Long-Term Debt and Finance Lease Obligations

12 Months Ended

Dec. 31, 2019

Long-Term Debt and Finance Lease Obligations

Long-Term Debt and Capital Lease Obligations

8.Long-Term Debt and Finance Lease Obligations

Fair Value of our Long-Term Debt

The following table summarizes the carrying amount and fair value of our debt facilities as of December 31, 2019 and 2018:

	As of December 31,
	2019				2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
7 7/8% Senior Notes due 2019 (1)		—		—		1,317,372		1,343,298
5 1/8% Senior Notes due 2020 (2)		1,100,000		1,110,208		1,100,000		1,089,957
6 3/4% Senior Notes due 2021		2,000,000		2,109,420		2,000,000		1,974,940
5 7/8% Senior Notes due 2022		2,000,000		2,129,580		2,000,000		1,833,140
5 % Senior Notes due 2023		1,500,000		1,543,770		1,500,000		1,247,445
5 7/8% Senior Notes due 2024		2,000,000		2,049,080		2,000,000		1,611,960
7 3/4% Senior Notes due 2026		2,000,000		2,128,900		2,000,000		1,653,720
Other notes payable		25,996		25,996		10,346		10,346
Subtotal		10,625,996	$	11,096,954		11,927,718	$	10,764,806
Unamortized deferred financing costs and debt discounts, net		(16,250)				(23,215)
Finance lease obligations (3)		212,617				66,984
Total long-term debt and finance lease obligations (including current portion)	$	10,822,363			$	11,971,487

(1) On September 3, 2019, we redeemed the principal balance of our 7 7/8% Senior Notes due 2019.

(2) Our 5 1/8% Senior Notes due 2020 mature on May 1, 2020 and have been reclassified to “Current portion of long-term debt and finance lease obligations” on our Consolidated Balance Sheets as of December 31, 2019. We will either fund this obligation from cash and marketable investment securities balances at that time and/or advances from our parent, DISH Network or, depending on market conditions, we may refinance this obligation, in whole or in part.

(3) Disclosure regarding fair value of finance leases is not required.

We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2).

Our Senior Notes are:

● general unsecured senior obligations of DISH DBS;

● ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and

● ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness.

The indentures related to our Senior Notes contain restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to:

● incur additional debt;

● pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock;

● make certain investments;

● create liens or enter into sale and leaseback transactions;

● enter into transactions with affiliates;

● merge or consolidate with another company; and

● transfer or sell assets.

In the event of a change of control, as defined in the related indentures, we would be required to make an offer to repurchase all or any part of a holder’s Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase.

5 1/8% Senior Notes due 2020

On April 5, 2013, we issued $1.1 billion aggregate principal amount of our seven-year 5 1/8% Senior Notes due May 1, 2020. Interest accrues at an annual rate of 5 1/8% and is payable semi-annually in cash, in arrears on May 1 and November 1 of each year.

The 5 1/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest.

6 3/4% Senior Notes due 2021

On May 5, 2011, we issued $2.0 billion aggregate principal amount of our ten-year 6 3/4% Senior Notes due June 1, 2021. Interest accrues at an annual rate of 6 3/4% and is payable semi-annually in cash, in arrears on June 1 and December 1 of each year.

The 6 3/4% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest.

5 7/8% Senior Notes due 2022

On May 16, 2012 and July 26, 2012, we issued $1.0 billion and $1.0 billion, respectively, aggregate principal amount of our ten-year 5 7/8% Senior Notes due July 15, 2022. Interest accrues at an annual rate of 5 7/8% and is payable semi-annually in cash, in arrears on January 15 and July 15 of each year.

The 5 7/8% Senior Notes due 2022 are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest.

5% Senior Notes due 2023

On December 27, 2012, we issued $1.5 billion aggregate principal amount of our 5% Senior Notes due March 15, 2023. Interest accrues at an annual rate of 5% and is payable semi-annually in cash, in arrears on March 15 and September 15 of each year.

The 5% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest.

5 7/8% Senior Notes due 2024

On November 20, 2014, we issued $2.0 billion aggregate principal amount of our ten-year 5 7/8% Senior Notes due November 15, 2024. Interest accrues at an annual rate of 5 7/8% and is payable semi-annually in cash, in arrears on May 15 and November 15 of each year.

The 5 7/8% Senior Notes due 2024 are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest.

7 3/4% Senior Notes due 2026

On June 13, 2016, we issued $2.0 billion aggregate principal amount of our ten-year 7 3/4% Senior Notes due July 1, 2026. Interest accrues at an annual rate of 7 3/4% and is payable semi-annually in cash, in arrears on January 1 and July 1 of each year.

The 7 3/4% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest.

Interest on Long-Term Debt

		Annual
	Semi-Annual	Debt Service
	Payment Dates	Requirements
		(In thousands)
5 1/8% Senior Notes due 2020 (1)	May 1 and November 1	$	56,375
6 3/4% Senior Notes due 2021	June 1 and December 1	$	135,000
5 7/8% Senior Notes due 2022	January 15 and July 15	$	117,500
5% Senior Notes due 2023	March 15 and September 15	$	75,000
5 7/8% Senior Notes due 2024	May 15 and November 15	$	117,500
7 3/4% Senior Notes due 2026	January 1 and July 1	$	155,000

(1) Our 5 1/8% Senior Notes due 2020 mature on May 1, 2020 and have been reclassified to “Current portion of long-term debt and finance lease obligations” on our Consolidated Balance Sheets as of December 31, 2019.

Our ability to meet our debt service requirements will depend on, among other factors, the successful execution of our business strategy, which is subject to uncertainties and contingencies beyond our control.

Other Long-Term Debt and Finance Lease Obligations

Other long-term debt and finance lease obligations consisted of the following:

	As of December 31,
	2019		2018
	(In thousands)
Satellites and other finance lease obligations	$	212,617	$	66,984
Notes payable related to satellite vendor financing and other debt payable in installments through 2025 with interest rates of approximately 6.0%		25,996		10,346
Total		238,613		77,330
Less: current portion		(51,108)		(21,155)
Other long-term debt and finance lease obligations, net of current portion	$	187,505	$	56,175

Finance Lease Obligations

Anik F3. Anik F3, an FSS satellite, was launched and commenced commercial operation in April 2007. This satellite is accounted for as a finance lease and depreciated over the term of the satellite service agreement. We have leased 100% of the Ku-band capacity on Anik F3 for a period of 15 years.

Nimiq 5. On May 19, 2019, DISH Network entered into a Master Transaction Agreement pursuant to which, on September 10, 2019, the satellite service agreement for Nimiq 5 was transferred to DISH Network and we began leasing it from an indirect wholly-owned subsidiary of DISH Network. Nimiq 5 was launched in September 2009 and commenced commercial operation at the 72.7 degree west longitude orbital location during October 2009. This satellite is accounted for as a finance lease and is being depreciated over the lease term which includes options to extend the lease that we are reasonably certain to exercise. We lease 100% of the capacity on Nimiq 5. See Note 17 for further discussion.

Ciel II. Ciel II, a Canadian DBS satellite, was launched in December 2008 and commenced commercial operation in February 2009. This satellite was previously accounted for as a finance lease and depreciated over the term of the satellite service agreement, 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. We lease 100% of the capacity on Ciel II. The initial 10-year term expired in January 2019 and as a result of an amendment, we renewed this lease through January 2021.

The summary of future maturities of our outstanding long-term debt as of December 31, 2019 is included in the commitments table in Note 12.