ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Colorado | 45-0897865 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
100 Inverness Terrace East, Englewood, Colorado | 80112-5308 | |
(Address of principal executive offices) | (Zip Code) | |
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer ý | (Do not check if a smaller reporting company) | Smaller reporting company o |
Emerging growth company o | ||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | * |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | * |
Item 3. | Defaults Upon Senior Securities | * |
• | our reliance on DISH Network Corporation and its subsidiaries (“DISH Network”) for a significant portion of our revenue; |
• | significant risks related to the construction, launch and operation of our satellites, such as the risk of material malfunction on one or more of our satellites, risks resulting from delays or failures of launches of our satellites and potentially missing our regulatory milestones, changes in the space weather environment that could interfere with the operation of our satellites, and our general lack of commercial insurance coverage on our satellites; |
• | our ability to realize the anticipated benefits of our current satellites and any future satellite we may construct or acquire; |
• | our ability to implement and realize benefits of our domestic and/or international investments, commercial alliances, partnerships, joint ventures, acquisitions and other strategic initiatives; |
• | the failure of third-party providers of components, manufacturing, installation services and customer support services to appropriately deliver the contracted goods or services; |
• | our ability to bring advanced technologies to market to keep pace with our customers and competitors; and |
• | risk related to our foreign operations and other uncertainties associated with doing business internationally, including changes in foreign exchange rates between foreign currencies and the United States dollar, economic instability and political disturbances. |
As of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
Assets | (unaudited) | (audited) | ||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Marketable investment securities, at fair value | ||||||||
Trade accounts receivable and contract assets, net (Note 3) | ||||||||
Trade accounts receivable - DISH Network, net | ||||||||
Inventory | ||||||||
Prepaids and deposits | ||||||||
Advances to affiliates, net | ||||||||
Other current assets | ||||||||
Total current assets | ||||||||
Noncurrent Assets: | ||||||||
Property and equipment, net | ||||||||
Regulatory authorizations | ||||||||
Goodwill | ||||||||
Other intangible assets, net | ||||||||
Investments in unconsolidated entities | ||||||||
Other noncurrent assets, net | ||||||||
Total noncurrent assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Trade accounts payable | $ | $ | ||||||
Trade accounts payable - DISH Network | ||||||||
Current portion of long-term debt and capital lease obligations | ||||||||
Advances from affiliates, net | ||||||||
Contract liabilities | ||||||||
Accrued interest | ||||||||
Accrued compensation | ||||||||
Accrued expenses and other | ||||||||
Total current liabilities | ||||||||
Noncurrent Liabilities: | ||||||||
Long-term debt and capital lease obligations, net | ||||||||
Deferred tax liabilities, net | ||||||||
Advances from affiliates | ||||||||
Other noncurrent liabilities | ||||||||
Total noncurrent liabilities | ||||||||
Total liabilities | ||||||||
Commitments and contingencies (Note 12) | ||||||||
Shareholders’ Equity: | ||||||||
Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued and outstanding at each of March 31, 2018 and December 31, 2017 | ||||||||
Common stock, $0.01 par value; 1,000,000 shares authorized, 1,078 shares issued and outstanding at March 31, 2018 and 1,000 shares issued and outstanding December 31, 2017 | ||||||||
Additional paid-in capital | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Accumulated earnings | ||||||||
Total HSS shareholders’ equity | ||||||||
Noncontrolling interests | ||||||||
Total shareholders’ equity | ||||||||
Total liabilities and shareholders’ equity | $ | $ | ||||||
For the three months ended March 31, | ||||||||
2018 | 2017 | |||||||
Revenue: | ||||||||
Services and other revenue - DISH Network | $ | $ | ||||||
Services and other revenue - other | ||||||||
Equipment revenue | ||||||||
Total revenue | ||||||||
Costs and expenses: | ||||||||
Cost of sales - services and other (exclusive of depreciation and amortization) | ||||||||
Cost of sales - equipment (exclusive of depreciation and amortization) | ||||||||
Selling, general and administrative expenses | ||||||||
Research and development expenses | ||||||||
Depreciation and amortization | ||||||||
Total costs and expenses | ||||||||
Operating income | ||||||||
Other income (expense): | ||||||||
Interest income | ||||||||
Interest expense, net of amounts capitalized | ( | ) | ( | ) | ||||
Gains (losses) on investments, net | ( | ) | ||||||
Other-than-temporary impairment loss on available-for-sale securities | ( | ) | ||||||
Equity in earnings of unconsolidated affiliate | ||||||||
Other, net | ( | ) | ||||||
Total other expense, net | ( | ) | ( | ) | ||||
Income before income taxes | ||||||||
Income tax benefit (provision) | ( | ) | ||||||
Net income | ||||||||
Less: Net income attributable to noncontrolling interests | ||||||||
Net income attributable to HSS | $ | $ | ||||||
Comprehensive income: | ||||||||
Net income | $ | $ | ||||||
Other comprehensive income, net of tax: | ||||||||
Foreign currency translation adjustments | ||||||||
Unrealized losses on available-for-sale securities and other | ( | ) | ( | ) | ||||
Recognition of other-than-temporary impairment loss on available-for-sale securities in net income | ||||||||
Total other comprehensive income, net of tax | ||||||||
Comprehensive income | ||||||||
Less: Comprehensive income attributable to noncontrolling interests | ||||||||
Comprehensive income attributable to HSS | $ | $ | ||||||
Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Earnings | Noncontrolling Interests | Total | ||||||||||||||||
Balance, January 1, 2017 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Stock-based compensation | ||||||||||||||||||||
Transfer of satellite launch service contract to EchoStar Corporation | ( | ) | ( | ) | ||||||||||||||||
Contribution of EchoStar XIX satellite, net of deferred tax | ||||||||||||||||||||
Contribution of non-cash net assets pursuant to Share Exchange Agreement (Note 1) | ||||||||||||||||||||
Exchange of non-cash net assets for HSS Tracking Stock (Note 1) | ( | ) | ( | ) | ||||||||||||||||
Other | ||||||||||||||||||||
Net Income | ||||||||||||||||||||
Foreign currency translation adjustment | ||||||||||||||||||||
Unrealized gains and other-than-temporary impairment loss on available-for-sale securities, net | ||||||||||||||||||||
Balance, March 31, 2017 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Balance, December 31, 2017 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Cumulative effect of adoption of ASU 2014-09 and ASU 2016-01 as of January 1, 2018 (Note 2) | — | — | ||||||||||||||||||
Balance, January 1, 2018 | ( | ) | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Capital contribution from EchoStar Corporation | ||||||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ||||||||||||||
Net income | ||||||||||||||||||||
Foreign currency translation adjustment | ( | ) | ||||||||||||||||||
Unrealized losses on available-for-sale securities, net | ( | ) | ( | ) | ||||||||||||||||
Balance, March 31, 2018 | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
For the three months ended March 31, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
Depreciation and amortization | ||||||||
Equity in earnings of unconsolidated affiliate | ( | ) | ( | ) | ||||
Amortization of debt issuance costs | ||||||||
Losses and impairment on investments, net | ||||||||
Stock-based compensation | ||||||||
Deferred tax (benefit) provision | ( | ) | ||||||
Dividend received from unconsolidated affiliate | ||||||||
Changes in current assets and current liabilities, net | ( | ) | ( | ) | ||||
Changes in noncurrent assets and noncurrent liabilities, net | ( | ) | ( | ) | ||||
Other, net | ( | ) | ||||||
Net cash flows from operating activities | ||||||||
Cash flows from investing activities: | ||||||||
Purchases of marketable investment securities | ( | ) | ||||||
Sales and maturities of marketable investment securities | ||||||||
Expenditures for property and equipment | ( | ) | ( | ) | ||||
Refunds and other receipts related to capital expenditures | ||||||||
Expenditures for externally marketed software | ( | ) | ( | ) | ||||
Payment for satellite launch services | ( | ) | ||||||
Net cash flows from investing activities | ( | ) | ||||||
Cash flows from financing activities: | ||||||||
Repayment of debt and capital lease obligations | ( | ) | ( | ) | ||||
Capital contribution from EchoStar Corporation | ||||||||
Other, net | ( | ) | ( | ) | ||||
Net cash flows from financing activities | ( | ) | ( | ) | ||||
Effect of exchange rates on cash and cash equivalents | ( | ) | ||||||
Net increase (decrease) in cash and cash equivalents, including restricted amounts | ( | ) | ||||||
Cash and cash equivalents, including restricted amounts, beginning of period | ||||||||
Cash and cash equivalents, including restricted amounts, end of period | $ | $ | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest (including capitalized interest) | $ | $ | ||||||
Capitalized interest | $ | $ | ||||||
Cash paid for income taxes | $ | $ | ||||||
Property and equipment financed under capital lease obligations | $ | $ | ||||||
Increase (decrease) in capital expenditures included in accounts payable, net | $ | $ | ( | ) | ||||
Transfer of satellite launch service contract to EchoStar Corporation | $ | $ | ( | ) | ||||
Contribution of non-cash net assets pursuant to Share Exchange Agreement (Note 1) | $ | $ | ||||||
Non-cash net assets exchanged for HSS Tracking Stock (Note 1) | $ | $ | ( | ) | ||||
Capitalized in-orbit incentive obligations | $ | $ | ||||||
Contribution of EchoStar XIX satellite | $ | $ | ||||||
• | Hughes — which provides broadband satellite technologies and broadband internet services to domestic and international home and small office customers and broadband network technologies, managed services, equipment, hardware, satellite services and communication solutions to domestic and international consumers and aeronautical, enterprise and government customers. The Hughes segment also designs, provides and installs gateway and terminal equipment to customers for other satellite systems. In addition, our Hughes segment designs, develops, constructs and provides telecommunication networks comprising satellite ground segment systems and terminals to mobile system operators and our enterprise customers. |
• | EchoStar Satellite Services (“ESS”) — which uses certain of our owned and leased in-orbit satellites and related licenses to provide satellite service operations and video delivery services on a full-time and occasional-use basis primarily to DISH Network, Dish Mexico, S. de R.L. de C.V., a joint venture that EchoStar entered into in 2008 (“Dish Mexico”), United States (“U.S.”) government service providers, internet service providers, broadcast news organizations, programmers, and private enterprise customers. ESS also manages satellite operations for certain satellites owned by DISH Network. |
• | Level 1, defined as observable inputs being quoted prices in active markets for identical assets; |
• | Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and |
• | Level 3, defined as unobservable inputs for which little or no market data exists, consistent with characteristics of the asset or liability that would be considered by market participants in a transaction to purchase or sell the asset or liability. |
Balance at December 31, 2017 | Adjustments Due to the | Balance at January 1, 2018 | ||||||||||||||
New Revenue Standard | New Investment Standard | |||||||||||||||
(In thousands) | ||||||||||||||||
Assets: | ||||||||||||||||
Trade accounts receivable and contract assets, net | $ | $ | ( | ) | $ | — | $ | |||||||||
Other current assets | $ | $ | $ | — | $ | |||||||||||
Other noncurrent assets, net | $ | $ | $ | — | $ | |||||||||||
Total assets | $ | $ | $ | — | $ | |||||||||||
Liabilities: | ||||||||||||||||
Contract liabilities | $ | $ | ( | ) | $ | — | $ | |||||||||
Accrued expenses and other | $ | $ | $ | — | $ | |||||||||||
Deferred tax liabilities, net | $ | $ | $ | — | $ | |||||||||||
Other noncurrent liabilities | $ | $ | ( | ) | $ | — | $ | |||||||||
Total liabilities | $ | $ | ( | ) | $ | — | $ | |||||||||
Shareholders’ Equity: | ||||||||||||||||
Accumulated other comprehensive income (loss) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
Accumulated earnings (losses) | $ | $ | $ | ( | ) | $ | ||||||||||
Total shareholders’ equity | $ | $ | $ | — | $ | |||||||||||
Total liabilities and shareholders’ equity | $ | $ | $ | — | $ | |||||||||||
As of March 31, 2018 | ||||||||||||||||
As Reported | Adjustments Due to the | Balances If We Had Not Adopted the New Standards | ||||||||||||||
Balance Sheet | New Revenue Standard | New Investment Standard | ||||||||||||||
(In thousands) | ||||||||||||||||
Assets: | ||||||||||||||||
Trade accounts receivable and contract assets, net | $ | $ | $ | — | $ | |||||||||||
Other current assets | $ | $ | ( | ) | $ | — | $ | |||||||||
Other noncurrent assets, net | $ | $ | ( | ) | $ | — | $ | |||||||||
Total assets | $ | $ | ( | ) | $ | — | $ | |||||||||
Liabilities: | ||||||||||||||||
Contract liabilities | $ | $ | $ | — | $ | |||||||||||
Accrued expenses and other | $ | $ | ( | ) | $ | — | $ | |||||||||
Deferred tax liabilities, net | $ | $ | ( | ) | $ | — | $ | |||||||||
Other noncurrent liabilities | $ | $ | $ | — | $ | |||||||||||
Total liabilities | $ | $ | $ | — | $ | |||||||||||
Shareholders’ Equity: | ||||||||||||||||
Accumulated other comprehensive loss | $ | ( | ) | $ | — | $ | — | $ | ( | ) | ||||||
Accumulated earnings | $ | $ | ( | ) | $ | $ | ||||||||||
Total shareholders’ equity | $ | $ | ( | ) | $ | — | $ | |||||||||
Total liabilities and shareholders’ equity | $ | $ | ( | ) | $ | — | $ | |||||||||
For the three months ended March 31, 2018 | ||||||||||||||||
As Reported | Adjustments Due to the | Balances If We Had Not Adopted the New Standards | ||||||||||||||
Statement of Operations and Comprehensive Income | New Revenue Standard | New Investment Standard | ||||||||||||||
(In thousands) | ||||||||||||||||
Revenue: | ||||||||||||||||
Services and other revenue - other | $ | $ | $ | — | $ | |||||||||||
Total revenue | $ | $ | $ | — | $ | |||||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales - services and other (exclusive of depreciation and amortization) | $ | $ | $ | — | $ | |||||||||||
Selling, general and administrative expenses | $ | $ | $ | — | $ | |||||||||||
Total costs and expenses | $ | $ | $ | — | $ | |||||||||||
Operating income | $ | $ | ( | ) | $ | — | $ | |||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net of amounts capitalized | $ | ( | ) | $ | $ | — | $ | ( | ) | |||||||
Gains (losses) on investments, net | $ | ( | ) | $ | $ | $ | ||||||||||
Other-than-temporary impairment loss on available-for-sale securities | $ | $ | — | $ | ( | ) | $ | ( | ) | |||||||
Total other expense, net | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
Income before income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Income tax provision | $ | ( | ) | $ | $ | — | $ | ( | ) | |||||||
Net income | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Net income attributable to HSS | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Comprehensive income | ||||||||||||||||
Net income | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Unrealized losses on available-for-sale securities and other | $ | ( | ) | $ | — | $ | ( | ) | $ | ( | ) | |||||
Recognition of other-than-temporary impairment loss on available-for-sale securities in net income | $ | $ | — | $ | $ | |||||||||||
Total other comprehensive income, net of tax | $ | $ | — | $ | $ | |||||||||||
Comprehensive income | $ | $ | ( | ) | $ | — | $ | |||||||||
Comprehensive income attributable to HSS | $ | $ | ( | ) | $ | — | $ | |||||||||
As of | ||||||||
March 31, 2018 | January 1, 2018 | |||||||
(In thousands) | ||||||||
Trade accounts receivable: | ||||||||
Sales and services | $ | $ | ||||||
Leasing | ||||||||
Total | ||||||||
Contract assets | ||||||||
Allowance for doubtful accounts | ( | ) | ( | ) | ||||
Total trade accounts receivable and contract assets, net | $ | $ | ||||||
Trade accounts receivable - DISH Network: | ||||||||
Sales and services | $ | $ | ||||||
Leasing | ||||||||
Total trade accounts receivable - DISH Network, net | $ | $ | ||||||
Noncurrent contract assets | $ | $ | ||||||
Contract liabilities: | ||||||||
Current | $ | $ | ||||||
Noncurrent | ||||||||
Total contract liabilities | $ | $ | ||||||
As of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Marketable investment securities, at fair value: | ||||||||
Debt securities: | ||||||||
Corporate bonds | $ | $ | ||||||
Other debt securities | ||||||||
Total debt securities | ||||||||
Equity securities | ||||||||
Total marketable investment securities | $ | $ | ||||||
Amortized | Unrealized | Estimated | ||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
As of March 31, 2018 | ||||||||||||||||
Corporate bonds | $ | $ | $ | ( | ) | $ | ||||||||||
Other debt securities | ( | ) | ||||||||||||||
Total available-for-sale debt securities | $ | $ | $ | ( | ) | $ | ||||||||||
As of December 31, 2017 | ||||||||||||||||
Corporate bonds | $ | $ | $ | ( | ) | $ | ||||||||||
Other debt securities | ( | ) | ||||||||||||||
Total available-for-sale debt securities | $ | $ | $ | ( | ) | $ | ||||||||||
As of | ||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Corporate bonds | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Total debt securities | ||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||
Total marketable investment securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
As of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Finished goods | $ | $ | ||||||
Raw materials | ||||||||
Work-in-process | ||||||||
Total inventory | $ | $ | ||||||
Depreciable Life In Years | As of | |||||||||
March 31, 2018 | December 31, 2017 | |||||||||
(In thousands) | ||||||||||
Land | — | $ | $ | |||||||
Buildings and improvements | 1 to 40 | |||||||||
Furniture, fixtures, equipment and other | 1 to 12 | |||||||||
Customer rental equipment | 2 to 4 | |||||||||
Satellites - owned | 2 to 15 | |||||||||
Satellites - acquired under capital leases | 10 to 15 | |||||||||
Construction in progress | — | |||||||||
Total property and equipment | ||||||||||
Accumulated depreciation | ( | ) | ( | ) | ||||||
Property and equipment, net | $ | $ | ||||||||
As of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Progress amounts for satellite construction, including prepayments under capital leases and launch services costs | $ | $ | ||||||
Satellite related equipment | ||||||||
Other | ||||||||
Construction in progress | $ | $ | ||||||
For the three months ended March 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Satellites | $ | $ | ||||||
Furniture, fixtures, equipment and other | ||||||||
Customer rental equipment | ||||||||
Buildings and improvements | ||||||||
Total depreciation expense | $ | $ | ||||||
Weighted Average Useful Life (in Years) | As of | |||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||
Cost | Accumulated Amortization | Carrying Amount | Cost | Accumulated Amortization | Carrying Amount | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Technology-based | ( | ) | ( | ) | ||||||||||||||||||||||
Trademark portfolio | ( | ) | ( | ) | ||||||||||||||||||||||
Total other intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||
As of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Investments in unconsolidated entities: | ||||||||
Equity method | $ | $ | ||||||
Other equity investments without a readily determinable fair value | ||||||||
Total investments in unconsolidated entities | $ | $ | ||||||
Effective Interest Rate | As of | |||||||||||||||||
March 31, 2018 | December 31, 2017 | |||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||
(In thousands) | ||||||||||||||||||
Senior Secured Notes: | ||||||||||||||||||
6 1/2% Senior Secured Notes due 2019 | $ | $ | $ | $ | ||||||||||||||
5 1/4% Senior Secured Notes due 2026 | ||||||||||||||||||
Senior Unsecured Notes: | ||||||||||||||||||
7 5/8% Senior Unsecured Notes due 2021 | ||||||||||||||||||
6 5/8% Senior Unsecured Notes due 2026 | ||||||||||||||||||
Less: Unamortized debt issuance costs | ( | ) | — | ( | ) | — | ||||||||||||
Subtotal | $ | $ | ||||||||||||||||
Capital lease obligations | ||||||||||||||||||
Total debt and capital lease obligations | ||||||||||||||||||
Less: Current portion | ( | ) | ( | ) | ||||||||||||||
Long-term debt and capital lease obligations, net | $ | $ | ||||||||||||||||
Hughes | ESS | Corporate and Other | Consolidated Total | |||||||||||||
(In thousands) | ||||||||||||||||
For the three months ended March 31, 2018 | ||||||||||||||||
External revenue | $ | $ | $ | $ | ||||||||||||
Intersegment revenue | $ | $ | $ | ( | ) | $ | — | |||||||||
Total revenue | $ | $ | $ | $ | ||||||||||||
EBITDA | $ | $ | $ | ( | ) | $ | ||||||||||
Capital expenditures (1) | $ | $ | ( | ) | $ | $ | ||||||||||
For the three months ended March 31, 2017 | ||||||||||||||||
External revenue | $ | $ | $ | $ | ||||||||||||
Intersegment revenue | $ | $ | $ | ( | ) | $ | — | |||||||||
Total revenue | $ | $ | $ | $ | ||||||||||||
EBITDA | $ | $ | $ | ( | ) | $ | ||||||||||
Capital expenditures (1) | $ | $ | $ | $ | ||||||||||||
(1) | Capital expenditures are net of refunds and other receipts related to capital expenditures. |
For the three months ended March 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
EBITDA | $ | $ | ||||||
Interest income and expense, net | ( | ) | ( | ) | ||||
Depreciation and amortization | ( | ) | ( | ) | ||||
Net income attributable to noncontrolling interests | ||||||||
Income before income taxes | $ | $ | ||||||
Hughes | ESS | Corporate and Other | Consolidated Total | |||||||||||||
(In thousands) | ||||||||||||||||
For the three months ended March 31, 2018 | ||||||||||||||||
North America: | ||||||||||||||||
U.S. | $ | $ | $ | $ | ||||||||||||
Canada and Mexico | ||||||||||||||||
All other (1) | ||||||||||||||||
Total revenue | $ | $ | $ | $ | ||||||||||||
(1) | All other revenue includes transactions with customers in Asia, Africa, Australia, Europe, South America, and the Middle East. |
Hughes | ESS | Corporate and Other | Consolidated Total | |||||||||||||
(In thousands) | ||||||||||||||||
For the three months ended March 31, 2018 | ||||||||||||||||
Equipment | $ | $ | $ | $ | ||||||||||||
Services | ||||||||||||||||
Design, development and construction services | ||||||||||||||||
Revenue from sales and services | ||||||||||||||||
Leasing income | ||||||||||||||||
Total revenue | $ | $ | $ | $ | ||||||||||||
HSS | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
Marketable investment securities, at fair value | ||||||||||||||||||||
Trade accounts receivable and contract assets, net | ||||||||||||||||||||
Trade accounts receivable - DISH Network, net | ||||||||||||||||||||
Inventory | ||||||||||||||||||||
Advances to affiliates, net | ( | ) | ||||||||||||||||||
Other current assets | ( | ) | ||||||||||||||||||
Total current assets | ( | ) | ||||||||||||||||||
Property and equipment, net | ||||||||||||||||||||
Regulatory authorizations | ||||||||||||||||||||
Goodwill | ||||||||||||||||||||
Other intangible assets, net | ||||||||||||||||||||
Investments in unconsolidated entities | ||||||||||||||||||||
Investment in subsidiaries | ( | ) | ||||||||||||||||||
Advances to affiliates | ( | ) | ||||||||||||||||||
Deferred tax asset | ( | ) | ||||||||||||||||||
Other noncurrent assets, net | ||||||||||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Liabilities and Shareholders’ Equity (Deficit) | ||||||||||||||||||||
Trade accounts payable | $ | $ | $ | $ | $ | |||||||||||||||
Trade accounts payable - DISH Network | ||||||||||||||||||||
Current portion of long-term debt and capital lease obligations | ||||||||||||||||||||
Advances from affiliates, net | ( | ) | ||||||||||||||||||
Accrued expenses and other | ( | ) | ||||||||||||||||||
Total current liabilities | ( | ) | ||||||||||||||||||
Long-term debt and capital lease obligations, net | ||||||||||||||||||||
Deferred tax liabilities, net | ( | ) | ||||||||||||||||||
Advances from affiliates | ( | ) | ||||||||||||||||||
Other non-current liabilities | ||||||||||||||||||||
Total HSS shareholders’ equity (deficit) | ( | ) | ||||||||||||||||||
Noncontrolling interests | ||||||||||||||||||||
Total liabilities and shareholders’ equity (deficit) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
HSS | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
Marketable investment securities, at fair value | ||||||||||||||||||||
Trade accounts receivable and contract assets, net | ||||||||||||||||||||
Trade accounts receivable - DISH Network, net | ||||||||||||||||||||
Inventory | ||||||||||||||||||||
Advances to affiliates, net | ( | ) | ||||||||||||||||||
Other current assets | ( | ) | ||||||||||||||||||
Total current assets | ( | ) | ||||||||||||||||||
Property and equipment, net | ||||||||||||||||||||
Regulatory authorizations | ||||||||||||||||||||
Goodwill | ||||||||||||||||||||
Other intangible assets, net | ||||||||||||||||||||
Investments in unconsolidated entities | ||||||||||||||||||||
Investment in subsidiaries | ( | ) | ||||||||||||||||||
Advances to affiliates | ( | ) | ||||||||||||||||||
Deferred tax asset | ( | ) | ||||||||||||||||||
Other noncurrent assets, net | ||||||||||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Liabilities and Shareholders’ Equity (Deficit) | ||||||||||||||||||||
Trade accounts payable | $ | $ | $ | $ | $ | |||||||||||||||
Trade accounts payable - DISH Network | ||||||||||||||||||||
Current portion of long-term debt and capital lease obligations | ||||||||||||||||||||
Advances from affiliates, net | ( | ) | ||||||||||||||||||
Accrued expenses and other | ( | ) | ||||||||||||||||||
Total current liabilities | ( | ) | ||||||||||||||||||
Long-term debt and capital lease obligations, net | ||||||||||||||||||||
Deferred tax liabilities, net | ( | ) | ||||||||||||||||||
Advances from affiliates | ( | ) | ||||||||||||||||||
Other non-current liabilities | ||||||||||||||||||||
Total HSS shareholders’ equity (deficit) | ( | ) | ||||||||||||||||||
Noncontrolling interests | ||||||||||||||||||||
Total liabilities and shareholders’ equity (deficit) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
HSS | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | ||||||||||||||||
Revenue: | ||||||||||||||||||||
Services and other revenue - DISH Network | $ | $ | $ | $ | $ | |||||||||||||||
Services and other revenue - other | ( | ) | ||||||||||||||||||
Equipment revenue - other | ( | ) | ||||||||||||||||||
Total revenue | ( | ) | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Costs of sales - services and other (exclusive of depreciation and amortization) | ( | ) | ||||||||||||||||||
Cost of sales - equipment (exclusive of depreciation and amortization) | ( | ) | ||||||||||||||||||
Selling, general and administrative expenses | ( | ) | ||||||||||||||||||
Research and development expenses | ||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
Total costs and expenses | ( | ) | ||||||||||||||||||
Operating income | ( | ) | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | ( | ) | ||||||||||||||||||
Interest expense, net of amounts capitalized | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Gains (losses) on investments, net | ( | ) | ( | ) | ||||||||||||||||
Equity in earnings of unconsolidated affiliate | ||||||||||||||||||||
Equity in earnings (losses) of subsidiaries, net | ( | ) | ( | ) | ||||||||||||||||
Other, net | ( | ) | ( | ) | ( | ) | ||||||||||||||
Total other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Income (loss) before income taxes | ( | ) | ( | ) | ||||||||||||||||
Income tax benefit (provision) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Net income (loss) | ( | ) | ( | ) | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||
Net income (loss) attributable to HSS | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Comprehensive income (loss): | ||||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustments | ||||||||||||||||||||
Unrealized losses on available-for-sale securities and other | ( | ) | ( | ) | ( | ) | ||||||||||||||
Equity in other comprehensive income (loss) of subsidiaries, net | ( | ) | ||||||||||||||||||
Total other comprehensive income (loss), net of tax | ( | ) | ||||||||||||||||||
Comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | ||||||||||||||||||||
Comprehensive income (loss) attributable to HSS | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
HSS | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | ||||||||||||||||
Revenue: | ||||||||||||||||||||
Services and other revenue - DISH Network | $ | $ | $ | $ | $ | |||||||||||||||
Services and other revenue - other | ( | ) | ||||||||||||||||||
Equipment revenue - other | ( | ) | ||||||||||||||||||
Total revenue | ( | ) | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Costs of sales - services and other (exclusive of depreciation and amortization) | ( | ) | ||||||||||||||||||
Cost of sales - equipment (exclusive of depreciation and amortization) | ( | ) | ||||||||||||||||||
Selling, general and administrative expenses | ( | ) | ||||||||||||||||||
Research and development expenses | ||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
Total costs and expenses | ( | ) | ||||||||||||||||||
Operating income | ( | ) | ||||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | ( | ) | ||||||||||||||||||
Interest expense, net of amounts capitalized | ( | ) | ( | ) | ( | ) | ||||||||||||||
Gains on investments, net | ||||||||||||||||||||
Other-than-temporary impairment loss on available-for-sale securities | ( | ) | ( | ) | ||||||||||||||||
Equity in earnings of unconsolidated affiliate | ||||||||||||||||||||
Equity in earnings (losses) of subsidiaries, net | ( | ) | ( | ) | ||||||||||||||||
Other, net | ( | ) | ||||||||||||||||||
Total other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Income (loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||
Income tax benefit (provision) | ( | ) | ||||||||||||||||||
Net income (loss) | ( | ) | ( | ) | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||
Net income (loss) attributable to HSS | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Comprehensive income (loss): | ||||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustments | ||||||||||||||||||||
Unrealized gains (losses) on available-for-sale securities and other | ( | ) | ( | ) | ( | ) | ||||||||||||||
Recognition of other-than-temporary loss on available-for-sale securities in net income (loss) | ||||||||||||||||||||
Equity in other comprehensive income (loss) of subsidiaries, net | ( | ) | ||||||||||||||||||
Total other comprehensive income (loss), net of tax | ( | ) | ||||||||||||||||||
Comprehensive income (loss) | ( | ) | ||||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | ||||||||||||||||||||
Comprehensive income (loss) attributable to HSS | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
HSS | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities | ( | ) | ( | ) | ||||||||||||||||
Net cash flows from operating activities | ( | ) | ( | ) | ||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases of marketable investment securities | ( | ) | ( | ) | ||||||||||||||||
Sales and maturities of marketable investment securities | ||||||||||||||||||||
Expenditures for property and equipment | ( | ) | ( | ) | ( | ) | ||||||||||||||
Refunds and other receipts related to capital expenditures | ||||||||||||||||||||
Expenditures for externally marketed software | ( | ) | ( | ) | ||||||||||||||||
Payment for satellite launch services | — | — | ( | ) | — | ( | ) | |||||||||||||
Distributions (contributions) and advances from (to) subsidiaries, net | ( | ) | ( | ) | ||||||||||||||||
Net cash flows from investing activities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Contributions (distributions) and advances (to) from parent, net | ( | ) | ||||||||||||||||||
Repayment of debt and capital lease obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||
Capital contribution from EchoStar | — | — | — | |||||||||||||||||
Other, net | ( | ) | ( | ) | ||||||||||||||||
Net cash flows from financing activities | ( | ) | ( | ) | ||||||||||||||||
Effect of exchange rates on cash and cash equivalents | ( | ) | ( | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents, including restricted amounts | ( | ) | ( | ) | ( | ) | ||||||||||||||
Cash and cash equivalents, including restricted amounts, beginning of period | ||||||||||||||||||||
Cash and cash equivalents, including restricted amounts, end of period | $ | $ | $ | $ | $ | |||||||||||||||
HSS | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities | ||||||||||||||||||||
Net cash flows from operating activities | ||||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Sales and maturities of marketable investment securities | ||||||||||||||||||||
Expenditures for property and equipment | ( | ) | ( | ) | ( | ) | ||||||||||||||
Expenditures for externally marketed software | ( | ) | ( | ) | ||||||||||||||||
Investment in subsidiary | ( | ) | ( | ) | ||||||||||||||||
Net cash flows from investing activities | ( | ) | ( | ) | ||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from capital contributions from parent | ( | ) | ||||||||||||||||||
Repayment of debt and capital lease obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||
Other, net | ( | ) | ( | ) | ||||||||||||||||
Net cash flows from financing activities | ( | ) | ( | ) | ||||||||||||||||
Effect of exchange rates on cash and cash equivalents | ||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents, including restricted amounts | ( | ) | ||||||||||||||||||
Cash and cash equivalents, including restricted amounts, beginning of period | ||||||||||||||||||||
Cash and cash equivalents, including restricted amounts, end of period | $ | $ | $ | $ | $ | |||||||||||||||
• | Revenue of $502.9 million |
• | Operating income of $80.7 million |
• | Net income of $20.4 million |
• | Net income attributable to HSS of $20.0 million |
• | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $214.5 million (see reconciliation of this non-GAAP measure on page 49) |
• | Total assets of $6.90 billion |
• | Total liabilities of $4.55 billion |
• | Total shareholders’ equity of $2.35 billion |
• | Cash, cash equivalents and current marketable investment securities of $2.40 billion |
For the three months ended March 31, | Variance | ||||||||||||||
Statements of Operations Data (1) | 2018 | 2017 | Amount | % | |||||||||||
(Dollars in thousands) | |||||||||||||||
Revenue: | |||||||||||||||
Services and other revenue - DISH Network | $ | 100,614 | $ | 111,490 | $ | (10,876 | ) | (9.8 | ) | ||||||
Services and other revenue - other | 359,334 | 270,223 | 89,111 | 33.0 | |||||||||||
Equipment revenue | 42,947 | 48,405 | (5,458 | ) | (11.3 | ) | |||||||||
Total revenue | 502,895 | 430,118 | 72,777 | 16.9 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of sales - services and other | 142,703 | 130,899 | 11,804 | 9.0 | |||||||||||
% of total services and other revenue | 31.0 | % | 34.3 | % | |||||||||||
Cost of sales - equipment | 44,023 | 44,226 | (203 | ) | (0.5 | ) | |||||||||
% of total equipment revenue | 102.5 | % | 91.4 | % | |||||||||||
Selling, general and administrative expenses | 94,650 | 74,378 | 20,272 | 27.3 | |||||||||||
% of total revenue | 18.8 | % | 17.3 | % | |||||||||||
Research and development expenses | 7,137 | 7,705 | (568 | ) | (7.4 | ) | |||||||||
% of total revenue | 1.4 | % | 1.8 | % | |||||||||||
Depreciation and amortization | 133,718 | 112,220 | 21,498 | 19.2 | |||||||||||
Total costs and expenses | 422,231 | 369,428 | 52,803 | 14.3 | |||||||||||
Operating income | 80,664 | 60,690 | 19,974 | 32.9 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 11,379 | 5,841 | 5,538 | 94.8 | |||||||||||
Interest expense, net of amounts capitalized | (64,413 | ) | (59,837 | ) | (4,576 | ) | 7.6 | ||||||||
Losses and impairment on investments, net | (392 | ) | (3,207 | ) | 2,815 | (87.8 | ) | ||||||||
Other, net | 879 | 2,358 | (1,479 | ) | (62.7 | ) | |||||||||
Total other expense, net | (52,547 | ) | (54,845 | ) | 2,298 | (4.2 | ) | ||||||||
Income before income taxes | 28,117 | 5,845 | 22,272 | * | |||||||||||
Income tax benefit (provision) | (7,736 | ) | 3,582 | (11,318 | ) | * | |||||||||
Net income | 20,381 | 9,427 | 10,954 | * | |||||||||||
Less: Net income attributable to noncontrolling interests | 380 | 292 | 88 | 30.1 | |||||||||||
Net income attributable to HSS | $ | 20,001 | $ | 9,135 | $ | 10,866 | * | ||||||||
Other data: | |||||||||||||||
EBITDA (2) | $ | 214,489 | $ | 171,769 | $ | 42,720 | 24.9 | ||||||||
Subscribers, end of period | 1,267,000 | 1,043,000 | 224,000 | 21.5 | |||||||||||
___________________________ | |||||||||||||||
(1) | An explanation of our key metrics is included on pages 52 and 53 under the heading “Explanation of Key Metrics and Other Items.” |
(2) | A reconciliation of EBITDA to “Net income,” the most directly comparable generally accepted accounting principles (“GAAP”) measure in the accompanying financial statements, is included on page 49. For further information on our use of EBITDA see “Explanation of Key Metrics and Other Items” on page 52. |
For the three months ended March 31, | Variance | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Net income | $ | 20,381 | $ | 9,427 | $ | 10,954 | * | ||||||||
Interest income and expense, net | 53,034 | 53,996 | (962 | ) | (1.8 | ) | |||||||||
Income tax provision (benefit) | 7,736 | (3,582 | ) | 11,318 | * | ||||||||||
Depreciation and amortization | 133,718 | 112,220 | 21,498 | 19.2 | |||||||||||
Net income attributable to noncontrolling interests | (380 | ) | (292 | ) | (88 | ) | 30.1 | ||||||||
EBITDA | $ | 214,489 | $ | 171,769 | $ | 42,720 | 24.9 | ||||||||
Hughes | ESS | Corporate and Other | Consolidated Total | |||||||||||||
(In thousands) | ||||||||||||||||
For the three months ended March 31, 2018 | ||||||||||||||||
Total revenue | $ | 400,818 | $ | 96,753 | $ | 5,324 | $ | 502,895 | ||||||||
Capital expenditures (1) | $ | 87,291 | $ | (77,038 | ) | $ | — | $ | 10,253 | |||||||
EBITDA | $ | 136,713 | $ | 84,150 | $ | (6,374 | ) | $ | 214,489 | |||||||
For the three months ended March 31, 2017 | ||||||||||||||||
Total revenue | $ | 329,320 | $ | 100,326 | $ | 472 | $ | 430,118 | ||||||||
Capital expenditures | $ | 65,667 | $ | 8,508 | $ | — | $ | 74,175 | ||||||||
EBITDA | $ | 100,852 | $ | 83,063 | $ | (12,146 | ) | $ | 171,769 | |||||||
(1) | Capital expenditures are net of refunds and other receipts related to capital expenditures. |
For the three months ended March 31, | Variance | |||||||||||||
2018 | 2017 | Amount | % | |||||||||||
(Dollars in thousands) | ||||||||||||||
Total revenue | $ | 400,818 | $ | 329,320 | $ | 71,498 | 21.7 | |||||||
Capital expenditures | $ | 87,291 | $ | 65,667 | $ | 21,624 | 32.9 | |||||||
EBITDA | $ | 136,713 | $ | 100,852 | $ | 35,861 | 35.6 | |||||||
For the three months ended March 31, | Variance | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Total revenue | $ | 96,753 | $ | 100,326 | $ | (3,573 | ) | (3.6 | ) | ||||||
Capital expenditures (1) | $ | (77,038 | ) | $ | 8,508 | $ | (85,546 | ) | * | ||||||
EBITDA | $ | 84,150 | $ | 83,063 | $ | 1,087 | 1.3 | ||||||||
(1) | Capital expenditures are net of refunds and other receipts related to capital expenditures. |
For the three months ended March 31, | Variance | ||||||||||||||
2018 | 2017 | Amount | % | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Total revenue | $ | 5,324 | $ | 472 | $ | 4,852 | * | ||||||||
Capital expenditures | $ | — | $ | — | $ | — | * | ||||||||
EBITDA | $ | (6,374 | ) | $ | (12,146 | ) | $ | 5,772 | (47.5 | ) | |||||
• | remediation costs, such as liability for stolen assets or information, repairs of system damage, and/or incentives to customers or business partners in an effort to maintain relationships after an attack; |
• | increased cybersecurity protection costs, which may include the costs of making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants; |
• | increased liability due to financial or other harm inflicted on our partners; |
• | lost revenues resulting from attacks on our satellites or technology, the unauthorized use of proprietary information or the failure to retain or attract customers following an attack; |
• | litigation and legal risks, including regulatory actions by state, federal and international regulators; and |
• | loss of reputation. |
Exhibit No. | Description | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase. | |
* | Incorporated by reference. |
** | Constitutes a management contract or compensatory plan or arrangement. |
HUGHES SATELLITE SYSTEMS CORPORATION | ||
Date: May 10, 2018 | By: | /s/ Michael T. Dugan |
Michael T. Dugan | ||
Chief Executive Officer, President and Director | ||
(Principal Executive Officer) | ||
Date: May 10, 2018 | By: | /s/ David J. Rayner |
David J. Rayner | ||
Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer | ||
(Principal Financial and Accounting Officer) | ||
1. | I have reviewed this Quarterly Report on Form 10-Q of Hughes Satellite Systems Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 10, 2018 | ||
By: | /s/ Michael T. Dugan | |
Name: | Michael T. Dugan | |
Title: | Chief Executive Officer, President and Director | |
(Principal Executive Officer) | ||
1. | I have reviewed this Quarterly Report on Form 10-Q of Hughes Satellite Systems Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 10, 2018 | ||
By: | /s/ David J. Rayner | |
Name: | David J. Rayner | |
Title: | Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer | |
(Principal Financial and Accounting Officer) | ||
(i) | the Quarterly Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(ii) | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 10, 2018 | ||
By: | /s/ Michael T. Dugan | |
Name: | Michael T. Dugan | |
Title: | Chief Executive Officer, President and Director | |
(Principal Executive Officer) | ||
By: | /s/ David J. Rayner | |
Name: | David J. Rayner | |
Title: | Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer | |
(Principal Financial and Accounting Officer) | ||
• | Consolidated revenues of $501.8 million. |
• | Consolidated net loss from continuing operations of $21.2 million, consolidated net loss attributable to EchoStar common stock of $21.6 million, and diluted losses per share of $0.22. Included in these amounts are net losses on investments of $36.7 million. Excluding these net losses, diluted earnings per share would have been $0.16. |
• | Consolidated EBITDA of $165.7 million, including net losses on investments of $36.7 million. Excluding these net losses, EBITDA would have been $202.4 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below). |
• | Approximately 1,267,000 Hughes broadband subscribers as of March 31, 2018. |
• | Cash, cash equivalents and current marketable investment securities of $3.3 billion as of March 31, 2018 |
• | Topic 606 relating to revenue recognition and the related costs from contracts with customers. The adoption decreased our revenue by $1.2 million and increased our net income by $1.1 million for the three months ended March 31, 2018. |
• | Topic 321 relating to accounting for investments. The adoption decreased our net losses on investments by $19.1 million and correspondingly increased our net income by $19.1 million. |
For the three months ended March 31, | |||||
2018 | 2017 | ||||
(Dollars in Thousands) | |||||
Revenue | |||||
Hughes | $ | 400,818 | $ | 329,320 | |
EchoStar Satellite Services | 96,753 | 100,326 | |||
Corporate & Other | 4,221 | 3,505 | |||
Total | $ | 501,792 | $ | 433,151 | |
EBITDA | |||||
Hughes | $ | 136,713 | $ | 100,852 | |
EchoStar Satellite Services | 84,150 | 83,063 | |||
Corporate & Other: | |||||
Corporate overhead, operating and other | (17,870) | (18,952) | |||
Equity in earnings (losses) of unconsolidated affiliates, net | (1,009) | 6,408 | |||
Gains (losses) on investments, net | (36,268) | 11,943 | |||
Sub-total | (55,147) | (601) | |||
Total | $ | 165,716 | $ | 183,314 | |
Net income (loss) from continuing operations | $ | (21,171) | $ | 30,775 | |
Net income from discontinued operations | $ | — | $ | 6,577 | |
Net income (loss) | $ | (21,171) | $ | 37,352 | |
Expenditures for property and equipment from continuing operations | $ | 50,982 | $ | 89,950 | |
For the three months ended March 31, | ||||||
2018 | 2017 | |||||
(Dollars in Thousands) | ||||||
Net income (loss) | $ | (21,171) | $ | 37,352 | ||
Interest income and expense, net | 47,116 | 37,105 | ||||
Income tax benefit, net | (5,403) | (12) | ||||
Depreciation and amortization | 145,554 | 115,083 | ||||
Net income from discontinued operations | — | (6,577) | ||||
Net (income) loss attributable to noncontrolling interests | (380) | 363 | ||||
EBITDA | $ | 165,716 | $ | 183,314 | ||
EchoStar Investor Relations | EchoStar Media Relations |
Deepak V. Dutt Phone: +1 301-428-1686 Email: deepak.dutt@echostar.com | Dan Brown Phone: +1 301-601-7216 Email: dan.brown@echostar.com |
As of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
Assets | (unaudited) | (audited) | ||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 2,239,591 | $ | 2,431,456 | ||||
Marketable investment securities, at fair value | 1,060,733 | 814,161 | ||||||
Trade accounts receivable and contract assets, net (Note 3) | 166,182 | 196,840 | ||||||
Trade accounts receivable - DISH Network, net | 56,861 | 43,295 | ||||||
Inventory | 85,995 | 83,595 | ||||||
Prepaids and deposits | 59,751 | 54,533 | ||||||
Other current assets | 13,163 | 91,671 | ||||||
Total current assets | 3,682,276 | 3,715,551 | ||||||
Noncurrent Assets: | ||||||||
Property and equipment, net | 3,461,004 | 3,465,471 | ||||||
Regulatory authorizations, net | 536,548 | 536,936 | ||||||
Goodwill | 504,173 | 504,173 | ||||||
Other intangible assets, net | 55,273 | 58,955 | ||||||
Investments in unconsolidated entities | 173,601 | 161,427 | ||||||
Other receivables - DISH Network | 93,287 | 92,687 | ||||||
Other noncurrent assets, net | 255,582 | 214,814 | ||||||
Total noncurrent assets | 5,079,468 | 5,034,463 | ||||||
Total assets | $ | 8,761,744 | $ | 8,750,014 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Trade accounts payable | $ | 103,785 | $ | 108,406 | ||||
Trade accounts payable - DISH Network | 3,742 | 4,753 | ||||||
Current portion of long-term debt and capital lease obligations | 41,424 | 40,631 | ||||||
Contract liabilities | 65,333 | 65,959 | ||||||
Accrued interest | 57,297 | 47,616 | ||||||
Accrued compensation | 32,905 | 47,756 | ||||||
Accrued expenses and other | 105,291 | 98,769 | ||||||
Total current liabilities | 409,777 | 413,890 | ||||||
Noncurrent Liabilities: | ||||||||
Long-term debt and capital lease obligations, net | 3,585,972 | 3,594,213 | ||||||
Deferred tax liabilities, net | 433,174 | 436,023 | ||||||
Other noncurrent liabilities | 127,306 | 128,503 | ||||||
Total noncurrent liabilities | 4,146,452 | 4,158,739 | ||||||
Total liabilities | 4,556,229 | 4,572,629 | ||||||
Commitments and contingencies (Note 15) | ||||||||
Stockholders’ Equity: | ||||||||
Preferred stock, $.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of March 31, 2018 and December 31, 2017 | — | — | ||||||
Common stock, $.001 par value, 4,000,000,000 shares authorized: | ||||||||
Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 53,932,336 shares issued and 48,400,018 shares outstanding at March 31, 2018 and 53,663,859 shares issued and 48,131,541 shares outstanding at December 31, 2017 | 54 | 54 | ||||||
Class B convertible common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of March 31, 2018 and December 31, 2017 | 48 | 48 | ||||||
Class C convertible common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of March 31, 2018 and December 31, 2017 | — | — | ||||||
Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of March 31, 2018 and December 31, 2017 | — | — | ||||||
Additional paid-in capital | 3,685,577 | 3,669,461 | ||||||
Accumulated other comprehensive loss | (111,413 | ) | (130,154 | ) | ||||
Accumulated earnings | 714,423 | 721,316 | ||||||
Treasury stock, at cost | (98,162 | ) | (98,162 | ) | ||||
Total EchoStar Corporation stockholders’ equity | 4,190,527 | 4,162,563 | ||||||
Other noncontrolling interests | 14,988 | 14,822 | ||||||
Total stockholders’ equity | 4,205,515 | 4,177,385 | ||||||
Total liabilities and stockholders’ equity | $ | 8,761,744 | $ | 8,750,014 | ||||
For the three months ended March 31, | ||||||||
2018 | 2017 | |||||||
Revenue: | ||||||||
Services and other revenue - DISH Network | $ | 103,805 | $ | 114,955 | ||||
Services and other revenue - other | 355,040 | 269,791 | ||||||
Equipment revenue | 42,947 | 48,405 | ||||||
Total revenue | 501,792 | 433,151 | ||||||
Costs and expenses: | ||||||||
Cost of sales - services and other (exclusive of depreciation and amortization) | 143,793 | 131,783 | ||||||
Cost of sales - equipment (exclusive of depreciation and amortization) | 44,023 | 43,938 | ||||||
Selling, general and administrative expenses | 103,275 | 82,991 | ||||||
Research and development expenses | 7,137 | 7,705 | ||||||
Depreciation and amortization | 145,554 | 115,083 | ||||||
Total costs and expenses | 443,782 | 381,500 | ||||||
Operating income | 58,010 | 51,651 | ||||||
Other income (expense): | ||||||||
Interest income | 15,635 | 8,291 | ||||||
Interest expense, net of amounts capitalized | (62,751 | ) | (45,396 | ) | ||||
Gains (losses) on investments, net | (36,663 | ) | 12,035 | |||||
Other-than-temporary impairment loss on available-for-sale securities | — | (3,298 | ) | |||||
Equity in earnings (losses) of unconsolidated affiliates, net | (1,009 | ) | 6,408 | |||||
Other, net | 204 | 1,072 | ||||||
Total other expense, net | (84,584 | ) | (20,888 | ) | ||||
Income (loss) from continuing operations before income taxes | (26,574 | ) | 30,763 | |||||
Income tax benefit, net | 5,403 | 12 | ||||||
Net income (loss) from continuing operations | (21,171 | ) | 30,775 | |||||
Net income from discontinued operations | — | 6,577 | ||||||
Net income (loss) | (21,171 | ) | 37,352 | |||||
Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (Note 1) | — | (655 | ) | |||||
Less: Net income attributable to other noncontrolling interests | 380 | 292 | ||||||
Net income (loss) attributable to EchoStar Corporation | (21,551 | ) | 37,715 | |||||
Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (Note 1) | — | (1,209 | ) | |||||
Net income (loss) attributable to EchoStar Corporation common stock | $ | (21,551 | ) | $ | 38,924 | |||
Amounts attributable to EchoStar Corporation common stock: | ||||||||
Net income (loss) from continuing operations | $ | (21,551 | ) | $ | 32,347 | |||
Net income from discontinued operations | — | 6,577 | ||||||
Net income (loss) attributable to EchoStar Corporation common stock | $ | (21,551 | ) | $ | 38,924 | |||
Weighted-average common shares outstanding - Class A and B common stock: | ||||||||
Basic | 95,888 | 94,745 | ||||||
Diluted | 95,888 | 95,893 | ||||||
Earnings (losses) per share - Class A and B common stock: | ||||||||
Basic: | ||||||||
Continuing operations | $ | (0.22 | ) | $ | 0.34 | |||
Discontinued operations | — | 0.07 | ||||||
Total basic earnings (losses) per share | $ | (0.22 | ) | $ | 0.41 | |||
Diluted: | ||||||||
Continuing operations | $ | (0.22 | ) | $ | 0.34 | |||
Discontinued operations | — | 0.07 | ||||||
Total diluted earnings (losses) per share | $ | (0.22 | ) | $ | 0.41 | |||
For the three months ended March 31, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (21,171 | ) | $ | 37,352 | |||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 145,554 | 126,742 | ||||||
Amortization of debt issuance costs | 1,936 | 1,790 | ||||||
Equity in (earnings) losses of unconsolidated affiliates, net | 1,009 | (5,249 | ) | |||||
Loss (gain) and impairment on investments, net | 36,673 | (8,737 | ) | |||||
Stock-based compensation | 2,765 | 956 | ||||||
Deferred tax (benefit) provision | (7,036 | ) | 343 | |||||
Dividend received from unconsolidated entity | — | 7,500 | ||||||
Changes in current assets and current liabilities, net | (13,313 | ) | (13,857 | ) | ||||
Changes in noncurrent assets and noncurrent liabilities, net | (13,982 | ) | (6,003 | ) | ||||
Other, net | 2,840 | 518 | ||||||
Net cash flows from operating activities | 135,275 | 141,355 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of marketable investment securities | (562,611 | ) | (45,905 | ) | ||||
Sales and maturities of marketable investment securities | 298,596 | 209,923 | ||||||
Expenditures for property and equipment | (128,506 | ) | (102,463 | ) | ||||
Refunds and other receipts related to capital expenditures | 77,524 | — | ||||||
Sale of investment in unconsolidated entity | — | 17,781 | ||||||
Expenditures for externally marketed software | (7,148 | ) | (10,832 | ) | ||||
Net cash flows from investing activities | (322,145 | ) | 68,504 | |||||
Cash flows from financing activities: | ||||||||
Repayment of debt and capital lease obligations | (9,368 | ) | (8,736 | ) | ||||
Net proceeds from Class A common stock options exercised | 3,481 | 26,325 | ||||||
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan | 2,636 | 2,409 | ||||||
Cash exchanged for Tracking Stock (Note 1) | — | (651 | ) | |||||
Other, net | (1,508 | ) | (1,475 | ) | ||||
Net cash flows from financing activities | (4,759 | ) | 17,872 | |||||
Effect of exchange rates on cash and cash equivalents | (242 | ) | 715 | |||||
Net increase (decrease) in cash and cash equivalents, including restricted amounts | (191,871 | ) | 228,446 | |||||
Cash and cash equivalents, including restricted amounts, beginning of period | 2,432,249 | 2,571,866 | ||||||
Cash and cash equivalents, including restricted amounts, end of period | $ | 2,240,378 | $ | 2,800,312 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest (including capitalized interest) | $ | 55,172 | $ | 54,053 | ||||
Capitalized interest | $ | 4,099 | $ | 21,824 | ||||
Cash paid for income taxes | $ | 839 | $ | 1,035 | ||||
Employee benefits paid in Class A common stock | $ | 7,605 | $ | 11,199 | ||||
Property and equipment financed under capital lease obligations | $ | 38 | $ | 7,485 | ||||
Increase (decrease) in capital expenditures included in accounts payable, net | $ | 585 | $ | (6,315 | ) | |||
Capitalized in-orbit incentive obligations | $ | — | $ | 31,000 | ||||
Non-cash net assets exchanged for Tracking Stock (Note 1) | $ | — | $ | 299,425 | ||||
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2018 |
Apr. 30, 2018 |
|
| Document and Entity Information | ||
| Entity Registrant Name | Hughes Satellite Systems Corp | |
| Entity Central Index Key | 0001533758 | |
| Document Type | 10-Q | |
| Document Period End Date | Mar. 31, 2018 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Current Reporting Status | No | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 1,078 | |
| Document Fiscal Year Focus | 2018 | |
| Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Preferred stock | ||
| Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
| Preferred stock, shares issued (in shares) | 0 | 0 |
| Preferred stock, shares outstanding (in shares) | 0 | 0 |
| Common stock | ||
| Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
| Common stock, shares issued (in shares) | 1,078 | 1,078 |
| Common stock, shares outstanding (in shares) | 1,078 | 1,078 |
Organization and Business Activities |
3 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
| Organization and Business Activities | Organization and Business Activities Principal Business Hughes Satellite Systems Corporation (which, together with its subsidiaries, is referred to as “HSS,” the “Company,” “we,” “us” and/or “our”) is a holding company and a subsidiary of EchoStar Corporation (“EchoStar”). We are a global provider of satellite service operations, video delivery services, broadband satellite technologies and broadband internet services for home and small office customers. We also deliver innovative network technologies, managed services, and various communications solutions for aeronautical, enterprise and government customers. We primarily operate in the following two business segments:
Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development, Human Resources, IT, Finance, Real Estate and Legal) and other activities that have not been assigned to our operating segments such as costs incurred in certain satellite development programs and other business development activities, and gains or losses from certain of our investments. These activities, costs and income, as well as eliminations of intersegment transactions, are accounted for in “Corporate and Other” in our segment reporting. We were formed as a Colorado corporation in March 2011 to facilitate the acquisition by EchoStar (the “Hughes Acquisition”) of Hughes Communications, Inc. and its subsidiaries and related financing transactions. In connection with our formation, EchoStar contributed the assets and liabilities of its satellite services business to us, including the principal operating subsidiary of its satellite services business, EchoStar Satellite Services L.L.C. A substantial majority of the voting power of the shares of each of EchoStar and DISH Network Corporation (“DISH”) is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family. On January 31, 2017, EchoStar and certain of its and our subsidiaries entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with DISH and certain of its subsidiaries. Pursuant to the Share Exchange Agreement, on February 28, 2017, among other things, EchoStar and certain of its and our subsidiaries received all of the shares of the Hughes Retail Preferred Tracking Stock issued by EchoStar (the “EchoStar Tracking Stock”) and the Hughes Retail Preferred Tracking Stock issued by us (the “HSS Tracking Stock”, together with the EchoStar Tracking Stock, the “Tracking Stock”) in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of EchoStar’s former EchoStar Technologies businesses and certain other assets (collectively, the “Share Exchange”). The EchoStar Technologies businesses designed, developed and distributed secure end-to-end video technology solutions including digital set-top boxes and related products and technology, primarily for satellite TV service providers and telecommunication companies, and provided digital broadcast operations, including satellite uplinking/downlinking, transmission services, signal processing, conditional access management, and other services. The Tracking Stock tracked the economic performance of the residential retail satellite broadband business of our Hughes segment, including certain operations, assets and liabilities attributed to such business (collectively, the “Hughes Retail Group”), and represented an aggregate 80.0% economic interest in the Hughes Retail Group. Following the consummation of the Share Exchange, EchoStar no longer operates the EchoStar Technologies businesses, the Tracking Stock was retired and is no longer outstanding, and all agreements, arrangements and policy statements with respect to the Tracking Stock terminated.
|
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information and notes required for complete financial statements prepared in conformity with GAAP. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2017. Principles of Consolidation We consolidate all entities in which we have a controlling financial interest. We are deemed to have a controlling financial interest in variable interest entities where we are the primary beneficiary. We are deemed to have a controlling financial interest in other entities when we own more than 50 percent of the outstanding voting shares and other shareholders do not have substantive rights to participate in management. For entities we control but do not wholly own, we record a noncontrolling interest within shareholders’ equity for the portion of the entity’s equity attributed to the noncontrolling ownership interests. All significant intercompany balances and transactions have been eliminated in consolidation. Reclassification Certain prior period amounts have been reclassified to conform with the current year presentation. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheets, the reported amounts of revenue and expense for each reporting period, and certain information disclosed in the notes to our financial statements. Estimates are used in accounting for, among other things, (i) amortization periods for deferred contract acquisition costs, (ii) inputs used to recognize revenue over time, (iii) allowances for doubtful accounts, (iv) warranty obligations, (v) self-insurance obligations, (vi) deferred taxes and related valuation allowances, (vii) uncertain tax positions, (viii) loss contingencies, (ix) fair value of financial instruments, (x) fair value of EchoStar’s stock-based compensation awards, (xi) fair value of assets and liabilities acquired in business combinations, (xii) lease classifications, (xiii) asset impairment testing, and (xiv) useful lives and methods for depreciation and amortization of long-lived assets. We base our estimates and assumptions on historical experience, observable market inputs and on various other factors that we believe to be relevant under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results may differ from previously estimated amounts, and such differences may be material to our financial statements. Changing economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. We review our estimates and assumptions periodically and the effects of revisions are reflected in the period they occur or prospectively if the revised estimate affects future periods. Fair Value Measurements We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We utilize the highest level of inputs available according to the following hierarchy in determining fair value:
Transfers between levels in the fair value hierarchy are considered to occur at the beginning of the quarterly accounting period. There were no transfers between levels for each of the three months ended March 31, 2018 and 2017. As of March 31, 2018 and December 31, 2017, the carrying amounts of our cash and cash equivalents, trade and other receivables, net of allowance for doubtful accounts, accounts payable and accrued liabilities were equal to or approximated their fair value due to their short-term nature or proximity to current market rates. Fair values of our marketable investment securities are based on a variety of observable market inputs. For our investments in publicly traded equity securities and U.S. government securities, fair value ordinarily is determined based on a Level 1 measurement that reflects quoted prices for identical securities in active markets. Fair values of our investments in other marketable debt securities generally are based on Level 2 measurements, as the markets for such debt securities are less active. Trades of identical debt securities on or near the measurement date are considered a strong indication of fair value. Matrix pricing techniques that consider par value, coupon rate, credit quality, maturity and other relevant features also may be used to determine fair value of our investments in marketable debt securities. Fair values for our outstanding debt (see Note 10) are based on quoted market prices in less active markets and are categorized as Level 2 measurements. We use fair value measurements from time to time in connection with asset impairment testing and the assignment of purchase consideration to assets and liabilities of acquired companies. Those fair value measurements typically include significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy. As of March 31, 2018 and December 31, 2017, the fair values of our in-orbit incentive obligations, based on measurements categorized within Level 2 of the fair value hierarchy, approximated their carrying amounts of $98.0 million and $99.3 million, respectively. Revenue Recognition Overview We account for our sales and services revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”), which we adopted on January 1, 2018, using the modified retrospective approach to contracts not completed as of the adoption date. Topic 606 provides a five-step revenue recognition model that we apply to our contracts with customers. Under this model we (i) identify the contract with the customer, (ii) identify our performance obligations in the contract, (iii) determine the transaction price for the contract, (iv) allocate the transaction price to our performance obligations and (v) recognize revenue when or as we satisfy our performance obligations. Revenue is recognized upon transfer of control of the promised goods or our performance of the services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We enter into contracts that may include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. Additionally, a significant portion of our revenue is derived from leases of property and equipment that is reported in “Services and other revenue - other” and “Services and other revenue - DISH Network” in our accompanying condensed consolidated statement of operations and comprehensive income (loss). Certain of our contracts with customers contain embedded equipment leases, which we separate from non-lease components of the contract based on the relative standalone selling prices of the lease and non-lease components. Hughes Our Hughes segment provides various communication and networking services to consumer and enterprise customers in domestic and international markets. Our services contracts typically obligate us to provide substantially the same services on a recurring basis in exchange for fixed recurring fees over the term of the contract. We satisfy such performance obligations over time and generally recognize revenue ratably as services are rendered over the service period. Certain of our contracts with service obligations provide for fees based on usage, capacity or volume. We satisfy these performance obligations and generally recognize the related revenue at the point in time or over the period when the services are rendered. Our Hughes segment also sells and leases communications equipment to its customers. Revenue from equipment sales generally is recognized upon shipment of the equipment. Our equipment sales contracts typically include standard product warranties, but generally do not provide for returns or refunds. Revenue for extended warranties is generally recognized ratably over the extended warranty period. For contracts with multiple performance obligations, we typically allocate the contract’s transaction price to each performance obligation based on their relative standalone selling prices. When the standalone selling price is not observable, our primary method used to estimate standalone selling price is the expected cost plus a margin. Our contracts generally require customer payments to be made at or shortly after the time we transfer control of goods or perform the services. In addition to equipment and service offerings, our Hughes segment also enters into long-term contracts to design, develop, construct and install complex telecommunication networks to customers in its enterprise and mobile satellite systems markets. Revenue from such contracts is generally recognized over time at a measure of progress that depicts the transfer of control of the goods or services to the customer. Depending on the nature of the arrangement, we measure progress toward contract completion using an appropriate input method or output method. Under our input method, we recognize the transaction price as revenue based on the ratio of costs incurred to estimated total costs at completion. Under our output method, revenue and cost of sales are recognized as products are delivered based on the expected profit for the entire agreement. Profit margins on long-term contracts generally are based on estimates of revenue and costs at completion. We review and revise our estimates periodically and recognize related adjustments in the period in which the revisions are made. Estimated losses on contracts are recorded in the period in which they are identified. We generally receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment. ESS Our ESS segment primarily provides satellite service operations through leasing arrangements and video delivery services on a full-time and occasional-use basis to DISH Network and Dish Mexico, as well as government service providers, internet service providers, broadcast news organizations, programmers, and private enterprise customers. We also provide telemetry, tracking and control (“TT&C”) services for satellites owned by DISH Network. Our ESS segment also provides technical consulting services that are billed by the hour. Generally, our service contracts with customers contain a single performance obligation and therefore there is no need to allocate the transaction price. We transfer control and recognize revenue for satellite services at the point in time or over the period when the services are rendered. Other Sales and value added taxes, Universal Service Fees and other taxes that we collect concurrent with revenue producing activities are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales at the time of shipment. Contract Balances Trade Accounts Receivable Trade accounts receivable includes amounts billed and currently due from customers and represents our unconditional rights to consideration arising from our performance under contracts with customers. Trade accounts receivable also includes amounts due from customers under our leasing arrangements. We make ongoing estimates relating to the collectibility of our accounts receivable and maintain an allowance for estimated losses resulting from the inability of our customers to make required payments. In determining the amount of the allowance, we consider historical levels of credit losses and make judgments about the creditworthiness of our customers based on ongoing credit evaluations. Past-due trade accounts receivable balances are written off when our internal collection efforts have been unsuccessful. Contract Assets and Contract Liabilities Contract assets represent revenue that we have recognized in advance of billing the customer and are included in “Trade accounts receivable and contract assets, net” or “Other noncurrent assets, net” in our balance sheets based on the expected timing of customer payment. Our contract assets include amounts that we referred to as “contracts in process” in prior periods. Our contract assets typically relate to our long-term contracts where we recognize revenue using the cost-based input method and the revenue recognized exceeds the amount billed to the customer. Contract liabilities consist of advance payments and billings in excess of revenue recognized under contracts with customers and is included in “Contract liabilities” or “Other noncurrent liabilities” in our balance sheets based on the timing of when we expect to recognize revenue. We recognize deferred revenue as revenue after we have transferred control of the goods or services to the customer and all revenue recognition criteria have been met. Contract Acquisition and Fulfillment Costs Contract Acquisition Costs Our contract acquisition costs represent incremental direct costs of obtaining a contract and consist primarily of sales incentives paid to employees and third-party representatives. When we determine that our contract acquisition costs are recoverable, we defer and amortize the costs over the contract term, or over the estimated life of the customer relationship if anticipated renewals are expected and the incentives payable upon renewal are not commensurate with the initial incentive. We amortize contract acquisition costs in proportion to the revenue to which the costs relate. We expense sales incentives as incurred if the expected amortization period is one year or less. Unamortized contract acquisition costs are included in “Other noncurrent assets, net” in our accompanying condensed consolidated balance sheets and related amortization expense is included in “Selling, general and administrative expenses” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Unamortized contract acquisition costs totaled $103.6 million as of March 31, 2018 and related amortization expense totaled $20.0 million for the three months ended March 31, 2018. Contract Fulfillment Costs We recognize costs to fulfill a contract as an asset when the costs relate directly to a contract, the costs generate or enhance our resources that will be used in satisfying future performance obligations, and the costs are expected to be recovered. We may incur such costs on certain contracts that require initial setup activities in advance of the transfer of goods or services to the customer. We amortize these costs in proportion to the revenue to which the costs relate. Unamortized contract fulfillment costs are included in “Other noncurrent assets, net” in our accompanying condensed consolidated balance sheets and related amortization expense is included in “Cost of sales - services and other” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Unamortized contract fulfillment costs totaled $1.8 million as of March 31, 2018 and related amortization expense was de minimis for the three months ended March 31, 2018. Research and Development Costs incurred in research and development activities generally are expensed as incurred. A significant portion of our research and development costs are incurred in connection with the specific requirements of a customer’s order. In such instances, the amounts for these customer funded development efforts are included in cost of sales. Cost of sales includes research and development costs incurred in connection with customers’ orders of approximately $6.6 million and $6.9 million for the three months ended March 31, 2018 and 2017, respectively. In addition, we incurred other research and development expenses of approximately $7.1 million and $7.7 million for the three months ended March 31, 2018 and 2017, respectively. Capitalized Software Costs Costs related to the procurement and development of software for internal-use and externally marketed software are capitalized and amortized using the straight-line method over the estimated useful life of the software, not in excess of five years. Capitalized costs of internal-use software are included in “Property and equipment, net” and capitalized costs of externally marketed software are included in “Other noncurrent assets, net” in our accompanying condensed consolidated balance sheets. Externally marketed software generally is installed in the equipment we sell to customers. We conduct software program reviews for externally marketed capitalized software costs at least annually, or as events and circumstances warrant such a review, to determine if capitalized software development costs are recoverable and to ensure that costs associated with programs that are no longer generating revenue are expensed. As of March 31, 2018 and December 31, 2017, the net carrying amount of externally marketed software was $89.7 million and $88.1 million, respectively, of which $22.3 million and $19.6 million, respectively, is under development and not yet placed in service. We capitalized costs related to the development of externally marketed software of $7.1 million and $10.8 million for the three months ended March 31, 2018 and 2017, respectively. We recorded amortization expense relating to the development of externally marketed software of $5.5 million and $3.4 million for the three months ended March 31, 2018 and 2017, respectively. The weighted average useful life of our externally marketed software was approximately four years as of March 31, 2018. Marketable Investment Securities Our marketable investment securities portfolio consists of investments in debt and equity instruments with readily determinable fair values. Debt Securities We classify debt securities as available-for-sale based on our investment strategy for the securities, except for securities that we have elected to account for using the fair value option. We recognize periodic changes in the difference between fair value and amortized cost in “Unrealized losses on available-for-sale securities and other” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Realized gains and losses upon sale of debt securities are reclassified from other comprehensive income (loss) and recognized on the trade date in “Gains (losses) on investments, net” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We use the first-in, first-out (“FIFO”) method to determine the cost basis on sales of debt securities. Interest income from debt securities is reported in “Interest income” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We evaluate our available-for-sale debt securities portfolio periodically to determine whether declines in the fair value of these securities are other than temporary. Our evaluation considers, among other things, the length of time and the extent to which the fair value of such security has been lower than amortized cost, market and company-specific factors related to the security, and our intent and ability to hold the investment to maturity or recovery. We generally consider a decline to be other than temporary when: (i) we intend to sell the security, (ii) it is more likely than not that we will be required to sell the security before maturity or recovery, or (iii) we do not expect to recover the amortized cost of the security at maturity. Declines in the fair value of available-for-sale debt securities that are determined to be other than temporary are reclassified from other comprehensive income (loss) and recognized in net income, thus establishing a new cost basis for the investment. Equity Securities Prior to January 1, 2018, we classified our marketable equity securities as available-for-sale or trading securities, depending on our investment strategy for the securities. For available-for-sale securities, we recognized periodic changes in the difference between fair value and cost in “Unrealized losses on available-for-sale securities and other” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Realized gains and losses upon sale of available-for-sale securities were reclassified from other comprehensive income (loss) and recognized on the trade date in “Gains (losses) on investments, net” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We used the FIFO method to determine the cost basis on sales of available-for-sale securities. For trading securities, we recognized periodic changes in the fair value of the securities in “Gains (losses) on investments, net” in our accompanying condensed consolidated statement of operations and comprehensive income (loss). Effective January 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2016-01, Financial Instruments (the “New Investment Standard”), which established new requirements for investments in equity securities in ASC Topic 321, Investments - Equity Securities. Accordingly, beginning in 2018, we recognize periodic changes in the fair value of all of our equity securities with a readily determinable fair value that are not accounted for using the equity method in “Gains (losses) on investments, net” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We recognize dividend income on equity securities on the ex-dividend date and report such income in “Other, net” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Investments in Unconsolidated Entities Our investments in unconsolidated entities consist of investments in equity securities that are not publicly traded and do not have readily determinable fair values. We use the equity method to account for such investments when we have the ability to significantly influence the operating decisions of the investee. Prior to January 1, 2018, we accounted for other investments without a readily determinable fair value using the cost method. In connection with our adoption of the New Investment Standard as of January 1, 2018, we have elected to measure such investments at cost, adjusted for changes resulting from impairments and observable price changes in orderly transactions for identical or similar securities of the same issuer. We consider information in periodic financial statements and other documentation provided by our investees and we may make inquiries of investee management to determine whether observable price changes have occurred. Our investments in unconsolidated entities that are accounted for using the equity method are initially recorded at cost and subsequently adjusted for our proportionate share of the net earnings or loss of the investee, which is reported in “Equity in earnings of unconsolidated affiliate” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). The carrying amount of such investments may include a component of goodwill if the cost of our investment exceeds the fair value of the underlying identifiable assets and liabilities of the investee. Dividends received from equity method investees reduce the carrying amount of the investment. We defer, to the extent of our ownership interest in the investee, recognition of intra-entity profits on sales of equipment to the investee until the investee has charged the cost of the equipment to expense in a subsequent sale to a third party or through depreciation. In these circumstances, we report the gross amounts of revenue and cost of sales in the statement of operations and include the intra-entity profit eliminations within “Equity in earnings of unconsolidated affiliate.” We evaluate all of our investments in unconsolidated entities periodically to determine whether events or changes in circumstances have occurred that may have a significant adverse effect on the fair value of the investment. As part of our evaluation, we review available information such as business plans and current financial statements of these companies for factors that may indicate an impairment of our investments. Such factors may include, but are not limited to, unprofitable operations, negative cash flow, material litigation, violations of debt covenants, bankruptcy and changes in business strategy. When we determine that an investment is impaired, we adjust the carrying amount of the investment to its estimated fair value and recognize the impairment loss in earnings. Other Significant Accounting Policies See Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements included in our Form 10-K for the year ended December 31, 2017 for a summary of our other significant accounting policies. Recently Adopted Accounting Pronouncements Revenue Recognition and Financial Instruments On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers and related amendments (collectively, the “New Revenue Standard”). The New Revenue Standard established a comprehensive new model for revenue recognition, which is codified in Topic 606 (see Revenue Recognition above), and provided guidance for certain costs associated with contracts with customers. We adopted the New Revenue Standard using the modified retrospective method for contracts that were not completed as of January 1, 2018. Accordingly, comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. Upon adoption of the New Revenue Standard, we recognized the cumulative effect of its initial application as a net increase to accumulated earnings of $18.2 million, net of related income taxes. The adoption of the New Revenue Standard also impacted the timing of recognition of certain fees charged to our customers in our consumer markets; however, the adoption has not had, and we do not expect it to have, a material impact on the overall timing or amount of revenue recognition. The primary impacts of the New Revenue Standard on our operating results relate to how we account for sales incentive costs (See Contract Acquisition and Fulfillment Costs above). Historically, we charged sales incentives to expense as incurred, except for incentives related to the consumer business in our Hughes segment, which were initially deferred and subsequently amortized over the related service agreement term. Under the New Revenue Standard, we continue to defer incentives for our consumer business; however, we now amortize those incentives over the estimated customer life, which includes expected contract renewal periods. In addition, we now defer certain sales incentives related to other businesses in our Hughes segment and amortize those incentives over the related service agreement term. As a result of these changes, we have recognized additional deferred costs on our accompanying condensed consolidated balance sheet and the costs generally are recognized as expenses over a longer period of time in our accompanying condensed consolidated statements of operations and comprehensive income (loss). The adoption of the New Revenue Standard by one of our unconsolidated entities had a similar impact on our investment in the unconsolidated entity, which we account for using the equity method. Additionally, on January 1, 2018, we prospectively adopted the applicable requirements of the New Investment Standard. The New Investment Standard substantially revises standards for the recognition, measurement and presentation of financial instruments, including requiring all equity investments, except for investments in consolidated subsidiaries and investments accounted for using the equity method, to be measured at fair value with changes in the fair value recognized through earnings. The New Investment Standard permits an entity to elect to measure an equity security without a readily determinable fair value at its cost, adjusted for changes resulting from impairments and observable price changes in orderly transactions for identical or similar securities of the same issuer. It also amends certain disclosure requirements associated with equity investments and the fair value of financial instruments. Upon adoption of the New Investment Standard on January 1, 2018, we recorded a $0.4 million charge to accumulated earnings to include net unrealized losses on our marketable equity securities then designated as available for sale, which previously were recorded in “Accumulated other comprehensive loss” in our accompanying condensed consolidated balance sheet. For our equity investments without a readily determinable fair value that were previously accounted for using the cost method, we have elected to measure such securities at cost, adjusted for impairments and observable price changes. We expect our future net income or loss to be more volatile as a result of these changes in accounting for our investments in equity securities that were previously accounted for as available for sale or using the cost method. The cumulative effects of changes to our accompanying condensed consolidated balance sheet as of January 1, 2018 for the adoption of the New Revenue Standard and the New Investment Standard were as follows:
Our adoption of the New Revenue Standard and the New Investment Standard impacted our accompanying condensed consolidated balance sheet and statements of operations and comprehensive income (loss) as follows:
Restricted Cash and Cash Equivalents ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents in the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018. As a result, the beginning and ending balances of cash and cash equivalents presented in our accompanying condensed consolidated statements of cash flows include amounts for restricted cash and cash equivalents, which historically were not included in such balances, and receipts and payments of restricted cash and cash equivalents, exclusive of transfers to and from unrestricted accounts, are reported in our accompanying condensed consolidated statements of cash flows. The adoption of this accounting standard did not have a material impact on our statements of cash flows and related disclosures. The beginning and ending balances of cash and cash equivalents presented in our accompanying condensed consolidated statements of cash flows included restricted cash and cash equivalents of $0.8 million and $0.8 million, respectively, for the three months ended March 31, 2018 and $0.7 million and $0.8 million, respectively, for the three months ended March 31, 2017. These amounts are included in “Other noncurrent assets, net” in our accompanying condensed consolidated balance sheets. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (“ASU 2016-02”). This standard requires lessees to recognize assets and liabilities for all leases with lease terms more than 12 months, including leases classified as operating leases. The standard also modifies the definition of a lease and the criteria for classifying leases as operating leases or financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We plan to adopt the new standard as of January 1, 2019. ASU 2016-02 requires the new standard to be applied on a modified retrospective basis to the earliest period presented in our consolidated financial statements. However, the FASB has recently proposed amendments that would permit adoption of the standard as of the effective date without restating prior periods. ASU 2016-02 provides certain practical expedients that we may elect to apply on the adoption date. We continue to evaluate the impact of the new standard and available adoption methods on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments rather than incurred losses. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. We are assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures. |
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Revenue Recognition Revenue from Contract with Customer (Notes) |
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| Revenue from Contract with Customer [Text Block] | Note 3. Revenue Recognition Information About Contract Balances The following table provides information about our trade accounts receivable, contract assets and contract liabilities from contracts with customers, including amounts for certain embedded leases.
For the three months ended March 31, 2018, revenue recognized that was included in the contract liability balance at the beginning of the period was $49.0 million. Bad debt expense related to our trade accounts receivable and contract assets is included in “Selling, general and administrative expenses” in our accompanying condensed consolidated statements of operations. For the three months ended March 31, 2018 and 2017, our bad debt expense was $4.7 million and $2.4 million, respectively. Transaction Price Allocated to Remaining Performance Obligations |
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Other Comprehensive Income (Loss) and Related Tax Effects |
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Mar. 31, 2018 | |
| Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
| Other Comprehensive Income (Loss) and Related Tax Effects | Other Comprehensive Income (Loss) and Related Tax Effects Except in unusual circumstances, we do not recognize tax effects on foreign currency translation adjustments because they are not expected to result in future taxable income or deductions. We have not recognized any tax effects on unrealized gains or losses on available-for-sale securities because such gains or losses would affect the amount of unrealized capital losses for which the related deferred tax asset has been fully offset by a valuation allowance. |
Investment Securities |
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| Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Securities | Overview Our marketable investment securities portfolio consists of various debt and equity instruments as follows:
Debt Securities Our corporate bond portfolio includes debt instruments issued by individual corporations, primarily in the industrial and financial services industries. Our other debt securities portfolio includes investments in various debt instruments, including U.S. government bonds and commercial paper. Generally, we classify our debt securities as available-for-sale based on our investment strategy for the securities. Our available-for-sale debt securities reflect amortized cost and unrealized gains and losses as summarized in the table below.
As of March 31, 2018, our available-for-sale debt securities included $523.8 million with contractual maturities of one year or less and $99.0 million with contractual maturities greater than one year. We may realize proceeds from certain investments prior to their contractual maturity as a result of our ability to sell these securities. Equity Securities Our marketable equity securities consist primarily of shares of common stock of public companies, which have experienced and may continue to experience volatility. Prior to January 1, 2018, we classified our marketable equity securities as available-for-sale or trading securities, depending on our investment strategy for the securities. As of December 31, 2017, our marketable equity securities consisted of available-for-sale securities with a fair value of $1.1 million, reflecting an adjusted cost basis of $1.5 million and unrealized losses of $0.4 million. Substantially all unrealized losses on our available-for-sale securities related to securities that were in a continuous loss position for less than 12 months. We recognized a $3.3 million other-than-temporary impairment for the three months ended March 31, 2017 on one of our available-for-sale securities which had experienced a decline in market value as a result of adverse developments during the three months ended March 31, 2017. Upon adoption of the New Investment Standard as of January 1, 2018 (see Note 2), we account for investments in equity securities at their fair value and we recognize unrealized gains and losses in “Gains (losses) on investments, net” in our accompanying condensed consolidated statement of operations and comprehensive income (loss). For the three months ended March 31, 2018, “Gains (losses) on investments, net” included net losses of $0.4 million related to equity securities that we held as of March 31, 2018. Fair Value Measurements Our marketable investment securities are measured at fair value on a recurring basis as summarized in the table below. As of March 31, 2018 and December 31, 2017, we did not have investments that were categorized within Level 3 of the fair value hierarchy.
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Inventory |
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| Inventory, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory | Inventory Our inventory consisted of the following:
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Property and Equipment |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | Property and Equipment Property and equipment consisted of the following:
Construction in progress consisted of the following:
Construction in progress as of March 31, 2018 included payments related to our payload on Telesat T19V satellite, which we expect will launch in the second quarter of 2018. We entered into an agreement for certain capacity on this satellite once launched, but are not party to the construction contract. Depreciation expense associated with our property and equipment consisted of the following:
Satellites As of March 31, 2018, our satellite fleet consisted of 15 of our owned and leased satellites in geosynchronous orbit, approximately 22,300 miles above the equator. We depreciate our owned satellites on a straight-line basis over the estimated useful life of each satellite. As of March 31, 2018, four of our satellites are accounted for as capital leases and are depreciated on a straight-line basis over their respective lease terms. Recent Developments EchoStar I. The EchoStar I satellite was removed from its orbital location and retired from commercial service in January 2018. This retirement is not expected to have a material impact on our results of operations or financial position. EchoStar VI. We expect to remove the EchoStar VI satellite from its orbital location and retire it from commercial service in the second quarter of 2018. This retirement is not expected to have a material impact on our results of operations or financial position. EchoStar 105/SES-11. The EchoStar 105/SES-11 satellite was launched in October 2017 and was placed into service in November 2017 at the 105 degree west longitude orbital location. Pursuant to agreements that we entered into in August 2014, we funded substantially all construction, launch and other costs associated with the EchoStar 105/SES-11 satellite and transferred the C-, Ku- and Ka-band payloads to two affiliates of SES Americom, Inc. (“SES”) after the launch date, while retaining the right to use the entire Ku-band payload on the satellite for an initial ten-year term, with an option for us to renew the agreement on a year-to-year basis. In October 2017, we recorded a $77.5 million receivable from SES in “Other current assets,” representing capitalized costs allocable to certain satellite payloads controlled by SES, and we reduced our carrying amount of the satellite by such amount. In January 2018, we received payment from SES for the receivable plus accrued interest. Our leased Ku-band payload on the EchoStar 105/SES-11 satellite has replaced the capacity we had on the AMC-15 satellite. Satellite Anomalies and Impairments Our satellites may experience anomalies from time to time, some of which may have a significant adverse effect on their remaining useful lives, the commercial operation of the satellites or our operating results or financial position. We are not aware of any anomalies with respect to our owned or leased satellites that have had any such significant adverse effect during the three months ended March 31, 2018. There can be no assurance, however, that anomalies will not have any such adverse effects in the future. In addition, there can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail. The EchoStar X satellite experienced anomalies in the past which affected seven solar array circuits. In December 2017, the satellite experienced anomalies which affected one additional solar array circuit reducing the number of functional solar array circuits to 16. As a result of these anomalies, we had a reduction in revenue of $1.2 million for the three months ended March 31, 2018 as compared to the same period in 2017. We historically have not carried in-orbit insurance on our satellites because we have assessed that the cost of insurance is not economical relative to the risk of failures. Therefore, we generally bear the risk of any in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our indebtedness, we are required, subject to certain limitations on coverage, to maintain in-orbit insurance for our SPACEWAY 3, EchoStar XVI, and EchoStar XVII satellites. Our other satellites, either in orbit or under construction, are not covered by launch or in-orbit insurance. We will continue to assess circumstances going forward and make insurance decisions on a case-by-case basis. |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill The excess of the cost of an acquired business over the fair values of net tangible and identifiable intangible assets at the time of the acquisition is recorded as goodwill. Goodwill is assigned to the reporting units within our operating segments and is subject to impairment testing annually, or more frequently when events or changes in circumstances indicate the fair value of a reporting unit is more likely than not less than its carrying amount. As of March 31, 2018 and December 31, 2017, all of our goodwill was assigned to reporting units of our Hughes segment. We test this goodwill for impairment annually in the second quarter. Other Intangible Assets Our other intangible assets, which are subject to amortization, consisted of the following:
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Investment in Unconsolidated Entities Investment in Unconsolidated Entities |
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| Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment in Unconsolidated Entities | Note 9. Investments in Unconsolidated Entities We have strategic investments in certain non-publicly traded equity securities that do not have a readily determinable fair value. We account for certain of these investments using the equity method. We accounted for other investments in such equity securities using the cost method of accounting prior to January 1, 2018. In connection with our adoption of the New Investment Standard effective January 1, 2018 (see Note 2), we elected to measure our equity securities without a readily determinable fair value, other than those accounted for using the equity method, at cost adjusted for changes resulting from impairments, if any, and observable price changes in orderly transactions for the identical or similar securities of the same issuer. For the three months ended March 31, 2018, we did not identify any observable price changes requiring an adjustment to our investments. Our investments in unconsolidated entities consisted of the following:
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Debt and Capital Lease Obligations |
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| Debt and Capital Lease Obligations | Debt and Capital Lease Obligations The following table summarizes the carrying amounts and fair values of our debt:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2018 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Our interim income tax provision and our interim estimate of our annual effective tax rate are subject to significant volatility due to several factors, including foreign losses and capital gains and losses for which related deferred tax assets are offset by a valuation allowance, changes in tax laws and relative changes in unrecognized tax benefits. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income or loss is lower. Income tax expense was approximately $7.7 million for the three months ended March 31, 2018 compared to an income tax benefit of approximately $3.6 million for the three months ended March 31, 2017. Our estimated effective income tax rate was 27.5% and (61.3)% for the three months ended March 31, 2018 and 2017, respectively. The variations in our effective tax rate from the U.S. federal statutory rate for the three months ended March 31, 2018 were primarily due to various permanent tax differences, the impact of state and local taxes, and the increase in our valuation allowance associated with certain foreign losses. For the three months ended March 31, 2017, the variations in our effective tax rate from the U.S. federal statutory rate were primarily due to the recognition of a one-time tax benefit for the revaluation of our deferred tax assets and liabilities due to a change in our state effective tax rate as a result of the Share Exchange. |
Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2018 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Commitments As of March 31, 2018, our satellite-related obligations were approximately $507.2 million. Our satellite-related obligations primarily include payments pursuant to regulatory authorizations; executory costs for our capital lease satellites; costs under agreements to lease satellite capacity; and in-orbit incentives relating to certain satellites; as well as commitments for long-term satellite operating leases and satellite service arrangements. Contingencies Patents and Intellectual Property Many entities, including some of our competitors, have or may have in the future patents and other intellectual property rights that cover or affect products or services directly or indirectly related to those that we offer. We may not be aware of all patents and other intellectual property rights that our products and services may potentially infringe. Damages in patent infringement cases can be substantial, and in certain circumstances can be trebled. Further, we cannot estimate the extent to which we may be required in the future to obtain licenses with respect to intellectual property rights held by others and the availability and cost of any such licenses. Various parties have asserted patent and other intellectual property rights with respect to our products and services. We cannot be certain that these persons do not own the rights they claim, that these rights are not valid or that our products and services do not infringe on these rights. Further, we cannot be certain that we would be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be able to redesign our products and services to avoid infringement. Separation Agreement and Share Exchange In connection with DISH Network’s distribution to EchoStar in 2008 of its digital set-top box business, certain infrastructure, and other assets and related liabilities, including certain satellites, uplink and satellite transmission assets and real estate (the “Spin-off”), EchoStar entered into a separation agreement with DISH Network that provides, among other things, for the division of certain liabilities, including liabilities resulting from litigation. Under the terms of the separation agreement, EchoStar assumed certain liabilities that relate to its and our business, including certain designated liabilities for acts or omissions that occurred prior to the Spin-off. Certain specific provisions govern intellectual property related claims under which, generally, EchoStar and its subsidiaries will only be liable for their acts or omissions following the Spin-off and DISH Network will indemnify EchoStar and its subsidiaries for any liabilities or damages resulting from intellectual property claims relating to the period prior to the Spin-off, as well as DISH Network’s acts or omissions following the Spin-off. Additionally, in connection with the Share Exchange, EchoStar and certain of its subsidiaries entered into the Share Exchange Agreement and other agreements which provide, among other things, for the division of certain liabilities, including liabilities relating to taxes, intellectual property and employees and liabilities resulting from litigation and the assumption of certain liabilities that relate to the transferred businesses and assets. These agreements also contain additional indemnification provisions between EchoStar and us and DISH Network for certain pre-existing liabilities and legal proceedings. Litigation We are involved in a number of legal proceedings concerning matters arising in connection with the conduct of our business activities. Many of these proceedings are at preliminary stages and/or seek an indeterminate amount of damages. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate. We record an accrual for litigation and other loss contingencies when we determine that a loss is probable and the amount of the loss can be reasonably estimated. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made. There can be no assurance that legal proceedings against us will be resolved in amounts that will not differ from the amounts of our recorded accruals. Legal fees and other costs of defending litigation are charged to expense as incurred. For certain cases, management is unable to predict with any degree of certainty the outcome or provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought or specified; (iii) damages are unsupported, indeterminate and/or exaggerated in management’s opinion; (iv) there is uncertainty as to the outcome of pending trials, appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties are involved (as with many patent-related cases). Except as described below, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material effect on our financial condition, operating results or cash flows, though there is no assurance that the resolution and outcomes of these proceedings, individually or in the aggregate, will not be material to our financial condition, operating results or cash flows for any particular period, depending, in part, upon the operating results for such period. We intend to vigorously defend the proceedings against us. In the event that a court or jury ultimately rules against us, we may be subject to adverse consequences, including, without limitation, substantial damages, which may include treble damages, fines, penalties, compensatory damages and/or other equitable or injunctive relief that could require us to materially modify our business operations or certain products or services that we offer to our consumers. Elbit On January 23, 2015, Elbit Systems Land and C4I LTD and Elbit Systems of America Ltd. (together referred to as “Elbit”) filed a complaint against our subsidiary Hughes Network Systems, L.L.C. (“HNS”), as well as against Black Elk Energy Offshore Operations, LLC, Bluetide Communications, Inc. and Helm Hotels Group, in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. Patent Nos. 6,240,073 (the “073 patent”) and 7,245,874 (“874 patent”). The 073 patent is entitled “Reverse Link for a Satellite Communication Network” and the 874 patent is entitled “Infrastructure for Telephony Network.” Elbit alleges that the 073 patent is infringed by broadband satellite systems that practice the Internet Protocol Over Satellite standard. Elbit alleges that the 874 patent is infringed by the manufacture and sale of broadband satellite systems that provide cellular backhaul service via connections to E1 or T1 interfaces at cellular backhaul base stations. On April 2, 2015, Elbit filed an amended complaint removing Helm Hotels Group as a defendant, but making similar allegations against a new defendant, Country Home Investments, Inc. On November 3 and 4, 2015, and January 22, 2016, the defendants filed petitions before the United States Patent and Trademark Office (“USPTO”) challenging the validity of the patents in suit, which the USPTO subsequently declined to institute. On April 13, 2016, the defendants answered Elbit’s complaint. At Elbit’s request, on June 26, 2017, the court dismissed Elbit’s claims of infringement against all parties other than HNS. Trial commenced on July 31, 2017. On August 7, 2017, the jury returned a verdict that the 073 patent was valid and infringed, and awarded Elbit approximately $21.1 million. The jury also found that such infringement of the 073 patent was not willful and that the 874 patent was not infringed. On March 30, 2018, the court ruled on post-trial motions, upholding the jury’s findings and awarding Elbit attorneys’ fees in an amount that has not yet been specified. As a result of pre-judgment interest, costs and unit sales through the 073 patent’s expiration in November 2017, the jury verdict would result in a payment of approximately $28.5 million plus post-judgment interest if not overturned or modified on appeal. Elbit has requested an award of $13.9 million of attorneys’ fees. HNS is contesting Elbit’s claims as inappropriate and unreasonable in light of the court’s decision and prevailing law. On April 27, 2018, HNS filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit. We cannot predict with certainty the outcome of the appeal. As of March 31, 2018, we have recorded an accrual of approximately $2.8 million with respect to this liability. Any eventual payments made with respect to the ultimate outcome of this matter may be different from our accruals and such differences could be significant. Realtime Data LLC On May 8, 2015, Realtime Data LLC (“Realtime”) filed suit against EchoStar Corporation and our subsidiary HNS in the U.S. District Court for the Eastern District of Texas alleging infringement of U.S. Patent Nos. 7,378,992 (the “992 patent”), entitled “Content Independent Data Compression Method and System;” 7,415,530 (the “530 patent”), entitled “System and Methods for Accelerated Data Storage and Retrieval,” and 8,643,513 (the “513 patent”), entitled “Data Compression System and Methods.” On September 14, 2015, Realtime amended its complaint, additionally alleging infringement of U.S. Patent No. 9,116,908 (the “908 patent”), entitled “System and Methods for Accelerated Data Storage and Retrieval.” Realtime generally alleges that the asserted patents are infringed by certain HNS data compression products and services. Realtime is no longer asserting the 992 patent against us. Over April 29, 2016 and May 5, 2016, the defendants filed petitions before the USPTO challenging the validity of the asserted patents. The USPTO instituted proceedings on each of those petitions. The USPTO invalidated the asserted claims of the 513 patent, but Realtime is still asserting this patent against us and may appeal this ruling. The USPTO is still reviewing the 530 patent; however, two of the four claims from that patent asserted against us were invalidated in a separate litigation between Realtime and a third party, which Realtime may appeal. The USPTO did not invalidate the asserted claims of the 908 patent. On February 14, 2017, Realtime filed a second suit against EchoStar Corporation and our subsidiary HNS in the same District Court, alleging infringement of four additional U.S. Patents, Nos. 7,358,867 (the “867 patent”), entitled “Content Independent Data Compression Method and System;” 8,502,707 (the “707 patent”), entitled “Data Compression Systems and Methods;” 8,717,204 (the “204 patent”), entitled “Methods for Encoding and Decoding Data;” and 9,054,728 (the “728 patent”), entitled “Data Compression System and Methods.” In response to petitions filed by third parties, the USPTO has instituted proceedings regarding the validity of all but one asserted claim of the 867 patent, all but one asserted claim of the 728 patent, and all asserted claims of the 204 patent. Additional third party petitions challenging the validity of all claims asserted in the 204 and 728 patents are awaiting institution decisions. On February 13, 2018 we filed petitions before the USPTO challenging the validity of all claims asserted against us from the 707 and 204 patents, as well as the one asserted claim of the 728 patent for which the USPTO has not yet instituted a proceeding. These petitions are also awaiting institution decisions at the USPTO. Trial is scheduled for January 21, 2019. Realtime is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Other In addition to the above actions, we are subject to various other legal proceedings and claims, which arise in the ordinary course of business. As part of our ongoing operations, the Company is subject to various inspections, audits, inquiries, investigations and similar actions by third parties, as well as by governmental/regulatory authorities responsible for enforcing the laws and regulations to which the Company may be subject. Further, under the federal False Claims Act, private parties have the right to bring qui tam, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the federal government. Some states have adopted similar state whistleblower and false claims provisions. In addition, the Company from time to time receives inquiries from federal, state and foreign agencies regarding compliance with various laws and regulations. In our opinion, the amount of ultimate liability with respect to any of these other actions is unlikely to materially affect our financial position, results of operations or cash flows, though the resolutions and outcomes, individually or in the aggregate, could be material to our financial position, operating results or cash flows for any particular period, depending, in part, upon the operating results for such period. |
Segment Reporting |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting | Segment Reporting Operating segments are business components of an enterprise for which separate financial information is available and regularly evaluated by our chief operating decision maker (“CODM”), who is our Chief Executive Officer. We primarily operate in two business segments, Hughes and ESS, as described in Note 1. The primary measure of segment profitability that is reported regularly to our CODM is earnings before interest, taxes, depreciation and amortization, or EBITDA. Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development, Human Resources, IT, Finance, Real Estate and Legal) and other activities that have not been assigned to our operating segments such as costs incurred in certain satellite development programs and other business development activities, and gains or losses from certain of our investments. Costs and income associated with these departments and activities are accounted for in the “Corporate and Other” column in the tables below or in the reconciliation of EBITDA below. Transactions between segments were not significant for the three months ended March 31, 2018 or 2017. Eliminations of intersegment transactions are included in the “Corporate and Other” column in the tables below. Total assets by segment have not been reported herein because the information is not provided to our CODM on a regular basis. The following table presents revenue, EBITDA, and capital expenditures for each of our operating segments:
The following table reconciles total consolidated EBITDA to reported “Income before income taxes” in our accompanying condensed consolidated statements of operations and comprehensive income (loss):
Disaggregation of Revenue In the following tables, revenue is disaggregated by segment, primary geographic market and nature of products and services. Geographic Information The following table disaggregates revenue from contracts with customers attributed to North America and other foreign locations as well as by segment, based on the location where the goods or services are provided.
Nature of Products and Services The following table disaggregates revenue based on the nature of products and services and by segment.
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Related Party Transactions |
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Mar. 31, 2018 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions EchoStar We and EchoStar have agreed that we shall have the right, but not the obligation, to receive from EchoStar certain corporate services, including among other things: treasury, tax, accounting and reporting, risk management, legal, internal audit, human resources, and information technology. These services are intended to be provided at cost. Effective March 2017, and as a result of the Share Exchange Agreement, we implemented a new methodology for determining the cost of these services. We may terminate a particular service we receive from EchoStar for any reason upon at least 30 days’ notice. We recorded expenses for services received from EchoStar of $4.4 million and $5.0 million for the three months ended March 31, 2018 and 2017, respectively. In addition, we occupy certain office space in buildings owned or leased by EchoStar and pay a portion of the taxes, insurance, utilities and maintenance of the premises in accordance with the percentage of the space we occupy. We participate in certain of EchoStar’s shared services arrangements for its subsidiaries in the ordinary course of business, including arrangements for payroll, accounts payable and cash management. From time to time in connection with the processing of transactions under these arrangements, we may pay or receive amounts attributable to other domestic subsidiaries of EchoStar. We report net payments on behalf of other subsidiaries in “Advances to affiliates, net” within current assets and we report net receipts on behalf of other subsidiaries in “Advances from affiliates, net” within current liabilities in our accompanying condensed consolidated balance sheets. No repayment schedule for these net advances has been determined. EchoStar and certain of its subsidiaries have provided cash advances to certain of our foreign subsidiaries to fund certain expenditures pursuant to loan agreements that mature in 2021 and 2022. Advances under these agreements bear interest at annual rates ranging from one to three percent, subject to periodic adjustment based on the one-year U.S. LIBOR rate. We report amounts payable under these agreements in “Advances from affiliates” within noncurrent liabilities in our accompanying condensed consolidated balance sheets. Contribution of EchoStar XIX Satellite. On February 1, 2017, EchoStar contributed the EchoStar XIX satellite and assigned the related construction contract with the satellite manufacturer to us. We recorded a $349.3 million increase in “Additional paid-in capital,” reflecting EchoStar’s $514.4 million carrying amount of the satellite, including capitalized interest that was previously charged to expense in our consolidated financial statements, less related deferred taxes of $165.1 million. EchoStar XXI and EchoStar XXIII Launch Facilitation and Operational Control Agreements. As part of applying for launch licenses for the EchoStar XXI and XXIII satellites through the UK Space Agency, our subsidiary, Hughes Network Systems, Ltd. (“HNS Ltd.”) and a subsidiary of EchoStar, EchoStar Operating L.L.C. (“EOC”), entered into agreements in June 2015 and March 2016 to transfer to HNS Ltd. EOC’s launch service contracts for the EchoStar XXI and EchoStar XXIII satellites, respectively, and to grant HNS Ltd. certain rights to control the in-orbit operations of these satellites. EOC retained ownership of the satellites and agreed to make additional payments to HNS Ltd. for amounts that HNS Ltd. is required to pay under both launch service contracts. In 2015 and 2016, we recorded additions to “Other noncurrent assets, net” and corresponding increases in “Additional paid-in capital” in our accompanying condensed consolidated balance sheet to reflect EOC’s cumulative payments under the launch service contracts prior to the transfer dates and to reflect EOC’s funding of additional cash payments to the launch service provider. The EchoStar XXIII and the EchoStar XXI satellites were successfully launched in March 2017 and June 2017, respectively. We recorded decreases in “Other noncurrent assets, net” and “Additional paid-in capital” of $61.8 million and $83.3 million, respectively, representing the carrying amounts of the launch service contracts at the time of launch to reflect the consumption of the contracts’ economic benefits by EOC, the owner of the satellites. Share Exchange Agreement. Prior to consummation of the Share Exchange, EchoStar was required to complete steps necessary for the transferring of certain assets and liabilities to DISH and certain of its subsidiaries. As part of these steps, subsidiaries of EchoStar that, prior to the consummation of the Share Exchange, owned EchoStar’s business of providing online video delivery and satellite video delivery for broadcasters and pay-TV operators, including satellite uplinking/downlinking, transmission services, signal processing, conditional access management and other services and related assets and liabilities were contributed to one of our subsidiaries in consideration for additional shares of HSS’ common stock that were then issued to a subsidiary of EchoStar. Certain data center assets that were included in the contribution of certain assets and liabilities to one of our subsidiaries were not included in the Share Exchange and continue to be owned by one of our subsidiaries and are pledged as collateral to support our obligations under the indentures relating to our 6 1/2% Senior Secured Notes due 2019 (the “2019 Senior Secured Note”) and our 5.250% Senior Secured Notes due 2026 (the “2026 Senior Secured Notes). EchoStar Mobile Limited Service Agreements. Certain of our subsidiaries provide services to subsidiaries of EchoStar to support the business of EchoStar Mobile Limited, a subsidiary of EchoStar that is licensed by the European Union and its member states (“EU”) to provide mobile satellite services and complementary ground component services covering the entire EU using S-band spectrum. Generally, the amounts EchoStar’s subsidiaries pay for these services are based on cost plus a fixed margin. We recorded revenue in “Services and other revenue - other” of $4.1 million and zero for the three months ended March 31, 2018 and 2017, respectively, related to these services. DISH Network Following the Spin-off, EchoStar and DISH have operated as separate publicly-traded companies. However, prior to the consummation of the Share Exchange on February 28, 2017, DISH Network owned the Tracking Stock, which represented an aggregate 80.0% economic interest in the residential retail satellite broadband business of our Hughes segment. Following the consummation of the Share Exchange, the Tracking Stock was retired. In addition, a substantial majority of the voting power of the shares of each of EchoStar and DISH is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family. In connection with and following both the Spin-off and the Share Exchange, EchoStar, we and certain other of EchoStar’s subsidiaries and DISH and certain of its subsidiaries entered into certain agreements pursuant to which we and EchoStar obtain certain products, services and rights from DISH Network; DISH Network obtains certain products, services and rights from us and EchoStar; and we and DISH Network indemnify each other against certain liabilities arising from our respective businesses. We and/or EchoStar also may enter into additional agreements with DISH Network in the future. Generally, the amounts we or DISH Network pay for products and services provided under the agreements are based on cost plus a fixed margin (unless noted differently below or in our most recent Form 10-K), which varies depending on the nature of the products and services provided. The following is a summary of the terms of our principal agreements with DISH Network that may have an impact on our financial condition and results of operations. Services and other revenue — DISH Network Satellite Capacity Leased to DISH Network. Since the Spin-off, we have entered into certain agreements to lease satellite capacity pursuant to which we provide satellite services to DISH Network on certain satellites owned or leased by us. The fees for the services provided under these agreements depend, among other things, upon the orbital location of the applicable satellite, the number of transponders that are providing services on the applicable satellite, and the length of the service arrangements. The terms of each service arrangement is set forth below: EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV. As part of the Satellite and Tracking Stock Transaction, described below in “Other agreements - DISH Network,” in March 2014, we began leasing certain satellite capacity to DISH Network on the EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. The term of each agreement to lease satellite capacity generally terminates upon the earlier of: (i) the end of life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. DISH Network generally has the option to renew each agreement to lease satellite capacity on a year-to-year basis through the end of the respective satellite’s life. There can be no assurance that any options to renew such agreements will be exercised. In December 2016, DISH Network renewed the agreement to lease satellite capacity relative to the EchoStar VII satellite for one year to June 2018. DISH Network has not renewed the agreement relative to the EchoStar VII satellite past such date. EchoStar IX. Effective January 2008, DISH Network began leasing satellite capacity from us on the EchoStar IX satellite. Subject to availability, DISH Network generally has the right to continue leasing satellite capacity from us on the EchoStar IX satellite on a month-to-month basis. EchoStar XII. DISH Network leases satellite capacity from us on the EchoStar XII satellite. The term of the agreement to lease satellite capacity expired at the end of September 2017. EchoStar XVI. In December 2009, we entered into an initial ten-year agreement to lease satellite capacity to DISH Network, pursuant to which DISH Network has leased satellite capacity from us on the EchoStar XVI satellite since January 2013. Effective December 2012, we and DISH Network amended the agreement to, among other things, change the initial term to generally expire upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite fails; (iii) the date the transponder(s) on which service is being provided under the agreement fails; or (iv) four years following the actual service commencement date. In July 2016, we and DISH Network further amended the agreement to, among other things, extend the initial term by one additional year through January 2018 and to reduce the term of the first renewal option by one year. In May 2017, DISH Network renewed the agreement for five-years to January 2023. DISH Network has the option to renew for an additional five-year period prior to expiration of the current term. There can be no assurance that such option to renew this agreement will be exercised. In the event that DISH Network does not exercise its five-year renewal option, DISH Network has the option to purchase the EchoStar XVI satellite for a certain price. If DISH Network does not elect to purchase the EchoStar XVI satellite at that time, we may sell the EchoStar XVI satellite to a third party and DISH Network is required to pay us a certain amount in the event we are not able to sell the EchoStar XVI satellite for more than a certain amount. Nimiq 5 Agreement. In September 2009, we entered into a fifteen-year agreement with Telesat Canada (“Telesat”) to lease satellite capacity from Telesat on all 32 direct broadcast satellite (“DBS”) transponders on the Nimiq 5 satellite at the 72.7 degree west longitude orbital location (the “Telesat Transponder Agreement”). In September 2009, we also entered into an agreement with DISH Network, pursuant to which DISH Network leases satellite capacity from us on all 32 of the DBS transponders covered by the Telesat Transponder Agreement (the “DISH Nimiq 5 Agreement”). Under the terms of the DISH Nimiq 5 Agreement, DISH Network makes certain monthly payments to us that commenced in September 2009, when the Nimiq 5 satellite was placed into service, and continue through the service term. Unless earlier terminated under the terms and conditions of the DISH Nimiq 5 Agreement, the service term will expire in October 2019. Upon expiration of the initial term, DISH Network has the option to renew the DISH Nimiq 5 Agreement on a year-to-year basis through the end of life of the Nimiq 5 satellite. Upon in-orbit failure or end of life of the Nimiq 5 satellite, and in certain other circumstances, DISH Network has certain rights to lease satellite capacity from us on a replacement satellite. There can be no assurance that any options to renew the DISH Nimiq 5 Agreement will be exercised or that DISH Network will exercise its option to lease satellite capacity on a replacement satellite. QuetzSat-1 Agreement. In November 2008, we entered into a ten-year agreement to lease satellite capacity from SES Latin America, which provides, among other things, for the provision by SES Latin America to us of leased satellite capacity on 32 DBS transponders on the QuetzSat-1 satellite. Concurrently, in 2008, we entered into an agreement to lease satellite capacity with DISH Network, pursuant to which DISH Network leases satellite capacity on 24 of the DBS transponders on the QuetzSat-1 satellite. The QuetzSat-1 satellite was launched in September 2011 and was placed into service in November 2011 at the 67.1 degree west longitude orbital location. In February 2013, we and DISH Network entered into an agreement pursuant to which we lease certain satellite capacity from DISH Network on five DBS transponders on the QuetzSat-1 satellite. In January 2013, the QuetzSat-1 satellite was moved to the 77 degree west longitude orbital location and DISH Network commenced commercial operations at such location in February 2013. Under the terms of our contractual arrangements with DISH Network, we began leasing satellite capacity to DISH Network on the QuetzSat-1 satellite in February 2013 and will continue leasing such capacity through the remainder of the service term. Unless extended or earlier terminated under the terms and conditions of our agreement with DISH Network for the QuetzSat-1 satellite, the initial service term will expire in November 2021. Upon expiration of the initial service term, DISH Network has the option to renew the agreement for the QuetzSat-1 satellite on a year-to-year basis through the end of life of the QuetzSat-1 satellite. Upon an in-orbit failure or end of life of the QuetzSat-1 satellite, and in certain other circumstances, DISH Network has certain rights to lease satellite capacity from us on a replacement satellite. There can be no assurance that any options to renew this agreement will be exercised or that DISH Network will exercise its option to lease satellite capacity on a replacement satellite. 103 Degree Orbital Location/SES-3. In May 2012, we entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree west longitude orbital location (the “103 Spectrum Rights”). In June 2013, we and DISH Network entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which DISH Network may use and develop the 103 Spectrum Rights. Effective in March 2018, DISH Network exercised its right to terminate the DISH 103 Spectrum Development Agreement and we exercised our right to terminate the 103 Spectrum Development Agreement. In connection with the 103 Spectrum Development Agreement, in May 2012, we also entered into a ten-year agreement with Ciel pursuant to which we leased certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree west longitude orbital location (the “Ciel 103 Agreement”). In June 2013, we and DISH Network entered into an agreement pursuant to which DISH Network leased certain satellite capacity from us on the SES-3 satellite (the “DISH 103 Agreement”). Under the terms of the DISH 103 Agreement, DISH Network made certain monthly payments to us through the service term. Effective in March 2018, DISH Network exercised its right to terminate the DISH 103 Agreement and we exercised our right to terminate the Ciel 103 Agreement. TT&C Agreement. Effective January 2012, we entered into a TT&C agreement pursuant to which we provided TT&C services to DISH Network for a period ending in December 2016 (the “TT&C Agreement”). In November 2016, we and DISH Network amended the TT&C Agreement to extend the term for one year through December 2017. In December 2017, we and DISH Network amended the TT&C Agreement to extend the term for one month through January 2018. In February 2018, we and DISH Network amended the TT&C Agreement to, among other things, extend the term through February 2023. The fees for services provided under the TT&C Agreement are calculated at either: (i) a fixed fee or (ii) cost plus a fixed margin, which will vary depending on the nature of the services provided. DISH Network is able to terminate the TT&C Agreement for any reason upon 12 months’ notice. In connection with the Satellite and Tracking Stock Transaction, described below in “Other agreements - DISH Network,” in February 2014, we amended the TT&C Agreement to cease the provision of TT&C services to DISH Network for the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. Effective March 2014, we provide TT&C services for the D-1 and EchoStar XV satellites; however, for the period that we received satellite services on the EchoStar XV satellite from DISH Network, we waived the fees for the TT&C services on the EchoStar XV satellite. Effective August 2016, we provide TT&C services to DISH Network for the EchoStar XVIII satellite. Real Estate Lease. Prior to the Share Exchange, EchoStar leased to DISH Network certain space at 530 EchoStar Drive, Cheyenne, Wyoming. In connection with the Share Exchange, EchoStar transferred ownership of a portion of this property to DISH Network and contributed a portion to us and we amended the agreement to (i) terminate the lease for the transferred space and (ii) provide for a continued lease to DISH Network of the portion of the property contributed to us for a period ending in December 2031. The rent on a per square foot basis for the lease is comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of the lease, and DISH Network is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. This agreement may be extended by mutual consent, in which case this agreement will be converted to a month-to-month lease agreement. Upon extension, either party has the right to terminate this agreement upon 30 days’ notice. TerreStar Agreement. In March 2012, DISH Network completed its acquisition of substantially all the assets of TerreStar Networks Inc. (“TerreStar”). Prior to DISH Network’s acquisition of substantially all the assets of TerreStar and the completion of the acquisition of all of the outstanding equity of Hughes Communications, Inc. (the “Hughes Acquisition”) on June 8, 2011, TerreStar and HNS entered into various agreements pursuant to which our Hughes segment provides, among other things, warranty, operations and maintenance and hosting services for TerreStar’s ground-based communications equipment. In December 2017, we and DISH Network amended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DISH Network generally has the right to continue to receive warranty services from us for our products on a month-to-month basis unless terminated by DISH Network upon at least 21 days’ written notice to us. DISH Network generally has the right to continue to receive operations and maintenance services from us on a quarter-to-quarter basis unless operations and maintenance services are terminated by DISH Network upon at least 90 days’ written notice to us. The provision of hosting services will continue until May 2022 and will not renew beyond May 2022 unless the parties enter into a new agreement or amend the existing agreement. In addition, DISH Network generally may terminate any and all services for convenience subject to providing us with prior notice and/or payment of termination charges. Hughes Broadband Distribution Agreement. Effective October 2012, HNS and dishNET Satellite Broadband L.L.C. (“dishNET”), a wholly-owned subsidiary of DISH, entered into a distribution agreement (the “Distribution Agreement”) pursuant to which dishNET has the right, but not the obligation, to market, sell and distribute the Hughes satellite internet service (the “Hughes service”). dishNET pays HNS a monthly per subscriber wholesale service fee for the Hughes service based upon a subscriber’s service level and based upon certain volume subscription thresholds. The Distribution Agreement also provides that dishNET has the right, but not the obligation, to purchase certain broadband equipment from us to support the sale of the Hughes service. The Distribution Agreement had an initial term of five years with automatic renewal for successive one year terms unless terminated by either party with a written notice at least 180 days before the expiration of the then-current term. In February 2014, HNS and dishNET entered into an amendment to the Distribution Agreement which, among other things, extended the initial term of the Distribution Agreement until March 2024. Upon expiration or termination of the Distribution Agreement, the parties will continue to provide the Hughes service to the then-current dishNET subscribers pursuant to the terms and conditions of the Distribution Agreement. DBSD North America Agreement. In March 2012, DISH Network completed its acquisition of 100% of the equity of reorganized DBSD North America, Inc. (“DBSD North America”). Prior to DISH Network’s acquisition of DBSD North America and our completion of the Hughes Acquisition, DBSD North America and HNS entered into various agreements pursuant to which our Hughes segment provides, among other things, warranty, operations and maintenance and hosting services of DBSD North America’s gateway and ground-based communications equipment. In December 2017, we and DBSD North America amended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DBSD North America generally has the right to continue to receive warranty services from us on a month-to-month basis until February 2019, unless terminated by DBSD North America upon at least 21 days’ written notice to us, and the right to continue to receive operations and maintenance services from us on a quarter-to-quarter basis, unless terminated by DBSD North America upon at least 120 days’ written notice to us. The provision of hosting services will continue until February 2022 and will automatically renew for an additional five-year period until February 2027 unless terminated by DBSD North America upon at least 180 days’ written notice to us. In addition, DBSD North America generally may terminate any and all such services for convenience, subject to providing us with prior notice and/or payment of termination charges. RUS Implementation Agreement. In September 2010, DISH Broadband L.L.C. (“DISH Broadband”), DISH’s indirect, wholly-owned subsidiary, was selected by the Rural Utilities Service (“RUS”) of the U.S. Department of Agriculture to receive up to approximately $14.1 million in broadband stimulus grant funds (the “Grant Funds”). Effective November 2011, HNS and DISH Broadband entered into a RUS Implementation Agreement (the “RUS Agreement”) pursuant to which HNS provided certain portions of the equipment and broadband service used to implement DISH Broadband’s RUS program. While the RUS Agreement expired in June 2013 when the Grant Funds were exhausted, HNS is required to continue providing services to DISH Broadband’s customers activated prior to the expiration of the RUS Agreement in accordance with the terms and conditions of the RUS Agreement. General and administrative expenses — DISH Network Amended and Restated Professional Services Agreement. In connection with the Spin-off, EchoStar entered into various agreements with DISH Network including a transition services agreement, satellite procurement agreement and services agreement, which all expired in January 2010 and were replaced by a professional services agreement (the “Professional Services Agreement”). In January 2010, EchoStar and DISH Network agreed that EchoStar and its subsidiaries shall continue to have the right, but not the obligation, to receive the following services from DISH Network, among others, certain of which were previously provided under a transition services agreement: information technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration, program acquisition services and other support services. Additionally, EchoStar and DISH agreed that DISH Network would continue to have the right, but not the obligation, to engage us to manage the process of procuring new satellite capacity for DISH Network (previously provided under a satellite procurement agreement), receive logistics, procurement and quality assurance services from EchoStar and its subsidiaries (previously provided under a services agreement) and other support services. In connection with the consummation of the Share Exchange, EchoStar and DISH amended and restated the Professional Services Agreement (the “Amended and Restated Professional Services Agreement”)_to provide that EchoStar and its subsidiaries and DISH Network shall have the right to receive additional services that either EchoStar and its subsidiaries or DISH Network may require as a result of the Share Exchange, including access to antennas owned by DISH Network for our use in performing TT&C services and maintenance and support services for our antennas. A portion of these costs and expenses have been allocated to us in the manner described above under the caption “EchoStar.” The term of the Amended and Restated Professional Services Agreement is through January 2019 and renews automatically for successive one-year periods thereafter, unless the agreement is terminated earlier by either party upon at least 60 days’ notice. However, either party may generally terminate the Amended and Restated Professional Services Agreement in part with respect to any particular service it receives for any reason upon at least 30 days’ notice, unless the statement of work for particular services states otherwise. Certain services being provided for under the Amended and Restated Professional Services Agreement may survive the termination of the agreement. Real Estate Lease from DISH Network. In connection with the Share Exchange, effective March 2017, we sublease from DISH Network certain space at 796 East Utah Valley Drive in American Fork, Utah for a period ending in August 2017. We have exercised our option to renew this sublease for a five-year period ending in August 2022. The rent on a per square foot basis for the lease is comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of the lease, and we are responsible for our portion of the taxes, insurance, utilities and maintenance of the premises. Collocation and Antenna Space Agreements. We and DISH Network have entered into an agreement pursuant to which DISH Network provides us with collocation space in El Paso, Texas. This agreement was for an initial period ending in August 2015, and provides us with renewal options for four consecutive years. Effective August 2015, we exercised our first renewal option for a period ending in August 2018 and in April 2018 we exercised our second renewal option for a period ending in August 2021. In connection with the Share Exchange, effective March 2017, we also entered into certain agreements pursuant to which DISH Network provides collocation and antenna space to EchoStar through February 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New Braunfels, Texas; Monee, Illinois; Spokane, Washington; and Englewood, Colorado. In August 2017, we and DISH Network also entered into certain other agreements pursuant to which DISH Network provides additional collocation and antenna space to EchoStar in Monee, Illinois and Spokane, Washington through August 2022. We generally may renew these collocation and antenna space agreements for three-year periods by providing DISH Network with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term. We may terminate certain of these agreements with 180 days’ prior written notice. The fees for the services provided under these agreements depend on the number of racks leased at the location. Other agreements — DISH Network Satellite and Tracking Stock Transaction. In February 2014, we and EchoStar entered into agreements with DISH Network to implement a transaction pursuant to which, among other things: (i) in March 2014, EchoStar and HSS issued the Tracking Stock to DISH Network in exchange for five satellites owned by DISH Network (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV) (including assumption of related in-orbit incentive obligations) and approximately $11.4 million in cash; and (ii) in March 2014, DISH Network began receiving certain satellite services from us as discussed above on these five satellites (collectively, the “Satellite and Tracking Stock Transaction.”) The Tracking Stock was retired in March 2017 and is no longer outstanding and all agreements, arrangements and policy statements with respect to such Tracking Stock terminated and are of no further effect. Share Exchange Agreement. On January 31, 2017, EchoStar and certain of its subsidiaries entered into the Share Exchange Agreement with DISH and certain of its subsidiaries, pursuant to which, on February 28, 2017, EchoStar and its subsidiaries received all of the shares of the Tracking Stock in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of EchoStar’s EchoStar Technologies businesses and certain other assets. Following consummation of the Share Exchange on February 28, 2017, EchoStar no longer operates the transferred EchoStar Technologies businesses and the Tracking Stock was retired and is no longer outstanding and all agreements, arrangements and policy statements with respect to such Tracking Stock terminated and are of no further effect. Pursuant to the Share Exchange Agreement, EchoStar transferred certain assets, investments in joint ventures, spectrum licenses and real estate properties and DISH Network assumed certain liabilities relating to the transferred assets and businesses. The Share Exchange Agreement contains customary representations and warranties by the parties, including representations by EchoStar related to the transferred assets, assumed liabilities and the financial condition of the transferred businesses. EchoStar and DISH Network have also agreed to customary indemnification provisions whereby each party indemnifies the other against certain losses with respect to breaches of representations, warranties or covenants and certain liabilities and if certain actions undertaken by EchoStar or DISH causes the transaction to be taxable to the other party after closing. Hughes Broadband Master Services Agreement. In March 2017, HNS and DISH Network L.L.C. (“DNLLC”), a wholly-owned subsidiary of DISH, entered into a master service agreement (the “MSA”) pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders and upgrades for the Hughes service and related equipment and other telecommunication services, and (ii) installs Hughes service equipment with respect to activations generated by DNLLC. Under the MSA, HNS and DNLLC make certain payments to each other relating to sales, upgrades, purchases and installation services. The MSA has an initial term of five years until March 2022 with automatic renewal for successive one-year terms. After the first anniversary, either party has the ability to terminate the MSA, in whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the MSA, HNS will continue to provide the Hughes service to subscribers and make certain payments to DNLLC pursuant to the terms and conditions of the MSA. We incurred sales incentives and other costs under the MSA totaling $8.7 million and zero for the three months ended March 31, 2018 and 2017, respectively. Intellectual Property and Technology License Agreement. Effective March 2017 in connection with the Share Exchange, EchoStar and DISH Network entered into an Intellectual Property and Technology License Agreement (“IPTLA”) pursuant to which EchoStar and DISH and their respective subsidiaries license to each other certain intellectual property and technology. The IPTLA will continue in perpetuity, unless mutually terminated by the parties. Pursuant to the IPTLA, EchoStar granted to DISH Network a license to EchoStar and its subsidiaries’ intellectual property and technology for use by DISH Network, among other things, in connection with its continued operation of the businesses acquired pursuant to the Share Exchange, including a limited license to use the “ECHOSTAR” trademark during a transition period. EchoStar retains full ownership of the “ECHOSTAR” trademark. In addition, DISH Network granted a license back to EchoStar and its subsidiaries, among other things, for the continued use of all intellectual property and technology that is used in EchoStar and its subsidiaries’ retained businesses but the ownership of which was transferred to DISH Network pursuant to the Share Exchange. Tax Matters Agreement. Effective March 2017, in connection with the Share Exchange, EchoStar and DISH entered into a tax matters agreement. This agreement governs certain rights, responsibilities and obligations of EchoStar and its subsidiaries with respect to taxes of the transferred businesses pursuant to the Share Exchange. Generally, EchoStar is responsible for all tax returns and tax liabilities for the transferred businesses and assets for periods prior to the Share Exchange and DISH Network is responsible for all tax returns and tax liabilities for the transferred businesses and assets from and after the Share Exchange. Both EchoStar and DISH Network have made certain tax-related representations and are subject to various tax-related covenants after the consummation of the Share Exchange. Both EchoStar and DISH Network have agreed to indemnify each other if there is a breach of any such tax representation or violation of any such tax covenant and that breach or violation results in the Share Exchange not qualifying for tax free treatment for the other party. In addition, DISH Network has agreed to indemnify EchoStar if the transferred businesses are acquired, either directly or indirectly (e.g., via an acquisition of DISH Network), by one or more persons and such acquisition results in the Share Exchange not qualifying for tax free treatment. The tax matters agreement supplements the Tax Sharing Agreement outlined below, which continues in full force and effect. Tax Sharing Agreement. Effective December 2007, EchoStar and DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) in connection with the Spin-off. This agreement governs EchoStar and DISH and their respective subsidiaries’ respective rights, responsibilities and obligations after the Spin-off with respect to taxes for the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes, including any taxes that are incurred as a result of restructuring activities undertaken to implement the Spin-off, are borne by DISH Network, and DISH Network indemnifies EchoStar and its subsidiaries for such taxes. However, DISH Network is not liable for and does not indemnify EchoStar or its subsidiaries for any taxes that are incurred as a result of the Spin-off or certain related transactions failing to qualify as tax-free distributions pursuant to any provision of Section 355 or Section 361 of the Internal Revenue Code of 1986, as amended, because of: (i) a direct or indirect acquisition of any of EchoStar’s stock, stock options or assets; (ii) any action that EchoStar and its subsidiaries take or fail to take; or (iii) any action that EchoStar and its subsidiaries take that is inconsistent with the information and representations furnished to the IRS in connection with the request for the private letter ruling, or to counsel in connection with any opinion being delivered by counsel with respect to the Spin-off or certain related transactions. In such case, EchoStar and its subsidiaries will be solely liable for, and will indemnify DISH Network for, any resulting taxes, as well as any losses, claims and expenses. The Tax Sharing Agreement will terminate after the later of the full period of all applicable statutes of limitations, including extensions, or once all rights and obligations are fully effectuated or performed. In light of the Tax Sharing Agreement, among other things, and in connection with EchoStar’s consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, in September 2013, EchoStar and DISH Network agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’s examination of EchoStar’s consolidated tax returns. As a result, DISH Network agreed to pay EchoStar an amount that includes the federal tax benefit DISH received as a result of our operations. Caltech. On October 1, 2013, Caltech Institute of Technology (“Caltech”) filed complaints against two of our subsidiaries, Hughes Communications, Inc. and HNS, as well as against DISH and certain of its subsidiaries, in the U.S. District Court for the Central District of California alleging infringement of U.S. Patent Nos. 7,116,710; 7,421,032; 7,916,781; and 8,284,833, each of which is entitled “Serial Concatenation of Interleaved Convolutional Codes forming Turbo-Like Codes.” Caltech asserted that encoding data as specified by the DVB-S2 standard infringed each of the asserted patents. Caltech claimed that certain of our Hughes segment’s satellite broadband products and services, infringed the asserted patents by implementing the DVB-S2 standard. Pursuant to a settlement agreement among us, DISH and Caltech, in May 2016, Caltech dismissed with prejudice all of its claims in these actions. Other Agreements Hughes Systique Corporation (“Hughes Systique”) We contract with Hughes Systique for software development services. In addition to our 43.7% ownership in Hughes Systique, Mr. Pradman Kaul, the President of Hughes Communications, Inc. and a member of EchoStar’s board of directors, and his brother, who is the Chief Executive Officer and President of Hughes Systique, in the aggregate, own approximately 25.6%, on an undiluted basis, of Hughes Systique’s outstanding shares as of March 31, 2018. Furthermore, Mr. Pradman Kaul serves on the board of directors of Hughes Systique. Hughes Systique is a variable interest entity and we are considered the primary beneficiary of Hughes Systique due to, among other factors, our ability to direct the activities that most significantly impact the economic performance of Hughes Systique. As a result, we consolidate Hughes Systique’s financial statements in our accompanying condensed consolidated financial statements. Dish Mexico EchoStar owns 49.0% of an entity that provides direct-to-home satellite services in Mexico known as Dish Mexico, and we provide certain satellite services to Dish Mexico. We recognized revenue from sales of services we provided to Dish Mexico of approximately $5.8 million and $3.9 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 and December 31, 2017, we had trade accounts receivable from Dish Mexico of approximately $6.6 million and $7.6 million, respectively. Deluxe/EchoStar LLC We own 50.0% of Deluxe/EchoStar LLC (“Deluxe”), a joint venture that we entered into in 2010 to build an advanced digital cinema satellite distribution network targeting delivery to digitally equipped theaters in the U.S. and Canada. We account for our investment in Deluxe using the equity method. We recognized revenue from Deluxe for transponder services and the sale of broadband equipment of approximately $1.1 million and $1.2 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 and December 31, 2017, we had trade accounts receivable from Deluxe of approximately $1.0 million and $1.1 million, respectively. AsiaSat We contract with AsiaSat Telecommunications Inc. (“AsiaSat”) for the use of transponder capacity on one of AsiaSat's satellites. Mr. William David Wade, who joined our board of directors in February 2017, served as the Chief Executive Officer of AsiaSat in 2016 and as a senior advisor to the Chief Executive Officer of AsiaSat through March 2017. We incurred expenses payable to AsiaSat under this agreement of approximately zero for the three months ended March 31, 2017. Global IP |
Supplemental Guarantor and Non-Guarantor Financial Information |
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| Supplemental Guarantor and Non-Guarantor Financial Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Guarantor and Non-Guarantor Financial Information | Supplemental Guarantor and Non-Guarantor Financial Information Certain of our wholly-owned subsidiaries (together, the “Guarantor Subsidiaries”) have fully and unconditionally guaranteed, on a joint and several basis, the obligations of our 2019 Senior Secured Notes and 7 5/8% Senior Unsecured Notes due 2021 (the “2021 Senior Unsecured Notes”), which were issued on June 1, 2011, and our 2026 Senior Secured Notes and 6.625% Senior Unsecured Notes due 2016, which were issued on July 27, 2016 (the “2026 Senior Unsecured Notes” and together with the 2026 Senior Secured Notes, the “2026 Notes”). See Note 10 for further information on the 2019 Senior Secured Notes, the 2021 Senior Unsecured Notes and the 2026 Notes. In lieu of separate financial statements of the Guarantor Subsidiaries, accompanying condensed consolidating financial information prepared in accordance with Rule 3-10(f) of Regulation S-X is presented below, including the accompanying condensed balance sheet information, the accompanying condensed statement of operations and comprehensive income (loss) information and the accompanying condensed statement of cash flows information of HSS, the Guarantor Subsidiaries on a combined basis and the non-guarantor subsidiaries of HSS on a combined basis and the eliminations necessary to arrive at the corresponding information of HSS on a consolidated basis. The indentures governing the 2019 Senior Secured Notes, the 2021 Senior Unsecured Notes and the 2026 Notes contain restrictive covenants that, among other things, impose limitations on our ability and the ability of certain of our subsidiaries to pay dividends or make distributions, incur additional debt, make certain investments, create liens or enter into sale and leaseback transactions, merge or consolidate with another company, transfer and sell assets, enter into transactions with affiliates or allow to exist certain restrictions on the ability of certain of our subsidiaries to pay dividends, make distributions, make other payments, or transfer assets to us. (In thousands)
(In thousands)
For the three months ended March 31, 2018 (In thousands)
For the three months ended March 31, 2017 (In thousands)
For the three months ended March 31, 2018 (In thousands)
For the three months ended March 31, 2017 (In thousands)
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation |
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| Principles of Consolidation | Principles of Consolidation |
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| Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheets, the reported amounts of revenue and expense for each reporting period, and certain information disclosed in the notes to our financial statements. Estimates are used in accounting for, among other things, (i) amortization periods for deferred contract acquisition costs, (ii) inputs used to recognize revenue over time, (iii) allowances for doubtful accounts, (iv) warranty obligations, (v) self-insurance obligations, (vi) deferred taxes and related valuation allowances, (vii) uncertain tax positions, (viii) loss contingencies, (ix) fair value of financial instruments, (x) fair value of EchoStar’s stock-based compensation awards, (xi) fair value of assets and liabilities acquired in business combinations, (xii) lease classifications, (xiii) asset impairment testing, and (xiv) useful lives and methods for depreciation and amortization of long-lived assets. We base our estimates and assumptions on historical experience, observable market inputs and on various other factors that we believe to be relevant under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results may differ from previously estimated amounts, and such differences may be material to our financial statements. Changing economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. We review our estimates and assumptions periodically and the effects of revisions are reflected in the period they occur or prospectively if the revised estimate affects future periods.
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| Fair Value Measurements | Fair Value Measurements We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We utilize the highest level of inputs available according to the following hierarchy in determining fair value:
Transfers between levels in the fair value hierarchy are considered to occur at the beginning of the quarterly accounting period. There were no transfers between levels for each of the three months ended March 31, 2018 and 2017. As of March 31, 2018 and December 31, 2017, the carrying amounts of our cash and cash equivalents, trade and other receivables, net of allowance for doubtful accounts, accounts payable and accrued liabilities were equal to or approximated their fair value due to their short-term nature or proximity to current market rates. Fair values of our marketable investment securities are based on a variety of observable market inputs. For our investments in publicly traded equity securities and U.S. government securities, fair value ordinarily is determined based on a Level 1 measurement that reflects quoted prices for identical securities in active markets. Fair values of our investments in other marketable debt securities generally are based on Level 2 measurements, as the markets for such debt securities are less active. Trades of identical debt securities on or near the measurement date are considered a strong indication of fair value. Matrix pricing techniques that consider par value, coupon rate, credit quality, maturity and other relevant features also may be used to determine fair value of our investments in marketable debt securities. Fair values for our outstanding debt (see Note 10) are based on quoted market prices in less active markets and are categorized as Level 2 measurements. We use fair value measurements from time to time in connection with asset impairment testing and the assignment of purchase consideration to assets and liabilities of acquired companies. Those fair value measurements typically include significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy. |
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| Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Overview We account for our sales and services revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”), which we adopted on January 1, 2018, using the modified retrospective approach to contracts not completed as of the adoption date. Topic 606 provides a five-step revenue recognition model that we apply to our contracts with customers. Under this model we (i) identify the contract with the customer, (ii) identify our performance obligations in the contract, (iii) determine the transaction price for the contract, (iv) allocate the transaction price to our performance obligations and (v) recognize revenue when or as we satisfy our performance obligations. Revenue is recognized upon transfer of control of the promised goods or our performance of the services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We enter into contracts that may include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. Additionally, a significant portion of our revenue is derived from leases of property and equipment that is reported in “Services and other revenue - other” and “Services and other revenue - DISH Network” in our accompanying condensed consolidated statement of operations and comprehensive income (loss). Certain of our contracts with customers contain embedded equipment leases, which we separate from non-lease components of the contract based on the relative standalone selling prices of the lease and non-lease components. Hughes Our Hughes segment provides various communication and networking services to consumer and enterprise customers in domestic and international markets. Our services contracts typically obligate us to provide substantially the same services on a recurring basis in exchange for fixed recurring fees over the term of the contract. We satisfy such performance obligations over time and generally recognize revenue ratably as services are rendered over the service period. Certain of our contracts with service obligations provide for fees based on usage, capacity or volume. We satisfy these performance obligations and generally recognize the related revenue at the point in time or over the period when the services are rendered. Our Hughes segment also sells and leases communications equipment to its customers. Revenue from equipment sales generally is recognized upon shipment of the equipment. Our equipment sales contracts typically include standard product warranties, but generally do not provide for returns or refunds. Revenue for extended warranties is generally recognized ratably over the extended warranty period. For contracts with multiple performance obligations, we typically allocate the contract’s transaction price to each performance obligation based on their relative standalone selling prices. When the standalone selling price is not observable, our primary method used to estimate standalone selling price is the expected cost plus a margin. Our contracts generally require customer payments to be made at or shortly after the time we transfer control of goods or perform the services. In addition to equipment and service offerings, our Hughes segment also enters into long-term contracts to design, develop, construct and install complex telecommunication networks to customers in its enterprise and mobile satellite systems markets. Revenue from such contracts is generally recognized over time at a measure of progress that depicts the transfer of control of the goods or services to the customer. Depending on the nature of the arrangement, we measure progress toward contract completion using an appropriate input method or output method. Under our input method, we recognize the transaction price as revenue based on the ratio of costs incurred to estimated total costs at completion. Under our output method, revenue and cost of sales are recognized as products are delivered based on the expected profit for the entire agreement. Profit margins on long-term contracts generally are based on estimates of revenue and costs at completion. We review and revise our estimates periodically and recognize related adjustments in the period in which the revisions are made. Estimated losses on contracts are recorded in the period in which they are identified. We generally receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment. ESS Our ESS segment primarily provides satellite service operations through leasing arrangements and video delivery services on a full-time and occasional-use basis to DISH Network and Dish Mexico, as well as government service providers, internet service providers, broadcast news organizations, programmers, and private enterprise customers. We also provide telemetry, tracking and control (“TT&C”) services for satellites owned by DISH Network. Our ESS segment also provides technical consulting services that are billed by the hour. Generally, our service contracts with customers contain a single performance obligation and therefore there is no need to allocate the transaction price. We transfer control and recognize revenue for satellite services at the point in time or over the period when the services are rendered. Other |
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| Shipping and Handling Cost, Policy [Policy Text Block] | Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales at the time of shipment. |
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| Receivables, Policy [Policy Text Block] | Trade Accounts Receivable |
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| Contract Asset | Contract assets represent revenue that we have recognized in advance of billing the customer and are included in “Trade accounts receivable and contract assets, net” or “Other noncurrent assets, net” in our balance sheets based on the expected timing of customer payment. Our contract assets include amounts that we referred to as “contracts in process” in prior periods. Our contract assets typically relate to our long-term contracts where we recognize revenue using the cost-based input method and the revenue recognized exceeds the amount billed to the customer. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contract Liabilities | Contract liabilities consist of advance payments and billings in excess of revenue recognized under contracts with customers and is included in “Contract liabilities” or “Other noncurrent liabilities” in our balance sheets based on the timing of when we expect to recognize revenue. We recognize deferred revenue as revenue after we have transferred control of the goods or services to the customer and all revenue recognition criteria have been met. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition, Customer Acquisitions [Policy Text Block] | Contract Acquisition Costs |
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| Contract Fulfillment Costs | Contract Fulfillment Costs |
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| Research and Development Expense | Costs incurred in research and development activities generally are expensed as incurred. A significant portion of our research and development costs are incurred in connection with the specific requirements of a customer’s order. In such instances, the amounts for these customer funded development efforts are included in cost of sales. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capitalized Software Costs | Costs related to the procurement and development of software for internal-use and externally marketed software are capitalized and amortized using the straight-line method over the estimated useful life of the software, not in excess of five years. Capitalized costs of internal-use software are included in “Property and equipment, net” and capitalized costs of externally marketed software are included in “Other noncurrent assets, net” in our accompanying condensed consolidated balance sheets. Externally marketed software generally is installed in the equipment we sell to customers. We conduct software program reviews for externally marketed capitalized software costs at least annually, or as events and circumstances warrant such a review, to determine if capitalized software development costs are recoverable and to ensure that costs associated with programs that are no longer generating revenue are expensed. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketable Securities, Policy | Marketable Investment Securities Our marketable investment securities portfolio consists of investments in debt and equity instruments with readily determinable fair values. Debt Securities We classify debt securities as available-for-sale based on our investment strategy for the securities, except for securities that we have elected to account for using the fair value option. We recognize periodic changes in the difference between fair value and amortized cost in “Unrealized losses on available-for-sale securities and other” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Realized gains and losses upon sale of debt securities are reclassified from other comprehensive income (loss) and recognized on the trade date in “Gains (losses) on investments, net” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We use the first-in, first-out (“FIFO”) method to determine the cost basis on sales of debt securities. Interest income from debt securities is reported in “Interest income” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We evaluate our available-for-sale debt securities portfolio periodically to determine whether declines in the fair value of these securities are other than temporary. Our evaluation considers, among other things, the length of time and the extent to which the fair value of such security has been lower than amortized cost, market and company-specific factors related to the security, and our intent and ability to hold the investment to maturity or recovery. We generally consider a decline to be other than temporary when: (i) we intend to sell the security, (ii) it is more likely than not that we will be required to sell the security before maturity or recovery, or (iii) we do not expect to recover the amortized cost of the security at maturity. Declines in the fair value of available-for-sale debt securities that are determined to be other than temporary are reclassified from other comprehensive income (loss) and recognized in net income, thus establishing a new cost basis for the investment. Equity Securities Prior to January 1, 2018, we classified our marketable equity securities as available-for-sale or trading securities, depending on our investment strategy for the securities. For available-for-sale securities, we recognized periodic changes in the difference between fair value and cost in “Unrealized losses on available-for-sale securities and other” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Realized gains and losses upon sale of available-for-sale securities were reclassified from other comprehensive income (loss) and recognized on the trade date in “Gains (losses) on investments, net” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We used the FIFO method to determine the cost basis on sales of available-for-sale securities. For trading securities, we recognized periodic changes in the fair value of the securities in “Gains (losses) on investments, net” in our accompanying condensed consolidated statement of operations and comprehensive income (loss). |
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| Investment in Unconsolidated Entities | Investments in Unconsolidated Entities Our investments in unconsolidated entities consist of investments in equity securities that are not publicly traded and do not have readily determinable fair values. We use the equity method to account for such investments when we have the ability to significantly influence the operating decisions of the investee. Prior to January 1, 2018, we accounted for other investments without a readily determinable fair value using the cost method. In connection with our adoption of the New Investment Standard as of January 1, 2018, we have elected to measure such investments at cost, adjusted for changes resulting from impairments and observable price changes in orderly transactions for identical or similar securities of the same issuer. We consider information in periodic financial statements and other documentation provided by our investees and we may make inquiries of investee management to determine whether observable price changes have occurred. Our investments in unconsolidated entities that are accounted for using the equity method are initially recorded at cost and subsequently adjusted for our proportionate share of the net earnings or loss of the investee, which is reported in “Equity in earnings of unconsolidated affiliate” in our accompanying condensed consolidated statements of operations and comprehensive income (loss). The carrying amount of such investments may include a component of goodwill if the cost of our investment exceeds the fair value of the underlying identifiable assets and liabilities of the investee. Dividends received from equity method investees reduce the carrying amount of the investment. We defer, to the extent of our ownership interest in the investee, recognition of intra-entity profits on sales of equipment to the investee until the investee has charged the cost of the equipment to expense in a subsequent sale to a third party or through depreciation. In these circumstances, we report the gross amounts of revenue and cost of sales in the statement of operations and include the intra-entity profit eliminations within “Equity in earnings of unconsolidated affiliate.” |
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| New Accounting Pronouncements | Recently Adopted Accounting Pronouncements Revenue Recognition and Financial Instruments On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers and related amendments (collectively, the “New Revenue Standard”). The New Revenue Standard established a comprehensive new model for revenue recognition, which is codified in Topic 606 (see Revenue Recognition above), and provided guidance for certain costs associated with contracts with customers. We adopted the New Revenue Standard using the modified retrospective method for contracts that were not completed as of January 1, 2018. Accordingly, comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. Upon adoption of the New Revenue Standard, we recognized the cumulative effect of its initial application as a net increase to accumulated earnings of $18.2 million, net of related income taxes. The adoption of the New Revenue Standard also impacted the timing of recognition of certain fees charged to our customers in our consumer markets; however, the adoption has not had, and we do not expect it to have, a material impact on the overall timing or amount of revenue recognition. The primary impacts of the New Revenue Standard on our operating results relate to how we account for sales incentive costs (See Contract Acquisition and Fulfillment Costs above). Historically, we charged sales incentives to expense as incurred, except for incentives related to the consumer business in our Hughes segment, which were initially deferred and subsequently amortized over the related service agreement term. Under the New Revenue Standard, we continue to defer incentives for our consumer business; however, we now amortize those incentives over the estimated customer life, which includes expected contract renewal periods. In addition, we now defer certain sales incentives related to other businesses in our Hughes segment and amortize those incentives over the related service agreement term. As a result of these changes, we have recognized additional deferred costs on our accompanying condensed consolidated balance sheet and the costs generally are recognized as expenses over a longer period of time in our accompanying condensed consolidated statements of operations and comprehensive income (loss). The adoption of the New Revenue Standard by one of our unconsolidated entities had a similar impact on our investment in the unconsolidated entity, which we account for using the equity method. Additionally, on January 1, 2018, we prospectively adopted the applicable requirements of the New Investment Standard. The New Investment Standard substantially revises standards for the recognition, measurement and presentation of financial instruments, including requiring all equity investments, except for investments in consolidated subsidiaries and investments accounted for using the equity method, to be measured at fair value with changes in the fair value recognized through earnings. The New Investment Standard permits an entity to elect to measure an equity security without a readily determinable fair value at its cost, adjusted for changes resulting from impairments and observable price changes in orderly transactions for identical or similar securities of the same issuer. It also amends certain disclosure requirements associated with equity investments and the fair value of financial instruments. Upon adoption of the New Investment Standard on January 1, 2018, we recorded a $0.4 million charge to accumulated earnings to include net unrealized losses on our marketable equity securities then designated as available for sale, which previously were recorded in “Accumulated other comprehensive loss” in our accompanying condensed consolidated balance sheet. For our equity investments without a readily determinable fair value that were previously accounted for using the cost method, we have elected to measure such securities at cost, adjusted for impairments and observable price changes. We expect our future net income or loss to be more volatile as a result of these changes in accounting for our investments in equity securities that were previously accounted for as available for sale or using the cost method. The cumulative effects of changes to our accompanying condensed consolidated balance sheet as of January 1, 2018 for the adoption of the New Revenue Standard and the New Investment Standard were as follows:
Our adoption of the New Revenue Standard and the New Investment Standard impacted our accompanying condensed consolidated balance sheet and statements of operations and comprehensive income (loss) as follows:
Restricted Cash and Cash Equivalents ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents in the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018. As a result, the beginning and ending balances of cash and cash equivalents presented in our accompanying condensed consolidated statements of cash flows include amounts for restricted cash and cash equivalents, which historically were not included in such balances, and receipts and payments of restricted cash and cash equivalents, exclusive of transfers to and from unrestricted accounts, are reported in our accompanying condensed consolidated statements of cash flows. The adoption of this accounting standard did not have a material impact on our statements of cash flows and related disclosures. The beginning and ending balances of cash and cash equivalents presented in our accompanying condensed consolidated statements of cash flows included restricted cash and cash equivalents of $0.8 million and $0.8 million, respectively, for the three months ended March 31, 2018 and $0.7 million and $0.8 million, respectively, for the three months ended March 31, 2017. These amounts are included in “Other noncurrent assets, net” in our accompanying condensed consolidated balance sheets. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (“ASU 2016-02”). This standard requires lessees to recognize assets and liabilities for all leases with lease terms more than 12 months, including leases classified as operating leases. The standard also modifies the definition of a lease and the criteria for classifying leases as operating leases or financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We plan to adopt the new standard as of January 1, 2019. ASU 2016-02 requires the new standard to be applied on a modified retrospective basis to the earliest period presented in our consolidated financial statements. However, the FASB has recently proposed amendments that would permit adoption of the standard as of the effective date without restating prior periods. ASU 2016-02 provides certain practical expedients that we may elect to apply on the adoption date. We continue to evaluate the impact of the new standard and available adoption methods on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments rather than incurred losses. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. We are assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures. |
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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] |
Our adoption of the New Revenue Standard and the New Investment Standard impacted our accompanying condensed consolidated balance sheet and statements of operations and comprehensive income (loss) as follows:
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Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contract with Customer, Asset and Liability [Table Text Block] | The following table provides information about our trade accounts receivable, contract assets and contract liabilities from contracts with customers, including amounts for certain embedded leases.
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Investment Securities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of marketable investment securities | Our marketable investment securities portfolio consists of various debt and equity instruments as follows:
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| Schedule of unrealized gains (losses) on marketable investment securities | Our available-for-sale debt securities reflect amortized cost and unrealized gains and losses as summarized in the table below.
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| Schedule of fair value measurements | Our marketable investment securities are measured at fair value on a recurring basis as summarized in the table below. As of March 31, 2018 and December 31, 2017, we did not have investments that were categorized within Level 3 of the fair value hierarchy.
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Inventory (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventory | Our inventory consisted of the following:
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Property and Equipment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment | Property and equipment consisted of the following:
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| Schedule of construction in progress | Construction in progress consisted of the following:
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other intangible assets subject to amortization | Our other intangible assets, which are subject to amortization, consisted of the following:
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Investment in Unconsolidated Entities (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Investment in Unconsolidated Entities | Our investments in unconsolidated entities consisted of the following:
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Debt and Capital Lease Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt and Capital Lease Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of carrying amounts and fair values of the entity's debt | The following table summarizes the carrying amounts and fair values of our debt:
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Segment Reporting (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenue, EBITDA, and capital expenditures by operating segments | The following table presents revenue, EBITDA, and capital expenditures for each of our operating segments:
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| Schedule of reconciliation of EBITDA to reported income before income taxes | The following table reconciles total consolidated EBITDA to reported “Income before income taxes” in our accompanying condensed consolidated statements of operations and comprehensive income (loss):
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| Disaggregation of Revenue [Table Text Block] | The following table disaggregates revenue based on the nature of products and services and by segment.
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Supplemental Guarantor and Non-Guarantor Financial Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Supplemental Guarantor and Non-Guarantor Financial Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of consolidating balance sheet | Condensed Consolidating Balance Sheet as of March 31, 2018 (In thousands)
(In thousands)
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| Schedule of consolidating statement of operations and comprehensive income (loss) |
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| Schedule of consolidating statement of cash flows |
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Organization and Business Activities (Details) - segment |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Mar. 31, 2018 |
|
| Related party transactions | ||
| Number of business segments | 2 | |
| Hughes Retail Group | DISH Network | Satellite And Tracking Stock Transaction | Hughes Retail Preferred Tracking Stock | ||
| Related party transactions | ||
| Percentage of economic interest in the Hughes Retail Group | 80.00% | |
| EchoStar Technologies Business | DISH Network | Share Exchange Agreement | ||
| Related party transactions | ||
| Ownership interest acquired by related party | 100.00% |
Other Comprehensive Income (Loss) and Related Tax Effects (Details) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Tax effects on unrealized gains or losses on available-for-sale securities | $ 0 | $ 0 | |
| Tax effects on foreign currency translation adjustments | 0 | 0 | |
| Cumulative foreign currency translation losses | (50,100,000) | $ (52,300,000) | |
| Other-than-temporary impairment loss on available-for-sale securities | $ 0 | 3,298,000 | |
| Reclassification out of Accumulated Other Comprehensive Income | Recognition of other-than-temporary impairment loss on available-for-sale securities in net income (1) | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Other-than-temporary impairment loss on available-for-sale securities | $ 3,300,000 | ||
Investment Securities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Marketable investment securities - current, at fair value: | ||
| Debt securities | $ 622,839 | $ 454,500 |
| Equity securities | 708 | 1,102 |
| Total marketable investment securities | 623,547 | 455,602 |
| Corporate bonds | ||
| Marketable investment securities - current, at fair value: | ||
| Debt securities | 594,866 | 368,083 |
| Other debt securities | ||
| Marketable investment securities - current, at fair value: | ||
| Debt securities | $ 27,973 | $ 86,417 |
Inventory (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Inventory, Net [Abstract] | ||
| Finished goods | $ 72,027 | $ 70,669 |
| Raw materials | 6,265 | 5,484 |
| Work-in-process | 7,703 | 7,442 |
| Total inventory | $ 85,995 | $ 83,595 |
Property and Equipment (Details 2) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Property and equipment | ||
| Construction in progress | $ 170,186 | $ 149,570 |
| Progress amounts for satellite construction, including prepayments under capital leases and launch services costs | ||
| Property and equipment | ||
| Construction in progress | 114,467 | 101,733 |
| Satellite related equipment | ||
| Property and equipment | ||
| Construction in progress | 34,485 | 28,358 |
| Other | ||
| Property and equipment | ||
| Construction in progress | $ 21,234 | $ 19,479 |
Property and Equipment (Details 3) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
| Depreciation expense | ||
| Total depreciation expense | $ 124,553 | $ 100,678 |
| Satellites | ||
| Depreciation expense | ||
| Total depreciation expense | 59,033 | 52,143 |
| Furniture, fixtures, equipment and other | ||
| Depreciation expense | ||
| Total depreciation expense | 20,774 | 16,682 |
| Customer rental equipment | ||
| Depreciation expense | ||
| Total depreciation expense | 43,448 | 30,596 |
| Buildings and improvements | ||
| Depreciation expense | ||
| Total depreciation expense | $ 1,298 | $ 1,257 |
Investment in Unconsolidated Entities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Investments, Debt and Equity Securities [Abstract] | ||
| Equity method | $ 16,641 | $ 15,149 |
| Other equity investments without a readily determinable fair value | 15,438 | 15,438 |
| Total investments in unconsolidated entities | $ 32,079 | $ 30,587 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
| Income Tax Disclosure [Abstract] | ||
| Income tax benefit (provision) | $ (7,736) | $ 3,582 |
| Effective income tax rate | 27.50% | (61.30%) |
Related Party Transactions (Details 3) - USD ($) $ in Millions |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
| Hughes Systique | |||
| Related party transactions | |||
| Ownership interest in related party | 43.70% | ||
| Ownership interest percentage by related party | 25.60% | ||
| Dish Mexico | |||
| Related party transactions | |||
| Equity interest in joint ventures | 49.00% | ||
| Revenue from Related Parties | $ 5.8 | $ 3.9 | |
| Receivables from related parties | $ 6.6 | $ 7.6 | |
| Deluxe/EchoStar LLC | |||
| Related party transactions | |||
| Equity interest in joint ventures | 50.00% | ||
| Revenue from Related Parties | $ 1.1 | 1.2 | |
| Receivables from related parties | 1.0 | $ 1.1 | |
| AsiaSat | |||
| Related party transactions | |||
| Related Party Transaction, Expenses from Transactions with Related Party | 0.0 | ||
| Global IP Revenue [Member] | |||
| Related party transactions | |||
| Revenue from Related Parties | $ 0.4 | $ 0.0 | |