Property and Equipment

9 Months Ended

Sep. 30, 2019

Property and Equipment.

Property and Equipment

7.Property and Equipment

Property and equipment consisted of the following:

	Depreciable			As of
	Life			September 30,		December 31,
	(In Years)			2019		2018
				(In thousands)
Equipment leased to customers	2	-	5	$	1,896,000	$	2,016,965
Satellites (1) (2)	2	-	15		1,866,361		843,913
Satellites acquired under finance lease agreements (1) (3)	10	-	15		888,940		499,819
Furniture, fixtures, equipment and other	2	-	20		1,995,436		1,923,585
Buildings and improvements (1)	5	-	40		347,923		290,650
Land (1)		-			17,809		13,186
Construction in progress		-			249,258		100,560
Total property and equipment					7,261,727		5,688,678
Accumulated depreciation (1)					(4,503,703)		(3,760,498)
Property and equipment, net				$	2,758,024	$	1,928,180

(1) See Note 1 for further information on the Master Transaction Agreement pursuant to which certain assets were transferred to us.

(2) See Note 5 for further information on the transaction with TSI.

(3) The Ciel II satellite was previously classified as a finance lease, however, as a result of an amendment, which was effective during the first quarter 2019, Ciel II is now accounted for as an operating lease.

Construction in progress consisted of the following:

	As of
	September 30,		December 31,
	2019		2018
	(In thousands)
Software	$	39,040	$	34,533
Wireless		189,910		53,466
Other		20,308		12,561
Total construction in progress	$	249,258	$	100,560

Depreciation and amortization expense consisted of the following:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(In thousands)
Equipment leased to customers	$	91,090	$	114,606	$	287,109	$	337,004
Satellites		25,321		25,085		62,956		75,257
Buildings, furniture, fixtures, equipment and other		37,770		35,594		106,957		128,698
Total depreciation and amortization	$	154,181	$	175,285	$	457,022	$	540,959

Cost of sales and operating expense categories included in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to customers.

Pay-TV Satellites. We currently utilize 13 satellites in geostationary orbit approximately 22,300 miles above the equator, eight of which we own and depreciate over their estimated useful life. We currently utilize certain capacity on one satellite that we lease from EchoStar, which is accounted for as an operating lease. We also lease four satellites from third parties: Ciel II, which is now accounted for as an operating lease, and Anik F3, Nimiq 5 and QuetzSat-1, which are accounted for as financing leases and are depreciated over their economic life.

As of September 30, 2019, our pay-TV satellite fleet consisted of the following:

		Degree	Lease
	Launch	Orbital	Termination
Satellites	Date	Location	Date
Owned:
EchoStar VII (1)	February 2002	119	N/A
EchoStar X (1)	February 2006	110	N/A
EchoStar XI (1)	July 2008	110	N/A
EchoStar XIV (1)	March 2010	119	N/A
EchoStar XV	July 2010	61.5	N/A
EchoStar XVI (1)	November 2012	61.5	N/A
EchoStar XVIII	June 2016	61.5	N/A
EchoStar XXIII (1)	March 2017	67.9	N/A
Leased from EchoStar (2):
EchoStar IX	August 2003	121	Month to month
Leased from Other Third Party:
Anik F3	April 2007	118.7	April 2022
Ciel II	December 2008	129	January 2020
Nimiq 5 (1)	September 2009	72.7	September 2024
QuetzSat-1 (1)	September 2011	77	November 2021

(1) Pursuant to the Master Transaction Agreement, these satellites and satellite service agreements were transferred to us. See Note 1 for further information.

(2) See Note 13 for further information on our Related Party Transactions with EchoStar.

Effective September 10, 2019, pursuant to the Master Transaction Agreement, the EchoStar XII satellite was transferred to us. During October 2019, the EchoStar XII satellite was de-orbited.

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