7.Long-Term Debt and Capital 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, 2017 and 2016:


	As of December 31,
	2017				2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
4 5/8% Senior Notes due 2017 (1)	$	—	$	—	$	900,000	$	913,887
4 1/4% Senior Notes due 2018 (2)		1,025,861		1,031,596		1,200,000		1,228,464
7 7/8% Senior Notes due 2019		1,400,000		1,501,206		1,400,000		1,559,698
5 1/8% Senior Notes due 2020		1,100,000		1,127,588		1,100,000		1,141,866
6 3/4% Senior Notes due 2021		2,000,000		2,120,480		2,000,000		2,178,880
5 7/8% Senior Notes due 2022		2,000,000		2,014,140		2,000,000		2,114,780
5 % Senior Notes due 2023		1,500,000		1,432,335		1,500,000		1,500,315
5 7/8% Senior Notes due 2024		2,000,000		1,952,220		2,000,000		2,064,000
7 3/4% Senior Notes due 2026		2,000,000		2,118,400		2,000,000		2,270,900
Other notes payable		11,509		11,509		12,606		12,606
Subtotal		13,037,370	$	13,309,474		14,112,606	$	14,985,396
Unamortized deferred financing costs and debt discounts, net		(31,041)				(40,123)
Capital lease obligations (3)		104,318				140,885
Total long-term debt and capital lease obligations (including current portion)	$	13,110,647			$	14,213,368

(1)

On July 17, 2017, we redeemed the principal balance of our 4 5/8% Senior Notes due 2017.

(2)

During 2017, we repurchased $174 million of our 4 1/4% Senior Notes due 2018 in open market trades. The remaining balance of $1.026 billion matures on April 1, 2018 and is included in “Current portion of long-term debt and capital lease obligations” on our Consolidated Balance Sheets as of December 31, 2017.

(3)

Disclosure regarding fair value of capital 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.

4 1/4% Senior Notes due 2018

On April 5, 2013, we issued $1.2 billion aggregate principal amount of our five-year 4 1/4% Senior Notes due April 1, 2018. During 2017, we repurchased $174 million of our 4 1/4% Senior Notes due 2018 in open market trades. The remaining balance of $1.026 billion matures on April 1, 2018. Interest accrues at an annual rate of 4 1/4% and is payable semi-annually in cash, in arrears on April 1 and October 1 of each year.

The 4 1/4% 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.

7 7/8% Senior Notes due 2019

On August 17, 2009 and October 5, 2009, we issued $1.0 billion and $400 million, respectively, aggregate principal amount of our ten-year 7 7/8% Senior Notes due September 1, 2019. Interest accrues at an annual rate of 7 7/8% and is payable semi-annually in cash, in arrears on March 1 and September 1 of each year.

The 7 7/8% 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.

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. Prior to July 1, 2019, we may also redeem up to 35% of the 7 3/4% Senior Notes at a specified premium with the net cash proceeds from certain equity offerings or capital contributions.

Interest on Long-Term Debt


		Annual
	Semi-Annual	Debt Service
	Payment Dates	Requirements
		(In thousands)
4 1/4% Senior Notes due 2018	April 1 and October 1	$	51,000
7 7/8% Senior Notes due 2019	March 1 and September 1	$	110,250
5 1/8% Senior Notes due 2020	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

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 Capital Lease Obligations

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


	As of December 31,
	2017		2016
	(In thousands)
Satellites and other capital lease obligations	$	104,318	$	140,885
Notes payable related to satellite vendor financing and other debt payable in installments through 2025 with interest rates of approximately 6.0%		11,509		12,606
Total		115,827		153,491
Less: current portion		(38,613)		(38,832)
Other long-term debt and capital lease obligations, net of current portion	$	77,214	$	114,659

Capital 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 capital 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.

Ciel II. Ciel II, a Canadian DBS satellite, was launched in December 2008 and commenced commercial operation in February 2009. This satellite is accounted for as a capital lease and depreciated over the term of the satellite service agreement. We have leased 100% of the capacity on Ciel II for an initial 10 year term, which expires in January 2019.

As of December 31, 2017 and 2016, we had $500 million capitalized for the estimated fair value of satellites acquired under capital leases included in “Property and equipment, net,” with related accumulated depreciation of $407 million and $365 million, respectively. On our Consolidated Statements of Operations and Comprehensive Income (Loss), we recognized $42 million in depreciation expense on satellites acquired under capital lease agreements during each of the years ended December 31, 2017, 2016 and 2015.

Future minimum lease payments under the capital lease obligations, together with the present value of the net minimum lease payments as of December 31, 2017 are as follows (in thousands):


For the Years Ended December 31,
2018	$	77,141
2019		50,719
2020		48,000
2021		48,000
2022		16,000
Thereafter		—
Total minimum lease payments		239,860
Less: Amount representing lease of the orbital location and estimated executory costs (primarily insurance and maintenance) including profit thereon, included in total minimum lease payments		(120,196)
Net minimum lease payments		119,664
Less: Amount representing interest		(15,346)
Present value of net minimum lease payments		104,318
Less: Current portion		(37,450)
Long-term portion of capital lease obligations	$	66,868

The summary of future maturities of our outstanding long-term debt as of December 31, 2017 is included in the commitments table in Note 11.