Leases

9 Months Ended

Sep. 30, 2022

Leases

Leases

7. Leases

We enter into operating and finance leases for, among other things, satellites, office space, warehouses and distribution centers, vehicles, and other equipment. Our leases have remaining lease terms from one to ten years, some of which include renewal options, and some of which include options to terminate the leases within one year.

During the fourth quarter of 2021, our QuetzSat 1 operating lease expired. Through the first quarter of 2022, our Anik F3 and Nimiq 5 satellites were accounted for as finance leases. However, during April 2022, we extended the Anik F3 lease and as a result, it is currently accounted for as an operating lease. Substantially all of our remaining leases are accounted for as operating leases, including the remainder of our satellite fleet.

The components of lease expense were as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Operating lease cost (1)	$	42,585	$	57,282	$	124,187	$	174,987
Short-term lease cost (1)(2)		16,143		6,609		58,132		17,445
Finance lease cost:
Amortization of right-of-use assets (3)		8,619		12,374		29,703		37,122
Interest on lease liabilities (3)		2,009		3,138		6,777		10,282
Total finance lease cost (3)		10,628		15,512		36,480		47,404
Total lease costs	$	69,356	$	79,403	$	218,799	$	239,836

(1) The decrease in operating lease cost primarily related to the QuetzSat-1 lease, which expired in November 2021. In addition, our EchoStar XI and EchoStar X satellites were reclassified to “Short-term lease costs.”

(2) Leases that have terms of 12 months or less.

(3) The decrease in finance lease cost is primarily related to the Anik F3 finance lease which was extended in April 2022 and as a result is currently accounted for as an operating lease.

Supplemental cash flow information related to leases was as follows:

	For the Nine Months Ended
	September 30,
	2022		2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	122,987	$	171,678
Operating cash flows from finance leases	$	6,735	$	10,035
Financing cash flows from finance leases	$	31,022	$	38,188
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	70,115	$	19,377
Finance leases	$	—	$	—

Supplemental balance sheet information related to leases was as follows:

	As of
	September 30,		December 31,
	2022		2021
	(In thousands)
Operating Leases:
Operating lease assets	$	166,059	$	220,089
Other current liabilities	$	88,088	$	139,492
Operating lease liabilities		82,298		83,725
Total operating lease liabilities	$	170,386	$	223,217
Finance Leases:
Property and equipment, gross	$	175,704	$	399,126
Accumulated depreciation		(106,850)		(300,569)
Property and equipment, net	$	68,854	$	98,557
Other current liabilities	$	37,175	$	39,957
Other long-term liabilities		40,967		69,207
Total finance lease liabilities	$	78,142	$	109,164
Weighted Average Remaining Lease Term:
Operating leases		3.3 years		3.0 years
Finance leases		2.0 years		2.6 years
Weighted Average Discount Rate:
Operating leases		7.4%		8.2%
Finance leases		10.0%		9.9%

Maturities of lease liabilities as of September 30, 2022 were as follows:

	Maturities of Lease Liabilities
	Operating		Finance
For the Years Ending December 31,	Leases		Leases		Total
	(In thousands)
2022 (remaining three months)	$	41,576	$	10,723	$	52,299
2023		65,189		42,950		108,139
2024		31,578		32,147		63,725
2025		17,168		—		17,168
2026		10,711		—		10,711
Thereafter		30,036		—		30,036
Total lease payments		196,258		85,820		282,078
Less: Imputed interest		(25,872)		(7,678)		(33,550)
Total		170,386		78,142		248,528
Less: Current portion		(88,088)		(37,175)		(125,263)
Long-term portion of lease obligations	$	82,298	$	40,967	$	123,265