, if dilutive, common stock
equivalents (warrants  and  employee  stock  options)  during  the  years  ended
December  31, 1994  and 1995;  and net income  has been  adjusted for cumulative
dividends on the 8% Series A Cumulative Preferred Stock (the "Series A Preferred
Stock"). Earnings  per share  for the  year  ended December  31, 1993  has  been
calculated  and presented on a pro forma basis as if the shares issued to effect
the December  31, 1993  reorganization  (Note 1)  were outstanding  during  each
period.                                                                         

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                                       

    The  Financial Accounting Standards  Board ("FASB") has  issued Statement of
Financial Accounting Standards No. 121, "Accounting for Impairment of Long-Lived
Assets and  for Long-Lived  Assets to  Be  Disposed Of"  ("SFAS No.  121").  The
Company  will be  required to adopt  SFAS No. 121  in 1996 and  expects that its
ultimate adoption will not have a significant impact on the Company's  financial
position, results of operations or cash flows.                                  

    Statement  of  Financial  Accounting  Standards  No.  123,  "Accounting  for
Stock-Based Compensation" ("SFAS No. 123"), issued  by the FASB in October  1995
and  effective for fiscal  years beginning after  December 15, 1995, encourages,
but does not require, a fair value based method of accounting for employee stock
options or similar  equity instruments.  It also allows  an entity  to elect  to
continue  to measure compensation cost under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"), but  requires
pro  forma disclosures of net income and earnings per share as if the fair value
based method of accounting had been  applied. The Company expects to adopt  SFAS
No.  123  in  1996. While  the  Company is  still  evaluating SFAS  No.  123, it
currently expects to  elect to measure  compensation cost under  APB No. 25  and
comply  with the  pro forma disclosure  requirements. If the  Company makes this
election, this  statement  will have  no  impact  on the  Company's  results  of
operations.                                                                     

RECLASSIFICATIONS                                                               

    Certain  reclassifications  have been  made  to the  prior  year's financial
statements to conform to the current year's financial statement presentation.   

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(3) PROPERTY AND EQUIPMENT                                                      
    Property and equipment  are stated  at cost  less accumulated  depreciation.
Cost  includes interest capitalized of $370,000,  $5.7 million and $25.8 million
during the years  ended December 31,  1993, 1994 and  1995, respectively on  the
EchoStar  DBS System  during construction  at the  Company's effective borrowing
rate. The  major  components of  property  and  equipment were  as  follows  (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                  ESTIMATED                            
                                                                    USEFUL          DECEMBER 31,       
                                                                   LIFE (IN   ------------------------ 
                                                                    YEARS)       1994         1995     
                                                                  ----------  -----------  ----------- 
                                                                                                       
Construction in progress.........................................     --      $   139,500  $   303,174 
Land.............................................................     --            1,613        1,613 
Buildings and improvements.......................................    7-40           8,936       21,006 
Furniture, fixtures and equipment................................    2-12           6,081       17,163 
Vehicles.........................................................     7               992        1,310 
Tooling..........................................................     2             1,339        2,039 
Furniture and equipment held for sale............................                 --            17,062 
Computer equipment held for sale.................................                 --               902 
                                                                              -----------  ----------- 
Total property and equipment.....................................                 158,461      364,269 
Less -- Accumulated depreciation.................................                  (7,221)     (10,269)
                                                                              -----------  ----------- 
Net property and equipment.......................................             $   151,240  $   354,000 
                                                                              -----------  ----------- 
                                                                              -----------  ----------- 

    Construction   in  progress  includes  capitalized   costs  related  to  the
construction and launch  (Note 11)  of EchoStar I,  which was  launched in  late
December  1995, EchoStar II, which  is scheduled for launch  prior to the end of
1996 and EchoStar III.                                                          

Construction in progress consisted of the following (in thousands):     

                                                        [Enlarge/Download Table]

                                                                                  DECEMBER 31,      
                                                                            ------------------------
                                                                               1994         1995    
                                                                            -----------  -----------
                                                                                                    
Progress amounts for satellite construction and launch, capitalized                                 
 interest, launch insurance, launch and in-orbit tracking, telemetry and                            
 control services:                                                                                  
  EchoStar I............................................................... $    75,613  $   193,629
  EchoStar II..............................................................      62,438       88,634
  EchoStar III.............................................................     --            20,801
  Uplink facility..........................................................       1,449      --     
  Other....................................................................     --               110
                                                                            -----------  -----------
                                                                            $   139,500  $   303,174
                                                                            -----------  -----------
                                                                            -----------  -----------

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(4) OTHER NONCURRENT ASSETS                                                     
    The major  components  of  other  noncurrent  assets  were  as  follows  (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                                   DECEMBER 31,    
                                                                               --------------------
                                                                                 1994       1995   
                                                                               ---------  ---------
                                                                                                   
Deferred debt issuance costs, net of amortization............................. $  11,891  $  10,622
FCC authorizations............................................................     9,519     11,309
SSET convertible subordinated debentures and accrued interest.................     9,029      9,610
DBSI convertible subordinated debentures......................................    --          1,000
Deferred tax assets, net......................................................     7,431     12,109
Investment in DBSC............................................................     4,210      4,111
Long-term note receivable from DBSC...........................................    --         16,000
Warehousing bond..............................................................       432        468
Prepaid travel................................................................       315        293
Other.........................................................................       213        136
                                                                               ---------  ---------
                                                                               $  43,040  $  65,658
                                                                               ---------  ---------
                                                                               ---------  ---------

    The  merger  with DirectSat  described  in Note  1  was accounted  for  as a
purchase. DirectSat's assets were valued at  $9.0 million by the Company at  the
time  of the merger and are included in FCC authorizations in the above summary.
DirectSat has been granted a conditional satellite construction permit, specific
orbital slot assignments  and frequency  assignments by the  FCC. The  DirectSat
permits  conditionally authorize DirectSat to provide DBS service utilizing: (i)
ten even-numbered channels at  119 DEG. WL, the  same orbital location that  has
been assigned to ESC; (ii) one channel at 110 DEG. WL; and (iii) 11 odd-numbered
channels  at  175  DEG. WL.  The  Company  expects to  use  DirectSat's approved
frequencies at 119 DEG. WL for the EchoStar II satellite.                       

    The  Company  also  purchased  $8.75  million  of  SSET's  6.5%  convertible
subordinated debentures which, if converted, would represent approximately 11.6%
of  SSET's common  stock, based  on the  number of  shares of  SSET common stock
outstanding at December 31,  1995. Management estimates that  the fair value  of
the  SSET  debentures  approximates  their carrying  value  in  the accompanying
financial statements based on current interest rates and the conversion features
contained in the debentures.  SSET is a reporting  company under the  Securities
Exchange  Act  of  1934  engaged  in  the  manufacture  and  sale  of  satellite
telecommunications equipment. In March 1994, SSET  also sold to the Company  for
$1.25  million  an approximate  6%  ownership interest  in  the stock  of Direct
Broadcasting Satellite  Corporation  ("DBSC")  and certain  notes  and  accounts
receivable from DBSC.                                                           

    In November 1994, the Company resolved a suit brought by the Company against
DBSC  regarding  enforceability  of  the  notes  and  accounts  receivable.  The
receivables were  exchanged for  shares of  DBSC common  stock and  the  Company
purchased  additional  DBSC shares  for $2,960,000  so  that, together  with the
shares of DBSC acquired from SSET, the Company presently owns approximately  40%
of  the outstanding common stock of DBSC. DBSC's principal assets include an FCC
conditional satellite construction permit and specific orbital slot  assignments
for  eleven  DBS frequencies  at  61.5 DEG.  WL  and eleven  DBS  frequencies at
175 DEG. WL.                                                                    

    The Company  has negotiated  the merger  of DBSC  with a  subsidiary of  the
Company.  The  merger has  been approved  by  DBSC shareholders  but may  not be
completed until  the FCC  has approved  the merger.  Assuming FCC  approval  for
consummation   of   this   merger,   the   Company   will   hold,   through  its

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(4) OTHER NONCURRENT ASSETS (CONTINUED)                                         
DBSC subsidiary,  the permit  and  slot assignments  for these  frequencies.  In
connection  with the merger, the Company  expects to issue approximately 675,000
shares of its  Class A Common  Stock to  DBSC shareholders in  exchange for  all
remaining DBSC stock.                                                           

    In  December 1995, the Company advanced  DBSC $16.0 million to make payments
under their satellite construction contract.  The Company has a note  receivable
from DBSC which bears interest at 11.5% and matures December 29, 2003. Under the
terms  of the promissory note, equal  installments of principal and interest are
due annually commencing in December 1997. This note is secured by all the assets
of DBSC as defined in the Security Agreement. Management estimates that the fair
value of this note approximates its carrying value in the accompanying financial
statements based on current risk adjusted interest rates.                       

    In 1995 the Company  also purchased $1.0 million  of DBS Industries,  Inc.'s
("DBSI")   convertible  subordinated  debentures   which,  if  converted,  would
represent less than 5% of DBSI's common stock, based on the number of shares  of
DBSI common stock outstanding at December 31, 1995. The debentures bear interest
at  prime plus 2%, adjusted and payable  quarterly (10.5% at December 31, 1995),
and mature July 1, 1998. The debentures are secured by 125,000 shares of  DBSC's
common  stock and  2,000 shares  of common stock  of E-SAT  Corporation which is
currently owned 80% by the Company. DBSI owns a minority interest in DBSC, is  a
reporting  company under the Securities  Exchange Act of 1934  and is engaged in
the development of satellite and radio systems for use in automating the control
and distribution  of gas  and electric  power by  utility companies.  Management
estimates  that  the  fair value  of  the DBSI's  debentures  approximates their
carrying value  in  the  accompanying  financial  statements  based  on  current
interest  rates  and the  conversion features  contained  in the  debentures. In
January  1996,  the  Company  purchased  an  additional  $3  million  of  DBSI's
convertible subordinated debentures.                                            

(5) SENIOR SECURED NOTES                                                        
    On  June 7, 1994, Dish,  Ltd. completed the Notes  Offering of 624,000 units
consisting of $624  million aggregate  principal amount  of the  12 7/8%  Senior
Secured  Notes (the  "1994 Notes")  and 3,744,000  Warrants for  the purchase of
Dish, Ltd.  Class A  Common Stock.  Effective with  the Merger  (Note 1),  these
Warrants  became exercisable for 2,808,000 Shares  of ECC's Class A Common Stock
(Note 9). The Notes Offering  resulted in net proceeds  to Dish, Ltd. of  $323.3
million.  At December 31, 1994,  the 1994 Notes were  reflected in the financial
statements at $334.2 million, net of unamortized discount of $289.8 million.  At
December  31, 1995,  the 1994 Notes  totaled $382.2 million,  net of unamortized
discount of $241.8 million. A limited trading market exists for the 1994  Notes.
However,  based on information  available to the Company,  the 1994 Notes traded
for approximately $690 per bond near December 31, 1995. This suggests a  current
aggregate market value of the 1994 Notes of approximately $430.6 million.       

    The  1994  Notes  rank  senior  in  right  of  payment  to  all subordinated
indebtedness of Dish, Ltd.  and PARI PASSU  in right of  payment with all  other
senior  indebtedness of  Dish, Ltd.,  subject to  the terms  of an Intercreditor
Agreement between Dish, Ltd., certain of its principal subsidiaries and  certain
creditors  thereof. The  1994 Notes  are secured by  liens on  certain assets of
Dish, Ltd., including EchoStar I and EchoStar II and all other components of the
EchoStar DBS System owned by Dish, Ltd. and its subsidiaries. The 1994 Notes are
guaranteed by each material direct subsidiary of Dish, Ltd. (Note 12).  Although
the  1994 Notes are titled "Senior": (i) Dish, Ltd. has not issued, and does not
have any current arrangements  to issue, any  significant indebtedness to  which
the  1994 Notes would be senior, however, Senior Secured Notes being offered for
sale subsequent to December 31, 1995, by                                        

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(5) SENIOR SECURED NOTES (CONTINUED)                                            
EchoStar Satellite Broadcasting Corporation, another wholly owned subsidiary  of
ECC,  will  effectively  be  subordinated  to  the  1994  Notes  and  all  other
liabilities of Dish, Ltd.  and its subsidiaries; and  (ii) at December 31,  1994
and  1995, the  1994 Notes were  effectively subordinated  to approximately $5.6
million and $5.4 million of mortgage indebtedness, respectively, with respect to
certain assets  of Dish,  Ltd.'s subsidiaries,  not including  the EchoStar  DBS
System.  Further, the  1994 Notes are  subordinate to advances  under the Credit
Facility (Note 6), and will be ranked  PARI PASSU with the security interest  of
approximately $30.0 million of contractor financing.                            

    Interest  on the  1994 Notes  currently is not  payable in  cash but accrues
through June 1, 1999, with the 1994 Notes accrediting to $624.0 million by  that
date.   Thereafter,  interest  on  the  1994  Notes  will  be  payable  in  cash
semi-annually on June  1 and  December 1 of  each year,  commencing December  1,
1999.  Except under certain circumstances  requiring prepayment premiums, and in
other limited circumstances, the 1994 Notes  are not redeemable at Dish,  Ltd.'s
option  prior to  June 1, 1999.  Thereafter, the  1994 Notes will  be subject to
redemption, at the  option of Dish,  Ltd., in  whole or in  part, at  redemption
prices  ranging from 104.828% during the year commencing June 1, 1999 to 100% on
or after June 1,  2002 of principal, together  with accrued and unpaid  interest
thereon  to the redemption date. On each of June 1, 2002 and June 1, 2003, Dish,
Ltd. will be required to redeem  25% of the original aggregate principal  amount
of  1994  Notes at  a redemption  price equal  to 100%  of the  principal amount
thereof, together with  accrued and  unpaid interest thereon  to the  redemption
date. The remaining principal of the 1994 Notes will mature on June 1, 2004.    

    In the event of a change of control and upon the occurrence of certain other
events,  as described in the 1994 Indenture, Dish, Ltd. will be required to make
an offer to  each holder of  1994 Notes to  repurchase all or  any part of  such
holder's  1994 Notes at a  purchase price equal to  101% of the accredited value
thereof on the  date of  purchase, if  prior to  June 1,  1999, or  101% of  the
aggregate  principal amount thereof,  together with accrued  and unpaid interest
thereon to the date of purchase, if on or after June 1, 1999.                   

    The 1994 Indenture contains restrictive covenants that, among other  things,
impose  limitations on  Dish, Ltd.  and its  subsidiaries with  respect to their
ability to: (i) incur additional indebtedness; (ii) issue preferred stock; (iii)
apply the proceeds of certain asset  sales; (iv) create, incur or assume  liens;
(v)  create dividend and other payment restrictions with respect to Dish, Ltd.'s
subsidiaries; (vi) merge, consolidate or  sell assets; (vii) incur  subordinated
or junior debt; and (viii) enter into transactions with affiliates. In addition,
Dish, Ltd., may pay dividends on its equity securities only if (1) no default is
continuing  under  the  1994 Indenture;  and  (2)  after giving  effect  to such
dividend, Dish, Ltd.'s ratio of total  indebtedness to cash flow (calculated  in
accordance  with the 1994  Indenture) would not  exceed 4.0 to  1. Moreover, the
aggregate amount of such dividends  generally may not exceed  the sum of 50%  of
Dish,  Ltd.'s consolidated  net income (calculated  in accordance  with the 1994
Indenture) from  the date  of  issuance of  the 1994  Notes,  plus 100%  of  the
aggregate  net proceeds  to Dish,  Ltd. from  the issuance  and sale  of certain
equity interests of Dish, Ltd. (including common stock).                        

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(6) SHORT-TERM AND LONG-TERM DEBT                                               

LONG-TERM MORTGAGE DEBT                                                         

    In addition  to the  1994 Notes  (Note 5),  long-term debt  consists of  the
following as of December 31, 1994 and 1995 (in thousands):                      

                                                        [Enlarge/Download Table]

                                                                                  1994       1995    
                                                                                ---------  --------- 
                                                                                                     
8.75% note payable for deferred satellite contract payments due in equal                             
 monthly installments of $677,590, including interest, through February 2001;                        
 secured by substantially all assets of Dish, Ltd., and Dish, Ltd.'s                                 
 subsidiaries.................................................................. $  --      $  32,833 
8.0% mortgage note payable due in equal monthly installments of $41,635,                             
 including interest, through May 2008; secured by land and office building.....     4,088      3,909 
10.5% mortgage note payable due in equal monthly installments of $9,442,                             
 including interest, through November 1998; final payment of $854,000 due                            
 November 1998; secured by land and warehouse building.........................       927        910 
9.9375% mortgage note payable due in equal quarterly principal installments of                       
 $10,625, plus interest, through April 2009; secured by land and office                              
 building......................................................................       616        574 
                                                                                ---------  --------- 
Total long-term debt, excluding the 1994 Notes.................................     5,631     38,226 
Less current installments......................................................      (238)    (4,782)
                                                                                ---------  --------- 
Long-term debt, excluding current installments................................. $   5,393  $  33,444 
                                                                                ---------  --------- 
                                                                                ---------  --------- 

    Aggregate  maturities of the  above long-term mortgage  debt are as follows:
1996, $4.8 million; 1997, $6.2 million; 1998, $7.6 million; 1999, $7.3  million;
2000,  $8.0  million;  and  thereafter, $4.3  million.  In  addition, contractor
financing of  $28.0 million  at the  prime  rate is  available for  EchoStar  II
payable in installments over five years following the launch (Note 11).         

DEFERRED SATELLITE CONTRACT PAYMENTS                                            

    The majority of the purchase price for the satellites is required to be paid
in  progress payments, with the remainder  payable in the form of non-contingent
payments deferred until EchoStar I and  EchoStar II are in orbit, with  interest
at  the prime rate over a period of  five years after the delivery and launch of
each such satellite (the  "Deferred Payments"). As security  for the portion  of
the  Deferred Payments due to the  contractor (Martin Marietta), Dish, Ltd. has:
(i) granted a security  interest in substantially all  assets of Dish, Ltd.  and
Dish,  Ltd.'s subsidiaries (the "Dish, Ltd. subsidiaries"), other than the stock
of the EchoStar subsidiaries and the proceeds derived from the sale of the  1994
Notes,  subordinate to the first security interest  in the assets of ESC granted
to the Trustee under the  1994 Indenture (Note 5), and  to the liens granted  to
any  commercial bank which  provides a revolving credit  facility to Dish, Ltd.,
except that such security interest ranks  PARI PASSU with the security  interest
in  the assets of ESC granted  for the benefit of the  holders of the 1994 Notes
with respect to $30.0  million of the Deferred  Payments; and (ii) caused  Dish,
Ltd.  and  its  subsidiaries  to  guarantee payment  in  full  of  such Deferred
Payments.                                                                       

    Martin Marietta has a  security interest in the  EchoStar DBS System  which,
with  respect to $30.0 million  of the Deferred Payments,  ranks PARI PASSU with
the lien on  such assets  granted for  the benefit of  the holders  of the  1994
Notes,  and,  with  respect  to  the  remainder  of  the  Deferred  Payments, is
subordinated to the lien on such assets  granted for the benefit of the  holders
of the 1994 Notes.                                                              

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(6) SHORT-TERM AND LONG-TERM DEBT (CONTINUED)                                   
However,  following any  default on  the Deferred  Payments, Martin  Marietta is
prohibited from realizing on  any of such  collateral for a  period of at  least
five  years following consummation of  the Notes Offering, and  in any event for
180 days following such default. Martin Marietta also has a security interest in
the assets  of the  Dish, Ltd.  subsidiaries  other than  ESC which  lien,  with
respect to the assets of certain of the Dish, Ltd. subsidiaries, ranks senior to
the  lien on  such assets  granted for the  benefit of  the holders  of the 1994
Notes.                                                                          

LONG-TERM NOTES PAYABLE TO STOCKHOLDER                                          

    As of December 31, 1993, ESC had  a long-term note payable to its  principal
stockholder,  including cumulative accrued interest  at prime, of $14.7 million.
The loan  proceeds were  used to  make payments  due pursuant  to the  satellite
construction  project (Note 11). The note accrued interest at 10% per annum from
January 1, 1994 to March 21,  1994. The stockholder exchanged the note  together
with  accrued but unpaid  interest for Series  A Preferred Stock  on May 6, 1994
(Note 16). The principal stockholder also  advanced $4.0 million to EchoStar  in
1994 used to fund transactions with SSET (Note 4) which was repaid from proceeds
of the 1994 Notes.                                                              

    The  Company also  had a noninterest-bearing  note payable  to its principal
stockholder at December 31, 1993 of $75,000 which was repaid in January 1994.   

BANK CREDIT FACILITY                                                            

    On May 6, 1994,  the principal subsidiaries of  Dish, Ltd., except ESC  (the
"Borrowers"),  entered  into an  agreement with  Bank  of America  Illinois (the
"Bank"), to  provide a  revolving credit  facility (the  "Credit Facility")  for
working  capital  advances and  for letters  of  credit necessary  for inventory
purchases and satellite construction payments.  The maximum amount available  to
the  Borrowers under the Credit  Facility is the lesser  of the "Borrowing Base"
(as defined in the Credit Facility) or $17.0 million, if prior to March 6, 1996,
or $14.5 million,  if on or  after March  6, 1996. The  Borrowing Base  includes
specified   percentages  of  eligible   receivables,  inventory  and  marketable
investment securities. At December  31, 1995 the  Borrowing Base exceeded  $17.0
million.  Advances under  the Credit Facility  bear interest at:  (i) the Bank's
Reference Rate (as defined in the Credit Facility); (ii) Eurodollar rate plus 2%
per annum  or (iii)  the secondary  CD bid  rate plus  2.25% per  annum, at  the
Borrowers'  choice.  Advances pursuant  to the  Credit  Facility are  secured by
substantially all of the assets of the Borrowers. At December 31, 1995,  standby
letters  of credit totaled $15.5 million,  and there were no documentary letters
of credit or advances outstanding.                                              

    The  Credit  Facility  contains  customary  representations,  covenants  and
conditions  to borrowing. The Credit Facility also contains a number of negative
covenants that  restrict  the  Borrowers from,  among  other  things,  incurring
additional  indebtedness, creating liens on  their assets, providing guarantees,
entering into merger or consolidation transactions, or disposing of their assets
outside the  ordinary  course  of  business.  Except  in  certain  circumstances
specified  in the Credit  Facility, the Borrowers  are able to  pay dividends to
Dish, Ltd. in an amount not to exceed 50% of excess cash flow (as defined in the
Credit Facility) in 1995 and 1996.                                              

(7) INCOME TAXES                                                                
    As stated in  Note 2, the  combined entities terminated  their Subchapter  S
status  on  December 31,  1993.  This change  in  tax status  was  recognized by
establishing a net deferred tax asset of $1.9 million on that date for temporary
differences between tax basis and amounts reported in the accompanying  combined
and  consolidated balance sheet. The current provision for income taxes for 1993
reflects                                                                        

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(7) INCOME TAXES (CONTINUED)                                                    
only amounts payable to certain states and foreign tax jurisdictions that do not
recognize Subchapter S status. Beginning  in 1994, the group filed  consolidated
corporate federal and state income tax returns.                                 

    The  components of the  (provision) benefit for income  taxes are as follows
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                                             YEAR ENDED DECEMBER 31,     
                                                                         ------------------------------- 
                                                                           1993       1994       1995    
                                                                         ---------  ---------  --------- 
                                                                                                         
Current (provision) benefit                                                                              
  Federal............................................................... $  --      $  (5,951) $   1,350 
  State.................................................................      (128)      (853)       (67)
  Foreign...............................................................      (429)      (925)      (301)
                                                                         ---------  ---------  --------- 
                                                                              (557)    (7,729)       982 
                                                                         ---------  ---------  --------- 
Deferred benefit                                                                                         
  Federal...............................................................     1,686      6,342      4,383 
  State.................................................................       255        988        380 
                                                                         ---------  ---------  --------- 
                                                                             1,941      7,330      4,763 
                                                                         ---------  ---------  --------- 
    Total benefit (provision)........................................... $   1,384  $    (399) $   5,745 
                                                                         ---------  ---------  --------- 
                                                                         ---------  ---------  --------- 

    The types of temporary differences that  give rise to a significant  portion
of  net deferred tax assets and their approximate tax effects as of December 31,
1994 and 1995 are as follows (in thousands):                                    

                                                        [Enlarge/Download Table]

                                                                                  1994       1995    
                                                                                ---------  --------- 
                                                                                                     
Current deferred tax assets                                                                          
  Inventory reserves and cost methods.......................................... $     438  $     834 
  Reserve for warranty costs...................................................       532        385 
  Accrued customer incentives..................................................       234     --     
  Accrued employee incentives..................................................       418        168 
  Allowance for doubtful accounts..............................................       106        456 
  Unrealized holding gain on marketable investment securities..................    --           (153)
  Other........................................................................       112         89 
                                                                                ---------  --------- 
    Net current deferred tax assets............................................     1,840      1,779 
                                                                                ---------  --------- 

Noncurrent deferred tax assets                                                                       
  Amortization of original issue discount (included in other noncurrent                              
   assets).....................................................................     7,431     15,439 
  Other........................................................................    --              7 
                                                                                ---------  --------- 
                                                                                    7,431     15,446 
                                                                                ---------  --------- 

Noncurrent deferred tax liabilities                                                                  
  Capitalized costs deducted for tax...........................................    --         (2,351)
  Depreciation.................................................................    --           (986)
                                                                                ---------  --------- 
                                                                                   --         (3,337)
                                                                                ---------  --------- 
    Noncurrent net deferred tax assets.........................................     7,431     12,109 
                                                                                ---------  --------- 
    Net deferred tax assets.................................................... $   9,271  $  13,888 
                                                                                ---------  --------- 
                                                                                ---------  --------- 

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(7) INCOME TAXES (CONTINUED)                                                    
    No valuation allowance has been provided  for the above deferred tax  assets
because  the Company currently  believes it is  more likely than  not that these
assets will  be realized.  If  future operating  results differ  materially  and
adversely  from the Company's  current expectations, its  judgment regarding the
need for a valuation allowance may change.                                      

PRO FORMA TAX EFFECTS                                                           

    The combined and consolidated statements of income present, on an  unaudited
pro  forma basis, net income for 1993 as if the Company had filed consolidated C
Corporation federal and state  income tax returns for  that year. The pro  forma
tax  effects assume foreign taxes paid  would have been fully creditable against
United States federal taxes payable and that the deferred tax assets established
on December 31, 1993  as described above,  would have been  provided for as  the
related  temporary differences arose. The pro  forma provisions for income taxes
for 1993 and the actual tax provisions  for 1994 and 1995 are reconciled to  the
amounts  computed by  applying the statutory  federal tax rate  to income before
taxes as follows (amounts in thousands):                                        

                                                        [Enlarge/Download Table]

                                                                                   1993               1994              1995      
                                                                             ----------------   ----------------   ---------------
                                                                             AMOUNT   PERCENT   AMOUNT   PERCENT   AMOUNT  PERCENT
                                                                             -------  -------   ------   -------   ------  -------
                                                                                                                                  
Statutory rate.............................................................. $(6,557)  (35.0)%  $(166)     (34.0)% $6,031   35.0% 
State income taxes, net of federal benefit..................................    (450)   (2.4)     (88)     (18.0)     203    1.2  
Tax exempt interest income..................................................     350     1.9       60       12.3       10    0.1  
Research and development credits............................................     195     1.0      156       31.9       31    0.2  
Non-deductible interest expense.............................................   --       --       (258)     (52.7)    (293)  (1.7) 
Other.......................................................................   --       --       (103)     (21.1)    (237)  (1.5) 
                                                                             -------  -------   ------   -------   ------  -------
    Total (provision) benefit for income taxes (pro forma in 1993)..........  (6,462)  (34.5)%  $(399)     (81.6)% $5,745   33.3% 
                                                                                      -------   ------   -------   ------  -------
                                                                                      -------   ------   -------   ------  -------
Less: Historical benefit for income taxes...................................   1,384                                              
                                                                             -------                                              
Pro forma tax effects....................................................... $(7,846)                                             
                                                                             -------                                              
                                                                             -------                                              

(8) EMPLOYEE BENEFIT PLAN AND EXECUTIVE INCENTIVE BONUS PLANS                   
    The Company  has a  401(k) Employee  Savings Plan  (the "401(k)  Plan")  for
eligible  employees. Voluntary employee contributions to  the 401(k) Plan may be
matched 50% by  the Company,  subject to a  maximum annual  contribution by  the
Company   of  $1,000  per  employee.  The   Company  may  also  make  an  annual
discretionary contribution to the plan with  approval by the Company's Board  of
Directors,  subject to  the maximum  deductible limit  provided by  the Internal
Revenue Code of 1986, as amended. The Company's total cash contributions to  the
401(k)  Plan  were $572,000,  $170,000  and $177,000  for  1993, 1994  and 1995,
respectively. Also in 1995, the Company contributed 55,000 shares of its Class A
Common Stock (fair value of approximately $1.1 million) to the 401(k) Plan as  a
discretionary contribution.                                                     

    During the years ended December 31, 1993, 1994 and 1995, the Company's Board
of  Directors  declared discretionary  bonuses  totaling $834,000,  $711,000 and
$75,000 respectively. Also, a launch bonus  award of 10 shares of the  Company's
Class  A Common Stock to all full time  employees with more than 90 days service
as of December 16, 1995 was awarded. A total of approximately 4,900 shares  with
an aggregate value of approximately $78,000 was issued.                         

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(9) STOCKHOLDERS' EQUITY                                                        
    Ownership  of each of the subsidiaries was  generally uniform at the time of
formation of  Dish, Ltd.  described in  Note 1.  As of  December 31,  1993,  the
stockholders  contributed their shares  in the subsidiaries  for an aggregate of
7,500 shares of Common Stock of Dish,  Ltd. Retained earnings that had not  been
distributed  prior to the reorganization and related termination of Subchapter S
status were constructively  distributed to the  stockholders and contributed  to
Dish, Ltd. as additional paid-in capital.                                       

    Dividends  declared and paid during the three years ended December 31, 1994,
included amounts to allow the stockholders  to pay taxes on Subchapter S  income
and  for investment in and advances to ESC related to construction of EchoStar I
and EchoStar II (Notes 2, 3 and 6).                                             

COMMON STOCK                                                                    

    The Class A, Class B and Class C Common Stock are equivalent in all respects
except voting rights. Holders of Class A  and Class C Common Stock are  entitled
to  one vote per share and  holders of Class B Common  Stock are entitled to ten
votes per share. Each share of Class B and Class C Common Stock is  convertible,
at  the option of  the holder, into  one share of  Class A Common  Stock. Upon a
change in control of ECC,  each holder of outstanding  shares of Class C  Common
Stock  is entitled to ten votes  for each share of Class  C Common Stock held by
the holder.  ECC's principal  stockholder owns  all outstanding  Class B  Common
Stock and all other stockholders own Class A Common Stock.                      

SERIES A PREFERRED STOCK                                                        

    On  May 6,  1994, the  Company exchanged  1,616,681 shares  of its Preferred
Stock with its principal stockholder in consideration for the cancellation of  a
note,  plus accrued  and unpaid  interest thereon.  Approximately 5%,  or 80,834
shares, of the Preferred Stock were subsequently sold to another stockholder and
officer of  the  Company. The  principal  stockholder  has pledged  all  of  his
Preferred  Stock  to  Martin  Marietta  as  collateral  security  for contractor
financing (Note 6).                                                             

    Each share  of the  Preferred Stock  is convertible,  at the  option of  the
holder,  into one share of Class A Common Stock, subject to adjustment from time
to time upon the  occurrence of certain events,  including, among other  things:
(i) dividends or distributions on Class A Common Stock payable in Class A Common
Stock or certain other capital stock; (ii) subdivisions, combinations or certain
reclassifications of Class A Common Stock; and (iii) issuances of Class A Common
Stock or rights, warrants or options to purchase Class A Common Stock at a price
per  share less than the  liquidation preference per share.  In the event of the
liquidation, dissolution or  winding up  of EchoStar, the  holders of  Preferred
Stock  would be entitled to receive an  amount equal to approximately $10.64 per
share as of December 31, 1995.                                                  

    The aggregate liquidation preference for all outstanding shares of Series  A
Preferred Stock is limited to the principal amount represented by the note, plus
accrued  and unpaid dividends thereon. Each share of Series A Preferred Stock is
entitled to receive dividends  equal to eight percent  per annum of the  initial
liquidation  preference for such  share. Each share of  Series A Preferred Stock
automatically converts into shares of Class A Common Stock in the event they are
transferred to  any  person other  than  certain permitted  transferees  and  is
entitled  to the equivalent of ten votes for  each share of Class A Common Stock
into which it is  convertible. Except as otherwise  required by law, holders  of
Series  A Preferred Stock vote together with the  holders of Class A and Class B
Common Stock as a single class.                                                 

    All accrued  dividends payable  to Mr.  Ergen  on his  Dish, Ltd.  Series  A
Preferred Stock through the date of the Exchange ($1.4 million), and all accrued
dividends payable to the remaining holder of Dish,                              

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(9) STOCKHOLDERS' EQUITY (CONTINUED)                                            
Ltd.  Series A Preferred Stock  through the date of  the Merger ($107,000), will
remain obligations of Dish, Ltd. (Note 1); however, no additional dividends will
accrue with  respect  to the  Dish,  Ltd. Series  A  Preferred Stock.  The  1994
Indenture  places significant  restrictions of  payment of  those dividends, and
dividends are  not  expected to  be  paid  in the  foreseeable  future.  Through
December  31, 1995, additional accrued dividends payable  to Mr. Ergen by ECC on
the ECC Series A Preferred Stock totaled $588,000.                              

    Cumulative but  unpaid dividends  totaled  $938,000 and  approximately  $2.1
million  at December  31, 1994 and  1995, respectively,  including amounts which
remain the obligation of Dish, Ltd.                                             

WARRANTS                                                                        

    The Warrants issued  in connection with  the Notes Offering  were valued  at
$26.1  million. The 1994  Notes and the  Warrants became separately transferable
and exercisable effective December 1, 1994.                                     

    Each Warrant  entitles  the  registered holder  thereof,  at  such  holder's
option,  to purchase from  ECC one share of  Class A Common  Stock at a purchase
price of $0.01 per share (the "Exercise Price"). The Exercise Price with respect
to all of the Warrants was paid in advance and, therefore, no additional amounts
are payable upon exercise of the Warrants.                                      

    Effective with  the Merger  (Note  1), or  subsequently, all  Warrants  were
exercised  and 2,808,000  Shares (as adjusted  for the Exchange  Ratio) of ECC's
Class A Common Stock were issued.                                               

(10) STOCK OPTIONS                                                              
    In April  1994, the  Company  adopted a  stock  incentive plan  (the  "Stock
Incentive  Plan") to provide incentive to attract and retain officers, directors
and key employees. ECC assumed all outstanding options for the purchase of Dish,
Ltd. common stock effective with the Exchange and Merger and has reserved up  to
10.0  million shares of its  Class A Common Stock  for granting awards under the
Stock Incentive Plan. Awards available  under the Stock Incentive Plan  include:
(i)  common  stock  purchase  options;  (ii)  stock  appreciation  rights; (iii)
restricted stock  and  restricted  stock units;  (iv)  performance  awards;  (v)
dividend  equivalents; and  (vi) other  stock-based awards.  All options granted
through December 31, 1995 have included  exercise prices not less than the  fair
market  value of the Shares at  the date of grant and  vest as determined by the
Company's Board of Directors, generally at the rate of 20% per year.            

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(10) STOCK OPTIONS (CONTINUED)                                                  
    The following  summarizes the  activity relating  to options  for the  years
ended December 31, 1994 and 1995:                                               

                                                        [Enlarge/Download Table]

                                                                             1994         1995       
                                                                            -------  --------------- 
                                                                              (IN THOUSANDS EXCEPT   
                                                                              FOR PER SHARE DATA)    
                                                                                                     
Incentive stock options --                                                                           
  Options outstanding at beginning of year.................................   --                 745 
  Granted..................................................................     745              420 
  Exercised................................................................   --                  (4)
  Terminated...............................................................   --                 (44)
                                                                            -------  --------------- 
  Options outstanding at end of year.......................................     745            1,117 
                                                                            -------  --------------- 
                                                                            -------  --------------- 
  Options exercisable at end of year.......................................   --                 141 
                                                                            -------  --------------- 
                                                                            -------  --------------- 
  Price of granted options................................................. $  9.33  $11.87 - $20.25 
                                                                            -------  --------------- 
                                                                            -------  --------------- 
  Price range of outstanding options....................................... $  9.33  $ 9.33 - $20.25 
                                                                            -------  --------------- 
                                                                            -------  --------------- 
  Price of terminated options.............................................. $ --     $ 9.33 - $20.25 
                                                                            -------  --------------- 
                                                                            -------  --------------- 

    In  March 1994, the Company entered into an employment agreement with one of
its executive officers. The  officer was granted  an option, containing  certain
conditions to vesting, to purchase 322,208 shares of Class A Common Stock of the
Company  for $1.0  million at any  time prior  to December 31,  1999, subject to
certain limitations. One-half of this option became exercisable on December  31,
1994  and the remainder became exercisable on  December 31, 1995. The option was
not granted pursuant to the Stock Incentive Plan.                               

    Effective March 1995,  the Company  granted an  additional option  to a  key
employee  to purchase 33,000 shares of Class  A Common Stock, which vests 50% in
March 1996 and 50% in March 1997. The  exercise price for each share of Class  A
Common  Stock is $11.87  per share. The  option was not  granted pursuant to the
Stock Incentive Plan.                                                           

(11) OTHER COMMITMENTS AND CONTINGENCIES                                        

SATELLITE CONTRACTS                                                             

    The  Company  has  contracted  with  Martin  Marietta  Corporation  ("Martin
Marietta") for the construction and delivery of high powered DBS satellites, and
for  related services. EchoStar I was shipped  to China on November 16, 1995 and
EchoStar II is expected to be delivered  in the summer of 1996. Penalties of  up
to  $5.0 million are  payable by Martin Marietta  in the event  of delays in the
delivery of  EchoStar I  by Martin  Marietta.  As of  December 31,  1995,  those
penalties  totaled  $3.2  million,  which  amount  has  been  deducted  from the
Company's deferred satellite payment obligation (Note 6).                       

    The Company also has  contracts with China  Great Wall Industry  Corporation
("Great  Wall") for the launch  of up to seven  satellites, using LM-2E or LM-3C
launch vehicles,  from  a launch  base  in China.  EchoStar  I was  launched  on
December  28, 1995. The EchoStar  I and EchoStar II  launch contract (the "Great
Wall Launch Contract") calls for the  launch of EchoStar II during July  through
September 1996.                                                                 

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(11) OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)                            
    A significant delay in the delivery or launch of EchoStar II would adversely
affect  the  Company's  operations.  In June  1995,  another  subsidiary  of ECC
contracted with Lockheed-Khrunichev-Energia-International, Inc. ("LKE") for  the
launch  of a satellite, using a Proton launch vehicle, from a launch base in the
Russian Federation.                                                             

    The  Company  has  filed   applications  with  the  Federal   Communications
Commission ("FCC") for authorization to construct, launch and operate a domestic
fixed  satellite  service  system ("FSS  System")  and a  two  satellite Ka-band
satellite system. No assurances can be given that the Company applications  will
be  approved by  the FCC  or that,  if approved,  the Company  will successfully
develop the FSS  System or the  Ka-band satellite system.  The Company  believes
that  establishment of the  FSS System or  the Ka-band system  would enhance its
competitive position in  the DTH  industry. In the  event the  Company's FSS  or
Ka-band satellite system applications are approved by the FCC, or if the Company
commits  to a third launch with Great  Wall, additional debt or equity financing
would be  required.  Financing  alternatives  related to  the  FSS  and  Ka-band
satellite  systems are currently being pursued by the Company. No assurances can
be given that financing will be available, or that it will be available on terms
favorable to the Company.                                                       

LEASES                                                                          

    Future minimum lease  payments under  noncancelable operating  leases as  of
December 31, 1995, are as follows (in thousands):                               

                                                                [Download Table]
                                                                      
Year ending December 31 --                                            
  1996.....................................................  $   1,061
  1997.....................................................        686
  1998.....................................................        275
  1999.....................................................        147
  2000.....................................................         24
  Thereafter...............................................          2
                                                             ---------
    Total minimum lease payments...........................  $   2,195
                                                             ---------
                                                             ---------

    Total  rental expense  for operating leases  was $1.2 million  in 1993, $1.4
million in 1994 and $1.2 million in 1995.                                       

PURCHASE COMMITMENTS                                                            

    The Company  has  entered  into agreements  with  various  manufacturers  to
purchase  DBS satellite receivers  and related components  manufactured based on
Dish, Ltd.  supplied specifications  and necessary  to receive  DBS  programming
proposed  to  be  offered by  the  Company  upon commencement  of  operations of
EchoStar's Dish Network-SM-. As of December 31, 1995, the remaining  commitments
total  approximately  $502.9 million.  At December  31, 1995,  the total  of all
outstanding purchase order commitments with  domestic and foreign suppliers  was
$515.8  million.  All  but  $11.1  million of  the  purchases  related  to these
commitments are expected to be made during 1996 and the remainder is expected to
be made  during  1997. The  Company  expects  to finance  these  purchases  from
available  cash  and sales  of  inventory, including  the  sale of  DBS receiver
systems and related products.                                                   

OTHER RISKS AND CONTINGENCIES                                                   

    Equipment  sold  by  the  Company   includes,  as  an  integral   component,
descrambler  modules  purchased from  an unrelated  entity under  a nonexclusive
right and license which expires in 2001.                                        

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(11) OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)                            
    The Company has agreed to indemnify its stockholders for any adjustments  to
their individual income tax returns resulting from adjustments to taxable income
or  tax credits for years  prior to 1994 during which  the Company elected to be
taxed as  Subchapter S  corporations. The  indemnities cover  additions to  tax,
interest  and  penalties,  as  well  as  attorneys'  and  accountants'  fees and
expenses, if any.                                                               

    The Company is subject to other legal proceedings and claims which arise  in
the ordinary course of its business. In the opinion of management, the amount of
ultimate  liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of the Company.          

(12) SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS                    
    The  1994  Notes  are  fully,  unconditionally  and  jointly  and  severally
guaranteed  by all subsidiaries of Dish, Ltd., except FlexTracker and certain de
minimis domestic and foreign subsidiaries. Summarized financial information  for
Dish, Ltd. and the subsidiary guarantors is as follows (in thousands):          

                                                        [Enlarge/Download Table]

                                                                         YEAR ENDED DECEMBER 31,        
                                                                  ------------------------------------- 
                                                                     1993         1994         1995     
                                                                  -----------  -----------  ----------- 
                                                                                                        
Income Statement Data --                                                                                
  Revenue........................................................ $   217,360  $   187,044  $   163,228 
  Expenses.......................................................     199,398      174,164      171,646 
                                                                  -----------  -----------  ----------- 
  Operating income (loss)........................................      17,962       12,880       (8,418)
  Other income (expense).........................................         543      (12,707)      (9,911)
                                                                  -----------  -----------  ----------- 
  Net income (loss) before income taxes..........................      18,505          173      (18,329)
  (Provision) benefit for income taxes...........................       1,384         (433)       6,182 
                                                                  -----------  -----------  ----------- 
    Net income (loss)............................................ $    19,889  $      (260) $   (12,147)
                                                                  -----------  -----------  ----------- 
                                                                  -----------  -----------  ----------- 

                                                        [Enlarge/Download Table]

                                                                         DECEMBER 31,  DECEMBER 31,
                                                                             1994          1995    
                                                                         ------------  ------------
                                                                                                   
Balance Sheet Data --                                                                              
  Current assets........................................................  $   80,914    $   81,959 
  Property and equipment, net...........................................     151,211       333,160 
  Other noncurrent assets...............................................     239,560       143,866 
                                                                         ------------  ------------
    Total assets........................................................  $  471,685    $  558,985 
                                                                         ------------  ------------
                                                                         ------------  ------------
  Current liabilities...................................................  $   28,094    $   50,710 
  Long-term liabilities.................................................     340,014       415,662 
  Stockholders' equity..................................................     103,577        92,613 
                                                                         ------------  ------------
    Total liabilities and stockholders' equity..........................  $  471,685    $  558,985 
                                                                         ------------  ------------
                                                                         ------------  ------------

    Upon  consummation of the merger with DirectSat, DirectSat became, by virtue
of the merger, a guarantor of the 1994 Notes on a full, unconditional and  joint
and several basis, in addition to the guarantees of the previous subsidiaries.  

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(13) OPERATIONS IN GEOGRAPHIC AREAS                                             
    The  Company sells  its products  on a  worldwide basis  and has established
operations in  Europe  and the  Pacific  Rim. Information  about  the  Company's
operations  in different geographic areas as of December 31, 1993, 1994 and 1995
and for the years then ended, were as follows (in thousands):                   

                                                        [Enlarge/Download Table]

                                                UNITED              OTHER              
                    1993                        STATES    EUROPE   INTERNATIONAL  TOTAL
---------------------------------------------  ---------  -------  --------   -------- 
                                                                                       
Total revenue................................  $175,453   $25,825  $19,663    $220,941 
                                               ---------  -------  --------   -------- 
                                               ---------  -------  --------            
Export sales.................................  $  8,005                                
                                               ---------                               
                                               ---------                               
Operating income.............................  $ 16,551   $    96  $ 1,557    $ 18,204 
                                               ---------  -------  --------            
                                               ---------  -------  --------            
Other income (expense), net..................                                      530 
                                                                              -------- 
Net income before income taxes...............                                 $ 18,734 
                                                                              -------- 
                                                                              -------- 
Identifiable assets..........................  $ 84,656   $ 7,272  $10,478    $102,406 
                                               ---------  -------  --------            
                                               ---------  -------  --------            
Corporate assets.............................                                    4,070 
                                                                              -------- 
Total assets.................................                                 $106,476 
                                                                              -------- 
                                                                              -------- 


                    1994                                                               
---------------------------------------------                                          
                                                                                       
Total revenue................................  $137,233   $24,072  $29,678    $190,983 
                                               ---------  -------  --------   -------- 
                                               ---------  -------  --------   -------- 
Export sales.................................  $  7,188                                
                                               ---------                               
                                               ---------                               
Operating income.............................  $ 10,811   $ 1,244  $ 1,161    $ 13,216 
                                               ---------  -------  --------            
                                               ---------  -------  --------            
Other income (expense), net..................                                  (12,727)
                                                                              -------- 
Net income before income taxes...............                                 $    489 
                                                                              -------- 
                                                                              -------- 
Identifiable assets..........................  $ 77,172   $ 6,397  $ 2,359    $ 85,928 
                                               ---------  -------  --------            
                                               ---------  -------  --------            
Corporate assets.............................                                  386,564 
                                                                              -------- 
Total assets.................................                                 $472,492 
                                                                              -------- 
                                                                              -------- 

                    1995                                                               
---------------------------------------------                                          
                                                                                       
Total revenue................................  $110,629   $31,351  $21,910    $163,890 
                                               ---------  -------  --------   -------- 
                                               ---------  -------  --------   -------- 
Export sales.................................  $  6,317                                
                                               ---------                               
                                               ---------                               
Operating income (loss)......................  $ (7,860)  $   146  $  (257)   $ (7,971)
                                               ---------  -------  --------            
                                               ---------  -------  --------            
Other income (expense), net..................                                   (9,260)
                                                                              -------- 
Net income before income taxes...............                                 $(17,231)
                                                                              -------- 
                                                                              -------- 
Identifiable assets..........................  $ 63,136   $10,088  $ 3,788    $ 77,012 
                                               ---------  -------  --------            
                                               ---------  -------  --------            
Corporate assets.............................                                  546,079 
                                                                              -------- 
Total assets.................................                                 $623,091 
                                                                              -------- 
                                                                              -------- 

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(14) VALUATION AND QUALIFYING ACCOUNTS                                          
    The Company's valuation  and qualifying  accounts as of  December 31,  1993,
1994 and 1995 are as follows (in thousands):                                    

                                                        [Enlarge/Download Table]

                                                                       ADDITIONS                                  
                                                                ------------------------                          
                                                   BALANCE AT   CHARGED TO   CHARGED TO                           
                                                  BEGINNING OF   COSTS AND      OTHER                  BALANCE AT 
                                                      YEAR       EXPENSES     ACCOUNTS    DEDUCTIONS   END OF YEAR
                                                  ------------  -----------  -----------  -----------  -----------
                                                                                                                  
Year ended December 31, 1993:                                                                                     
  Assets:                                                                                                         
    Allowance for doubtful accounts..............  $       92    $     305    $  --        $     (51)   $     346 
    Loan loss reserve............................          25           52           29          (56)          50 
    Reserve for inventory........................       1,425          136       --             (158)       1,403 
  Liabilities:                                                                                                    
    Reserve for warranty costs...................       1,600          326       --             (576)       1,350 
    Other reserves...............................         110       --           --              (17)          93 
Year ended December 31, 1994:                                                                                     
  Assets:                                                                                                         
    Allowance for doubtful accounts..............  $      346    $       8    $  --        $    (168)   $     186 
    Loan loss reserve............................          50           75       --              (30)          95 
    Reserve for inventory........................       1,403          329       --             (147)       1,585 
  Liabilities:                                                                                                    
    Reserve for warranty costs...................       1,350          508       --             (458)       1,400 
    Other reserves...............................          93       --           --           --               93 
Year ended December 31, 1995:                                                                                     
  Assets:                                                                                                         
    Allowance for doubtful accounts..............  $      186    $   1,160    $  --        $    (240)   $   1,106 
    Loan loss reserve............................          95           19       --              (36)          78 
    Reserve for inventory........................       1,585        1,511       --             (299)       2,797 
  Liabilities:                                                                                                    
    Reserve for warranty costs...................       1,400          562       --             (949)       1,013 
    Other reserves...............................          93       --           --               (1)          92 

(15) QUARTERLY FINANCIAL DATA (UNAUDITED)                                       
    The  Company's quarterly results of operations are summarized as follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                      QUARTER ENDED                   
                                                   ---------------------------------------------------
                                                    MARCH 31,   JUNE 30,   SEPTEMBER 30,  DECEMBER 31,
                                                      1994        1994         1994           1994    
                                                   -----------  ---------  -------------  ------------
                                                                                                      
Total revenue.....................................  $  46,993   $  42,748   $    48,958    $   52,284 
Operating income..................................      4,359       2,573         3,481         2,803 
Net income (loss).................................      2,893         678        (1,619)       (1,862)

                                                        [Enlarge/Download Table]

                                                                      QUARTER ENDED                   
                                                   ---------------------------------------------------
                                                    MARCH 31,   JUNE 30,   SEPTEMBER 30,  DECEMBER 31,
                                                      1995        1995         1995           1995    
                                                   -----------  ---------  -------------  ------------
                                                                                                      
Total revenue.....................................  $  40,413   $  39,252   $    43,606    $   40,619 
Operating (loss) income...........................       (698)        768           341        (8,382)
Net loss..........................................     (2,240)     (1,787)         (360)       (7,099)

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NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(15) QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)                           
    In the fourth quarter of 1995, the Company incurred operating and net losses
principally as  a result  of expenses  incurred related  to development  of  the
EchoStar  DBS  System and  lower  sales volumes  at  reduced gross  margins. The
Company  also  increased  reserves  related  to  inventory  and  trade  accounts
receivable in the fourth quarter of 1995.                                       

(16) PARENT ONLY FINANCIAL INFORMATION                                          
    The  following  financial  information reflects  the  condensed  parent only
balance sheets, statements  of income  and cash  flows for  ECC, reflecting  the
assumed  consummation of the Exchange and Merger retroactive to January 1, 1993.
The  Exchange  and  Merger  described  in   Note  1  was  accounted  for  as   a
reorganization of entities under common control.                                

                                                        [Enlarge/Download Table]

                                                                                   YEAR ENDED DECEMBER 31,      
                                                                               -------------------------------- 
                                                                                 1993       1994        1995    
                                                                               ---------  ---------  ---------- 
                                                                               (IN THOUSANDS, EXCEPT SHARES AND 
                                                                                       PER SHARE DATA)          
                                                                                                                
Income Statement Data --                                                                                        
  Equity in earnings (losses) of subsidiaries................................. $  20,118  $      90  $  (12,361)
  Other income................................................................    --         --           1,321 
                                                                               ---------  ---------  ---------- 
  Net income (loss) before income taxes.......................................    20,118         90     (11,040)
  Provision for income taxes..................................................    --         --            (446)
                                                                               ---------  ---------  ---------- 
    Net income (loss)......................................................... $  20,118  $      90  $  (11,486)
                                                                               ---------  ---------  ---------- 
                                                                               ---------  ---------  ---------- 
Loss Attributable to Common Shares............................................            $    (848) $  (12,691)
                                                                                          ---------  ---------- 
                                                                                          ---------  ---------- 
Weighted Average Common Shares Outstanding....................................               32,442      35,562 
                                                                                          ---------  ---------- 
                                                                                          ---------  ---------- 
Loss Per Common and Common Equivalent Share...................................            $   (0.03) $    (0.36)
                                                                                          ---------  ---------- 
                                                                                          ---------  ---------- 
Pro Forma (Unaudited) Net Income and Earnings                                                                   
  Per Common Share (Note 7)                                                                                     
  Historical net income before income taxes................................... $  20,118                        
    Pro forma income tax effects..............................................    (7,846)                       
                                                                               ---------                        
    Pro forma net income...................................................... $  12,272                        
                                                                               ---------                        
                                                                               ---------                        
    Pro forma common shares outstanding.......................................    32,221                        
                                                                               ---------                        
                                                                               ---------                        
    Pro forma earnings per common share....................................... $    0.38                        
                                                                               ---------                        
                                                                               ---------                        

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(16) PARENT ONLY FINANCIAL INFORMATION (CONTINUED)                              

                                                        [Enlarge/Download Table]

                                                                                            DECEMBER 31,       
                                                                                      ------------------------ 
                                                                                         1994         1995     
                                                                                      -----------  ----------- 
                                                                                           (IN THOUSANDS)      
                                                                                                               
Balance Sheet Data --                                                                                          
Current assets:                                                                                                
  Cash and cash equivalents.......................................................... $   --       $     7,802 
  Marketable investment securities...................................................     --            15,460 
  Advances to affiliates.............................................................     --            19,545 
  Other current assets...............................................................     --               191 
                                                                                      -----------  ----------- 
    Total current assets.............................................................     --            42,998 
                                                                                      -----------  ----------- 
Investments in subsidiaries:                                                                                   
  Restricted (Note 12)...............................................................     103,577       92,613 
  Unrestricted.......................................................................         231          280 
                                                                                      -----------  ----------- 
                                                                                          103,808       92,893 
Other non current assets.............................................................     --            21,111 
                                                                                      -----------  ----------- 
    Total assets..................................................................... $   103,808  $   157,002 
                                                                                      -----------  ----------- 
                                                                                      -----------  ----------- 
Current liabilities.................................................................. $   --       $       316 

Stockholders' Equity:                                                                                          
  Preferred Stock, 20,000,000 shares authorized, 1,616,681 shares of Series A                                  
   Cumulative Preferred Stock issued and outstanding, including accrued dividends of                           
   $938,000 and $2,143,000, respectively.............................................      15,990       17,195 
  Class A Common Stock, $.01 par value, 200,000,000 shares authorized, 3,739,400 and                           
   10,535,003 shares issued and outstanding, respectively............................          38          105 
  Class B Common Stock, $.01 par value, 100,000,000 shares authorized, 29,804,401,                             
   shares issued and outstanding.....................................................         298          298 
  Class C Common Stock, $.01 par value, 100,000,000 shares authorized, none                                    
   outstanding.......................................................................     --           --      
  Common Stock Purchase Warrants.....................................................      26,133          714 
  Additional paid-in capital.........................................................      62,197      151,674 
  Unrealized holding gain on available-for-sale securities, net......................     --               239 
  Retained earnings (deficit)........................................................        (848)     (13,539)
                                                                                      -----------  ----------- 
    Total stockholders' equity.......................................................     103,808      156,686 
                                                                                      -----------  ----------- 
    Total liabilities and stockholders' equity....................................... $   103,808  $   157,002 
                                                                                      -----------  ----------- 
                                                                                      -----------  ----------- 

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ECHOSTAR COMMUNICATIONS CORPORATION AND AFFILIATES AND SUBSIDIARIES 

NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1993, 1994 AND 1995

(16) PARENT ONLY FINANCIAL INFORMATION (CONTINUED)                              

                                                        [Enlarge/Download Table]

                                                                                    YEAR ENDED DECEMBER 31,      
                                                                               --------------------------------- 
                                                                                  1993       1994        1995    
                                                                               ----------  ---------  ---------- 
                                                                                                                 
Cash Flows Data --                                                                                               
  Cash flows from operating activities:                                                                          
    Net income (loss)......................................................... $   20,118  $      90  $  (11,486)
    Adjustments --                                                                                               
      Equity in (earnings) losses of subsidiaries.............................    (20,118)       (90)     12,361 
      Changes in --                                                                                              
        Other current assets..................................................     --         --            (191)
        Current liabilities...................................................     --         --             316 
                                                                               ----------  ---------  ---------- 
            Net cash flows from operating activities..........................     --         --           1,000 
                                                                               ----------  ---------  ---------- 
Cash flows from investing activities:                                                                            
  Advances to affiliates......................................................     --         --         (19,545)
  Purchases of marketable investment securities, net..........................     --         --         (15,475)
  Increase in noncurrent assets...............................................     --         --         (21,111)
                                                                               ----------  ---------  ---------- 
            Net cash flows from investing activities..........................     --         --         (56,131)
                                                                               ----------  ---------  ---------- 
Cash flows from financing activities:                                                                            
  Net proceeds from issuance of Class A Common Stock..........................     --         --          62,933 
                                                                               ----------  ---------  ---------- 
NET INCREASE IN CASH AND CASH EQUIVALENTS.....................................     --         --           7,802 
CASH AND CASH EQUIVALENTS, beginning of period................................     --         --          --     
                                                                               ----------  ---------  ---------- 
CASH AND CASH EQUIVALENTS, end of period...................................... $   --      $  --      $    7,802 
                                                                               ----------  ---------  ---------- 
                                                                               ----------  ---------  ---------- 

(17) SUBSEQUENT EVENTS                                                          
    In  March 1996,  ECC announced  that its  wholly owned  subsidiary, EchoStar
Satellite Broadcasting Corporation  ("ESB"), is considering  a private  offering
(the  "Offering") pursuant  to Rule  144A under  the Securities  Act of  1933 of
Senior Secured Discount Notes due 2004 (the "Senior Secured Notes") expected  to
provide  net proceeds to  ESB of $250.0  million. ESB was  formed on January 24,
1996 for the purpose of the Offering. ECC will contribute all of the outstanding
capital stock of its wholly owned subsidiary, Dish, Ltd., to ESB.               

    EchoStar DBS Corporation ("EDC")  was formed under  Colorado law in  January
1996  for  purposes  of  participating in  a  Federal  Communications Commission
auction ("FCC Auction")  held on January  24 through January  26, 1996. EDC  was
required  to post a $10.0 million deposit  to participate in the FCC Auction for
28 DBS frequencies at 110 DEG. WL and post a $2.0 million deposit to participate
in the FCC Auction for 24 DBS frequencies at 148 DEG. WL. EDC is a wholly  owned
subsidiary of ECC.                                                              

    On  January 26, 1996, EDC submitted the winning bid of $52.3 million dollars
for 24 DBS frequencies at 148 DEG. WL. Previous deposits made with the FCC  were
applied  to satisfy the 20%  down payment. The balance of  the bid price must be
remitted to the FCC upon grant of the construction permit, which could occur  as
early as April 1996.                                                            

    Funds  necessary to pay the balance of the purchase price are expected to be
provided by ECC from the proceeds of the Senior Secured Notes.                  

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To EchoStar Satellite Broadcasting Corporation:                                 

    We  have  audited  the  accompanying  balance  sheet  of  ECHOSTAR SATELLITE
BROADCASTING CORPORATION (a Colorado corporation and wholly owned subsidiary  of
EchoStar  Communications Corporation) as of January 24, 1996. This balance sheet
is the  responsibility of  the Company's  management. Our  responsibility is  to
express an opinion on this balance sheet based on our audit.                    

    We  conducted  our  audit  in accordance  with  generally  accepted auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable  assurance  about  whether  the balance  sheet  is  free  of material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the  amounts  and  disclosures in  the  balance  sheet. An  audit  also includes
assessing the  accounting  principles used  and  significant estimates  made  by
management,  as well  as evaluating the  overall balance  sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.             

    In our opinion, the balance sheet referred to above presents fairly, in  all
material  respects, the  financial position  of EchoStar  Satellite Broadcasting
Corporation as  of  January 24,  1996,  in conformity  with  generally  accepted
accounting principles.                                                          

                       ARTHUR ANDERSEN LLP

Denver, Colorado,                                                               
February 23, 1996.                                                              

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ECHOSTAR SATELLITE BROADCASTING CORPORATION 
BALANCE SHEET 
JANUARY 24, 1996

ASSETS

                                                        [Enlarge/Download Table]
                                                                                             
Cash............................................................................... $   1,000
                                                                                    ---------
                                                                                    ---------

                                     STOCKHOLDER'S EQUITY                                    

Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding...... $   1,000
Retained earnings..................................................................    --    
                                                                                    ---------
    Total stockholder's equity..................................................... $   1,000
                                                                                    ---------
                                                                                    ---------

    EchoStar  Satellite Broadcasting Corporation (the "Issuer") was formed under
Colorado law in  January 1996 for  purposes of effecting  an offering of  Senior
Secured  Discount Notes  (the "Offering"), and  is a wholly  owned subsidiary of
EchoStar Communications Corporation ("ECC"). ECC will transfer to the Issuer all
of the capital stock  of its wholly  owned subsidiary Dish,  Ltd. Dish, Ltd.  is
primarily  engaged in the design, assembly, marketing and worldwide distribution
of direct to home ("DTH") satellite television products. Dish, Ltd. is currently
developing a high powered direct broadcast satellite ("DBS") system.            

    As of January 24, 1996, the only transaction of the Issuer was the  issuance
of 1,000 shares of common stock to ECC for $1,000.                              

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To EchoStar DBS Corporation:                                                    

    We  have audited the accompanying balance  sheet of ECHOSTAR DBS CORPORATION
(a Colorado corporation and wholly  owned subsidiary of EchoStar  Communications
Corporation) as of January 19, 1996. This balance sheet is the responsibility of
the  Company's management. Our  responsibility is to express  an opinion on this
balance sheet based on our audit.                                               

    We conducted  our  audit  in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance  about  whether  the  balance sheet  is  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts  and  disclosures in  the  balance  sheet. An  audit  also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well  as evaluating  the overall balance  sheet presentation.  We
believe that our audit provides a reasonable basis for our opinion.             

    In  our opinion, the balance sheet referred to above presents fairly, in all
material respects,  the financial  position of  EchoStar DBS  Corporation as  of
January 19, 1996, in conformity with generally accepted accounting principles.  

                       ARTHUR ANDERSEN LLP

Denver, Colorado,                                                               
February 23, 1996.                                                              

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ECHOSTAR DBS CORPORATION
BALANCE SHEET 
JANUARY 19, 1996

ASSETS

                                                        [Enlarge/Download Table]
                                                                                          
Cash.......................................................................... $     1,000
FCC Auction deposits..........................................................  12,000,000
                                                                               -----------
    Total assets.............................................................. $12,001,000
                                                                               -----------
                                                                               -----------

                           LIABILITIES AND STOCKHOLDER'S EQUITY                           

LIABILITIES:                                                                              
  Note payable to EchoStar Communications Corporation......................... $12,000,000
STOCKHOLDER'S EQUITY:                                                                     
  Common stock, $.01 par value, 1,000 shares authorized, issued and                       
   outstanding................................................................       1,000
  Retained earnings...........................................................     --     
                                                                               -----------
    Total liabilities and stockholder's equity................................ $12,001,000
                                                                               -----------
                                                                               -----------

FORMATION OF ECHOSTAR DBS CORPORATION                                           

    EchoStar  DBS Corporation ("EDC")  was formed under  Colorado law in January
1996 for  purposes  of  participating in  a  Federal  Communications  Commission
auction  ("FCC Auction") held  on January 24  through January 26,  1996. EDC was
required to post a $10.0 million deposit  to participate in the FCC Auction  for
28 Direct Broadcast Satellite ("DBS") frequencies at 110 DEG. WL and post a $2.0
million  deposit to  participate in  the FCC Auction  for 24  DBS frequencies at
148 DEG.  WL.  EDC is  a  wholly  owned subsidiary  of  EchoStar  Communications
Corporation ("ECC").                                                            

    As  of January 18, 1996, the only transactions of EDC were the sale of 1,000
shares of  common stock  to ECC,  the execution  of the  note payable  described
below, and the deposit of the loan proceeds with the FCC.                       

    On  January 26, 1996, EDC submitted the  winning bid of $52.3 million for 24
DBS frequencies at  148 DEG. WL.  Previous deposits  made with the  FCC will  be
applied  to satisfy the 20%  down payment. The balance of  the bid price must be
remitted to the FCC upon grant of the construction permit, which could occur  as
early as April 1996.                                                            

    Funds  necessary to pay the balance of the purchase price are expected to be
provided by ECC from  an Offering of Senior  Secured Discount Notes by  EchoStar
Satellite  Broadcasting  Corporation, another  wholly  owned subsidiary  of ECC.
EDC's common stock  will be pledged  as part  of the collateral  for the  Senior
Secured  Discount  Notes and  EDC  will be  a  guarantor of  the  Senior Secured
Discount Notes.                                                                 

NOTE PAYABLE TO ECHOSTAR                                                        

    On January 19, 1996, EDC borrowed $12.0 million from ECC. The loan  proceeds
were  used to  make deposits  on January  19, 1996,  related to  the FCC Auction
described above.  The note  payable  is due  December  31, 1996,  with  interest
payable quarterly to ECC at the prime rate.                                     

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Direct Broadcasting Satellite Corporation (Colorado):                        

    We  have  audited  the  accompanying balance  sheet  of  DIRECT BROADCASTING
SATELLITE CORPORATION (a  Colorado corporation  and wholly  owned subsidiary  of
EchoStar Communications Corporation) as of December 31, 1995. This balance sheet
is  the responsibility  of the  Company's management.  Our responsibility  is to
express an opinion on this balance sheet based on our audit.                    

    We conducted  our  audit  in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance  about  whether  the  balance sheet  is  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts  and  disclosures in  the  balance  sheet. An  audit  also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well  as evaluating  the overall balance  sheet presentation.  We
believe    that   our    audit   provides    a   reasonable    basis   for   our
opinion.                                                                        

    In our opinion, the balance sheet referred to above presents fairly, in  all
material  respects,  the  financial position  of  Direct  Broadcasting Satellite
Corporation (Colorado) as  of December  31, 1995, in  conformity with  generally
accepted accounting principles.                                                 

                       ARTHUR ANDERSEN LLP

Denver, Colorado,                                                               
February 23, 1996.                                                              

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DIRECT BROADCASTING SATELLITE CORPORATION (COLORADO)

BALANCE SHEET 

DECEMBER 31, 1995 

ASSETS

                                                        [Enlarge/Download Table]
                                                                                             
Cash............................................................................... $   1,000
                                                                                    ---------
                                                                                    ---------

                                     STOCKHOLDER'S EQUITY                                    

Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding...... $   1,000
Retained earnings..................................................................    --    
                                                                                    ---------
    Total stockholder's equity..................................................... $   1,000
                                                                                    ---------
                                                                                    ---------

    Direct Broadcasting Satellite Corporation (Colorado) ("DBSC (Colorado)") was
formed  in  December 1995  by  EchoStar Communications  Corporation  ("ECC") for
purposes of effecting  a merger with  Direct Broadcasting Satellite  Corporation
("DBSC"),  a Delaware corporation. In  December 1995, ECC acquired approximately
40% of the outstanding common stock of DBSC from ECC's wholly owned  subsidiary,
Dish,  Ltd., for $4,210,000. This  amount represented the cost  to Dish, Ltd. of
the DBSC common stock.  DBSC holds a  conditional satellite construction  permit
and  specific  orbital  slot  assignments  for 11  DBS  frequencies  at  each of
61.5 DEG. WL and 175 DEG. WL.                                                   

    In 1996,  ECC expects  to acquire  the  remaining 60%  interest in  DBSC  in
exchange  for the issuance of approximately 675,000 shares of its Class A Common
Stock to DBSC shareholders. This acquisition will be accounted for as a purchase
and recorded at the  fair value of the  ECC Class A Common  Stock issued to  the
DBSC  shareholders. In connection with the acquisition, ECC will merge DBSC with
DBSC (Colorado). The merger has been  approved by DBSC shareholders but may  not
be completed until the FCC has approved the merger.                             

    As  of January  24, 1996,  the only transaction  of DBSC  (Colorado) was the
issuance of 1,000 shares of common stock to ECC for $1,000.                     

    Following the merger, ECC will also assign to DBSC the construction contract
for EchoStar III,  a high powered  DBS satellite scheduled  for launch in  1997.
DBSC will provide a non-recourse guarantee of Senior Secured Notes to be offered
by  EchoStar Satellite Broadcasting Corporation, another wholly owned subsidiary
of ECC.                                                                         

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    The   following  financial  statements   of  Direct  Broadcasting  Satellite
Corporation ("DBSC")  are included  as  part of  the Registration  Statement  in
connection  with a  pending merger  of DBSC  with a  wholly owned  subsidiary of
EchoStar  Communications  Corporation  (the  "Merger"),  and  are  included  for
informational  purposes only. No assurances can be given that the Merger will be
consummated, or if consummated, the date that such consummation will occur.     

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors                                                       
Direct Broadcasting Satellite Corporation                                       
Washington, D.C.                                                                

    We have  audited  the accompanying  balance  sheets of  Direct  Broadcasting
Satellite  Corporation, a development  stage company, as of  March 31, 1995, and
December 31, 1995, and the related statements of income and cash flows for  each
of  the two years  ended March 31, 1995  and the nine  months ended December 31,
1995 and the statements of stockholders' equity for each of the five years ended
March 31, 1995 and the  nine months ended December 31,  1995. See Note 2.  These
financial  statements are  the responsibility  of the  Company's management. Our
responsibility is to express an opinion  on these financial statements based  on
our audits.                                                                     

    We  conducted  our audits  in  accordance with  generally  accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the  amounts and disclosures in the financial statements. An audit also includes
assessing the  accounting  principles used  and  significant estimates  made  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.          

    In our opinion, the financial  statements referred to above present  fairly,
in  all  material  respects,  the  financial  position  of  Direct  Broadcasting
Satellite Corporation,  as of  March 31,  1995 and  December 31,  1995, and  the
results  of its operations  and its cash flows  for the two  years in the period
ended March 31, 1995 and the nine months ended December 31, 1995, in  conformity
with generally accepted accounting principles.                                  

    The  accompanying financial statements have  been prepared assuming that the
Corporation will  continue  as  a going  concern.  The  Corporation's  recurring
operating  losses raise  substantial doubt  about its  ability to  continue as a
going concern  at December  31,  1995. Management's  plans  in regard  to  these
matters  are  described in  Note 1  of  the notes  to financial  statements. The
financial statements do not include any  adjustments that might result from  the
outcome of this uncertainty.                                                    

                     REGARDIE, BROOKS & LEWIS,
                                  CHARTERED CERTIFIED PUBLIC ACCOUNTANTS

Bethesda, Maryland,                                                             
January 23, 1996.                                                               

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

BALANCE SHEETS

ASSETS

                                                        [Enlarge/Download Table]

                                                                                                    DECEMBER 31,  
                                                                                   MARCH 31, 1995       1995      
                                                                                   --------------  -------------- 
                                                                                                                  
CURRENT ASSETS:                                                                                                   
  Cash............................................................................ $      119,892  $       72,950 
  Money Market Funds --                                                                                           
    Crestfunds, Inc. -- Cash Reserves Fund........................................      2,131,988         285,978 
    Pacific Horizon Prime Fund....................................................       --                 7,081 
                                                                                   --------------  -------------- 
      Total current assets........................................................      2,251,880         366,009 
                                                                                   --------------  -------------- 
PROPERTY AND EQUIPMENT, AT COST:                                                                                  
  Satellite development in process (Note 4).......................................        372,625      17,882,707 
  Computer equipment..............................................................          5,073           5,073 
  Less: Accumulated depreciation..................................................         (1,725)         (2,730)
                                                                                   --------------  -------------- 
    Cost less accumulated depreciation............................................        375,973      17,885,050 
                                                                                   --------------  -------------- 
OTHER ASSETS:                                                                                                     
  FCC license (Note 3)............................................................        687,136         865,571 
  Unamortized loan costs..........................................................       --                67,058 
  Deferred tax benefit (Note 7)...................................................       --              --       
  Security deposits...............................................................          2,575           2,575 
                                                                                   --------------  -------------- 
    Total other assets............................................................        689,711         935,204 
                                                                                   --------------  -------------- 
      Total assets................................................................ $    3,317,564  $   19,186,263 
                                                                                   --------------  -------------- 
                                                                                   --------------  -------------- 

                                       LIABILITIES AND STOCKHOLDERS' EQUITY                                       
CURRENT LIABILITIES:                                                                                              
  Accounts payable................................................................ $       79,589  $      140,958 
  Unsecured notes payable (Note 6A)...............................................       --               500,000 
  Accrued interest................................................................       --               237,226 
  Unsecured note payable (Note 6B) (in arrears)...................................        350,000         325,000 
  Accrued interest in arrears (Note 6)............................................        340,537         341,074 
  Due to shareholder..............................................................          7,380           3,024 
                                                                                   --------------  -------------- 
      Total current liabilities...................................................        777,506       1,547,282 
                                                                                   --------------  -------------- 
LONG-TERM DEBT:                                                                                                   
  Secured note payable (Note 5)...................................................       --            16,000,000 
  Unsecured notes payable (Note 6A)...............................................        500,000        --       
  Accrued interest (Notes 5 & 6)..................................................        199,680          10,082 
                                                                                   --------------  -------------- 
    Total long-term debt..........................................................        699,680      16,010,082 
                                                                                   --------------  -------------- 
      Total liabilities...........................................................      1,477,186      17,557,364 
                                                                                   --------------  -------------- 
COMMITMENTS (Note 4)                                                                                              
STOCKHOLDERS' EQUITY:                                                                                             
  Common stock, $.01 par value, 3,000,000 shares authorized; shares issued and                                    
   outstanding, 1,618,138 and 1,620,138, respectively.............................         16,181          16,201 
  Additional paid in capital......................................................      5,833,066       5,849,046 
  Accumulated deficit (Note 1)....................................................     (2,755,808)     (2,755,808)
  Accumulated deficit during development stage....................................     (1,253,061)     (1,480,540)
                                                                                   --------------  -------------- 
    Total stockholders' equity....................................................      1,840,378       1,628,899 
                                                                                   --------------  -------------- 
      Total liabilities and stockholders' equity.................................. $    3,317,564  $   19,186,263 
                                                                                   --------------  -------------- 
                                                                                   --------------  -------------- 

See the accompanying report of independent public accountants.
The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

STATEMENTS OF INCOME

                                                        [Enlarge/Download Table]

                                                   YEARS ENDED MARCH 31                          APRIL 1, 1990  
                                                --------------------------  NINE MONTHS ENDED   (INCEPTION) TO  
                                                    1994          1995      DECEMBER 31, 1995  DECEMBER 31, 1995
                                                ------------  ------------  -----------------  -----------------
                                                                                (NOTE 2)           (NOTE 1)     
                                                                                                                
REVENUE:                                                                                                        
  Gain on settlement of indebtedness........... $    --       $    --         $      31,656     $        31,656 
  Investment income............................      --             31,988           56,071              88,059 
                                                ------------  ------------  -----------------  -----------------
    Total revenue..............................      --             31,988           87,727             119,715 
                                                ------------  ------------  -----------------  -----------------
OPERATING EXPENSES:                                                                                             
  Interest expense.............................      131,103        85,031           59,739             612,256 
  Legal fees...................................       12,769       151,972           23,251             385,892 
  Consulting fees..............................       36,370       148,303          167,654             417,327 
  Professional services........................        1,800        16,210            6,566              34,021 
  Rent.........................................        2,206        19,369           24,975              46,550 
  Taxes and licenses...........................        3,722           520              455               7,034 
  Other administrative expenses................       13,440        32,765           31,561              94,445 
  Depreciation.................................          154         1,571            1,005               2,730 
                                                ------------  ------------  -----------------  -----------------
      Total operating expenses.................      201,564       455,741          315,206           1,600,255 
                                                ------------  ------------  -----------------  -----------------
NET LOSS BEFORE INCOME TAXES...................     (201,564)     (423,753)        (227,479)         (1,480,540)
PROVISION FOR INCOME TAXES (Note 7)............      --            --              --                 --        
                                                ------------  ------------  -----------------  -----------------
NET LOSS....................................... $   (201,564) $   (423,753)   $    (227,479)    $    (1,480,540)
                                                ------------  ------------  -----------------  -----------------
                                                ------------  ------------  -----------------  -----------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING.....      901,555     1,272,701        1,618,583           1,024,845 
                                                ------------  ------------  -----------------  -----------------
                                                ------------  ------------  -----------------  -----------------
LOSS PER COMMON SHARE.......................... $      (0.23) $      (0.33)   $       (0.14)    $         (1.44)
                                                ------------  ------------  -----------------  -----------------
                                                ------------  ------------  -----------------  -----------------

See the accompanying report of independent public accountants.
The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE FIVE YEARS ENDED MARCH 31, 1995 
AND THE NINE MONTH PERIOD ENDED DECEMBER 31, 1995 

                                                        [Enlarge/Download Table]

                                                                                             ACCUMULATED                
                                                                                               DEFICIT                  
                                                COMMON STOCK       ADDITIONAL                   DURING        TOTAL     
                                           ----------------------   PAID IN    ACCUMULATED   DEVELOPMENT   STOCKHOLDERS'
                                            SHARES     PAR VALUE    CAPITAL      DEFICIT        STAGE         EQUITY    
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
                                                                                 (NOTE 1)                               
                                                                                                                        
Balance at March 31, 1990................    709,888   $   7,099   $1,127,742   $(2,755,808)  $   --        $(1,620,967)
  Issuance of common stock --                                                                                           
    October 15, 1990 at $0.01 per                                                                                       
     share...............................    150,000       1,500       (1,500)      --            --            --      
  Net loss for the period April 1, 1990                                                                                 
   through March 31, 1991................     --          --           --           --          (384,427)     (384,427) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
Balance at March 31, 1991................    859,888       8,599    1,126,242   (2,755,808)     (384,427)   (2,005,394) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
  Net loss for the period April 1, 1991                                                                                 
   through March 31, 1992................     --          --           --           --          (125,826)     (125,826) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
Balance at March 31, 1992................    859,888       8,599    1,126,242   (2,755,808)     (510,253)   (2,131,220) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
  Net loss for the period April 1, 1992                                                                                 
   through March 31, 1993................     --          --           --           --          (117,491)     (117,491) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
Balance at March 31, 1993................    859,888       8,599    1,126,242   (2,755,808)     (627,744)   (2,248,711) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
  Issuance of common stock --                                                                                           
    December 21, 1993 at $2.00 per                                                                                      
     share...............................    125,000       1,250      248,750       --            --           250,000  
  Net loss for the period April 1, 1993                                                                                 
   through March 31, 1994................     --          --           --           --          (201,564)     (201,564) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
Balance at March 31, 1994................    984,888       9,849    1,374,992   (2,755,808)     (829,308)   (2,200,275) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
  Issuance of common stock --                                                                                           
    April 12, 1994 at $3.00 per share....     25,000         250       74,750       --            --            75,000  
    June 13, 1994 at $4.00 per share.....     18,750         187       74,813       --            --            75,000  
    August 5, 1994 at $4.00 per share....      6,250          63       24,937       --            --            25,000  
    November 15, 1994 at $7.14 per share,                                                                               
     net.................................    583,250       5,832    4,283,574       --            --         4,289,406  
  Net loss for the period April 1, 1994                                                                                 
   through March 31, 1995................     --          --           --           --          (423,753)     (423,753) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
Balance at March 31, 1995................  1,618,138      16,181    5,833,066   (2,755,808)   (1,253,061)    1,840,378  
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
  Issuance of Common Stock --                                                                                           
    November 16, 1995 at $8.00 per                                                                                      
     share...............................      2,000          20       15,980       --            --            16,000  
    Net loss for the period April 1, 1995                                                                               
     through December 31, 1995...........     --          --           --           --          (227,479)     (227,479) 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
Balance at December 31, 1995.............  1,620,138   $  16,201   $5,849,046   $(2,755,808)  $(1,480,540)  $1,628,899  
                                           ---------  -----------  ----------  ------------  ------------  ------------ 
                                           ---------  -----------  ----------  ------------  ------------  ------------ 

See the accompanying report of independent public accountants.
The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31, 1994 AND 1995,
AND THE NINE MONTH PERIOD ENDED DECEMBER 31, 1995 

                                                        [Enlarge/Download Table]

                                                         YEARS ENDED MARCH 31,                       APRIL 1, 1990  
                                                         ---------------------  NINE MONTHS ENDED   (INCEPTION) TO  
                                                           1994        1995     DECEMBER 31, 1995  DECEMBER 31, 1995
                                                         ---------  ----------  -----------------  -----------------
                                                                                    (NOTE 2)           (NOTE 1)     
                                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                               
  Net loss.............................................  $(201,564) $ (423,753)   $    (227,479)     $  (1,480,540) 
  Adjustments to reconcile net loss to net cash applied                                                             
   to operating activities:                                                                                         
    Depreciation.......................................        154       1,571            1,005              2,730  
    Gain on settlement of indebtedness.................     --          --              (31,656)           (31,656) 
    Noncash consulting fees............................     --          --               16,000             16,000  
    (Decrease) increase in accounts payable............    (51,331)      5,416            3,268            (49,074) 
    Increase in accrued interest payable...............    131,103      64,311           59,739            589,297  
    Increase (decrease) due to shareholders............      1,667       4,378           (4,356)            (5,230) 
                                                         ---------  ----------  -----------------  -----------------
      Net cash applied to operating activities.........   (119,971)   (348,077)        (183,479)          (958,473) 
                                                         ---------  ----------  -----------------  -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                               
  Acquisition of furniture and equipment...............     (3,089)     (1,984)        --                   (5,073) 
  Increase in satellite development costs..............    (63,500)    (41,750)     (17,517,375)       (17,872,625) 
  Increase in FCC license..............................   (106,097)   (371,630)        (170,017)          (665,244) 
                                                         ---------  ----------  -----------------  -----------------
      Net cash used in investing activities............   (172,686)   (415,364)     (17,687,392)       (18,542,942) 
                                                         ---------  ----------  -----------------  -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                               
  Increase in secured notes payable....................     --          --           16,000,000         16,000,000  
  Issuance of common stock.............................    250,000   3,134,999         --                3,384,999  
  Increase notes payable...............................     76,250      --             --                  652,500  
  Increase in contract payable.........................     --          --             --                   62,500  
  Payment of contract payable..........................     --          --             --                  (62,500) 
  Payment of note payable..............................     --        (152,500)         (15,000)          (167,500) 
  Increase in security deposit.........................     (1,463)     (1,112)        --                   (2,575) 
                                                         ---------  ----------  -----------------  -----------------
      Net cash provided by financing activities........    324,787   2,981,387       15,985,000         19,867,424  
                                                         ---------  ----------  -----------------  -----------------
NET INCREASE (DECREASE) IN CASH........................     32,130   2,217,946       (1,885,871)           366,009  
CASH AT BEGINNING OF YEAR..............................      1,804      33,934        2,251,880           --        
                                                         ---------  ----------  -----------------  -----------------
CASH AT END OF YEAR....................................  $  33,934  $2,251,880    $     366,009      $     366,009  
                                                         ---------  ----------  -----------------  -----------------
                                                         ---------  ----------  -----------------  -----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                   
  Cash paid during the year for interest...............  $  --      $   20,719    $    --            $      22,958  
                                                         ---------  ----------  -----------------  -----------------
                                                         ---------  ----------  -----------------  -----------------
SUPPLEMENTAL SCHEDULE OF NONCASH AND FINANCING                                                                      
 ACTIVITIES:                                                                                                        
  Additional common stock was issued upon the                                                                       
   conversion of notes payable in the amount of                                                                     
   $700,000, plus related accrued interest totaling                                                                 
   $629,406............................................  $  --      $1,329,406  $     --           $     1,329,406  
  Additional common stock was issued in exchange for                                                                
   consulting services.................................     --          --               16,000             16,000  
Disclosure of accounting policy:                                                                                    
  For the purposes of the statement of cash flows, the                                                              
   Company considers money market funds to be cash                                                                  
   equivalents                                                                                                      

See the accompanying report of independent public accountants.
The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS 

MARCH 31, 1995 AND DECEMBER 31, 1995

(1) ORGANIZATION                                                                
    Direct  Broadcasting  Satellite  Corporation (the  "Company"  or  "DBSC"), a
development stage company,  was incorporated January  23, 1981 in  the state  of
Delaware.  It is constructing satellites, and plans to operate a direct-to-home,
multi-channel satellite broadcast television  service. Funding of the  Company's
operations  has been obtained through the  private placement of common stock and
issuance of convertible debt, demand notes and accounts payable.                

    On December 21,  1995, the Company  and EchoStar Communications  Corporation
("EchoStar"),  a 39.8%  shareholder, agreed to  a merger, subject  to receipt of
requisite government  approval.  EchoStar holds  direct  broadcasting  satellite
authorizations  for 21 channels at  119 DEG. W.L. Under  the terms of the Merger
Agreement, (1) the Company and EchoStar agreed to merge DBSC into a wholly-owned
subsidiary of EchoStar, and (2) the  Company's shareholders will be entitled  to
receive  at their option $7.99 in cash or .67417 EchoStar shares for each of the
Company's 975,148 shares not already owned by EchoStar.                         

    EchoStar also agreed,  at its  sole discretion, to  loan the  Company up  to
$150,000,000   for  expenses  associated  with  the  construction,  launch,  and
insurance of the Company's  spacecraft. On December 29,  1995, the Company  drew
down  $16  million under  its  loan purchase  agreement  with EchoStar  and paid
Lockheed Martin Corporation $16 million on the same day.                        

    Without the EchoStar or other financing,  the Company's ability to meet  its
existing  obligations  and proceed  with the  construction  of the  satellite is
doubtful. In such case, the ultimate realization of the capitalized FCC  license
application  costs, as  well as  the deferred  satellite development  costs, are
doubtful, and the  continuance of the  Company as an  operating entity would  be
uncertain.                                                                      

    The  Company's development  activities were  dormant for  a period  of years
ended March 31, 1990. During  the year ended March  31, 1991, the Company  began
development  of two new  satellites. In accordance with  SFAS No. 7, development
stage activities  for presentation  purposes  on the  statements of  income  and
statements  of stockholders' equity are for the period April 1, 1990 to December
31, 1995. Prior development  stage activity losses  amounting to $2,755,808  are
reflected in stockholders' equity as accumulated deficit.                       

(2) SIGNIFICANT ACCOUNTING POLICIES                                             
    Effective  April 1, 1995, the Company changed its fiscal year to December 31
from March 31. All balances for the nine months ended December 31, 1995  include
activity from April 1, 1995 to December 31, 1995.                               

    Loan costs will be amortized over the 8-year life of the $16 million secured
note, effective January 1, 1996.                                                

    Management uses estimates and assumptions in preparing financial statements.
Those  estimates  and  assumptions affect  the  reported amounts  of  assets and
liabilities, the  disclosure  of  contingent assets  and  liabilities,  and  the
reported   revenues  and  expenses.  Actual  results  could  differ  from  those
estimates.                                                                      

(3) FCC LICENSE                                                                 
    The Company's application for  authority to construct  and operate a  direct
broadcast satellite system was approved by the Federal Communications Commission
("FCC") and a conditional construction permit for two spacecraft was released on
August  15,  1989. On  November 10,  1993, the  FCC found  that the  Company had
complied  with   the  necessary   due   diligence  requirements   and   assigned

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

MARCH 31, 1995 AND DECEMBER 31, 1995

(3) FCC LICENSE (CONTINUED)                                                     
specific  orbit/spectrum resources to the Company.  On December 8, 1995, the FCC
staff granted  the  Company an  extension  of  time through  November  1998,  to
construct  and launch two spacecrafts. Pursuant to a FCC request, on January 31,
1994 the  Company submitted  certain technical  data to  the FCC  and asked  for
launch authority.                                                               

    On  June  30,  1995, the  Company  notified the  FCC  that it  had  signed a
spacecraft contract modification and  sought approval thereof.  The FCC has  not
yet  acted on either  request. Certain costs incurred  in connection with filing
the FCC license application and maintaining the authority have been capitalized.
Amortization periods for these costs will be determined at the time the services
related to the applicable  FCC license commences, or  capitalized costs will  be
written  off at the time efforts to provide services are abandoned. FCC licenses
are expected to have a useful life of approximately 12 years.                   

(4) SATELLITE DEVELOPMENT COSTS                                                 
    The Company  has  entered  into  a contract  for  the  construction  of  two
satellites.  The  contract,  as amended  May  31, 1995,  provides  for periodic,
non-refundable payments over a period extending to October 30, 2003, as well  as
cancellation  penalties if the contract is  terminated before the satellites are
launched. As of December 31, 1995, payments made under the terms of the contract
totaled $17,838,500. The contract calls  for additional payments of  $30,000,000
in the year ending December 31, 1996. The total commitment under the contract is
in excess of $160 million.                                                      

    At  December  31,  1995,  total  satellite  development  costs  amounted  to
$17,882,707, including capitalized interest of $10,082.                         

    During construction and  prior to  launch, the  Company has  granted to  the
Contractor  a  full security  interest  in all  hardware,  software and  work in
process (collectively "Security") related to the two satellites. In the event of
certain defaults  by  the  Company,  the  Contractor  shall  immediately  assume
ownership of the entire Security.                                               

(5) SECURED NOTE PAYABLE                                                        
    On  December 29, 1995, the Company borrowed  $16,000,000, per the terms of a
note purchase  agreement  and a  security  agreement between  EchoStar  and  the
Company.  The promissory note is  secured by an assignment,  pledge and grant of
security interest in all the estate, right, title, and interest of the  Company,
whether now owned or hereafter acquired, in, to and under (1) the Satellites and
DBS  Rights,  (2)  all  agreements,  contracts  and  documents  related  to  the
Satellites, DBS Rights, and business of the Company, (3) all income and revenues
from all business operations, and (4) all tangible and/or intangible property of
the Company, including the Satellites.  However, the security in the  Satellites
is  subordinate to the security interest in and to the Satellites held by Martin
Marietta.                                                                       

    Interest accrues at Chase Manhattan Bank prime rate plus 3 percent as of the
date of  the loan.  Principal  and interest  is  payable in  equal  installments
beginning  on December 29, 1997,  and ending on December  29, 2003. The December
29, 1997  installment related  to  the $16,000,000  loan will  be  approximately
$3,713,300, including interest at 11.5%.                                        

(6) UNSECURED NOTES PAYABLE                                                     

A.  UNSECURED NOTE PAYABLE                                                      

    Note  payable  in  the amount  of  $500,000  is payable  90  days  after the
successful  launch  and  check-out  of  the  Company's  first  Direct  Broadcast
Satellite-Broadcast Satellite System, or on demand in                           

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

MARCH 31, 1995 AND DECEMBER 31, 1995

(6) UNSECURED NOTES PAYABLE (CONTINUED)                                         
certain other limited circumstances. Interest is payable at Chase Manhattan Bank
prime  rate plus 1% per annum or 4%  after maturity, or in the event of default.
At December 31,  1995, the note  payable and the  related accrued interest  were
payable  on demand.  At March  31, 1995,  both the  principal and  interest were
classified as long-term debt since the launching of the satellite was not within
one year of the balance sheet date.                                             

B.  CONVERTIBLE NOTES PAYABLE                                                   

    Convertible notes payable at December 31, 1995 amounted to $325,000, and  at
March  31,  1995 amounted  to $350,000.  At December  31, 1995,  notes totalling
$100,000 accrue interest at  75% of Chase Manhattan  Bank prime rate, and  notes
totalling $225,000 accrue interest at 100% of the prime rate.                   

    Until  November 15, 1994, notes totalling $475,000 accrue interest at 75% of
Chase Manhattan Bank prime rate, and notes totalling $500,000 accrue interest at
100% of the prime rate. The notes  were issued on various dates from October  1,
1982  to March  6, 1984  and were  due 24  months from  date of  issue. Interest
payments have not been made over  the years. However, interest has been  accrued
and  is reflected in  the accompanying financial  statements. Both the principal
and interest are classified as currently payable since the notes are in arrears.

    The notes provide that  until they are  paid in full, a  note holder at  his
option  may convert principal into shares of  the authorized common stock of the
Company as follows: $100,000  of principal at $6.67  per share, and $225,000  of
principal at $8.33 per share. On November 15, 1994, certain notes were converted
to common stock.                                                                

(7) INCOME TAXES                                                                
    Effective  April 1, 1992, the Company  adopted SFAS No. 109, "Accounting for
Income Taxes",  which requires  an  asset and  liability approach  to  financial
accounting  and reporting for income taxes. The difference between the financial
statement and  tax  bases of  assets  and  liabilities are  computed  for  those
differences  that have future  tax consequences using  the currently enacted tax
laws and rates that apply  to the periods in which  they are expected to  affect
taxable  income. Valuation allowances  are established, if  necessary, to reduce
the deferred tax asset to the amount that will more likely than not be realized.
Income tax expense is the current tax payable or refundable for the period, plus
or minus the net change in the deferred tax assets and liabilities.             

    The adoption  of SFAS  No.  109 did  not have  an  effect on  the  Company's
financial  statements because the deferred income tax benefit has been offset by
a valuation allowance of equal  amount. The valuation allowance was  established
to  reduce the deferred tax benefit to the amount that will more likely than not
be realized. This reduction is necessary due to the uncertainty of the Company's
ability to utilize all of the future tax deduction resulting from net  operating
losses.                                                                         

    The gross deferred income tax benefit was approximately $849,382 at December
31, 1995, and $781,002 at March 31, 1995.                                       

    The  deferred income tax benefit results primarily from net operating losses
for tax purposes. The net operating loss carryover to future years is $2,202,393
at December  31,  1995, none  of  which will  expire  until the  year  1999.  In
addition,  the  Company has  not  claimed as  a  tax deduction  accrued interest
payable of $578,300. For income tax purposes, the Company reports its net income
(loss) on the cash basis.                                                       

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

MARCH 31, 1995 AND DECEMBER 31, 1995

(8) CONTINGENT LIABILITIES                                                      
    In 1982, the Company  entered into agreements  with two French  corporations
pursuant  to which each corporation, in exchange for the Company's commitment to
procure satellite hardware, paid to a satellite launch provider, for the benefit
of the Company, a  launch reservation fee of  $100,000. The first agreement,  as
amended,  specified that payment of the $100,000  plus interest of 13% per annum
was due on December 31, 1983. The second agreement provided that the Company was
obligated to issue 6,000 (as adjusted) shares of common stock no later than  two
years from the date of the agreement.                                           

    No equipment was procured from either corporation, no shares of common stock
have  been issued nor  has the Company  returned the $100,000  payment to either
corporation. The  Company  has  not  determined  whether  either  obligation  is
currently  enforceable under French  law. The Company is  unaware of any request
for payment or for the issuance of  the Company's shares from August 3, 1987  to
date.                                                                           

(9) STOCKHOLDERS' EQUITY                                                        
    In  November 1994, the  Company resolved a suit  brought by EchoStar against
the Company regarding enforceability  of certain notes  and accounts payable  of
the  Company. Pursuant to the settlement, the payables were exchanged for shares
of the Company's common  stock and EchoStar purchased  additional shares of  the
Company  for $2,960,000  so that,  together with  the shares  of DBSC previously
acquired, EchoStar presently  owns approximately 40%  of the outstanding  common
stock  of DBSC. As part of this settlement  the Company issued an option to sell
at a  fixed  price  of  $2,000,000  the greater  of  11.3%  of  its  issued  and
outstanding  common stock at the  date of exercise, or  333,333 shares of common
stock, and an Optional Merger Election,  whereby the Company or the  Purchaser's
wholly  owned subsidiary  can elect  to merge  with each  other provided certain
conditions precedent  have been  met.  On December  21,  1995, the  Company  and
EchoStar entered into a Merger Agreement. See Note 1.                           

    Legal  fees  expense  has  been  charged  $125,000  for  costs  incurred  in
connection with the above transaction.                                          

(10) RELATED PARTY TRANSACTIONS                                                 
Consulting fees are paid to certain shareholders and officers.          

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SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION
(UNAUDITED) 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 

DISH, LTD. AND SUBSIDIARIES 

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DISH, LTD. AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS 

(IN THOUSANDS)

ASSETS

                                                        [Enlarge/Download Table]

                                                              DECEMBER 31,   MARCH 31, 
                                                                  1995         1996    
                                                              ------------  -----------
                                                                            (UNAUDITED)
                                                                                       
CURRENT ASSETS:                                                                        
  Cash and cash equivalents.................................    $ 13,949     $  2,155  
  Marketable investment securities..........................         210          212  
  Trade accounts receivable, net............................      10,435       13,131  
  Inventories...............................................      38,769       27,298  
  Income tax receivable.....................................       3,870        4,504  
  Deferred tax assets.......................................       1,834        4,415  
  Other current assets......................................      12,791       12,429  
                                                              ------------  -----------
      Total current assets..................................      81,858       64,144  
RESTRICTED CASH AND MARKETABLE SECURITIES:                                             
  1994 Notes escrow.........................................      73,291       63,617  
  Other.....................................................      26,400       41,900  
PROPERTY AND EQUIPMENT, net.................................     333,199      333,231  
OTHER NONCURRENT ASSETS.....................................      44,547       45,142  
                                                              ------------  -----------
      Total assets..........................................    $559,295     $548,034  
                                                              ------------  -----------
                                                              ------------  -----------

                          LIABILITIES AND STOCKHOLDER'S EQUITY                         

CURRENT LIABILITIES:                                                                   
  Trade accounts payable....................................    $ 19,063     $ 12,280  
  Deferred programming revenue..............................       5,563        7,416  
  Accrued expenses and other current liabilities............      21,335        6,688  
  Notes payable and current portion of long-term debt.......       4,782        4,783  
                                                              ------------  -----------
      Total current liabilities.............................      50,743       31,167  
LONG-TERM DEFERRED PROGRAMMING REVENUE......................      --            3,790  
1994 NOTES, net.............................................     382,218      395,333  
LONG-TERM MORTGAGE DEBT AND NOTE PAYABLE, excluding current                            
 portion....................................................      33,444       32,421  
                                                              ------------  -----------
      Total liabilities.....................................     466,405      462,711  
                                                              ------------  -----------
COMMITMENTS AND CONTINGENCIES (Note 6)                                                 

STOCKHOLDER'S EQUITY (Note 1):                                                         
  Preferred Stock, 20,000,000 and no shares authorized,                                
   1,616,681 and no shares of Series A Cumulative Preferred                            
   Stock issued and outstanding, including accrued dividends                           
   of $1,555,000 and $0, respectively.......................      16,607       --      
  Class A Common Stock, $.01 par value, 200,000,000 and no                             
   shares authorized, 6,470,599 and no shares issued and                               
   outstanding, respectively................................          65       --      
  Class B Common Stock, $.01 par value, 100,000,000 and no                             
   shares authorized, 29,804,401 and no shares issued and                              
   outstanding, respectively .                                       298       --      
  Common Stock, $.01 par value, none and 1,000 shares                                  
   authorized, issued and outstanding, respectively.........      --           --      
  Additional paid-in capital................................      89,495      106,465  
  Unrealized holding gains on available-for-sale securities,                           
   net of deferred taxes....................................         251          (26) 
  Retained earnings (deficit)...............................     (13,826)     (21,116) 
                                                              ------------  -----------
      Total stockholder's equity............................      92,890       85,323  
                                                              ------------  -----------
      Total liabilities and stockholder's equity............    $559,295     $548,034  
                                                              ------------  -----------
                                                              ------------  -----------

The accompanying notes to consolidated financial statements 
are an integral part of these balance sheets. 

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DISH, LTD. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF INCOME 

(IN THOUSANDS, EXCEPT PER SHARE DATA) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                             THREE MONTHS ENDED  
                                                                                                 MARCH 31,       
                                                                                            -------------------- 
                                                                                              1995       1996    
                                                                                            ---------  --------- 
                                                                                                                 
REVENUE:                                                                                                         
  DTH products and technical services...................................................... $  36,277  $  36,741 
  Programming..............................................................................     3,871      3,913 
  Loan origination and participation income................................................       265        372 
                                                                                            ---------  --------- 
      Total revenue........................................................................    40,413     41,026 
                                                                                            ---------  --------- 
EXPENSES:                                                                                                        
  DTH products and technical services......................................................    29,445     32,750 
  Programming..............................................................................     3,432      3,283 
  Selling, general and administrative......................................................     7,871     10,571 
  Depreciation.............................................................................       363      3,330 
                                                                                            ---------  --------- 
      Total expenses.......................................................................    41,111     49,934 
                                                                                            ---------  --------- 
OPERATING LOSS.............................................................................      (698)    (8,908)
                                                                                            ---------  --------- 
OTHER INCOME (EXPENSE):                                                                                          
  Interest income..........................................................................     3,638      1,708 
  Interest expense, net of amounts capitalized.............................................    (6,563)    (4,941)
  Other, net...............................................................................        28         (1)
                                                                                            ---------  --------- 
      Total other income (expense).........................................................    (2,897)    (3,234)
                                                                                            ---------  --------- 
NET LOSS BEFORE INCOME TAXES...............................................................    (3,595)   (12,142)
BENEFIT FOR INCOME TAXES...................................................................     1,355      4,852 
                                                                                            ---------  --------- 
NET LOSS................................................................................... $  (2,240) $  (7,290)
                                                                                            ---------  --------- 
                                                                                            ---------  --------- 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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DISH, LTD. AND SUBSIDIARIES 

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 1996 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                               RETAINED                 
                                                                                               EARNINGS                 
                                                                                               (DEFICIT)                
                                                                                                  AND                   
                                                                                 ADDITIONAL   UNREALIZED       TOTAL    
                                                        PREFERRED     COMMON       PAID-IN      HOLDING    STOCKHOLDER'S
                                                          STOCK        STOCK       CAPITAL      LOSSES        EQUITY    
                                          SHARES OF    -----------  -----------  -----------  -----------  -------------
                                        COMMON STOCK                                                                    
                                         OUTSTANDING                                                                    
                                        -------------                                                                   
                                          (NOTE 1)                                                                      
                                                                                                                        
BALANCES, at December 31, 1995.........      36,275     $  16,607    $     363    $  89,495    $ (13,575)    $  92,890  
  Exchange of Common Stock (Note 1)....     (36,274)      (16,607)        (363)      16,970                     --      
  Unrealized holding losses on                                                                                          
   available-for-sale securities,                                                                                       
   net.................................                                                             (277)         (277) 
  Net loss.............................                                                           (7,290)       (7,290) 
                                        -------------  -----------  -----------  -----------  -----------  -------------
BALANCES, at March 31, 1996............           1     $  --        $  --        $ 106,465    $ (21,142)    $  85,323  
                                        -------------  -----------  -----------  -----------  -----------  -------------
                                        -------------  -----------  -----------  -----------  -----------  -------------

The accompanying notes to consolidated financial statements 
are an integral part of this statement. 

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CONSOLIDATED STATEMENTS OF CASH FLOWS 

(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                            THREE MONTHS ENDED   
                                                                                                MARCH 31,        
                                                                                          ---------------------- 
                                                                                             1995        1996    
                                                                                          ----------  ---------- 
                                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                            
  Net loss............................................................................... $   (2,240) $   (7,290)
  Adjustments to reconcile net loss to net cash flows from operating activities --                               
    Depreciation.........................................................................        363       3,330 
    Provision for doubtful accounts......................................................        111         610 
    Benefit for deferred taxes...........................................................     (2,493)     (2,800)
    Amortization of deferred debt issuance costs on 1994 Notes...........................        315         315 
    Amortization of discount on 1994 Notes, net of amounts capitalized...................      6,131       4,189 
    Equity in earnings of joint venture..................................................        (15)     --     
    Change in reserve for excess and obsolete inventory..................................        233         227 
    Long-term deferred programming revenue...............................................     --           3,790 
    Other, net...........................................................................         26        (170)
    Changes in working capital items --                                                                          
      Trade accounts receivable..........................................................       (728)     (2,081)
      Inventories........................................................................     (4,238)     11,244 
      Income tax receivable..............................................................     --            (634)
      Other current assets...............................................................       (730)        362 
      Liability under cash management program............................................        (57)     --     
      Trade accounts payable.............................................................     (1,061)     (6,783)
      Deferred programming revenue.......................................................       (657)      1,853 
      Accrued expenses...................................................................      1,221         109 
      Other current liabilities..........................................................         38         244 
                                                                                          ----------  ---------- 
          Net cash flows from operating activities.......................................     (3,781)      6,515 
                                                                                          ----------  ---------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                            
  Purchases of marketable investment securities..........................................    (15,211)         (2)
  Sales of marketable investment securities..............................................     27,777      --     
  Purchases of restricted marketable investment securities...............................     --         (15,500)
  Purchases of property and equipment....................................................       (538)     (2,715)
  Investment earnings placed in escrow...................................................     (2,714)     (1,057)
  Funds released from escrow account.....................................................     16,257      10,285 
  Expenditures for satellite systems under construction..................................    (19,621)     (7,928)
  Expenditures for FCC authorizations....................................................     --            (370)
                                                                                          ----------  ---------- 
          Net cash flows from investing activities.......................................      5,950     (17,287)
                                                                                          ----------  ---------- 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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DISH, LTD. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                             THREE MONTHS ENDED  
                                                                                                 MARCH 31,       
                                                                                            -------------------- 
                                                                                              1995       1996    
                                                                                            ---------  --------- 
                                                                                                                 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                            
  Repayments of mortgage indebtedness and note payable..................................... $     (57) $  (1,022)
                                                                                            ---------  --------- 
      Net cash flows from financing activities.............................................       (57)    (1,022)
                                                                                            ---------  --------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................................     2,112    (11,794)
CASH AND CASH EQUIVALENTS, beginning of period.............................................    17,506     13,949 
                                                                                            ---------  --------- 
CASH AND CASH EQUIVALENTS, end of period................................................... $  19,618  $   2,155 
                                                                                            ---------  --------- 
                                                                                            ---------  --------- 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                               
  Cash paid for interest, net of amounts capitalized....................................... $     106  $     354 
  Cash paid for income taxes...............................................................        39     --     
  Cumulative Series A Preferred Stock dividends............................................       301     --     
  Satellite launch payment for EchoStar II applied to EchoStar I launch....................    --         15,000 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS                       
    Dish,  Ltd.  ("Dish")  successfully  launched  its  first  direct  broadcast
satellite ("DBS"), EchoStar  I, in December  1995 and, on  March 4, 1996,  began
broadcasting  its  DBS  programming  (the  "Dish  Network-SM-")  to  the  entire
continental United  States. The  Dish Network-SM-  currently includes  over  100
channels  of high quality digital video and audio programming and will expand to
approximately 200  digital video  and audio  channels following  the  successful
launch  of  a  second  DBS satellite,  DirectSat  I  ("EchoStar  II"), currently
scheduled in the fall of 1996.                                                  

    In addition to its DBS business, Dish is engaged in the design, manufacture,
distribution and  installation of  satellite direct  to home  ("DTH")  products,
domestic  distribution  of  DTH  programming and  consumer  financing  of Dish's
domestic DTH  products  and services.  In  the  first quarter  of  1996,  Dish's
ultimate  parent corporation,  EchoStar Communications  Corporation ("EchoStar")
formed a wholly owned subsidiary, Dish Network Credit Corporation ("DNCC"),  for
the purpose of providing consumer financing for EchoStar's domestic DTH products
and  services. At  that time, Dish's  subsidiary that  previously provided these
services ceased  new  loan origination  activities.  In future  periods,  Dish's
revenue from loan origination and participation income will decline.            

    In  January  1996, Dish's  Articles  of Incorporation  were  amended whereby
EchoStar exchanged all previously  outstanding capital stock  of Dish for  1,000
shares  of Dish's new  $.01 par value  Common Stock. The  accompanying March 31,
1996 balance sheet reflects this exchange.                                      

    In January  1996,  EchoStar  formed  a  wholly  owned  subsidiary,  EchoStar
Satellite  Broadcasting  Corporation ("ESB"),  for the  purpose of  completing a
private offering  (the "1996  Notes Offering"),  pursuant to  Rule 144A  of  the
Securities  Act of 1933,  as amended (the  "Securities Act"), of  13 1/8% Senior
Secured Discount Notes due 2004 (the "1996 Notes"), resulting in net proceeds of
approximately $337.0 million. The 1996  Notes Offering was consummated in  March
1996.  Proceeds from  the 1996  Notes Offering will  be used  for: (i) continued
development, marketing and distribution of the Dish Network-SM-; (ii) EchoStar's
purchase of  DBS frequencies  at 148  DEG. WL;  (iii) construction,  launch  and
insurance  of  EchoStar III  and EchoStar  IV; (iv)  additional launch  costs of
EchoStar  II;  and  (v)  other   general  corporate  purposes.  The   additional
frequencies  were acquired by EchoStar  at a public auction  held by the Federal
Communications Commission  ("FCC")  in  January 1996  (the  "FCC  Auction").  In
connection  with  the  1996  Notes Offering,  EchoStar  contributed  all  of the
outstanding capital stock of  Dish to ESB. This  transaction has been  accounted
for  as a reorganization of entities under  common control whereby Dish has been
treated as  the predecessor  to ESB.  ESB is  subject to  all, and  EchoStar  is
subject  to certain of, the terms and conditions of the Indenture related to the
1996 Notes  (the  "1996  Notes Indenture").  On  April  24, 1996,  ESB  filed  a
Registration Statement on Form S-1 under the Securities Act to exchange the 1996
Notes for publicly registered notes.                                            

    In  June 1995, EchoStar completed  an offering of its  Class A Common Stock,
resulting  in  net  proceeds  of   approximately  $63.0  million  (the   "Equity
Offering").  In June 1994, Dish completed an  offering of 12 7/8% Senior Secured
Discount Notes due 2004 (the "1994 Notes") and Warrants (collectively, the "1994
Notes Offering"), resulting  in net  proceeds of  approximately $323.3  million.
Dish and most of its subsidiaries are subject to the terms and conditions of the
Indenture related to the 1994 Notes (the "1994 Notes Indenture").               

    EchoStar presently owns approximately 40% of the outstanding common stock of
Direct  Broadcasting  Satellite  Corporation ("DBSC").  DBSC's  principal assets
include an FCC  conditional satellite construction  permit and specific  orbital
slot  assignments for  eleven DBS  frequencies at  61.5 DEG.  WL and  eleven DBS
frequencies at 175 DEG.  WL (the "DBS Rights").  EchoStar intends to merge  DBSC
with  Direct  Broadcasting Satellite  Corporation ("New  DBSC"), a  wholly owned
subsidiary of EchoStar (the                                                     

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED)           
"DBSC Merger"). The DBSC Merger has been approved by DBSC shareholders but  will
not  be consummated  until the  FCC has  approved the  DBSC Merger.  Although no
assurances can be given, EchoStar expects the FCC to issue an order with respect
to the DBSC Merger in the near future. Assuming FCC approval of the DBSC Merger,
EchoStar will hold,  through New  DBSC, DBSC's DBS  Rights. On  April 16,  1996,
EchoStar  filed a  Registration Statement on  Form S-4 under  the Securities Act
covering 658,000 shares of EchoStar Class A Common Stock that are intended to be
issued in connection with the DBSC Merger.                                      

    The accompanying consolidated financial statements include only the accounts
of Dish and its subsidiaries and exclude all accounts of Dish's parent, ESB, and
its ultimate parent, EchoStar.                                                  

    Unless  otherwise  stated  herein,   or  the  context  otherwise   requires,
references  herein to Dish shall include Dish and all of its direct and indirect
subsidiaries, and EchoStar shall  include EchoStar, ESB, Dish  and all of  their
direct and indirect wholly owned subsidiaries.                                  

    The  accompanying unaudited condensed Consolidated Financial Statements have
been prepared in  accordance with generally  accepted accounting principles  for
interim financial information and with the instructions to Form 10-Q and Article
10  of Regulation S-X. Accordingly,  they do not include  all of the information
and footnotes required by generally accepted accounting principles for  complete
financial  statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation  have
been included. Operating results for the three month period ended March 31, 1996
are  not necessarily indicative of the results that may be expected for the year
ended December 31,  1996. For  further information,  refer to  the Combined  and
Consolidated Financial Statements and footnotes thereto included in Dish, Ltd.'s
Annual  Report on Form 10-K for the  year ended December 31, 1995. Certain prior
year  amounts  have  been  reclassified   to  conform  with  the  current   year
presentation.                                                                   

SIGNIFICANT RISKS AND UNCERTAINTIES                                             

    Execution  of  EchoStar's  business  strategy  to  launch  and  operate  DBS
satellites  has  dramatically  changed  its  operating  results  and   financial
position.  As of  March 31,  1996, EchoStar  expects to  expend approximately an
additional $520 million through 1999 to build, launch and support its first four
satellites (Note 6), assuming receipt of all required FCC licenses and  permits.
EchoStar  consummated the 1994  Notes Offering, the 1996  Notes Offering and the
Equity Offering to satisfy these  capital requirements. Annual interest  expense
on  the 1994 and 1996 Notes and depreciation of the investment in the satellites
and related assets will each be of a magnitude that exceeds historical levels of
income before taxes. Beginning in 1995 EchoStar reported significant net  losses
and  expects net losses to continue for the foreseeable future. EchoStar's plans
also include  the  construction and  launch  of two  fixed  service  satellites,
additional   DBS   satellites  and   marketing  campaigns   (including  receiver
subsidization if conditions warrant) to  promote its DBS products and  services.
EchoStar  may need  to raise significant  additional funds  for construction and
launch of additional satellites,  and there can be  no assurance that  necessary
funds  will  be available  or, if  available,  they will  be available  on terms
favorable to EchoStar. However, management believes, but can give no  assurance,
that  demand for its  DBS products and  services will result  in sufficient cash
flow which,  together with  other  sources of  capital,  will be  sufficient  to
satisfy  future planned expenditures.  Significant delays or  launch failures in
EchoStar's satellite launch program may have significant adverse consequences to
EchoStar's operating results and financial condition.                           

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles requires  the use  of management  estimates and
assumptions that affect the reported amounts of                                 

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED)           
assets and liabilities and  disclosure of contingent  assets and liabilities  at
the  date of the financial  statements and the reported  amounts of revenues and
expenses for  each reporting  period.  Actual results  could differ  from  those
estimates.                                                                      

(2) SUPPLEMENTAL ANALYSIS                                                       

CASH AND CASH EQUIVALENTS                                                       

    Dish considers all liquid investments purchased with an original maturity of
ninety  days or less to be cash equivalents. Cash equivalents as of December 31,
1995 and  March 31,  1996 consist  of money  market funds,  corporate notes  and
commercial paper stated at cost which equates to market value.                  

RESTRICTED CASH AND MARKETABLE SECURITIES                                       

    Dish  classifies all marketable investment securities as available-for-sale.
Accordingly, these investments  are reflected  at market value  based on  quoted
market  prices. Related unrealized  gains and losses are  reported as a separate
component of stockholder's  equity, net  of related deferred  income taxes.  The
specific  identification method is used to  determine cost in computing realized
gains and losses.                                                               

    Restricted Cash  and Marketable  Securities in  escrow as  reflected on  the
accompanying  balance sheets represent the  remaining net proceeds received from
the 1994 Notes Offering, plus interest earned, less amounts expended to date  in
connection   with  the  development,   construction  and  launch   of  the  Dish
Network-SM-. These proceeds  are held in  a separate escrow  account (the  "1994
Escrow  Account")  for the  benefit of  the holders  of the  1994 Notes  and are
invested in certain debt  and other marketable securities,  as permitted by  the
1994 Notes Indenture, until disbursed for the express purposes identified in the
1994 Notes Offering Prospectus.                                                 

    Other  Restricted Cash includes  $11.4 million to  satisfy certain covenants
regarding launch  insurance  required  by  the 1994  Notes  Indenture.  Dish  is
required  to  maintain launch  insurance  and Restricted  Cash  totalling $225.0
million for each of EchoStar I and EchoStar II. Dish has obtained $219.3 million
of launch insurance on  each satellite, and, together  with the cash  segregated
and  reserved on  the accompanying balance  sheets, has  satisfied its insurance
obligations under the 1994 Notes Indenture.  In addition, as of March 31,  1996,
$15.0  million was in an escrow account  established pursuant to a DBS satellite
receiver manufacturing  contract  for payment  to  the manufacturer  as  certain
milestones  are  reached and  $15.5 million  was  in an  escrow account  for the
purpose of cash collateralizing certain standby letters of credit (Note 4).  The
major components of Restricted Cash and Marketable Securities are as follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                DECEMBER 31, 1995                       MARCH 31, 1996             
                                       -----------------------------------  ---------------------------------------
                                                    UNREALIZED                            UNREALIZED               
                                        AMORTIZED     HOLDING     MARKET     AMORTIZED      HOLDING       MARKET   
                                          COST         GAIN        VALUE       COST       GAIN (LOSS)      VALUE   
                                       -----------  -----------  ---------  -----------  -------------  -----------
                                                                                                                   
Commercial paper......................  $  66,214    $  --       $  66,214  $    70,311    $  --        $    70,311
Government bonds......................     32,904          420      33,324       34,900          (26)        34,874
Accrued interest......................        153       --             153          332       --                332
                                       -----------       -----   ---------  -----------          ---    -----------
                                        $  99,271    $     420   $  99,691  $   105,543    $     (26)   $   105,517
                                       -----------       -----   ---------  -----------          ---    -----------
                                       -----------       -----   ---------  -----------          ---    -----------

INVENTORIES                                                                     

    Inventories  are  stated at  the  lower of  cost  or market  value.  Cost is
determined using the first-in,  first-out ("FIFO") method. Proprietary  products
are  manufactured  by  outside  suppliers to  Dish's  specifications.  Dish also
distributes  non-proprietary  products   purchased  from  other   manufacturers.

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
Manufactured  inventories include  materials, labor  and manufacturing overhead.
Cost of  other inventories  includes  parts, contract  manufacturers'  delivered
price,  assembly and testing labor, and related overhead, including handling and
storage costs. The major components of inventory were as follows (in thousands):

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Finished goods................................................................  $   20,458    $  17,957 
DBS receiver components.......................................................       9,615        9,728 
Competitor DBS Receivers......................................................       9,404          559 
Spare parts...................................................................       2,089        2,078 
Reserve for excess and obsolete inventory.....................................      (2,797)      (3,024)
                                                                               ------------  -----------
                                                                                $   38,769    $  27,298 
                                                                               ------------  -----------
                                                                               ------------  -----------

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                                  

    The composition  of accrued  expenses and  other current  liabilities is  as
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Accrued EchoStar I launch costs...............................................  $   15,000    $  --     
Accrued expenses..............................................................       3,850        3,959 
Reserve for warranty costs....................................................       1,013        1,013 
Other.........................................................................       1,472        1,716 
                                                                               ------------  -----------
                                                                                $   21,335    $   6,688 
                                                                               ------------  -----------
                                                                               ------------  -----------

PROPERTY AND EQUIPMENT                                                          

    Property  and equipment  are stated  at cost  less accumulated depreciation.
Cost  includes  interest   capitalized  on  the   EchoStar  DBS  System   during
construction  at EchoStar's  effective borrowing  rate. The  major components of
property and equipment were as follows (in thousands):                          

                                                        [Enlarge/Download Table]

                                                                 ESTIMATED                             
                                                                   USEFUL                              
                                                                    LIFE     DECEMBER 31,   MARCH 31,  
                                                                 (IN YEARS)      1995         1996     
                                                                 ----------  ------------  ----------- 
                                                                                                       
Construction in progress........................................     --       $  282,373   $    81,322 
EchoStar I satellite............................................     12           --           198,143 
Furniture, fixtures and equipment...............................    2-12          17,163        21,329 
Buildings and improvements......................................    7-40          21,006        21,109 
Tooling and other...............................................     2             2,039         3,470 
Land............................................................     --            1,613         1,613 
Vehicles........................................................     7             1,310         1,325 
Furniture and equipment held for sale...........................                  17,062        17,614 
Computer equipment held for sale................................                     902           885 
                                                                             ------------  ----------- 
    Total property and equipment................................                 343,468       346,810 
Less -- Accumulated depreciation................................                 (10,269)      (13,579)
                                                                             ------------  ----------- 
    Net property and equipment..................................              $  333,199   $   333,231 
                                                                             ------------  ----------- 
                                                                             ------------  ----------- 

    Construction in progress principally  includes capitalized costs related  to
EchoStar II, which is scheduled for launch in the fall of 1996.                 

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
Construction in progress consisted of the following (in thousands):     

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Progress amounts for satellite construction, launch, launch insurance,                                  
 capitalized interest, launch and in-orbit tracking, telemetry and control                              
 services:                                                                                              
  EchoStar I..................................................................  $  193,629    $  --     
  EchoStar II.................................................................      88,634       81,133 
  Other.......................................................................         110          189 
                                                                               ------------  -----------
                                                                                $  282,373    $  81,322 
                                                                               ------------  -----------
                                                                               ------------  -----------

OTHER NONCURRENT ASSETS                                                         

    The  major  components  of  other  noncurrent  assets  were  as  follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Deferred tax assets, net......................................................  $   12,109    $  12,497 
FCC authorizations, net of amortization.......................................      11,309       11,681 
1994 Notes deferred debt issuance costs, net of amortization..................      10,622       10,307 
SSET convertible subordinated debentures and accrued interest.................       9,610        9,758 
Other, net....................................................................         897          899 
                                                                               ------------  -----------
                                                                                $   44,547    $  45,142 
                                                                               ------------  -----------
                                                                               ------------  -----------

(3) LONG-TERM DEBT                                                              

1994 NOTES                                                                      

    On June 7,  1994, Dish completed  the 1994 Notes  Offering of 624,000  units
consisting  of $624  million aggregate  principal amount  of the  1994 Notes and
3,744,000 Warrants. The 1994 Notes Offering resulted in net proceeds to Dish  of
approximately  $323.3  million.  Interest on  the  1994 Notes  currently  is not
payable in cash but accrues through June 1, 1999, with the 1994 Notes  accreting
to  $624 million by  that date. Thereafter,  interest on the  1994 Notes will be
payable in cash semi-annually on June 1 and December 1 of each year,  commencing
December  1,  1999. At  March 31,  1996, the  1994 Notes  were reflected  in the
accompanying financial statements at $395.3 million, net of unamortized discount
of $228.7 million.                                                              

(4) BANK CREDIT FACILITY AND LETTERS OF CREDIT                                  
    On May  6, 1994,  the principal  subsidiaries of  Echostar, except  EchoStar
Satellite  Corporation ("ESC") (the "Borrowers"), entered into an agreement with
Bank of America  Illinois to provide  a revolving credit  facility (the  "Credit
Facility")  for working capital advances and for letters of credit necessary for
inventory purchases  and satellite  construction payments.  The Credit  Facility
expired  in May  1996 and EchoStar  does not  currently intend to  arrange a new
credit facility. Instead, EchoStar is using available cash to collateralize  its
letter  of credit obligations, which historically  has been the only significant
use of the Credit Facility. At March 31, 1996, EchoStar had cash  collateralized
$15.5  million of certain standby letters of credit for trade purchases which is
included in  restricted  cash  and marketable  securities  in  the  accompanying
financial statements (Note 2).                                                  

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(5) INCOME TAXES                                                                
    The  components  of  the  benefit  for  income  taxes  were  as  follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                                     THREE MONTHS ENDED  
                                                                                         MARCH 31,       
                                                                                    -------------------- 
                                                                                      1995       1996    
                                                                                    ---------  --------- 
                                                                                                         
Current (provision) benefit                                                                              
  Federal.......................................................................... $    (767) $   1,971 
  State............................................................................      (194)       203 
  Foreign..........................................................................      (177)      (122)
                                                                                    ---------  --------- 
                                                                                       (1,138)     2,052 
                                                                                    ---------  --------- 
Deferred benefit                                                                                         
  Federal..........................................................................     2,050      2,568 
  State............................................................................       443        232 
                                                                                    ---------  --------- 
                                                                                        2,493      2,800 
                                                                                    ---------  --------- 
    Total benefit.................................................................. $   1,355  $   4,852 
                                                                                    ---------  --------- 
                                                                                    ---------  --------- 

    Dish's deferred tax assets (approximately  $16.9 million at March 31,  1996)
relate  principally to temporary differences  for amortization of original issue
discount on the 1994 Notes and various accrued expenses which are not deductible
until paid.  No valuation  allowance has  been provided  because Dish  currently
believes  it is more likely than not  that these deferred assets will ultimately
be realized. If future  operating results differ  materially and adversely  from
Dish's  current expectations,  its judgment regarding  the need  for a valuation
allowance may change.                                                           

(6) OTHER COMMITMENTS AND CONTINGENCIES                                         

SATELLITE CONTRACTS                                                             

    EchoStar has contracted with Martin Marietta Corporation ("Martin Marietta")
for the construction and delivery of high powered DBS satellites and for related
services. Penalties are payable by Martin Marietta as a result of delays in  the
delivery  of EchoStar I  by Martin Marietta  and may be  payable with respect to
EchoStar II or EchoStar III. As of  November 19, 1995, the date that EchoStar  I
was delivered by Martin Marietta to China, those penalties totaled approximately
$3.2  million with respect to EchoStar I.  Penalties of $2.0 million are payable
by Martin Marietta in  the event that  EchoStar II is not  delivered by May  15,
1996. Thereafter, delays in the delivery of EchoStar II would result in PER DIEM
additional penalties up to a maximum of $5.0 million in the aggregate. Beginning
August  1, 1997,  a PER  DIEM penalty of  $3,333, to  a maximum  of $100,000, is
payable if EchoStar III is not  delivered by July 31, 1997. Beginning  September
1,  1997, additional  delays in  the delivery  of EchoStar  III would  result in
additional PER DIEM penalties of $33,333, up to a maximum of $5.0 million in the
aggregate.                                                                      

    EchoStar has entered into a contract with Arianespace, Inc.  ("Arianespace")
to  launch  Echo-Star II  from Korou,  French Guiana  in the  fall of  1996 (the
"Arianespace Contract"). The launch is scheduled to be performed on a  dedicated
Ariane  42P launch vehicle. The Arianespace  Contract provides the potential for
the EchoStar  launch to  occur before  the  fall of  1996 if  earlier  scheduled
launches   are  accelerated  or  delayed.   The  Arianespace  Contract  contains
provisions entitling either party to delay the launch in limited  circumstances,
subject  to  the payment  of  penalties in  some cases.  As  of March  31, 1996,
EchoStar has  paid  Arianespace  approximately  $4.4  million  pursuant  to  the
Arianespace Contract. All remaining payments are payable monthly and will be due
prior to the launch.                                                            

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(6) OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)                             
    EchoStar  II  was previously  scheduled to  be launched  by the  same launch
provider as EchoStar I,  China Great Wall  Industry Corporation ("Great  Wall").
EchoStar  I was successfully  launched by Great Wall  in December 1995. EchoStar
notified Great Wall of its decision to terminate the launch of EchoStar II  with
Great  Wall.  EchoStar  applied  $15.0 million  previously  paid  Great  Wall in
connection with this launch to the  final $15.0 million owed Great Wall  related
to  the launch  of EchoStar I.  In May 1996,  EchoStar received a  refund of the
remaining $4.5 million previously paid Great Wall in connection with the  second
launch.                                                                         

    EchoStar  has  entered into  a contract  for  launch services  with Lockheed
Martin Commercial Launch Services, Inc. ("Lockheed") for the launch of  EchoStar
III from Cape Canaveral Air Station, Florida during the fall of 1997, subject to
delay  or acceleration in  certain circumstances (the  "Lockheed Contract"). The
Lockheed Contract provides for launch of  the satellite utilizing an Atlas  IIAS
launch vehicle. EchoStar has made an initial payment to Lockheed of $5.0 million
and the remaining cost is payable in installments in accordance with the payment
schedule  set forth in the Lockheed  Contract, which requires that substantially
all payments be made to Lockheed prior to the launch.                           

    EchoStar has contracted with Lockheed-Khrunichev-Energia-International, Inc.
("LKE") for the launch of  EchoStar IV during 1998  from the Kazakh Republic,  a
territory  of the  former Soviet Union,  utilizing a Proton  launch vehicle (the
"LKE Contract"). Either party may request a delay in the relevant launch period,
subject to the payment  of penalties based  on the length of  the delay and  the
proximity of the request to the launch date. EchoStar has paid LKE $20.0 million
pursuant  to the LKE Contract. No  additional payments are currently required to
be made to LKE until 1997.                                                      

PURCHASE COMMITMENTS                                                            

    Dish has entered into agreements with various manufacturers to purchase  DBS
satellite receivers and related components manufactured based on Dish's supplied
specifications.  As of March 31, 1996 the remaining commitments total as much as
$622.2 million. At March 31, 1996,  the total of all outstanding purchase  order
commitments  with domestic and foreign suppliers  was as much as $641.3 million.
All  but  approximately  $85.9  million  of  the  purchases  related  to   these
commitments are expected to be made during 1996 and the remainder is expected to
be  made during 1997. EchoStar expects to finance these purchases from available
cash, marketable investment  securities and  sales of  inventory, including  the
sale of EchoStar Receiver Systems and related products.                         

OTHER RISKS AND CONTINGENCIES                                                   

    EchoStar  is  subject to  legal proceedings  and claims  which arise  in the
ordinary course of  its business. In  the opinion of  management, the amount  of
ultimate  liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of EchoStar.             

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DISH, LTD. AND SUBSIDIARIES 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(7) SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS                     
    The  1994  Notes  are  fully,  unconditionally  and  jointly  and  severally
guaranteed  by all subsidiaries of Dish,  except for certain de minimis domestic
and foreign  subsidiaries. Summarized  financial information  for Dish  and  the
subsidiary guarantors is as follows (in thousands):                             

                                                        [Enlarge/Download Table]

                                                                                  THREE MONTHS ENDED   
                                                                                       MARCH 31,       
                                                                                 --------------------- 
                                                                                   1995        1996    
                                                                                 ---------  ---------- 
                                                                                                       
Income Statement Data --                                                                               
  Revenue....................................................................... $  40,076  $   40,973 
  Expenses......................................................................    40,730      49,910 
                                                                                 ---------  ---------- 
  Operating loss................................................................      (654)     (8,937)
  Other income (expense), net...................................................    (2,892)     (3,147)
                                                                                 ---------  ---------- 
  Net loss before income taxes..................................................    (3,546)    (12,084)
  Benefit for income taxes......................................................     1,348       4,848 
                                                                                 ---------  ---------- 
    Net loss.................................................................... $  (2,198) $   (7,236)
                                                                                 ---------  ---------- 
                                                                                 ---------  ---------- 

                                                        [Enlarge/Download Table]

                                                                             DECEMBER 31,   MARCH 31, 
                                                                                 1995         1996    
                                                                             ------------  -----------
                                                                                                      
Balance Sheet Data --                                                                                 
  Current assets............................................................  $   81,959   $    64,321
  Property and equipment, net...............................................     333,160       333,191
  Other noncurrent assets...................................................     143,866       150,285
                                                                             ------------  -----------
    Total assets............................................................  $  558,985   $   547,797
                                                                             ------------  -----------
                                                                             ------------  -----------
  Current liabilities.......................................................  $   50,710   $    34,943
  Long-term liabilities.....................................................     415,662       427,754
  Stockholder's equity......................................................      92,613        85,100
                                                                             ------------  -----------
    Total liabilities and stockholder's equity..............................  $  558,985   $   547,797
                                                                             ------------  -----------
                                                                             ------------  -----------

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SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION
(UNAUDITED) 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 

ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

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ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

(IN THOUSANDS)

ASSETS

                                                        [Enlarge/Download Table]

                                                                                    DECEMBER 31,   MARCH 31, 
                                                                                        1995         1996    
                                                                                    ------------  -----------
                                                                                                             
                                                                                                  (UNAUDITED)
                                                                                                  -----------
CURRENT ASSETS:                                                                                              
  Cash and cash equivalents........................................................  $   21,754    $ 164,813 
  Marketable investment securities.................................................      15,670          212 
  Trade accounts receivable, net...................................................       9,179       10,072 
  Inventories......................................................................      38,769       27,298 
  Income tax receivable............................................................       3,554        4,806 
  Deferred tax assets..............................................................       1,779        3,973 
  Other current assets.............................................................      13,037       15,468 
                                                                                    ------------  -----------
    Total current assets...........................................................     103,742      226,642 
RESTRICTED CASH AND MARKETABLE SECURITIES:                                                                   
  1994 Notes escrow................................................................      73,291       63,617 
  1996 Notes escrow................................................................      --          169,970 
  Other............................................................................      26,400       41,900 
PROPERTY AND EQUIPMENT, net........................................................     354,000      359,821 
OTHER NONCURRENT ASSETS............................................................      65,658      102,721 
                                                                                    ------------  -----------
    Total assets...................................................................  $  623,091    $ 964,671 
                                                                                    ------------  -----------
                                                                                    ------------  -----------
                                     LIABILITIES AND STOCKHOLDERS' EQUITY                                    
CURRENT LIABILITIES:                                                                                         
  Trade accounts payable...........................................................  $   19,063    $  13,599 
  Deferred programming revenue.....................................................       5,563        7,416 
  Accrued expenses and other current liabilities...................................      21,335        7,072 
  Notes payable and current portion of long-term debt..............................       4,782        4,783 
                                                                                    ------------  -----------
    Total current liabilities......................................................      50,743       32,870 
LONG-TERM DEFERRED PROGRAMMING REVENUE.............................................      --            3,790 
1994 NOTES, net....................................................................     382,218      395,333 
1996 NOTES, net....................................................................      --          350,890 
LONG-TERM MORTGAGE DEBT AND NOTE PAYABLE, excluding current portion................      33,444       32,421 
                                                                                    ------------  -----------
    Total liabilities..............................................................     466,405      815,304 
                                                                                    ------------  -----------
COMMITMENTS AND CONTINGENCIES (Note 6)                                                                       
STOCKHOLDERS' EQUITY:                                                                                        
  Preferred Stock, 20,000,000 shares authorized, 1,616,681 shares of Series A                                
   Cumulative Preferred Stock issued and outstanding, including accrued dividends                            
   of $2,143,000 and $2,444,000, respectively......................................      17,195       17,496 
  Class A Common Stock, $.01 par value, 200,000,000 shares authorized, 10,535,003                            
   and 10,621,116 shares issued and outstanding, respectively......................         105          106 
  Class B Common Stock, $.01 par value, 100,000,000 shares authorized, 29,804,401                            
   shares issued and outstanding...................................................         298          298 
  Common Stock Purchase Warrants...................................................         714           20 
  Class C Common Stock, 100,000,000 shares authorized, none outstanding............      --           --     
  Additional paid-in capital.......................................................     151,674      152,487 
  Unrealized holding gains on available-for-sale securities, net of deferred                                 
   taxes...........................................................................         239           21 
  Retained earnings (deficit)......................................................     (13,539)     (21,061)
                                                                                    ------------  -----------
    Total stockholders' equity.....................................................     156,686      149,367 
                                                                                    ------------  -----------
    Total liabilities and stockholders' equity.....................................  $  623,091    $ 964,671 
                                                                                    ------------  -----------
                                                                                    ------------  -----------

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 

(IN THOUSANDS, EXCEPT PER SHARE DATA) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                         THREE MONTHS ENDED   
                                                                                              MARCH 31,       
                                                                                        --------------------- 
                                                                                          1995        1996    
                                                                                        ---------  ---------- 
                                                                                                              
REVENUE:                                                                                                      
  DTH products and technical services.................................................. $  36,277  $   36,741 
  Programming..........................................................................     3,871       3,913 
  Loan origination and participation income............................................       265         813 
                                                                                        ---------  ---------- 
    Total revenue......................................................................    40,413      41,467 
                                                                                        ---------  ---------- 
EXPENSES:                                                                                                     
  DTH products and technical services..................................................    29,445      32,750 
  Programming..........................................................................     3,432       3,283 
  Selling, general and administrative..................................................     7,871      10,733 
  Depreciation.........................................................................       363       3,330 
                                                                                        ---------  ---------- 
    Total expenses.....................................................................    41,111      50,096 
                                                                                        ---------  ---------- 
OPERATING LOSS.........................................................................      (698)     (8,629)
                                                                                        ---------  ---------- 
OTHER INCOME (EXPENSE):                                                                                       
  Interest income......................................................................     3,638       2,677 
  Interest expense, net of amounts capitalized.........................................    (6,563)     (6,043)
  Other, net...........................................................................        28         (17)
                                                                                        ---------  ---------- 
    Total other income (expense).......................................................    (2,897)     (3,383)
                                                                                        ---------  ---------- 
NET LOSS BEFORE INCOME TAXES...........................................................    (3,595)    (12,012)
BENEFIT FOR INCOME TAXES...............................................................     1,355       4,791 
                                                                                        ---------  ---------- 
NET LOSS............................................................................... $  (2,240) $   (7,221)
                                                                                        ---------  ---------- 
                                                                                        ---------  ---------- 
NET LOSS ATTRIBUTABLE TO COMMON SHARES................................................. $  (2,541) $   (7,522)
                                                                                        ---------  ---------- 
                                                                                        ---------  ---------- 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING.............................................    33,544      40,376 
                                                                                        ---------  ---------- 
                                                                                        ---------  ---------- 
LOSS PER COMMON AND COMMON EQUIVALENT SHARE............................................ $   (0.08) $    (0.19)
                                                                                        ---------  ---------- 
                                                                                        ---------  ---------- 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 1996 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                                    RETAINED                
                                                                                                    EARNINGS                
                                                                                                   (DEFICIT)                
                                             SHARES OF                       COMMON                   AND                   
                                              COMMON                          STOCK    ADDITIONAL  UNREALIZED      TOTAL    
                                               STOCK     PREFERRED  COMMON  PURCHASE    PAID-IN     HOLDING    STOCKHOLDERS'
                                            OUTSTANDING    STOCK    STOCK   WARRANTS    CAPITAL      LOSSES       EQUITY    
                                            -----------  ---------  ------  ---------  ----------  ----------  -------------
                                                                                                                            
BALANCES, at December 31, 1995.............   40,339      $17,195    $403     $ 714     $151,674    $(13,300)    $156,686   
  Series A Cumulative Preferred Stock                                                                                       
   dividends...............................                   301                                                     301   
  Issuance of Class A Common Stock.........       13                                         113                      113   
  Common Stock Purchase Warrants                                                                                            
   exercised...............................       74                    1      (694)         693                   --       
  Employee Incentive Funded by Issuance of                                                                                  
   Class A Common Stock....................                                                    7                        7   
  Unrealized holding losses on                                                                                              
   available-for-sale securities, net......                                                             (218)        (218)  
  Net loss.................................                                                           (7,522)      (7,522)  
                                            -----------  ---------  ------  ---------  ----------  ----------  -------------
BALANCES, at March 31, 1996................   40,426      $17,496    $404     $  20     $152,487    $(21,040)    $149,367   
                                            -----------  ---------  ------  ---------  ----------  ----------  -------------
                                            -----------  ---------  ------  ---------  ----------  ----------  -------------

The accompanying notes to consolidated financial statements 
are an integral part of this statement. 

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ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                           THREE MONTHS ENDED  
                                                                                               MARCH 31,       
                                                                                          -------------------- 
                                                                                            1995       1996    
                                                                                          ---------  --------- 
                                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                          
  Net loss............................................................................... $  (2,240) $  (7,221)
  Adjustments to reconcile net loss to net cash flows from operating activities --                             
    Depreciation.........................................................................       363      3,330 
    Provision for doubtful accounts......................................................       111        621 
    Benefit for deferred taxes...........................................................    (2,493)    (1,371)
    Amortization of deferred debt issuance costs on 1994 Notes...........................       315        315 
    Amortization of discount on 1994 Notes, net of amounts capitalized...................     6,131      4,189 
    Amortization of discount on 1996 Notes, net of amounts capitalized...................    --            843 
    Equity in (earnings) losses of joint venture.........................................       (15)        25 
    Change in reserve for excess and obsolete inventory..................................       233        227 
    Long-term deferred programming revenue...............................................    --          3,790 
    Other, net...........................................................................        26       (163)
    Changes in working capital items --                                                                        
      Trade accounts receivable..........................................................      (728)    (1,514)
      Inventories........................................................................    (4,238)    11,244 
      Income tax receivable..............................................................    --         (1,252)
      Other current assets...............................................................      (730)    (2,431)
      Liability under cash management program............................................       (57)    --     
      Trade accounts payable.............................................................    (1,061)    (5,464)
      Deferred programming revenue.......................................................      (657)     1,853 
      Accrued expenses...................................................................     1,221         97 
      Other current liabilities..........................................................        38        640 
                                                                                          ---------  --------- 
        Net cash flows from operating activities.........................................    (3,781)     7,758 
                                                                                          ---------  --------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                          
  Purchases of marketable investment securities..........................................   (15,211)        (2)
  Sales of marketable investment securities..............................................    27,777     15,479 
  Purchases of restricted marketable investment securities...............................    --        (15,500)
  Purchases of property and equipment....................................................      (538)    (2,715)
  Offering proceeds and investment earnings placed in escrow.............................    (2,714)  (178,452)
  Funds released from escrow accounts....................................................    16,257     17,785 
  Investment in convertible subordinated debentures from DBSI............................    --         (3,000)
  Long-term note receivable from DBSC....................................................    --         (7,500)
  Expenditures for satellite systems under construction..................................   (19,621)   (13,292)
  Deposit on FCC authorization...........................................................    --        (10,459)
  Expenditures for FCC authorizations....................................................    --         (3,177)
                                                                                          ---------  --------- 
        Net cash flows from investing activities.........................................     5,950   (200,833)
                                                                                          ---------  --------- 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) 

(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                           THREE MONTHS ENDED  
                                                                                               MARCH 31,       
                                                                                          -------------------- 
                                                                                            1995       1996    
                                                                                          ---------  --------- 
                                                                                                               
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                          
  Repayments of mortgage indebtedness and note payable................................... $     (57) $  (1,022)
  Stock options exercised................................................................    --            113 
  Net proceeds from issuance of 1996 Notes...............................................    --        337,043 
                                                                                          ---------  --------- 
        Net cash flows from financing activities.........................................       (57)   336,134 
                                                                                          ---------  --------- 
NET INCREASE IN CASH AND CASH EQUIVALENTS................................................     2,112    143,059 
CASH AND CASH EQUIVALENTS, beginning of period...........................................    17,506     21,754 
                                                                                          ---------  --------- 
CASH AND CASH EQUIVALENTS, end of period................................................. $  19,618  $ 164,813 
                                                                                          ---------  --------- 
                                                                                          ---------  --------- 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                             
  Cash paid for interest, net of amounts capitalized..................................... $     106  $     354 
  Cash paid for income taxes.............................................................        39     --     
  Cumulative Series A Preferred Stock dividends..........................................       301        301 
  Satellite launch payment for EchoStar II applied to EchoStar I launch..................    --         15,000 
  Employee incentives funded by issuance of Class A Common Stock.........................    --              7 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS                       
    EchoStar  Communications Corporation ("EchoStar")  successfully launched its
first direct broadcast satellite ("DBS"), EchoStar  I, in December 1995 and,  on
March  4, 1996, began broadcasting its  DBS programming (the "Dish Network-SM-")
to the entire continental United States. The Dish Network-SM- currently includes
over 100 channels of high quality  digital video and audio programming and  will
expand  to  approximately 200  digital video  and  audio channels  following the
successful launch  of  a second  DBS  satellite, DirectSat  I  ("EchoStar  II"),
currently scheduled in the fall of 1996.                                        

    In  addition  to  its  DBS  business, EchoStar  is  engaged  in  the design,
manufacture, distribution and installation of  satellite direct to home  ("DTH")
products,  domestic distribution  of DTH  programming and  consumer financing of
EchoStar's domestic DTH products and services.                                  

    In January  1996,  EchoStar  formed  a  wholly  owned  subsidiary,  EchoStar
Satellite  Broadcasting  Corporation ("ESB"),  for the  purpose of  completing a
private offering  (the "1996  Notes Offering"),  pursuant to  Rule 144A  of  the
Securities  Act of 1933,  as amended (the  "Securities Act"), of  13 1/8% Senior
Secured Discount Notes due 2004 (the "1996 Notes"), resulting in net proceeds of
approximately $337.0 million. The 1996  Notes Offering was consummated in  March
1996.  Proceeds from  the 1996  Notes Offering will  be used  for: (i) continued
development, marketing and distribution of the Dish Network-SM-; (ii) EchoStar's
purchase of  DBS frequencies  at 148  DEG. WL;  (iii) construction,  launch  and
insurance  of  EchoStar III  and EchoStar  IV; (iv)  additional launch  costs of
EchoStar  II;  and  (v)  other   general  corporate  purposes.  The   additional
frequencies  were acquired by EchoStar  at a public auction  held by the Federal
Communications Commission  ("FCC")  in  January 1996  (the  "FCC  Auction").  In
connection  with  the  1996  Notes Offering,  EchoStar  contributed  all  of the
outstanding capital stock of  its wholly owned subsidiary,  Dish, Ltd., to  ESB.
This  transaction has been  accounted for as a  reorganization of entities under
common control whereby Dish,  Ltd. has been treated  as the predecessor to  ESB.
ESB  is subject  to all, and  EchoStar is subject  to certain of,  the terms and
conditions of  the  Indenture  related  to  the  1996  Notes  (the  "1996  Notes
Indenture").  On April 24, 1996, ESB filed  a Registration Statement on Form S-1
under the Securities  Act to  exchange the  1996 Notes  for publicly  registered
notes.                                                                          

    In  June 1995, EchoStar completed  an offering of its  Class A Common Stock,
resulting  in  net  proceeds  of   approximately  $63.0  million  (the   "Equity
Offering"). Dish Ltd. owns the majority of EchoStar's operating subsidiaries. In
June  1994, Dish, Ltd. completed an offering  of 12 7/8% Senior Secured Discount
Notes due 2004 (the  "1994 Notes") and Warrants  (collectively, the "1994  Notes
Offering"), resulting in net proceeds of approximately $323.3 million. Dish Ltd.
and  most of  its subsidiaries are  subject to  the terms and  conditions of the
Indenture related to the 1994 Notes (the "1994 Notes Indenture").               

    Unless  otherwise  stated  herein,   or  the  context  otherwise   requires,
references  herein to EchoStar shall include EchoStar  and all of its direct and
indirect wholly owned subsidiaries.                                             

    The accompanying unaudited condensed Consolidated Financial Statements  have
been  prepared in accordance  with generally accepted  accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X.  Accordingly, they do not  include all of the  information
and  footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments  (consisting
of  normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 1996
are not necessarily indicative of the results that may be expected for the  year
ended  December 31,  1996. For  further information,  refer to  the Combined and

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED)           
Consolidated Financial  Statements and  footnotes thereto  included in  EchoStar
Communications  Corporation's  Annual Report  on Form  10-K  for the  year ended
December 31, 1995. Certain prior year amounts have been reclassified to  conform
with the current year presentation.                                             

SIGNIFICANT RISKS AND UNCERTAINTIES                                             

    Execution  of  EchoStar's  business  strategy  to  launch  and  operate  DBS
satellites  has  dramatically  changed  its  operating  results  and   financial
position.  As of  March 31,  1996, EchoStar  expects to  expend approximately an
additional $520 million through 1999 to build, launch and support its first four
satellites (Note 6), assuming receipt of all required FCC licenses and  permits.
EchoStar  consummated the 1994  Notes Offering, the 1996  Notes Offering and the
Equity Offering to satisfy these  capital requirements. Annual interest  expense
on  the 1994 and 1996 Notes and depreciation of the investment in the satellites
and related assets will each be of a magnitude that exceeds historical levels of
income before taxes. Beginning in 1995 EchoStar reported significant net  losses
and  expects net losses to continue for the foreseeable future. EchoStar's plans
also include  the  construction and  launch  of two  fixed  service  satellites,
additional   DBS   satellites  and   marketing  campaigns   (including  receiver
subsidization if  market conditions  warrant) to  promote its  DBS products  and
services.   EchoStar  may  need  to   raise  significant  additional  funds  for
construction and launch of additional satellites, and there can be no  assurance
that  necessary funds  will be  available or,  if available,  that they  will be
available on terms favorable to EchoStar. However, management believes, but  can
give  no assurance, that demand for its DBS products and services will result in
sufficient cash flow  which, together  with other  sources of  capital, will  be
sufficient  to satisfy future planned expenditures. Significant delays or launch
failures in EchoStar's  satellite launch  program may  have significant  adverse
consequences to EchoStar's operating results and financial condition.           

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted accounting  principles requires  the use  of management  estimates  and
assumptions  that  affect the  reported amounts  of  assets and  liabilities and
disclosure of contingent  assets and liabilities  at the date  of the  financial
statements  and the reported amounts of  revenue and expenses for each reporting
period. Actual results could differ from those estimates.                       

(2) SUPPLEMENTAL ANALYSIS                                                       

CASH AND CASH EQUIVALENTS                                                       

    EchoStar  considers  all  liquid  investments  purchased  with  an  original
maturity  of ninety days or less to  be cash equivalents. Cash equivalents as of
December 31, 1995, and March 31,  1996 consist of money market funds,  corporate
notes and commercial paper stated at cost which equates to market value.        

RESTRICTED CASH AND MARKETABLE SECURITIES                                       

    EchoStar    classifies    all    marketable    investment    securities   as
available-for-sale. Accordingly, these investments are reflected at market value
based on quoted market prices. Related unrealized gains and losses are  reported
as  a separate component of stockholders' equity, net of related deferred income
taxes. The specific identification method is used to determine cost in computing
realized gains and losses.                                                      

    Restricted Cash and Marketable Securities in Escrow Accounts as reflected on
the accompanying balance  sheets represent the  remaining net proceeds  received
from the 1994 Notes Offerings, and a portion of the proceeds from the 1996 Notes
Offering, plus interest earned, less amounts expended to date in connection with
the  development,  construction  and  launch  of  the  Dish  Network-SM-.  These

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
proceeds are held in separate escrow accounts (the "1994 Escrow Account" and the
"1996 Escrow Account", respectively) for the benefit of the holders of the  1994
and 1996 Notes and are invested in certain debt and other marketable securities,
as  permitted  by the  respective Indentures,  until  disbursed for  the express
purposes identified in  the 1994 Notes  Offering Prospectus and  the 1996  Notes
Offering Memorandum, as the case may be.                                        

    Other  Restricted Cash includes  $11.4 million to  satisfy certain covenants
regarding launch insurance  required by  the 1994 Notes  Indenture. EchoStar  is
required  to  maintain launch  insurance  and Restricted  Cash  totalling $225.0
million for each  of EchoStar I  and EchoStar II.  EchoStar has obtained  $219.3
million  of  launch insurance  on each  satellite, and,  together with  the cash
segregated and reserved on  the accompanying balance  sheets, has satisfied  its
insurance  obligations under the 1994 Notes  Indenture. In addition, as of March
31, 1996, $15.0 million was in an  escrow account established pursuant to a  DBS
satellite  receiver manufacturing  contract for  payment to  the manufacturer as
certain milestones are reached  and $15.5 million was  in an escrow account  for
the  purpose of cash collateralizing certain standby letters of credit (Note 4).
The major components of Restricted Cash and Marketable Securities are as follows
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                 DECEMBER 31, 1995                      MARCH 31, 1996            
                                        -----------------------------------  -------------------------------------
                                                     UNREALIZED                           UNREALIZED              
                                         AMORTIZED     HOLDING     MARKET     AMORTIZED     HOLDING      MARKET   
                                           COST         GAIN        VALUE       COST         GAIN         VALUE   
                                        -----------  -----------  ---------  -----------  -----------  -----------
                                                                                                                  
Commercial paper.......................  $  66,214    $  --       $  66,214  $    70,600   $  --       $    70,600
Government bonds.......................     32,904          420      33,324      204,411          49       204,460
Accrued interest.......................        153       --             153          427      --               427
                                        -----------       -----   ---------  -----------       -----   -----------
                                         $  99,271    $     420   $  99,691  $   275,438   $      49   $   275,487
                                        -----------       -----   ---------  -----------       -----   -----------
                                        -----------       -----   ---------  -----------       -----   -----------

INVENTORIES                                                                     

    Inventories are  stated  at the  lower  of cost  or  market value.  Cost  is
determined  using the first-in, first-out  ("FIFO") method. Proprietary products
are manufactured  by outside  suppliers to  EchoStar's specifications.  EchoStar
also  distributes non-proprietary  products purchased  from other manufacturers.
Manufactured inventories include  materials, labor  and manufacturing  overhead.
Cost  of  other inventories  includes  parts, contract  manufacturers' delivered
price, assembly and testing labor, and related overhead, including handling  and
storage costs. The major components of inventory were as follows (in thousands):

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Finished goods................................................................  $   20,458    $  17,957 
DBS receiver components.......................................................       9,615        9,728 
Competitor DBS Receivers......................................................       9,404          559 
Spare parts...................................................................       2,089        2,078 
Reserve for excess and obsolete inventory.....................................      (2,797)      (3,024)
                                                                               ------------  -----------
                                                                                $   38,769    $  27,298 
                                                                               ------------  -----------
                                                                               ------------  -----------

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                                  

    The  composition of  accrued expenses  and other  current liabilities  is as
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Accrued EchoStar I launch costs...............................................  $   15,000    $  --     
Accrued expenses..............................................................       3,850        3,947 
Reserve for warranty costs....................................................       1,013        1,013 
Other.........................................................................       1,472        2,112 
                                                                               ------------  -----------
                                                                                $   21,335    $   7,072 
                                                                               ------------  -----------
                                                                               ------------  -----------

PROPERTY AND EQUIPMENT                                                          

    Property and equipment  are stated  at cost  less accumulated  depreciation.
Cost   includes  interest  capitalized   on  the  EchoStar   DBS  System  during
construction at EchoStar's  effective borrowing  rate. The  major components  of
property and equipment were as follows (in thousands):                          

                                                        [Enlarge/Download Table]

                                                                 ESTIMATED                             
                                                                   USEFUL                              
                                                                  LIFE (IN   DECEMBER 31,   MARCH 31,  
                                                                   YEARS)        1995         1996     
                                                                 ----------  ------------  ----------- 
                                                                                                       
Construction in progress........................................     --       $  303,174   $   107,912 
EchoStar I satellite............................................     12               --       198,143 
Furniture, fixtures and equipment...............................    2-12          17,163        21,329 
Buildings and improvements......................................    7-40          21,006        21,109 
Tooling and other...............................................     2             2,039         3,470 
Land............................................................     --            1,613         1,613 
Vehicles........................................................     7             1,310         1,325 
Furniture and equipment held for sale...........................                  17,062        17,614 
Computer equipment held for sale................................                     902           885 
                                                                             ------------  ----------- 
    Total property and equipment................................                 364,269       373,400 
Less-Accumulated depreciation...................................                 (10,269)      (13,579)
                                                                             ------------  ----------- 
    Net property and equipment..................................              $  354,000   $   359,821 
                                                                             ------------  ----------- 
                                                                             ------------  ----------- 

    Construction   in  progress  includes  capitalized   costs  related  to  the
construction and launch  of EchoStar II,  which is scheduled  for launch in  the
fall  of 1996 and DBSC I ("EchoStar III") which is scheduled for launch prior to
the end of 1997.                                                                

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
Construction in progress consisted of the following (in thousands):     

                                                        [Enlarge/Download Table]

                                                                             DECEMBER 31,   MARCH 31, 
                                                                                 1995         1996    
                                                                             ------------  -----------
                                                                                                      
Progress amounts for satellite construction, launch, launch insurance,                                
 capitalized interest, launch and in-orbit tracking, telemetry and control                            
 services:                                                                                            
  EchoStar I................................................................  $  193,629   $   --     
  EchoStar II...............................................................      88,634        81,133
  EchoStar III launch.......................................................      20,801         5,058
  EchoStar IV launch........................................................      --            21,532
  Other.....................................................................         110           189
                                                                             ------------  -----------
                                                                              $  303,174   $   107,912
                                                                             ------------  -----------
                                                                             ------------  -----------

OTHER NONCURRENT ASSETS                                                         

    The major  components  of  other  noncurrent  assets  were  as  follows  (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                             DECEMBER 31,   MARCH 31, 
                                                                                 1995         1996    
                                                                             ------------  -----------
                                                                                                      
Long-term note receivable from DBSC.........................................  $   16,000   $    23,500
FCC authorizations, net of amortization.....................................      11,309        15,288
1996 Notes deferred debt issuance costs, net of amortization................          --        13,004
1994 Notes deferred debt issuance costs.....................................      10,622        10,307
Deferred tax assets, net....................................................      12,109        11,420
Deposit on FCC authorization................................................          --        10,459
SSET convertible subordinated debentures and accrued interest...............       9,610         9,758
Investment in DBSC..........................................................       4,111         4,086
DBSI convertible subordinated debentures....................................       1,000         4,000
Other, net..................................................................         897           899
                                                                             ------------  -----------
                                                                              $   65,658   $   102,721
                                                                             ------------  -----------
                                                                             ------------  -----------

    EchoStar presently owns approximately 40% of the outstanding common stock of
Direct  Broadcasting  Satellite  Corporation ("DBSC").  DBSC's  principal assets
include an FCC  conditional satellite construction  permit and specific  orbital
slot  assignments for  eleven DBS  frequencies at  61.5 DEG.  WL and  eleven DBS
frequencies at 175 DEG.  WL (the "DBS Rights").  EchoStar intends to merge  DBSC
with  Direct  Broadcasting Satellite  Corporation ("New  DBSC"), a  wholly owned
subsidiary of EchoStar (the "DBSC Merger"). The DBSC Merger has been approved by
DBSC shareholders but  will not be  consummated until the  FCC has approved  the
DBSC  Merger. Although no assurances  can be given, EchoStar  expects the FCC to
issue an order with respect to the DBSC Merger in the near future. Assuming  FCC
approval  of the DBSC Merger,  EchoStar will hold, through  New DBSC, DBSC's DBS
Rights. On April 16, 1996, EchoStar  filed a Registration Statement on Form  S-4
under  the Securities  Act covering  658,000 shares  of EchoStar  Class A Common
Stock that are intended to be issued in connection with the DBSC Merger.        

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
EARNINGS PER SHARE                                                              

    Earnings per share have been calculated based on the weighted average number
of shares of common stock issued and outstanding and, if dilutive, common  stock
equivalents  (warrants and employee stock options) during the three months ended
March 31, 1995 and 1996. Net loss has been adjusted for cumulative dividends  on
the 8% Series A Cumulative Preferred Stock.                                     

(3) LONG-TERM DEBT                                                              

1994 NOTES                                                                      

    On  June 7, 1994,  Dish, Ltd. completed  the 1994 Notes  Offering of 624,000
units consisting of $624.0 million aggregate principal amount of the 1994  Notes
and  3,744,000 Warrants.  The 1994  Notes Offering  resulted in  net proceeds to
Dish, Ltd. of approximately $323.3 million. Interest on the 1994 Notes currently
is not payable in  cash but accrues  through June 1, 1999,  with the 1994  Notes
accreting to $624.0 million by that date. Thereafter, interest on the 1994 Notes
will  be payable in  cash semi-annually on June  1 and December  1 of each year,
commencing December 1, 1999. At March 31, 1996, the 1994 Notes were reflected in
the accompanying  financial statements  at $395.3  million, net  of  unamortized
discount of $228.7 million.                                                     

1996 NOTES                                                                      

    On  March  25, 1996,  ESB completed  the 1996  Notes Offering  consisting of
$580.0 million aggregate  principal amount  of the  1996 Notes.  The 1996  Notes
Offering  resulted  in  net proceeds  to  ESB of  approximately  $337.0 million.
Interest on the 1996 Notes currently is not payable in cash but accrues  through
March  15, 2000, with the  1996 Notes accreting to  $580.0 million by that date.
Thereafter, interest on the 1996 Notes will be payable in cash semi-annually  on
March  15 and September 15 of each year, commencing September 15, 2000. At March
31, 1996, the 1996 Notes were reflected in the accompanying financial statements
at $350.9 million, net of unamortized discount of $229.1 million.               

(4) BANK CREDIT FACILITY AND LETTERS OF CREDIT                                  
    On May  6, 1994,  the principal  subsidiaries of  EchoStar, except  EchoStar
Satellite  Corporation ("ESC") (the "Borrowers"), entered into an agreement with
Bank of America Illinois,  to provide a revolving  credit facility (the  "Credit
Facility")  for working capital advances and for letters of credit necessary for
inventory purchases  and satellite  construction payments.  The Credit  Facility
expired  in May  1996 and EchoStar  does not  currently intend to  arrange a new
credit facility. Instead, EchoStar is using available cash to collateralize  its
letter  of credit obligations, which have historically been the only significant
use of the Credit Facility. At March 31, 1996, EchoStar had cash  collateralized
$15.5  million of certain standby letters of credit for trade purchases which is
included in  restricted  cash  and marketable  securities  in  the  accompanying
financial statements (Note 2).                                                  

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(5) INCOME TAXES                                                                
    The  components  of  the  benefit  for  income  taxes  were  as  follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                                     THREE MONTHS ENDED  
                                                                                         MARCH 31,       
                                                                                    -------------------- 
                                                                                      1995       1996    
                                                                                    ---------  --------- 
                                                                                                         
Current (provision) benefit                                                                              
  Federal.......................................................................... $    (767) $   3,202 
  State............................................................................      (194)       340 
  Foreign..........................................................................      (177)      (122)
                                                                                    ---------  --------- 
                                                                                       (1,138)     3,420 
                                                                                    ---------  --------- 
Deferred benefit                                                                                         
  Federal..........................................................................     2,050      1,281 
  State............................................................................       443         90 
                                                                                    ---------  --------- 
                                                                                        2,493      1,371 
                                                                                    ---------  --------- 
      Total benefit................................................................ $   1,355  $   4,791 
                                                                                    ---------  --------- 
                                                                                    ---------  --------- 

    EchoStar's deferred tax  assets (approximately  $15.4 million  at March  31,
1996)  relate principally to temporary  differences for amortization of original
issue discount on the 1994 and 1996 Notes and various accrued expenses which are
not deductible  until paid.  No valuation  allowance has  been provided  because
EchoStar  currently  believes it  is more  likely than  not that  these deferred
assets  will  ultimately  be  realized.  If  future  operating  results   differ
materially  and  adversely from  EchoStar's  current expectations,  its judgment
regarding the need for a valuation allowance may change.                        

(6) OTHER COMMITMENTS AND CONTINGENCIES                                         

SATELLITE CONTRACTS                                                             

    EchoStar has contracted with Martin Marietta Corporation ("Martin Marietta")
for the construction and delivery of high powered DBS satellites and for related
services. Penalties are payable by Martin Marietta as a result of delays in  the
delivery  of EchoStar I  by Martin Marietta  and may be  payable with respect to
EchoStar II or EchoStar III. As of  November 19, 1995, the date that EchoStar  I
was delivered by Martin Marietta to China, those penalties totaled approximately
$3.2  million with respect to EchoStar I.  Penalties of $2.0 million are payable
by Martin Marietta in  the event that  EchoStar II is not  delivered by May  15,
1996. Thereafter, delays in the delivery of EchoStar II would result in PER DIEM
additional penalties up to a maximum of $5.0 million in the aggregate. Beginning
August  1, 1997,  a PER  DIEM penalty of  $3,333, to  a maximum  of $100,000, is
payable if EchoStar III is not  delivered by July 31, 1997. Beginning  September
1,  1997, additional  delays in  the delivery  of EchoStar  III would  result in
additional PER DIEM penalties of $33,333, up to a maximum of $5.0 million in the
aggregate.                                                                      

    EchoStar has entered into a contract with Arianespace, Inc.  ("Arianespace")
to  launch  EchoStar II  from  Korou, French  Guiana in  the  fall of  1996 (the
"Arianespace Contract"). The launch is scheduled to be performed on a  dedicated
Ariane  42P launch vehicle. The Arianespace  Contract provides the potential for
the EchoStar  launch to  occur before  the  fall of  1996 if  earlier  scheduled
launches   are  accelerated  or  delayed.   The  Arianespace  Contract  contains
provisions entitling either party to delay the launch in limited  circumstances,
subject  to  the payment  of  penalties in  some cases.  As  of March  31, 1996,
EchoStar has  paid  Arianespace  approximately  $4.4  million  pursuant  to  the
Arianespace Contract. All remaining payments are payable monthly and will be due
prior to the launch.                                                            

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(6) OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)                             
    EchoStar  II  was previously  scheduled to  be launched  by the  same launch
provider as EchoStar I,  China Great Wall  Industry Corporation ("Great  Wall").
EchoStar  I was successfully  launched by Great Wall  in December 1995. EchoStar
notified Great Wall of its decision to terminate the launch of EchoStar II  with
Great  Wall.  EchoStar  applied  $15.0 million  previously  paid  Great  Wall in
connection with this launch to the  final $15.0 million owed Great Wall  related
to  the launch  of EchoStar I.  In May 1996,  EchoStar received a  refund of the
remaining $4.5 million previously paid Great Wall in connection with the  second
launch.                                                                         

    EchoStar  has  entered into  a contract  for  launch services  with Lockheed
Martin Commercial Launch Services, Inc. ("Lockheed") for the launch of  EchoStar
III from Cape Canaveral Air Station, Florida during the fall of 1997, subject to
delay  or acceleration in  certain circumstances (the  "Lockheed Contract"). The
Lockheed Contract provides for launch of  the satellite utilizing an Atlas  IIAS
launch vehicle. EchoStar has made an initial payment to Lockheed of $5.0 million
and the remaining cost is payable in installments in accordance with the payment
schedule  set forth in the Lockheed  Contract, which requires that substantially
all payments be made to Lockheed prior to the launch.                           

    EchoStar has contracted with Lockheed-Khrunichev-Energia-International, Inc.
("LKE") for the launch of  EchoStar IV during 1998  from the Kazakh Republic,  a
territory  of the  former Soviet Union,  utilizing a Proton  launch vehicle (the
"LKE Contract"). Either party may request a delay in the relevant launch period,
subject to the payment  of penalties based  on the length of  the delay and  the
proximity of the request to the launch date. EchoStar has paid LKE $20.0 million
pursuant  to the LKE Contract. No  additional payments are currently required to
be made to LKE until 1997.                                                      

PURCHASE COMMITMENTS                                                            

    EchoStar has entered into agreements with various manufacturers to  purchase
DBS  satellite receivers and related components manufactured based on EchoStar's
supplied specifications. As of March 31, 1996 the remaining commitments total as
much as $622.2 million. At March 31, 1996, the total of all outstanding purchase
order commitments with  domestic and  foreign suppliers  was as  much as  $641.3
million.  All but approximately $85.9 million  of the purchases related to these
commitments are expected to be made during 1996 and the remainder is expected to
be made during 1997. EchoStar expects to finance these purchases from  available
cash,  marketable investment  securities and  sales of  inventory, including the
sale of EchoStar Receiver Systems and related products.                         

OTHER RISKS AND CONTINGENCIES                                                   

    EchoStar is  subject to  legal proceedings  and claims  which arise  in  the
ordinary  course of its  business. In the  opinion of management,  the amount of
ultimate liability with respect to these actions will not materially affect  the
financial position, results of operations or liquidity of EchoStar.             

(7) SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS                     
    The  1994  Notes  are  fully,  unconditionally  and  jointly  and  severally
guaranteed by all  subsidiaries of  Dish, Ltd.,  except for  certain de  minimis
domestic and foreign subsidiaries (collectively, the "1994 Notes Guarantors").  

    The 1996 Notes are initially guaranteed by EchoStar on a subordinated basis.
On  and after the Dish Guarantee Date  (as defined in the 1996 Notes Indenture),
the 1996 Notes will be guaranteed by Dish, Ltd., which guarantee will rank  PARI
PASSU with all senior unsecured indebtedness of Dish, Ltd. On and after the date
upon   which  the   DBSC  Merger  is   consummated,  the  1996   Notes  will  be

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ECHOSTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(7) SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS (CONTINUED)         
guaranteed by New  DBSC, which guarantee  will rank pari  passu with all  senior
unsecured  indebtedness of New DBSC. If the  DBSC Merger is not consummated, New
DBSC will not be required to guarantee the 1996 Notes. There can be no assurance
that the DBSC Merger will be approved by the FCC or that it will be consummated.

    The net  assets of  Dish,  Ltd. exceed  the net  assets  of the  1994  Notes
Guarantors  by approximately $277,000  and $223,000 as of  December 31, 1995 and
March 31, 1996, respectively. Summarized consolidated financial information  for
Dish, Ltd. is as follows (in thousands):                                        

                                                        [Enlarge/Download Table]

                                                                             THREE MONTHS ENDED MARCH  
                                                                                        31,            
                                                                             ------------------------- 
                                                                                 1995         1996     
                                                                             ------------  ----------- 
                                                                                                       
Income Statement Data --                                                                               
  Revenue...................................................................  $   40,413   $    41,026 
  Expenses..................................................................      41,111        49,934 
                                                                             ------------  ----------- 
  Operating loss............................................................        (698)       (8,908)
  Other income (expense), net...............................................      (2,897)       (3,234)
                                                                             ------------  ----------- 
  Net loss before income taxes..............................................      (3,595)      (12,142)
  Benefit for income taxes..................................................       1,355         4,852 
                                                                             ------------  ----------- 
      Net loss..............................................................  $   (2,240)  $    (7,290)
                                                                             ------------  ----------- 
                                                                             ------------  ----------- 



                                                                             DECEMBER 31,   MARCH 31,  
                                                                                 1995         1996     
                                                                             ------------  ----------- 
                                                                                                       
Balance Sheet Data --                                                                                  
  Current assets............................................................  $   81,858   $    64,144 
  Property and equipment, net...............................................     333,199       333,231 
  Other noncurrent assets...................................................     144,238       150,659 
                                                                             ------------  ----------- 
      Total assets..........................................................  $  559,295   $   548,034 
                                                                             ------------  ----------- 
                                                                             ------------  ----------- 
Current liabilities.........................................................  $   50,743   $    31,167 
Long-term liabilities.......................................................     415,662       431,544 
Stockholder's equity........................................................      92,890        85,323 
                                                                             ------------  ----------- 
      Total liabilities and stockholder's equity............................  $  559,295   $   548,034 
                                                                             ------------  ----------- 
                                                                             ------------  ----------- 

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SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION
(UNAUDITED) 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 

ECHOSTAR SATELLITE BROADCASTING CORPORATION 
AND SUBSIDIARIES

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CONSOLIDATED BALANCE SHEETS 

(IN THOUSANDS)

ASSETS

                                                        [Enlarge/Download Table]

                                                                                                     DECEMBER 31,   MARCH 31, 
                                                                                                         1995         1996    
                                                                                                     ------------  -----------
                                                                                                                              
                                                                                                                   (UNAUDITED)
CURRENT ASSETS:                                                                                                               
  Cash and cash equivalents.........................................................................   $ 13,949     $162,651  
  Marketable investment securities..................................................................        210          212  
  Trade accounts receivable, net....................................................................     10,435       20,629  
  Inventories.......................................................................................     38,769       27,298  
  Income tax receivable.............................................................................      3,870        4,504  
  Deferred tax assets...............................................................................      1,834        4,600  
  Other current assets..............................................................................     12,791       12,599  
                                                                                                     ------------  -----------
      Total current assets..........................................................................     81,858      232,493  
RESTRICTED CASH AND MARKETABLE SECURITIES:                                                                                    
  1994 Notes escrow.................................................................................     73,291       63,617  
  1996 Notes escrow.................................................................................     --          169,970  
  Other.............................................................................................     26,400       41,900  
PROPERTY AND EQUIPMENT, net.........................................................................    333,199      333,231  
OTHER NONCURRENT ASSETS.............................................................................     44,547       58,146  
                                                                                                     ------------  -----------
      Total assets..................................................................................   $559,295     $899,357  
                                                                                                     ------------  -----------
                                                                                                     ------------  -----------
                                              LIABILITIES AND STOCKHOLDER'S EQUITY                                            
CURRENT LIABILITIES:                                                                                                          
  Trade accounts payable............................................................................   $ 19,063     $ 12,280  
  Deferred programming revenue......................................................................      5,563        7,416  
  Accrued expenses and other current liabilities....................................................     21,335        7,437  
  Notes payable and current portion of long-term debt...............................................      4,782        4,783  
                                                                                                     ------------  -----------
      Total current liabilities.....................................................................     50,743       31,916  
LONG-TERM DEFERRED PROGRAMMING REVENUE..............................................................     --            3,790  
1994 NOTES, net.....................................................................................    382,218      395,333  
1996 NOTES, net.....................................................................................     --          350,890  
LONG-TERM MORTGAGE DEBT AND NOTE PAYABLE, excluding current portion.................................     33,444       32,421  
                                                                                                     ------------  -----------
      Total liabilities.............................................................................    466,405      814,350  
                                                                                                     ------------  -----------
COMMITMENTS AND CONTINGENCIES (Note 6)                                                                                        

STOCKHOLDER'S EQUITY (Note 1):                                                                                                
  Preferred Stock, 20,000,000 and no shares authorized, 1,616,681 and no shares of Series A                                   
   Cumulative Preferred Stock issued and outstanding, including accrued dividends of $1,555,000 and                           
   $0, respectively.................................................................................     16,607       --      
  Class A Common Stock, $.01 par value, 200,000,000 and no shares authorized, 6,470,599 and no                                
   shares issued and outstanding, respectively......................................................         65       --      
  Class B Common Stock, $.01 par value, 100,000,000 and no shares authorized, 29,804,401 and no                               
   shares issued and outstanding, respectively......................................................        298       --      
  Common Stock, $.01 par value, none and 1,000 shares authorized, issued and outstanding,                                     
   respectively.....................................................................................     --           --      
  Additional paid-in capital........................................................................     89,495      106,466  
  Unrealized holding gains on available-for-sale securities, net of deferred taxes..................        251           21  
  Retained earning (deficit)........................................................................    (13,826)     (21,480) 
                                                                                                     ------------  -----------
      Total stockholder's equity....................................................................     92,890       85,007  
                                                                                                     ------------  -----------
      Total liabilities and stockholder's equity....................................................   $559,295     $899,357  
                                                                                                     ------------  -----------
                                                                                                     ------------  -----------

The accompanying notes to consolidated financial statements 
are an integral part of these balance sheets. 

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ECHOSTAR SATELLITE BROADCASTING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 

(IN THOUSANDS, EXCEPT PER SHARE DATA) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                            THREE MONTHS ENDED   
                                                                                                 MARCH 31,       
                                                                                           --------------------- 
                                                                                             1995        1996    
                                                                                           ---------  ---------- 
                                                                                                                 
REVENUE:                                                                                                         
  DTH products and technical services..................................................... $  36,277  $   36,741 
  Programming.............................................................................     3,871       3,913 
  Loan origination and participation income...............................................       265         372 
                                                                                           ---------  ---------- 
      Total revenue.......................................................................    40,413      41,026 
                                                                                           ---------  ---------- 
EXPENSES:                                                                                                        
  DTH products and technical services.....................................................    29,445      32,750 
  Programming.............................................................................     3,432       3,283 
  Selling, general and administrative.....................................................     7,871      10,571 
  Depreciation............................................................................       363       3,330 
                                                                                           ---------  ---------- 
      Total expenses......................................................................    41,111      49,934 
                                                                                           ---------  ---------- 
OPERATING LOSS............................................................................      (698)     (8,908)
                                                                                           ---------  ---------- 
OTHER INCOME (EXPENSE):                                                                                          
  Interest income.........................................................................     3,638       1,974 
  Interest expense, net of amounts capitalized............................................    (6,563)     (5,784)
  Other, net..............................................................................        28          (1)
                                                                                           ---------  ---------- 
      Total other income (expense)........................................................    (2,897)     (3,811)
                                                                                           ---------  ---------- 
NET LOSS BEFORE INCOME TAXES..............................................................    (3,595)    (12,719)
BENEFIT FOR INCOME TAXES..................................................................     1,355       5,065 
                                                                                           ---------  ---------- 
NET LOSS.................................................................................. $  (2,240) $   (7,654)
                                                                                           ---------  ---------- 
                                                                                           ---------  ---------- 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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ECHOSTAR SATELLITE BROADCASTING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 1996 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                               RETAINED                 
                                                                                               EARNINGS                 
                                                                                               (DEFICIT)                
                                                                                                  AND                   
                                          SHARES OF                              ADDITIONAL   UNREALIZED       TOTAL    
                                        COMMON STOCK    PREFERRED     COMMON       PAID-IN      HOLDING    STOCKHOLDER'S
                                         OUTSTANDING      STOCK        STOCK       CAPITAL      LOSSES        EQUITY    
                                        -------------  -----------  -----------  -----------  -----------  -------------
                                                                                                                        
BALANCES, at December 31, 1995.........      36,275     $  16,607    $     363    $  89,495    $ (13,575)    $  92,890  
  Issuance of Common Stock (Note 1)....           1                                       1                          1  
  Reorganization of Entities Under                                                                                      
   Common Control (Note 1).............     (36,275)      (16,607)        (363)      16,970                     --      
  Unrealized holding losses on                                                                                          
   available-for-sale securites, net...                                                             (230)         (230) 
  Net loss.............................                                                           (7,654)       (7,654) 
                                        -------------  -----------  -----------  -----------  -----------  -------------
BALANCES, at March 31, 1996............           1     $  --        $  --        $ 106,466    $ (21,459)    $  85,007  
                                        -------------  -----------  -----------  -----------  -----------  -------------
                                        -------------  -----------  -----------  -----------  -----------  -------------

The accompanying notes to consolidated financial statements 
are an integral part of this statement. 

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ECHOSTAR SATELLITE BROADCASTING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                            THREE MONTHS ENDED    
                                                                                                MARCH 31,         
                                                                                         ------------------------ 
                                                                                            1995         1996     
                                                                                         ----------  ------------ 
                                                                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                             
  Net loss.............................................................................. $   (2,240) $     (7,654)
  Adjustments to reconcile net loss to net cash flows from operating activities --                                
    Depreciation........................................................................        363         3,330 
    Provision for doubtful accounts.....................................................        111           610 
    Benefit for deferred taxes..........................................................     (2,493)       (3,013)
    Amortization of deferred debt issuance costs on 1994 Notes..........................        315           315 
    Amortization of discount on 1994 Notes, net of amounts capitalized..................      6,131         4,189 
    Amortization of discount on 1996 Notes, net of amounts capitalized..................     --               843 
    Equity in earnings of joint venture.................................................        (15)      --      
    Change in reserve for excess and obsolete inventory.................................        233           227 
    Long-term deferred programming revenue..............................................     --             3,790 
    Other, net..........................................................................         26          (170)
    Changes in working capital items --                                                                           
      Trade accounts receivable.........................................................       (728)       (9,579)
      Inventories.......................................................................     (4,238)       11,244 
      Income tax receivable.............................................................     --              (634)
      Other current assets..............................................................       (730)          192 
      Liability under cash management program...........................................        (57)      --      
      Trade accounts payable............................................................     (1,061)       (6,783)
      Deferred programming revenue......................................................       (657)        1,853 
      Accrued expenses..................................................................      1,221           858 
      Other current liabilities.........................................................         38           244 
                                                                                         ----------  ------------ 
          Net cash flows from operating activities......................................     (3,781)         (138)
                                                                                         ----------  ------------ 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                             
  Purchases of marketable investment securities.........................................    (15,211)           (2)
  Sales of marketable investment securities.............................................     27,777       --      
  Purchases of restricted marketable investment securities..............................     --           (15,500)
  Purchases of property and equipment...................................................       (538)       (2,715)
  Offering proceeds and investment earnings placed in escrow............................     (2,714)     (178,452)
  Funds released from escrow accounts...................................................     16,257        17,785 
  Expenditures for satellite systems under construction.................................    (19,621)       (7,928)
  Expenditures for FCC authorizations...................................................     --              (370)
                                                                                         ----------  ------------ 
          Net cash flows from investing activities......................................      5,950      (187,182)
                                                                                         ----------  ------------ 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) 

(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                            THREE MONTHS ENDED   
                                                                                                MARCH 31,        
                                                                                          ---------------------- 
                                                                                            1995        1996     
                                                                                          ---------  ----------- 
                                                                                                                 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                            
  Repayments of mortgage indebtedness and note payable................................... $     (57) $    (1,022)
  Proceeds from issuance of Common Stock.................................................    --                1 
  Net proceeds from issuance of 1996 Notes...............................................    --          337,043 
                                                                                          ---------  ----------- 
          Net cash flows from financing activities.......................................       (57)     336,022 
                                                                                          ---------  ----------- 
NET INCREASE IN CASH AND CASH EQUIVALENTS................................................     2,112      148,702 
CASH AND CASH EQUIVALENTS, beginning of period...........................................    17,506       13,949 
                                                                                          ---------  ----------- 
CASH AND CASH EQUIVALENTS, end of period................................................. $  19,618  $   162,651 
                                                                                          ---------  ----------- 
                                                                                          ---------  ----------- 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                               
  Cash paid for interest, net of amounts capitalized..................................... $     106  $       354 
  Cash paid for income taxes.............................................................        39      --      
  Cumulative Series A Preferred Stock dividends..........................................       301      --      
  Satellite launch payment for EchoStar II applied to EchoStar I launch..................    --           15,000 

The accompanying notes to consolidated financial statements 
are an integral part of these statements. 

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ECHOSTAR SATELLITE BROADCASTING CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS                       
    EchoStar  Satellite  Broadcasting  Corporation  ("ESB")  is  a  wholly owned
subsidiary of EchoStar Communications  Corporation ("EchoStar"). ESB was  formed
in  January 1996  for the  purpose of completing  a private  offering (the "1996
Notes Offering"),  pursuant to  Rule 144A  of  the Securities  Act of  1933,  as
amended  (the "Securities  Act"), of 13  1/8% Senior Secured  Discount Notes due
2004 (the  "1996 Notes"),  resulting  in net  proceeds of  approximately  $337.0
million.  The 1996 Notes  Offering was consummated in  March 1996. In connection
with the  1996  Notes Offering,  EchoStar  contributed all  of  the  outstanding
capital  stock  of  its  wholly  owned  subsidiary,  Dish,  Ltd.,  to  ESB. This
transaction has been accounted for as a reorganization of entities under  common
control.  Accordingly, Dish, Ltd. has been treated as the predecessor to ESB and
the historical  financial statements  of ESB  are  those of  Dish, Ltd.  ESB  is
subject  to all, and EchoStar is subject to certain of, the terms and conditions
of the Indenture  related to  the 1996 Notes  (the "1996  Notes Indenture").  On
April  24,  1996, ESB  filed  a Registration  Statement  on Form  S-1  under the
Securities Act to exchange the 1996 Notes for publicly registered notes.        

    ESB successfully  launched its  first  direct broadcast  satellite  ("DBS"),
EchoStar  I, in December 1995 and, on  March 4, 1996, began broadcasting its DBS
programming (the "Dish  Network-SM-") to the  entire continental United  States.
The  Dish  Network-SM-  currently includes  over  100 channels  of  high quality
digital video and audio programming and will expand to approximately 200 digital
video and  audio  channels following  the  successful  launch of  a  second  DBS
satellite, DirectSat I ("EchoStar II"), currently scheduled in the fall of 1996.

    In  addition to its DBS business, ESB is engaged in the design, manufacture,
distribution and  installation of  satellite direct  to home  ("DTH")  products,
domestic  distribution  of  DTH  programming  and  consumer  financing  of ESB's
domestic DTH  products and  services. In  the first  quarter of  1996,  EchoStar
formed  a wholly owned subsidiary, Dish Network Credit Corporation ("DNCC"), for
the purpose of providing consumer financing for EchoStar's domestic DTH products
and services.  At that  time, ESB's  subsidiary that  previously provided  these
services ceased new loan origination activities. In future periods ESB's revenue
from loan origination and participation income will decline.                    

    Proceeds  from  the 1996  Notes  Offering will  be  used for:  (i) continued
development, marketing and distribution of the Dish Network-SM-; (ii) EchoStar's
purchase of  DBS frequencies  at 148  DEG. WL;  (iii) construction,  launch  and
insurance  of  EchoStar III  and EchoStar  IV; (iv)  additional launch  costs of
EchoStar  II;  and  (v)  other   general  corporate  purposes.  The   additional
frequencies  were acquired by EchoStar  at a public auction  held by the Federal
Communications Commission ("FCC") in January 1996 (the "FCC Auction").          

    In June 1995, EchoStar  completed an offering of  its Class A Common  Stock,
resulting   in  net  proceeds  of   approximately  $63.0  million  (the  "Equity
Offering"). In June  1994, Dish, Ltd.  completed an offering  of 12 7/8%  Senior
Secured  Discount Notes due 2004 (the  "1994 Notes") and Warrants (collectively,
the "1994 Notes Offering"),  resulting in net  proceeds of approximately  $323.3
million.  Dish Ltd. and  most of its  subsidiaries are subject  to the terms and
conditions of  the  Indenture  related  to  the  1994  Notes  (the  "1994  Notes
Indenture").                                                                    

    EchoStar presently owns approximately 40% of the outstanding common stock of
Direct  Broadcasting  Satellite  Corporation ("DBSC").  DBSC's  principal assets
include an FCC  conditional satellite construction  permit and specific  orbital
slot  assignments for  eleven DBS  frequencies at  61.5 DEG.  WL and  eleven DBS
frequencies at 175 DEG.  WL (the "DBS Rights").  EchoStar intends to merge  DBSC
with  Direct  Broadcasting Satellite  Corporation ("New  DBSC"), a  wholly owned
subsidiary of EchoStar (the "DBSC Merger"). The DBSC Merger has been approved by
DBSC shareholders but will not be                                               

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED)           
consummated until the FCC has approved  the DBSC Merger. Although no  assurances
can  be given, EchoStar  expects the FCC to  issue an order  with respect to the
DBSC Merger  in the  near future.  Assuming  FCC approval  of the  DBSC  Merger,
EchoStar  will hold,  through New  DBSC, DBSC's DBS  Rights. On  April 16, 1996,
EchoStar filed a  Registration Statement on  Form S-4 under  the Securities  Act
covering 658,000 shares of EchoStar Class A Common Stock that are intended to be
issued in connection with the DBSC Merger.                                      

    The accompanying consolidated financial statements include only the accounts
of ESB and its subsidiaries and exclude all accounts of ESB's parent, EchoStar. 

    Unless   otherwise  stated  herein,  or   the  context  otherwise  requires,
references herein to ESB shall  include ESB and all  of its direct and  indirect
subsidiaries,  and EchoStar shall include EchoStar,  ESB and all of their direct
and indirect wholly owned subsidiaries.                                         

    The accompanying unaudited condensed Consolidated Financial Statements  have
been  prepared in accordance  with generally accepted  accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X.  Accordingly, they do not  include all of the  information
and  footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments  (consisting
of  normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 1996
are not necessarily indicative of the results that may be expected for the  year
ended  December 31,  1996. For  further information,  refer to  the Combined and
Consolidated Financial Statements and footnotes thereto included in Dish, Ltd.'s
Annual Report on Form 10-K for the  year ended December 31, 1995. Certain  prior
year   amounts  have  been  reclassified  to   conform  with  the  current  year
presentation.                                                                   

SIGNIFICANT RISKS AND UNCERTAINTIES                                             

    Execution  of  EchoStar's  business  strategy  to  launch  and  operate  DBS
satellites   has  dramatically  changed  its  operating  results  and  financial
position. As of  March 31,  1996, EchoStar  expects to  expend approximately  an
additional $520 million through 1999 to build, launch and support its first four
satellites  (Note 6), assuming receipt of all required FCC licenses and permits.
EchoStar consummated the 1994  Notes Offering, the 1996  Notes Offering and  the
Equity  Offering to satisfy these  capital requirements. Annual interest expense
on the 1994 and 1996 Notes and depreciation of the investment in the  satellites
and related assets will each be of a magnitude that exceeds historical levels of
income  before taxes. Beginning in 1995 EchoStar reported significant net losses
and expects net losses to continue for the foreseeable future. EchoStar's  plans
also  include  the  construction and  launch  of two  fixed  service satellites,
additional  DBS   satellites  and   marketing  campaigns   (including   receiver
subsidization  if market  conditions warrant)  to promote  its DBS  products and
services.  EchoStar  may  need  to   raise  significant  additional  funds   for
construction  and launch of additional satellites  and there can be no assurance
that necessary  funds will  be available  or, if  available, that  they will  be
available  on terms favorable to EchoStar. However, management believes, but can
give no assurance, that demand for its DBS products and services will result  in
sufficient  cash flow  which, together  with other  sources of  capital, will be
sufficient to satisfy future planned expenditures. Significant delays or  launch
failures  in EchoStar's  satellite launch  program may  have significant adverse
consequences to EchoStar's operating results and financial condition.           

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles requires  the use  of management  estimates and
assumptions that affect the reported amounts of                                 

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION AND PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED)           
assets and liabilities and  disclosure of contingent  assets and liabilities  at
the  date of the financial  statements and the reported  amounts of revenues and
expenses for  each reporting  period.  Actual results  could differ  from  those
estimates.                                                                      

(2) SUPPLEMENTAL ANALYSIS                                                       

CASH AND CASH EQUIVALENTS                                                       

    ESB  considers all liquid investments purchased with an original maturity of
ninety days or less to be cash equivalents. Cash equivalents as of December  31,
1995,  and March  31, 1996  consist of money  market funds,  corporate notes and
commercial paper stated at cost which equates to market value.                  

RESTRICTED CASH AND MARKETABLE SECURITIES                                       

    ESB classifies all marketable  investment securities as  available-for-sale.
Accordingly,  these investments  are reflected at  market value  based on quoted
market prices. Related unrealized  gains and losses are  reported as a  separate
component  of stockholder's  equity, net of  related deferred  income taxes. The
specific identification method is used  to determine cost in computing  realized
gains and losses.                                                               

    Restricted Cash and Marketable Securities in Escrow Accounts as reflected on
the  accompanying balance sheets  represent the remaining  net proceeds received
from the 1994 Notes Offering and a  portion of the proceeds from the 1996  Notes
Offering, plus interest earned, less amounts expended to date in connection with
the development, construction and launch of the Dish Network-SM-. These proceeds
are  held in separate escrow  accounts (the "1994 Escrow  Account" and the "1996
Escrow Account", respectively), for the benefit  of the holders of the 1994  and
1996  Notes and are invested in certain debt and other marketable securities, as
permitted by the respective Indentures, until disbursed for the express purposes
identified in the  1994 Notes  Offering Prospectus  or the  1996 Notes  Offering
Memorandum, as the case may be.                                                 

    Other  Restricted Cash includes  $11.4 million to  satisfy certain covenants
regarding launch insurance required by the 1994 Notes Indenture. ESB is required
to maintain launch insurance  and Restricted Cash  totalling $225.0 million  for
each  of EchoStar I and  EchoStar II. ESB has  obtained $219.3 million of launch
insurance on each satellite, and, together with the cash segregated and reserved
on the  accompanying balance  sheets, has  satisfied its  insurance  obligations
under the 1994 Notes Indenture. In addition, as of March 31, 1996, $15.0 million
was  in  an escrow  account  established pursuant  to  a DBS  satellite receiver
manufacturing contract for payment to the manufacturer as certain milestones are
reached and $15.5  million was  in an  escrow account  for the  purpose of  cash
collateralizing certain standby letters of credit (Note 4).                     

    The  major components  of Restricted Cash  and Marketable  Securities are as
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                 DECEMBER 31, 1995                      MARCH 31, 1996            
                                        -----------------------------------  -------------------------------------
                                                     UNREALIZED                           UNREALIZED              
                                         AMORTIZED     HOLDING     MARKET     AMORTIZED     HOLDING      MARKET   
                                           COST         GAIN        VALUE       COST         GAIN         VALUE   
                                        -----------  -----------  ---------  -----------  -----------  -----------
                                                                                                                  
Commercial paper.......................  $  66,214    $  --       $  66,214  $    70,600   $  --       $    70,600
Government bonds.......................     32,904          420      33,324      204,411          49       204,460
Accrued interest.......................        153       --             153          427      --               427
                                        -----------       -----   ---------  -----------       -----   -----------
                                         $  99,271    $     420   $  99,691  $   275,438   $      49   $   275,487
                                        -----------       -----   ---------  -----------       -----   -----------
                                        -----------       -----   ---------  -----------       -----   -----------

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
INVENTORIES                                                                     

    Inventories are  stated  at the  lower  of cost  or  market value.  Cost  is
determined  using the first-in, first-out  ("FIFO") method. Proprietary products
are  manufactured  by  outside  suppliers  to  ESB's  specifications.  ESB  also
distributes   non-proprietary  products  purchased   from  other  manufacturers.
Manufactured inventories include  materials, labor  and manufacturing  overhead.
Cost  of  other inventories  includes  parts, contract  manufacturers' delivered
price, assembly and testing labor, and related overhead, including handling  and
storage costs. The major components of inventory were as follows (in thousands):

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Finished goods................................................................  $   20,458    $  17,957 
DBS receiver components.......................................................       9,615        9,728 
Competitor DBS Receivers......................................................       9,404          559 
Spare parts...................................................................       2,089        2,078 
Reserve for excess and obsolete inventory.....................................      (2,797)      (3,024)
                                                                               ------------  -----------
                                                                                $   38,769    $  27,298 
                                                                               ------------  -----------
                                                                               ------------  -----------

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                                  

    The  composition of  accrued expenses  and other  current liabilities  is as
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Accrued EchoStar I launch costs...............................................  $   15,000    $  --     
Accrued expenses..............................................................       3,850        4,708 
Reserve for warranty costs....................................................       1,013        1,013 
Other.........................................................................       1,472        1,716 
                                                                               ------------  -----------
                                                                                $   21,335    $   7,437 
                                                                               ------------  -----------
                                                                               ------------  -----------

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
PROPERTY AND EQUIPMENT                                                          

    Property and equipment  are stated  at cost  less accumulated  depreciation.
Cost   includes  interest  capitalized   on  the  EchoStar   DBS  System  during
construction at ESB's effective borrowing rate. The major components of property
and equipment were as follows (in thousands):                                   

                                                        [Enlarge/Download Table]

                                                                   ESTIMATED                              
                                                                  USEFUL LIFE   DECEMBER 31,   MARCH 31,  
                                                                  (IN YEARS)        1995         1996     
                                                                 -------------  ------------  ----------- 
                                                                                                          
Construction in progress........................................      --         $  282,373   $    81,322 
EchoStar I satellite............................................          12         --           198,143 
Furniture, fixtures and equipment...............................        2-12         17,163        21,329 
Buildings and improvements......................................        7-40         21,006        21,109 
Tooling and other...............................................           2          2,039         3,470 
Land............................................................      --              1,613         1,613 
Vehicles........................................................           7          1,310         1,325 
Furniture and equipment held for sale...........................                     17,062        17,614 
Computer equipment held for sale................................                        902           885 
                                                                                ------------  ----------- 
      Total property and equipment..............................                    343,468       346,810 
Less-Accumulated depreciation...................................                    (10,269)      (13,579)
                                                                                ------------  ----------- 
      Net property and equipment................................                 $  333,199   $   333,231 
                                                                                ------------  ----------- 
                                                                                ------------  ----------- 

    Construction in progress principally  includes capitalized costs related  to
EchoStar II, which is scheduled for launch in the fall of 1996.                 

Construction in progress consisted of the following (in thousands):     

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Progress amounts for satellite construction, launch, launch insurance,                                  
 capitalized interest, launch and in-orbit tracking, telemetry and control                              
 services:                                                                                              
  EchoStar I..................................................................  $  193,629    $  --     
  EchoStar II.................................................................      88,634       81,133 
  Other.......................................................................         110          189 
                                                                               ------------  -----------
                                                                                $  282,373    $  81,322 
                                                                               ------------  -----------
                                                                               ------------  -----------

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(2) SUPPLEMENTAL ANALYSIS (CONTINUED)                                           
OTHER NONCURRENT ASSETS                                                         

    The  major  components  of  other  noncurrent  assets  were  as  follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                               DECEMBER 31,   MARCH 31, 
                                                                                   1995         1996    
                                                                               ------------  -----------
                                                                                                        
Deferred tax assets, net......................................................  $   12,109    $  12,497 
FCC authorizations, net of amortization.......................................      11,309       11,681 
1996 Notes deferred debt issuance costs.......................................      --           13,004 
1994 Notes deferred debt issuance costs, net of amortization..................      10,622       10,307 
SSET convertible subordinated debentures and accrued interest.................       9,610        9,758 
Other, net....................................................................         897          899 
                                                                               ------------  -----------
                                                                                $   44,547    $  58,146 
                                                                               ------------  -----------
                                                                               ------------  -----------

(3) LONG-TERM DEBT                                                              

1994 NOTES                                                                      

    On June 7,  1994, Dish, Ltd.  completed the 1994  Notes Offering of  624,000
units  consisting of $624.0 million aggregate principal amount of the 1994 Notes
and 3,744,000 Warrants.  The 1994  Notes Offering  resulted in  net proceeds  to
Dish, Ltd. of approximately $323.3 million. Interest on the 1994 Notes currently
is  not payable in  cash but accrues through  June 1, 1999,  with the 1994 Notes
accreting to $624.0 million by that date. Thereafter, interest on the 1994 Notes
will be payable in  cash semi-annually on  June 1 and December  1 of each  year,
commencing December 1, 1999. At March 31, 1996, the 1994 Notes were reflected in
the  accompanying  financial statements  at $395.3  million, net  of unamortized
discount of $228.7 million.                                                     

1996 NOTES                                                                      

    On March  25, 1996,  ESB completed  the 1996  Notes Offering  consisting  of
$580.0  million aggregate  principal amount  of the  1996 Notes.  The 1996 Notes
Offering resulted  in  net proceeds  to  ESB of  approximately  $337.0  million.
Interest  on the 1996 Notes currently is not payable in cash but accrues through
March 15, 2000, with the  1996 Notes accreting to  $580.0 million by that  date.
Thereafter,  interest on the 1996 Notes will be payable in cash semi-annually on
March 15 and September 15 of each year, commencing September 15, 2000. At  March
31, 1996, the 1996 Notes were reflected in the accompanying financial statements
at $350.9 million, net of unamortized discount of $229.1 million.               

(4) BANK CREDIT FACILITY AND LETTERS OF CREDIT                                  
    On  May 6,  1994, the  principal subsidiaries  of EchoStar,  except EchoStar
Satellite Corporation ("ESC") (the "Borrowers"), entered into an agreement  with
Bank  of America Illinois,  to provide a revolving  credit facility (the "Credit
Facility") for working capital advances and for letters of credit necessary  for
inventory  purchases and  satellite construction  payments. The  Credit Facility
expired in May  1996 and EchoStar  does not  currently intend to  arrange a  new
credit  facility. Instead, EchoStar is using available cash to collateralize its
letter of credit obligations, which have historically been the only  significant
use  of the Credit Facility. At March 31, 1996, EchoStar had cash collateralized
$15.5 million of certain standby letters of credit for trade purchases which  is
included  in  restricted  cash  and marketable  securities  in  the accompanying
financial statements (Note 2).                                                  

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(5) INCOME TAXES                                                                
    The components  of  the  benefit  for  income  taxes  were  as  follows  (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                                     THREE MONTHS ENDED  
                                                                                         MARCH 31,       
                                                                                    -------------------- 
                                                                                      1995       1996    
                                                                                    ---------  --------- 
                                                                                                         
Current (provision) benefit                                                                              
  Federal.......................................................................... $    (767) $   1,971 
  State............................................................................      (194)       203 
  Foreign..........................................................................      (177)      (122)
                                                                                    ---------  --------- 
                                                                                       (1,138)     2,052 
                                                                                    ---------  --------- 
Deferred benefit                                                                                         
  Federal..........................................................................     2,050      2,764 
  State............................................................................       443        249 
                                                                                    ---------  --------- 
                                                                                        2,493      3,013 
                                                                                    ---------  --------- 
    Total benefit.................................................................. $   1,355  $   5,065 
                                                                                    ---------  --------- 
                                                                                    ---------  --------- 

    ESB's  deferred tax assets  (approximately $17.1 million  at March 31, 1996)
relate principally to temporary differences  for amortization of original  issue
discount  on the 1994 and 1996 Notes  and various accrued expenses which are not
deductible until  paid. No  valuation allowance  has been  provided because  ESB
currently  believes it is more  likely than not that  these deferred assets will
ultimately be  realized.  If  future operating  results  differ  materially  and
adversely from ESB's current expectations, its judgment regarding the need for a
valuation allowance may change.                                                 

(6) OTHER COMMITMENTS AND CONTINGENCIES                                         

SATELLITE CONTRACTS                                                             

    EchoStar has contracted with Martin Marietta Corporation ("Martin Marietta")
for the construction and delivery of high powered DBS satellites and for related
services.  Penalties are payable by Martin Marietta as a result of delays in the
delivery of EchoStar I  by Martin Marietta  and may be  payable with respect  to
EchoStar  II or EchoStar III. As of November  19, 1995, the date that EchoStar I
was delivered by Martin Marietta to China, those penalties totaled approximately
$3.2 million with respect to EchoStar  I. Penalties of $2.0 million are  payable
by  Martin Marietta in  the event that EchoStar  II is not  delivered by May 15,
1996. Thereafter, delays in the delivery of EchoStar II would result in PER DIEM
additional penalties up to a maximum of $5.0 million in the aggregate. Beginning
August 1, 1997,  a PER  DIEM penalty  of $3,333, to  a maximum  of $100,000,  is
payable  if EchoStar III is not delivered  by July 31, 1997. Beginning September
1, 1997,  additional delays  in the  delivery of  EchoStar III  would result  in
additional PER DIEM penalties of $33,333, up to a maximum of $5.0 million in the
aggregate.                                                                      

    EchoStar  has entered into a contract with Arianespace, Inc. ("Arianespace")
to launch  EchoStar II  from  Korou, French  Guiana in  the  fall of  1996  (the
"Arianespace  Contract"). The launch is scheduled to be performed on a dedicated
Ariane 42P launch vehicle. The  Arianespace Contract provides the potential  for
the  EchoStar  launch to  occur before  the  fall of  1996 if  earlier scheduled
launches  are  accelerated  or   delayed.  The  Arianespace  Contract   contains
provisions  entitling either party to delay the launch in limited circumstances,
subject to  the payment  of  penalties in  some cases.  As  of March  31,  1996,
EchoStar  has  paid  Arianespace  approximately  $4.4  million  pursuant  to the
Arianespace Contract. All remaining payments are payable monthly and will be due
prior to the launch.                                                            

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(6) OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)                             
    EchoStar II  was previously  scheduled to  be launched  by the  same  launch
provider  as EchoStar I,  China Great Wall  Industry Corporation ("Great Wall").
EchoStar I was successfully  launched by Great Wall  in December 1995.  EchoStar
notified  Great Wall of its decision to terminate the launch of EchoStar II with
Great Wall.  EchoStar  applied  $15.0  million previously  paid  Great  Wall  in
connection  with this launch to the final  $15.0 million owed Great Wall related
to the launch  of EchoStar I.  In May 1996,  EchoStar received a  refund of  the
remaining  $4.5 million previously paid Great Wall in connection with the second
launch.                                                                         

    EchoStar has  entered into  a  contract for  launch services  with  Lockheed
Martin  Commercial Launch Services, Inc. ("Lockheed") for the launch of EchoStar
III from Cape Canaveral Air Station, Florida during the fall of 1997, subject to
delay or acceleration  in certain circumstances  (the "Lockheed Contract").  The
Lockheed  Contract provides for launch of  the satellite utilizing an Atlas IIAS
launch vehicle. EchoStar has made an initial payment to Lockheed of $5.0 million
and the remaining cost is payable in installments in accordance with the payment
schedule set forth in the  Lockheed Contract, which requires that  substantially
all payments be made to Lockheed prior to launch.                               

    EchoStar has contracted with Lockheed-Khrunichev-Energia-International, Inc.
("LKE")  for the launch of  EchoStar IV during 1998  from the Kazakh Republic, a
territory of the  former Soviet Union,  utilizing a Proton  launch vehicle  (the
"LKE Contract"). Either party may request a delay in the relevant launch period,
subject  to the payment  of penalties based on  the length of  the delay and the
proximity of the request to the launch date. EchoStar has paid LKE $20.0 million
pursuant to the LKE Contract. No  additional payments are currently required  to
be made to LKE until 1997.                                                      

PURCHASE COMMITMENTS                                                            

    ESB  has entered into agreements with  various manufacturers to purchase DBS
satellite receivers and related components manufactured based on ESB's  supplied
specifications.  As of March 31, 1996 the remaining commitments total as much as
$622.2 million. At March 31, 1996,  the total of all outstanding purchase  order
commitments  with domestic and foreign suppliers  was as much as $641.3 million.
All  but  approximately  $85.9  million  of  the  purchases  related  to   these
commitments are expected to be made during 1996 and the remainder is expected to
be  made during 1997. EchoStar expects to finance these purchases from available
cash, marketable investment  securities and  sales of  inventory, including  the
sale of EchoStar Receiver Systems and related products.                         

OTHER RISKS AND CONTINGENCIES                                                   

    EchoStar  is  subject to  legal proceedings  and claims  which arise  in the
ordinary course of  its business. In  the opinion of  management, the amount  of
ultimate  liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of EchoStar.             

(7) SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS                     
    The  1994  Notes  are  fully,  unconditionally  and  jointly  and  severally
guaranteed  by all  subsidiaries of  Dish, Ltd.,  except for  certain de minimis
domestic and foreign subsidiaries.                                              

    The 1996 Notes are initially guaranteed by EchoStar on a subordinated basis.
On and after the Dish Guarantee Date  (as defined in the 1996 Notes  Indenture),
the  1996 Notes will be guaranteed by Dish, Ltd., which guarantee will rank PARI
PASSU with all senior unsecured indebtedness of Dish, Ltd. On and after the date
upon  which  the   DBSC  Merger  is   consummated,  the  1996   Notes  will   be

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995 AND MARCH 31, 1996

(7) SUMMARY FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS (CONTINUED)         
guaranteed  by New DBSC,  which guarantee will  rank PARI PASSU  with all senior
unsecured indebtedness of New DBSC. If  the DBSC Merger is not consummated,  New
DBSC will not be required to guarantee the 1996 Notes. There can be no assurance
that the DBSC Merger will be approved by the FCC or that it will be consummated.

    The  net  assets of  Dish,  Ltd. exceed  the net  assets  of the  1994 Notes
Guarantors by approximately $277,000  and $223,000 as of  December 31, 1995  and
March  31, 1996, respectively. Summarized consolidated financial information for
Dish, Ltd. is as follows (in thousands):                                        

                                                        [Enlarge/Download Table]

                                                                                  THREE MONTHS ENDED   
                                                                                       MARCH 31,       
                                                                                 --------------------- 
                                                                                   1995        1996    
                                                                                 ---------  ---------- 
                                                                                                       
Income Statement Data --                                                                               
  Revenue....................................................................... $  40,413  $   41,026 
  Expenses......................................................................    41,111      49,934 
  Operating loss................................................................      (698)     (8,908)
  Other income (expense), net...................................................    (2,897)     (3,234)
  Net loss before income taxes..................................................    (3,595)    (12,142)
  Benefit for income taxes......................................................     1,355       4,852 
                                                                                 ---------  ---------- 
    Net loss.................................................................... $  (2,240) $   (7,290)
                                                                                 ---------  ---------- 
                                                                                 ---------  ---------- 

                                                        [Enlarge/Download Table]

                                                                             DECEMBER 31,   MARCH 31, 
                                                                                 1995         1996    
                                                                             ------------  -----------
                                                                                                      
Balance Sheet Data --                                                                                 
  Current assets............................................................  $   81,858   $    64,144
  Property and equipment, net...............................................     333,199       333,231
  Other noncurrent assets...................................................     144,238       150,659
                                                                             ------------  -----------
    Total assets............................................................  $  559,295   $   548,034
                                                                             ------------  -----------
                                                                             ------------  -----------
  Current liabilities.......................................................  $   50,743   $    31,167
  Long-term liabilities.....................................................     415,662       431,544
  Stockholder's equity......................................................      92,890        85,323
                                                                             ------------  -----------
    Total liabilities and stockholder's equity..............................  $  559,295   $   548,034
                                                                             ------------  -----------
                                                                             ------------  -----------

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SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION
(UNAUDITED) 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 

DIRECT BROADCASTING SATELLITE CORPORATION 
(DELAWARE)
(A DEVELOPMENT STAGE COMPANY) 

    The   following  supplemental  quarterly  financial  information  of  Direct
Broadcasting  Satellite  Corporation  ("DBSC")  is  included  as  part  of   the
Registration Statement in connection with a pending merger of DBSC with a wholly
owned  subsidiary of EchoStar Communications  Corporation (the "Merger"), and is
included for informational purposes  only. No assurances can  be given that  the
Merger  will be consummated, or if  consummated, the date that such consummation
will occur.                                                                     

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

BALANCE SHEETS

ASSETS

                                                        [Enlarge/Download Table]

                                                                                 DECEMBER 31,     MARCH 31,   
                                                                                     1995           1996      
                                                                                 -------------  ------------- 
                                                                                                              
                                                                                   (AUDITED)     (UNAUDITED)  
CURRENT ASSETS:                                                                                               
  Cash.......................................................................... $      72,950  $      18,857 
  Money Market Funds --                                                                                       
    Crestfunds, Inc. -- Cash Reserves Fund......................................       285,978        199,497 
    Pacific Horizon Prime Fund..................................................         7,081      2,516,577 
                                                                                 -------------  ------------- 
      Total current assets......................................................       366,009      2,734,931 
                                                                                 -------------  ------------- 
PROPERTY AND EQUIPMENT, AT COST:                                                                              
  Satellite development in process (Note 4).....................................    17,882,707     23,396,333 
  Computer equipment............................................................         5,073          5,073 
  Less: Accumulated depreciation................................................        (2,730)        (2,998)
                                                                                 -------------  ------------- 
  Cost less accumulated depreciation............................................    17,885,050     23,398,408 
                                                                                 -------------  ------------- 
OTHER ASSETS:                                                                                                 
  FCC license (Note 3)..........................................................       865,571        927,770 
  Unamortized loan costs........................................................        67,058         64,963 
  Deferred tax benefit (Note 7).................................................      --             --       
  Security deposits.............................................................         2,575          2,575 
                                                                                 -------------  ------------- 
    Total other assets..........................................................       935,204        995,308 
                                                                                 -------------  ------------- 
      Total assets.............................................................. $  19,186,263  $  27,128,647 
                                                                                 -------------  ------------- 
                                                                                 -------------  ------------- 
                                     LIABILITIES AND STOCKHOLDERS' EQUITY                                     
CURRENT LIABILITIES:                                                                                          
  Accounts payable.............................................................. $     140,958  $     124,139 
  Unsecured note payable (Note 6A)..............................................       500,000        500,000 
  Accrued interest..............................................................       237,226        249,027 
  Unsecured notes payable (Note 6B) (in arrears)................................       325,000        325,000 
  Accrued interest in arrears (Note 6)..........................................       341,074        347,794 
  Due to shareholder............................................................         3,024          2,182 
                                                                                 -------------  ------------- 
    Total current liabilities...................................................     1,547,282      1,548,142 
                                                                                 -------------  ------------- 
LONG-TERM DEBT:                                                                                               
  Secured notes payable (Note 5)................................................    16,000,000     23,500,000 
  Accrued interest (Notes 5 & 6)................................................        10,082        523,708 
                                                                                 -------------  ------------- 
    Total long-term debt........................................................    16,010,082     24,023,708 
                                                                                 -------------  ------------- 
    Total liabilities...........................................................    17,557,364     25,571,850 
                                                                                 -------------  ------------- 
COMMITMENTS (Note 4)                                                                                          
STOCKHOLDERS' EQUITY:                                                                                         
  Common stock, $.01 par value, 3,000,000 shares authorized; 1,620,138 shares                                 
   issued and outstanding.......................................................        16,201         16,201 
  Additional paid in capital....................................................     5,849,046      5,849,046 
  Accumulated deficit (Note 1)..................................................    (2,755,808)    (2,755,808)
  Accumulated deficit during development stage..................................    (1,480,540)    (1,552,642)
                                                                                 -------------  ------------- 
    Total stockholders' equity..................................................     1,628,899      1,556,797 
                                                                                 -------------  ------------- 
    Total liabilities and stockholders' equity.................................. $  19,186,263  $  27,128,647 
                                                                                 -------------  ------------- 
                                                                                 -------------  ------------- 

The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

STATEMENTS OF INCOME

(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                          THREE MONTHS ENDED                    
                                                                              MARCH 31,          APRIL 1, 1990  
                                                                       ------------------------  (INCEPTION TO) 
                                                                          1995         1996      MARCH 31, 1996 
                                                                       -----------  -----------  -------------- 
                                                                                                                
REVENUE:                                                                                                        
  Gain on settlement of indebtedness.................................. $   --       $   --       $       31,656 
  Investment income...................................................      19,480       13,015         101,074 
                                                                       -----------  -----------  -------------- 
    Total revenue.....................................................      19,480       13,015         132,730 
                                                                       -----------  -----------  -------------- 
OPERATING EXPENSES:                                                                                             
  Interest income.....................................................      19,320       18,520         630,776 
  Legal fees..........................................................     --             7,303         393,195 
  Consulting fees.....................................................      42,303       36,000         453,327 
  Professional services...............................................       4,660        6,650          40,671 
  Rent................................................................       7,226        6,800          53,350 
  Taxes and licenses..................................................     --               670           7,704 
  Other administrative expenses.......................................       7,811        6,810         101,255 
  Depreciation and amortization.......................................         691        2,364           5,094 
                                                                       -----------  -----------  -------------- 
    Total operating expenses..........................................      82,011       85,117       1,685,372 
                                                                       -----------  -----------  -------------- 
NET LOSS BEFORE INCOME TAXES..........................................     (62,531)     (72,102)     (1,552,642)
PROVISION FOR INCOME TAXES (Note 7)...................................     --           --             --       
                                                                       -----------  -----------  -------------- 
NET LOSS.............................................................. $   (62,531) $   (72,102) $   (1,552,642)
                                                                       -----------  -----------  -------------- 
                                                                       -----------  -----------  -------------- 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING............................   1,618,138    1,620,138       1,049,565 
                                                                       -----------  -----------  -------------- 
                                                                       -----------  -----------  -------------- 
LOSS PER COMMON SHARE................................................. $      (.04) $      (.04) $        (1.48)
                                                                       -----------  -----------  -------------- 
                                                                       -----------  -----------  -------------- 

The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

STATEMENT OF STOCKHOLDERS' EQUITY 

FOR THE THREE MONTHS ENDED MARCH 31, 1996 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                            ACCUMULATED                  
                                         COMMON STOCK        ADDITIONAL                    DEFICIT DURING      TOTAL     
                                    ----------------------     PAID-IN      ACCUMULATED     DEVELOPMENT    STOCKHOLDERS' 
                                      SHARES     PAR VALUE     CAPITAL        DEFICIT          STAGE          EQUITY     
                                    -----------  ---------  -------------  --------------  --------------  ------------- 
                                                                                                                         
Balance at December 31, 1995.......   1,620,138  $  16,201  $   5,849,046  $   (2,755,808) $   (1,480,540) $   1,628,899 
  Net loss.........................                                                               (72,102)       (72,102)
                                    -----------  ---------  -------------  --------------  --------------  ------------- 
Balance at March 31, 1996..........   1,620,138  $  16,201  $   5,849,046  $   (2,755,808) $   (1,552,642) $   1,556,797 
                                    -----------  ---------  -------------  --------------  --------------  ------------- 
                                    -----------  ---------  -------------  --------------  --------------  ------------- 

The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

STATEMENTS OF CASH FLOWS

(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                        THREE MONTHS ENDED                        
                                                                             MARCH 31,             APRIL 1, 1990  
                                                                   -----------------------------  (INCEPTION TO)  
                                                                       1995            1996       MARCH 31, 1996  
                                                                   -------------  --------------  --------------- 
                                                                                                                  
                                                                                                     (NOTE 1)     
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                             
  Net loss.......................................................  $     (62,531) $      (72,102) $    (1,552,642)
  Adjustments to reconcile net loss to net cash applied to                                                        
   operating activities:                                                                                          
    Depreciation and amortization................................            691           2,364            5,094 
    Gain on settlement of indebtedness...........................       --              --                (31,656)
    Noncash consulting fees......................................       --              --                 16,000 
    Increase (decrease) in accounts payable......................          3,235           2,747          (46,327)
    Increase in accrued interest payable.........................         19,319          18,521          607,818 
    Increase (decrease) due to shareholders......................          7,380            (842)          (6,072)
                                                                   -------------  --------------  --------------- 
      Net cash applied to operating activities...................        (31,906)        (49,312)      (1,007,785)
                                                                   -------------  --------------  --------------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                             
  Acquisition of furniture and equipment.........................       --              --                 (5,073)
  Increase in satellite development costs........................        (21,000)     (5,000,000)     (22,872,625)
  Increase in FCC license........................................       (101,544)        (14,708)        (679,952)
                                                                   -------------  --------------  --------------- 
    Net cash used in investing activities........................       (122,544)     (5,014,708)     (23,557,650)
                                                                   -------------  --------------  --------------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                             
  Increase in secured notes payable..............................       --             7,500,000       23,500,000 
  Issuance of common stock.......................................       --              --              3,384,999 
  Increase notes payable.........................................       --              --                652,500 
  Increase in contract payable...................................       --              --                 62,500 
  Payment on contract payable....................................       --              --                (62,500)
  Increase in loan costs.........................................       --               (67,058)         (67,058)
  Payment of notes payable.......................................       --              --               (167,500)
  Increase in security deposit...................................           (380)       --                 (2,575)
                                                                   -------------  --------------  --------------- 
    Net cash provided by financing activities....................           (380)      7,432,942       27,300,366 
                                                                   -------------  --------------  --------------- 
NET INCREASE (DECREASE) IN CASH..................................       (154,830)      2,368,922        2,734,931 
CASH AT BEGINNING OF PERIOD......................................      2,406,710         366,009        --        
                                                                   -------------  --------------  --------------- 
CASH AT END OF PERIOD............................................  $   2,251,880  $    2,734,931  $     2,734,931 
                                                                   -------------  --------------  --------------- 
                                                                   -------------  --------------  --------------- 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                                  
  Cash paid during the year for interest.........................  $    --        $     --        $        22,958 
SUPPLEMENTAL SCHEDULE OF NONCASH AND FINANCING ACTIVITIES:                                                        
  Additional common stock was issued upon the conversion of notes                                                 
   payable in the amount of $700,000, plus relate accrued                                                         
   interest totaling $629,406....................................       --              --              1,329,406 
  Additional common stock was issue in exchange for consulting                                                    
   services......................................................       --              --                 16,000 
Disclosure of accounting policy:                                                                                  
  For the purposes of the statement of cash flows, the Company                                                    
   considers money market funds to be cash equivalents.                                                           

The accompanying notes are an integral part of these financial statements.

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS 

DECEMBER 31, 1995 AND MARCH 31, 1996

(1) ORGANIZATION                                                                
    Direct  Broadcasting  Satellite  Corporation (the  "Company"  or  "DBSC"), a
development stage company,  was incorporated January  23, 1981 in  the State  of
Delaware.  It is constructing satellites, and plans to operate a direct-to-home,
multi-channel satellite broadcast television  service. Funding of the  Company's
operations  has been obtained through the  private placement of common stock and
issuance of convertible debt, demand notes and accounts payable.                

    On December 21,  1995, the Company  and EchoStar Communications  Corporation
("EchoStar"),  a 39.8%  shareholder, agreed to  a merger, subject  to receipt of
requisite government  approval.  Echostar holds  direct  broadcasting  satellite
authorizations  for 21 channels at  119 DEG. W.L. Under  the terms of the Merger
Agreement, (1) the Company and EchoStar agreed to merge DBSC into a wholly-owned
subsidiary of EchoStar, and (2) the  Company's shareholders will be entitled  to
receive at their option, $7.99 in cash or .67417 EchoStar shares for each of the
Company's 975,148 shares not already owned by EchoStar.                         

    Echostar  also agreed,  at its  sole discretion, to  loan the  Company up to
$150,000,000  for  expenses  associated  with  the  construction,  launch,   and
insurance  of the Company's  spacecraft. On December 29,  1995, the Company drew
down $16  million under  its  loan purchase  agreement  with EchoStar  and  paid
Lockheed Martin Corporation $16 million on the same day. During the three months
ended March 31, 1996, the Company drew down an additional $7.5 million under the
agreement.                                                                      

    Without  the Echostar or other financing,  the Company's ability to meet its
existing obligations  and proceed  with  the construction  of the  satellite  is
doubtful.  In such case, the ultimate realization of the capitalized FCC license
application costs,  as well  as the  deferred satellite  development costs,  are
doubtful,  and the continuance  of the Company  as an operating  entity would be
uncertain.                                                                      

    The Company's  development activities  were dormant  for a  period of  years
ended  March 31, 1990. During  the year ended March  31, 1991, the Company began
development of two new  satellites. In accordance with  SFAS No. 7,  development
stage  activities for presentation purposes on the statements of income and cash
flow are for the period April 1, 1990 to March 31, 1996. Prior development stage
activity losses amounting to $2,755,808 are reflected in stockholders' equity as
accumulated deficit.                                                            

(2) SIGNIFICANT ACCOUNTING POLICIES                                             
    Effective April 1, 1995, the Company changed its fiscal year to December  31
from March 31.                                                                  

    Loan  costs are being amortized  over the 8-year life  of the secured notes,
effective January 1, 1996.                                                      

    Management uses estimates and assumptions in preparing financial statements.
Those estimates  and  assumptions affect  the  reported amounts  of  assets  and
liabilities,  the  disclosure  of  contingent assets  and  liabilities,  and the
reported  revenues  and  expenses.  Actual  results  could  differ  from   those
estimates.                                                                      

    Losses  per share have been computed based on the weighted average number of
shares of common stock outstanding during each three month period.              

(3) FCC LICENSE                                                                 
    The Company's application for  authority to construct  and operate a  direct
broadcast satellite system was approved by the Federal Communications Commission
("FCC") and a conditional construction permit for two spacecraft was released on
August  15,  1989. On  November 10,  1993, the  FCC found  that the  Company had
complied with the  necessary due  diligence requirements  and assigned  specific
orbit/spectrum  resources to  the Company.  On December  8, 1995,  the FCC staff
granted the                                                                     

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1995 AND MARCH 31, 1996

(3) FCC LICENSE (CONTINUED)                                                     
Company an extension of time through November 1998, to construct and launch  two
spacecrafts.  Pursuant  to  a  FCC  request, on  January  31,  1994  the Company
submitted certain technical data to the FCC and asked for launch authority.     

    On June  30,  1995, the  Company  notified the  FCC  that it  had  signed  a
spacecraft  contract  modification and  sought  approval thereof.  Certain costs
incurred in connection with filing  the FCC license application and  maintaining
the  authority have been capitalized. Amortization  periods for these costs will
be determined at  the time the  services related to  the applicable FCC  license
commences,  or capitalized  costs will  be written  off at  the time  efforts to
provide services are abandoned. FCC licenses are expected to have a useful  life
of approximately 12 years.                                                      

(4) SATELLITE DEVELOPMENT COSTS                                                 
    The  Company  has  entered  into  a contract  for  the  construction  of two
satellites. The  contract,  as amended  May  31, 1995,  provides  for  periodic,
non-refundable  payments over a period extending to October 30, 2003, as well as
cancellation penalties if the contract  is terminated before the satellites  are
launched.  As of March 31,  1996, payments made under  the terms of the contract
totaled $22,838,500. The contract calls  for additional payments of  $52,500,000
in the year ending December 31, 1996. The total commitment under the contract is
in excess of $160 million.                                                      

    At   March  31,  1996,   total  satellite  development   costs  amounted  to
$23,396,333, including capitalized interest of $523,708.                        

    During construction and  prior to  launch, the  Company has  granted to  the
Contractor  a  full security  interest  in all  hardware,  software and  work in
process (collectively "Security") related to the two satellites. In the event of
certain defaults  by  the  Company,  the  Contractor  shall  immediately  assume
ownership of the entire Security.                                               

(5) SECURED NOTES PAYABLE                                                       
    On December 29, 1995, the Company borrowed $16,000,000, and during the three
months  ended  March 31,  1996, borrowed  $7,500,000,  per the  terms of  a note
purchase agreement and a  security agreement between  EchoStar and the  Company.
The  promissory notes are secured by an assignment, pledge and grant of security
interest in all the  estate, right, title and  interest of the Company,  whether
now  owned or hereafter  acquired, in, to  and under (1)  the Satellites and DBS
Rights, (2) all agreements, contracts  and documents related to the  Satellites,
DBS  Rights, and business of  the Company, (3) all  income and revenues from all
business operations,  and (4)  all tangible  and/or intangible  property of  the
Company,  including the Satellites.  However, the security  in the Satellites is
subordinate to the  security interest in  and to the  Satellites held by  Martin
Marietta.                                                                       

    Interest accrues at Chase Manhattan Bank prime rate plus 3 percent as of the
date  of each loan draw. Principal and interest is payable in seven equal annual
installments beginning two  years after each  loan draw. The  December 29,  1997
installment  related to the  $16,000,000 loan will  be approximately $3,713,300,
including interest at 11.5%. The  annual installments related to the  $7,500,000
of additional loans will be approximately $1,725,027, starting in February 1998,
including interest at 11.25%.                                                   

(6) UNSECURED NOTES PAYABLE                                                     

A.  UNSECURED NOTE PAYABLE.                                             

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1995 AND MARCH 31, 1996

(6) UNSECURED NOTES PAYABLE (CONTINUED)                                         
    A  note  payable in  the amount  of $500,000  is payable  90 days  after the
successful   launch   and   check-out   of   DBSC's   first   Direct   Broadcast
Satellite-Broadcast  Satellite  System, or  on demand  in certain  other limited
circumstances. Interest is payable  at Chase Manhattan Bank  prime rate plus  1%
per annum or 4% after maturity, or in event of default. As of December 31, 1995,
the note payable and the related accrued interest were payable on demand.       

B.  CONVERTIBLE NOTES PAYABLE.                                          

    Convertible  notes payable  amounted to  $325,000 at  December 31,  1995 and
March 31,  1996.  Notes totalling  $100,000  accrue  interest at  75%  of  Chase
Manhattan  Bank prime rate, and notes totalling $225,000 accrue interest at 100%
of the prime rate.                                                              

    The notes provide that  until they are  paid in full, a  note holder at  his
option  may convert principal into shares of  the authorized common stock of the
Company as follows: $100,000  of principal at $6.67  per share, and $225,000  of
principal at $8.33 per share.                                                   

(7) INCOME TAXES                                                                
    Effective  April 1, 1992, the Company  adopted SFAS No. 109, "Accounting for
Income Taxes",  which requires  an  asset and  liability approach  to  financial
accounting  and reporting for income taxes. The difference between the financial
statement and  tax  bases of  assets  and  liabilities are  computed  for  those
differences  that have future  tax consequences using  the currently enacted tax
laws and rates that apply  to the periods in which  they are expected to  affect
taxable  income. Valuation allowances  are established, if  necessary, to reduce
the deferred tax asset to the amount that will more likely than not be realized.
Income tax expense is the current tax payable or refundable for the period, plus
or minus the net change in the deferred tax assets and liabilities.             

    The adoption  of Statement  109 did  not  have an  effect on  the  Company's
financial  statements because the deferred income tax benefit has been offset by
a valuation allowance of equal  amount. The valuation allowance was  established
to  reduce the deferred tax benefit to the amount that will more likely than not
be realized. This reduction is necessary due to the uncertainty of the Company's
ability to utilize all of the future tax deduction resulting from net  operating
losses.                                                                         

    The gross deferred income tax benefit was approximately $849,382 at December
31, 1995, and $868,146 at March 31, 1996.                                       

    The  deferred income tax benefit results primarily from net operating losses
for tax purposes. The net operating loss carryover to future years is $2,202,393
at December 31,  1995, and  $2,250,483 at  March 31,  1996, none  of which  will
expire  until the year 1999.  In addition, the Company has  not claimed as a tax
deduction accrued interest  payable of  $596,821. For income  tax purposes,  the
Company reports its net income (loss) on the cash basis.                        

(8) CONTINGENT LIABILITIES                                                      
    In  1982, the Company  entered into agreements  with two French corporations
pursuant to which each corporation, in exchange for the Company's commitment  to
procure satellite hardware, paid to a satellite launch provider, for the benefit
of  the Company, a launch  reservation fee of $100,000.  The first agreement, as
amended, specified that payment of the  $100,000 plus interest of 13% per  annum
was due on December 31, 1983. The second agreement provided that the Company was
obligated  to issue 6,000 (as adjusted) shares of common stock no later than two
years from the date of the agreement.                                           

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DIRECT BROADCASTING SATELLITE CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 

NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

DECEMBER 31, 1995 AND MARCH 31, 1996

(8) CONTINGENT LIABILITIES (CONTINUED)                                          
    No equipment was procured from either corporation, no shares of common stock
have been issued  nor has the  Company returned the  $100,000 payment to  either
corporation.  The  Company  has  not  determined  whether  either  obligation is
currently enforceable under French  law. The Company is  unaware of any  request
for  payment or for the issuance of the  Company's shares from August 3, 1987 to
date.                                                                           

(9) RELATED PARTY TRANSACTIONS                                                  
Consulting fees are paid to certain shareholders and officers.          

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    NO DEALER, SALESMAN OR ANY OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING  MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN  THIS  PROSPECTUS, AND,  IF  GIVEN  OR MADE,  SUCH  INFORMATION  OR
REPRESENTATIONS  MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER
OR BY THE INITIAL  PURCHASERS. THIS PROSPECTUS DOES  NOT CONSTITUTE AN OFFER  TO
SELL  OR A SOLICITATION  OF AN OFFER  TO BUY ANY  SECURITY OTHER THAN SECURITIES
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF  AN
OFFER  TO  BUY  ANY  OF THE  SECURITIES  OFFERED  HEREBY TO  ANY  PERSON  IN ANY
JURISDICTION IN WHICH IT IS  UNLAWFUL TO MAKE SUCH  AN OFFER OR SOLICITATION  TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL  UNDER  ANY  CIRCUMSTANCES  CREATE  AN  IMPLICATION  THAT  THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.       

------------------------

TABLE OF CONTENTS 

                                                                [Download Table]

                                                   PAGE   
                                                 ---------
                                                          
Prospectus Summary.............................          7
Risk Factors...................................         20
Use of Proceeds................................         34
The Exchange Offer.............................         35
Capitalization.................................         43
Selected Financial Data........................         44
Management's Discussion and Analysis of                   
 Financial Condition and Results of                       
 Operations....................................         46
Business.......................................         59
Management.....................................         89
Certain Relationships and Related                         
 Transactions..................................         95
Security Ownership of Certain Beneficial Owners           
 and Management................................         96
Description of Certain Indebtedness............         98
Description of Exchange Notes..................        100
Certain United States Federal Income Tax                  
 Considerations................................        132
Plan of Distribution...........................        134
Notice to Investors............................        135
Independent Experts............................        138
Legal Matters..................................        138
Index to Financial Statements..................        F-1

PROSPECTUS

$580,000,000

ECHOSTAR SATELLITE
BROADCASTING CORPORATION

OFFER TO EXCHANGE $1,000 PRINCIPAL AMOUNT OF ITS
13 1/8% SENIOR SECURED DISCOUNT NOTES DUE 2004 WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR EACH
$1,000 PRINCIPAL AMOUNT OF ITS OUTSTANDING 13 1/8%
SENIOR SECURED DISCOUNT NOTES DUE 2004

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: 

FIRST TRUST NATIONAL ASSOCIATION

BY FACSIMILE: 
(612) 244-1537
CONFIRMATION BY TELEPHONE:
(612) 244-1197
BY MAIL/HAND DELIVERY/OVERNIGHT DELIVERY: 
FIRST TRUST NATIONAL ASSOCIATION
180 EAST FIFTH STREET 
ST. PAUL, MINNESOTA 55101 
ATTN: PHYLLIS MEATH 
SPECIALIZED FINANCE GROUP 

JUNE 28, 1996 

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