EX-99.1 8 a2223084zex-99_1.htm EX-99.1
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EXHIBIT 99.1

Unaudited Condensed Attributed Financial Information for Hughes Retail Group

On March 1, 2014, EchoStar Corporation (the terms "we," "us," "EchoStar," and "our" refer to EchoStar Corporation and its subsidiaries) issued shares of its newly authorized Hughes Retail Preferred Tracking Stock (the "EchoStar Tracking Stock") and Hughes Satellite Systems Corporation ("HSS"), a subsidiary of EchoStar, also issued shares of its newly authorized Hughes Retail Preferred Tracking Stock (the "HSS Tracking Stock" and together with the EchoStar Tracking Stock, the "Tracking Stock") to certain subsidiaries of DISH Network Corporation.

The Tracking Stock is intended to reflect the separate performance of the Hughes Retail Group, which is comprised primarily of our business of providing satellite broadband internet services to residential retail subscribers, including the assets and liabilities primarily associated with the operation of the business; and the business operations, revenue, billings, operating and other direct and indirect support activities to provide services to the business and Hughes retail subscribers. The Hughes Retail Group also includes any proceeds associated with a sale or transfer of the Hughes Retail Group or any assets of the Hughes Retail Group, and any other assets acquired by or for the account of the Hughes Retail Group or otherwise attributed, contributed, allocated or transferred to the Hughes Retail Group from time to time. The EchoStar Group is comprised of all existing and future businesses of EchoStar and its subsidiaries, excluding the Hughes Retail Group.

Holders of the Tracking Stock are holders of capital stock of the issuer (EchoStar or HSS) and are subject to risks associated with an investment in the issuer and all of its businesses, assets and liabilities. The issuance of the Tracking Stock does not affect the rights of our creditors or the creditors of our subsidiaries.

Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Hughes Retail Group and the EchoStar Group, our tracking stock structure does not affect the ownership or the legal title to our assets or responsibility for our liabilities.

The accompanying condensed attributed financial information as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013 and 2012 are unaudited. The Company's management is solely responsible for this financial information and believes that it has been prepared in conformity with accounting principles generally accepted in the United States.

The following tables present our consolidated assets and liabilities as of December 31, 2014 and 2013 and our consolidated revenue, expenses and cash flows for the years ended December 31, 2014, 2013 and 2012. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the Hughes Retail Group as if that business and its assets had been attributed to that group at the beginning of each period. As a result of our Policy Statement adopted as of March 1, 2014, we used different attribution methods for certain items in periods prior to March 1, 2014. Therefore, the attributed financial position, results of operations and cash flows of the Hughes Retail Group and all other operations are not directly comparable to the corresponding attributed financial information for periods after March 1, 2014. The financial information in this Exhibit should be read in conjunction with our consolidated financial statements for the period ended December 31, 2014 included in our Annual Report on Form 10-K.

1

CONDENSED ATTRIBUTED BALANCE SHEETS
(In thousands)
(Unaudited)

 
   Attributed
As of December 31, 2014 		  Attributed
As of December 31, 2013 		 
 
   Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		  Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		 

Assets

                                                  

Current Assets:

                                                  

Cash, cash equivalents and marketable investment securities

   $ —   $ 1,688,156   $ —   $ 1,688,156   $ —   $ 1,620,652   $ —   $ 1,620,652  

Trade accounts receivable, net

     29,086     134,146     —     163,232     24,466     134,826     —     159,292  

Trade accounts receivable—DISH Network, net

     —     251,669     —     251,669     —     355,135     —     355,135  

Inventory

     8,282     56,580     (1,899 )   62,963     10,004     56,080     —     66,084  

Deferred tax assets

     4,982     82,226     —     87,208     4,143     65,490     —     69,633  

Prepaid expenses

     592     66,572     —     67,164     814     54,586     —     55,400  

Inter-group advances

     —     27,449     (27,449 )   —     —     —     —     —  

Other current assets

     —     7,699     —     7,699     —     29,930     —     29,930  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total current assets

     42,942     2,314,497     (29,348 )   2,328,091     39,427     2,316,699     —     2,356,126  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noncurrent Assets:

                                                  

Restricted cash and marketable investment securities

     —     18,945     —     18,945     —     16,137     —     16,137  

Property and equipment, net

     166,145     3,037,002     (8,354 )   3,194,793     151,023     2,395,354     —     2,546,377  

Regulatory authorizations, net

     —     568,378     —     568,378     —     583,900     —     583,900  

Goodwill

     260,000     250,630     —     510,630     260,000     244,173     —     504,173  

Other intangible assets, net

     51,088     144,574     —     195,662     75,280     186,759     —     262,039  

Economic interest in Hughes Retail Group

     —     93,126     (93,126 )   —     —     488,852     (488,852 )   —  

Other investments

     —     159,962     —     159,962     —     169,771     —     169,771  

Other receivable—DISH Network

     —     90,241     —     90,241     —     89,811     —     89,811  

Other noncurrent assets, net

     40,997     146,946     (647 )   187,296     40,272     133,357     —     173,629  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total noncurrent assets

     518,230     4,509,804     (102,127 )   4,925,907     526,575     4,308,114     (488,852 )   4,345,837  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total assets

   $ 561,172   $ 6,824,301   $ (131,475 ) $ 7,253,998   $ 566,002   $ 6,624,813   $ (488,852 ) $ 6,701,963  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Liabilities and Stockholders' Equity

                                                  

Current Liabilities:

                                                  

Trade accounts payable

   $ 12,613   $ 175,669   $ —   $ 188,282   $ —   $ 201,416   $ —   $ 201,416  

Trade accounts payable—DISH Network

     —     32,474     —     32,474     —     55,743     —     55,743  

Current portion of long-term debt and capital lease obligations

     —     41,912     —     41,912     —     69,791     —     69,791  

Deferred revenue and prepayments

     26,504     45,204     —     71,708     20,999     36,593     —     57,592  

Accrued compensation

     —     32,117     —     32,117     —     30,940     —     30,940  

Accrued royalties

     —     27,590     —     27,590     —     24,010     —     24,010  

Inter-group advances

     27,449     —     (27,449 )   —     —     —     —     —  

Accrued expenses and other

     15,167     108,483     —     123,650     6,108     112,845     —     118,953  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total current liabilities

     81,733     463,449     (27,449 )   517,733     27,107     531,338     —     558,445  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noncurrent Liabilities:

                                                  

Long-term debt and capital lease obligations, net of current portion

     —     2,325,775     —     2,325,775     —     2,352,597     —     2,352,597  

Deferred tax liabilities

     9,457     670,067     —     679,524     40,225     447,981     —     488,206  

Other noncurrent liabilities

     4,351     102,977     —     107,328     9,818     66,666     —     76,484  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total noncurrent liabilities

     13,808     3,098,819     —     3,112,627     50,043     2,867,244     —     2,917,287  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total liabilities

     95,541     3,562,268     (27,449 )   3,630,360     77,150     3,398,582     —     3,475,732  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Stockholders' Equity:

                                                  

Equity/Attributed net assets (liabilities)

     465,631     3,171,563     (104,026 )   3,533,168     488,852     3,217,370     (488,852 )   3,217,370  

Noncontrolling interest in HSS Tracking Stock

     —     80,457     —     80,457     —     —     —     —  

Other noncontrolling interests

     —     10,013     —     10,013     —     8,861     —     8,861  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Equity/Attributed net assets (liabilities)

     465,631     3,262,033     (104,026 )   3,623,638     488,852     3,226,231     (488,852 )   3,226,231  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total liabilities and equity/attributed net assets (liabilities)

   $ 561,172   $ 6,824,301   $ (131,475 ) $ 7,253,998   $ 566,002   $ 6,624,813   $ (488,852 ) $ 6,701,963  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2

CONDENSED ATTRIBUTED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)

 
   Attributed
For the Year Ended
December 31, 2014 		  Attributed
For the Year Ended
December 31, 2013 		  Attributed
For the Year Ended
December 31, 2012 		 
 
   Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		  Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		  Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		 

Revenue:

                                                                          

Services and equipment revenue—other

   $ 562,495   $ 1,173,878   $ (265,386 ) $ 1,470,987   $ 505,989   $ 844,828   $ —   $ 1,350,817   $ 499,642   $ 1,078,298   $ —   $ 1,577,940  

Services and equipment revenue—DISH Network

     —     1,974,591     —     1,974,591     —     1,931,635     —     1,931,635     —     1,543,764     —     1,543,764  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total revenue

     562,495     3,148,469     (265,386 )   3,445,578     505,989     2,776,463     —     3,282,452     499,642     2,622,062     —     3,121,704  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Costs and Expenses:

                                                                          

Cost of sales (exclusive of depreciation and amortization)

     320,127     2,060,922     (253,133 )   2,127,916     251,634     1,955,264     —     2,206,898     239,148     1,850,286     —     2,089,434  

Selling, general and administrative expenses

     143,987     228,023     —     372,010     131,115     227,384     —     358,499     109,735     262,909     —     372,644  

Research and development expenses

     878     60,008     —     60,886     7,338     60,604     —     67,942     13,230     56,419     —     69,649  

Depreciation and amortization

     134,952     423,076     (1,352 )   556,676     122,259     384,852     —     507,111     107,400     349,926     —     457,326  

Impairment of long-lived assets

     —     —     —     —     —     38,415     —     38,415     —     32,765     —     32,765  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total costs and expenses

     599,944     2,772,029     (254,485 )   3,117,488     512,346     2,666,519     —     3,178,865     469,513     2,552,305     —     3,021,818  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Operating income (loss)

     (37,449 )   376,440     (10,901 )   328,090     (6,357 )   109,944     —     103,587     30,129     69,757     —     99,886  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other Income (Expense):

                                                                          

Interest income

     1     9,147     (46 )   9,102     —     14,656     —     14,656     —     11,176     —     11,176  

Interest expense, net of amounts capitalized

     (45 )   (171,350 )   46     (171,349 )   —     (192,554 )   —     (192,554 )   —     (153,029 )   —     (153,029 )

Realized gains on marketable investment securities and other investments, net

     —     41     —     41     —     38,341     —     38,341     —     177,558     —     177,558  

Economic interest in earnings (loss) of Hughes Retail Group

     —     (3,549 )   3,549     —     —     (3,841 )   3,841     —     —     18,204     (18,204 )   —  

Other, net

     —     12,449     —     12,449     —     1,934     —     1,934     —     59,093     —     59,093  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total other income (expense), net

     (44 )   (153,262 )   3,549     (149,757 )   —     (141,464 )   3,841     (137,623 )   —     113,002     (18,204 )   94,798  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income (loss) before income taxes

     (37,493 )   223,178     (7,352 )   178,333     (6,357 )   (31,520 )   3,841     (34,036 )   30,129     182,759     (18,204 )   194,684  

Income tax benefit (provision), net

     14,836     (45,620 )   —     (30,784 )   2,516     34,921     —     37,437     (11,925 )   28,254     —     16,329  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net income (loss)

     (22,657 )   177,558     (7,352 )   147,549     (3,841 )   3,401     3,841     3,401     18,204     211,013     (18,204 )   211,013  

Less: Net loss attributable to noncontrolling interests in HSS Tracking Stock

     —     (6,714 )   —     (6,714 )   —     —     —     —     —     —     —     —  

Less: Net income (loss) attributable to noncontrolling interests to other noncontrolling interest

     —     1,389     —     1,389     —     876     —     876     —     (35 )   —     (35 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net income (loss) attributable to EchoStar

   $ (22,657 ) $ 182,883   $ (7,352 ) $ 152,874   $ (3,841 ) $ 2,525   $ 3,841   $ 2,525   $ 18,204   $ 211,048   $ (18,204 ) $ 211,048  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

3


 CONDENSED ATTRIBUTED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
   Attributed For the Year Ended
December 31, 2014 		  Attributed For the Year Ended
December 31, 2013 		  Attributed For the Year Ended
December 31, 2012 		 
 
   Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		  Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		  Hughes
Retail
Group 		  EchoStar
Group 		  Inter-Group
Eliminations 		  EchoStar
Consolidated 		 

Cash Flows from Operating Activities:

                                                                          

Net income (loss)

   $ (22,657 ) $ 177,558   $ (7,352 ) $ 147,549   $ (3,841 ) $ 3,401   $ 3,841   $ 3,401   $ 18,204   $ 211,013   $ (18,204 ) $ 211,013  

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

                                                                          

Depreciation and amortization

     134,952     423,076     (1,352 )   556,676     122,259     384,852     —     507,111     107,400     349,926     —     457,326  

Equity in (earnings) losses of unconsolidated affiliates, net

     —     (8,198 )   —     (8,198 )   —     5,024     —     5,024     —     438     —     438  

Economic interest in loss (earnings) of Hughes Retail Group

     —     3,549     (3,549 )   —     —     3,841     (3,841 )   —     —     (18,204 )   18,204     —  

Realized gains on marketable investment securities and other investments, net

     —     (41 )   —     (41 )   —     (38,341 )   —     (38,341 )   —     (177,558 )   —     (177,558 )

Impairment of long-lived assets

     —     —     —     —     —     38,415     —     38,415     —     32,765     —     32,765  

Stock-based compensation

     —     14,683     —     14,683     —     18,353     —     18,353     —     14,585     —     14,585  

Deferred tax provision (benefit)

     (31,607 )   63,349     —     31,742     (10,801 )   (24,979 )   —     (35,780 )   (15,264 )   14,189     —     (1,075 )

Changes in current assets and current liabilities, net

     18,996     56,352     1,899     77,247     1,185     (27,308 )   —     (26,123 )   3,917     (8,570 )   —     (4,653 )

Changes in noncurrent assets and noncurrent liabilities, net

     (687 )   (8,265 )   647     (8,305 )   (20,874 )   (20,776 )   —     (41,650 )   (15,499 )   (26,803 )   —     (42,302 )

Other, net

     —     28,778     —     28,778     —     20,097     —     20,097     —     14,610     —     14,610  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net cash flows from operating activities

     98,997     750,841     (9,707 )   840,131     87,928     362,579     —     450,507     98,758     406,391     —     505,149  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash Flows from Investing Activities:

                                                                          

Purchases of marketable investment securities

     —     (1,523,514 )   —     (1,523,514 )   —     (1,080,437 )   —     (1,080,437 )   —     (971,154 )   —     (971,154 )

Sales and maturities of marketable investment securities

     —     1,353,157     —     1,353,157     —     912,030     —     912,030     —     1,248,748     —     1,248,748  

Purchases of property and equipment

     (125,882 )   (563,851 )   9,707     (680,026 )   (120,734 )   (271,139 )   —     (391,873 )   (89,777 )   (423,228 )   —     (513,005 )

Changes in restricted cash and cash equivalents

     —     (2,808 )   —     (2,808 )   —     12,908     —     12,908     —     (4,759 )   —     (4,759 )

Capital contribution to DISH Digital

     —     (18,569 )   —     (18,569 )   —     (7,000 )   —     (7,000 )   —     —     —     —  

Acquisition of regulatory authorizations

     —     —     —     —     —     (41,748 )   —     (41,748 )   —     (98,477 )   —     (98,477 )

Proceeds from asset transfer to DISH Network

     —     —     —     —     —     40,398     —     40,398     —     —     —     —  

Purchase of strategic investments

     —     (35 )   —     (35 )   —     (428 )   —     (428 )   —     (2,608 )   —     (2,608 )

Distribution received from investment in affiliates

     —     —     —     —     —     —     —     —     —     7,500     —     7,500  

Inter-group advances

     —     (27,449 )   27,449     —     —     —     —     —           —     —     —  

Other, net

     —     (15,795 )   —     (15,795 )   —     (14,139 )   —     (14,139 )   —     (13,026 )   —     (13,026 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net cash flows from investing activities

     (125,882 )   (798,864 )   37,156     (887,590 )   (120,734 )   (449,555 )   —     (570,289 )   (89,777 )   (257,004 )   —     (346,781 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash Flows from Financing Activities:

                                                                          

Net proceeds from Class A common stock options exercised and stock issued under the Employee Stock Purchase Plan

     —     28,857     —     28,857     —     71,247     —     71,247     —     15,398     —     15,398  

Repayment of long-term debt and capital lease obligations

     —     (63,122 )   —     (63,122 )   —     (68,225 )   —     (68,225 )   —     (60,022 )   —     (60,022 )

Net proceeds from issuance of Tracking Stock

     —     7,526     —     7,526     —     —     —     —     —     —     —     —  

Excess tax benefit from stock option exercises

     —     (7,252 )   —     (7,252 )   —     12,663     —     12,663     —     —     —     —  

Inter-group advances

     27,449     —     (27,449 )   —     —     —     —     —     —     —     —     —  

Inter-group equity contributions (distributions), net

     (564 )   564     —     —     32,806     (32,806 )   —     —     (8,981 )   8,981     —     —  

Other, net

     —     (1,105 )   —     (1,105 )   —     2,641     —     2,641     —     648     —     648  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net cash flows from financing activities

     26,885     (34,532 )   (27,449 )   (35,096 )   32,806     (14,480 )   —     18,326     (8,981 )   (34,995 )   —     (43,976 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Effect of exchange rates on cash and cash equivalents

     —     (2,511 )   —     (2,511 )   —     3,961     —     3,961     —     3,187     —     3,187  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase (decrease) in cash and cash equivalents

     —     (85,066 )   —     (85,066 )   —     (97,495 )   —     (97,495 )   —     117,579     —     117,579  

Cash and cash equivalents, beginning of period

     —     634,119     —     634,119     —     731,614     —     731,614     —     614,035     —     614,035  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash and cash equivalents, end of period

   $ —   $ 549,053   $ —   $ 549,053   $ —   $ 634,119   $ —   $ 634,119   $ —   $ 731,614   $ —   $ 731,614  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

4


 NOTES TO CONDENSED ATTRIBUTED FINANCIAL INFORMATION
(Unaudited)

Note 1. Business Description

The Hughes Retail Group is generally comprised of our business of providing satellite broadband internet services to residential retail subscribers, including the assets and liabilities primarily associated with the operation of the business; and the business operations, revenue, billings, operating and other direct and indirect support activities to provide services to the business and Hughes retail subscribers. The Hughes Retail Group also includes any proceeds associated with a sale or transfer of the Hughes Retail Group or any assets of the Hughes Retail Group, and any other assets acquired by or for the account of the Hughes Retail Group or otherwise attributed, contributed, allocated or transferred to the Hughes Retail Group from time to time. The EchoStar Group consists of all other operations of EchoStar, including all existing and future businesses other than the Hughes Retail Group. EchoStar has adopted a policy statement (the "Policy Statement") as described in Note 2 below, which sets forth management and allocation policies for purposes of attributing all of the business and operations of EchoStar to either the Hughes Retail Group or the EchoStar Group (each as fully defined in the Policy Statement and collectively, the "Groups").

Note 2. Basis of Presentation

The overall objective of the attributed financial information is to present the amounts reported in EchoStar's consolidated financial statements attributed to the Hughes Retail Group and the EchoStar Group. The Policy Statement contains specific provisions that determine how certain assets, liabilities, revenue and expenses are attributed to the Groups, effective March 1, 2014. The Policy Statement does not explicitly address the attribution of all amounts reported in our consolidated financial statements; accordingly, management applies judgment in attributing certain amounts based on its assessment of the activities of the Groups and the guiding principles set forth in the Policy Statement. In addition, because the Policy Statement was not effective in periods prior to March 1, 2014, it has limited applicability to the attributed financial information for such periods.

Set forth below is an overview of the Policy Statement and additional discussion about how we have attributed amounts in our consolidated financial statements to the Groups.

Policy Statement

In accordance with the Policy Statement, all existing and future retail subscribers, including related customer contracts, are attributed to the Hughes Retail Group. Assets and liabilities that are directly related to the Hughes Retail Group are attributed to the Hughes Retail Group, including certain accounts receivable, inventory, property and equipment, deferred subscriber acquisition costs, intangible assets and tax related assets and liabilities. To the extent practicable, costs and expenses are attributed without markup to the Hughes Retail Group or the EchoStar Group based on specific identification. Common or shared costs, including corporate overhead, are allocated between the Hughes Retail Group and the EchoStar Group using objective methods and criteria that reflect the relative usage of the corresponding functions or services. Where resources are shared by the Groups and determinations based on use alone are not practicable, we use other methods and criteria that we believe are fair and result in a reasonable estimate of the costs associated with operation, utilization, and maintenance of such resources to each Group. Such methods and criteria may include allocations based on revenue, operating costs, square footage, headcount or management estimates. Under the documents governing the Tracking Stock, any change in our management's allocation methodologies requires the consent of the holders of a majority of the outstanding shares of the Tracking Stock, but does not require the consent of our common stockholders.

5

The Hughes Retail Group utilizes broadband satellite capacity that is operated and maintained by the EchoStar Group. The Policy Statement provides for a monthly charge to the Hughes Retail Group for its utilization of such capacity based on the number of retail subscribers and revenue per month. In addition, the Policy Statement establishes pricing for the Hughes Retail Group purchases of customer rental equipment from the EchoStar Group based on cost plus a fixed margin percentage. Income taxes incurred by EchoStar and its subsidiaries that include operations of the Hughes Retail Group are allocated between the EchoStar Group and the Hughes Retail Group based primarily on the relative amounts of earnings or loss attributable to each Group.

The various attributions, allocations and inter-group charges provided for in the Policy Statement generally do not affect the amounts reported in EchoStar's consolidated financial statements, except for effects on the attribution of equity and net income or loss between the holders of Tracking Stock and EchoStar's common stockholders. The Policy Statement also does not significantly affect the way that the Hughes segment management assesses operating performance and allocates resources. In addition, our chief operating decision maker reviews the Hughes Retail Group financial information only to the extent such information is included in our periodic filings with the SEC. Therefore we do not consider the Hughes Retail Group to be a separate operating segment.

Balance Sheet Attributions

Assets attributed to the Hughes Retail Group based on specific identification consist primarily of trade accounts receivable from retail broadband subscribers, property and equipment (primarily customer rental equipment) used solely in the retail business, and deferred subscriber acquisition costs included in other noncurrent assets. Goodwill and other intangible assets (primarily customer relationships, developed technology and trademarks), which were recognized in connection with our acquisition of Hughes Communications, Inc. in June 2011, were attributed to the Hughes Retail Group based on an analysis of information for the retail business that was available at the acquisition date.

No attribution to the Hughes Retail Group has been made for certain significant assets that it shares with the EchoStar Group, including regulatory authorizations and property and equipment (such as satellites and related terrestrial facilities), because those assets are operated and maintained by the EchoStar Group and it is not practicable to allocate the asset carrying amounts between the Groups. However, the Hughes Retail Group has the right to use such assets and is charged for its use of such assets in accordance with the Policy Statement.

Liabilities attributed to the Hughes Retail Group based on specific identification consist primarily of customer prepayments and deferred revenue related to retail subscribers and deferred tax liabilities related to assets and liabilities that have been attributed to the Hughes Retail Group. Except to a limited extent, it is not practicable to attribute accounts payable and accrued liabilities to the Hughes Retail Group because those amounts arise from centralized processes managed by the EchoStar Group. The Hughes Retail Group generally incurs inter-group payables to all other operations in connection with such centralized processes. As provided in the Policy Statement, none of our long-term debt is attributed to the Hughes Retail Group; however, interest is charged on all inter-group payables.

Revenue and Expense Attributions

The Hughes Retail Group revenue relates to services and equipment provided to retail broadband subscribers and is readily identifiable based on specific identification.

Expenses attributed to the Hughes Retail Group based on specific identification include depreciation of property and equipment and amortization of intangible assets that are attributed to the Hughes Retail Group. Certain other operating expenses, such as compensation of employees that work exclusively in the retail business, are also attributed to the Hughes Retail Group based on specific identification. A substantial portion of the Hughes Retail Group cost of sales is based on the specific inter-group pricing

6

provisions of the Policy Statement, including a monthly charge per retail subscriber and charges for customer rental equipment at cost plus a fixed margin percentage. The Hughes Retail Group operating expenses also reflect allocations of corporate overhead and other expenses incurred by EchoStar.

Cash Flow Attributions

The Hughes Retail Group participates in EchoStar's centralized cash management system and does not maintain separate cash accounts. Under the centralized cash management system, net advances of cash to or from the Hughes Retail Group are reflected in an inter-group receivable or payable account, which bears interest at the same rate earned by EchoStar on its cash and marketable investment securities portfolio. There is no allocation of EchoStar's long-term debt or related interest costs to the Hughes Retail Group.

Cash receipts from retail broadband subscribers and payments of certain expenses attributed to the Hughes Retail Group on a specific identification basis generally are reflected in the attributed statements of cash flows in the period the cash is received or paid. It is not practicable to determine the timing of related cash disbursements under the centralized cash management system for other costs and expenses attributed to the Hughes Retail Group. The accompanying statements of cash flows generally presents cash flows related to such transactions when they are recognized on an accrual basis in an inter-group receivable or payable account. Periodic changes in inter-group receivables or payables generally are indicative of amounts received or paid by the EchoStar Group on behalf of the Hughes Retail Group and are reported in the accompanying attributed statements of cash flows as investing activity for the Group with a net receivable balance or as financing activity for the Group with a net payable balance.

Attributions for Periods Prior to Adoption of the Policy Statement

Except as discussed below, attributions of assets, liabilities, revenue, expenses and cash flows to the Hughes Retail Group in periods prior to the adoption of the Policy Statement effective March 1, 2014 are substantially as described above. However, because the Policy Statement was not effective, the attributed financial information for periods prior to March 1, 2014 do not reflect retrospective application of specific pricing terms in the Policy Statement, such as the monthly charge per subscriber or the cost-plus-fixed-margin pricing for equipment transfers. In lieu of charges based on such specific terms, the attributed financial information for periods prior to March 1, 2014 reflect actual costs incurred for specifically identified items or are based on allocations of actual costs incurred for shared resources. In addition, because no arrangement for interest-bearing inter-group receivables or payables existed prior to March 1, 2014, no such accounts or related interest are reflected in the attributed financial information for periods prior to March 1, 2014. In such periods, EchoStar's equity in the net assets of the Hughes Retail Group is presented as "Equity/Attributed net assets" and periodic changes in such equity are presented as "Inter-group equity contributions (distributions), net" within financing activities in the attributed statements of cash flows. As a result of our use of different attribution methods for certain items in periods prior to March 1, 2014, the attributed financial position, results of operations and cash flows of the Groups are not directly comparable to the corresponding attributed financial information for periods after March 1, 2014. Accordingly, the attributed financial information for periods prior to March 1, 2014 does not purport to present the attributed financial information that would have resulted if the Policy Statement had been adopted in such periods.

7

Note 3. Property and Equipment

Property and equipment for the Hughes Retail Group consisted of the following:

 
    
   As of December 31,  
 
   Depreciable
Life
(In Years) 		 
 
   2014   2013  
 
    
   (In thousands)
  

Customer rental equipment

     2 - 4   $ 482,934   $ 361,248  

Accumulated depreciation

           (316,789 )   (210,225 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Property and equipment, net

         $ 166,145   $ 151,023  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Depreciation expense associated with the Hughes Retail Group property and equipment, net of retirements, was $110.8 million, $92.1 million, and $78.2 million for the years ended December 31, 2014, 2013 and 2012.

Note 4. Goodwill and Other Intangible Assets

Goodwill

Goodwill is assigned to reporting units of our operating segments. A portion of the Hughes segment goodwill was attributed to the Hughes Retail Group as if the Hughes Retail Group had been a separate reporting unit at June 8, 2011, the date EchoStar completed the acquisition of Hughes Communications, Inc. Approximately $260.0 million of the $504.2 million Hughes segment goodwill was attributed to the Hughes Retail Group.

Other Intangible Assets

Other intangible assets for the Hughes Retail Group consisted of the following:

 
   As of December 31,  
 
   2014   2013  
 
   Cost   Accumulated
Amortization 		  Carrying
Amount 		  Cost   Accumulated
Amortization 		  Carrying
Amount 		 
 
   (In thousands)
  

Customer relationships

   $ 145,100   $ (114,657 ) $ 30,443   $ 145,100   $ (95,063 ) $ 50,037  

Technology-based

     23,500     (14,035 )   9,465     23,500     (10,118 )   13,382  

Trademark portfolio

     13,620     (2,440 )   11,180     13,620     (1,759 )   11,861  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total other intangible assets

   $ 182,220   $ (131,132 ) $ 51,088   $ 182,220   $ (106,940 ) $ 75,280  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Customer relationships are amortized predominantly in relation to the expected contribution of cash flow to the business over the life of the intangible asset. Other intangible assets are amortized on a straight-line basis over the periods the assets are expected to contribute to our cash flows. For the years ended December 31, 2014, 2013 and 2012, amortization expense was $24.2 million, $30.2 million, and $29.2 million, respectively.

Note 5. Income Taxes

We establish a provision for income taxes currently payable or receivable and for income tax amounts deferred to future periods based upon a separate return allocation method which results in income tax expense that approximates the expense that would result if the Hughes Retail Group was a stand-alone entity. Deferred tax assets and liabilities are recorded for the estimated future tax effects of differences that exist between the financial reporting carrying amount and tax bases of assets and liabilities.

8

Deferred tax assets are offset by valuation allowances when we determine it is more likely than not that such deferred tax assets will not be realized in the foreseeable future.

In accordance with the Policy Statement, all income tax obligations and benefits that arose prior to March 1, 2014, except for deferred income taxes related to differences between the financial reporting carrying amounts and tax bases of the Hughes Retail Group assets and liabilities, are attributable to the EchoStar Group. Because no arrangements for inter-group settlement of income taxes existed prior to March 1, 2014, no inter-group receivables or payables were recognized for attributed income tax expenses or benefits related to operations for periods prior to March 1, 2014.

We have accounted for income taxes for the Hughes Retail Group in the accompanying attributed financial information in a manner similar to a stand-alone company. To the extent this methodology differs from our tax sharing policy, differences have been reflected in the attributed net assets of the groups.

The components of the benefit (provision) for income taxes are as follows:

 
   For the Years Ended December 31,  
 
   2014   2013   2012  
 
   (In thousands)
  

Current:

                    

Federal

   $ (13,788 ) $ (6,809 ) $ (22,350 )

State

     (2,982 )   (1,475 )   (4,840 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total current provision

     (16,770 )   (8,284 )   (27,190 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Deferred:

                    

Federal

     27,954     9,550     13,498  

State

     3,652     1,250     1,767  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income tax benefit

     31,606     10,800     15,265  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total income tax (provision) benefit, net

   $ 14,836   $ 2,516   $ (11,925 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

The actual tax provisions for the years ended December 31, 2014, 2013 and 2012 reconcile to the amounts computed by applying the statutory federal tax rate to income (loss) before income taxes as shown below:

 
   For the Years Ended
December 31, 		 
 
   2014   2013   2012  

Statutory rate

     35.0 %   35.0 %   35.0 %

State income taxes, net of federal effect

     4.6 %   4.6 %   4.6 %
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total effective tax rate

     39.6 %   39.6 %   39.6 %
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

9

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:

 
   For the Years Ended
December 31, 		 
 
   2014   2013  
 
   (In thousands)
  

Deferred tax assets

              

Accrued expense

   $ 4,982   $ 4,143  

Deferred revenue

     1,208     2,858  
​ ​ ​ ​ ​ ​ ​ ​

Total deferred assets

     6,190     7,001  
​ ​ ​ ​ ​ ​ ​ ​

Deferred tax liabilities

              

Depreciation and amortization

     (10,665 )   (43,083 )
​ ​ ​ ​ ​ ​ ​ ​

Total deferred tax liabilities

     (10,665 )   (43,083 )
​ ​ ​ ​ ​ ​ ​ ​

Net deferred tax liabilities

   $ (4,475 ) $ (36,082 )
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

Current portion of net deferred tax assets

   $ 4,982   $ 4,143  

Noncurrent portion of net deferred tax liabilities

     (9,457 )   (40,225 )
​ ​ ​ ​ ​ ​ ​ ​

Total net deferred tax liabilities

   $ (4,475 ) $ (36,082 )
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

Note 6. Equity/Attributed Net Assets

The reported amounts of equity/attributed net assets for the Hughes Retail Group and EchoStar Group represent the excess of attributed assets over attributed liabilities for the respective groups. EchoStar Group equity includes the 20.0% retained economic interest of EchoStar common stockholders in the net assets of the Hughes Retail Group.

The Hughes Retail Group equity/attributed net assets consisted of attributed paid-in capital and accumulated earnings as follows:

 
   As of December 31,  
 
   2014   2013  
 
   (In thousands)
  

Attributed paid-in capital

   $ 456,122   $ 456,686  

Attributed accumulated earnings (deficit):

              

Periods prior to March 1, 2014

     33,395     32,166  

Periods beginning March 1, 2014

     (23,886 )   —  
​ ​ ​ ​ ​ ​ ​ ​

Total

     9,509     32,166  
​ ​ ​ ​ ​ ​ ​ ​

Total equity/attributed net assets

   $ 465,631   $ 488,852  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

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Unaudited Condensed Attributed Financial Information for Hughes Retail Group
CONDENSED ATTRIBUTED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
NOTES TO CONDENSED ATTRIBUTED FINANCIAL INFORMATION (Unaudited)