A N N U A L R E P O R T
Ye a r E n d e d D e c e m b e r 3 1 , 2 0 2 1
CONNECTING
THE WORLD
March 17, 2022
Dear EchoStar Corporation Shareholder,
EchoStar had a solid year in 2021. We achieved year over year growth in revenue and net income and remained focused on meeting our
customers’ needs. Looking forward, we prepare for the launch of our groundbreaking new satellite, EchoStar XXIV/JUPITER 3, which
will primarily provide additional capacity for our HughesNet satellite internet service.
In addition to our revenue and net income growth, adjusted EBITDA grew by approximately 12%. Our Hughes segment, which
represents the significant majority of our total revenue and adjusted EBITDA, grew total revenue by 5%, and adjusted EBITDA by 9%
in 2021. Our balance sheet remained strong at year end with over $1.5 billion of cash and marketable securities and zero net debt.
Highlights of 2021 include:
• Hughes was selected by Eutelsat Communications to enable services on Eutelsat’s new KONNECT Very High-Throughput
Satellite. Hughes will design, manufacture and deliver JUPITER System gateways, end-user terminals and a network
management system that support the payload with extensive flexibility
• Hughes debuted its new satellite/cellular hybrid terminal for customers in Europe. The first-of-its-kind dual-transport terminal
intelligently routes IP traffic via terrestrial or mobile satellite system (MSS) networks; as the terminal moves in and out of
terrestrial cellular coverage areas, the S-band satellite service takes over automatically, ensuring continuous connectivity
• We successfully commissioned a nano-satellite and placed it at the altitude prescribed in our license for the S-band
frequency. We have fulfilled the requirements under the International Telecommunication Union Radio Regulations for
bringing the related Australian filing into use. The nano-satellite is being used to develop and test a wide range of potential S-
band applications and services
At the end of February 2022, we announced that Mike Dugan will be retiring as Chief Executive Officer and President, and that Hamid
Akhavan has been appointed as his successor. Under Mike’s tenure, EchoStar continued to rank as one of the world’s leading satellite
operators, owning and/or leasing 10 satellites or payloads. Through a series of strategic transactions, Mike streamlined and focused
EchoStar, enabling it to better compete in the ever-changing global telecommunications industry. Under the Hughes business, we
continue to lead the industry with the number-one satellite internet service in the world, serving customers across the Americas with our
HughesNet® service and enabling service for millions more worldwide with JUPITER™ System technology. I want to take this
opportunity once again to thank Mike for his years of service and guidance to EchoStar. We all look forward to Hamid joining the
EchoStar team and driving our success to the next level.
Thank you for your continued support.
Sincerely,
Charles W. Ergen
Chairman of the Board of Directors
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒
ENDED DECEMBER 31, 2021.
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
☐
TRANSITION PERIOD FROM TO .
Commission File Number: 001-33807
EchoStar Corporation
(Exact name of registrant as specified in its
charter)
(State or other jurisdiction of incorporation or organization)
Nevada
26-1232727
(I.R.S. Employer Identification No.)
100 Inverness Terrace East, Englewood, Colorado
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
(303) 706-4000
80112-5308
(Zip Code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Securities registered pursuant to Section 12(b) of the Act:
Class A common stock $0.001 par value
The NASDAQ Stock Market LLC
(Title of each class)
SATS
(Ticker symbol)
Securities registered pursuant to Section 12(g) of the Act: None
(Name of each exchange on which registered)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
☒ Accelerated filer
☐ Smaller reporting company
☐ Emerging growth company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. Yes ☒ No ☐
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As of June 30, 2021, the aggregate market value of Class A common stock held by non-affiliates of the registrant was $976.8 million based upon
the closing price of the Class A common stock as reported on the NASDAQ Global Select Market as of the close of business on that date.
As of February 15, 2022, the registrant’s outstanding common stock consisted of 38,169,758 shares of Class A common stock and
47,687,039 shares of Class B common stock, each $0.001 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement to be filed in connection with its 2022 Annual Meeting of Shareholders are incorporated by
reference in Part III.
Table of Contents
Disclosure Regarding Forward Looking Statements
TABLE OF CONTENTS
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART I
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART IV
Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures
Index to Consolidated Financial Statements
i
1
14
25
26
26
26
27
28
29
53
55
55
55
56
56
56
56
56
57
57
58
63
64
F-1
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Form 10-K”) contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about our
estimates, expectations, future developments, plans, objectives, strategies, financial condition, expected impact of
regulatory developments and legal proceedings, opportunities in our industries and businesses and other trends
and projections for the next fiscal quarter and beyond. All statements, other than statements of historical facts, may
be forward-looking statements. Forward-looking statements may also be identified by words such as “anticipate,”
“intend,” “plan,” “goal,” “seek,” “believe,” “estimate,” “expect,” “predict,” “project,” “continue,” “future,” “will,” “would,”
“could,” “can,” “may” and similar terms. These forward-looking statements are based on information available to us
as of the date of this Form 10-K and represent management’s current views and assumptions based on past
experience and trends, current economic and industry conditions, expected future developments and other relevant
factors. Forward-looking statements are not guarantees of future performance, events or results and involve
potential known and unknown risks, uncertainties, including the impact of the coronavirus pandemic (COVID-19),
and other factors, many of which may be beyond our control and may pose a risk to our operating and financial
condition both the near- and long-term. Accordingly, actual performance, events or results could differ materially
from those expressed or implied in the forward-looking statements due to a number of factors including, but not
limited to:
•
•
•
•
•
•
•
significant risks related to our ability to operate and control our satellites, operational and environmental
risks related to our owned and leased satellites, and risks related to our satellites under construction;
our ability and the ability of third parties with whom we engage to operate our business as a result of the
COVID-19 pandemic, including regulatory and competitive considerations;
our ability to implement and/or realize benefits of our investments and other strategic initiatives;
legal proceedings relating to the BSS Transaction or other matters that could result in substantial costs and
material adverse effects to our business;
risks related
internationally;
to our
foreign operations and other uncertainties associated with doing business
risks related to our dependency upon third-party providers; and
risks related to our human capital resources.
Other factors that could cause or contribute to such differences include, but are not limited to, those discussed in
Part I, Item 1A. Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations of this Form 10-K and those discussed in other documents we file with the Securities and Exchange
Commission (“SEC”).
All cautionary statements made herein should be read as being applicable to all forward-looking statements
wherever they appear. Investors should consider the risks and uncertainties described herein and should not place
undue reliance on any forward-looking statements. We do not undertake, and specifically disclaim, any obligation to
publicly release the results of any revisions that may be made to any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law.
Although we believe that the expectations reflected in any forward-looking statements are reasonable, we cannot
guarantee future results, events, levels of activity, performance or achievements. We do not assume responsibility
for the accuracy and completeness of any forward-looking statements. We assume no responsibility for updating
forward-looking information contained or incorporated by reference herein or in any documents we file with the SEC,
except as required by law.
Should one or more of the risks or uncertainties described herein or in any documents we file with the SEC occur, or
should underlying assumptions prove incorrect, our actual results and plans could differ materially from those
expressed in any forward-looking statements.
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ITEM 1.
BUSINESS
OVERVIEW
PART I
EchoStar Corporation (which, together with its subsidiaries, is referred to as “EchoStar,” the “Company,” “we,” “us”
and “our”) is a holding company that was organized in October 2007 as a corporation under the laws of the State of
Nevada and has operated as a separately traded public company from DISH Network Corporation (“DISH”) since
2008. A substantial majority of the voting power of the shares of each of EchoStar Corporation and DISH is owned
beneficially by Charles W. Ergen, our Chairman, and by certain entities established for the benefit of his family. Our
Class A common stock is publicly traded on the NASDAQ Global Select Market (“NASDAQ”) under the symbol
“SATS.”
We are an industry leader in both networking technologies and services, innovating to deliver the global solutions
that power a connected future for people, enterprises and things everywhere. We provide broadband satellite
technologies, broadband internet services for consumer customers, which include home and small to medium-sized
businesses, satellite services and solutions for enterprise customers, which include aeronautical and government
enterprises.
Our industry continues to evolve with the increasing worldwide demand for broadband internet access for
information, entertainment and commerce. The ongoing COVID-19 pandemic has made even more evident the
worldwide need and demand for connectivity and communications to facilitate an ever-increasing virtual global
community and workplace. In addition to fiber and wireless systems, technologies such as geostationary high
throughput satellites, low-earth orbit (“LEO”) networks, medium-earth orbit (“MEO”) systems and multi-transport
networks using combinations of technologies are expected to continue to play significant roles in enabling global
broadband access, networks and services. We intend to use our expertise, technologies, capital, investments,
global presence, relationships and other capabilities to continue to provide broadband internet systems, equipment,
networks and services for information, the internet-of-things, entertainment, education, remote-connectivity and
commerce across industries and communities globally for consumer and enterprise customers. We are closely
tracking the developments in next-generation satellite businesses, and we are seeking to utilize our services,
technologies, licenses and expertise to find new commercial opportunities for our business.
We currently operate in two business segments: our Hughes segment (“Hughes segment”) and our EchoStar
Satellite Services segment (“ESS segment”). These segments are consistent with the way we make decisions
regarding the allocation of resources, as well as how operating results are reviewed by our chief operating decision
maker (“CODM”), who is the Company’s Chief Executive Officer.
Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development,
Human Resources, Information Technology, Finance, Accounting, Real Estate and Legal) and other activities, such
as costs incurred in certain satellite development programs and other business development activities, and gains or
losses from certain of our investments, that have not been assigned to our business segments. These activities,
costs and income, as well as eliminations of intersegment transactions, are accounted for in our Corporate and
Other segment in our segment reporting.
In September 2019, pursuant to a master transaction agreement (the “Master Transaction Agreement”) with DISH
and a wholly-owned subsidiary of DISH (“Merger Sub”), (i) we transferred certain real property and the various
businesses, products, licenses, technology, revenues, billings, operating activities, assets and liabilities primarily
related to the former portion of our ESS segment that managed, marketed and provided (1) broadcast satellite
services primarily to DISH and its subsidiaries (together with DISH, “DISH Network”) and our joint venture Dish
Mexico, S. de R.L. de C.V. (“Dish Mexico”) and its subsidiaries, and (2) telemetry, tracking and control (“TT&C”)
services for satellites owned by DISH Network and a portion of our other businesses (collectively, the “BSS
Business”) to one of our former subsidiaries, EchoStar BSS Corporation (“BSS Corp.”), (ii) we distributed to each
holder of shares of our Class A or Class B common stock entitled to receive consideration in the transaction an
amount of shares of common stock of BSS Corp., par value $0.001 per share (“BSS Common Stock”), equal to one
share of BSS Common Stock for each share of our Class A or Class B common stock owned by such stockholder
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(the “Distribution”); and (iii) immediately after the Distribution, (1) Merger Sub merged with and into BSS Corp. (the
“Merger”), such that BSS Corp. became a wholly-owned subsidiary of DISH and with DISH then owning and
operating the BSS Business, and (2) each issued and outstanding share of BSS Common Stock owned by
EchoStar stockholders was converted into the right to receive 0.23523769 shares of DISH Class A common stock,
par value $0.001 per share (“DISH Common Stock”) ((i) - (iii) collectively, the “BSS Transaction”).
In connection with the BSS Transaction, we and DISH Network agreed to indemnify each other against certain
losses with respect to breaches of certain representations and covenants and certain retained and assumed
liabilities, respectively. Refer to Note 19 in our Consolidated Financial Statements for further details on certain
customary agreements entered into with DISH in relation to the BSS Transaction.
The BSS Transaction was structured in a manner intended to be tax-free to us and our stockholders for U.S. federal
income tax purposes and was accounted for as a spin-off to our shareholders as we did not receive any
consideration. Following the consummation of the BSS Transaction, we no longer operate the BSS Business, which
was a substantial portion of our ESS segment. As a result of the BSS Transaction, the financial results of the BSS
Business, except for certain real estate that transferred in the transaction, are presented as discontinued operations
and, as such, excluded from continuing operations and segment results for all periods presented in our
accompanying Consolidated Financial Statements and notes thereto in Item 15 of this Form 10-K (“Consolidated
Financial Statements”).
See Note 5 in our Consolidated Financial Statements for further detail of our discontinued operations.
The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting
principles in the United States (“U.S. GAAP”). All amounts reference results from continuing operations unless
otherwise noted and are expressed in thousands of U.S. dollars, except share and per share amounts and unless
otherwise noted. Additionally, certain prior period amounts have been adjusted to conform to the current period
presentation.
BUSINESS STRATEGIES
Capitalize on domestic and international demand for broadband services. We intend to capitalize on the
domestic and international demand for satellite-delivered broadband internet services and enterprise solutions by
utilizing, among other things, our industry expertise, technology leadership with LEO and geosynchronous (“GEO”)
satellite systems, increased satellite capacity, access to spectrum resources, licenses and high-quality, reliable
service to drive growth in consumer subscribers and enterprise customers. In addition to satellite-based technology
leadership, we continue to pursue opportunities utilizing and combining multi-transport technology solutions
including 4G/LTE, 5G, fiber and cable.
Expand satellite capacity and related infrastructure. During 2021, we continued the design and construction of
a new, next-generation, high throughput geostationary satellite, with an expected launch in the fourth quarter of
2022, that is primarily intended to provide additional capacity for our HughesNet satellite internet service (the
“HughesNet service”) in North, Central and South America as well as enterprise services. We expect that our
expertise in the identification, acquisition and development of satellite spectrum and orbital rights and satellite
operations, together with our increased satellite capacity and existing, acquired or developed infrastructure, will
continue to provide opportunities in domestic and international markets to enhance services to our existing and
additional customers. We intend to continue to provide services to a broad customer base, including residential,
providers of satellite-delivered broadband, corporate communications and government services.
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Continue to selectively explore new domestic and international strategic initiatives. We intend to continue to
selectively explore opportunities to pursue investments, commercial alliances, partnerships, joint ventures,
acquisitions, dispositions and other strategic initiatives and transactions, domestically and internationally, that we
believe may allow us to increase our existing market share, expand into new markets, and acquire new customers
through the use of multi-transport technologies, increase our satellite capacity, expand into new markets and new
customers, broaden our portfolio of services, products and intellectual property and strengthen our relationships
with our customers. For example, our joint venture with Al Yah Satellite Communications Company PrJSC
(“Yahsat”) enables us to provide satellite broadband services across Africa, the Middle East and southwest Asia.
Additionally, on January 4, 2022, we formed our joint venture with Bharti Airtel Limited (“BAL”) and its subsidiary,
Bharti Airtel Services Limited (together with BAL, “Bharti”), which will enable us to combine the very small aperture
terminal (“VSAT”) businesses of both companies to offer flexible and scalable enterprise networking solutions in
India using satellite connectivity for primary transport, back-up and hybrid network implementation.
Continue development of S-band and other hybrid spectrum resources. We believe we remain in a unique
position to develop a hybrid mobile satellite service (“MSS”) and complementary ground component (“CGC”)
network. We have positioned ourselves to continue to develop the S-band spectrum globally by acquiring Sirion
Global Pty Ltd., which we have renamed EchoStar Global Australia Pty Ltd (“EchoStar Global”), which holds global
S-band non-geostationary satellite spectrum rights for MSS. Our third nano-satellite, launched in the second
quarter of 2021, was successfully commissioned and placed at the altitude prescribed in our Australian license for
the S-band frequency. We have completed the process of fulfilling the remaining requirements under the
International Telecommunication Union (“ITU”) Radio Regulations of bringing the Australian filing into use. The
nano-satellite will now be used to develop and test a wide range of potential S-band applications and services. We
also hold licenses for S-band MSS and terrestrial services in Mexico.
Develop improved and new technologies. Our engineering capabilities provide us with the opportunity to
develop and deploy cutting edge technologies, license our technologies to others and maintain a leading
technological position in the industries in which we are active.
BUSINESS SEGMENTS
HUGHES SEGMENT
Our Products and Services
Our Hughes segment is an industry leader in both networking technologies and services, innovating to deliver the
global solutions that power a connected future for people, enterprises and things everywhere. We provide
broadband satellite technologies and broadband internet products and services to consumer customers. We
provide broadband network technologies, managed services, equipment, hardware, satellite services and
communications solutions to government and enterprise customers. We also design, provide and install gateway
and terminal equipment to customers for other satellite systems. In addition, we design, develop, construct and
provide telecommunication networks comprising satellite ground segment systems and terminals to mobile system
operators and our enterprise customers.
Our Hughes segment incorporates advances in technology to reduce costs and to increase the functionality and
reliability of our products and services. Through advanced and proprietary methodologies, technologies, software
and techniques, we continue to improve the efficiency of our networks. We invest in technologies to enhance our
system and network management capabilities, specifically our managed services for enterprises. We also continue
to invest in next generation technologies that can be applied to our future products and services.
Our Hughes segment continues to focus our efforts on optimizing financial returns of our existing satellites while
planning for new satellite capacity to be launched, leased or acquired. In addition, we are also pursuing wireline
and wireless capacity to utilize in markets that include residential, community WiFi, backhaul, and other enterprise
broadband and multi-transport services. Our consumer revenue growth depends on our success in adding new and
retaining existing subscribers, as well as increasing our Average Revenue Per User/subscriber (“ARPU”). Service
and acquisition costs related to ongoing support for our direct and indirect customers and partners are typically
impacted most significantly by our growth. The growth of both our enterprise and consumer businesses rely heavily
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on global economic conditions and the competitive landscape for pricing relative to competitors and alternative
technologies.
Our Hughes segment currently uses capacity from our owned and leased satellites, including additional satellite
capacity leased from third-party providers to provide services to our customers. We also use other multi-transport
capacity that includes cable, fiber, 5G, and 4G/LTE. Growth of our consumer subscriber base in the U.S. continues
to be constrained where we are nearing or have reached maximum capacity in most areas. Our Latin America
consumer subscriber base in certain areas has also become capacity constrained. These constraints are not
expected to be resolved until we acquire additional capacity.
In May 2019, we entered into an agreement with Yahsat pursuant to which, in November 2019, Yahsat contributed
its satellite communications services business in Brazil to one of our Brazilian subsidiaries in exchange for a 20%
ownership interest in that subsidiary. The combined business provides broadband internet services and enterprise
solutions in Brazil using the Telesat T19V satellite, the Eutelsat 65W satellite and Yahsat’s Al Yah 3 satellite. Under
the terms of the agreement, Yahsat may also acquire, for further cash investments, additional minority ownership
interests in the business in the future provided certain conditions are met.
In May 2019, we entered into an agreement with Bharti, pursuant to which Bharti will contribute its VSAT
telecommunications services and hardware business in India to our two existing Indian subsidiaries that conduct our
VSAT services and hardware business. On January 4, 2022, the formation of this joint venture was announced,
with Bharti obtaining a 33% ownership interest in the combined business. The joint venture combines the VSAT
businesses of both companies to offer flexible and scalable enterprise networking solutions using satellite
connectivity for primary transport, back-up and hybrid implementation.
In August 2017, we entered into a long-term contract for the design and construction of the EchoStar XXIV satellite,
a new, next-generation, high throughput geostationary satellite. The EchoStar XXIV satellite is primarily intended to
provide additional capacity for our HughesNet service in North, Central and South America as well as enterprise
broadband services. The EchoStar XXIV satellite is expected to be launched in the fourth quarter of 2022. Further
delays or impediments could have a material adverse impact on our business operations, future revenues, financial
position and prospects, the completion of manufacture of the EchoStar XXIV satellite and our planned expansion of
satellite broadband services throughout North, South and Central America. In December 2020, we entered into an
agreement with a launch provider for the launch of EchoStar XXIV. Capital expenditures associated with the
construction and launch of the EchoStar XXIV satellite are included in Corporate and Other segment in our segment
reporting.
Our Customers
Our enterprise customers include, but are not limited to, lottery agencies, gas station operators, aircraft connectivity
providers and companies with multi-branch networks that rely on satellite or terrestrial networks for critical
communication across wide geographies. Most of our enterprise customers have contracts with us for the services
they purchase. Our Hughes segment also designs, provides and installs gateway and terminal equipment to
customers for other satellite systems and provides satellite ground segment systems and terminals for other satellite
systems, including mobile system operators. Developments toward the launch of next-generation satellite systems,
including LEO, MEO and geostationary systems, as well as other multi-transport technologies, could provide
additional opportunities to drive the demand for our equipment, hardware, technology and services.
Our Competition
Our industry is highly competitive. As a global provider of network technologies, products and services, our Hughes
segment competes with a large number of telecommunications service providers, which puts pressure on prices and
margins. To compete effectively, we emphasize our network quality, customization capability, offering of networks
as a turnkey managed service, position as a single point of contact for products and services and competitive
prices.
In our consumer broadband satellite technologies and internet services markets, we compete against traditional
telecommunications and wireless carriers, other satellite internet providers, as well as fiber, cable, and wireless
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internet service providers offering competitive services in the markets we seek to serve. Cost, speed and
accessibility are key determining factors in the selection of a service provider by the consumer. In addition,
government subsidies, such as the Federal Communication Commission’s (“FCC”) Rural Development Opportunity
Fund can have the effect of subsidizing the growth of our wired, wireless and satellite competitors. Our primary
satellite competitor in our North American consumer market is ViaSat Communications, Inc., which is owned by
ViaSat, Inc. (“ViaSat”). ViaSat has also announced plans to enter the South and Central American consumer
markets. Starlink has begun offering competing services in the markets we serve and it may become a significant
competitor in the future. We seek to differentiate ourselves based on the ubiquitous availability of our service,
quality, proprietary technology, and distribution channels.
In our enterprise markets, we compete against providers of satellite-based and terrestrial-based networks, including
fiber, cable, wireless internet service, multiprotocol label switching and internet protocol-based virtual private
networks.
Our principal competitors for the supply of very-small-aperture terminal satellite networks are Gilat Satellite
Networks Ltd, ViaSat, and ST Engineering iDirect, Inc. To differentiate ourselves from our competitors, we
emphasize particular technological features of our products and services, our ability to customize networks and
perform desired development work and the quality of our customer service. We also face competition from resellers
and numerous local companies who purchase equipment and sell services to local customers, including domestic
and international telecommunications operators, cable companies and other major carriers.
Manufacturing
Certain products in our Hughes segment are assembled at our facilities in Maryland and we outsource a significant
portion of the manufacturing of our products to third parties. We believe that the manufacturing facilities used by
our Hughes segment have sufficient capacity to handle current demand. We adjust our capacity based on our
production requirements. We also work with third-party vendors for the development and manufacture of
components that are integrated into our products. We develop dual sourcing capabilities for critical parts when
practical and we evaluate outsourced subcontract vendors on a periodic basis. Our operations group, together with
our engineering group, works with our vendors and subcontractors to reduce development costs, to increase
production efficiency, and to obtain components at lower prices.
ESS SEGMENT
Our Services
Our ESS segment provides satellite services on a full-time and/or occasional-use basis to U.S. government service
providers, internet service providers, broadcast news organizations, content providers and private enterprise
customers. We operate our ESS business using primarily the EchoStar IX satellite and the EchoStar 105/SES-11
satellite and related infrastructure. Revenue in our ESS segment depends largely on our ability to continuously
make use of our available satellite capacity with existing customers and our ability to enter into commercial
relationships with new customers. Our ESS segment, like others in the fixed satellite services industry, has
encountered, and may continue to encounter, negative pressure on transponder rates and demand.
Our Customers
Our satellite capacity is currently used by our customers for a variety of applications, including:
•
Fixed Satellite Services (“FSS”). We provide satellite services to broadcast news organizations, internet
service providers and content providers who use our satellites to deliver programming and internet. Our
satellites are also used for the transmission of live sporting events, internet access, disaster recovery and
satellite news gathering services.
• Government Services. We provide satellite and technical services to U.S. government service providers.
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•
Network Services. We provide satellite services to companies for private networks that allow delivery of
video and data services for corporate communications. Our satellites can be used for point-to-point or point
to multi-point communications.
Our Competition
Our ESS segment competes against larger, well-established satellite service companies, such as Intelsat S.A., SES
S.A., Telesat and Eutelsat Communications S.A., in an industry that is characterized by long-term contracts and
high costs for customers to change service providers. Several of our competitors maintain key North American and
other international orbital slots that may further limit our ability to compete and offer competitive pricing.
OTHER BUSINESS OPPORTUNITIES
We intend to continue to selectively explore opportunities to pursue investments, commercial alliances,
partnerships, joint ventures, acquisitions, dispositions and other strategic initiatives and transactions, domestically
and internationally, that we believe may allow us to increase our existing market share, increase our satellite
capacity, expand into new satellite and other technologies, markets and customers, broaden our portfolio of
services, products and intellectual property, make our business more valuable, align us for future growth and
expansion, maximize the return on our investments and strengthen our business and relationships with our
customers. We may allocate or dispose of significant resources for long-term value that may not have a short or
medium-term or any positive impact on our revenue, results of operations, or cash flow.
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OUR SATELLITE FLEET
As of December 31, 2021, our satellite fleet consisted of ten GEO satellites, seven of which are owned and three of
which are leased. They are all in geosynchronous orbit, approximately 22,300 miles above the equator. Our owned
S-band LEO nano-satellites are not included in the table below.
The following table presents our GEO satellite fleet as of December 31, 2021:
GEO Satellite
Owned:
SPACEWAY 3 (1)
EchoStar XVII
EchoStar XIX
Al Yah 3 (2)
EchoStar IX (3) (4)
EUTELSAT 10A (“W2A”) (5)
EchoStar XXI
Finance leases:
Eutelsat 65 West A
Telesat T19V
EchoStar 105/SES-11
Segment
Launch Date
Nominal Degree
Orbital Location
(Longitude)
Depreciable
Life (In Years)
Hughes
Hughes
Hughes
Hughes
ESS
August 2007
July 2012
December 2016
January 2018
August 2003
Corporate and Other
April 2009
Corporate and Other
June 2017
Hughes
Hughes
ESS
March 2016
July 2018
October 2017
95 W
107 W
97.1 W
20 W
121 W
10 E
10.25 E
65 W
63 W
105 W
10
15
15
7
12
-
15
15
15
15
(1) Depreciable life represents the remaining useful life as of June 8, 2011, the date EchoStar completed its acquisition of Hughes
Communications, Inc. (“Hughes Communications”) and its subsidiaries (the “Hughes Acquisition”).
(2) Upon consummation of our joint venture with Yahsat in Brazil in November 2019, we acquired the Brazilian Ka-band payload on this satellite.
Depreciable life represents the remaining useful life as of November 2019.
(3) We own the Ka-band and Ku-band payloads on this satellite.
(4) EchoStar IX is approaching its end of station-kept life. The Company expects to place the satellite in an inclined-orbit in the fourth quarter of
2022 or first quarter of 2023, but this ability is dependent upon events beyond our control and may not occur on schedule if at all. Inclined-
orbit will extend its life but impact revenue generating capabilities.
(5) We acquired the S-band payload on this satellite in December 2013. Prior to acquisition, the S-band payload experienced an anomaly at the
time of launch and, as a result, is not fully operational.
Our EchoStar XXIV satellite is included in construction in progress as of December 31, 2021. The satellite is
expected to be launched in the fourth quarter of 2022.
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 year ended December 31, 2021. 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 satellites were to fail.
We generally do not carry in-orbit insurance on our satellites or payloads 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 our joint venture agreement with Yahsat, we are required to maintain insurance for
the Al Yah 3 Brazilian payload during the commercial in-orbit service of such payload, subject to certain limitations
on coverage. Our satellites and other payloads, 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-related decisions
on a case-by-case basis.
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We evaluate our satellites for impairment and test for recoverability whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Certain of the anomalies previously disclosed may be
considered to represent a significant adverse change in the physical condition of a particular satellite. However,
based on the redundancy designed within each satellite, certain of these anomalies are not necessarily considered
to be significant events that would require a test of recoverability.
GOVERNMENT REGULATIONS
We are subject to telecommunications regulation by a number of regulatory bodies including the FCC, other U.S.
federal and state regulators, the ITU and regulators in other countries and regions where we hold licenses including
the E.U., the U.K., India, Australia and several Latin American countries. In addition, we are also subject to the
export control laws and regulations and trade sanctions laws and regulations of the U.S. and other countries with
respect to the export of telecommunications equipment and services. In addition, in the U.S. and some other
countries we are subject to country specific approvals of our products. Depending upon the circumstances, non-
compliance with applicable legislation or regulations could result in suspension or revocation of our licenses or
authorizations, the termination or loss of contracts or the imposition of contractual damages, civil fines or criminal
penalties.
The following summary of regulations and legislation is not intended to describe all present and proposed
government regulation and legislation affecting our business. Government regulations that are currently the subject
of judicial or administrative proceedings, draft legislation or administrative proposals could impact us and our
industries to varying degrees. The FCC and other regulators from time to time initiate proceedings that could
adversely impact our satellite operations, including spectrum usage. We cannot predict either the outcome of these
proceedings or proposals or any potential impact they might have on the industry or on our operations.
FCC Regulations Applicable to Our Operations
FCC Jurisdiction over Satellite and Terrestrial Operations. Non-governmental bodies, including commercial
entities, that use radio frequencies to provide communications services to, from or within the U.S. are subject to the
jurisdiction of the FCC under the Communications Act of 1934, as amended (the “Communications Act”). The
Communications Act gives the FCC regulatory jurisdiction over many areas relating to communications operations,
including:
•
•
•
•
•
the assignment of satellite radio frequencies and orbital locations to specific services and companies, the
licensing of satellites and earth stations and the granting of related authorizations;
approval for the relocation of satellites to different orbital locations, the replacement of a satellite with
another new or existing satellite and the authorization of specific earth stations to communicate with such
newly relocated satellites;
ensuring compliance with the terms and conditions of assignments, licenses, authorizations and approvals;
avoiding harmful interference with other radio frequency emitters; and
ensuring compliance with other applicable provisions of the Communications Act and FCC rules and
regulations.
All satellite licenses issued by the FCC are subject to expiration unless extended by the FCC. Our U.S. FSS
licenses generally have 15 year terms. We hold licenses and authorizations for satellite and earth stations as well
as other services. To obtain and operate under such FCC licenses and authorizations, we must satisfy legal,
technical qualification requirements and other conditions including, among other things, satisfaction of certain
technical and ongoing due diligence obligations, maintaining bonds, payment of annual regulatory fees and various
reporting requirements.
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Telecommunications Regulation. Many of the services we provide are also subject to FCC regulation as
telecommunications services. For certain services in the U.S., we are required to contribute fees, computed as a
percentage of our revenue from telecommunications services to the Universal Service Fund (“USF”) to support
mechanisms that subsidize the provision of services to low-income consumers, high-cost areas, schools, libraries
and rural health care providers. Current FCC rules permit us to pass this USF contribution through to our
customers. The FCC also requires broadband internet access and internet telephony service providers to comply
with the requirements of the Federal Communications Assistance for Law Enforcement Act, which generally requires
telecommunications carriers to ensure that law enforcement agencies are able to conduct lawfully-authorized
surveillance of users of their services. In addition, as a provider of interconnected voice over internet protocol
services, we are required to abide by a number of rules related to telephony service, including rules dealing with the
protection of customer information and the processing of emergency calls.
State and Local Regulation
We are also regulated by state and local authorities. While the FCC has preempted many state and local
regulations that would impair the installation and use of very-small-aperture terminals and other consumer satellite
dishes, our businesses nonetheless are subject to state and local regulation, including, among others, obtaining
regulatory authorizations and zoning regulations that affect the ability to install these consumer satellite earth station
antennas. In addition, in order to obtain universal service funding, we are subject to being an eligible
telecommunications carrier in certain states.
International Regulation
Foreign Administrations’ Jurisdiction Over Satellite and Terrestrial Operations. Some of our satellites and
earth stations are licensed in foreign jurisdictions. We also have terrestrial authorizations in foreign jurisdictions. In
order to provide service to a foreign location from our satellites, we are required to obtain approvals from the FCC
and foreign administrative agencies. The laws and regulations addressing access to satellite and terrestrial
systems vary from country to country. In most countries, a license is required to provide our services and to operate
satellite systems and earth stations. Such licenses may impose certain conditions, including implementation and
operation of the satellite system in a manner consistent with certain milestones (such as for contracting, satellite
design, construction, launch and implementation of service), that the satellite or its launch be procured through a
national entity, that the satellite control center be located in national territory, that a license be obtained prior to
launching or operating the satellite, or that a license be obtained before interconnecting with the local switched
telephone network and we may be subject to penalties or fines for failing to meet such conditions. Additionally,
some countries may have restrictions on the services we provide and how we provide them and/or may limit the
rates that can be charged for the services we provide or impose other service terms or restrictions. Furthermore,
foreign countries in which we currently, or may in the future, operate may not authorize us access to all of the
spectrum that we need to provide service in a particular country.
The ITU Frequency and Orbital Location Registration. The orbital location and frequencies for our satellites are
subject to the frequency registration and coordination process of the ITU. The ITU Radio Regulations define the
international rules, regulations and rights for a satellite and associated earth stations to use specific radio
frequencies at a specific orbital location. These rules, which include deadlines for the bringing of satellite networks
into use, differ depending on the type of service to be provided and the frequencies to be used by the satellite. On
our behalf, various countries have made and may in the future make, additional filings for the frequency
assignments at particular orbital locations that are used or to be used by our current satellite networks and potential
future satellite networks we may build or acquire. In the event the international coordination process that is
triggered by ITU filings under applicable rules is not successfully completed, or that the requests for modification of
the broadcast satellite services plan regarding the allocation of orbital locations and frequencies are not granted by
the ITU, we will have to operate the applicable satellite(s) on a non-interference basis, which could have an adverse
impact on our business operations. If we cannot do so, we may have to cease operating such satellite(s) at the
affected orbital locations. We cannot be sure of the successful outcome of these ITU coordination processes. We
make commercially reasonable efforts to cooperate with the filing nation in the preparation of ITU filings,
coordination of our operations in accordance with the relevant ITU Radio Regulations and responses to relevant ITU
inquiries.
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Registration in the United Nations (“UN”) Registry of Space Objects. The U.S. and other jurisdictions in which
we license satellites are generally parties to the UN Convention on the Registration of Objects Launched into Outer
Space, which requires a satellite’s launching state to register the satellite as a space object. The act of registration
carries liability for the registering country in the event that the satellite causes third party damage. Administrations
may place certain requirements on satellite licensees in order to procure the necessary launch or operational
authorizations that accompany registration of the satellite. In some jurisdictions, these authorizations are separate
and distinct, with unique requirements, from the authorization to use a set of frequencies to provide satellite
services.
Telecommunications Regulation. Many of the services we provide are also subject to the regulation of other
countries as telecommunications services. For certain services, we may be required to contribute fees to a
universal service or other fund to support mechanisms that subsidize the provision of services to designated
groups. Many countries also impose requirements on telecommunications carriers to ensure that law enforcement
agencies are able to conduct lawfully-authorized surveillance of users of their services. In addition, we are subject
to a number of other rules, including rules related to telephony service such as the protection of customer
information and processing of emergency calls.
Export Control Regulation
In the operation of our business, we must comply with all applicable export control and trade sanctions laws and
regulations of the U.S. and other countries. Applicable U.S. laws and regulations include the Arms Export Control
Act, the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”) and the
trade sanctions laws and regulations administered by the U.S. Department of the Treasury’s Office of Foreign
Assets Control (“OFAC”).
The export of certain hardware, technical data, and services relating to satellites and the supply of certain ground
control equipment, technical data and services to non-U.S. persons or to destinations outside the U.S. is regulated
by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) under the EAR. In addition, BIS
regulates our export of satellite communications network equipment to non-U.S. persons or to destinations outside
of the U.S. The export of other items is regulated by the U.S. Department of State’s Directorate of Defense Trade
Controls (“DDTC”) under the ITAR and are subject to strict export control and prior approval requirements. In
addition, we cannot provide certain equipment or services to certain countries subject to U.S. trade sanctions unless
we first obtain the necessary authorizations from OFAC. We are also subject to the Foreign Corrupt Practices Act
and similar anti-bribery laws in other jurisdictions that generally prohibit companies and their intermediaries from
making improper payments or giving or promising to give anything of value to foreign government officials and other
individuals for the purpose of obtaining or retaining business or gaining a competitive advantage.
Environmental Regulation
We are subject to the requirements of federal, state, local and foreign environmental and occupational safety and
health laws and regulations. These include laws regulating air emissions, waste-water discharge and waste
management, most significantly the Resource Conservation and Recovery Act and the Emergency Planning and
Community Right-to-Know Act (“EPCRA”). Under the Resource Conservation and Recovery Act, our Hughes
segment is considered a small quantity generator.
As required by the EPCRA, we file annual reports with regulatory agencies covering four areas: Emergency
Planning, Emergency Release, Hazardous Chemical Storage and Toxic Chemical Release Inventory. We maintain
small quantities of hazardous materials on our premises and, therefore, have relatively modest reporting
requirements under the EPCRA. We are also subject to the requirements of other environmental and occupational
safety and health laws and regulations. Additionally, we review the Superfund Amendments and Reauthorization
Act Title III regulatory requirements and annually report quantities of onsite material storage using Tier II, state DEQ
(Department of Environmental Quality) reporting systems.
Our environmental compliance costs, capital and other expenditures to date have not been material, and we do not
expect them to be material in 2021. However, environmental requirements are complex, change frequently and
have become more stringent over time. Accordingly, we cannot provide assurance that these requirements will not
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change or become more stringent in the future in a manner that could have a material adverse effect on our
business and/or environmental compliance costs, capital or other expenditures.
PATENTS AND TRADEMARKS
We currently rely on a combination of patent, trade secret, copyright and trademark law, together with licenses, non-
disclosure and confidentiality agreements and technical measures, to establish and protect proprietary rights in our
products. We hold U.S. and foreign patents covering various aspects of our products and services. The duration of
each of our U.S. patents is generally 20 years from the earliest filing date to which the patent has priority. We have
granted licenses to use our trademarks and service-marks to affiliates and resellers worldwide, and we typically
retain the right to monitor the use of those marks and impose significant restrictions on their use in efforts to ensure
a consistent brand identity. We protect our proprietary rights in our software through software licenses that, among
other things, require that the software source code be maintained as confidential information and that prohibit any
reverse-engineering of that code.
We believe that our patents are important to our business. We also believe that, in some areas, the improvement of
existing products and the development of new products, as well as reliance upon trade secrets and unpatented
proprietary know-how, are important in establishing and maintaining a competitive advantage. We believe, to a
certain extent, that the value of our products and services are dependent upon our proprietary software, hardware
and other technology remaining trade secrets and/or subject to copyright protection. Generally, we enter into non-
disclosure and invention assignment agreements with our employees, subcontractors and certain customers and
other business partners. Please see Item 3. Legal Proceedings of this Form 10-K for more information.
RESEARCH AND DEVELOPMENT AND ENGINEERING
We have a skilled and multi-disciplined engineering organization that develops our products and services. Our in-
house technological capability includes a wide range of skills required to develop systems, hardware, software and
firmware used in our products and services.
With respect to hardware development, we have skill sets that include complex digital designs, radio frequency and
intermediate frequency analog designs, advanced application-specific integrated circuit designs and sophisticated
consumer and system level packaging designs. We also have extensive experience in developing products for
high-volume, low-cost manufacturing for the consumer industry, including dual mode satellite and wireless
handsets.
As a complement to our hardware development, we have extensive experience in designing reliable, real time,
embedded software systems as part of our communication systems and services offerings. For example, our
broadband product
for data
communications. Our engineers have also developed many large turnkey systems for our customers by designing
the overall solution, implementing the various subsystems, deploying the entire network and user terminals,
integrating and verifying the operational system and ultimately training the customers’ technicians and operators.
the enterprise market supports an extensive range of protocols
line
for
Costs incurred in research and development activities are generally 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 -
equipment in the Consolidated Statements of Operations in our Consolidated Financial Statements.
GEOGRAPHIC AREA DATA AND TRANSACTIONS WITH MAJOR CUSTOMERS
For principal geographic area data and transactions with major customers for 2021, 2020 and 2019, see Note 22 in
our Consolidated Financial Statements. See Item 1A. Risk Factors for information regarding risks related to our
foreign operations.
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HUMAN CAPITAL RESOURCES
Our Human Capital
As of December 31, 2021, we had approximately 2,500 employees globally; of which approximately 1,900 were
located in the U.S. and 600 internationally. We generally consider relations with our employees to be good. Other
than approximately 200 of our employees located in Italy and Brazil, none are represented by a union. Our mission
is to be a global connectivity provider for people, enterprises and things.
Employee Training and Development
We have a robust ongoing training and development program to enable employees to further refine and develop
their skills. These training and development programs include technical programs meant to keep our employees
abreast of the latest developments in our industry as well as courses to assist employees in developing their
business communications and management skills.
Worker Health and Safety
Our commitment is to provide a safe, healthy and reliable workplace. We provide access to a variety of innovative,
flexible, and convenient health and wellness programs. Due to the COVID-19 pandemic, we have a taken a number
of steps to prioritize health and safety of our employees including but not limited to: limiting visitor site access to
business-essential purposes; introducing screening checks at certain sites where needed and mandated; and
enabling employees to work from home as required or appropriate. Out of an abundance of caution for the health of
our employees and to support local government initiatives to stem the spread of the virus, we implemented several
precautions at various sites around the world at all times in compliance with local government requirements and
Centers for Disease Control and Prevention (CDC) guidelines. For the employees coming in to the physical offices,
we implemented enhanced safety and security procedures in accordance with state, local, federal and CDC
recommendations.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and
accordingly file an annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy
statements and other information with the SEC. Our public filings are maintained on the SEC’s internet site at http://
www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that
file electronically with the SEC.
WEBSITE ACCESS
Our Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, may also be
accessed free of charge through our website at http://www.echostar.com as soon as reasonably practicable after we
have electronically filed such material with, or furnished it to, the SEC.
We have adopted a written code of ethics that applies to all of our directors, officers and employees, including our
principal executive officer, principal financial officer, principal accounting officer and controller, in accordance with
the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder. Our code of ethics is available
on our corporate website at http://www.echostar.com. In the event that we make changes in, or provide waivers of,
the provisions of this code of ethics that the SEC requires us to disclose, we intend to disclose these events on our
website.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Furnished in accordance with Item 401(b) of Regulation S-K, pursuant to General Instruction G(3) of Form 10-K.
The following table and information below sets forth the name, age and position with EchoStar of each of our
executive officers, the period during which each executive officer has served as such and each executive officer’s
business experience during at least the past five years:
Name
Charles W. Ergen
Michael T. Dugan
David J. Rayner
Anders N. Johnson
Pradman P. Kaul
Dean A. Manson
Age
68
73
64
64
75
55
Chairman
Position
Chief Executive Officer, President and Director
Executive Vice President, Chief Financial Officer, Chief Operating
Officer and Treasurer
Chief Strategy Officer and President, EchoStar Satellite Services
L.L.C.
President, Hughes Communications and Director
Executive Vice President, General Counsel and Secretary
Charles W. Ergen. Mr. Ergen has served as our executive Chairman since November 2009 and Chairman of the
Board of Directors since our formation in 2007. Mr. Ergen served as our Chief Executive Officer from our formation
in 2007 until November 2009. Mr. Ergen serves as executive Chairman and has been Chairman of the Board of
Directors of DISH since its formation and, during the past five years, has held executive officer and director
positions with DISH Network, most recently serving as the Chief Executive Officer of DISH from March 2015 to
December 2017.
Michael T. Dugan. Mr. Dugan has served as our Chief Executive Officer and President since November 2009.
Mr. Dugan has also served as a member of our Board of Directors since our formation in 2007. Mr. Dugan served
as a senior advisor to EchoStar from January 1, 2008 until November 2009. From May 2004 to December 2007, he
was a director of DISH and, from 1990 to 2006, he served in several executive roles at DISH Network, including as
President, Chief Operating Officer, Chief Technical Officer and senior advisor.
David J. Rayner. Mr. Rayner has served as our Executive Vice President, Chief Financial Officer and Treasurer
since December 2012 and as our Chief Operating Officer since September 2016. From November 2011 to
November 2012, Mr. Rayner served as Chief Financial Officer of Tendril Networks, Inc., a Boulder, Colorado
software company. Mr. Rayner served as our Chief Financial Officer from June 2010 to November 2011 and served
as our Chief Administrative Officer from January 2008 to June 2010. Prior to that, Mr. Rayner served as Executive
Vice President of Installation and Service Networks of DISH and previously as Chief Financial Officer of DISH.
Before joining DISH in December 2004, Mr. Rayner served as Senior Vice President and Chief Financial Officer of
Time Warner Telecom in Denver, beginning in June 1998.
Anders N. Johnson. Mr. Johnson has served as President of EchoStar Satellite Services L.L.C. since June 2011
and as our Chief Strategy Officer since September 2016. Before joining EchoStar, Mr. Johnson was most recently
at SES World Skies where he served as Senior Vice President of Strategic Satellite Development. Mr. Johnson
joined SES GLOBAL after the combination of GE Americom and SES GLOBAL in 2001. Prior to SES GLOBAL,
Mr. Johnson worked at GE Capital beginning in 1985 in a variety of executive level roles in Satellite Services,
Aviation Services and Transportation & Industrial Financing.
Pradman P. Kaul. Mr. Kaul has served as President of Hughes Communications since its formation in
February 2006 and as President of Hughes Network Systems, LLC, a wholly owned subsidiary of Hughes
Communications (and together with Hughes Communications, “Hughes”) since 2000. Mr. Kaul has also served as a
member of our Board of Directors since August 2011 as well as a member of the board of directors of Hughes
Communications from February 2006 until June 2011. Previously, Mr. Kaul served as the Chief Operating Officer,
Executive Vice President and Director of Engineering of Hughes Network Systems, LLC.
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Dean A. Manson. Mr. Manson has served as our Executive Vice President, General Counsel and Secretary since
November 2011 and is responsible for all our legal, government affairs and corporate information security.
Mr. Manson joined our subsidiary Hughes Network Systems, LLC in 2000 from the law firm of Milbank, Tweed,
Hadley & McCloy LLP, where he focused on international project finance and corporate transactions and was
appointed General Counsel in 2004.
There are no arrangements or understandings between any executive officer and any other person pursuant to
which any executive officer was selected as such. Pursuant to the Bylaws of EchoStar, executive officers serve at
the discretion of the Board of Directors.
ITEM 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones facing us. If any of the following events occur or
evolve in a way different than expected, our business, financial condition, results of operation, prospects or ability to
fund a share or debt repurchase program, invest capital in or otherwise run our business, execute on our strategic
plans or return capital to our shareholders could be materially and adversely affected.
RISKS RELATED TO THE COVID-19 PANDEMIC
As the COVID-19 pandemic and its effects continue to develop, it is impossible at this time to predict its ultimate
impact on our business. We have set forth some key risks identified to date.
Our operations, and those of our customers, suppliers, vendors, and other third parties with whom we
conduct business, including regulatory agencies, have been, and may continue to be, adversely affected by
the COVID‑19 pandemic.
The effects of the COVID-19 pandemic have disrupted our and our customers’, suppliers’, vendors’ and other
business partners’ and investees’ businesses, and have delayed the manufacture and deployment of our satellites,
specifically our EchoStar XXIV satellite. Disruption to our vendors’ and suppliers’ businesses could adversely
impact our supply chain. Additionally, some regulatory bodies have reduced activities and/or temporarily closed
their offices which may materially delay the review and/or approval of licenses or authorizations we need to operate
our business. We cannot currently estimate or determine the final magnitude of these impacts.
Additionally, many of our subscribers are working remotely or engaging in distance learning. These activities have
increased the usage on our HughesNet service so that there is little or no capacity remaining for subscriber growth
in our most popular geographic areas. This limitation on capacity has resulted in our subscribers experiencing
slower speeds, which, in turn, has resulted in higher churn.
A portion of the expected sales of our products or services have been, and additional sales may be, delayed
or canceled as a result of effects of the COVID-19 pandemic on the operations of our customers.
Due to the economic downturn arising from the COVID-19 pandemic, a number of our enterprise customers are
facing uncertain futures and certain of these customers have filed for bankruptcy protection. When enterprise
customers fail or seek reorganization under the bankruptcy laws, we may be obliged to provide services for which
we are not being paid. Further, the COVID-19 pandemic has resulted in increased unemployment, which could
result in reduced demand and increased inability to pay from our consumer customers.
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RISKS RELATED TO OUR BUSINESS OPERATIONS
We may pursue acquisitions, dispositions, capital expenditures, the development, acquisition and launch of
new satellites and other strategic initiatives to complement or expand our business, which may not be
successful and we may lose a portion or all of our investment.
Our success may depend on the existence of, and our ability to capitalize on, opportunities to acquire or develop
other businesses or technologies or partner with other companies that could complement, enhance or expand our
current business, services or products or that may otherwise offer us growth opportunities. We may pursue a
number of strategic initiatives to complement or expand our business. Any such strategic initiatives may involve a
high degree of risk, including, but not limited to, the following:
•
•
•
•
•
•
•
•
the risks associated with developing and constructing new satellites;
the diversion of our management’s attention away from our existing business onto a strategic initiative;
possible adverse effects on our and our targets’ and partners’ business, financial condition or operating
results during the integration process;
exposure to significant financial losses if the strategic initiatives are not successful;
the inability to obtain regulatory approvals in the anticipated time frame, or at all;
the risks associated with complying with regulations applicable to the acquired or developed business or
technologies which may cause us to incur substantial expenses;
the disruption of relationships with employees, vendors or customers; and
the risks associated with foreign and international operations and/or investments or dispositions.
New strategic initiatives may require the commitment of significant capital that would otherwise have been directed
to investments in our existing businesses or distributed to shareholders.
We could face decreased demand and increased pricing pressure with respect to our products and services
due to competition.
Our business operates in an intensely competitive, consumer- and enterprise-driven and rapidly changing
environment and competes with a growing number of companies that provide similar products and services to
consumer and enterprise customers. There can be no assurance that we will be able to effectively compete against
our competitors due to their significant resources and operating history. Material competitive risks to our business
include, but are not limited to, the following:
•
•
Competition from new or different technology compared to our offerings;
Competition from existing or new competitors entering the same markets we serve;
• Government funding for competing products and services, reducing demand for our products and services;
•
and
Competitive pressures to provide enhanced functionality for the same or lower price with each new
generation of technology.
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Our business will be negatively impacted if we fail to adequately anticipate our satellite capacity needs or
are unable to obtain satellite capacity.
We have made substantial contractual commitments for satellite capacity based on our existing customer contracts
and backlog. If our existing customer contracts were to be terminated prior to their respective expiration dates, we
may have insufficient revenue to cover our satellite capacity costs. On the other hand, we may not have sufficient
satellite capacity available to meet increases in demand and we may not be able to quickly or easily adjust our
capacity to such changes in demand. At present, until the launch and operation of additional satellites that our
systems can utilize, there is limited additional capacity in North America and in certain areas of Latin America,
including within our own fleet of satellites, which could materially and adversely affect our ability to provide services
to customers and grow our revenue and business. Our business could be adversely affected if we are not able to
renew our capacity leases at economically viable rates, or if sufficient capacity is not available to us.
We are dependent upon third-party providers for components, manufacturing, installation services and
customer support services, and our results of operations may be materially adversely affected if any of
these third-party providers fail to appropriately deliver the contracted goods or services.
Our dependence upon third-party providers causes certain risks to our business, including the following:
•
•
Components. A limited number of suppliers manufacture, and in some cases a single supplier
manufactures, some of the key components required to build our products. We do not generally maintain
long-term agreements with our suppliers or subcontractors for our products. If we change or lose suppliers,
we could experience a delay in manufacturing our products. In addition, if either our current suppliers or
any new suppliers increase prices beyond what we currently pay, we may be unable to produce our
products at competitive prices and we may be unable to satisfy demand from our customers.
Commodity Price Risk. Fluctuations in pricing of raw materials can affect our product costs and we may
not be able to pass on the increased costs to our customers. Additionally, we are seeing increasing
inflationary price pressure and where we have fixed-price customer contracts, we may have to absorb the
increased costs.
• Manufacturing. While we develop and manufacture prototypes for certain of our products, we use contract
manufacturers to produce a significant portion of our hardware. If these contract manufacturers fail to
provide products that meet our specifications in a timely manner or at all, our business could be adversely
impacted.
•
Installation, customer support, and other services. Some of our products and services utilize a network
of third-party service providers. The costs incurred for these services may increase due to a shortage of
experienced workers and higher salaries required to recruit and retain a skilled third-party workforce. A
decline in levels of service or attention to the needs of our customers could adversely affect our reputation,
renewal rates and ability to win and retain customers. In addition, if the agreements for the provision of
these services are terminated or not renewed, we could face difficulties replacing these service providers.
Our foreign operations and investments expose us to risks and restrictions not present in our domestic
operations.
Our sales outside the U.S. accounted for 21.4%, 19.6% and 20.4% of our revenue for the years ended
December 31, 2021, 2020 and 2019, respectively. We expect our foreign operations to represent a significant and
growing portion of our business. Our foreign operations involve varying degrees of risk and uncertainties inherent in
doing business abroad. Such risks include:
•
Complications in complying with restrictions on foreign ownership and investment and limitations
on repatriation of earnings. We may not be permitted to be the sole owner of our operations in some
countries and may have to enter into partnership or joint venture relationships. Many foreign legal regimes
and/or our contractual arrangements restrict our repatriation of earnings to the U.S. from our subsidiaries
and joint venture entities. Applicable law in such foreign countries may also limit our ability to distribute or
access our assets or offer our products and services in certain circumstances. In such event, we will not
have unrestricted access to the cash flow and assets of our subsidiaries and joint ventures.
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•
•
•
•
•
Regulatory restrictions. Satellite market access, landing rights and terrestrial wireless rights are
dependent on the national regulations established by foreign governments and international non-
governmental bodies. Non-compliance with these requirements may result in the loss of the authorizations
and licenses to conduct business in these countries, as well as fines, penalties, or other sanctions.
Financial and legal constraints and obligations. Operating pursuant to foreign licenses subjects us to
certain financial constraints and obligations, including, but not limited to: (a) tax liabilities that may or may
not be dependent on revenue; (b) the regulatory requirements associated with maintaining such licenses,
which may be subject to interpretation by foreign courts and regulatory bodies; (c) the burden of creating
and maintaining additional entities, branches, facilities and/or staffing in foreign jurisdictions; and (d)
regulations requiring that we make certain satellite capacity available for “free” or available at reduced rates.
Compliance with applicable export control laws and regulations in the U.S. and other countries. We
must comply with all applicable export control and trade sanctions laws and regulations of the U.S. and
other countries. A violation any export or trade-related regulations could materially adversely affect our
business.
Changes in exchange rates between foreign currencies and the U.S. dollar. Fluctuations in currency
exchange rates, recessions and currency devaluations have affected, and may in the future affect, revenue,
profits and cash earned from our international businesses.
Regulations may favor state-owned enterprises or local service providers. Many of the countries in
which we conduct business have traditionally had state-owned or state-granted monopolies on
telecommunications services that favor an incumbent service provider. We face competition from these
favored and entrenched companies in countries that have not liberalized.
We may not be able to generate cash to meet our debt service needs or fund our operations.
As of December 31, 2021, our total indebtedness was $1.5 billion. Our ability to make payments on or to refinance
our indebtedness and to fund our operations will depend on our ability to generate cash in the future. If we are
unable to generate sufficient cash, we may be forced to take actions such as revising or delaying our strategic
plans, reducing or delaying capital expenditures and/or the development, design, acquisition and construction of
new satellites, selling assets, restructuring or refinancing our debt or seeking additional equity capital. We may not
be able to implement any of these actions on satisfactory terms, or at all.
Covenants in our indentures restrict our business in many ways.
The indentures governing the Hughes Satellite Systems Corporation (“HSSC”) 5.250% Senior Secured Notes due
August 1, 2026 and 6.625% Senior Unsecured Notes due August 1, 2026 contain various covenants, subject to
certain exceptions, that limit HSSC’s ability and/or certain of its subsidiaries’ ability to, among other things:
•
•
•
incur additional debt;
pay dividends or make distributions on HSSC’s capital stock or repurchase HSSC’s capital stock;
allow to exist certain restrictions on such subsidiaries’ ability to pay dividends, make distributions, make
other payments, or transfer assets;
• make certain investments;
•
•
create liens or enter into sale and leaseback transactions;
enter into transactions with affiliates;
• merge or consolidate with another company; and
•
transfer and sell assets.
Failure to comply with these and certain other financial covenants, if not cured or waived, may result in an event of
default under the indentures, which could have a material adverse effect on our business, financial condition, results
of operations or prospects. If certain events of default occur and are continuing under the respective indenture, the
trustee under that indenture or the requisite holders of the notes under that indenture may declare all such notes to
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be immediately due and payable and, in the case of the indenture governing our secured notes, could proceed
against the collateral that secures the secured notes. If certain other events of default occur, the indentures will
become immediately due and payable. Certain of our subsidiaries have pledged a significant portion of our assets
as collateral to secure the 5.250% Senior Secured Notes due August 1, 2026.
A natural disaster could diminish our ability to provide service to our customers.
Natural disasters could damage or destroy our ground infrastructure and/or our other or our vendors’ infrastructure,
equipment and facilities, resulting in a disruption of service to our customers, which may adversely affect our
business.
RISKS RELATED TO OUR HUMAN CAPITAL
We rely on key personnel and the loss of their services may negatively affect our businesses.
We believe that our future success depends to a significant extent upon the performance of Mr. Charles W. Ergen,
our Chairman, and certain other key executives. The loss of Mr. Ergen or certain other key executives, the ability to
effectively provide for the succession of our senior management, or the ability of Mr. Ergen or such other key
executives to devote sufficient time and effort to our business could have a material adverse effect on our business,
financial condition and results of operations. Although some of our key executives may have agreements relating to
their equity compensation that limit their ability to work for or consult with competitors, we generally do not have
employment agreements with them. To the extent Mr. Ergen is performing services for both DISH Network and us,
his attention may be diverted away from our business and therefore adversely affect our business.
Our business growth and customer retention strategies rely in part on the work of technically skilled
employees.
Our response to technological developments depends, to a significant degree, on the work of technically skilled
employees. In addition, we have made and will continue to make significant investments in research, development,
and marketing for new products, services, satellites and related technologies, as well as entry into new business
areas. Investments in new technologies, satellites and business areas are inherently dependent on these
technically skilled employees as well. Competition for the services of such employees has become more intense as
demand for these types of employees grows. We compete with other companies for these employees and although
we strive to attract and retain these employees, we may not succeed in these respects. Additionally, if we were to
lose certain key technically skilled employees, the loss of knowledge and intellectual capital might have an adverse
impact on business.
Restrictions on immigration or increased enforcement of immigration laws could limit our access to
qualified and skilled professionals, increase our cost of doing business or otherwise disrupt our
operations.
The success of our business is dependent on our ability to recruit engineers and other professionals, including
those who are citizens of other countries. Immigration laws in the U.S. and other countries in which we operate are
subject to legislative and regulatory changes, as well as variations in the standards of application and enforcement
due to political forces and economic conditions. It is difficult to predict the political and economic events that could
affect immigration laws, or the restrictive impact they could have on obtaining or renewing work visas for our
professionals. If immigration laws are changed or if new and more restrictive government regulations are enacted
or increased, our access to qualified and skilled professionals may be limited.
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RISKS RELATED TO OUR SATELLITES
Our ability to operate and control our satellites is subject to risks related to DISH Network’s operation of the
BSS Business and third-parties’ operation of satellite operations centers.
In connection with the BSS Transaction, we transferred our satellite operation centers, which are used to monitor
and control our satellites, to DISH Network. Therefore, we now are subject to the inherent risks of having a related
party operate, maintain and manage these satellite operations centers. In addition, certain of our satellites are
operated, maintained and managed by third parties.
Our owned and leased satellites in orbit are subject to significant operational and environmental risks that
could limit our ability to utilize these satellites.
Satellites are subject to significant operational risks while in orbit. These risks include malfunctions, commonly
referred to as anomalies, which have occurred and may occur in the future in our satellites and the satellites of other
operators. Any single anomaly could materially and adversely affect our ability to utilize the satellite. Anomalies
may also reduce the expected capacity, commercial operation and/or useful life of a satellite, thereby reducing the
revenue that could be generated by that satellite, or create additional expenses due to the need to provide
replacement or back-up satellites or satellite capacity earlier than planned and could have a material adverse effect
on our business. We may not be able to prevent or mitigate the impacts of anomalies in the future.
Meteoroid events, decommissioned satellites, and increased solar activity also pose a potential threat to all in-orbit
satellites. We may be required to perform maneuvers to avoid collisions and these maneuvers may prove
unsuccessful or could reduce the useful life of the satellite through the expenditure of fuel to perform these
maneuvers.
Generally, the minimum design life of each of our satellites is 15 years. We can provide no assurance, however, as
to the actual operational lives of our satellites, which may be shorter or longer than their design lives. Our ability to
earn revenue depends on the continued operation of our satellites, each of which has a limited useful life.
We generally do not carry in-orbit insurance on our satellites or payloads because we have assessed that the cost
of insurance is not economical relative to the risk of failures. If one or more of our in-orbit uninsured satellites or
payloads fail, we could be required to record significant impairment charges for the satellite or payload.
Our satellites under construction, including the EchoStar XXIV satellite, are subject to risks related to
construction, technology, regulations and launch that could limit our ability to utilize these satellites,
increase costs and adversely affect our business.
Satellite construction and launch are subject to significant risks, including manufacturing and delivery delays,
anomalies, launch failure and incorrect orbital placement. The technologies in our satellite designs are very
complex and difficulties in constructing our designs could result in delays in the deployment of our satellites or
increased or unanticipated costs. For example, we have seen delays in the delivery calendar for EchoStar XXIV.
There can be no assurance that the technologies in our existing satellites or in new satellites that we design,
acquire and build will work as we expect, will not become obsolete, that we will realize any or all of the anticipated
benefits of our satellite designs or our new satellites, and/or that we will obtain all regulatory approvals required to
operate our new or acquired satellites. Launch anomalies and failures can result in significant delays in the
deployment of satellites because of the need both to construct replacement satellites, which can take significant
amounts of time, and to obtain other launch opportunities. Such significant delays have and could in the future
materially affect our business, our ability to meet regulatory or contractual required milestones, the availability and
our use of other or replacement satellite resources and our ability to provide services to customers. In addition,
significant delays in a satellite program could give customers who have purchased or reserved capacity on that
satellite a right to terminate their service contracts relating to the satellite. We may not be able to accommodate
affected customers on other satellites until a replacement satellite is available. In addition, we may not be able to
obtain launch insurance on reasonable economic terms or at all. If we do obtain launch insurance, it may not cover
the full cost of constructing and launching or replacing a satellite nor fully cover our losses in the event of a launch
failure or significant degradation.
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Our use of certain satellites is often dependent on satellite coordination agreements, which may be difficult
to obtain.
Satellite operators are required to enter into international spectrum coordination agreements with other affected
satellite operators and must be approved by the relevant governments. If a required agreement cannot be
concluded, we may have to operate the applicable satellite(s) in a manner that does not cause harmful radio
frequency interference with the affected satellite. If we cannot do so, we may have to cease operating such
satellite(s) at the affected orbital locations.
We may face interference from other services sharing satellite spectrum.
The FCC and other regulators have adopted rules or may adopt rules in the future that require us to share spectrum
on a basis with other radio services. There can be no assurance that these operations would not interfere with our
operations and adversely affect our business.
RISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
Our future growth depends on growing demand for our services.
Future demand and effective delivery for our products and services will depend significantly on the growing demand
for our services, such as broadband internet connectivity. If the deployment of, or demand for, our services is not as
widespread or as rapid as we or our customers expect, our revenue growth will be negatively impacted.
Our business depends on certain intellectual property rights and on not infringing the intellectual property
rights of others.
We rely on our patents, copyrights, trademarks, trade secrets, licenses and other agreements to conduct our
business. Legal challenges to our intellectual property rights and claims of intellectual property infringement could
result in significant monetary liability and require us to change our business practices or limit our ability to compete
effectively or could otherwise have a material adverse effect on our business. Even if any such challenges or claims
prove to be without merit, they can be time-consuming and costly to defend and may divert management’s attention
and resources away from our business.
Moreover, we rely in part on technologies developed or licensed by third parties. If we are unable to obtain or retain
licenses or other required intellectual property rights from these third parties on reasonable terms, our business
could be adversely affected. In addition, we work with suppliers for the development and manufacture of
components that are integrated into our products and our products may contain technologies provided to us by
these suppliers. We may have little or no ability to determine in advance whether any such technology infringes the
intellectual property rights of others, or whether such suppliers have obtained or continue to obtain the appropriate
licenses or other intellectual property rights to use such technology. Our suppliers may not be required to indemnify
us in the event that a claim of infringement is asserted against us, or they may be required to indemnify us only up
to a maximum amount. Legal challenges to these intellectual property rights may impair our ability to use the
products and technologies that we need in order to operate our business and may have a material adverse effect on
our business. See further discussion under Item 1. Business — Patents and Trademarks and Item 3. Legal
Proceedings of this Form 10-K.
Litigation or governmental proceedings could result in material adverse consequences.
We are involved in lawsuits, regulatory inquiries, audits, consumer claims and governmental and other legal
proceedings. Some of these proceedings may raise difficult and complicated factual and legal issues and can be
subject to uncertainties and complexities. The timing of the final resolutions is typically uncertain. Additionally, the
possible outcomes of, or resolutions to, these proceedings could include adverse judgments, settlements,
injunctions or liabilities, any of which could require substantial payments or have other adverse impacts on our
business.
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The confidentiality, integrity, and availability of our services and products depends on the continuing
operation of our information technology and other enabling systems.
Our systems are vulnerable to damage, intrusion, or disruption from criminal and/or terrorist attacks, natural
disasters/climate change such as sea level rise, drought, flooding, wildfires, increased storm severity, pandemics
like COVID-19 and power loss, telecommunications failures, computer viruses, ransomware attacks, digital denial of
service attacks, phishing, or other attempts to injure or maliciously access our systems. Some of our systems are
not fully redundant, and disaster recovery planning cannot account for all possibilities. In addition, our products and
services are highly technical and complex and may contain errors or vulnerabilities, which could result in
interruptions in or failure of our services or systems.
Our international businesses expose us to additional risks that could harm our business.
Our international operations continue to grow. In addition to risks described elsewhere in this segment, our
international businesses expose us to other risks, including but not limited to the following:
•
•
•
Data privacy and security concerns relating to our technology and our practices could damage our
reputation, cause us to incur significant liability, and deter current and potential users or customers from
using our products and services.
Software bugs or defects, security breaches, and attacks on our systems could result in the improper
disclosure of our user data which could harm our business reputation.
Concerns about our practices about the collection, use, disclosure, or security of personal information or
other data-privacy-related matters, even if unsubstantiated, could harm our reputation and financial
condition. Our policies and practices may change over time as expectations regarding privacy and data
change.
We experience cyber-attacks and other attempts to gain unauthorized access to our systems on a
consistent basis.
We have experienced, and may experience in the future, security issues, whether due to insider error or
malfeasance or system errors or vulnerabilities in our or our 3rd parties’ systems, which could result in substantial
legal and financial exposure, government inquiries and enforcement actions, litigation, and unfavorable media
coverage. We may be unable to anticipate or detect attacks or vulnerabilities or implement adequate preventative
measures. Attacks and security issues could also compromise trade secrets and other sensitive information.
Our ongoing investments in security will likely continue to identify new vulnerabilities within our services
and products.
In addition to our efforts to mitigate cyber-attacks, we are making significant investments to assure that our products
are resistant to compromise. As a result of these efforts, we could discover new vulnerabilities within our products
and systems that would be undesirable for our users and customers. We may not discover all such vulnerabilities
due to the scale of activities on our platforms, or due to other factors, including but not limited to issues outside of
our control such as natural disasters or pandemic (including COVID-19), and we may be notified of such
vulnerabilities via third parties. Any of the foregoing developments may negatively affect user and customer trust,
harm our reputation and brands, and adversely affect our business and financial results. Any such developments
may also subject us to litigation and regulatory inquiries, which could result in monetary penalties and damages,
distract management’s time and attention, and lead to enhanced regulatory oversight.
Compliance with data privacy laws may be costly, and non-compliance with such laws may result in
significant liability.
The personal information and data we process and store is increasingly subject to data security and data privacy
laws of many jurisdictions. These laws impose a significant compliance burden and complying with them has
required us to change our business practices or the functionality of our products and services. Privacy laws and
regulations are becoming more complex and onerous, and a data privacy breach could have a material adverse
effect on our business.
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If our products contain defects, we could be subject to significant costs to correct such defects and our
product and network service contracts could be delayed or cancelled, which could adversely affect our
revenue.
The products and the networks we deploy are highly complex, and some may contain defects when first introduced
or when new versions or enhancements are released, despite testing and our quality control procedures. Defects
may also occur in components and products that we purchase from third parties. In addition, many of our products
and network services are designed to interface with our customers’ existing networks, each of which has different
specifications and utilizes multiple protocol standards. Our products and services must interoperate with the other
products and services within our customers’ networks, as well as with future products and services that might be
added to these networks, to meet our customers’ requirements. There can be no assurance that we will be able to
detect and fix all defects in the products and networks we sell. The occurrence of any defects, errors or failures in
our products or network services could materially affect our business.
RISKS RELATED TO THE REGULATION OF OUR BUSINESS
The risk of non-compliance with laws and regulations, including the risk of changes to laws and
regulations, could adversely affect our business.
Our business is regulated by numerous governmental agencies and other regulatory bodies, both domestically and
internationally. In addition, our international operations are subject to the laws and regulations of many different
jurisdictions that may differ significantly from U.S. laws and regulations. Violations of these laws and regulations
could result in fines or penalties or other sanctions which could have a material adverse impact on our business.
Additionally, our ability to operate and grow our business depends on laws and regulations that govern the
frequency bands and/or orbital locations we operate in or may operate in in the future.
These laws and regulations are subject to the administrative and political process and do change from time to time.
Our business could suffer a material adverse impact if laws and regulations change and we are not able to adapt to
these changes efficiently.
Our business depends on regulatory authorizations issued by the FCC and state and foreign regulators that
can expire, be revoked or modified, and applications for licenses and other authorizations that may not be
granted.
Generally, all licenses granted by the FCC and most other countries are subject to expiration unless renewed by the
regulatory agency. Our satellite licenses are currently set to expire at various times. In addition, we occasionally
receive special temporary authorizations that are granted for limited periods of time (e.g., 180 days or less) and
subject to possible renewal. Generally, our licenses and special temporary authorizations have been renewed on a
routine basis, but there can be no assurance that this will continue.
RISKS RELATED TO THE BSS TRANSACTION
If the Distribution and the Merger do not qualify as a tax‑free distribution and merger under the Internal
Revenue Code of 1986, as amended (the “Code”), then we and/or our stockholders may be required to pay
substantial U.S. federal income taxes and under certain circumstances we may have indemnification
obligations to DISH Network.
The parties to the BSS Transaction received a tax opinion from their respective counsels as to the tax‑free nature of
the transactions. They did not obtain a private letter ruling from the IRS with respect to the Distribution and the
Merger and instead are relying solely on their respective tax opinions for comfort that the Distribution and the
Merger qualify for tax‑free treatment for U.S. federal income tax purposes under the Code. The failure of any
factual representation or assumption to be true, correct and complete, or any undertaking to be fully complied with,
could affect the validity of the tax opinions and result in tax liabilities for our shareholders and/or us.
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We may be more susceptible to adverse events as a result of the BSS Transaction.
We have divested the BSS Business and our business will be subject to increased concentration of risks that affect
our retained businesses. We are now a smaller, less diversified and more narrowly focused business, which makes
us more vulnerable to changing market and economic conditions.
RISKS RELATED TO OUR OWNERSHIP
We are controlled by one principal stockholder who is our Chairman.
Charles W. Ergen, our Chairman, beneficially owns approximately 58% of our total equity securities (assuming
conversion of the Class B common stock beneficially owned by Mr. Ergen into Class A common stock and giving
effect to the exercise of options held by Mr. Ergen that are either currently exercisable as of, or may become
exercisable within 60 days after, February 15, 2022) and beneficially owns approximately 93% of the total voting
power of all classes of shares (assuming no conversion of any Class B common stock and giving effect to the
exercise of options held by Mr. Ergen that are either currently exercisable as of, or may become exercisable within
60 days after, February 15, 2022). Through his beneficial ownership of our equity securities, Mr. Ergen has the
ability to elect a majority of our directors and to control all other matters requiring the approval of our stockholders.
As a result of Mr. Ergen’s voting power, we are a “controlled company” as defined in the NASDAQ listing rules and,
therefore, are not subject to NASDAQ requirements that would otherwise require us to have (i) a majority of
independent directors; (ii) a nominating committee composed solely of independent directors; (iii) compensation of
our executive officers determined by a majority of the independent directors or a compensation committee
composed solely of independent directors; (iv) a compensation committee charter which provides the compensation
committee with the authority and funding to retain compensation consultants and other advisors; and/or (v) director
nominees selected, or recommended for the Board’s selection, either by a majority of the independent directors or a
nominating committee composed solely of independent directors.
We have potential conflicts of interest with DISH Network due to our common ownership.
Questions relating to conflicts of interest may arise between DISH Network and us in a number of areas relating to
our past and ongoing relationships. Areas in which conflicts of interest between DISH Network and us could arise
include, but are not limited to, the following:
•
Cross directorships and stock ownership. Charles W. Ergen serves as the Chairman of our and DISH’s
board of directors, is employed by both companies and has fiduciary duties to our and DISH’s
shareholders. Mr. Ergen may have actual or apparent conflicts of interest with respect to matters involving
or affecting each company. For example, there is potential for a conflict of interest when we or DISH
Network look at acquisitions and other corporate opportunities that may be suitable for both companies. In
addition, some of our directors and officers, including Mr. Ergen, own DISH stock and options to purchase
DISH stock. These ownership interests could create actual, apparent or potential conflicts of interest when
these individuals are faced with decisions that could have different implications for our company and DISH
Network.
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•
•
Intercompany agreements with DISH Network. We have entered into various agreements with DISH
Network. Pursuant to certain agreements, we obtain certain products, services and rights from DISH
Network; DISH Network obtains certain products, services and rights from us; and we and DISH Network
indemnify each other against certain liabilities arising from our respective businesses. Generally, the
amounts paid for products and services provided under the agreements are based on cost plus a fixed
margin, which varies depending on the nature of the products and services provided. Certain other
intercompany agreements cover matters such as tax sharing and our responsibility for certain liabilities
previously undertaken by DISH Network for certain of our businesses. We have also entered into certain
commercial agreements with DISH Network. The terms of certain of these agreements were established
while we were a wholly-owned subsidiary of DISH and were not the result of arm’s length negotiations. The
allocation of assets, liabilities, rights, indemnifications and other obligations between DISH Network and us
under certain agreements with DISH Network may not necessarily reflect what two unaffiliated parties might
have agreed to. Had these agreements been negotiated with unaffiliated third parties, their terms may have
been more or less favorable to us. In addition, DISH Network or its affiliates will likely continue to enter into
transactions, including joint ventures, acquisitions, dispositions and other strategic initiatives and
transactions, with us or other affiliates. Although the terms of any such transactions will be established
based upon negotiations between us and DISH Network and, when appropriate, subject to approval by a
committee of non-interlocking directors or in certain instances non-interlocking management, there can be
no assurance that the terms of any such transactions will be as favorable to us or our subsidiaries or
affiliates as may otherwise be obtained in negotiations between unaffiliated third parties.
Competition for business opportunities. DISH Network may have interests in various companies that
have subsidiaries or controlled affiliates that own or operate domestic or foreign services that may compete
with services offered by our businesses. We may also compete with DISH Network when we participate in
auctions for spectrum or orbital slots for our satellites or other business opportunities. In other auctions, we
and DISH Network may be prohibited from participating separately, and cooperating with DISH Network
may result in a less favorable outcome for us.
We may not be able to resolve any potential conflicts of interest with DISH Network and, even if we do so, the
resolution may be less favorable to us than if we were dealing with an unaffiliated party.
We do not have any agreements not to compete with DISH Network. However, many of our potential customers
who compete with DISH Network have historically perceived us as a competitor due to our affiliation with DISH
Network. There can be no assurance that we will be successful in entering into any commercial relationships with
potential customers who are competitors of DISH Network (particularly if we continue to be perceived as affiliated
with DISH Network as a result of common ownership, certain shared management services and other arrangements
with DISH Network).
It may be difficult for a third party to acquire us, even if doing so may be beneficial to our shareholders,
because of our capital structure.
Certain provisions of our articles of incorporation and bylaws may discourage, delay or prevent a change in control
of our company that a shareholder may consider favorable. These provisions include the following:
•
•
•
•
a capital structure with multiple classes of common stock: a Class A that entitles the holders to one vote per
share; a Class B that entitles the holders to ten votes per share; a Class C that entitles the holders to one
vote per share, except upon a change in control of our company in which case the holders of Class C are
entitled to ten votes per share; and a non-voting Class D;
a provision that authorizes the issuance of “blank check” preferred stock, which could be issued by our
board of directors to increase the number of outstanding shares and thwart a takeover attempt;
a provision limiting who may call special meetings of shareholders; and
a provision establishing advance notice requirements for nominations of candidates for election to our board
of directors or for proposing matters that can be acted upon by shareholders at shareholder meetings.
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As discussed above, Mr. Ergen beneficially owns approximately 58% of our total equity securities and approximately
93% of the total voting power of all classes of shares and such ownership may make it impractical for any third party
to obtain control of us.
In addition, pursuant to our articles of incorporation we have a significant amount of authorized and unissued stock
that would allow our board of directors to issue shares to persons friendly to current management, thereby
protecting the continuity of management, or which could be used to dilute the stock ownership of persons seeking to
obtain control of us.
GENERAL RISKS
Our articles of incorporation designate the Eighth Judicial District Court of Clark County of the State of
Nevada as the sole and exclusive forum for certain types of actions and proceedings that may be initiated
by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for
disputes with us or our directors, officers, employees or agents.
Any person purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to
have notice of and to have consented to this provision of our articles of incorporation. This choice of forum
provision may limit our stockholders’ ability to bring certain claims, including claims against our directors, officers or
employees, in a judicial forum that the stockholder finds favorable and therefore the choice of forum provision may
discourage lawsuits or increase costs with respect to such claims.
We may face other risks described from time to time in periodic and current reports we file with the SEC.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
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ITEM 2.
PROPERTIES
Our principal executive offices are located at 100 Inverness Terrace East, Englewood, Colorado 80112-5308 and
our telephone number is (303) 706-4000. The following table sets forth certain information concerning our principal
properties related to Hughes segment and ESS segment and to Corporate and Other segment as of December 31,
2021. We operate various facilities in the United States and abroad. We believe that our facilities are well
maintained and are sufficient to meet our current and projected needs.
Location
Owned:
Englewood, Colorado
Germantown, Maryland
Griesheim, Germany
Leased:
Gilbert, Arizona
San Diego, California
Englewood, Colorado
Gaithersburg, Maryland
Gaithersburg, Maryland
Southfield, Michigan
Las Vegas, Nevada
Segment(s)
Function
ESS/Corporate and
Other
Hughes
Hughes/Corporate
and Other
Corporate headquarters and ESS operations
Hughes corporate headquarters, engineering offices,
network operations and shared hubs
Shared hub, operations, administrative offices and
warehouse
Hughes
Hughes
Hughes
Hughes
Hughes
Hughes
Hughes
Gateways
Engineering and sales offices
Gateways and equipment
Manufacturing and testing facilities and logistics offices
Engineering and administrative offices
Shared hub and regional network management center
Shared hub, antennae yards, gateway, backup network
operation and control center for Hughes corporate
headquarters
Cheyenne, Wyoming
Hughes/ESS
Gateways, equipment and ESS operations
Barueri, Brazil
Sao Paulo, Brazil
Bangalore, India
Gurgaon, India
New Delhi, India
Milton Keynes, United
Kingdom
Hughes
Hughes
Hughes
Hughes
Hughes
Hughes
Shared hub
Hughes Brazil corporate headquarters, sales offices and
warehouse
Engineering office and office space
Administrative offices, shared hub, operations,
warehouse, and development center
Hughes India corporate headquarters
Hughes Europe corporate headquarters and operations
ITEM 3.
LEGAL PROCEEDINGS
For a discussion of legal proceedings, see Note 21 in our Consolidated Financial Statements.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
26
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Market Information. Our Class A common stock is publicly traded on the NASDAQ Global Select Market under the
symbol “SATS.”
Holders. As of February 15, 2022, there were 38,169,758 shares of our Class A common stock outstanding held by
7,558 holders of record of our Class A common stock, not including stockholders who beneficially own Class A
common stock held in nominee or street name. As of February 15, 2022, there were 47,687,039 shares of our
Class B common stock outstanding, of which 9,948,283 shares were held by Charles W. Ergen, our Chairman and
37,738,756 shares were held in trusts and entities established for the benefit of Mr. Ergen’s family. There is
currently no established trading market for our Class B common stock.
Dividends. We have not paid any cash dividends on our common stock in the past two years. We currently do not
intend to declare dividends on our common stock. Payment of any future dividends will depend upon our earnings,
capital requirements, contractual restrictions and other factors the board of directors considers appropriate. We
currently intend to retain our earnings, if any, to support operations, future growth and expansion, although we have
repurchased and may, in the future, repurchase shares of our common stock from time to time. Our ability to
declare dividends is affected by the covenants in our subsidiary HSSC’s indentures. See further discussion under
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and
Capital Resources in this Form 10-K.
Securities Authorized for Issuance Under Equity Compensation Plans. See Item 12. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters in this Form 10-K.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Our Board of Directors previously authorized us to repurchase up to $500.0 million of our Class A common stock
through and including December 31, 2021. On November 2, 2021, our Board of Directors authorized us to
repurchase up to $500.0 million of our Class A common stock commencing January 1, 2022 through and including
December 31, 2022. Purchases under our repurchase authorizations may be made through privately negotiated
transactions, open market repurchases, one or more trading plans in accordance with Rule 10b5-1 under the
Securities Exchange Act of 1934, as amended, or otherwise, subject to market conditions and other factors. We
may elect not to purchase the maximum amount or any of the shares allowable under these authorizations and we
may also enter into additional share repurchase programs authorized by our Board of Directors. During the year
ended December 31, 2021, we repurchased 10,941,872 shares of our Class A common stock.
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The following table provides information regarding repurchases of our Class A common stock during the three
months ended December 31, 2021:
Period
October 1 - 31
November 1 - 30
December 1 - 31
Total Number of
Shares (or Units)
Purchased
Average Price
Paid Per Share
(or Unit)
Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Disclosed Plans
or Program
Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units)
That May Yet Be
Purchased under
the Plans or
Program (1)
772,054 $
167,452
264,315
24.91
25.22
25.58
772,054 $
167,452
264,315
205,922
201,697
194,933
194,933
Total
(1) On October 29, 2020, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A common stock through and
including December 31, 2021. On November 2, 2021, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A
common stock commencing January 1, 2022 through and including December 31, 2022. All shares repurchased reflected in the table above
have been converted to treasury shares.
1,203,821 $
1,203,821 $
25.10
ITEM 6.
[RESERVED]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following Management’s Discussion and Analysis of our Financial Condition and Results of Operations
(“Management’s Discussion and Analysis”) should be read in conjunction with our Consolidated Financial
Statements. This Management’s Discussion and Analysis is intended to help provide an understanding of our
financial condition, changes in our financial condition and our results of operations. Many of the statements in this
Management’s Discussion and Analysis are forward-looking statements that involve assumptions and are subject to
risks and uncertainties that are often difficult to predict and beyond our control. Actual results could differ materially
from those expressed or implied by such forward-looking statements. See Disclosure Regarding Forward-Looking
Statements in this Form 10-K for further discussion. For a discussion of additional risks, uncertainties and other
factors that could impact our results of operations or financial condition, see Item 1A. Risk Factors of this Form 10-
K. Further, such forward-looking statements speak only as of the date of this Form 10-K and we undertake no
obligation to update them.
EXECUTIVE SUMMARY
We are an industry leader in both networking technologies and services, innovating to deliver the global solutions
that power a connected future for people, enterprises and things everywhere. We provide broadband satellite
technologies, broadband internet services for consumer customers, which include home and small to medium-sized
businesses, satellite services and solutions for enterprise customers, which include aeronautical and government
enterprises.
We currently operate in two business segments: Hughes segment and ESS segment. These segments are
consistent with the way we make decisions regarding the allocation of resources, as well as how operating results
are reviewed by our CODM, who is the Company’s Chief Executive Officer.
Our operations include various corporate departments (primarily Executive, Treasury, Strategic Development,
Human Resources, Information Technology, Finance, Accounting, Real Estate and Legal) and other activities, such
as costs incurred in certain satellite development programs and other business development activities, and gains or
losses from certain of our investments, that have not been assigned to our business segments. These activities,
costs and income, as well as eliminations of intersegment transactions, are accounted for in our Corporate and
Other segment in our segment reporting.
In September 2019, pursuant to the Master Transaction Agreement with DISH and the Merger Sub, we completed
the BSS Transaction.
In connection with the BSS Transaction, we and DISH Network agreed to indemnify each other against certain
losses with respect to breaches of certain representations and covenants and certain retained and assumed
liabilities, respectively. Refer to Note 19 in our Consolidated Financial Statements for further details on certain
customary agreements entered into with DISH in relation to the BSS Transaction.
The BSS Transaction was structured in a manner intended to be tax-free to us and our stockholders for U.S. federal
income tax purposes and was accounted for as a spin-off to our shareholders as we did not receive any
consideration. Following the consummation of the BSS Transaction, we no longer operate the BSS Business, which
was a substantial portion of our ESS segment. As a result of the BSS Transaction, the financial results of the BSS
Business, except for certain real estate that transferred in the transaction, are presented as discontinued operations
and, as such, excluded from continuing operations and segment results for the year ended December 31, 2019 in
our Consolidated Financial Statements. See Note 5 in our Consolidated Financial Statements for further discussion
of our discontinued operations.
Highlights from our financial results are as follows:
Consolidated Results of Operations for the Year Ended December 31, 2021:
•
Revenue of $2.0 billion
• Operating income of $217.0 million
•
Net income of $62.7 million
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
•
•
Net income attributable to EchoStar common stock of $72.9 million and basic and diluted earnings per
share of common stock of $0.81
Earnings before interest, taxes, depreciation and amortization, net income (loss) from discontinued
operations and net income (loss) attributable to non-controlling interests (“EBITDA”) of $702.5 million (see
reconciliation of this non-GAAP measure in Results of Operations)
Consolidated Financial Condition as of December 31, 2021:
•
•
•
•
Total assets of $6.0 billion
Total liabilities of $2.6 billion
Total stockholders’ equity of $3.4 billion
Cash and cash equivalents and marketable investment securities of $1.5 billion
Hughes Segment
Our Hughes segment is an industry leader in both networking technologies and services, innovating to deliver the
global solutions that power a connected future for people, enterprises and things everywhere. We provide
broadband satellite technologies and broadband internet products and services to consumer customers. We
provide broadband network technologies, managed services, equipment, hardware, satellite services and
communications solutions to government and enterprise customers. We also design, provide and install gateway
and terminal equipment to customers for other satellite systems. In addition, we design, develop, construct and
provide telecommunication networks comprising satellite ground segment systems and terminals to mobile system
operators and our enterprise customers.
Our Hughes segment incorporates advances in technology to reduce costs and to increase the functionality and
reliability of our products and services. Through advanced and proprietary methodologies, technologies, software
and techniques, we continue to improve the efficiency of our networks. We invest in technologies to enhance our
system and network management capabilities, specifically our managed services for enterprises. We also continue
to invest in next generation technologies that can be applied to our future products and services.
Our Hughes segment continues to focus our efforts on optimizing financial returns of our existing satellites while
planning for new satellite capacity to be launched, leased or acquired. In addition, we are also pursuing wireline
and wireless capacity to utilize in markets that include residential, community WiFi, backhaul, and other enterprise
broadband and multi-transport services. Our consumer revenue growth depends on our success in adding new and
retaining existing subscribers, as well as increasing our ARPU. Service and acquisition costs related to ongoing
support for our direct and indirect customers and partners are typically impacted most significantly by our growth.
The growth of both our enterprise and consumer businesses rely heavily on global economic conditions and the
competitive landscape for pricing relative to competitors and alternative technologies.
Our Hughes segment currently uses capacity from our owned and leased satellites, including additional satellite
capacity leased from third-party providers to provide services to our customers. We also use other multi-transport
capacity that includes cable, fiber, 5G, and 4G/LTE. Growth of our consumer subscriber base in the U.S. continues
to be constrained where we are nearing or have reached maximum capacity in most areas. Our Latin America
consumer subscriber base in certain areas has also become capacity constrained. These constraints are not
expected to be resolved until we acquire additional capacity.
In May 2019, we entered into an agreement with Yahsat pursuant to which, in November 2019, Yahsat contributed
its satellite communications services business in Brazil to one of our Brazilian subsidiaries in exchange for a 20%
ownership interest in that subsidiary. The combined business provides broadband internet services and enterprise
solutions in Brazil using the Telesat T19V satellite, the Eutelsat 65W satellite and Yahsat’s Al Yah 3 satellite. Under
the terms of the agreement, Yahsat may also acquire, for further cash investments, additional minority ownership
interests in the business in the future provided certain conditions are met.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
In May 2019, we entered into an agreement with Bharti, pursuant to which Bharti will contribute its VSAT
telecommunications services and hardware business in India to our two existing Indian subsidiaries that conduct our
VSAT services and hardware business. On January 4, 2022, the formation of this joint venture was announced,
with Bharti obtaining a 33% ownership interest in the combined business. The joint venture combines the VSAT
businesses of both companies to offer flexible and scalable enterprise networking solutions using satellite
connectivity for primary transport, back-up and hybrid implementation.
In August 2017, we entered into a long-term contract for the design and construction of the EchoStar XXIV satellite,
a new, next-generation, high throughput geostationary satellite. The EchoStar XXIV satellite is primarily intended to
provide additional capacity for our HughesNet service in North, Central and South America as well as enterprise
broadband services. The EchoStar XXIV satellite is expected to be launched in the fourth quarter of 2022. Further
delays or impediments could have a material adverse impact on our business operations, future revenues, financial
position and prospects, the completion of manufacture of the EchoStar XXIV satellite and our planned expansion of
satellite broadband services throughout North, South and Central America. In December 2020, we entered into an
agreement with a launch provider for the launch of EchoStar XXIV. Capital expenditures associated with the
construction and launch of the EchoStar XXIV satellite are included in our Corporate and Other segment in our
segment reporting.
Our broadband subscribers include customers that subscribe to our HughesNet services in the U.S. and Latin
America through retail, wholesale and small/medium enterprise service channels.
The following table presents our approximate number of broadband subscribers:
United States
Latin America
Total broadband subscribers
2021
As of December 31,
2020
1,090,000
372,000
1,462,000
1,189,000
375,000
1,564,000
2019
1,239,000
238,000
1,477,000
The following table presents the approximate number of net subscriber additions for each quarter in 2021:
United States
Latin America
Total net subscriber additions
For the Three Months Ended
December 31 September 30
June 30
March 31
(30,000)
(18,000)
(48,000)
(24,000)
(8,000)
(32,000)
(20,000)
9,000
(11,000)
(25,000)
14,000
(11,000)
Our U.S. consumer subscriber base in certain areas continues to be capacity constrained and we are managing the
available capacity to maintain service quality to our existing subscribers. Balancing of total subscribers relative to
capacity utilization in the fourth quarter resulted in lower total subscribers. During the fourth quarter, the lower net
subscribers were due to both lower gross additions and higher churn as compared to the third quarter.
Our Latin America consumer subscriber base in certain areas, similar to the U.S., has also become capacity
constrained. Continued high bandwidth demand in certain areas has resulted in managing subscriber growth, and
similar to the U.S. we are balancing capacity utilization with subscriber levels in the impacted areas which resulted
in lower total subscribers. During the fourth quarter, the lower net subscribers were due to both lower gross
additions and higher churn as compared to the third quarter.
As of December 31, 2021 and 2020, our Hughes segment had $1.4 billion and $1.3 billion of contracted revenue
backlog, respectively. We define Hughes segment contracted revenue backlog as our expected future revenue
under enterprise customer contracts that are non-cancelable, including lease revenue. Our contracted revenue
backlog as of December 31, 2021 changed primarily due to an increase in contracts from our international
customers. Of the total Hughes segment contracted revenue backlog as of December 31, 2021, we expect to
recognize $506.1 million of revenue in 2022.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
ESS Segment
Our ESS segment provides satellite services on a full-time and/or occasional-use basis to U.S. government service
providers, internet service providers, broadcast news organizations, content providers and private enterprise
customers. We operate our ESS business using primarily the EchoStar IX satellite and the EchoStar 105/SES-11
satellite and related infrastructure. Revenue in our ESS segment depends largely on our ability to continuously
make use of our available satellite capacity with existing customers and our ability to enter into commercial
relationships with new customers. Our ESS segment, like others in the fixed satellite services industry, has
encountered, and may continue to encounter, negative pressure on transponder rates and demand.
As of December 31, 2021 and 2020, our ESS segment had contracted revenue backlog of $10.4 million and $6.7
million, respectively. We define contracted revenue backlog for our ESS segment as contracted future satellite
lease revenue. Our contracted revenue backlog as of December 31, 2021, changed due to an increase in satellite
service contracts with existing and new customers. Of the total ESS segment contracted revenue backlog as of
December 31, 2021, we expect to recognize $5.9 million of revenue in 2022.
Other Business Opportunities
Our industry continues to evolve with the increasing worldwide demand for broadband internet access for
information, entertainment and commerce. The ongoing COVID-19 pandemic has made even more evident the
worldwide need and demand for connectivity and communications to facilitate an ever-increasing virtual global
community and workplace. In addition to fiber and wireless systems, technologies such as geostationary high
throughput satellites, LEO networks, MEO systems and multi-transport networks using combinations of technologies
are expected to continue to play significant roles in enabling global broadband access, networks and services. We
intend to use our expertise, technologies, capital, investments, global presence, relationships and other capabilities
to continue to provide broadband internet systems, equipment, networks and services for information, the internet-
of-things, entertainment, education, remote-connectivity and commerce across industries and communities globally
for consumer and enterprise customers. We are closely tracking the developments in next-generation satellite
businesses, and we are seeking to utilize our services, technologies, licenses and expertise to find new commercial
opportunities for our business.
We intend to continue to selectively explore opportunities to pursue investments, commercial alliances,
partnerships, joint ventures, acquisitions, dispositions and other strategic initiatives and transactions, domestically
and internationally, that we believe may allow us to increase our existing market share, increase our satellite
capacity, expand into new satellite and other technologies, markets and customers, broaden our portfolio of
services, products and intellectual property, make our business more valuable, align us for future growth and
expansion, maximize the return on our investments and strengthen our business and relationships with our
customers. We may allocate or dispose of significant resources for long-term value that may not have a short or
medium-term or any positive impact on our revenue, results of operations, or cash flow.
S-Band Strategy
We continue to explore the development and deployment of S-band technologies that we expect will reduce the cost
of satellite communications for internet of things, machine-to-machine communications, public protection, disaster
relief and other end-to-end services worldwide and the integration of our products and services into new global,
hybrid networks that leverage multiple satellites and terrestrial technologies. We believe we remain in a unique
position to develop a hybrid MSS and CGC network in the E.U., the U.K. and other European countries, including
through the use of our EchoStar XXI satellite, which was placed into service in November 2017, and the EUTELSAT
10A payload. We have positioned ourselves to continue to develop the S-band spectrum globally by acquiring
Sirion Global Pty Ltd., which we have renamed EchoStar Global which holds global S-band non-geostationary
satellite spectrum rights for MSS. Additionally, we entered into a contract with Tyvak Nano-Satellite Systems, Inc. for
the design and construction of S-band nano-satellites. We launched two nano-satellites in the third quarter of 2020.
Following launch, both nano-satellites experienced technical anomalies that precluded them from fulfilling their
intended regulatory milestone missions. We obtained milestone relief due to these force majeure events. In the
second quarter of 2021, we launched our third nano-satellite. The nano-satellite was successfully commissioned
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
and placed at the altitude prescribed in our license for the S-band frequency. We have completed the process of
fulfilling the remaining requirements under the ITU Radio Regulations of bringing the Australian filing into use. The
nano-satellite will now be used to develop and test a wide range of potential S-band applications and services. We
also hold licenses for S-band MSS and terrestrial services in Mexico.
Cybersecurity
We and the third parties whom we work with face a constantly evolving landscape of cybersecurity threats in which
hackers and other parties use complex assortments of techniques and methods to execute cyberattacks.
Cybersecurity incidents have increased significantly in quantity and severity and are expected to continue to
increase. In addition to our efforts to mitigate cyber-attacks, we are making investments to alleviate the potential
impact to our products. As a result of these efforts, we could discover new vulnerabilities within our products and
systems. We may not discover all such vulnerabilities due to the scale of activities on our platforms, or due to other
factors, including but not limited to issues outside of our control. In addition, our IT systems and infrastructure are
vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious acts,
human errors and natural disasters. Moreover, despite network security and backup measures, some of our servers
are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems.
We are not aware of any cyber-incidents with respect to our owned or leased satellites or other networks,
equipment or systems that have had a material adverse effect on our business, costs, operations, prospects, results
of operation or financial position during the year ended December 31, 2021 and through February 24, 2022. There
can be no assurance, however, that any such incident can be detected or thwarted or will not have such a material
adverse effect in the future.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
RESULTS OF OPERATIONS
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020
The following table presents our consolidated results of operations for the year ended December 31, 2021
compared to the year ended December 31, 2020:
Statements of Operations Data (1)
Revenue:
Services and other revenue
Equipment revenue
Total revenue
Costs and expenses:
For the years ended
December 31,
Variance
2021
2020
Amount
%
$ 1,715,287
270,433
1,985,720
$ 1,682,304
205,603
1,887,907
$
32,983
64,830
97,813
Cost of sales - services and other
551,679
577,943
(26,264)
% of total services and other revenue
32.2 %
34.4 %
Cost of sales - equipment
% of total equipment revenue
231,975
166,435
65,540
85.8 %
80.9 %
Selling, general and administrative expenses
461,705
474,912
(13,207)
23.3 %
31,777
1.6 %
491,329
245
1,768,710
217,010
25.2 %
29,448
1.6 %
525,011
1,685
1,775,434
112,473
22,801
(95,512)
69,531
(5,170)
(12,613)
(55,266)
(12,434)
(88,663)
128,347
(65,626)
62,721
39,982
(147,927)
(31,306)
(7,267)
6,015
—
195
(140,308)
(27,835)
(24,069)
(51,904)
2,329
(33,682)
(1,440)
(6,724)
104,537
(17,181)
52,415
100,837
2,097
(18,628)
(55,266)
(12,629)
51,645
156,182
(41,557)
114,625
% of total revenue
Research and development expenses
% of total revenue
Depreciation and amortization
Impairment of long-lived assets
Total costs and expenses
Operating income (loss)
Other income (expense):
Interest income, net
Interest expense, net of amounts capitalized
Gains (losses) on investments, net
Equity in earnings (losses) of unconsolidated
affiliates, net
Foreign currency transaction gains (losses), net
Other-than-temporary impairment losses on equity
method investments
Other, net
Total other income (expense), net
Income (loss) before income taxes
Income tax benefit (provision), net
Net income (loss)
Less: Net loss (income) attributable to non-
controlling interests
Net income (loss) attributable to EchoStar
Corporation common stock
Other data:
EBITDA (2)
Subscribers, end of period
10,154
11,754
(1,600)
(13.6)
$
72,875
$
(40,150)
$
113,025
*
$
702,541
1,462,000
$
616,875
1,564,000
$
85,666
(102,000)
13.9
(6.5)
Percentage is not meaningful.
*
(1) An explanation of our key metrics is included in Explanation of Key Metrics and Other Items.
(2) A reconciliation of EBITDA to Net income (loss), the most directly comparable U.S. GAAP measure in our Consolidated Financial
Statements, is included in Results of Operations. For further information on our use of EBITDA, see Explanation of Key Metrics and Other
Items.
34
2.0
31.5
5.2
(4.5)
39.4
(2.8)
7.9
(6.4)
(85.5)
(0.4)
92.9
(43.0)
(35.4)
*
(28.9)
*
*
*
(36.8)
*
*
*
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
The following discussion relates to our results of operations for the years ended December 31, 2021 and 2020.
Services and other revenue. Services and other revenue totaled $1.7 billion for the year ended December 31,
2021, an increase of $33.0 million, or 2.0%, as compared to 2020. The increase was primarily attributable to our
Hughes segment related to higher sales of broadband services to our consumer customers of $27.8 million and to
our mobile satellite system customers of $1.4 million. Sales of broadband services to our enterprise customers
remained flat compared to 2020. Our Corporate and Other segment increased by $2.1 million. These variances
reflect the negative impact of exchange rate fluctuations of $4.6 million, primarily attributable to our consumer
customers.
Equipment revenue. Equipment revenue totaled $270.4 million for the year ended December 31, 2021, an
increase of $64.8 million, or 31.5%, as compared to 2020. The increase was primarily attributable to increases in
hardware sales of $76.7 million to our enterprise customers, partially offset by decreases in hardware sales to our
mobile satellite system customers of $8.0 million and to our consumer customers of $3.9 million.
Cost of sales - services and other. Cost of sales - services and other totaled $551.7 million for the year ended
December 31, 2021, a decrease of $26.3 million, or 4.5%, as compared to 2020. The decrease was attributable to
lower costs of services provided to our consumer customers associated with customer care and field services as
well as a non-recurring decrease in a certain international regulatory fee of $4.5 million.
Cost of sales - equipment. Cost of sales - equipment totaled $232.0 million for the year ended December 31,
2021, an increase of $65.5 million, or 39.4%, as compared to 2020. The increase was primarily attributable to the
corresponding increase in equipment revenue and product mix.
Selling, general and administrative expenses. Selling, general and administrative expenses totaled $461.7
million for the year ended December 31, 2021, a decrease of $13.2 million, or 2.8%, as compared to 2020. The
decrease was primarily attributable to decreases in bad debt expense of $4.7 million and decreases in other selling,
general and administrative expenses of $7.1 million.
Depreciation and amortization. Depreciation and amortization expenses totaled $491.3 million for the year ended
December 31, 2021, a decrease of $33.7 million, or 6.4%, as compared to 2020. The decrease was primarily
attributable to (i) decreases in our satellite depreciation of $27.1 million, mainly related to our SPACEWAY 3 satellite
which was fully depreciated at the end of the first quarter of 2021, (ii) decreases in amortization of intangibles of
$6.5 million, and (iii) decreases in other property and equipment depreciation expense of $2.9 million.
Impairment of long-lived assets. Impairment of long-lived assets totaled $0.2 million for the year ended December
31, 2021, a decrease of $1.4 million, or 85.5%, as compared to 2020. The decrease was primarily attributable to an
impairment loss related to our nano-satellites which experienced technical anomalies following launch in 2020.
Interest income, net. Interest income, net totaled $22.8 million for the year ended December 31, 2021, a decrease
of $17.2 million, or 43.0%, as compared to 2020, primarily attributable to decreases in the yield on our marketable
investment securities and a decrease in our marketable investment securities average balance.
Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized, totaled $95.5 million
for the year ended December 31, 2021, a decrease of $52.4 million, or 35.4%, as compared to 2020. The decrease
was primarily attributable to a decrease of $41.4 million in interest expense and the amortization of deferred
financing cost as a result of the repurchases and maturity of our 7 5/8% Senior Unsecured Notes due 2021 and an
increase of $9.8 million in capitalized interest relating to the EchoStar XXIV satellite program.
Gains (losses) on investments, net. Gains (losses) on investments, net totaled $69.5 million in gains for the year
ended December 31, 2021, an increase of $100.8 million, as compared to 2020. The change was primarily
attributable to increased gains on marketable investment securities of $ 63.7 million in 2021 as compared to 2020,
gains on other equity securities of $7.1 million in 2021 and a $29.8 million impairment loss in 2020.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Equity in earnings (losses) of unconsolidated affiliates, net. Equity in earnings (losses) of unconsolidated
affiliates, net totaled $5.2 million in losses for the year ended December 31, 2021, a decrease in losses of $2.1
million, or 28.9%, as compared to 2020. The decrease was related to net increased earnings from our investments
in our equity method investees.
Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net totaled $12.6
million in losses for the year ended December 31, 2021, as compared to $6.0 million in gains for the year ended
December 31, 2020, a negative change of $18.6 million. The change was due to the net impact of foreign
exchange rate fluctuations of certain foreign currencies during the year.
Other-than-temporary impairment losses on equity method investments. Other-than-temporary impairment
losses on equity method investments was $55.3 million for the year ended December 31, 2021, related to the
impairment of our investment in Dish Mexico. Given changing market trends, conditions, and company-specific
events, we concluded that our investment in Dish Mexico was not recoverable.
Other, net. Other, net totaled $12.4 million in losses for the year ended December 31, 2021, as compared to $0.2
million in gains for the year ended December 31, 2020, an increase in losses of $12.6 million. The increase was
primarily attributable to a litigation expense of $16.8 million and losses from debt repurchases on our 7 5/8% Senior
Unsecured Notes due 2021 of $1.9 million, partially offset by dividends received from certain marketable equity
securities of $2.5 million.
Income tax benefit (provision), net. Income tax benefit (provision), net was $(65.6) million for the year ended
December 31, 2021, as compared to $(24.1) million for the year ended December 31, 2020. Our effective income
tax rate was 51.1% and (86.5)% for the years ended December 31, 2021 and 2020, respectively. The variations in
our effective tax rate from the U.S. federal statutory rate for the year ended December 31, 2021 were primarily due
to certain foreign losses and impairments where the Company carries a full valuation allowance, and the impact of
state and local taxes. The variations in our current year effective tax rate from the U.S. federal statutory rate for the
year ended December 31, 2020 were primarily due to the increase in our valuation allowance associated with
certain foreign losses, permanent book tax differences, and by the impact of state and local taxes, partially offset by
the change in net losses that are capital in nature and research and experimentation credits.
Net income (loss) attributable to EchoStar Corporation common stock. The following table reconciles the
change in Net income (loss) attributable to EchoStar Corporation common stock:
Net income (loss) attributable to EchoStar Corporation for the year ended December 31,
2020
$
Decrease (increase) in other-than-temporary impairment losses on equity method
investments
Decrease (increase) in income tax benefit (provision), net
Increase (decrease) in foreign currency transaction gains (losses), net
Increase (decrease) in interest income, net
Increase (decrease) in other, net
Increase (decrease) in net income (loss) attributable to non-controlling interest
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
Decrease (increase) in interest expense, net of amounts capitalized
Increase (decrease) in gains (losses) on investments, net
Increase (decrease) in operating income (loss), including depreciation and amortization
Net income (loss) attributable to EchoStar Corporation for the year ended December 31,
2021
36
Amounts
(40,150)
(55,266)
(41,557)
(18,628)
(17,181)
(12,629)
(1,600)
2,097
52,415
100,837
104,537
$
72,875
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
EBITDA. EBITDA is a non-GAAP financial measure and is described under Explanation of Key Metrics and Other
Items below. The following table reconciles EBITDA to Net income (loss), the most directly comparable U.S. GAAP
measure in our Consolidated Financial Statements:
Net income (loss)
Interest income, net
Interest expense, net of amounts capitalized
Income tax provision (benefit), net
Depreciation and amortization
Net loss (income) attributable to non-
controlling interests
EBITDA
*
Percentage is not meaningful
For the years ended
December 31,
Variance
2021
2020
Amount
%
$
62,721 $
(51,904) $
114,625
(22,801)
(39,982)
95,512
65,626
491,329
147,927
24,069
525,011
10,154
11,754
$
702,541 $
616,875 $
17,181
(52,415)
41,557
(33,682)
(1,600)
85,666
*
(43.0)
(35.4)
*
(6.4)
(13.6)
13.9
The following table reconciles the change in EBITDA:
EBITDA for the year ended December 31, 2020
Increase (decrease) in gains (losses) on investments, net
Increase (decrease) in operating income (loss), excluding depreciation and amortization
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
Decrease (increase) in net loss (income) attributable to non-controlling interests
Increase (decrease) in other, net
Increase (decrease) in foreign currency transaction gains (losses), net
Decrease (increase) in other-than-temporary impairment losses on equity method
investments
EBITDA for the year ended December 31, 2021
$
$
Amounts
616,875
100,837
70,855
2,097
(1,600)
(12,629)
(18,628)
(55,266)
702,541
Segment Operating Results and Capital Expenditures
The following tables present our total revenue, capital expenditures and EBITDA by segment for the year ended
December 31, 2021, as compared to the year ended December 31, 2020:
For the year ended December 31, 2021
Total revenue
Capital expenditures
EBITDA
For the year ended December 31, 2020
Total revenue
Capital expenditures
EBITDA
Hughes
ESS
Corporate and
Other
Consolidated
Total
$
1,956,226 $
17,679 $
11,815 $
1,985,720
296,303
781,824
—
9,185
142,127
(88,468)
438,430
702,541
$
1,860,834 $
17,398 $
9,675 $
1,887,907
355,197
727,608
41
7,873
53,560
(118,606)
408,798
616,875
37
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Hughes Segment
Total revenue
Capital expenditures
EBITDA
For the years ended
December 31,
Variance
2021
2020
Amount
%
$ 1,956,226 $ 1,860,834 $
95,392
296,303
781,824
355,197
727,608
(58,894)
54,216
5.1
(16.6)
7.5
Total revenue was $2.0 billion for the year ended December 31, 2021, an increase of $95.4 million, or 5.1%, as
compared to 2020. Services and other revenue increased primarily due to increases in sales of broadband services
to our consumer customers of $27.8 million and to our mobile satellite system customers of $1.4 million. Sales of
broadband services to our enterprise customers remained flat compared to 2020. Equipment revenue increased
primarily due to increases in hardware sales of $76.7 million to our enterprise customers, partially offset by
decreases in hardware sales to our mobile satellite system customers of $8.0 million and to our consumer
customers of $ 3.9 million. These variances reflect the negative impact of exchange rate fluctuations of $4.7 million.
Capital expenditures were $296.3 million for the year ended December 31, 2021, a decrease of $58.9 million, or
16.6%, as compared to 2020, primarily due to decreases in expenditures associated with our consumer business,
partially offset by increased expenditures related to our enterprise business and construction of our satellite-related
ground infrastructure in preparation of the launch of EchoStar XXIV.
The following table reconciles the change in the Hughes Segment EBITDA:
EBITDA for the year ended December 31, 2020
Increase (decrease) in operating income (loss), excluding depreciation and amortization
Increase (decrease) in other, net
Increase (decrease) in gains (losses) on investments, net
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
Decrease (increase) in net loss (income) attributable to non-controlling interests
Increase (decrease) in foreign currency transaction gains (losses), net
EBITDA for the year ended December 31, 2021
Amounts
727,608
65,216
3,658
2,249
(229)
(1,600)
(15,078)
781,824
$
$
ESS Segment
Total revenue
Capital expenditures
EBITDA
For the years ended
December 31,
Variance
2021
2020
Amount
%
$
17,679 $
17,398 $
—
9,185
41
7,873
281
(41)
1,312
1.6
(100.0)
16.7
Total revenue was $17.7 million for the year ended December 31, 2021, which is primarily flat compared to 2020.
EBITDA was $9.2 million for the year ended December 31, 2021, an increase of $1.3 million, or 16.7%, as
compared to 2020, primarily due to the recovery of a bad debt reserve.
38
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Corporate and Other Segment
Total revenue
Capital expenditures
EBITDA
*
Percentage is not meaningful.
For the years ended
December 31,
Variance
2021
2020
Amount
%
$
11,815 $
9,675 $
142,127
53,560
(88,468)
(118,606)
2,140
88,567
30,138
22.1
*
(25.4)
Total revenue was $11.8 million for the year ended December 31, 2021, an increase of $2.1 million, or 22.1%, as
compared to 2020, primarily due to increased services and other revenue from DISH Network.
Capital expenditures were $142.1 million for the year ended December 31, 2021, an increase of $88.6 million, as
compared to 2020, primarily due to increases in expenditures related to the EchoStar XXIV satellite program.
The following table reconciles the change in the Corporate and Other Segment EBITDA:
Amounts
$
(118,606)
98,588
4,353
2,326
(3,672)
(16,191)
(55,266)
(88,468)
EBITDA for the year ended December 31, 2020
Increase (decrease) in gains (losses) on investments, net
Increase (decrease) in operating income (loss), excluding depreciation and amortization
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
Increase (decrease) in foreign currency transaction gains (losses), net
Increase (decrease) in other, net
Decrease (increase) in other-than-temporary impairment losses on equity method
investments
EBITDA for the year ended December 31, 2021
$
39
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
The following table presents our consolidated results of operations for the year ended December 31, 2020
compared to the year ended December 31, 2019:
Statements of Operations Data (1)
Revenue:
Services and other revenue
Equipment revenue
Total revenue
Costs and expenses:
For the years ended
December 31,
2020
2019
Variance
Amount
%
$ 1,682,304
205,603
1,887,907
$ 1,619,271
266,810
1,886,081
$
63,033
(61,207)
1,826
3.9
(22.9)
0.1
Cost of sales - services and other
577,943
561,353
16,590
3.0
% of total services and other revenue
34.4 %
34.7 %
Cost of sales - equipment
% of total equipment revenue
166,435
226,002
(59,567)
(26.4)
80.9 %
84.7 %
Selling, general and administrative expenses
474,912
509,145
(34,233)
% of total revenue
Research and development expenses
% of total revenue
Depreciation and amortization
Impairment of long-lived assets
Total costs and expenses
Operating income (loss)
Other income (expense):
Interest income, net
Interest expense, net of amounts capitalized
Gains (losses) on investments, net
Equity in earnings (losses) of unconsolidated
affiliates, net
Foreign currency transaction gains (losses), net
Other, net
Total other income (expense), net
Income (loss) from continuing operations before
income taxes
Income tax benefit (provision), net
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
Less: Net loss (income) attributable to non-
controlling interests
Net income (loss) attributable to EchoStar
Corporation common stock
Other data:
EBITDA (2)
Subscribers, end of period
25.2 %
29,448
1.6 %
525,011
1,685
1,775,434
112,473
27.0 %
25,739
1.4 %
490,765
—
1,813,004
73,077
39,982
(147,927)
(31,306)
(7,267)
6,015
195
(140,308)
(27,835)
(24,069)
(51,904)
—
(51,904)
82,352
(251,016)
28,912
(14,734)
(11,590)
(166)
(166,242)
(93,165)
(20,488)
(113,653)
39,401
(74,252)
3,709
34,246
1,685
(37,570)
39,396
(42,370)
103,089
(60,218)
7,467
17,605
361
25,934
65,330
(3,581)
61,749
(39,401)
22,348
11,754
11,335
419
$
(40,150)
$
(62,917)
$
22,767
$
616,875
1,564,000
$
577,599
1,477,000
$
39,276
87,000
(6.7)
14.4
7.0
*
(2.1)
53.9
(51.4)
(41.1)
*
(50.7)
*
*
(15.6)
(70.1)
17.5
(54.3)
(100.0)
(30.1)
3.7
(36.2)
6.8
5.9
Percentage is not meaningful.
*
(1) An explanation of our key metrics is included in Explanation of Key Metrics and Other Items.
(2) A reconciliation of EBITDA to Net income (loss), the most directly comparable U.S. GAAP measure in our Consolidated Financial
Statements, is included in Results of Operations. For further information on our use of EBITDA, see Explanation of Key Metrics and Other
Items.
40
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
The following discussion relates to our results of operations for the years ended December 31, 2020 and 2019.
Services and other revenue. Services and other revenue totaled $1.7 billion for the year ended December 31,
2020, an increase of $63.0 million, or 3.9%, as compared to 2019.
•
•
Services and other revenue from our Hughes segment for the year ended December 31, 2020 increased by
$69.2 million, or 4.4%, to $1.7 billion compared to 2019. The increase was primarily attributable to
increases in sales of broadband services to our consumer customers of $109.3 million, partially offset by a
decrease in sales of services to our enterprise customers of $35.9 million. These variances reflect the
negative impact of exchange rate fluctuations of $35.6 million, primarily attributable to our consumer
customers.
Services and other revenue from our Corporate and Other segment for the year ended December 31, 2020
decreased by $7.3 million, or 43.0%, to $9.7 million compared to 2019, primarily attributable to a decrease
in income from certain real estate previously leased to DISH Network and transferred as part of the BSS
Transaction.
Equipment revenue. Equipment revenue totaled $205.6 million for the year ended December 31, 2020, a
decrease of $61.2 million, or 22.9%, as compared to 2019. The decrease was primarily attributable to $43.2 million
related to the bankruptcy of a certain customer and $38.9 million decreased sales to our international enterprise
customers, partially offset by $24.7 million increased sales to our domestic enterprise customers. These variances
reflect the negative impact of exchange rate fluctuations of $3.5 million, primarily attributable to our enterprise
customers.
Cost of sales - services and other. Cost of sales - services and other totaled $577.9 million for the year ended
December 31, 2020, an increase of $16.6 million, or 3.0%, as compared to 2019. The increase was primarily
attributable to the corresponding increase in services and other revenue.
Cost of sales - equipment. Cost of sales - equipment totaled $166.4 million for the year ended December 31,
2020, a decrease of $59.6 million, or 26.4%, as compared to 2019. The decrease was primarily attributable to the
corresponding reduction in equipment revenue.
Selling, general and administrative expenses. Selling, general and administrative expenses totaled $474.9
million for the year ended December 31, 2020, a decrease of $34.2 million, or 6.7%, as compared to 2019. The
decrease was primarily attributable to expenses related to the license fee dispute in India of $9.4 million in 2019,
certain legal proceedings of $25.7 million in 2019, and decreased sales and marketing expenses of $6.4 million in
2020, partially offset by increases in other general and administrative expenses of $7.3 million in 2020.
Depreciation and amortization. Depreciation and amortization expenses totaled $525.0 million for the year ended
December 31, 2020, an increase of $34.2 million, or 7.0%, as compared to 2019. The increase was primarily
attributable to increases in depreciation expense of $21.8 million relating to our customer premises equipment and
$13.4 million relating to the depreciation of assets acquired in the Yahsat Brazil JV Transaction of which $7.9 million
are related to non-recurring accelerated depreciation of assets that were scheduled for replacement after the Yahsat
Brazil JV Transaction.
Impairment of long-lived assets. Impairment of long-lived assets totaled $1.7 million for the year ended December
31, 2020, attributable to an impairment loss related to our nano-satellites which experienced technical anomalies
following launch.
Interest income, net. Interest income, net totaled $40.0 million for the year ended December 31, 2020, a decrease
of $42.4 million, or 51.4%, as compared to 2019, primarily attributable to decreases in the yield on our marketable
investment securities and lower cash balances.
41
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized totaled $147.9 million
for the year ended December 31, 2020, a decrease of $103.1 million, or 41.1%, as compared to 2019. The
decrease was primarily attributable to a decrease of $29.0 million in interest expense and in amortization of deferred
financing cost as a result of the purchase and maturity in June 2019 of our 6 1/2% Senior Secured Notes due in
2019, a decrease of $66.1 million of interest expense related to the license fee dispute in India, a decrease of $4.1
million related to a certain legal proceeding in 2019 and an increase of $4.8 million in capitalized interest in 2020
relating to the construction of the EchoStar XXIV satellite and its related infrastructure.
Gains (losses) on investments, net. Gains (losses) on investments, net totaled $31.3 million in losses for the
year ended December 31, 2020, as compared to $28.9 million in gains for the year ended December 31, 2019, a
negative change of $60.2 million. The change was primarily attributable to $69.0 million of net negative variances on
marketable investment securities compared to 2019, partially offset by an $6.9 million loss in Other Equity
Investments in 2020.
Equity in earnings (losses) of unconsolidated affiliates, net. Equity in earnings (losses) of unconsolidated
affiliates, net totaled $7.3 million in losses for the year ended December 31, 2020, a decrease in losses of $7.5
million, or 50.7%, as compared to 2019. The decrease in losses was related to decreased losses from our
investments in our equity method investees.
Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net totaled
$6.0 million in gains for the year ended December 31, 2020, as compared to $11.6 million in losses for the year
ended December 31, 2019, a positive change of $17.6 million. The change was due to the net weakening of the
U.S. dollar against certain foreign currencies in 2020 compared to 2019.
Income tax benefit (provision), net. Income tax benefit (provision), net was $(24.1) million for the year ended
December 31, 2020, as compared to $(20.5) million for the year ended December 31, 2019. Our effective income
tax rate was (86.5)% and (59.8)% for the years ended December 31, 2020 and 2019, respectively. The variations in
our effective tax rate from the U.S. federal statutory rate for the year ended December 31, 2020 were primarily due
to the increase in our valuation allowance associated with certain foreign losses, permanent book tax differences
and the impact of state and local taxes, partially offset by the change in net losses that are capital in nature and
research and experimentation credits. The variations in our current year effective tax rate from the U.S. federal
statutory rate for the year ended December 31, 2019 were primarily due to the increase in our valuation allowance
associated with certain foreign losses and by the impact of state and local taxes partially offset by the change in net
unrealized gains that are capital in nature and research and experimentation credits.
Net income (loss) attributable to EchoStar Corporation common stock. The following table reconciles the
change in Net income (loss) attributable to EchoStar Corporation common stock:
Amounts
Net income (loss) attributable to EchoStar Corporation for the year ended December 31,
2019
$
Decrease (increase) in interest expense, net of amounts capitalized
Increase (decrease) in operating income (loss), including depreciation and amortization
Increase (decrease) in foreign currency transaction gains (losses), net
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
Decrease (increase) in net loss (income) attributable to non-controlling interests
Increase (decrease) in other, net
Decrease (increase) in income tax benefit (provision), net
Increase (decrease) in net income (loss) from discontinued operations
Increase (decrease) in interest income, net
Increase (decrease) in gains (losses) on investments, net
Net income (loss) attributable to EchoStar Corporation for the year ended December 31,
2020
$
(62,917)
103,089
39,396
17,605
7,467
419
361
(3,581)
(39,401)
(42,370)
(60,218)
(40,150)
42
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
EBITDA. EBITDA is a non-GAAP financial measure and is described under Explanation of Key Metrics and Other
Items below. The following table reconciles EBITDA to Net income (loss), the most directly comparable U.S. GAAP
measure in our Consolidated Financial Statements:
For the years ended
December 31,
Variance
2020
2019
Amounts
%
Net income (loss)
Interest income, net
Interest expense, net of amounts capitalized
Income tax provision (benefit), net
Depreciation and amortization
Net loss (income) from discontinued operations
Net loss (income) attributable to non-controlling
interests
EBITDA
$
(51,904) $
(39,982)
147,927
24,069
525,011
—
(74,252) $
(82,352)
251,016
20,488
490,765
(39,401)
22,348
42,370
(103,089)
3,581
34,246
39,401
11,754
11,335
419
$
616,875 $
577,599 $
39,276
(30.1)
(51.4)
(41.1)
17.5
7.0
(100.0)
3.7
6.8
The following table reconciles the change in EBITDA:
EBITDA for the year ended December 31, 2019
Increase (decrease) in operating income (loss), excluding depreciation and amortization
Increase (decrease) in foreign currency transaction gains (losses), net
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
Decrease (increase) in net loss (income) attributable to non-controlling interests
Increase (decrease) in other, net
Increase (decrease) in gains (losses) on investments, net
EBITDA for the year ended December 31, 2020
Segment Operating Results and Capital Expenditures
Amounts
577,599
73,642
17,605
7,467
419
361
(60,218)
616,875
$
$
The following tables present our total revenue, capital expenditures and EBITDA by segment for the year ended
December 31, 2020, as compared to the year ended December 31, 2019:
For the year ended December 31, 2020
Total revenue
Capital expenditures
EBITDA
For the year ended December 31, 2019
Total revenue
Capital expenditures
EBITDA
Hughes
ESS
Corporate and
Other
Consolidated
Total
$
1,860,834 $
17,398 $
9,675 $
1,887,907
355,197
727,608
41
7,873
53,560
(118,606)
408,798
616,875
$
1,852,742 $
16,257 $
17,082 $
1,886,081
308,781
625,660
—
6,994
109,293
(55,055)
418,074
577,599
43
Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Hughes Segment
Total revenue
Capital expenditures
EBITDA
For the years ended
December 31,
Variance
2020
2019
Amount
%
$ 1,860,834 $ 1,852,742 $
355,197
727,608
308,781
625,660
8,092
46,416
101,948
0.4
15.0
16.3
Total revenue was $1.9 billion for the year ended December 31, 2020, an increase of $8.1 million, or 0.4%, as
compared to 2019. Services and other revenue increased primarily due to increases in sales of broadband services
to our consumer customers of $109.3 million, partially offset by a decrease in sales of services to our enterprise
customers of $35.9 million. These variances reflect the negative impact of exchange rate fluctuations of $35.6
million, primarily attributable to our consumer customers. Equipment revenue decreased primarily due to $43.2
million related to the bankruptcy of a certain customer and $38.9 million decreased sales to our international
enterprise customers, partially offset by $24.7 million increased sales to our domestic enterprise customers. These
variances reflect the negative impact of exchange rate fluctuations of $3.5 million, primarily attributable to our
enterprise customers.
Capital expenditures were $355.2 million for the year ended December 31, 2020, an increase of $46.4 million, or
15.0%, as compared to 2019, primarily due to increases in expenditures associated with our consumer business
and construction of our satellite-related ground infrastructure.
The following table reconciles the change in the Hughes Segment EBITDA:
EBITDA for the year ended December 31, 2019
Increase (decrease) in operating income (loss), excluding depreciation and amortization
Increase (decrease) in foreign currency transaction gains (losses), net
Increase (decrease) in gains (losses) on investments, net
Decrease (increase) in net loss (income) attributable to non-controlling interests
Increase (decrease) in other, net
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
EBITDA for the year ended December 31, 2020
Amounts
625,660
80,562
13,298
8,770
419
255
(1,356)
727,608
$
$
ESS Segment
Total revenue
Capital expenditures
EBITDA
*
Percentage is not meaningful.
For the years ended
December 31,
Variance
2020
2019
Amounts
%
$
17,398 $
16,257 $
1,141
41
7,873
—
6,994
41
879
7.0
*
12.6
Total revenue was $17.4 million for the year ended December 31, 2020, an increase of $1.1 million, or 7.0%, as
compared to 2019, primarily due to an increase in transponder services provided to third parties.
EBITDA was $7.9 million for the year ended December 31, 2020, an increase of $0.9 million, or 12.6%, as
compared to 2019, primarily due to the increase in overall ESS segment revenue.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Corporate and Other Segment
Total revenue
Capital expenditures
EBITDA
*
Percentage is not meaningful.
For the years ended
December 31,
Variance
2020
2019
Amounts
%
$
9,675 $
17,082 $
53,560
109,293
(118,606)
(55,055)
(7,407)
(55,733)
(63,551)
(43.4)
(51.0)
*
Total revenue was $9.7 million for the year ended December 31, 2020, a decrease of $7.4 million, or 43.4%, as
compared to 2019, which was primarily attributable to a decrease in income from certain real estate previously
leased to DISH Network and transferred as part of the BSS Transaction.
Capital expenditures were $53.6 million for the year ended December 31, 2020, a decrease of $55.7 million, or
51.0%, as compared to 2019, primarily due to decreases in satellite expenditures on the EchoStar XXIV satellite.
The following table reconciles the change in the Corporate and Other Segment EBITDA:
EBITDA for the year ended December 31, 2019
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net
Increase (decrease) in foreign currency transaction gains (losses), net
Increase (decrease) in other, net
Increase (decrease) in operating income (loss), excluding depreciation and amortization
Increase (decrease) in gains (losses) on investments, net
EBITDA for the year ended December 31, 2020
$
LIQUIDITY AND CAPITAL RESOURCES
Cash, Cash Equivalents and Marketable Investment Securities
Amounts
$
(55,055)
8,823
4,306
116
(7,808)
(68,988)
(118,606)
We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.
See Item 7A. Quantitative and Qualitative Disclosures about Market Risk in this Form 10-K for further discussion
regarding our marketable investment securities.
As of December 31, 2021 and 2020, our cash, cash equivalents and marketable investment securities totaled $1.5
billion and $2.5 billion, respectively, of which $1.0 billion and $1.6 billion, respectively, we held as marketable
investment securities, consisting of various debt and equity instruments including corporate bonds, corporate equity
securities, government bonds and mutual funds.
The following discussion highlights our cash flow activities, which include results from continuing and discontinued
operations, for the years ended December 31, 2021, 2020 and 2019.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Cash Flow Activities
The following table summarizes our cash flows provided by (used for) operating, investing and financing activities,
as reflected in the Consolidated Statement of Cash Flows:
Operating activities
Investing activities
Financing activities
For the years ended
December 31,
2021
2020
Variance
$
632,226 $
534,388 $
97,838
158,930
(1,142,455)
1,301,385
(1,147,345)
(15,620)
(1,131,725)
Effect of exchange rates on cash and cash equivalents
(3,749)
(1,390)
(2,359)
Net increase (decrease) in cash and cash equivalents
$
(359,938) $
(625,077) $
265,139
Cash flows provided by (used for) operating activities increased by $97.8 million primarily attributable to changes in
net income (loss) of $114.6 million, gains (losses) on investments, net of $(100.8) million, foreign currency
translation losses (gains), net of $18.6 million, deferred tax provision (benefit), net of $19.5 million, other-than-
temporary impairment losses on equity method investments of $55.3 million, and changes in assets and liabilities,
net of $(1.3) million.
Cash flows provided by (used for) investing activities increased by $1.3 billion primarily attributable to our
marketable investment securities net activity, other investments net activity and an increase in expenditures for
property and equipment.
Cash flows provided by (used for) financing activities decreased by $1.1 billion primarily attributable to the
repurchase and maturity of our 7 5/8% Senior Unsecured Notes due 2021 of $(901.8) million and treasury share
repurchases of $(261.4) million.
Operating activities
Investing activities
Financing activities
For the years ended
December 31,
2020
2019
Variance
$
534,388 $
656,322 $
(121,934)
(1,142,455)
821,958
(1,964,413)
(15,620)
(885,311)
869,691
Effect of exchange rates on cash and cash equivalents
(1,390)
(575)
(815)
Net increase (decrease) in cash and cash equivalents
$
(625,077) $
592,394 $
(1,217,471)
Cash flows provided by (used for) operating activities decreased by $121.9 million primarily attributable to changes
in net income (loss) of $22.3 million, depreciation and amortization of $63.2 million, gains (losses) on investments,
net of $60.2 million, foreign currency translation losses (gains), net of $(17.6) million, deferred tax provision
(benefit), net of $(14.4) million, and changes in assets and liabilities, net of $(80.0) million.
Cash flows provided by (used for) investing activities decreased by $2.0 billion primarily attributable to our
marketable investment securities and other investments net activity and an increase in expenditures for property
and equipment.
Cash flows provided by (used for) financing activities increased by $869.7 million primarily attributable cash outflows
for the year ended December 31, 2019 of $920.9 million for the repurchase and maturity of our 6 1/2% Senior
Secured Notes due 2019 and treasury share repurchases of $(43.5) million.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Obligations and Future Capital Requirements
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2021:
Long-term debt (1)
Interest on long-term debt (2)
Satellite-related commitments (3)
Operating lease obligations (4)
Finance lease obligations (5)
Total
Total (6)(7)
$ 1,500,000 $
Payments Due in the Years Ending December 31,
2022
2023
2024
2025
2026
Thereafter
— $
— $
— $
— $ 1,500,000 $
445,315
89,063
342,173
140,843
202,345
24,014
130
130
89,063
24,847
23,479
—
89,063
22,705
20,278
—
89,063
23,121
16,428
—
—
—
89,063
21,652
109,005
15,564
102,582
—
—
$ 2,489,963 $ 254,050 $ 137,389 $ 132,046 $ 128,612 $ 1,626,279 $ 211,587
(1) Assumes all long-term debt is outstanding until scheduled maturity.
(2) Includes interest on long-term debt.
(3) Includes payments pursuant to: i) agreements for the construction of the EchoStar XXIV satellite, ii) the EchoStar XXIV launch contract, iii)
regulatory authorizations, non-lease costs associated with our finance lease satellites, in-orbit incentives relating to certain satellites and
commitments for satellite service arrangements.
(4) Operating leases consist primarily of leases for office space, data centers and satellite-related ground infrastructure.
(5) Finance leases consist primarily of leases for satellite capacity.
(6) The table excludes amounts related to deferred tax liabilities, unrecognized tax positions and certain other amounts recorded in our non-
current liabilities as the timing of any payments is uncertain.
(7) The table excludes long-term deferred revenue and other long-term liabilities that do not require future cash payments.
In certain circumstances, the dates on which we are obligated to pay our contractual obligations could change.
Off-Balance Sheet Arrangements
We generally do not engage in off-balance sheet financing activities or use derivative financial instruments for
hedge accounting or speculative purposes.
As of December 31, 2021, we had foreign currency forward contracts with a notional value of $12.8 million in place
to partially mitigate foreign currency exchange risk. From time to time, we may enter into foreign currency forward
contracts, or take other measures, to mitigate risks associated with foreign currency denominated assets, liabilities,
commitments and anticipated foreign currency transactions.
Letters of Credit
The following table presents the components of our letters of credit as of December 31, 2021:
Restricted cash
Insurance bonds
Credit arrangement available to our foreign subsidiaries
Total letters of credit
Certain letters of credit are secured by assets of our foreign subsidiaries.
Amounts
13,290
4,120
30,775
48,185
$
$
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Satellites
As our satellite fleet ages, we will be required to evaluate replacement alternatives such as acquiring, leasing or
constructing additional satellites, with or without customer commitments for capacity. We may also construct,
acquire or lease additional satellites or satellite capacity in the future to provide satellite services at additional orbital
locations or to improve the quality of our satellite services.
Satellite Insurance
We generally do not carry in-orbit insurance on our satellites or payloads 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 our joint venture agreement with Yahsat, we are required to maintain insurance for
the Al Yah 3 Brazilian payload during the commercial in-orbit service of such payload, subject to certain limitations
on coverage. Our satellites and other payloads, 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-related decisions
on a case-by-case basis.
Future Capital Requirements
We primarily rely on our existing cash and marketable investment securities balances, as well as cash flow
generated through our operations to fund our business. Revenue in our ESS segment depends largely on our
ability to continuously make use of our available satellite capacity with existing customers and our ability to enter
into commercial relationships with new customers. Consumer revenue in our Hughes segment depends on our
success in adding new and retaining existing subscribers and driving higher average revenue per subscriber.
Revenue in our enterprise and equipment businesses relies heavily on global economic conditions and the
competitive landscape for pricing relative to competitors and alternative technologies. Service costs related to
ongoing support of our direct and indirect customers and partners are typically impacted most significantly by our
growth. There can be no assurance that we will have positive cash flows from operations. Furthermore, if we
experience negative cash flows, our existing cash and marketable investment securities balances may be reduced.
We have a significant amount of outstanding indebtedness. As of December 31, 2021, our total indebtedness was
$1.5 billion. Our liquidity requirements will continue to be significant, primarily due to our remaining debt service
requirements and the design and construction of our new EchoStar XXIV satellite. We may from time to time seek
to purchase amounts of our outstanding debt in open market purchases, privately negotiated transactions or
otherwise, depending on market conditions, our liquidity needs and other factors. The amounts we may repurchase
may be material. In addition, our future capital expenditures are likely to increase if we make acquisitions or
additional investments in infrastructure, technologies or joint ventures to support and expand our business, or if we
decide to purchase or build additional satellites or other technologies or assets. Other aspects of our business
operations may also require additional capital. We also expect to owe U.S. Federal income tax for 2021.
We anticipate that our existing cash and marketable investment securities are sufficient to fund the currently
anticipated operations of our business through the next twelve months.
Stock Repurchases
Our Board of Directors previously authorized us to repurchase up to $500.0 million of our Class A common stock
through and including December 31, 2021. On November 2, 2021, our Board of Directors authorized us to
repurchase up to $500.0 million of our Class A common stock commencing January 1, 2022 through and including
December 31, 2022. Purchases under our repurchase authorizations may be made through privately negotiated
transactions, open market repurchases, one or more trading plans in accordance with Rule 10b5-1 under the
Securities Exchange Act of 1934, as amended, or otherwise, subject to market conditions and other factors. We
may elect not to purchase the maximum amount or any of the shares allowable under these authorizations and we
may also enter into additional share repurchase programs authorized by our Board of Directors. During the twelve
months ended December 31, 2021, we repurchased 10,941,872 shares of our Class A common stock for $261.6
million under this program. The remaining authorization under this program, which expired on December 31, 2021,
was $194.9 million.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
CRITICAL ACCOUNTING POLICIES
For a summary of our significant accounting policies, including those discussed below, see Note 2 in our
Consolidated Financial Statements.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our Consolidated Financial Statements in conformity with U.S. GAAP requires us to make certain
estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the
balance sheets, the reported amounts of revenue and expenses for each reporting period, and certain information
disclosed in our Consolidated Financial Statements. We base our estimates, judgments and assumptions on
historical experience and on various other factors that we believe to be relevant under the circumstances. Actual
results may differ from previously estimated amounts, and such differences may be material to our Consolidated
Financial Statements. 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. The following
represent what we believe are the critical accounting policies that may involve a high degree of estimation,
judgment and complexity.
Contingent Liabilities
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. Legal fees and other costs of defending legal proceedings are
charged to expense as incurred. A significant amount of management judgment is required in determining whether
an accrual should be recorded for a loss contingency and the amount of such accrual. Estimates generally are
developed in consultation with legal counsel and are based on an analysis of potential outcomes. Due to the
inherent uncertainty in determining the likelihood of potential outcomes and the potential financial statement impact
of such outcomes, it is possible that upon further development or resolution of a contingent matter, charges related
to existing loss contingencies could be recorded in future periods, which could be material to our consolidated
results of operations and financial position.
Revenue Recognition
Our Hughes segment enters into contracts to design, develop and deliver telecommunication networks to customers
in our enterprise and mobile satellite systems markets. Those contracts require significant effort to develop and
construct the network over an extended time period. Revenue from such contracts is recognized over time using an
appropriate method to measure progress toward completion. Depending on the nature of the arrangement, we
measure progress toward completion using the cost-to-cost input method or the units-of-delivery output method.
Under the cost-to-cost method, revenue reflects the ratio of costs incurred to estimated total costs at completion.
Under the units-of-delivery method, revenue and related costs are recognized as products are delivered based on
the expected profit for the entire agreement. Profit margins on long-term contracts are based on estimates of total
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. Changes in our periodic estimates for these contracts could result in significant
adjustments to our revenue or costs, which could be material to our consolidated results of operations.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Impairment of Assets
Impairment of long-lived assets
We evaluate our long-lived assets other than goodwill and intangible assets with indefinite lives for impairment
whenever events and changes in circumstances indicate that their carrying amounts may not be recoverable. The
carrying amount of a long-lived asset or asset group is considered to not be recoverable when the market value or
estimated future undiscounted cash flows from such asset or asset group is less than its carrying amount. In that
event, an impairment loss is recorded in the determination of operating income based on the amount by which the
carrying amount exceeds the estimated fair value of the long-lived asset or asset group. The estimated fair value is
determined primarily using market value or cash flow techniques reflecting the estimated cash flows and discount
rate that would be assumed by a market participant for the asset or asset group under review. Our discounted cash
flow estimates typically include assumptions based on unobservable inputs and may reflect probability-weighting of
alternative scenarios. Estimated losses on long-lived assets to be disposed of by sale may be determined in a
similar manner, except that fair value estimates are reduced for estimated selling costs. Changes in estimates of
future cash flows, discount rates and other assumptions could result in recognition of additional impairment losses
in future periods.
We evaluate goodwill and intangible assets with indefinite lives for impairment on an annual basis or whenever
events and changes in circumstances indicate the carrying amounts may not be recoverable. Our impairment
assessment typically begins with a qualitative assessment to determine whether it is more likely than not the fair
value of the indefinite lived asset or reporting unit is less than its carrying amount. The qualitative assessment
includes comparing the overall financial performance against the planned results. Additionally, fair value is assessed
under certain events and circumstances, including macroeconomic conditions, industry and market considerations,
cost factors, and other relevant entity-specific events which requires significant judgment. If we determine in the
qualitative assessment that it is more likely than not that the fair value is less than its carrying value, then we
estimate the fair value using discounted cash flows or market value and compare the estimated fair value to its
carrying value. If the carrying value exceeds the fair value, then an impairment is recognized for the difference.
Impairment of investments
We periodically evaluate all of our investments to determine whether events or changes in circumstances have
occurred that may have a significant adverse effect on the fair value of the investment and/or if there has been
observable price changes in orderly transactions for identical or similar securities of the same issuer. We consider
information if provided to us by our investees such as current financial statements, business plans, investment
documentation, capitalization tables, liquidation waterfalls, and board materials, and we may make additional
inquiries of investee management.
Indicators of impairment may include, but are not limited to, unprofitable operations, material loss contingencies,
changes in business strategy, changes in the investees’ enterprise value and changes in the investees’ investment
pricing. When we determine that one of our other investments is impaired we reduce its carrying value to its
estimated fair value and recognize the impairment loss. Additionally, when there has been an observable price
change to a cost method investment, we adjust the carrying amount of the investment to its then estimated fair
value and recognize the investment gain or loss.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Income Taxes
Our income tax policy is to record the estimated future tax effects of temporary differences between the tax bases of
assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating
loss and tax credit carryforwards. Determining necessary valuation allowances requires us to make assessments
about the timing of future events, including the probability of expected future taxable income and available tax
planning opportunities. We periodically evaluate our need for a valuation allowance based on both historical
evidence, including trends, and future expectations in each reporting period. Any such valuation allowance is
recorded in either Income tax benefit (provision), net on our Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Income (Loss) or Accumulated other comprehensive income (loss)
within Stockholders' equity on our Consolidated Balance Sheets. Future performance could have a significant effect
on the realization of tax benefits, or reversals of valuation allowances, as reported in our consolidated results of
operations.
Management evaluates the recognition and measurement of uncertain tax positions based on applicable tax law,
regulations, case law, administrative rulings and pronouncements and the facts and circumstances surrounding the
tax position. Changes in our estimates related to the recognition and measurement of the amount recorded for
uncertain tax positions could result in significant changes in our Income tax benefit (provision), net, which could be
material to our consolidated results of operations.
NEW ACCOUNTING PRONOUNCEMENTS
For a discussion of new accounting pronouncements, refer to Note 2. Summary of Significant Accounting Policies in
our Consolidated Financial Statements. We are continuing to assess the impact of adopting certain recently issued
accounting pronouncements on our Consolidated Financial Statements and related disclosures.
SEASONALITY
For our Hughes segment, service revenue is generally not impacted by seasonal fluctuations other than those
associated with fluctuations related to sales and promotional activities.
Our ESS segment is not generally affected by seasonal impacts.
We cannot predict with any certainty whether these trends will continue in the near future as the economy and our
customers react to the COVID-19 pandemic and experience associated disruptions and dislocations.
INFLATION AND SUPPLY CHAIN
Inflation has started to impact our operations in 2021 as we have experienced increased costs in certain functional
areas including field services and customer care. We are unable to predict the extent or nature of any future
inflationary pressure at this time. Our ability to increase the prices charged for our products and services in future
periods will depend primarily on competitive pressures or contractual terms.
The worldwide interruptions and delays in the supply of components, materials and parts, although not materially
impacting our operations during 2021, may impact our ability to timely provide equipment deliveries in the future.
These interruptions and delays could also increase the cost of our equipment which we may not be able to pass
onto our customers.
EXPLANATION OF KEY METRICS AND OTHER ITEMS
Services and other revenue. Services and other revenue primarily includes the sales of consumer and enterprise
broadband services, maintenance and other contracted services, revenue associated with satellite and transponder
leases and services, satellite uplinking/downlinking, subscriber wholesale service fees for the HughesNet service
professional services and facilities rental revenue.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Equipment revenue. Equipment revenue primarily includes broadband equipment and networks sold to customers
in our consumer and enterprise markets.
Cost of sales - services and other. Cost of sales - services and other primarily includes the cost of broadband
services provided to our consumer and enterprise customers, maintenance and other contracted services, costs
associated with satellite and transponder leases and services, professional services and facilities rental.
Cost of sales - equipment. Cost of sales - equipment consists primarily of the cost of broadband equipment and
networks provided to customers in our consumer and enterprise markets. It also includes certain other costs
associated with the deployment of equipment to our customers.
Selling, general and administrative expenses. Selling, general and administrative expenses primarily include
selling and marketing costs and employee-related costs associated with administrative services (e.g., information
systems, human resources and other services), including stock-based compensation expense. It also includes
professional fees (e.g. legal, information systems and accounting services) and other expenses associated with
facilities and administrative services.
Research and development expenses. Research and development expenses primarily include costs associated
with the design and development of products to support future growth and provide new technology and innovation to
our customers.
Impairment of long-lived assets. Impairment of long-lived assets includes our impairment losses related to our
property and equipment, goodwill, regulatory authorizations and other intangible assets.
Interest income, net. Interest income, net primarily includes interest earned on our cash, cash equivalents and
marketable investment securities, and other investments including premium amortization and discount accretion on
debt securities.
Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized primarily includes
interest expense associated with our debt and finance lease obligations (net of capitalized interest), amortization of
debt issuance costs and interest expense related to certain legal proceedings.
Gains (losses) on investments, net. Gains (losses) on investments, net primarily includes changes in fair value of
our marketable equity securities and other investments for which we have elected the fair value option. It may also
include realized gains and losses on the sale or exchange of our available-for-sale debt securities, other-than-
temporary impairment losses on our available-for-sale securities, realized gains and losses on the sale or exchange
of equity securities and debt securities without readily determinable fair value and adjustments to the carrying
amount of investments in unconsolidated affiliates and marketable equity securities resulting from impairments and
observable price changes.
Equity in earnings (losses) of unconsolidated affiliates, net. Equity in earnings (losses) of unconsolidated
affiliates, net includes earnings or losses from our investments accounted for using the equity method.
Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net include gains
and losses resulting from the re-measurement of transactions denominated in foreign currencies.
Other, net. Other, net primarily includes dividends received from our marketable investment securities and other
non-operating income and expense items that are not appropriately classified elsewhere in the Consolidated
Statements of Operations in our Consolidated Financial Statements.
Net income (loss) from discontinued operations. Net income (loss) from discontinued operations includes the
financial results of the BSS Business transferred in the BSS Transaction, except for certain real estate that
transferred in the transaction.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is defined as Net income
(loss) excluding Interest income and expense, net, Income tax benefit (provision), net, Depreciation and
amortization, Net income (loss) from discontinued operations and Net income (loss) attributable to non-controlling
interests. EBITDA is not a measure determined in accordance with U.S. GAAP. This non-GAAP measure is
reconciled to Net income (loss) in our discussion of Results of Operations above. EBITDA should not be considered
in isolation or as a substitute for operating income, net income or any other measure determined in accordance with
U.S. GAAP. EBITDA is used by our management as a measure of operating efficiency and overall financial
performance for benchmarking against our peers and competitors. Management believes EBITDA provides
meaningful supplemental information regarding the underlying operating performance of our business and is
appropriate to enhance an overall understanding of our financial performance. Management also believes that
EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested
parties to evaluate the performance of companies in our industry.
Subscribers. Subscribers include customers that subscribe to our HughesNet service, through retail, wholesale
and small/medium enterprise service channels.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risks Associated with Financial Instruments and Foreign Currency
Our investments and debt are exposed to market risks, discussed below.
Cash, Cash Equivalents and Marketable Investment Securities
As of December 31, 2021, our cash, cash equivalents and marketable investment securities had a fair value of
$1.5 billion. Of this amount, a total of $1.4 billion was invested in: (a) cash; (b) commercial paper and corporate
notes with an overall average maturity of less than one year and rated in one of the four highest rating categories by
at least two nationally recognized statistical rating organizations; (c) debt instruments of the U.S. government and its
agencies; and/or (d) instruments with similar risk, duration and credit quality characteristics to the commercial paper
and corporate obligations described above. The primary purpose of these investing activities has been to preserve
principal until the cash is required to, among other things, fund operations, make strategic investments and expand
the business. Consequently, the size of this portfolio fluctuates significantly as cash is received and used in our
business. The value of this portfolio may be negatively impacted by credit losses; however, this risk is mitigated
through diversification that limits our exposure to any one issuer.
Interest Rate Risk
A change in interest rates would not affect the fair value of our cash, or materially affect the fair value of our cash
equivalents due to their maturities of less than 90 days. A change in interest rates would affect the fair value of our
current marketable debt securities portfolio; however, we normally hold these investments to maturity. Based on our
cash, cash equivalents and current marketable debt securities investment portfolio of $1.4 billion as of
December 31, 2021, a hypothetical 10% change in average interest rates during 2021 would not have had a
material impact on the fair value of our cash, cash equivalents and debt securities portfolio due to the limited
duration of our investments.
Our cash, cash equivalents and current marketable debt securities had an average annual rate of return for the year
ended December 31, 2021 of 0.23%. A change in interest rates would affect our future annual interest income from
this portfolio, since funds would be re-invested at different rates as the instruments mature. A hypothetical 10%
decrease in average interest rates during 2021 would have resulted in a decrease of $0.4 million in annual interest
income.
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Strategic Marketable Investment Securities
As of December 31, 2021, we held investments in the publicly traded securities of several companies with a fair
value of $142.9 million. These investments, which are held for strategic and financial purposes, are concentrated in
a small number of companies, are highly speculative and have historically experienced, and continue to experience
volatility. The fair value of these investments are subject to significant fluctuations in fair value and can be
significantly impacted by the risk of adverse changes in securities markets generally, as well as risks related to the
performance of the companies whose securities we have invested in, risks associated with specific industries and
other factors. In general, our strategic marketable investment securities portfolio is not significantly impacted by
interest rate fluctuations as it currently consists primarily of equity securities, the value of which is more closely
related to factors specific to the underlying business. A hypothetical 10% adverse change in the market price of our
public strategic equity investments during 2021 would have resulted in a decrease of $14.3 million in the fair value
of these investments.
Other Investments
As of December 31, 2021, we had $206.5 million of other equity investments and other debt investments of privately
held companies that we hold for strategic business purposes. The fair value of these investments is not readily
determinable. We periodically review these investments and may adjust the carrying amount to their estimated fair
value when there are indications of impairment, observable prices changes for the investments or observable
transactions of the same investments. A hypothetical adverse change equal to 10% of the carrying amount of these
equity instruments during 2021 would have resulted in a decrease of $20.7 million in the value of these investments.
Our ability to realize value from our strategic investments in companies that are privately held depends on the
success of those companies’ businesses and their ability to obtain sufficient capital to execute their business plans.
Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to
sell these investments, or that when we sell them, we will not be able to recover our investment.
Foreign Currency Exchange Risk
Our international business is conducted in a variety of foreign currencies with our largest exposures being to the
Brazilian real, the Indian rupee, European euro and the British pound. Transactions in foreign currencies are
converted into U.S. dollars using exchange rates in effect on the dates of the transactions. This exposes us to
fluctuations in foreign currency exchange rates.
Our objective in managing our exposure to foreign currency changes is to reduce earnings and cash flow volatility
associated with foreign currency exchange rate fluctuations, primarily resulting from loans to foreign subsidiaries in
U.S. dollars. Accordingly, we may enter into foreign currency forward contracts, or take other measures, to mitigate
risks associated with foreign currency denominated assets, liabilities, commitments and anticipated foreign currency
transactions As of December 31, 2021, we had foreign currency forward contracts with a notional value of
$12.8 million in place to partially mitigate foreign currency exchange risk. The estimated fair values of the foreign
currency contracts were not material as of December 31, 2021. The impact of a hypothetical 10% adverse change
in exchange rates on the carrying amount of the net assets and liabilities of our foreign subsidiaries during 2021
would have resulted in an estimated loss to the cumulative translation adjustment of $42.6 million as of
December 31, 2021.
Derivative Financial Instruments
We generally do not use derivative financial instruments for speculative purposes and we generally do not apply
hedge accounting treatment to our derivative financial instruments. We evaluate our derivative financial instruments
from time to time but there can be no assurance that we will not enter into additional foreign currency forward
contracts, or take other measures, in the future to mitigate our foreign currency exchange risk.
54
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our Consolidated Financial Statements are included in Item 15 of this Form 10-K.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in
Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this Form 10-K. Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by
this Form 10-K such that the information required to be disclosed in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms, and is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and
Rule 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the three months
ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. We continue to review our internal control over financial reporting and may from
time to time make changes aimed at enhancing its effectiveness and to ensure that our systems evolve with our
business.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Our internal control over financial reporting is designed 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 in the United States.
Our internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions
and dispositions of our assets;
(ii) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our
financial statements in accordance with generally accepted accounting principles in the United States, and
that our receipts and expenditures are being made only in accordance with authorizations of our
management and our directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures
may deteriorate.
55
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Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based
on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our
internal control over financial reporting was effective as of December 31, 2021.
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by
KPMG LLP, an independent registered public accounting firm, as stated in their report which appears in Item
15(a) of this Form 10-K.
ITEM 9B. OTHER INFORMATION
Financial Results
On February 24, 2022, we issued a press release (the “Press Release”) announcing our financial results for the
quarter and year ended December 31, 2021. A copy of the Press Release is furnished herewith as Exhibit 99.1.
The foregoing information, including the exhibit related thereto, is furnished in response to Item 2.02 of Form 8-K
and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise, and shall not be incorporated by reference into any registration statement or other document pursuant
to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Securities Exchange
Act of 1934, as amended, except as otherwise expressly stated in any such filing.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item with respect to the identity and business experience of our directors and
corporate governance will be set forth in our Proxy Statement for the 2022 Annual Meeting of Shareholders, which
will be filed no later than 120 days after December 31, 2021, under the caption “Election of Directors,” which
information is hereby incorporated herein by reference.
The information required by this Item with respect to the identity and business experience of our executive officers is
set forth in Part I of this Form 10-K under the caption Item 1. Business — Information about our Executive Officers.
The information required by this Item with respect to our code of ethics is contained in Part I of this Form 10-K under
the caption Item 1. Business — Website Access.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item will be set forth in our Proxy Statement for the 2022 Annual Meeting of
Shareholders, which will be filed no later than 120 days after December 31, 2021, under the caption “Executive
Compensation and Other Information,” which information is hereby incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item will be set forth in our Proxy Statement for the 2022 Annual Meeting of
Shareholders, which will be filed no later than 120 days after December 31, 2021, under the captions “Election of
Directors,” “Equity Security Ownership” and “Equity Compensation Plan Information,” which information is hereby
incorporated herein by reference.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item will be set forth in our Proxy Statement for the 2022 Annual Meeting of
Shareholders, which will be filed no later than 120 days after December 31, 2021, under the caption “Certain
Relationships and Related Party Transactions,” which information is hereby incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item will be set forth in our Proxy Statement for the 2022 Annual Meeting of
Shareholders, which will be filed no later than 120 days after December 31, 2021, under the caption “Principal
Accountant Fees and Services,” which information is hereby incorporated herein by reference.
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
PART IV
(1) Consolidated Financial Statements
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the years ended December 31, 2021,
2020 and 2019
Consolidated Statements of Comprehensive Income (Loss) for the years ended
December 31, 2021, 2020 and 2019
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021,
2020 and 2019
Notes to Consolidated Financial Statements
(2) Exhibits
Page
F-1
F-2
F-4
F-6
F-7
F-8
F-9
F-11
2.1*
2.2*
2.3*
3.1*
3.2*
3.3*
3.4*
3.5*
Form of Separation Agreement between EchoStar Corporation and DISH Network Corporation
(incorporated by reference to Exhibit 2.1 to Amendment No. 1 of EchoStar Corporation’s Form 10 filed
December 12, 2007, Commission File No. 001-33807).
Agreement and Plan of Merger between EchoStar Corporation, EchoStar Satellite Services L.L.C.,
Broadband Acquisition Corporation and Hughes Communications, Inc. dated as of February 13, 2011
(incorporated by reference to Exhibit 2.1 to Hughes Communications Inc.’s Current Report on Form 8-
K, filed February 15, 2011, Commission File No. 1-33040). ****
Master Transaction Agreement by and among DISH Network Corporation, BSS Merger Sub Inc.,
EchoStar Corporation, and EchoStar BSS Corporation, dated as of May 19, 2019 (incorporated by
reference to Exhibit 2.1 to EchoStar Corporation’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2019, filed August 8, 2019, Commission File No. 001-33807). ****
Articles of Incorporation of EchoStar Corporation (incorporated by reference to Exhibit 3.1 to
Amendment No. 1 of EchoStar Corporation’s Form 10 filed December 12, 2007, Commission File
No. 001-33807).
Amendment to the Articles of Incorporation of EchoStar Corporation (incorporated by reference to
Exhibit 3.1 to EchoStar Corporation’s Current Report on Form 8-K filed January 25, 2008,
Commission File No. 001-33807).
Certificate of Amendment to Articles of Incorporation of EchoStar Corporation, dated as of May 4,
2016 (incorporated by reference to Exhibit 3.1 to EchoStar Corporation’s Current Report on Form 8-K,
filed May 5, 2016, Commission File No. 001-33807).
Certificate of Withdrawal of Certificate of Designation of EchoStar Corporation (incorporated by
reference to Exhibit 31 to EchoStar Corporation’s Current Report on Form 8-K, filed March 6, 2017,
Commission File No. 001-33807).
Bylaws of EchoStar Corporation (incorporated by reference to Exhibit 3.2 to Amendment No. 1 of
EchoStar Corporation’s Form 10 filed December 12, 2007, Commission File No. 001-33807).
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4.1*
4.2*
4.3*
4.4*
4.5*
4.6*
4.7*
4.8*
4.9*
4.10*
4.11*
4.12*
Specimen Class A Common Stock Certificate of EchoStar Corporation (incorporated by reference to
Exhibit 4.1 to Amendment No. 1 of EchoStar Corporation’s Form 10 filed December 12, 2007,
Commission File No. 001-33807).
Security Agreement, dated as of June 8, 2011, among EH Holding Corporation (currently known as
Hughes Satellite Systems Corporation), the guarantors listed on the signature pages thereto, and
U.S. Bank National Association, as successor collateral agent (incorporated by reference to
Exhibit 4.1 to EchoStar Corporation’s Current Report on Form 8-K filed June 9, 2011, Commission
File No. 001-33807).
Indenture, relating to the 5.250% Senior Secured Notes, dated as of July 27, 2016, among Hughes
Satellite Systems Corporation, the guarantors party thereto, U.S. Bank National Association, as
trustee and successor collateral agent (incorporated by reference to Exhibit 4.1 to EchoStar
Corporation’s Current Report on Form 8-K filed on July 27, 2016, Commission File No. 001-33807).
Indenture, relating to the 6.625% Senior Unsecured Notes, dated as of July 27, 2016, among Hughes
Satellite Systems Corporation, the guarantors party thereto and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.2 to EchoStar Corporation’s Current Report on Form 8-
K filed on July 27, 2016, Commission File No. 001-33807).
Registration Rights Agreement, dated as of July 27, 2016, among Hughes Satellite Systems
Corporation, the guarantors party thereto and Deutsche Bank Securities Inc. (incorporated by
reference to Exhibit 4.3 to EchoStar Corporation’s Current Report on Form 8-K filed on July 27, 2016,
Commission File No. 001-33807).
Additional Secured Party Joinder, dated as of July 27, 2016, among U.S. Bank National Association,
as trustee and successor collateral agent, and Hughes Satellite Systems Corporation (incorporated
by reference to Exhibit 4.4 to EchoStar Corporation’s Current Report on Form 8-K filed on July 27,
2016, Commission File No. 001-33807).
Form of 5.250% Senior Secured Note due 2026 (included as part of Exhibit 4.3).
Form of 6.625% Senior Unsecured Note due 2026 (included as part of Exhibit 4.4).
Supplemental Indenture relating to Hughes Satellite Systems Corporation’s 5.250% Senior Secured
Notes due 2026, dated March 23, 2017, by and among Hughes Satellite Systems Corporation, the
guarantors and the supplemental guarantor listed on the signature pages thereto, U.S. Bank National
Association, as trustee and successor collateral agent (incorporated by reference to Exhibit 4.19 to
Hughes Satellite Systems Corporation’s Registration Statement on Form S-4, filed April 6, 2017,
Commission File No. 333-179121).
Supplemental Indenture relating to Hughes Satellite Systems Corporation’s 6.625% Senior Notes due
2026, dated as of March 23, 2017, by and among Hughes Satellite Systems Corporation, the
guarantors and the supplemental guarantor listed on the signature pages thereto and U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 4.20 to Hughes Satellite
Systems Corporation’s Registration Statement on Form S-4, filed April 6, 2017, Commission File No.
333-179121).
Joinder Agreement, dated as of August 10, 2017, to the Security Agreement dated as of June 8, 2011,
by and between HNS Americas, L.L.C., HNS Americas II, L.L.C. and U.S. Bank National Association,
as successor collateral agent (incorporated by reference to Exhibit 4.24 to EchoStar Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2017, filed February 22, 2018,
Commission File No. 001-33807).
Second Supplemental Indenture relating to Hughes Satellite Systems Corporation’s 5.250% Senior
Secured Notes due 2026, dated August 10, 2017, by and among Hughes Satellite Systems
Corporation, the guarantors and the supplemental guarantor listed on the signature pages thereto,
U.S. Bank National Association, as trustee and successor collateral agent (incorporated by reference
to Exhibit 4.25 to EchoStar Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2017, filed February 22, 2018, Commission File No. 001-33807).
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4.13*
4.14*
4.15*
4.16*
4.17*
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
Second Supplemental Indenture relating to Hughes Satellite Systems Corporation’s 6.625% Senior
Notes due 2026, dated as of August 10, 2017, by and among Hughes Satellite Systems Corporation,
the guarantors and the supplemental guarantor listed on the signature pages thereto and U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 4.26 to EchoStar Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2017, filed February 22, 2018,
Commission File No. 001-33807).
Joinder Agreement, dated as of June 12, 2019, to the Security Agreement dated as of June 8, 2011,
by and between EchoStar BSS Corporation, EchoStar FSS L.L.C. and U.S. Bank National
Association, as successor collateral agent (incorporated by reference to Exhibit 4.1 to EchoStar
Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed August 8,
2019, Commission File No. 001-33807).
Third Supplemental Indenture relating to Hughes Satellite Systems Corporation’s 5.250% Senior
Secured Notes due 2026, dated June 12, 2019, by and among Hughes Satellite Systems
Corporation, the guarantors and the supplemental guarantors listed on the signature pages thereto,
U.S. Bank National Association, as trustee and successor collateral agent (incorporated by reference
to Exhibit 4.2 to EchoStar Corporation’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2019, filed August 8, 2019, Commission File No. 001-33807).
Third Supplemental Indenture relating to Hughes Satellite Systems Corporation’s 6.625% Senior
Notes due 2026, dated as of June 12, 2019, by and among Hughes Satellite Systems Corporation,
the guarantors and the supplemental guarantors listed on the signature pages thereto and U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 4.3 to EchoStar Corporation’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed August 8, 2019,
Commission File No. 001-33807).
Description of our Capital Stock ((incorporated by reference to Exhibit 4.25 to EchoStar Corporations’
Annual Report on Form 10-K for the year ended December 31, 2019, filed February 20, 2020,
Commission File No. 001-33807).
Form of Tax Sharing Agreement between EchoStar Corporation and DISH Network Corporation
(incorporated by reference to Exhibit 10.2 to Amendment No. 1 of EchoStar Corporation’s Form 10
filed December 12, 2007, Commission File No. 001-33807).
Form of EchoStar Corporation 2008 Class B CEO Stock Option Plan (incorporated by reference to
Exhibit 10.25 to Amendment No. 1 of EchoStar Corporation’s Form 10 filed December 12, 2007,
Commission File No. 001-33807).**
Amended and Restated EchoStar Corporation 2008 Stock Incentive Plan (the “2008 Stock Incentive
Plan”) (incorporated by reference to EchoStar Corporation’s Definitive Proxy Statement on Form 14,
filed September 18, 2014, Commission File No. 001-33807).**
Amended and Restated EchoStar Corporation 2008 Non-Employee Director Stock Option Plan (the
“2008 Non-Employee Director Stock Option Plan”) (incorporated by reference to EchoStar
Corporation’s Definitive Proxy Statement on Form 14, filed March 31, 2009, Commission File
No. 001-33807).**
Allocation Agreement, dated August 4, 2009, between EchoStar Corporation and DISH Network
Corporation (incorporated by reference from Exhibit 10.4 to EchoStar Corporation’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2009, filed November 9, 2009, Commission File
No. 001-33807).
Form of Restricted Stock Unit Agreement for 2008 Stock Incentive Plan — Executive or Director
(incorporated by reference to Exhibit 10.1 to EchoStar Corporation’s Quarterly Report on Form 10-Q
filed November 6, 2015, Commission File
for
No. 001-33807).**
the quarter ended September 30, 2015,
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10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
Form of Stock Option Agreement for 2008 Stock Incentive Plan (1999) (incorporated by reference to
Exhibit 10.39 to EchoStar Corporation’s Annual Report on Form 10-K for the year ended December
31, 2015, filed February 24, 2016, Commission File No. 001-33807).**
Form of Stock Option Agreement for 2008 Stock Incentive Plan — Employee (2008) (incorporated by
reference to Exhibit 10.40 to EchoStar Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2015, filed February 24, 2016, Commission File No. 001-33807).**
Form of Stock Option Agreement for 2008 Stock Incentive Plan — Executive (2008) (incorporated by
reference to Exhibit 10.41 to EchoStar Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2015, filed February 24, 2016, Commission File No. 001-33807).**
Form of Stock Option Agreement for 2008 Stock Incentive Plan — Employee (2014) (incorporated by
reference to Exhibit 10.42 to EchoStar Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2015, filed February 24, 2016, Commission File No. 001-33807).**
Form of Stock Option Agreement for 2008 Stock Incentive Plan — Executive (2014) (incorporated by
reference to Exhibit 10.43 to EchoStar Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2015, filed February 24, 2016, Commission File No. 001-33807). **
Form of Non-Employee Director Stock Option Agreement for 2008 Non-Employee Director Stock
Option Plan (incorporated by reference to Exhibit 10.44 to EchoStar Corporation’s Annual Report on
Form 10-K for the year ended December 31, 2015, filed February 24, 2016, Commission File
No. 001-33807). **
Form of Restricted Stock Unit Agreement for 2008 Stock Incentive Plan — Executive or Director
(2011) (incorporated by reference to Exhibit 10.45 to EchoStar Corporation’s Annual Report on Form
10-K for the year ended December 31, 2015, filed February 24, 2016, Commission File
No. 001-33807).**
Share Exchange Agreement among DISH Network Corporation, DISH Network L.L.C., DISH
Operating L.L.C., EchoStar Corporation, EchoStar Broadcasting Holding Parent L.L.C., EchoStar
Broadcasting Holding Corporation, EchoStar Technologies Holding Corporation, and EchoStar
Technologies L.L.C., dated as of January 31, 2017 (incorporated by reference to Exhibit 10.1 to
EchoStar Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed
May 10, 2017, Commission File No. 001-33807. ***/****
to EchoStar
EchoStar Corporation 2017 Stock
Corporation’s Definitive Proxy Statement on Form 14, filed March 23, 2017, Commission File No.
001-33807).**
Incentive Plan (incorporated by reference
EchoStar Corporation 2017 Non-Employee Director Stock Incentive Plan (incorporated by reference
to EchoStar Corporation’s Definitive Proxy Statement on Form 14, filed March 23, 2017, Commission
File No. 001-33807).**
Amended and Restated EchoStar Corporation 2017 Employee Stock Purchase Plan (incorporated by
reference to EchoStar Corporation’s Definitive Proxy Statement on Form 14, filed March 23, 2017,
Commission File No. 001-33807).**
EchoStar Non-Qualified Plan -- Executive Plan and Adoption Agreement, as amended (incorporated
by reference to Exhibit 10.1 to EchoStar Corporation’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2017, filed August 9, 2017, Commission File No. 001-33807).**
Form of Stock Option Agreement for the EchoStar Corporation 2017 Stock Incentive Plan - Employee
(2017) (incorporated by reference to Exhibit 10.2 to EchoStar Corporation’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2017, filed August 9, 2017, Commission File
No. 001-33807).**
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10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30(H)
21(H)
Form of Stock Option Agreement for the EchoStar Corporation 2017 Stock Incentive Plan - Executive
(2017) (incorporated by reference to Exhibit 10.3 to EchoStar Corporation’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2017, filed August 9, 2017, Commission File
No. 001-33807). **
Form of Non-Employee Director Stock Option Agreement for the EchoStar Corporation 2017 Non-
Employee Director Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to EchoStar
Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed August 9,
2017, Commission File No. 001-33807).**
Form of Restricted Stock Unit Agreement for the EchoStar Corporation 2017 Stock Incentive Plan -
Executive (2017) (incorporated by reference to Exhibit 10.5 to EchoStar Corporation’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2017, filed August 9, 2017, Commission File
No. 001-33807).**
Letter Agreement between EchoStar Corporation and DISH Network Corporation, dated August 3,
2018, amending that certain Form of Tax Sharing Agreement between EchoStar Corporation and
DISH Network (incorporated by reference to Exhibit 10.1 to EchoStar Corporation’s Quarterly Report
on Form 10-Q for the quarter ended September 2018, filed November 8, 2018, Commission File No.
001-33807).
Amendment to EchoStar Non-Qualified Plan -- Executive Plan and Adoption Agreement, dated
November 1, 2018 (incorporated by reference to Exhibit 10.35 to EchoStar Corporation’s Annual
Report on Form 10-K for the year ended December 31, 2018, filed February 21, 2019, Commission
File No. 001-33807).**
Amended and Restated EchoStar Corporation Executive Officer Bonus Incentive Plan, dated as of
April 30, 2019 (incorporated by reference to Exhibit 10.1 to EchoStar Corporation’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2019, filed August 8, 2019, Commission File No.
001-33807).**
Contract between EchoStar XXIV L.L.C. and Space Systems/Loral, LLC (currently known as Maxar
Space LLC) for the Jupiter 3 Satellite programs, dated as April 19, 2017 (incorporated by reference to
Exhibit 10.30 to EchoStar Corporations’ Annual Report on Form 10-K for the year ended December
31, 2019, filed February 20, 2020, Commission File No. 001-33807). ***/****
Amendment to EchoStar Non-Qualified Plan – Executive Plan and Adoption Agreement, dated
October 21, 2019 (incorporated by reference to Exhibit 10.1 to EchoStar Corporation’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2020, filed November 5, 2020,
Commission File No. 001-33807). **
Amendment No. 1 to Contract between EchoStar XXIV L.L.C. and SpaceSystems/Loral, LLC
(currently known as Maxar Space LLC) for the Jupiter 3 Satellite Program, dated October 1, 2018
(incorporated by reference to Exhibit 10.2 to EchoStar Corporation’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2020, filed November 5, 2020. Commission File No. 001-33807).
****
Amendment No. 1 to EchoStar Corporation 2017 Non-Employee Director Stock Incentive Plan
(incorporated by reference to EchoStar Corporation’s Definitive Proxy Statement on Schedule 14A,
filed March 17, 2021, Commission File No. 001-33807). **
Second Amended and Restated EchoStar Corporation Executive Officer Bonus Incentive Plan, dated
as of November 2, 2021. **
Subsidiaries of EchoStar Corporation.
23(H)
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
24(H)
99.1(I)
Powers of Attorney of Charles W. Ergen, R. Stanton Dodge, Lisa W. Hershman, Pradman P. Kaul,
Jeffrey R. Tarr, C. Michael Schroeder and William David Wade.
Press release dated February 24, 2022 issued by EchoStar Corporation regarding financial results for
the quarter and full year ended December 31, 2021.
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31.1(H)
Section 302 Certification of Chief Executive Officer.
31.2(H)
Section 302 Certification of Chief Financial Officer.
32.1(I)
Section 906 Certifications of Chief Executive Officer and Chief Financial Officer.
101.INS
101.SCH
XBRL Instance Document. The instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.
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.
(H)
(I)
*
**
***
****
Filed herewith.
Furnished herewith.
Incorporated by reference.
Constitutes a management contract or compensatory plan or arrangement.
Certain portions of the exhibit have been omitted in accordance with the Securities and Exchange Commission’s rules and regulations
regarding confidential treatment.
Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. We agree to furnish supplementally to the
Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request, subject to our right to request confidential
treatment of any requested schedule or exhibit.
ITEM 16. FORM 10-K SUMMARY
None.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
ECHOSTAR CORPORATION
By:
/s/ David J. Rayner
David J. Rayner
Executive Vice President,
Chief Financial Officer,
Chief Operating Officer, and
Treasurer
Date: February 24, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Michael T. Dugan
Michael T. Dugan
/s/ David J. Rayner
David J. Rayner
*
Charles W. Ergen
*
R. Stanton Dodge
*
Lisa W. Hershman
*
Pradman P. Kaul
*
Jeffrey R. Tarr
*
C. Michael Schroeder
*
William David Wade
* By:
/s/ Dean A. Manson
Dean A. Manson
Attorney-in-Fact
Chief Executive Officer, President and Director
(Principal Executive Officer)
February 24, 2022
Executive Vice President, Chief Financial Officer,
Chief Operating Officer and Treasurer
(Principal Financial and Accounting Officer)
February 24, 2022
Chairman
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
Director
Director
Director
Director
Director
Director
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements:
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (KPMG LLP, Denver, CO, Auditor Firm ID: 185)
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021,
2020 and 2019
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2021,
2020 and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
Page
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
EchoStar Corporation:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of EchoStar Corporation and subsidiaries (the
Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive
income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended
December 31, 2021, and the related notes (collectively, the consolidated financial statements). We also have
audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020 and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally
accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.
Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on
the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
F-2
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assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Sufficiency of audit evidence over certain Hughes segment revenue
As discussed in Note 2 and Note 3 to the consolidated financial statements, the Company reported
$1,956,226,000 in total revenue for the Hughes segment for the year ended December 31, 2021, of which
$1,685,799,000 and $270,427,000 was related to total services and other revenue and certain equipment
related revenue, respectively. The Hughes segment provides broadband satellite technologies and
broadband internet services to consumer customers, and broadband network technologies, managed
services, equipment, hardware, satellite services, and communications solutions to consumer and
enterprise customers.
We identified the evaluation of the sufficiency of audit evidence over certain Hughes segment revenue as a
critical audit matter. Specifically, a high degree of auditor judgment was required to evaluate the nature and
extent of audit evidence obtained related to the total services and other revenue and certain equipment
related revenue of the Hughes segment. IT professionals with specialized skills and knowledge were
required to assess the multiple information technology (IT) applications, data interfaces, and procedures
used to initiate, process, and record transactions.
The following are the primary procedures we performed to address this critical audit matter. We applied
auditor judgment to determine the nature and extent of procedures to be performed. We evaluated the
design and tested the operating effectiveness of internal controls, including controls related to the multiple
IT applications, data interfaces, and procedures used to initiate, process, and record transactions. We
assessed the recorded amounts by sampling transactions and comparing the amounts recognized for
consistency with underlying documentation, including contracts or payment and transaction support. We
involved IT professionals with specialized skills and knowledge, who assisted in testing IT applications used
by the Company in its revenue recognition process, and configuration and interface controls over the
transfer of relevant data between systems used in the revenue recognition processes. We evaluated the
sufficiency of audit evidence obtained by assessing the results of the procedures performed, including the
appropriateness of the nature and extent of such evidence.
/s/ KPMG LLP
We have served as the Company’s auditor since 2007.
Denver, Colorado
February 24, 2022
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ECHOSTAR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents
Marketable investment securities
Trade accounts receivable and contract assets, net
Other current assets, net
Total current assets
Non-current assets:
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Regulatory authorizations, net
Other intangible assets, net
Other investments, net
Other non-current assets, net
Total non-current assets
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable
Current portion of long-term debt, net
Contract liabilities
Accrued expenses and other current liabilities
Total current liabilities
Non-current liabilities:
Long-term debt, net
Deferred tax liabilities, net
Operating lease liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Commitments and contingencies
As of December 31,
2020
2021
$
535,894 $
1,010,496
182,063
198,444
1,926,897
2,338,285
149,198
511,086
469,766
13,984
297,747
338,241
4,118,307
6,045,204 $
$
$
109,338 $
—
141,343
209,442
460,123
1,495,994
403,684
134,897
136,426
2,171,001
2,631,124
896,005
1,638,271
183,989
189,821
2,908,086
2,390,313
128,303
511,597
478,762
18,433
284,937
352,921
4,165,266
7,073,352
122,366
898,237
104,569
299,999
1,425,171
1,495,256
359,896
114,886
70,893
2,040,931
3,466,102
The accompanying notes are an integral part of these Consolidated Financial Statements.
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ECHOSTAR CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, none
issued and outstanding at both December 31, 2021 and 2020
Common stock, $0.001 par value, 4,000,000,000 shares authorized:
Class A common stock, $0.001 par value, 1,600,000,000 shares
authorized, 58,059,622 shares issued and 38,726,923 shares outstanding
at December 31, 2021 and 57,254,201 shares issued and 48,863,374
shares outstanding at December 31, 2020
Class B convertible common stock, $0.001 par value, 800,000,000 shares
authorized, 47,687,039 shares issued and outstanding at both
December 31, 2021 and 2020
Class C convertible common stock, $0.001 par value, 800,000,000 shares
authorized, none issued and outstanding at both December 31, 2021 and
2020
Class D common stock, $0.001 par value, 800,000,000 shares
authorized, none issued and outstanding at both December 31, 2021 and
2020
Additional paid-in capital
Accumulated other comprehensive income (loss)
Accumulated earnings (losses)
Treasury shares, at cost
Total EchoStar Corporation stockholders' equity
Non-controlling interests
Total stockholders' equity
Total liabilities and stockholders' equity
$
—
—
58
48
—
57
48
—
—
3,345,878
(212,102)
656,466
(436,521)
3,353,827
60,253
3,414,080
6,045,204 $
—
3,321,426
(187,876)
583,591
(174,912)
3,542,334
64,916
3,607,250
7,073,352
The accompanying notes are an integral part of these Consolidated Financial Statements.
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ECHOSTAR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
For the years ended December 31,
2020
2019
2021
Revenue:
Services and other revenue
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
Impairment of long-lived assets
Total costs and expenses
Operating income (loss)
Other income (expense):
Interest income, net
Interest expense, net of amounts capitalized
Gains (losses) on investments, net
Equity in earnings (losses) of unconsolidated affiliates,
net
Foreign currency transaction gains (losses), net
Other-than-temporary impairment losses on equity
method investments
Other, net
Total other income (expense), net
Income (loss) from continuing operations before income
taxes
Income tax benefit (provision), net
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
Less: Net loss (income) attributable to non-controlling
interests
Net income (loss) attributable to EchoStar Corporation
common stock
Earnings (losses) per share - Class A and B common
stock:
Basic and diluted earnings (losses) from continuing
operations per share
Total basic and diluted earnings (losses) per share
$
1,715,287 $
270,433
1,985,720
1,682,304 $
205,603
1,887,907
1,619,271
266,810
1,886,081
551,679
577,943
561,353
231,975
461,705
31,777
491,329
245
1,768,710
217,010
22,801
(95,512)
69,531
(5,170)
(12,613)
(55,266)
(12,434)
(88,663)
128,347
(65,626)
62,721
—
62,721
166,435
474,912
29,448
525,011
1,685
1,775,434
112,473
39,982
(147,927)
(31,306)
(7,267)
6,015
—
195
(140,308)
(27,835)
(24,069)
(51,904)
—
(51,904)
226,002
509,145
25,739
490,765
—
1,813,004
73,077
82,352
(251,016)
28,912
(14,734)
(11,590)
—
(166)
(166,242)
(93,165)
(20,488)
(113,653)
39,401
(74,252)
10,154
11,754
11,335
$
72,875 $
(40,150) $
(62,917)
$
$
0.81 $
0.81 $
(0.41) $
(0.41) $
(1.06)
(0.65)
The accompanying notes are an integral part of these Consolidated Financial Statements.
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ECHOSTAR CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands)
For the years ended December 31,
2020
2019
2021
Net income (loss)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
Unrealized gains (losses) on available-for-sale
securities
Other
Amounts reclassified to net income (loss):
Realized losses (gains) on available-for-sale debt
securities
Total other comprehensive income (loss), net of tax
Comprehensive income (loss)
Less: Comprehensive income (loss) attributable to non-
controlling interests
Comprehensive income (loss) attributable to EchoStar
Corporation
$
62,721 $
(51,904) $
(74,252)
(24,061)
(83,736)
463
(5,005)
(253)
2,614
2,845
2,571
1,466
(12)
(28,615)
34,106
(2)
(81,377)
(133,281)
(592)
6,290
(67,962)
(14,543)
(27,392)
(8,007)
$
48,649 $
(105,889) $
(59,955)
The accompanying notes are an integral part of these Consolidated Financial Statements.
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ECHOSTAR CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts in thousands)
Balance, December 31, 2018
$
102
$
3,702,522
$
(125,100) $
694,129
$
(131,454) $
15,275
$
4,155,474
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Earnings
(Losses)
Treasury
Shares, at cost
Non-controlling
Interests
Total
Issuances of Class A common stock:
Exercise of stock options
Employee benefits
Employee Stock Purchase Plan
Stock-based compensation
Purchase of non-controlling interest
Net assets distributed pursuant to the BSS
Transaction
Issuance of equity and contribution of assets
pursuant to the Yahsat JV formation
Other comprehensive income (loss)
Net income (loss)
Other, net
Balance, December 31, 2019
Cumulative effect of accounting changes
Balance, January 1, 2020
Issuances of Class A common stock:
Exercise of stock options
Employee benefits
Employee Stock Purchase Plan
Stock-based compensation
Issuance of equity and contribution of assets
pursuant to the Yahsat JV formation
Contribution by non-controlling interest holder
Other comprehensive income (loss)
Net income (loss)
Treasury share repurchase
Other, net
3
—
—
—
—
—
—
—
—
—
105
—
105
—
—
—
—
—
—
—
—
—
—
67,307
6,654
9,778
9,353
(833)
(532,747)
29,576
(1,127)
—
—
—
—
—
—
—
2,962
—
—
3,290,483
(122,138)
—
—
—
—
—
—
—
—
—
—
(62,917)
1,597
632,809
(9,068)
—
—
—
—
—
—
—
—
—
—
(131,454)
—
—
—
—
—
67,310
6,654
9,778
9,353
(6,480)
(7,313)
—
(532,747)
73,199
3,328
(11,335)
1,761
75,748
(240)
102,775
6,290
(74,252)
2,231
3,745,553
(9,308)
3,290,483
(122,138)
623,741
(131,454)
75,508
3,736,245
855
6,921
10,109
8,887
4,338
—
—
—
—
(167)
—
—
—
—
—
—
(65,738)
—
—
—
—
—
—
—
—
—
—
(40,150)
—
—
—
—
—
—
—
—
—
—
(43,458)
—
—
—
—
—
(1,580)
18,241
(15,631)
(11,754)
—
132
855
6,921
10,109
8,887
2,758
18,241
(81,369)
(51,904)
(43,458)
(35)
Balance, December 31, 2020
105
3,321,426
(187,876)
583,591
(174,912)
64,916
3,607,250
Issuances of Class A common stock:
Exercise of stock options
Employee benefits
Employee Stock Purchase Plan
Stock-based compensation
Contribution by non-controlling interest holder
Other comprehensive income (loss)
Net income (loss)
Treasury share repurchase
Other
Balance, December 31, 2021
$
$
—
1
—
—
—
—
—
—
—
106
$
$
408
7,124
9,471
7,699
—
—
—
—
(250) $
—
—
—
—
—
(24,226)
—
—
—
—
—
—
—
—
—
$
72,875
—
—
3,345,878
$
(212,102) $
656,466
—
—
—
—
—
—
—
(261,609)
—
$
—
—
—
—
9,880
(4,389)
(10,154)
—
—
(436,521) $
60,253
408
7,125
9,471
7,699
9,880
(28,615)
62,721
(261,609)
(250)
3,414,080
$
$
$
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
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ECHOSTAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
For the years ended December 31,
2020
2019
2021
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to cash
flows provided by (used for) operating activities:
Depreciation and amortization
Impairment of long-lived assets
Losses (gains) on investments, net
Equity in losses (earnings) of unconsolidated
affiliates, net
Foreign currency transaction losses (gains), net
Deferred tax provision (benefit), net
Stock-based compensation
Amortization of debt issuance costs
Dividends received from unconsolidated affiliates
Other-than-temporary impairment losses on equity
method investments
Other, net
Changes in assets and liabilities, net:
Trade accounts receivable and contract assets,
net
Other current assets, net
Trade accounts payable
Contract liabilities
Accrued expenses and other current liabilities
Non-current assets and non-current liabilities, net
Net cash provided by (used for) operating activities
Cash flows from investing activities:
Purchases of marketable investment securities
Sales and maturities of marketable investment
securities
Expenditures for property and equipment
Expenditures for externally marketed software
Purchase of other investments
Sales of other investments
Investments in unconsolidated affiliates
Purchases of regulatory authorizations
Dividend received from unconsolidated affiliate
Net cash provided by (used for) investing activities
$
62,721 $
(51,904) $
(74,252)
491,329
245
(69,531)
525,011
1,685
31,306
5,170
12,613
37,664
7,699
2,381
—
55,266
19,740
(2,334)
(7,303)
(15,599)
36,774
(84,621)
80,012
632,226
7,267
(6,015)
18,147
8,887
4,324
—
—
(12,501)
2,237
(12,984)
(12,339)
3,509
42,822
(15,064)
534,388
588,200
—
(28,912)
14,734
11,590
32,542
9,353
5,912
2,716
—
6,297
8,289
(39,190)
13,149
26,376
66,352
13,166
656,322
(1,651,608)
(2,799,838)
(993,369)
2,321,560
(438,430)
(33,543)
(50,000)
10,951
—
—
—
158,930
2,110,336
(408,798)
(38,655)
(5,500)
—
—
—
—
(1,142,455)
2,391,220
(418,584)
(29,310)
(93,687)
—
(2,149)
(34,447)
2,284
821,958
The accompanying notes are an integral part of these Consolidated Financial Statements.
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ECHOSTAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Cash flows from financing activities:
Repurchase and maturity of the 2019 Senior Secured
Notes
Repurchase and maturity of the 2021 Senior
Unsecured Notes
Payment of finance lease obligations
Payment of in-orbit incentive obligations
Proceeds from Class A common stock options
exercised
Proceeds from Class A common stock issued under
the Employee Stock Purchase Plan
Treasury share repurchase
Contribution by non-controlling interest holder
Purchase of non-controlling interest
Other, net
Net cash provided by (used for) financing activities
Effect of exchange rates on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, including restricted amounts,
beginning of period
Cash and cash equivalents, including restricted amounts,
end of period
—
—
(920,923)
(901,818)
(670)
(2,214)
—
(811)
(1,554)
—
(29,347)
(5,447)
408
855
67,337
9,471
(261,436)
9,880
—
(966)
(1,147,345)
10,109
(43,458)
18,241
—
998
(15,620)
9,779
—
—
(7,313)
603
(885,311)
(3,749)
(359,938)
(1,390)
(625,077)
(575)
592,394
896,812
1,521,889
929,495
$
536,874 $
896,812 $
1,521,889
The accompanying notes are an integral part of these Consolidated Financial Statements.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND BUSINESS ACTIVITIES
Principal Business
EchoStar Corporation (which, together with its subsidiaries, is referred to as “EchoStar,” the “Company,” “we,” “us”
and “our”) is a holding company that was organized in October 2007 as a corporation under the laws of the State of
Nevada and has operated as a separately traded public company from DISH Network Corporation (“DISH”) since
2008. Our Class A common stock is publicly traded on the NASDAQ Global Select Market (“NASDAQ”) under the
symbol “SATS.”
We are an industry leader in both networking technologies and services, innovating to deliver the global solutions
that power a connected future for people, enterprises and things everywhere. We provide broadband satellite
technologies, broadband internet services for consumer customers, which include home and small to medium-sized
businesses, and satellite services. We also deliver innovative network technologies, managed services and
communications solutions for enterprise customers, which include aeronautical and government enterprises. We
operate in the following two business segments:
•
•
Hughes segment (“Hughes segment”) — which provides broadband satellite technologies and
broadband internet services to domestic and international consumer customers and broadband network
technologies, managed services, equipment, hardware, satellite services and communication solutions to
service providers and enterprise 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 segment (“ESS segment”) — which uses certain of our owned and leased
in-orbit satellites and related licenses to provide satellite services on a full-time and/or occasional-use basis
to U.S. government service providers, internet service providers, broadcast news organizations, content
providers and private enterprise customers.
Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development,
Human Resources, Information Technology, Finance, Accounting, Real Estate and Legal) and other activities, such
as costs incurred in certain satellite development programs and other business development activities, and gains or
losses from certain of our investments, that have not been assigned to our business segments. These activities,
costs and income, as well as eliminations of intersegment transactions, are accounted for in Corporate and Other
segment in our segment reporting. We also divide our operations by primary geographic market as follows: (i) North
America (the U.S. and its territories, Mexico, and Canada); (ii) South and Central America and (iii) Other (Asia,
Africa, Australia, Europe, India, and the Middle East). Refer to Note 22. Segment Reporting for further detail.
In September 2019, pursuant to a master transaction agreement (the “Master Transaction Agreement”) with DISH
and a wholly-owned subsidiary of DISH (“Merger Sub”), (i) we transferred certain real property and the various
businesses, products, licenses, technology, revenues, billings, operating activities, assets and liabilities primarily
related to the former portion of our ESS segment that managed, marketed and provided (1) broadcast satellite
services primarily to DISH and its subsidiaries (together with DISH, “DISH Network”) and our joint venture Dish
Mexico, S. de R.L. de C.V. (“Dish Mexico”) and its subsidiaries, and (2) telemetry, tracking and control (“TT&C”)
services for satellites owned by DISH Network and a portion of our other businesses (collectively, the “BSS
Business”) to one of our former subsidiaries, EchoStar BSS Corporation (“BSS Corp.”), (ii) we distributed to each
holder of shares of our Class A or Class B common stock entitled to receive consideration in the transaction an
amount of shares of common stock of BSS Corp., par value $0.001 per share (“BSS Common Stock”), equal to one
share of BSS Common Stock for each share of our Class A or Class B common stock owned by such stockholder
(the “Distribution”); and (iii) immediately after the Distribution, (1) Merger Sub merged with and into BSS Corp. (the
“Merger”), such that BSS Corp. became a wholly-owned subsidiary of DISH and with DISH then owning and
operating the BSS Business, and (2) each issued and outstanding share of BSS Common Stock owned by
EchoStar stockholders was converted into the right to receive 0.23523769 shares of DISH Class A common stock,
par value $0.001 per share (“DISH Common Stock”) ((i) - (iii) collectively, the “BSS Transaction”).
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In connection with the BSS Transaction, we and DISH Network agreed to indemnify each other against certain
losses with respect to breaches of certain representations and covenants and certain retained and assumed
liabilities, respectively. Refer to Note 19 in our Consolidated Financial Statements for further details on certain
customary agreements entered into with DISH in relation to the BSS Transaction.
The BSS Transaction was structured in a manner intended to be tax-free to us and our stockholders for U.S. federal
income tax purposes and was accounted for as a spin-off to our shareholders as we did not receive any
consideration. Following the consummation of the BSS Transaction, we no longer operate the BSS Business, which
was a substantial portion of our ESS segment. As a result of the BSS Transaction, the financial results of the BSS
Business, except for certain real estate that transferred in the transaction, are presented as discontinued operations
and, as such, excluded from continuing operations and segment results for the year ended December 31, 2019 as
presented in these Consolidated Financial Statements and the accompanying notes (collectively, the “Consolidated
Financial Statements”).
Refer to Note 5. Discontinued Operations for further detail. Additionally, all amounts in the following footnotes
reference results from continuing operations unless otherwise noted.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
These Consolidated Financial Statements and the accompanying notes are prepared in conformity with generally
accepted accounting principles in the United States (“U.S. GAAP”). 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 in
which we are the primary beneficiary and in other entities in which we own more than 50% 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 non-controlling interest within stockholders’ equity for the portion of the entity’s
equity attributed to the non-controlling ownership interests. All significant intercompany balances and transactions
have been eliminated in consolidation.
All amounts presented in these Consolidated Financial Statements are expressed in thousands of U.S. dollars,
except share and per share amounts and unless otherwise noted.
Reclassification
Certain prior period amounts have been reclassified to conform with the current period presentation.
Use of Estimates
We are required to make certain estimates and assumptions that affect the amounts reported in these Consolidated
Financial Statements. The most significant estimates and assumptions are used in determining: (i) inputs used to
recognize revenue over time, including amortization periods for deferred contract acquisition costs; (ii) allowances
for doubtful accounts; (iii) deferred taxes and related valuation allowances, including uncertain tax positions; (iv)
loss contingencies; (v) fair value of financial instruments; (vi) fair value of assets and liabilities acquired in business
combinations; and (vii) asset impairment testing.
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. Additionally, 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 thereto are reflected in the period they occur or prospectively if the revised estimate affects future
periods.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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:
•
•
•
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.
Fair values of our marketable investment securities are measured on a recurring basis 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 Level 1 measurements that reflect quoted prices for identical securities
in active markets. Fair values of our investments in other marketable debt securities are generally based on Level 2
measurements as the markets for such debt securities are less active. We consider trades of identical debt
securities on or near the measurement date as a strong indication of fair value and matrix pricing techniques that
consider par value, coupon rate, credit quality, maturity and other relevant features may also be used to determine
fair value of our investments in marketable debt securities. Fair values for our outstanding debt are based on
quoted market prices in less active markets and are categorized as Level 2 measurements. Additionally, we use fair
value measurements from time to time in connection with other investments, 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.
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 during the years ended December 31, 2021 and 2020.
As of December 31, 2021 and 2020, the carrying amounts of our cash and cash equivalents, trade accounts
receivable and contract assets, net, trade accounts payable, and accrued expenses and other current liabilities
were equal to or approximated their fair value due to their short-term nature or proximity to current market rates.
Revenue Recognition
Overview
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.
We also recognize lease revenue which is derived from leases of property and equipment which, for operating
leases, is reported in Services and other revenue in the Consolidated Statements of Operations and, for sales-type
leases, is reported in Equipment revenue in the Consolidated Statements of Operations. Certain of our customer
contracts 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.
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Hughes Segment
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Our Hughes segment service 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 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 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 based upon shipment terms. Our equipment sales
contracts typically include standard product warranties, but generally do not provide for returns or refunds.
Revenue for extended warranties is 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 for mobile system operators and enterprise
customers. Revenue from such contracts is generally recognized over time as 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 the input
method, we recognize the transaction price as revenue based on the ratio of costs incurred to estimated total costs
at completion. Under the 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 Segment
Generally, our ESS segment 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.
Lease Revenue
We lease satellite capacity, communications equipment and real estate to certain of our customers. We identify and
determine the classification of such leases as operating leases or sales-type leases. A lease is classified as a
sales-type lease if it meets the criteria for a finance lease; otherwise it is classified as an operating lease. Some of
our leases are embedded in contracts with customers that include non-lease performance obligations. For such
contracts, except where we have elected otherwise, we allocate consideration in the contract between lease and
non-lease components based on their relative standalone selling prices. We elected an accounting policy to not
separate the lease of equipment from related services in our HughesNet satellite internet service (the “HughesNet
service”) contracts with customers and account for all revenue from such contracts as non-lease service revenue.
Assets subject to operating leases remain in Property and equipment, net and continue to be depreciated. Assets
subject to sales-type leases are derecognized from Property and equipment, net at lease commencement and a net
investment in the lease asset is recognized in Trade accounts receivable and contract assets, net and Other non-
current assets, net.
Operating lease revenue is generally recognized on a straight-line basis over the lease term. Sales-type lease
revenue and a corresponding receivable generally are recognized at lease commencement based on the present
value of the future lease payments and related interest income on the receivable is recognized over the lease term.
Payments under sales-type leases are discounted using the interest rate implicit in the lease or our incremental
borrowing rate if the interest rate implicit in the lease cannot be reasonably determined. We report revenue from
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
sales-type leases at the commencement date in Equipment revenue and periodic interest income in Services and
other revenue. We report operating lease revenue in Services and other revenue.
Other
Sales and Value Added Taxes, Universal Service Fees and other taxes that we collect concurrent with revenue
producing activities are excluded from revenue and included in Accrued expenses and other current liabilities in the
Consolidated Balance Sheets.
Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost after control
over a product has transferred to the customer and are included in Cost of sales - equipment in the Consolidated
Statements of Operations at the time of shipment.
Cost of Sales - Services and Other
Cost of sales - services and other in the Consolidated Statements of Operations primarily consists of costs of
satellite capacity and services, hub infrastructure, customer care, wireline and wireless capacity and direct labor
costs associated with the services provided and is generally charged to expense as incurred.
Cost of Sales - Equipment
Cost of sales - equipment in the Consolidated Statements of Operations primarily consists of inventory costs,
including freight and royalties, and is generally recognized at the point in time control of the equipment is passed to
the customer and related revenue is recognized.
Additionally, customer-related 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 also included in Cost of sales - equipment in the Consolidated Statements of Operations.
Stock-based Compensation Expense
Stock-based compensation expense is recognized based on the fair value of stock awards ultimately expected to
vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. Compensation expense for awards with service conditions only is
recognized on a straight-line basis over the requisite service period for the entire award. Compensation expense for
awards subject to performance conditions is recognized only when satisfaction of the performance condition is
probable.
Advertising Costs
Advertising costs are expensed as incurred and are included in Selling, general and administrative expenses in the
Consolidated Statements of Operations.
Research and Development
Research and development costs, not incurred in connection with customer requirements, are generally expensed
when incurred.
Debt Issuance Costs
Costs of issuing debt generally are deferred and amortized utilizing the effective interest method, with amortization
included in Interest expense, net of amounts capitalized in the Consolidated Statements of Operations. We report
unamortized debt issuance costs as a reduction of the related long-term debt in the Consolidated Balance Sheets.
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Foreign Currency
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The functional currency for certain of our foreign operations is determined to be the local currency. Accordingly, we
translate assets and liabilities of these foreign entities from their local currencies to U.S. dollars using period-end
exchange rates and translate income and expense accounts at monthly average rates. The resulting translation
adjustments are reported as Foreign currency translation adjustments in the Consolidated Statements of
Comprehensive Income (Loss). Except in certain uncommon circumstances, we have not recorded deferred
income taxes related to our foreign currency translation adjustments.
Gains and losses resulting from the re-measurement of transactions denominated in foreign currencies are
recognized in Foreign currency transaction gains (losses), net in the Consolidated Statements of Operations.
Income Taxes
We recognize a provision or benefit for income taxes currently payable or receivable and for income tax amounts
deferred to future periods. Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future
income tax effects of temporary differences between U.S. GAAP carrying amounts of existing assets and liabilities
and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. Deferred tax assets are offset by
valuation allowances when we determine it is more likely than not that such deferred tax assets will not be realized
in the foreseeable future. We determine deferred tax assets and liabilities separately for each taxing jurisdiction and
report the net amount for each jurisdiction as a non-current asset or liability in the Consolidated Balance Sheets.
From time to time, we engage in transactions where the income tax consequences are uncertain. We recognize tax
benefits when, in management’s judgment, a tax filing position is more likely than not to be sustained if challenged
by the tax authorities. For tax positions that meet the more-likely-than-not threshold, we may not recognize a
portion of a tax benefit depending on management’s assessment of how the tax position will ultimately be settled.
Unrecognized tax benefits generally are netted against the deferred tax assets associated with our net operating
loss and tax credit carryforwards. We adjust our estimates periodically based on ongoing examinations by, and
settlements with, various taxing authorities, as well as changes in tax laws, regulations and precedent. Estimates of
our uncertain tax positions are made based upon prior experience and are updated in light of changes in facts and
circumstances. However, due to the uncertain and complex application of tax regulations, it is possible that the
ultimate resolution of audits may result in liabilities which could be materially different from these estimates. In such
an event, we will record additional income tax provision or benefit in the period in which such resolution occurs. We
classify interest and penalties, if any, associated with our unrecognized tax benefits as a component of income tax
provision or benefit.
Lessee Accounting
At the inception of a contract, we assess whether the contract is, or contains, a lease. The assessment is based on
(i) whether the contract involves the use of a distinct identified asset, (ii) whether we obtain the right to substantially
all the economic benefit from the use of the asset throughout the period, and (iii) whether we have the right to direct
the use of the asset. Our operating leases consist primarily of leases for office space, data centers and satellite-
related ground infrastructure.
A lease is classified as a finance lease when one or more of the following criteria are met: (i) the lease transfers
ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is
reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful life of the asset, (iv)
the present value of the lease payments equals or exceeds substantially all of the fair value of the asset or (v) the
asset is of a specialized nature and there is not expected to be an alternative use to the lessor at the end of the
lease term. A lease is classified as an operating lease if it does not meet any of these criteria. Our finance leases
consist primarily of leases for satellite capacity.
All significant lease arrangements are generally recognized at lease commencement. Operating lease right-of-use
(“ROU”) assets and lease liabilities are recognized at commencement. An ROU asset and corresponding lease
liability are not recorded for leases with an initial term of 12 months or less (short-term leases), and we recognize
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
lease expense for these leases as incurred over the lease term. ROU assets represent our right to use an
underlying asset during the reasonably certain lease term, and lease liabilities represent our obligation to make
lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when
it is reasonably certain that we will exercise that option.
The ROU asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus
any prepayments to the lessor and initial direct costs such as brokerage commissions, less any lease incentives
received. The lease liability is initially measured at the present value of the minimum lease payments, discounted
using an estimate of our incremental borrowing rate for a collateralized loan with the same term as the underlying
lease. The incremental borrowing rates used for the initial measurement of lease liabilities are based on the original
lease terms. In determining our incremental borrowing rate, we consider the lease term, secured incremental
borrowing rate, and for leases denominated in a currency different than U.S. dollar, the collateralized borrowing rate
in the foreign currency using the U.S. dollar and foreign currency swap spread, when available.
We report operating lease ROU assets in Operating lease right-of-use assets and operating lease liabilities in
Accrued expenses and other current liabilities and Operating lease liabilities. We report finance lease ROU assets
in Property and equipment, net and finance lease liabilities in Current portion of long-term debt, net and Long-term
debt, net.
Earnings Per Share
We present basic and diluted earnings or losses per share (“EPS”) for our Class A and Class B common stock.
Basic EPS for our Class A and Class B common stock excludes potential dilution and is computed by dividing Net
income (loss) attributable to EchoStar Corporation common stock by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if shares of common
stock were issued pursuant to our stock-based compensation awards. The potential dilution from common stock
awards is computed using the treasury stock method based on the average market value of our Class A common
stock during the period. The calculation of our diluted weighted-average common shares outstanding excluded
options to purchase shares of our Class A common stock, the effect of which would be anti-dilutive.
Other Comprehensive Income (Loss)
The amounts reclassified to net income (loss) related to unrealized gain (loss) on available-for-sale securities in are
included in Gains (losses) on investments, net in the Consolidated Statements of Operations.
Cash and Cash Equivalents
We consider all liquid investments purchased with an original maturity of less than 90 days to be cash equivalents.
Cash equivalents as of December 31, 2021 and 2020 primarily consisted of commercial paper, government bonds,
corporate notes and money market funds. The amortized cost of these investments approximates their fair value.
Marketable Investment Securities
Debt Securities
Our corporate bond portfolio includes debt instruments issued by individual corporations, primarily in the industrial
and financial services industries. Our commercial paper portfolio includes instruments issued by individual
corporations, primarily in the industrial, financial services and utilities industries. Our other debt securities portfolio
includes investments in various debt instruments, including U.S. government bonds and mutual funds. We consider
all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.
We account for our debt securities as available-for-sale or using the fair value option based on our investment
strategy for the securities. For available-for-sale debt securities, we recognize periodic changes in the difference
between fair value and amortized cost in Unrealized gains (losses) on available-for-sale securities in the
Consolidated Statements of Comprehensive Income (Loss). Gains and losses realized upon sales of available-for-
sale debt securities are reclassified from other comprehensive income (loss) and recognized on the trade date in
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Gains (losses) on investments, net in the Consolidated Statements of Operations. We use the first-in, first-out
(“FIFO”) method to determine the cost basis on sales of available-for-sale debt securities. Interest income from
available-for-sale debt securities is reported in Interest income, net in the Consolidated Statements of Operations.
We periodically evaluate our available-for-sale debt securities portfolio to determine whether any declines in the fair
value of these securities are other-than-temporary. Our evaluation considers, among other things, (i) the length of
time and extent to which the fair value of such security has been lower than amortized cost, (ii) market and
company-specific factors related to the security and (iii) our intent and ability to hold the investment to maturity or
when it recovers its value. 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 when it
recovers its value 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 (loss) in the Consolidated Statements of
Operations, thus establishing a new cost basis for the investment.
From time to time we make strategic investments in marketable corporate debt securities. Generally, we elect to
account for these debt securities using the fair value option because it results in consistency in accounting for
unrealized gains and losses for all securities in our portfolio of strategic investments. When we elect the fair value
option for investments in debt securities, we recognize periodic changes in fair value of these securities in Gains
(losses) on investments, net in the Consolidated Statements of Operations. Interest income from these securities is
reported in Interest income, net in the Consolidated Statements of Operations.
Equity Securities
We account for our equity securities with readily determinable fair values at fair value and recognize periodic
changes in the fair value in Gains (losses) on investments, net in the Consolidated Statements of Operations. We
recognize dividend income on equity securities on the ex-dividend date and report such income in Other, net in the
Consolidated Statements of Operations.
Restricted Marketable Investment Securities
Restricted marketable investment securities that are pledged as collateral for our letters of credit and surety bonds
are included in Other non-current assets, net in the Consolidated Balance Sheets. Restricted marketable securities
are accounted for in the same manner as marketable securities that are not restricted, but are presented differently
in the Consolidated Balance Sheets due to the restrictions.
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 our customer contracts. Trade accounts
receivable also includes amounts due from customers under our leasing arrangements. We make ongoing
estimates relating to the collectability of our trade accounts receivable and maintain an allowance for estimated
losses resulting from the inability of our customers to make the 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. Bad debt expense related to our trade accounts receivable
and other contract assets is included in Selling, general and administrative expenses in the Consolidated
Statements of Operations.
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Contract Assets
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 non-current assets, net in the Consolidated Balance
Sheets based on the expected timing of customer payment. 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. Our contract assets also include receivables related to sales-type leases recognized
over the lease term as the customer is billed.
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 non-current assets, net in the Consolidated
Balance Sheets and related amortization expense is included in Selling, general and administrative expenses in the
Consolidated Statements of Operations.
Inventory
Inventory is stated at the lower of cost or net realizable value. Cost of inventory is determined using the FIFO
method and consists primarily of materials, direct labor and indirect overhead incurred in the procurement and
manufacturing of our products. We use standard costing methodologies in determining the cost of certain of our
finished goods and work-in-process inventories. We determine net realizable value using our best estimates of
future use or recovery, considering the aging and composition of inventory balances, the effects of technological
and/or design changes, forecasted future product demand based on firm or near-firm customer orders and
alternative means of disposition of excess or obsolete items. We recognize losses within Cost of sales - equipment
in the Consolidated Statements of Operations when we determine that the cost of inventory and commitments to
purchase inventory exceed net realizable value.
Property and Equipment
Satellites
Satellites are stated at cost, less accumulated depreciation. Depreciation is recorded on a straight-line basis over
their estimated useful lives. The cost of our satellites includes construction costs, including the present value of in-
orbit incentives payable to the satellite manufacturer, launch costs, capitalized interest and related insurance
premiums. We depreciate our owned satellites on a straight-line basis over the estimated useful life of each
satellite.
We have satellites acquired under finance leases. The recorded costs of those satellites are the present values of
all lease payments. We amortize our finance lease ROU satellites over their respective lease terms.
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 evaluate our satellites for impairment and test for recoverability whenever events or changes in circumstances
indicate that their carrying value may not be recoverable. Certain anomalies may be considered a significant
adverse change in the physical condition of a particular satellite. However, based on redundancies designed within
each satellite, certain of these anomalies may not be considered to be significant events requiring a test of
recoverability.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
We generally do not carry in-orbit insurance on our satellites and payloads 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. However, we may be required to carry insurance on specific satellites and payloads per the terms of
certain agreements. We will continue to assess circumstances going forward and make insurance-related decisions
on a case-by-case basis.
Other Property and Equipment
Other property and equipment are stated at cost, less accumulated depreciation. Depreciation is recorded on a
straight-line basis over their estimated useful lives. Other property and equipment includes: land; buildings and
improvements; furniture, fixtures, equipment and internal-use software; customer premises equipment; and
construction in process. Costs related to the procurement and development of software for internal-use are
capitalized and amortized using the straight-line method over the estimated useful life of the software, not in excess
of five years. Repair and maintenance costs are charged to expense when incurred.
Goodwill
We test goodwill for impairment annually in our second fiscal quarter, or more frequently if indicators of impairment
may exist. All of our goodwill is assigned to our Hughes segment, as it was generated through the acquisition of
Hughes Communications, Inc. (“Hughes Communications”) and its subsidiaries in 2011 (the “Hughes Acquisition”),
and the agreement with Al Yah Satellite Communications Company PrJSC (“Yahsat”) pursuant to which, in
November 2019, Yahsat contributed its satellite communications services business in Brazil to one of our Brazilian
subsidiaries in exchange for a 20% equity ownership interest in that subsidiary (the “Yahsat Brazil JV Transaction”).
We consider qualitative factors to assess if it is more likely than not that the fair value for goodwill is below the
carrying amount. We may also elect to bypass the qualitative assessment and perform a quantitative assessment.
In conducting a qualitative assessment, we analyze a variety of events or factors that may influence the fair value of
the reporting unit. There has been no impairment to date.
Regulatory Authorizations
Finite Lived
We have regulatory authorizations that are not related to the Federal Communications Commission (“FCC”) and
have determined that they have finite lives due to uncertainties about the ability to extend or renew their terms.
Finite lived regulatory authorizations are amortized over their estimated useful lives on a straight-line basis.
Renewal costs are usually capitalized when they are incurred.
Indefinite Lived
We also have indefinite lived regulatory authorizations that primarily consist of FCC authorizations and certain other
contractual or regulatory rights to use spectrum at specified orbital locations. We have determined that our FCC
authorizations generally have indefinite useful lives based on the following:
•
•
•
FCC authorizations are non-depleting assets;
Renewal satellite applications generally are authorized by the FCC subject to certain conditions, without
substantial cost under a stable regulatory, legislative and legal environment;
Expenditures required to maintain the authorization are not significant; and
• We intend to use these authorizations indefinitely.
Costs incurred to maintain or renew indefinite-lived regulatory authorizations are expensed as incurred.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Other Intangible Assets
Our other intangible assets consist of customer relationships, patents, trademarks and licenses which are amortized
using the straight-line method over their estimated useful lives. We evaluate the recoverability of intangible assets
periodically by taking into account events or circumstances that indicate that the carrying amount of the assets may
not be recoverable.
Impairment of Long-lived Assets
We review our long-lived assets for recoverability whenever events or changes in circumstances indicate that their
carrying amounts may not be recoverable. The evaluation is performed at the lowest level for which identifiable
cash flows are largely independent of the cash flows of other assets and liabilities. For assets held and used in
operations, the asset is not recoverable if the carrying amount of the asset exceeds its undiscounted estimated
future net cash flows. When an asset is not recoverable, we adjust the carrying amount of such asset to its
estimated fair value and recognize the impairment loss in Impairment of long-lived assets in the Consolidated
Statements of Operations.
Other Investments
Equity Method Investments
We use the equity method to account for investments when we have the ability to exercise significant influence on
the operating decisions of the affiliate. Such investments 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 (losses) of
unconsolidated affiliates, net in the Consolidated Statements of Operations. During the fourth quarter of 2019, we
changed our accounting policy to record our share of the net earnings or losses of these affiliates on a three-month
lag. This change was immaterial to these Consolidated Financial Statements. Additionally, the carrying amount of
such investments includes a component of goodwill when the cost of our investment exceeds the fair value of the
underlying identifiable assets and liabilities of the affiliate. Lastly, dividends received from these affiliates reduces
the carrying amount of our investment.
Other Equity Investments
We generally measure investments in non-publicly traded equity instruments without a readily determinable fair
value at cost adjusted for observable price changes in orderly transactions for the identical or similar securities of
the same issuer and changes resulting from impairments, if any. Other equity instruments are measured to
determine their value based on observable market information. When we adjust the carrying amount of an
investment to its estimated fair value, the gain or loss is recorded in Gains (losses) on investments, net in the
Consolidated Statements of Operations.
Other Debt Investments
We generally record our investments in non-publicly traded debt instruments without a readily determinable fair
value at amortized cost. We recognize any discounts over the term of the loan in Interest income in the
Consolidated Statements of Operations. In addition, some of our debt instruments have interest income that is
paid-in-kind, which is added to the principal balance to determine the then current interest income. When we adjust
the carrying amount of an investment, the gain or loss is recorded in Gains (losses) on investments, net in the
Consolidated Statements of Operations.
Impairment Considerations
We periodically evaluate all of our other investments to determine whether events or changes in circumstances
have occurred that may have a significant adverse effect on the fair value of the investment. We consider
information if provided to us by our investees such as current financial statements, business plans, investment
documentation, capitalization tables, liquidation waterfalls, and board materials; and we may make additional
inquiries of investee management.
F-21
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Indicators of impairment may include, but are not limited to, unprofitable operations, material loss contingencies,
changes in business strategy, changes in market trends or market conditions, changes in the investees’ enterprise
value and changes in the investees’ investment pricing. When we determine that one of our other investments is
impaired we reduce its carrying value to its estimated fair value and recognize the impairment loss in Other-than-
temporary impairment losses on equity method investments or Gains (losses) on investments, net in the
Consolidated Statements of Operations.
Contract Liabilities
Contract liabilities consist of advance payments and billings in excess of revenue recognized under customer
contracts and are included in Contract liabilities or Other non-current liabilities in the Consolidated Balance Sheets
based on the timing of when we expect to recognize revenue. We recognize contract liabilities as revenue after all
revenue recognition criteria have been met.
Correction of Prior Period Consolidated Financial Statements
In 2021, the Company identified an error relating to its presentation of Comprehensive income (loss) attributable to
non-controlling interests and the calculation of Comprehensive income (loss) attributable to EchoStar Corporation
as of December 31, 2020 through the quarter ended June 30, 2021. The impact of the adjustment is included in this
2021 Form 10-K and is summarized below.
The Company considered both the quantitative and qualitative factors within the provisions of SEC Staff Accounting
Bulletin No. 99, Materiality, and Staff Accounting Bulletin No. 108, Considering the Effect of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements. Based on an evaluation of
the misstatement, the Company concluded the prior period errors were immaterial to the previously issued
consolidated financial statements. The Company elected to correct the identified error in the prior period within the
current Consolidated Financial Statements. Future filings that include prior periods will be corrected, as needed,
when filed. The revision had no effect on the Company’s previously reported year ended 2019 financial statements.
F-22
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following tables present the effect of recording the immaterial correction in the Consolidated Statements of
Comprehensive Income (Loss) for the year ended December 31, 2020 and for the quarters ended March 31, 2021
and June 30, 2021 to reflect this adjustment:
For the year ended December 31, 2020
As Previously
Reported
Adjustment
As Adjusted
Comprehensive income (loss)
$
(133,281) $
— $
(133,281)
Less: Comprehensive income (loss)
attributable to non-controlling interests
Comprehensive income (loss) attributable to
EchoStar Corporation
$
27,392
(54,784)
(27,392)
(160,673) $
54,784 $
(105,889)
For the three months ended March 31, 2021
As Previously
Reported
Adjustment
As Adjusted
Comprehensive income (loss)
$
44,362 $
— $
Less: Comprehensive income (loss)
attributable to non-controlling interests
Comprehensive income (loss) attributable to
EchoStar Corporation
$
6,557
(13,114)
37,805 $
13,114 $
44,362
(6,557)
50,919
For the three months ended June 30, 2021
As Previously
Reported
Adjustment
As Adjusted
Comprehensive income (loss)
$
76,605 $
— $
76,605
Less: Comprehensive income (loss)
attributable to non-controlling interests
Comprehensive income (loss) attributable to
EchoStar Corporation
$
(6,060)
12,120
6,060
82,665 $
(12,120) $
70,545
For the six months ended June 30, 2021
As Previously
Reported
Adjustment
As Adjusted
Comprehensive income (loss)
$
120,967 $
— $
120,967
Less: Comprehensive income (loss)
attributable to non-controlling interests
Comprehensive income (loss) attributable to
EchoStar Corporation
$
497
(994)
(497)
120,470 $
994 $
121,464
Recently Adopted Accounting Pronouncements
Income Taxes
On January 1, 2021, we adopted Accounting Standards Update (“ASU”) No. 2019-12 - Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is part of the Financial Accounting
Standards Board (“FASB”) overall simplification initiative and seeks to simplify the accounting for income taxes by
updating certain guidance and removing certain exceptions. Our adoption of this ASU did not have a material
impact on our Consolidated Financial Statements.
F-23
Table of Contents
Credit Losses
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On January 1, 2020, we adopted ASU No. 2016-13 - Financial Instruments - Credit Losses (Topic 326), as
amended, and codified in Accounting Standards Codification Topic 326 (“ASC 326”). ASC 326 introduces a new
approach to the periodic estimation of credit losses for certain financial assets based on expected losses instead of
incurred losses. It also modifies the impairment model for available-for-sale debt securities and provides a
simplified accounting model for purchased financial assets that have experienced credit deterioration since their
original purchase. We have elected to apply the requirements of the new standard prospectively and we recognized
a cumulative effect of adoption of $9.1 million to Accumulated earnings (losses) as of January 1, 2020. Based on
this election, we did not restate our comparative Consolidated Financial Statements and they continue to be
reported under the accounting standards in effect for the periods before January 1, 2020.
The following describes the accounting impacts, by major balance sheet line item, of our adoption of this new
standard based on the relevant types of losses that we and our equity method investees may be subject to:
•
Trade Accounts Receivable and Contract Assets, Net — Our trade accounts receivables and contract
assets consist of amounts due from both our consumer and enterprise customers. Our receivables and
related credit losses for our consumer customers are limited due to policies that require advance payment
for services, predominant use of credit card and ACH payment processes, and our ability to promptly
terminate service when timely payments are not received. However, for our enterprise customers, we
estimate expected credit losses on a collective basis based on our historical loss experience, as adjusted to
reflect changes in relevant factors, such as macroeconomic conditions and customer mix, that can
significantly impact collectability.
We apply our collective estimation processes separately to several pools of receivables that share common
risk characteristics, generally based on the customers’ geographical location. Customers with significant
past-due balances or other atypical characteristics are excluded from our collective analysis and evaluated
on a case-by-case basis. Our estimates of expected credit losses for such receivables reflect significant
judgments that consider customer-specific matters such as the customer’s financial condition, payment
history, and recent developments in the customer’s business and industry. Due to the short-term nature of
our trade receivables and contract assets, forecasts about the future have limited relevance to our expected
credit loss estimates.
We record our customer related estimated credit losses as a component of our bad debt expense as
reported in Selling, general and administrative expenses.
• Other Current Assets, Net, and Other Non-current Assets, Net — We estimate expected credit losses
for receivables with payment terms longer than one year separately by borrower, due to the unique risk
characteristics of such receivables. We generally use discounted cash flow techniques to estimate such
credit losses. In applying such techniques, we may estimate principal and interest cash flows under
probability-weighted scenarios that consider entity-specific matters and forecasted economic conditions.
The majority of our other non-current receivables are from entities in the telecommunications industry. The
collection of contractual principal and interest on these receivables is highly dependent on the future
business operations of those entities. Our estimation of expected credit losses for such receivables
requires significant judgment about matters specific to the borrower and their industry. Accordingly, our
actual collection experience may differ from the assumptions reflected in our expected credit loss estimates.
We record our estimated credit losses as a component of our bad debt expense as reported in Selling,
general and administrative expenses.
F-24
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
• Other Investments, Net — We estimate expected credit losses on our other debt investments with
payment terms longer than one year separately by debtor, due to the unique risk characteristics of such
debt investments. We generally use discounted cash flow techniques to estimate such credit losses. In
applying such techniques, we may estimate principal and interest cash flows under probability-weighted
scenarios that consider entity-specific matters and forecasted economic conditions. The majority of our
other debt investments are with entities in the telecommunications industry. The collection of contractual
principal and interest on these debt investments are highly dependent on the future business operations of
those entities. Our estimation of expected credit losses for such debt investments require significant
judgment about matters specific to the debtor and their industry. Accordingly, our actual collection
experience may differ from the assumptions reflected in our expected credit loss estimates.
We record our other debt investments related estimated credit losses as a reduction of Interest income, net.
Financial Impact of Adoption. The following table presents our adoption of this new standard resulting in
adjustments to our Consolidated Balance Sheet effective January 1, 2020:
Balance
December 31,
2019
Adoption of ASC
326 Increase
(Decrease)
Balance January 1,
2020
Trade accounts receivable and contract
assets, net
Other current assets, net
Other investments, net
Other non-current assets, net
Total assets
Deferred tax liabilities, net
Accumulated earnings (losses)
Non-controlling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
$
$
$
$
$
$
$
$
196,629 $
179,531 $
325,405 $
334,841 $
(13,672) $
6,723 $
(7,381) $
4,050 $
182,957
186,254
318,024
338,891
7,154,298 $
(10,280) $
7,144,018
351,692 $
632,809 $
75,748 $
3,745,553 $
7,154,298 $
(972) $
(9,068) $
(240) $
(9,308) $
(10,280) $
350,720
623,741
75,508
3,736,245
7,144,018
The application of ASC 326 requirements did not materially affect our Consolidated Statements of Operations for
the year ended December 31, 2020.
Recently Issued Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU No. 2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848
(“ASC 848”). The purpose of ASC 848 is to provide optional guidance to ease the potential effects on financial
reporting of the market-wide migration away from Interbank Offered Rates to alternative reference rates. ASC 848
applies only to contracts, hedging relationships, and other transactions that reference a reference rate expected to
be discontinued because of reference rate reform. The guidance may be applied upon issuance of ASC 848
through December 31, 2022. We expect to utilize the optional expedients provided by the guidance for contracts
amended solely to use an alternative reference rate. We have evaluated the impact of adopting this new guidance
and do not expect it to have a material impact on our consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract
Assets and Contract Liabilities from Contracts with Customers, which provides an exception to fair value
measurement for contract assets and contract liabilities related to revenue contracts acquired in a business
combination. The ASU requires an entity (acquirer) to recognize and measure contract assets and contract
liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer
should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.
The ASU is effective for the Company for annual and interim periods in fiscal years beginning after December 15,
2023. Early adoption is permitted. The ASU is applied to business combinations occurring on or after the effective
date.
F-25
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business
Entities about Government Assistance, which requires business entities (except for not-for-profit entities and
employee benefit plans) to disclose information about certain government assistance they receive. The Topic 832
disclosure requirements include: (i) the nature of the transactions and the related accounting policy used; (ii) the line
items on the balance sheet and income statement that are affected and the amounts applicable to each financial
statement line item; and (iii) significant terms and conditions of the transactions. The ASU is effective for the
Company for fiscal years beginning after December 15, 2021. We are evaluating the impact of adopting this new
guidance and do not expect it to have a material impact on our consolidated financial statements.
NOTE 3. REVENUE RECOGNITION
Contract Balances
The following table presents the components of our contract balances:
Trade accounts receivable and contract assets, net:
Sales and services
Leasing
Total trade accounts receivable
Contract assets
Allowance for doubtful accounts
Total trade accounts receivable and contract assets, net
Contract liabilities:
Current
Non-current
Total contract liabilities
As of December 31,
2020
2021
154,676 $
5,668
160,344
36,307
(14,588)
182,063 $
149,513
4,554
154,067
45,308
(15,386)
183,989
141,343 $
10,669
152,012 $
104,569
10,519
115,088
$
$
$
$
The following table presents the revenue recognized in the Consolidated Statements of Operations that was
previously included within contract liabilities:
Revenue
$
82,633 $
72,877 $
65,417
The following table presents the activity in our allowance for doubtful accounts:
For the years ended December 31,
2021
2020
2019
Balance at beginning of period
$
15,386 $
23,777 $
Credit losses (1)
Deductions
Foreign currency translation
22,591
18,582
(23,543)
(26,031)
154
(942)
16,604
30,027
(21,832)
(1,022)
For the years ended December 31,
2021
2020
2019
23,777
Balance at end of period
(1) The impact of adopting ASC 326 on January 1, 2020 was a net decrease to our allowance for doubtful accounts largely driven by a
$13.4 million reclassification to Other current assets, net and Other non-current assets, net, offset by a $2.9 million adjustment to Accumulated
earnings (losses).
14,588 $
15,386 $
$
F-26
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Contract Acquisition Costs
The following table presents the activity in our contract acquisition costs, net:
For the years ended December 31,
2020
2019
2021
Balance at beginning of period
Additions
Amortization expense
Foreign currency translation
Balance at end of period
Performance Obligations
$
$
99,837 $
72,503
(88,178)
(1,176)
82,986 $
113,592 $
91,143
(101,278)
(3,620)
99,837 $
114,306
97,457
(97,650)
(521)
113,592
As of December 31, 2021, the remaining performance obligations for our customer contracts with original expected
durations of more than one year was $914.7 million. We expect to recognize 51% of our remaining performance
obligations of these contracts as revenue in the next twelve months. This amount and percentages exclude
agreements with consumer customers in our Hughes segment, our leasing arrangements and agreements with
certain customers under which collectability of all amounts due through the term of contracts is uncertain.
Disaggregation of Revenue
Geographic Information
The following tables present our revenue from customer contracts disaggregated by primary geographic market and
by segment:
For the year ended December 31, 2021
North America
South and Central America
Other
Total revenue
For the year ended December 31, 2020
North America
South and Central America
Other
Total revenue
For the year ended December 31, 2019
North America
South and Central America
Other
Total revenue
Hughes
ESS
Corporate and
Other
Consolidated
Total
$
1,617,229 $
17,679 $
11,782 $
1,646,690
176,515
162,482
—
—
—
33
176,515
162,515
$
1,956,226 $
17,679 $
11,815 $
1,985,720
$
1,556,961 $
17,398 $
9,443 $
1,583,802
151,194
152,679
—
—
232
—
151,426
152,679
$
1,860,834 $
17,398 $
9,675 $
1,887,907
$
1,527,823 $
16,257 $
16,526 $
1,560,606
125,458
199,461
—
—
448
108
125,906
199,569
$
1,852,742 $
16,257 $
17,082 $
1,886,081
F-27
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Nature of Products and Services
The following tables present our revenue disaggregated by the nature of products and services and by segment:
For the year ended December 31, 2021
Services and other revenue:
Services
Lease revenue
Total services and other revenue
Equipment revenue:
Equipment
Design, development and construction services
Lease revenue
Total equipment revenue
Total revenue
For the year ended December 31, 2020
Services and other revenue:
Services
Lease revenue
Total services and other revenue
Equipment revenue:
Equipment
Design, development and construction services
Lease revenue
Total equipment revenue
Total revenue
For the year ended December 31, 2019
Services and other revenue:
Services
Lease revenue
Total services and other revenue
Equipment revenue:
Equipment
Design, development and construction services
Lease revenue
Total equipment revenue
Total revenue
Hughes
ESS
Corporate and
Other
Consolidated
Total
$
1,646,778 $
11,961 $
5,691 $
1,664,430
39,021
1,685,799
5,718
17,679
6,118
11,809
50,857
1,715,287
108,767
152,934
8,726
270,427
—
—
—
—
6
—
—
6
108,773
152,934
8,726
270,433
$
1,956,226 $
17,679 $
11,815 $
1,985,720
$
1,614,730 $
10,785 $
4,631 $
1,630,146
40,503
1,655,233
6,613
17,398
5,042
9,673
52,158
1,682,304
110,108
88,511
6,982
205,601
—
—
—
—
2
—
—
2
110,110
88,511
6,982
205,603
$
1,860,834 $
17,398 $
9,675 $
1,887,907
$
1,535,966 $
10,464 $
6,493 $
1,552,924
50,073
1,586,039
5,793
16,257
10,481
16,974
66,347
1,619,271
115,052
145,646
6,005
266,703
—
—
—
—
107
—
—
107
115,159
145,646
6,005
266,810
$
1,852,742 $
16,257 $
17,082 $
1,886,081
F-28
Table of Contents
Lease Revenue
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents our lease revenue by type of lease:
For the years ended December 31,
2021
2020
2019
Sales-type lease revenue:
Revenue at lease commencement
$
7,998 $
6,982 $
Interest income
Total sales-type lease revenue
Operating lease revenue
Total lease revenue
728
8,726
50,857
393
7,375
51,765
$
59,583 $
59,140 $
6,005
784
6,789
65,563
72,352
Substantially all of our net investment in sales-type leases consisted of lease receivables totaling $17.1 million and
$13.0 million as of December 31, 2021 and 2020, respectively.
The following table presents future operating lease payments to be received as of December 31, 2021:
December 31,
2022
2023
2024
2025
2026
2027 and beyond
Total lease payments
$
Amounts
45,269
33,460
30,847
29,125
28,356
71,718
$
238,775
The following table presents amounts for assets subject to operating leases, which are included in Property and
equipment, net:
2021
Accumulated
Depreciation
Cost
As of December 31,
Net
Cost
2020
Accumulated
Depreciation
Net
Customer premises
equipment
Satellites
Real estate
Total
$ 1,778,061 $ (1,485,525) $
292,536 $ 1,617,053 $ (1,265,129) $
351,924
104,620
48,275
(45,309)
(18,064)
59,311
30,211
104,620
48,275
(38,335)
(17,094)
66,285
31,181
$ 1,930,956 $ (1,548,898) $
382,058 $ 1,769,948 $ (1,320,558) $
449,390
F-29
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents depreciation expense for assets subject to operating leases, which is included in
Depreciation and amortization:
Customer premises equipment
$
230,609 $
230,079 $
182,523
Satellites
Real estate
Total
6,975
970
6,975
942
7,495
923
$
238,554 $
237,996 $
190,941
For the years ended December 31,
2021
2020
2019
NOTE 4.
LESSEE ACCOUNTING
The following table presents the amounts for ROU assets and lease liabilities:
Right-of-use assets:
Operating
Finance
Total right-of-use assets
Lease liabilities:
Current:
Operating
Finance
Total current
Non-current:
Operating
Finance
Total non-current
Total lease liabilities
As of December 31,
2021
2020
$
$
149,198 $
258,498
407,696 $
128,303
278,237
406,540
$
16,781 $
14,699
123
16,904
423
15,122
134,897
114,886
—
134,897
$
151,801 $
129
115,015
130,137
As of December 31, 2021, we have prepaid our obligations regarding most of our finance ROU assets. Finance
lease assets are reported net of accumulated amortization of $95.7 million and $74.0 million as of December 31,
2021 and 2020, respectively.
F-30
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents the components of lease cost and weighted-average lease terms and discount rates for
operating and finance leases:
For the years ended December 31,
2020
2019
2021
Lease cost:
Operating lease cost
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease cost
Short-term lease cost
Variable lease cost
Total lease cost
Lease term and discount rate:
Weighted-average remaining lease term:
Finance leases
Operating leases
Weighted-average discount rate:
Finance leases
Operating leases
$
23,379 $
24,000 $
24,342
29,270
49
29,319
—
2,625
27,611
106
27,717
376
3,853
$
55,323 $
55,946 $
26,489
173
26,662
434
8,837
60,275
As of December 31,
2020
2021
0.3 years
10.8 years
1.2 years
10.6 years
12.8 %
5.6 %
12.2 %
6.0 %
The following table presents the detailed cash flows from operating and finance leases:
For the years ended December 31,
2020
2019
2021
Cash paid for amounts included in the measurement
of lease liabilities:
Operating cash flows from operating leases
$
21,861 $
21,834 $
22,618
Operating cash flows from finance leases
Financing cash flows from finance leases
49
430
106
499
173
654
We obtained ROU assets in exchange for lease liabilities of $26.1 million, $22.6 million and $8.5 million upon
commencement of operating leases during the year ended December 31, 2021, 2020 and 2019, respectively.
F-31
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents future minimum lease payments of our lease liabilities as of December 31, 2021:
Year ending December 31,
2022
2023
2024
2025
2026
2027 and beyond
Total future minimum lease payments
Less: Interest
Total lease liabilities
NOTE 5.
DISCONTINUED OPERATIONS
BSS Business
Operating
Leases
Finance Leases
Total
$
24,014 $
130 $
23,479
20,278
16,428
15,564
102,582
202,345
(50,667)
$
151,678 $
—
—
—
—
—
130
(7)
123 $
24,144
23,479
20,278
16,428
15,564
102,582
202,475
(50,674)
151,801
The following table presents the financial results of our discontinued operations of the BSS Business:
Revenue:
Services and other revenue - DISH Network
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
Depreciation and amortization
Total costs and expenses
Operating income (loss)
Other income (expense):
Interest expense
Total other income (expense), net
Income (loss) from discontinued operations before income taxes
Income tax benefit (provision), net
Net income (loss) from discontinued operations
For the year ended
December 31,
2019
$
$
195,942
16,260
212,202
28,057
8,946
97,435
134,438
77,764
(17,865)
(17,865)
59,899
(20,498)
39,401
No assets or liabilities attributable to our discontinued operations were held by us as of December 31, 2021 or
December 31, 2020.
F-32
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents the significant supplemental cash flow information and adjustments to reconcile net
income to net cash flow from operating activities for discontinued operations of the BSS business:
Operating activities:
Net income (loss) from discontinued operations
Depreciation and amortization
Investing activities:
Expenditures for property and equipment
Financing activities:
Payment of finance lease obligations
Payment of in-orbit incentive obligations
Terminated or Transferred Related Party Agreements
For the year ended
December 31,
2019
$
$
$
$
$
39,401
97,435
510
27,203
4,474
Effective September 10, 2019, the following agreements were terminated or transferred to DISH Network as part of
the BSS Transaction. Unless noted differently below, we have no further obligations and have neither earned
additional revenue nor incurred additional expense, as applicable, under or in connection with these agreements
after the consummation of the BSS Transaction.
Satellite Capacity Leased to DISH Network. We entered into certain agreements to lease satellite capacity
pursuant to which we provided satellite services to DISH Network on certain satellites, as listed below, owned or
leased by us. The fees for the services provided under these agreements depended, among other things, upon the
orbital location of the applicable satellite, the number of transponders that provided services on the applicable
satellite and the length of the service arrangements. The terms of each of the agreements are set forth below:
•
•
•
•
EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV — In March 2014, we began leasing certain
satellite capacity to DISH Network on the EchoStar VII satellite, the EchoStar X satellite, the EchoStar XI
satellite and the EchoStar XIV satellite.
EchoStar XII — DISH Network leased satellite capacity from us on the EchoStar XII satellite.
EchoStar XVI — In December 2009, we entered into an agreement to lease satellite capacity to DISH
Network, pursuant to which DISH Network leased satellite capacity from us on the EchoStar XVI satellite
beginning in January 2013.
Nimiq 5 Agreement — In September 2009, we entered into an agreement with Telesat Canada to lease
satellite capacity from Telesat Canada 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 entered into an agreement with DISH Network, pursuant to which DISH Network
leased 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 made certain monthly payments to us that commenced in September 2009, when the Nimiq 5
satellite was placed into service. Following the consummation of the BSS Transaction, we retained certain
obligations related to DISH Network’s performance under the Telesat Transponder Agreement.
F-33
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
• QuetzSat-1 Agreement — In November 2008, we entered into an agreement to lease satellite capacity
from SES Latin America, which provided, 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 pursuant to which DISH Network leased from us 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 January
2013, the QuetzSat-1 satellite was moved to the 77 degree west longitude orbital location. In February
2013, we and DISH Network entered into an agreement pursuant to which we leased back from DISH
Network certain satellite capacity on five DBS transponders on the QuetzSat-1 satellite.
TT&C Agreement. Effective January 2012, we entered into a TT&C agreement pursuant to which we provided
TT&C services to DISH Network, which we subsequently amended (the “2012 TT&C Agreement”). The fees for
services provided under the 2012 TT&C Agreement were calculated at either: (i) a fixed fee or (ii) cost plus a fixed
margin, which varied depending on the nature of the services provided.
Real Estate Leases to DISH Network. We entered into lease agreements pursuant to which DISH Network leased
certain real estate from us. The rent on a per square foot basis each of the leases or subsequent amendments was
comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of
the leases or subsequent amendments and DISH Network was responsible for its portion of the taxes, insurance,
utilities and maintenance of the premises. These components of the BSS Transaction do not qualify for
discontinued operations treatment, and therefore the revenue from these lease agreements has not been treated as
discontinued operations. The terms of each of the leases are set forth below:
•
•
Santa Fe Lease Agreement — DISH Network leased from us all of 5701 S. Santa Fe Dr., Littleton,
Colorado. In connection with the BSS Transaction, we transferred this property to DISH Network.
Cheyenne Lease Agreement — During 2017, we and certain of our subsidiaries entered into a share
exchange agreement (the “Share Exchange Agreement”) with DISH and certain of its subsidiaries whereby
we and certain of our subsidiaries received all the shares of preferred tracking stock previously issued by us
and one of our subsidiaries (the “Tracking Stock”) in exchange for 100% of the equity interests of certain of
our subsidiaries that held substantially all of our former EchoStar Technologies businesses and certain
other assets (collectively, the “Share Exchange”). Prior to the Share Exchange, we leased to DISH Network
certain space at 530 EchoStar Drive, Cheyenne, Wyoming. In connection with the Share Exchange, we
transferred ownership of a portion of this property to DISH Network and we and DISH Network amended
this agreement to, among other things, provide for a continued lease to DISH Network of the portion of the
property we retained (the “Cheyenne Data Center”). In connection with the BSS Transaction, we
transferred the Cheyenne Data Center to DISH Network.
Real Estate Leases from DISH Network. We entered into a lease agreement pursuant to which we leased from
DISH Network certain space at 801 N. DISH Dr. in Gilbert, Arizona for the Satellite Operations Center and Satellite
Access Center. The rent on a per square foot basis was comparable to per square foot rental rates of similar
commercial property in the same geographic area at the time of the leases or subsequent amendments and
included our portion of the taxes, insurance, utilities and certain maintenance of the premises. In connection with the
BSS Transaction, we terminated this lease and transferred the Gilbert Satellite Operations Center, including any and
all equipment, software, processes, software licenses, hardware licenses, furniture and technical documentation
located within, to DISH Network.
NOTE 6. BUSINESS COMBINATIONS
In May 2019, we entered into the Yahsat Brazil JV Transaction. The combined business provides broadband
internet services and enterprise solutions in Brazil using the Telesat T19V satellite, the Eutelsat 65W satellite and
Yahsat’s Al Yah 3 satellite. The results of operations related to the business we acquired from Yahsat have been
included in these Consolidated Financial Statements from the date of acquisition. As of December 31, 2020, we
incurred $1.6 million of costs associated with the closing of the Yahsat Brazil JV Transaction.
F-34
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 7. EARNINGS PER SHARE
The following table presents the calculation of basic and diluted EPS for our Class A and B common stock:
For the years ended December 31,
2020
2019
2021
Net income (loss) attributable to EchoStar
Corporation common stock:
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss) attributable to EchoStar Corporation
common stock
Weighted-average common shares outstanding:
Basic
Dilutive impact of stock awards outstanding
Diluted
Earnings (losses) per share:
Basic:
Continuing operations
Discontinued operations
Total basic earnings (losses) per share
Diluted:
Continuing operations
Discontinued operations
Total diluted earnings (losses) per share
$
$
$
$
$
$
72,875 $
—
(40,150) $
—
(102,318)
39,401
72,875 $
(40,150) $
(62,917)
89,908
33
89,941
97,920
—
97,920
96,738
—
96,738
0.81 $
—
0.81 $
0.81 $
—
0.81 $
(0.41) $
—
(0.41) $
(0.41) $
—
(0.41) $
(1.06)
0.41
(0.65)
(1.06)
0.41
(0.65)
The following table presents the number of anti-dilutive options to purchase shares of our Class A common stock
which have been excluded from the calculation of our weighted-average common shares outstanding:
For the years ended December 31,
2020
2019
2021
Number of shares
4,766
4,374
4,813
F-35
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 8. OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents the changes in the balances of Accumulated other comprehensive income (loss) by
component:
Balance, December 31, 2019
Other comprehensive income (loss) before
reclassifications
Amounts reclassified to net income (loss)
Other comprehensive income (loss)
Balance, December 31, 2020
Other comprehensive income (loss) before
reclassifications
Amounts reclassified to net income (loss)
Other comprehensive income (loss)
Balance, December 31, 2021
Cumulative
Foreign
Currency
Translation
Adjustments
$
(122,176) $
(68,097)
—
(68,097)
(190,273)
(19,672)
—
(19,672)
(209,945) $
$
Unrealized
Gain (Loss)
On Available-
For-Sale
Securities
Accumulated
Other
Comprehensive
Income (Loss)
Other
405 $
(367) $
(122,138)
(253)
(2)
(255)
150
463
(12)
451
601 $
2,614
—
2,614
2,247
(5,005)
—
(5,005)
(2,758) $
(65,736)
(2)
(65,738)
(187,876)
(24,214)
(12)
(24,226)
(212,102)
NOTE 9. MARKETABLE INVESTMENT SECURITIES
The following table presents our Marketable investment securities:
Marketable investment securities:
Available-for-sale debt securities:
Corporate bonds
Commercial paper
Other debt securities
Total available-for-sale debt securities
Equity securities
Total marketable investment securities, including restricted amounts
Less: Restricted marketable investment securities
Total marketable investment securities
As of December 31,
2020
2021
$
289,784 $
372,746
498,358
92,673
880,815
142,943
1,101,888
148,292
1,622,926
24,435
1,023,758
1,647,361
(13,262)
(9,090)
$
1,010,496 $
1,638,271
F-36
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Table of Contents
Debt Securities
Available-for-Sale
The following table presents the components of our available-for-sale debt securities:
As of December 31, 2021
Corporate bonds
Commercial paper
Other debt securities
Amortized
Cost
Unrealized
Gains
Losses
Estimated
Fair Value
$
290,169 $
— $
(385) $
289,784
498,358
92,742
—
—
—
(69)
498,358
92,673
881,269 $
— $
(454) $
880,815
Total available-for-sale debt securities
As of December 31, 2020
Corporate bonds
Commercial paper
Other debt securities
$
$
372,702 $
1,101,888
148,292
Total available-for-sale debt securities
$ 1,622,882 $
78 $
—
6
84 $
(34) $
—
372,746
1,101,888
(6)
148,292
(40) $ 1,622,926
The following table presents the activity on our available-for-sale debt securities:
Proceeds from sales
Gains (losses) on sales, net
For the years ended December 31,
2021
2020
2019
$
$
410,918 $
160,494 $
435,978
12 $
2 $
549
As of December 31, 2021, we have $793.4 million of available-for-sale debt securities with contractual maturities of
one year or less and $87.4 million with contractual maturities greater than one year.
Fair Value Option
The following table presents the activity on our fair value option corporate bonds:
Proceeds from sales
Gains (losses) on investments, net
Equity Securities
For the years ended December 31,
2021
2020
2019
$
$
— $
— $
32,054 $
14,980 $
46,717
6,746
The following table presents the activity of our equity securities:
Proceeds from sales
Gains (losses) on investments, net
For the years ended December 31,
2021
2020
2019
$
$
832 $
49,391 $
14,401 $
(3,241) $
104,729
53,873
F-37
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Fair Value Measurements
The following table presents our marketable investment securities categorized by the fair value hierarchy, certain of
which have historically experienced volatility:
As of December 31, 2021
Cash equivalents (including restricted)
Available-for-sale debt securities:
Corporate bonds
Commercial paper
Other debt securities
Total available-for-sale debt securities
Equity securities
Total marketable investment securities, including restricted
amounts
Less: Restricted marketable investment securities
Total marketable investment securities
As of December 31, 2020
Cash equivalents (including restricted)
Available-for-sale debt securities:
Corporate bonds
Commercial paper
Other debt securities
Total available-for-sale debt securities
Equity securities
Total marketable investment securities, including restricted
amounts
Less: Restricted marketable investment securities
Total marketable investment securities
Level 1
Level 2
Total
$
$
7,872 $
423,123 $
430,995
— $
289,784 $
—
14,274
14,274
131,413
145,687
(13,262)
498,358
78,399
866,541
11,530
878,071
—
289,784
498,358
92,673
880,815
142,943
1,023,758
(13,262)
$
132,425 $
878,071 $
1,010,496
$
$
416 $
809,698 $
810,114
— $
372,746 $
372,746
—
1,101,888
1,101,888
139,486
139,486
14,441
8,806
148,292
1,483,440
1,622,926
9,994
24,435
153,927
1,493,434
1,647,361
(9,090)
—
(9,090)
$
144,837 $
1,493,434 $
1,638,271
As of December 31, 2021 and 2020, we did not have any investments that were categorized within Level 3 of the
fair value hierarchy.
NOTE 10. PROPERTY AND EQUIPMENT
The following table presents the components of Property and equipment, net:
Property and equipment, net:
Satellites, net
Other property and equipment, net
Total property and equipment, net
As of December 31,
2020
2021
$
1,610,623 $
727,662
1,602,076
788,237
$
2,338,285 $
2,390,313
F-38
Table of Contents
Satellites
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As of December 31, 2021, our satellite fleet consisted of ten geosynchronous (“GEO”) satellites, seven of which are
owned and three of which are leased. They are all in geosynchronous orbit, approximately 22,300 miles above the
equator. Our owned S-band low-earth orbit (“LEO”) nano-satellites are not included in the table below.
The following table presents our GEO satellite fleet as of December 31, 2021:
GEO Satellite
Owned:
SPACEWAY 3 (1)
EchoStar XVII
EchoStar XIX
Al Yah 3 (2)
EchoStar IX (3) (4)
EUTELSAT 10A (“W2A”) (5)
EchoStar XXI
Finance leases:
Eutelsat 65 West A
Telesat T19V
EchoStar 105/SES-11
Segment
Launch Date
Nominal Degree
Orbital Location
(Longitude)
Depreciable
Life
(In Years)
Hughes
Hughes
Hughes
Hughes
ESS
August 2007
July 2012
December 2016
January 2018
August 2003
Corporate and Other
April 2009
Corporate and Other
June 2017
Hughes
Hughes
ESS
March 2016
July 2018
October 2017
95 W
107 W
97.1 W
20 W
121 W
10 E
10.25 E
65 W
63 W
105 W
10
15
15
7
12
-
15
15
15
15
(1) Depreciable life represents the remaining useful life as of June 8, 2011, the date EchoStar completed the Hughes Acquisition.
(2) Upon consummation of our joint venture with Yahsat in Brazil in November 2019, we acquired the Brazilian Ka-band payload on this satellite.
Depreciable life represents the remaining useful life as of November 2019.
(3) We own the Ka-band and Ku-band payloads on this satellite.
(4) EchoStar IX is approaching its end of station-kept life. The Company expects to place the satellite in an inclined-orbit in the fourth quarter of
2022 or first quarter of 2023, but this ability is dependent upon events beyond our control and may not occur on schedule if at all. Inclined-
orbit will extend its life but impact revenue generating capabilities.
(5) We acquired the S-band payload on this satellite in December 2013. Prior to acquisition, the S-band payload experienced an anomaly at the
time of launch and, as a result, is not fully operational.
The following table presents the components of our satellites, net:
Satellites, net:
Satellites - owned
Satellites - acquired under finance leases
Construction in progress
Total satellites
Accumulated depreciation:
Satellites - owned
Satellites - acquired under finance leases
Total accumulated depreciation
Total satellites, net
Depreciable
Life (In Years)
As of December 31,
2020
2021
7 to 15
15
—
$
$
1,806,664 $
354,170
541,422
2,702,256
1,805,590
352,245
409,032
2,566,867
(995,962)
(95,671)
(1,091,633)
1,610,623 $
(890,783)
(74,008)
(964,791)
1,602,076
F-39
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents the depreciation expense associated with our satellites, net:
For the years ended December 31,
2020
2019
2021
Depreciation expense:
Satellites - owned
Satellites - acquired under finance leases
Total depreciation expense
$
$
105,819 $
128,404 $
23,740
27,611
129,559 $
156,015 $
130,705
25,755
156,460
The following table presents capitalized interest associated with our satellites and satellite-related ground
infrastructure:
Capitalized interest
$
37,150 $
27,369 $
22,576
For the years ended December 31,
2021
2020
2019
Construction in Progress
In August 2017, we entered into a contract for the design and construction of the EchoStar XXIV satellite, a new,
next-generation, high throughput geostationary satellite. The EchoStar XXIV satellite is primarily intended to
provide additional capacity for our HughesNet service in North, Central and South America as well as enterprise
broadband services. Capital expenditures associated with the construction and launch of the EchoStar XXIV
satellite are included in Corporate and Other segment in our segment reporting. We launched two nano-satellites in
the third quarter of 2020. Following launch, both nano-satellites experienced technical anomalies that precluded
them from fulfilling their intended regulatory milestone missions. We recorded an impairment of $1.7 million for the
year ended December 31, 2020, related to these nano-satellites. In the second quarter of 2021, we launched our
third nano-satellite.
Satellite-Related Commitments
As of December 31, 2021 and 2020 our satellite-related commitments were $342.2 million and $487.7 million,
respectively. These include payments pursuant to: i) agreements for the construction of the EchoStar XXIV satellite,
ii) the EchoStar XXIV launch contract, iii) to regulatory authorizations and non-lease costs associated with our
finance lease satellites, in-orbit incentives relating to certain satellites and commitments for satellite service
arrangements.
In certain circumstances, the dates on which we are obligated to pay our contractual obligations could change.
Satellite Anomalies and Impairments
We are not aware of any anomalies with respect to our owned or leased satellites or payloads that have had any
significant adverse effect on their remaining useful lives, the commercial operation of the satellites or payloads or
our operating results or financial position as of and for the year ended December 31, 2021.
Satellite Insurance
We generally do not carry in-orbit insurance on our satellites or payloads 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 our joint venture agreement with Yahsat, we are required to maintain insurance for
the Al Yah 3 Brazilian payload during the commercial in-orbit service of such payload, subject to certain limitations
on coverage. Our satellites and other payloads, 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-related decisions
on a case-by-case basis.
F-40
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Fair Value of In-Orbit Incentives
As of December 31, 2021 and 2020, the fair values of our in-orbit incentive obligations approximated their carrying
amounts of $53.2 million and $55.4 million, respectively.
Other Property and Equipment, Net
The following table presents Other property and equipment, net:
Other property and equipment, net:
Land
Buildings and improvements
Furniture, fixtures, equipment and other
Customer premises equipment
Construction in progress
Total other property and equipment
Accumulated depreciation
Other property and equipment, net
Depreciable
Life (In Years)
As of December 31,
2021
2020
—
1 to 40
1 to 12
2 to 4
$
28,938 $
115,537
911,474
1,778,061
158,559
2,992,569
29,055
115,335
887,086
1,617,053
99,716
2,748,245
(2,264,907)
(1,960,008)
$
727,662 $
788,237
The following table presents the depreciation expense associated with our other property and equipment:
For the years ended December 31,
2020
2019
2021
Other property and equipment depreciation expense:
Buildings and improvements
Furniture, fixtures, equipment and other
Customer premises equipment
Total depreciation expense
$
$
6,036 $
90,895
230,609
327,540 $
5,394 $
94,389
230,079
329,862 $
5,791
90,885
194,906
291,582
F-41
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 11. REGULATORY AUTHORIZATIONS
The following table presents our Regulatory authorizations, net:
Balance, December 31, 2018
$
46,787 $
(16,790) $
29,997 $
400,042 $ 430,039
Finite lived
Accumulated
Amortization
Cost
Total
Indefinite
lived
Total
Additions
Amortization expense
Currency translation adjustments
Balance, December 31, 2019
Amortization expense
Currency translation adjustments
Balance, December 31, 2020
Amortization expense
12,833
—
(1,169)
58,451
—
2,930
61,381
—
—
12,833
39,491
(3,672)
(3,672)
318
(851)
—
758
52,324
(3,672)
(93)
(20,144)
38,307
440,291
478,598
(4,483)
(2,012)
(26,639)
(4,495)
(4,483)
918
34,742
(4,495)
(2,198)
—
3,729
444,020
—
(4,483)
4,647
478,762
(4,495)
(2,303)
(4,501)
Currency translation adjustments
(4,244)
2,046
Balance, December 31, 2021
$
57,137 $
(29,088) $
28,049 $
441,717 $ 469,766
Weighted-average useful life (in years)
13
Finite Lived Assets
In November 2019, we were granted an S-band spectrum license for terrestrial rights in Mexico for $7.9 million. The
acquired asset is subject to amortization over a period of 15 years.
In November 2019, we also acquired Ka-band spectrum rights $4.5 million, upon consummation of the Yahsat Brazil
JV Transaction, which are subject to amortization over a period of 11 years.
Future Amortization
The following table presents our estimated future amortization of our regulatory authorizations with finite lives as of
December 31, 2021:
For the years ending December 31,
2022
2023
2024
2025
2026
2027 and beyond
Total
Amount
$
4,333
4,333
4,341
4,333
4,491
6,218
$
28,049
F-42
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Indefinite Lived Assets
In October 2019, we acquired Sirion Global Pty Ltd., which we have renamed EchoStar Global Australia Pty Ltd
(“EchoStar Global”), which holds global S-band non-geostationary stationary satellite spectrum rights for mobile
satellite services. We acquired the global S-band non-geostationary satellite spectrum rights for $39.5 million, of
which $26.5 million were made in cash payments and the remainder relate to deferred tax liabilities. The acquired
spectrum rights are not subject to amortization.
NOTE 12. OTHER INTANGIBLE ASSETS
The following table presents our other intangible assets:
Cost:
As of December 31, 2018
As of December 31, 2019
As of December 31, 2020
As of December 31, 2021
Accumulated amortization:
As of December 31, 2018
Amortization expense
As of December 31, 2019
Amortization expense
As of December 31, 2020
Amortization expense
As of December 31, 2021
Carrying amount:
As of December 31, 2018
As of December 31, 2019
As of December 31, 2020
As of December 31, 2021
Customer
Relationships
Patents
Trademarks
and Licenses
Total
$
270,300 $
61,283 $
29,700 $
361,283
270,300
270,300
61,283
61,283
29,700
29,700
361,283
361,283
$
270,300 $
61,283 $
29,700 $
361,283
$
(244,787) $
(13,146)
(257,933)
(9,496)
(61,004) $
(93)
(61,097)
(11,261) $
(1,485)
(12,746)
(317,052)
(14,724)
(331,776)
(93)
(1,485)
(11,074)
(267,429)
(61,190)
(14,231)
(342,850)
(2,871)
(93)
(1,485)
(4,449)
$
(270,300) $
(61,283) $
(15,716) $
(347,299)
$
$
$
$
25,513 $
12,367 $
2,871 $
— $
279 $
186 $
93 $
— $
18,439 $
16,954 $
15,469 $
13,984 $
44,231
29,507
18,433
13,984
Weighted-average useful life (in years)
8
6
20
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Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Future Amortization
The following table presents our estimated future amortization of other intangible assets as of December 31, 2021:
For the years ending December 31,
2022
2023
2024
2025
2026
2027 and beyond
Total
NOTE 13. OTHER INVESTMENTS
The following table presents our Other investments, net:
Other investments, net:
Equity method investments
Other equity investments
Other debt investments, net
Total other investments, net
Equity Method Investments
Dish Mexico
Amount
$
1,485
1,485
1,485
1,485
1,485
6,559
$
13,984
As of December 31,
2020
2021
$
91,226 $
151,070
91,636
114,885
$
297,747 $
31,662
102,205
284,937
We own 49% of Dish Mexico, a joint venture that we entered into in 2008 to provide direct-to-home satellite services
in Mexico. Historically, we provided certain satellite services to Dish Mexico. However, following the consummation
of the BSS Transaction, we no longer provide these services.
During the fourth quarter of 2021, we recognized a $55.3 million other-than-temporary impairment on our
investment in Dish Mexico. Given changing market trends, conditions, and company-specific events, we concluded
that our investment in Dish Mexico was not recoverable.
Deluxe/EchoStar LLC
We own 50% 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.
Broadband Connectivity Solutions (Restricted) Limited
We own 20% of Broadband Connectivity Solutions (Restricted) Limited (together with its subsidiaries, “BCS”), a joint
venture that we entered into in 2018 to provide commercial Ka-band satellite broadband services across Africa, the
Middle East and southwest Asia operating over Yahsat's Al Yah 2 and Al Yah 3 Ka-band satellites.
F-44
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Financial Information for Our Equity Method Investments
The following table presents revenue recognized:
Deluxe
BCS
The following table presents trade accounts receivable:
Deluxe
BCS
For the years ended December 31,
2021
2020
2019
$
$
5,480 $
8,278 $
4,393 $
9,080 $
4,377
8,979
As of December 31,
2020
2021
$
$
934 $
5,544 $
716
9,347
We recorded cash distributions from our investments of $2.7 million for the year ended December 31, 2019. There
were no cash distributions from our investments for the years ended December 31, 2021 and 2020. These cash
distributions were determined to be a return on investment and reported in Net cash provided by (used for)
operating activities in the Consolidated Statements of Cash Flows. We recorded an additional dividend from our
investments of $2.3 million for the year ended December 31, 2019 that was considered a return of investment and
reported in Net cash provided by (used for) investing activities in the Consolidated Statements of Cash Flows. There
were no returns of investment during the years ended December 31, 2021 and 2020.
Other Equity Investments
The following table presents the activity on our investments:
Gain (loss) on investments, net
$
21,256 $
(29,833) $
(36,700)
For the years ended December 31,
2021
2020
2019
Other Debt Investments, Net
The following table presents our other debt investments, net:
Other debt investments, net:
Cost basis
Discount
Allowance for credit losses
Total other debt investments, net
As of December 31,
2021
2020
$
127,433 $
114,903
(9,602)
(2,946)
(10,185)
(2,513)
$
114,885 $
102,205
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents the activity in our allowance for credit losses for these investments:
For the years ended
December 31,
2021
2020
Balance at the beginning of the period
Credit Losses (1)
$
2,513 $
433
Balance at end of period
(1) The impact of adopting ASC 326 on January 1, 2020 was a $2.1 million adjustment to Accumulated earnings (losses).
$
2,946 $
—
2,513
2,513
The following table presents the interest income, net related to our debt investments, net:
Interest income, net
Interest income
Credit losses
Total interest income, net
NOTE 14. LONG-TERM DEBT
For the years ended December 31,
2021
2020
2019
$
$
17,191 $
14,736 $
(433)
(367)
16,758 $
14,369 $
2,500
—
2,500
The following table presents the carrying amount and fair values of our Current portion of long-term debt, net and
Long-term debt, net:
Effective
Interest
Rate
As of December 31,
2021
2020
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Senior Secured Notes:
5 1/4% Senior Secured Notes due 2026
5.320% $ 750,000 $ 825,555 $ 750,000 $ 834,045
Senior Unsecured Notes:
7 5/8% Senior Unsecured Notes due 2021
6 5/8% Senior Unsecured Notes due 2026
Less: Unamortized debt issuance costs
Total long-term debt
Less: Current portion, net
Long-term debt, net
2021 Senior Unsecured Notes
—%
6.688%
(4,006)
900,000
750,000
—
750,000
924,003
852,810
—
2,610,858
(924,003)
$ 1,495,994 $ 1,664,295 $ 1,495,256 $ 1,686,855
—
838,740
—
1,664,295
—
1,495,994
—
2,393,493
(898,237)
(6,507)
On June 1, 2011, HSSC issued $900.0 million aggregate principal amount of 7 5/8% Senior Unsecured Notes due
2021 (the “2021 Senior Unsecured Notes,”) at an issue price of 100.0%, pursuant to an Unsecured Indenture dated
June 1, 2011. The principal and interest owed on the 2021 Senior Unsecured Notes were paid off at its maturity
date on June 15, 2021.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
2026 Senior Secured Notes and 2026 Senior Unsecured Notes
On July 27, 2016, HSSC issued $750.0 million aggregate principal amount of 5 1/4% Senior Secured Notes due
2026 (the “2026 Senior Secured Notes”) at an issue price of 100.0%, pursuant to an indenture dated July 27, 2016
(the “2016 Secured Indenture”) and $750.0 million aggregate principal amount of 6 5/8% Senior Unsecured Notes
due 2026 (the “2026 Senior Unsecured Notes”) at an issue price of 100.0%, pursuant to an indenture dated July 27,
2016 (together with the 2016 Secured Indenture, the “Indentures”). The 2026 Senior Secured Notes and the 2026
Senior Unsecured Notes are referred to collectively as the “Notes” and individually as a series of the Notes. The
Notes mature on August 1, 2026. Interest on the 2026 Senior Secured Notes accrues at an annual rate of 5 1/4%
and interest on the 2026 Senior Unsecured Notes accrues at an annual rate of 6 5/8%. Interest on the Notes is
payable semi-annually in cash, in arrears, on February 1 and August 1 of each year.
Additional Information Relating to the Notes
Each series of the Notes is redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the
principal amount thereof plus a “make-whole” premium, as defined in the applicable Indenture, together with
accrued and unpaid interest, if any, to the date of redemption.
The 2026 Senior Secured Notes are:
•
•
•
•
•
•
•
secured obligations of HSSC;
secured by security interests in substantially all existing and future tangible and intangible assets of HSSC
and certain of its subsidiaries on a first priority basis, subject to certain exceptions;
effectively junior to HSSC’s obligations that are secured by assets that are not part of the collateral that
secures the 2026 Senior Secured Notes to the extent of the value of the collateral securing such
obligations;
effectively senior to HSSC’s existing and future unsecured obligations to the extent of the value of the
collateral securing the 2026 Senior Secured Notes, after giving effect to permitted liens as provided in the
2016 Secured Indenture;
senior in right of payment to all existing and future obligations of HSSC that are expressly subordinated to
the 2026 Senior Secured Notes;
structurally junior to any existing and future obligations of any of HSSC’s subsidiaries that do not guarantee
the 2026 Senior Secured Notes; and
unconditionally guaranteed, jointly and severally, on a general senior secured basis by certain of our
HSSC’s subsidiaries, which guarantees rank equally with all of the guarantors’ existing and future
unsubordinated indebtedness and effectively senior to such guarantors’ existing and future obligations to
the extent of the value of the assets securing the 2026 Senior Secured Notes.
The 2026 Senior Unsecured Notes are:
•
•
•
•
•
unsecured senior obligations of HSSC;
ranked equally with all existing and future unsubordinated indebtedness and effectively junior to any
secured indebtedness up to the value of the assets securing such indebtedness;
effectively junior to HSSC’s obligations that are secured to the extent of the value of the collateral securing
such obligations;
senior in right of payment to all existing and future obligations of HSSC that are expressly subordinated to
the 2026 Senior Unsecured Notes;
structurally junior to any existing and future obligations of any of HSSC’s subsidiaries that do not guarantee
the 2026 Senior Unsecured Notes; and
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
•
unconditionally guaranteed, jointly and severally, on a general senior secured basis by certain of HSSC’s
subsidiaries, which guarantees rank equally with all of the guarantors’ existing and future unsubordinated
indebtedness, and effectively junior to any secured indebtedness of the guarantors up to the value of the
assets securing such indebtedness.
Subject to certain exceptions, the Indentures contain restrictive covenants that, among other things, impose
limitations on HSSC’s ability and, in certain instances, the ability of certain of HSSC’s subsidiaries to:
•
•
incur additional debt;
pay dividends or make distributions on HSSC’s or their capital stock or repurchase HSSC’s or their capital
stock;
• make certain investments;
•
•
create liens or enter into sale and leaseback transactions;
enter into transactions with affiliates;
• merge or consolidate with another company;
•
•
transfer and sell assets; and
allow to exist certain restrictions on its or their ability to pay dividends, make distributions, make other
payments, or transfer assets.
In the event of a Change of Control, as defined in the respective Indentures, HSSC would be required to make an
offer to repurchase all or any part of a holder’s Notes at a purchase price equal to 101.0% of the aggregate principal
amount thereof, together with accrued and unpaid interest to the date of repurchase.
The Indentures provide for customary events of default for each series of the Notes, including, among other things,
non-payment, breach of the covenants in the applicable Indentures, payment defaults or acceleration of other
indebtedness, a failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If
any event of default occurs and is continuing with respect to any series of the Notes, the trustee or the holders of at
least 25.0% in principal amount of the then outstanding Notes of such series may declare all the Notes of such
series to be due and payable immediately, together with any accrued and unpaid interest.
Debt Issuance Costs
For the years ended December 31, 2021, 2020 and 2019, we amortized $2.4 million, $4.3 million and $5.9 million,
respectively, of debt issuance costs incurred for all debt issuances, which are included in Interest expense, net of
amounts capitalized in the Consolidated Statements of Operations.
NOTE 15.
INCOME TAXES
The following table presents the components of Income (loss) from continuing operations before income taxes in the
Consolidated Statements of Operations:
For the years ended December 31,
2020
2019
2021
Domestic
Foreign
Income (loss) from continuing operations before
income taxes
$
$
269,400 $
108,078 $
120,295
(141,053)
(135,913)
(213,460)
128,347 $
(27,835) $
(93,165)
F-48
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents the components of Income tax benefit (provision), net, in the Consolidated Statements
of Operations:
Current benefit (provision), net:
Federal
State
Foreign
Total current benefit (provision), net
Deferred benefit (provision), net:
Federal
State
Foreign
Total deferred benefit (provision), net
$
$
$
For the years ended December 31,
2020
2019
2021
(9,324) $
(2,750) $
(5,089)
(15,171)
(3,467)
(4,868)
(2,116)
286
(633)
(27,962) $
(9,734) $
(5,436)
(41,665) $
(9,707) $
(2,155)
6,156
(37,664)
3,497
(8,125)
(14,335)
(7,511)
(10,964)
3,423
(15,052)
(20,488)
Total income tax benefit (provision), net
$
(65,626) $
(24,069) $
The following table presents our actual tax provisions reconciled to the amounts computed by applying the statutory
federal tax rate to Income (loss) from continuing operations before income taxes in the Consolidated Statements of
Operations :
For the years ended December 31,
2020
2019
2021
Statutory rate
$
(26,953) $
5,845 $
State income taxes, net of federal provision (benefit)
Permanent differences
Tax credits
Valuation allowance
Rates different than statutory
Withholding tax
Other
(14,140)
(5,804)
6,914
(349)
(2,209)
1,353
(40,743)
(44,212)
18,137
(646)
(2,391)
17,180
(766)
(911)
19,565
(8,137)
(6,531)
12,453
(54,251)
18,786
(2,171)
(202)
Total income tax benefit (provision), net
$
(65,626) $
(24,069) $
(20,488)
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents the components of our deferred tax assets and liabilities:
Deferred tax assets:
Net operating losses, credit and other carryforwards
Unrealized losses on investments, net
Accrued expenses
Stock-based compensation
Other assets
Total deferred tax assets
Valuation allowance
Deferred tax assets after valuation allowance
Deferred tax liabilities:
Depreciation and amortization
Other liabilities
Total deferred tax liabilities
Total net deferred tax liabilities
Net deferred tax assets (liabilities) foreign jurisdiction
Net deferred tax assets (liabilities) domestic
Total net deferred tax assets (liabilities)
As of December 31,
2020
2021
$
253,767 $
274,894
44,651
31,996
7,067
19,776
43,693
21,787
6,723
35,689
357,257
382,786
(234,571)
(225,593)
$
122,686 $
157,193
$
(493,093) $
(514,091)
(27,860)
(1,217)
(520,953)
(515,308)
(398,267) $
(358,115)
(7,242) $
1,781
(391,025)
(359,896)
(398,267) $
(358,115)
$
$
$
Overall, our net deferred tax assets were offset by a valuation allowance of $234.6 million and $225.6 million as of
December 31, 2021 and 2020, respectively. The change in the valuation allowance relates to an increase in the net
operating loss carryforwards of certain foreign subsidiaries and an increase to investment deferred tax assets that
management does not believe will be realized; however, these increases are partially offset by a decrease due to
changes in foreign exchange rates.
Tax benefits of net operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review
of historical and projected future operating results, the eligible carryforward period, and other circumstances. As of
December 31, 2021, we had net operating loss carryforwards of $684.4 million, including $682.8 million of foreign
net operating loss carryforwards. The net operating loss carryforwards associated with India will begin to expire in
2027. As of December 31, 2021, we have tax credit carryforwards of $127.6 million and $99.9 million for federal
and state income tax purposes, respectively. If not utilized, the federal tax credit carryforwards will begin to expire
in 2035.
As of December 31, 2021, we had undistributed earnings attributable to foreign subsidiaries for which no provision
for U.S. income taxes or foreign withholding taxes has been made because it is expected that such earnings will be
reinvested outside the U.S. indefinitely. It is not practicable to determine the amount of the unrecognized deferred
tax liability at this time. However, due to the one-time transition tax on the deemed repatriation of post-1986
undistributed foreign subsidiary earnings, the majority of previously unremitted earnings have now been subjected
to U.S. federal income tax. As of December 31, 2021 and 2020, we had net deferred tax assets related to our
foreign subsidiaries of $5.4 million and $1.8 million, respectively, which were recorded in Other non-current assets,
net in the Consolidated Balance Sheets.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Accounting for Uncertainty in Income Taxes
In addition to filing U.S. federal income tax returns, we file income tax returns in all states that impose an income
tax. As of December 31, 2021, we are not currently under a U.S. federal income tax examination. However, the
IRS could perform tax examinations on years as early as tax year 2008. We are also subject to frequent state
income tax audits and have open state examinations on years as early as tax year 2008. We also file income tax
returns in the United Kingdom, Brazil, India and a number of other foreign jurisdictions. We generally are open to
income tax examination in these foreign jurisdictions for taxable years beginning in 2004. As of December 31,
2021, we are currently being audited by the Indian tax authorities for fiscal years 2004 through 2018. We have no
other on-going significant income tax examinations in process in our foreign jurisdictions.
The following table presents the reconciliation of the beginning and ending amount of unrecognized income tax
benefits:
For the years ended December 31,
2020
2019
2021
Unrecognized tax benefit balance as of beginning of
period:
Additions based on tax positions related to the current
year
Additions based on tax positions related to prior years
Reductions based on tax positions related to prior
years
$
150,060 $
70,401 $
69,540
193
105
3,349
76,882
(82)
(572)
861
—
—
Balance as of end of period
$
150,276 $
150,060 $
70,401
As of December 31, 2021 and 2020, we had $150.3 million and $150.1 million, respectively, of unrecognized
income tax benefits, all of which, if recognized, would affect our effective tax rate. Additions based on tax positions
related to prior years in 2020 include amounts in our deferred tax assets previously considered contingent liabilities
related to combined state filings with DISH Network. During 2020, we and DISH Network concluded that combined
state filings were no longer required. The amounts have been added to this schedule to reflect the change in filing
status.
For the years ended December 31, 2021, 2020 and 2019, our income tax provision included an insignificant amount
of interest and penalties.
NOTE 16. STOCKHOLDERS’ EQUITY
Preferred Stock
Our board of directors is authorized to issue preferred stock and may divide such preferred stock into series and,
with respect to each series, to determine the preferences and rights and the qualifications, limitations or restrictions
of the series, including the dividend rights, conversion rights, voting rights, redemption rights and terms, liquidation
preferences, sinking fund provisions, the number of shares constituting the series and the designation of such
series. Our board of directors may, without stockholder approval, issue additional preferred stock of existing or new
series with voting and other rights that could adversely affect the voting power of the holders of common stock and
could have certain anti-takeover effects.
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Common Stock
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Our Class A, Class B, and Class C common stock are equivalent except for voting rights. Holders of Class A and
Class C common stock are entitled to one vote per share and holders of Class B common stock are entitled to
10 votes per share. Upon a change in control of the Company, each holder of outstanding shares of Class C
common stock is entitled to 10 votes for each share of Class C common stock held. Each share of Class B and
Class C common stock is convertible, at the option of the holder, into one share of Class A common stock. Charles
W. Ergen, our Chairman, and certain entities established for the benefit of his family beneficially own all outstanding
Class B common stock. There are no shares of Class C common stock outstanding.
Any holder of Class D common stock is not entitled to a vote on any matter or to convert the shares of Class D
common stock into any other class of common stock. There are no shares of Class D common stock outstanding.
Each share of common stock is entitled to receive its pro rata share, based upon the number of shares of common
stock held, of dividends and distributions upon liquidation.
Common Stock Repurchase Program
Pursuant to a stock repurchase program approved by our board of directors, we were authorized to repurchase up
to $500.0 million of our Class A common stock through December 31, 2021. The following table presents
information with respect to purchases made by the Company:
Period
Beginning Balance
Year ended December 31, 2019
Year ended December 31, 2020
Year ended December 31, 2021
Total Number of
Shares (or Units)
Purchased
Average Price
Paid Per Share
(or Unit)
Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Disclosed Plans
or Program
Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units)
That May Yet Be
Purchased under
the Plans or
Program (1)
$
500,000
— $
1,905,906
10,941,872
—
22.79
23.90
—
1,905,906
10,941,872
500,000
456,542
194,933
194,933
Total
(1) On October 29, 2020, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A common stock through and
including December 31, 2021. On November 2, 2021, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A
common stock commencing January 1, 2022 through and including December 31, 2022. All shares repurchased reflected in the table above
have been converted to treasury shares.
12,847,778 $
12,847,778 $
23.74
NOTE 17. EMPLOYEE BENEFIT PLANS
Employee Stock Purchase Plan
We have an employee stock purchase plan (the “ESPP”), under which we are authorized to issue 5.0 million shares
of Class A common stock. As of December 31, 2021, we had approximately 1.3 million shares of Class A common
stock which remain available for issuance under the ESPP. Generally, all full-time employees who have been
employed by EchoStar for at least one calendar quarter are eligible to participate in the ESPP. Employee stock
purchases are made through payroll deductions. Under the terms of the ESPP, each employee’s deductions are
limited so that the maximum they may purchase under the ESPP is $25,000 in fair value of Class A common stock
per year. Stock purchases are made on the last business day of each calendar quarter at 85.0% of the closing price
of the Class A common stock on that date. For the years ended December 31, 2021, 2020 and 2019, employee
purchases of Class A common stock through the ESPP totaled approximately 446,000 shares, 452,000 shares and
285,000 shares, respectively.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
401(k) Employee Savings Plans
Under the EchoStar 401(k) Plan (“the Plan”), eligible employees are entitled to contribute up to 75.0% of their
eligible compensation, on a pre-tax and/or after-tax basis, subject to the maximum contribution limit provided by the
Internal Revenue Code of 1986, as amended (the “Code”). All employee contributions to the Plan are immediately
vested. We match 50 cents on the dollar for the first 6.0% of each employee’s salary contributions to the Plan for a
total of 3.0% match on a pre-tax basis up to a maximum of $7,500 annually. Our match is calculated each pay
period there is an employee contribution. In addition, we may make an annual discretionary contribution to the Plan
to be made in cash or our stock. Our contributions under the Plan vest at 20.0% per year and are 100.0% vested
after an eligible employee has completed five years of employment. Forfeitures of unvested participant balances
may be used to fund matching and discretionary contributions.
The following table presents our matching contributions, discretionary contributions and shares:
For the years ended December 31,
2020
2019
2021
Matching contributions
Fair value of discretionary contributions of our Class A
common stock, net of forfeitures, under 401(k) plan
$
$
Approximate number of shares
5,434 $
5,239 $
5,095
7,125 $
6,921 $
336,000
160,000
6,654
181,000
NOTE 18. STOCK-BASED COMPENSATION
Stock Incentive Plans
We maintain stock incentive plans to attract and retain officers, directors, employees, consultants and advisors.
Stock awards under these plans may include both performance-based and non-performance-based stock
incentives. As of December 31, 2021, we had outstanding stock options to acquire approximately 4.8 million shares
of our Class A common stock under these plans. Stock options granted prior to December 31, 2021 were granted
with exercise prices equal to or greater than the market value of our Class A common stock at the date of grant or
the last trading day prior to the date of grant (if the grant date is not a trading day) and generally with a maximum
term of ten years for our officers and employees and five years for our non-employee directors. While we generally
issue stock awards subject to vesting, typically over five years, some stock awards have been granted with
immediate or longer vesting periods or that vest only upon the achievement of certain performance objectives.
Under these plans, we grant to certain of our employees awards of fully vested shares of Class A common stock
under our Employee Innovator Recognition Program, which is available to all of our eligible employees. As of
December 31, 2021, we had approximately 6.4 million shares of our Class A common stock available for future
grant under our stock incentive plans.
In connection with the BSS Transaction, we adjusted stock options that were unexercised and outstanding as of the
date of the Distribution, which resulted in an increase in the number of such options and a reduction in the exercise
price of such options.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents our exercise prices for stock options outstanding and exercisable as of December 31,
2021:
Exercise
Price Range
$0.00 - $20.00
$20.01 - $25.00
$25.01 - $30.00
$30.01 - $35.00
$35.01 - $40.00
$40.01 - $45.00
$45.01 - $50.00
$50.01 - $55.00
Number
Outstanding
as of
December 31,
2021
Options Outstanding
Weighted-
Average
Remaining
Contractual Term
(In Years)
Weighted-
Average
Exercise
Price
Options Exercisable
Weighted-
Average
Remaining
Contractual Term
(In Years)
Number
Exercisable as
of December
31, 2021
Weighted-
Average
Exercise
Price
—
309,321
442,635
616,374
1,503,054
1,006,518
863,829
57,524
4,799,255
0
9
1
5
7
3
5
5
5
$
—
24.43
29.46
32.76
38.77
—
33,221
425,635
415,065
786,480
42.22
1,001,942
48.55
52.68
38.86
676,675
47,156
3,386,174
0
4
1
4
6
3
5
4
4
$
—
24.34
29.62
33.49
38.65
42.22
48.61
52.70
39.98
Stock Award Activity
The following table presents our stock option activity:
2021
For the years ended December 31,
2020
2019
Options
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Total options
outstanding, beginning
of period
Granted
Exercised
Forfeited and
canceled
Total options
outstanding, end of
period
Exercisable at end of
period
4,804,891 $
39.48
4,812,644 $
43.40
5,013,038 $
325,500
(22,264)
24.49
18.32
180,500
30.39
1,959,597
(45,170)
18.93
(1,986,937)
41.80
38.12
33.89
(308,872)
34.79
(143,083)
41.58
(173,054)
48.99
4,799,255
38.86
4,804,891
39.48
4,812,644
3,386,174
39.99
3,045,000
39.42
2,510,947
43.40
38.76
The following table presents our additional share-based compensation disclosures:
For the years ended December 31,
2020
2021
2019
Tax benefits from stock options exercised
Aggregate intrinsic value of our stock options exercised
$
$
304 $
238 $
173 $
603 $
6,989
17,101
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Stock-Based Compensation
The following table presents our total non-cash, stock-based compensation expense:
For the years ended December 31,
2020
2021
2019
Stock-based compensation expense:
Research and development expenses
Selling, general and administrative expenses
Total stock-based compensation expense
$
$
530 $
7,169
7,699 $
551 $
8,327
8,878 $
465
8,860
9,325
The income tax benefits related to stock-based compensation expense was $1.5 million, $1.7 million and
$1.9 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, total
unrecognized stock-based compensation cost, net of estimated forfeitures, related to our unvested stock awards
was $10.9 million. This amount is based on an estimated future forfeiture rate of 2.0% per year and will be
recognized over a weighted-average period of approximately two years.
Valuation of Stock Options
The fair value of each stock option granted for the years ended December 31, 2021, 2020 and 2019 was estimated
at the date of the grant using a Black-Scholes option valuation model. The following table presents the estimated
grant-date fair values and related assumptions:
For the years ended December 31,
2020
2019
2021
Assumptions:
Risk-free interest rate
Volatility
Expected term of options (in years)
Weighted-average grant-date fair value
0.48% - 1.11%
0.25% - 1.72%
1.83% - 2.54%
29.91% - 34.51% 24.32% - 30.07% 23.58% - 30.95%
4.0 - 5.9
4.0 - 5.9
5.7 - 5.8
$6.20 - $8.32
$6.56 - $11.63
$10.22 - $14.49
We do not currently intend to pay dividends on our common stock and accordingly, the dividend yield used in the
Black-Scholes option valuation model was assumed to be zero for all periods. The Black-Scholes option valuation
model was developed for use in estimating the fair value of traded stock options which have no vesting restrictions
and are fully transferable. Consequently, our estimate of fair value may differ from that determined using other
valuation models. Further, the Black-Scholes option valuation model requires the input of subjective assumptions.
Changes in the subjective input assumptions can materially affect the fair value estimate.
Based on the closing market price of our Class A common stock on December 31, 2021, the aggregate intrinsic
value of our stock options was $0.6 million for options outstanding and $0.1 million for options exercisable as of
December 31, 2021.
NOTE 19. RELATED PARTY TRANSACTIONS - DISH NETWORK
Overview
EchoStar Corporation and DISH have operated as separate publicly-traded companies since 2008 (the “Spin-off”).
A substantial majority of the voting power of the shares of each of EchoStar Corporation and DISH is owned
beneficially by Charles W. Ergen, our Chairman, and by certain entities established for the benefit of his family.
In January 2017, we and certain of our subsidiaries entered into the Share Exchange Agreement with DISH and
certain of its subsidiaries pursuant to which, in February 2017, we received all of the shares of the Tracking Stock,
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representing an 80% economic interest in the residential retail satellite broadband business of our Hughes segment,
in the Share Exchange. The Tracking Stock was retired in March 2017.
In September 2019, pursuant to the Master Transaction Agreement with DISH and the Merger Sub, we completed
the BSS Transaction.
In connection with and following the Spin-off, the Share Exchange and the BSS Transaction, we and DISH Network
entered into certain agreements pursuant to which we obtain certain products, services and rights from DISH
Network; DISH Network obtains certain products, services and rights from us; and we and DISH Network indemnify
each other against certain liabilities arising from our respective businesses. 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), which varies depending on the nature of the products and services provided. We
may also enter into additional agreements with DISH Network in the future.
The following is a summary of the transactions and the terms of the underlying principal agreements that have had
or may have an impact on our consolidated financial condition and results of operations.
Services and Other Revenue — DISH Network
The following table presents our Services and other revenue - DISH Network:
Services and other revenue - DISH Network
$
33,884 $
36,531 $
53,429
For the years ended December 31,
2021
2020
2019
The following table presents the related trade accounts receivable:
As of December 31,
2020
2021
Trade accounts receivable - DISH Network
$
4,244 $
5,612
Satellite Capacity Leased to DISH Network. 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.
Telesat Obligation Agreement. In September 2009, we entered into the Telesat Transponder Agreement. In
September 2009, we entered into the DISH Nimiq 5 Agreement. Under the terms of the DISH Nimiq 5 Agreement,
DISH Network made certain monthly payments to us that commenced in September 2009, when the Nimiq 5
satellite was placed into service. We transferred the Telesat Transponder Agreement to DISH Network in
September 2019 as part of the BSS Transaction; however, we retained certain obligations related to DISH
Network’s performance under that agreement and we entered into an agreement with DISH Network whereby DISH
Network compensates us for retaining such obligations.
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Real Estate Leases to DISH Network. We have entered into lease agreements pursuant to which DISH Network
leases certain real estate from us. The rent on a per square foot basis for each of the leases is comparable to per
square foot rental rates of similar commercial property in the same geographic area at the time of the leases or
subsequent amendments. Additionally, DISH Network compensates us for its portion of the taxes, insurance, utilities
and/or maintenance of the premises. The terms of each of the leases are set forth below:
•
100 Inverness Occupancy License Agreement — In March 2017, we and DISH Network entered into a
license agreement for DISH Network to use certain of our space at 100 Inverness Terrace East, Englewood,
Colorado for an initial period ending in December 2020. Effective December 2020, we amended this
agreement to extend the license until December 2021. Effective December 2021, we amended this
agreement to extend the license until December 2022. This agreement may be terminated by either party
upon 180 days’ prior notice. Subsequent to December 2022, this agreement will be converted to a month-
to-month lease agreement unless extended by mutual consent or terminated by one of the parties upon 30
days’ notice. In connection with the BSS Transaction, we transferred to DISH Network the Englewood
Satellite Operations Center located at 100 Inverness Terrace East, including any and all equipment,
hardware licenses, software, processes, software licenses, furniture and technical documentation
associated with the satellites transferred in the BSS Transaction.
• Meridian Lease Agreement — The lease for all of 9601 S. Meridian Blvd., Englewood, Colorado was
originally for a period ending in December 2016. We and DISH Network have amended this lease over time
to, among other things, extend the term through December 2022. After December 2022, this agreement
may be converted by mutual consent to a month-to-month lease agreement with either party having the
right to terminate 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 our completion of the Hughes Acquisition, TerreStar and HNS entered into various agreements pursuant to
which we provide, among other things, warranty, operations and maintenance and hosting services for TerreStar’s
ground-based communications equipment (the “TerreStar Agreements”). 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 these 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. 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. In March 2020, we entered into an agreement with DISH
Network pursuant to which we perform certain work and provide certain credits to amounts owed to us under the
TerreStar Agreements in exchange for DISH Network’s granting us rights to use certain satellite capacity under the
Amended and Restated Professional Services Agreement (as defined below). As a result, we and DISH Network
amended the TerreStar Agreements to suspend our provision of warranty services to DISH Network from April 2020
through December 2020. Following the expiration of this suspension, we have recommenced providing warranty
services to DISH Network.
Hughes Broadband Distribution Agreement. Effective October 2012, we and DISH Network entered into a
distribution agreement (the “Distribution Agreement”) pursuant to which DISH Network has the right, but not the
obligation, to market, sell and distribute our Gen 4 HughesNet service. DISH Network pays us a monthly per
subscriber wholesale service fee for our Gen 4 HughesNet service based upon a subscriber’s service level and
based upon certain volume subscription thresholds. The Distribution Agreement also provides that DISH Network
has the right, but not the obligation, to purchase certain broadband equipment from us to support the sale of the
Gen 4 HughesNet 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, we and DISH Network 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, we and DISH Network will continue to
provide our Gen 4 HughesNet service to the then-current DISH Network subscribers pursuant to the terms and
conditions of the Distribution Agreement.
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DBSD North America Agreement. In March 2012, DISH Network completed its acquisition of all of the equity of
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 we provide, 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 has 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. In February 2019, we further amended these
agreements to provide DBSD North America with the right to continue to receive warranty services from us on a
month-to-month basis until December 2023, unless terminated by DBSD North America upon at least 21 days’
written notice to us. The provision of hosting services will continue 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.
Hughes Equipment and Services Agreement. In February 2019, we and DISH Network entered into an
agreement pursuant to which we will sell to DISH Network our HughesNet Service and HughesNet equipment that
has been modified to meet DISH Network’s internet-of-things specifications for the transfer of data to DISH
Network’s network operations centers. This agreement has an initial term of five years expiring February 2024 with
automatic renewal for successive one-year terms unless terminated by DISH Network with at least 180 days’ written
notice to us or by us with at least 365 days' written notice to DISH Network.
Operating Expenses — DISH Network
The following table presents our operating expenses related to DISH Network:
For the years ended December 31,
2020
2019
2021
Operating expenses - DISH Network
$
5,935 $
5,793 $
5,198
The following table presents the related trade accounts payable:
Trade accounts payable - DISH Network
As of December 31,
2020
2021
$
503 $
752
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Amended and Restated Professional Services Agreement. In connection with the Spin-off, we entered into
various agreements with DISH Network including a transition services agreement, satellite procurement agreement
and services agreement, all of which expired in January 2010 and were replaced by a professional services
agreement (the “Professional Services Agreement”). In January 2010, we and DISH Network agreed that we
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, we and DISH Network 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 us (previously provided under a services agreement) and provide other support
services. In connection with the consummation of the Share Exchange, we and DISH amended and restated the
Professional Services Agreement (as amended to date, the “Amended and Restated Professional Services
Agreement”) to provide that we and DISH Network shall have the right to receive additional services that either we
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
(collectively, the “TT&C Antennas”). In September 2019, in connection with the BSS Transaction, we and DISH
further amended the Amended and Restated Professional Services Agreement to provide that we and DISH
Network shall have the right to receive additional services that either we or DISH Network may require as a result of
the BSS Transaction and to remove our access to and the maintenance and support services for the TT&C
Antennas. The term of the Amended and Restated Professional Services Agreement is through January 1, 2023
and renews automatically for successive one-year periods thereafter, unless the agreement is terminated earlier by
either party upon at least 60 days’ notice. We or DISH Network 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
provided under the Amended and Restated Professional Services Agreement may survive the termination of the
agreement.
Real Estate Leases from DISH Network. We have entered into lease agreements pursuant to which we lease
certain real estate from DISH Network. The rent on a per square foot basis is comparable to per square foot rental
rates of similar commercial property in the same geographic area at the time of the lease or subsequent
amendments and includes our portion of the taxes, insurance, utilities and/or maintenance of the premises. The
terms of each of the leases are set forth below:
•
•
Cheyenne Lease Agreement — Effective March 2017, we entered into a lease with DISH Network for
certain space at 530 EchoStar Drive in Cheyenne, Wyoming for an initial period ending in February 2019.
In August 2018, we exercised our option to renew this lease for a one-year period ending in February 2020.
In connection with the BSS Transaction, we transferred the Cheyenne Satellite Operations Center, including
any equipment, software licenses, and furniture located within, to DISH Network and amended this lease to
reduce the space provided to us for the Cheyenne Satellite Access Center for a period ending in September
2021. In March 2021, we exercised our option to renew this lease for a one-year period ending September
2022 and amended the lease to provide us the option to renew this lease for up to three additional years. In
November 2021, we exercised our option to renew this lease for a one-year period ending September 2023.
American Fork Occupancy License Agreement — Effective March 2017, we entered into an agreement
with DISH Network for certain space at 796 East Utah Valley Drive in American Fork, Utah for a period
ending in August 2017. We exercised our option to renew this agreement for a five-year period ending in
August 2022. We and DISH Network amended this agreement to, among other things, terminate this
agreement in March 2019.
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Collocation and Antenna Space Agreements. We and DISH Network entered into an agreement pursuant to
which DISH Network provided us with collocation space in El Paso, Texas. This agreement was for an initial period
ending in July 2015, and provided us with renewal options for four consecutive three-year terms. We exercised our
first renewal option for a period commencing in August 2015 and ending in July 2018, in April 2018 we exercised our
second renewal option for a period ending in July 2021, and in May 2021 we exercised our third renewal option for a
period ending in July 2024. 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 October 2019, we provided a termination notice for our
New Braunfels, Texas agreement to be effective May 2020. In November 2020, we provided a termination notice for
one of our Englewood, Colorado agreements to be effective May 2021. 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 us in Monee, Illinois and Spokane, Washington through August 2022. In November 2021, we exercised
our right to renew the collocation agreements at Gilbert, Arizona, Cheyenne, Wyoming, Spokane, Washington,
Englewood, Colorado and Monee, Illinois for a period ending in February 2025. Generally, we may renew our
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. In September 2019, in connection with the BSS
Transaction, we entered into an agreement pursuant to which DISH Network provided us with certain additional
collocation space in Cheyenne, Wyoming for a period that ended in September 2020. The fees for the services
provided under these agreements depend on the number of racks located at the location.
Also in connection with the BSS Transaction, in September 2019, we entered into an agreement pursuant to which
DISH Network provides us with antenna space and power in Cheyenne, Wyoming for a period of five years
commencing in August 2020, with four three-year renewal terms, with prior written notice of renewal required no
more than 120 days but no less than 90 days prior to the end of the then-current term. In March 2021, we entered
into additional agreements pursuant to which DISH Network provides us with antenna space and power in
Cheyenne, Wyoming, and the right to use an antenna and certain space in Gilbert, Arizona. Both agreements are
for a period of five years with four three-year renewal terms, with prior written notice of renewal required no more
than 120 days but no less than 90 days prior to the end of the then-current term.
Hughes Broadband Master Services Agreement. In conjunction with the launch of our EchoStar XIX satellite, in
March 2017, we and DISH Network entered into a master service agreement (the “Hughes Broadband MSA”)
pursuant to which DISH Network, among other things: (i) has the right, but not the obligation, to market, promote
and solicit orders and upgrades for our Gen 5 HughesNet service and related equipment and other
telecommunication services and (ii) installs Gen 5 HughesNet service equipment with respect to activations
generated by DISH Network. Under the Hughes Broadband MSA, we and DISH Network make certain payments to
each other relating to sales, upgrades, purchases and installation services. The current term of the Hughes
Broadband MSA is through March 2023 with automatic renewal for successive one-year terms. Either party has the
ability to terminate the Hughes Broadband 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 Hughes Broadband MSA, we will continue to provide our Gen
5 HughesNet service to subscribers and make certain payments to DISH Network pursuant to the terms and
conditions of the Hughes Broadband MSA. We incurred sales incentives and other costs under the Hughes
Broadband MSA totaling $8.4 million, $16.6 million and $17.1 million for the years ended December 31, 2021, 2020
and 2019, respectively.
2019 TT&C Agreement. In September 2019, in connection with the BSS Transaction, we entered into an
agreement pursuant to which DISH Network provides TT&C services to us for a period ending in September 2021,
with the option for us to renew for a one-year period upon written notice at least 90 days prior to the initial expiration
(the “2019 TT&C Agreement”). In June 2021, we amended the 2019 TT&C Agreement to extend the term until
September 2022 and added the option for us to renew the 2019 TT&C Agreement up to an additional three years.
The fees for services provided under the 2019 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. Any party is able to terminate
the 2019 TT&C Agreement for any reason upon 12 months’ notice.
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Referral Marketing Agreement. In June 2021, we and DISH Network entered into an agreement pursuant to
which we will pre-qualify prospects contacting Hughes call centers and transfer those prospects to DISH Network
for introduction to DISH Network’s video services, for prospects that convert Hughes will receive a commission.
This agreement has an indefinite term and, after June 2022, may be terminated by either party upon 90 days’ prior
written notice.
Other Receivables - DISH Network
The following table presents our other receivables owed from DISH Network:
Other receivables - DISH Network, current
Other receivables - DISH Network, noncurrent
As of December 31,
2020
2021
$
$
12,705 $
77,920 $
—
92,680
Tax Sharing Agreement. Effective December 2007, we and DISH Network entered into a tax sharing agreement
(the “Tax Sharing Agreement”) in connection with the Spin-off. This agreement governs our and DISH Network’s
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 us for such taxes. However, DISH Network is not liable for and does not indemnify us 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 Code, because of: (i) a direct or indirect acquisition of
any of our stock, stock options or assets; (ii) any action that we take or fail to take or (iii) any action that we 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, we 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 our consolidated federal income
tax returns for certain tax years prior to and for the year of the Spin-off, in September 2013, we 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 our consolidated tax returns. Prior to the agreement with DISH Network in 2013, the federal
tax benefits were reflected as a deferred tax asset for depreciation and amortization, which was netted in our non-
current deferred tax liabilities. The agreement with DISH Network in 2013 requires DISH Network to pay us the
federal tax benefit it receives at such time as we would have otherwise been able to realize such tax benefit. We
recorded a non-current receivable from DISH Network in Other receivables - DISH Network and a corresponding
increase in our Deferred tax liabilities, net to reflect the effects of this agreement in September 2013. In addition, in
September 2013, we and DISH Network agreed upon a tax sharing arrangement for filing certain combined state
income tax returns and a method of allocating the respective tax liabilities between us and DISH Network for such
combined returns, through the taxable period ending on December 31, 2017 (the “State Tax Arrangement”).
In August 2018, we and DISH Network amended the Tax Sharing Agreement and the 2013 agreements (the “Tax
Sharing Amendment”). Under the Tax Sharing Amendment, to the extent permitted by applicable tax law, DISH
Network is entitled to apply the benefit of our 2009 net operating losses (the “SATS 2009 NOLs”) to DISH Network’s
federal tax return for the year ended December 31, 2008, in exchange for DISH Network paying us over time the
value of the net annual federal income taxes paid by us that would have been otherwise offset by the SATS 2009
NOLs. The Tax Sharing Amendment also requires us and DISH Network to pay the other for the benefits of certain
past and future federal research and development tax credits that we or DISH Network receive or received as a
result of being part of a controlled group under the Code, and requires DISH Network to compensate us for certain
past tax losses utilized by DISH Network and for certain past and future excess California research and
development tax credits generated by us and used by DISH Network. In addition, the Tax Sharing Amendment
extends the term of the State Tax Arrangement to the earlier of termination of the Tax Sharing Agreement, a change
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in control of either us or DISH Network or, for any particular state, if we and DISH Network no longer file a combined
tax return for such state.
We and DISH Network filed combined income tax returns in certain states from 2008 through 2019. We have
earned and recognized tax benefits for certain state income tax credits that we would be unable to fully utilize
currently if we had filed separately from DISH Network. We have charged Additional paid-in capital in prior periods
when DISH Network has utilized such tax benefits. We expect to increase Additional paid-in capital upon receipt of
any consideration that DISH Network pays to us in exchange for these tax credits. For the years ended December
31, 2020 and 2019, DISH Network has utilized tax benefits of $2.2 million and tax provisions of $1.6 million,
respectively.
Other Agreements
Master Transaction Agreement. In May 2019, we and BSS Corp. entered into the Master Transaction Agreement
with DISH and Merger Sub with respect to the BSS Transaction. Pursuant to the terms of the Master Transaction
Agreement, on September 10, 2019: (i) we transferred the BSS Business to BSS Corp.; (ii) we completed the
Distribution; and (iii) immediately after the Distribution, (1) BSS Corp. became a wholly-owned subsidiary of DISH
such that DISH owns and operates the BSS Business and (2) each issued and outstanding share of BSS Common
Stock owned by EchoStar stockholders was converted into the right to receive 0.23523769 shares of DISH
Common Stock. Following the consummation of the BSS Transaction, we no longer operate the BSS Business,
which was a substantial portion of our ESS segment. The Master Transaction Agreement contained customary
representations and warranties by us and DISH Network, including our representations relating to the assets,
liabilities and financial condition of the BSS Business, and representations by DISH Network relating to its financial
condition and liabilities. We and DISH Network have agreed to indemnify each other against certain losses with
respect to breaches of certain representations and covenants and certain retained and assumed liabilities,
respectively.
BSS Transaction Intellectual Property and Technology License Agreement. Effective September 2019, in
connection with the BSS Transaction, we and DISH Network entered into an intellectual property and technology
license agreement (the “BSS IPTLA”) pursuant to which we and DISH Network license to each other certain
intellectual property and technology. The BSS IPTLA will continue in perpetuity, unless mutually terminated by the
parties. Pursuant to the BSS IPTLA, we granted to DISH Network a license to our intellectual property and
technology for use by DISH Network, among other things, in connection with its continued operation of the BSS
Business acquired pursuant to the BSS Transaction, including a limited license to use the “ESS” and “ECHOSTAR
SATELLITE SERVICES” trademarks during a transition period. EchoStar retains full ownership of the “ESS” and
“ECHOSTAR SATELLITE SERVICES” trademarks. In addition, DISH Network granted a license back to us, among
other things, for the continued use of all intellectual property and technology that is used in our retained businesses
but the ownership of which was transferred to DISH Network pursuant to the BSS Transaction.
BSS Transaction Tax Matters Agreement. Effective September 2019, in connection with the BSS Transaction,
we, BSS Corp. and DISH entered into a tax matters agreement. This agreement governs certain of our rights,
responsibilities and obligations with respect to taxes of the BSS Business transferred pursuant to the BSS
Transaction. Generally, we are responsible for all tax returns and tax liabilities for the BSS Business for periods
prior to the BSS Transaction and DISH is responsible for all tax returns and tax liabilities for the BSS Business from
and after the BSS Transaction. Both we and DISH made certain tax-related representations and are subject to
various tax-related covenants after the consummation of the BSS Transaction. Both we and DISH Network have
agreed to indemnify each other for certain losses if there is a breach of any the tax representations or violation of
any of the tax covenants in the tax matters agreement and that breach or violation results in the failure of the BSS
Transaction being treated as a transaction that is tax-free for EchoStar or its stockholders for U.S. federal income
tax purposes. In addition, DISH Network has agreed to indemnify us if the BSS Business is acquired, either directly
or indirectly (e.g., via an acquisition of DISH Network), by one or more persons, where either it took an action, or
knowingly facilitated, consented to or assisted with an action by its stockholders, that resulted in the failure of the
BSS Transaction being treated as a transaction that is tax-free for EchoStar and its stockholders for U.S. federal
income tax purposes. This tax matters agreement supplements the Tax Sharing Agreement outlined above and the
Share Exchange Tax Matters Agreement outlined below, both of which continue in full force and effect.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
BSS Transaction Employee Matters Agreement. Effective September 2019, in connection with the BSS
Transaction, we and DISH Network entered into an employee matters agreement that addressed the transfer of
employees from us to DISH Network, including certain benefit and compensation matters and the allocation of
responsibility for employee related liabilities relating to current and past employees of the BSS Business. DISH
Network assumed employee-related liabilities relating to the BSS Business as part of the BSS Transaction, except
that we are responsible for certain pre-BSS Transaction compensation and benefits for employees who transferred
to DISH Network in connection with the BSS Transaction.
Share Exchange Agreement. In February 2017 we consummated the Share Exchange, following which we no
longer operate 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, we 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 contained customary
representations and warranties by the parties, including representations by us related to the transferred assets,
assumed liabilities and the financial condition of the transferred businesses. We and DISH Network 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
us or DISH causes the transaction to be taxable to the other party after closing.
Share Exchange Intellectual Property and Technology License Agreement. Effective March 2017, in
connection with the Share Exchange, we and DISH Network entered into an intellectual property and technology
license agreement (“IPTLA”) pursuant to which we and DISH Network 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, we granted to DISH Network a license to our 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 us, among other things, for the continued use of all intellectual property and technology that is used in our
retained businesses but the ownership of which was transferred to DISH Network pursuant to the Share Exchange.
Share Exchange Tax Matters Agreement. Effective March 2017, in connection with the Share Exchange, we and
DISH entered into a tax matters agreement. This agreement governs certain of our rights, responsibilities and
obligations with respect to taxes of the transferred businesses pursuant to the Share Exchange. Generally, we are
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 we and DISH Network made certain tax-related
representations and are subject to various tax-related covenants after the consummation of the Share Exchange.
Both we 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 us 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 above which continues in full force and effect.
Share Exchange Employee Matters Agreement. Effective March 2017, in connection with the Share Exchange,
we and DISH Network entered into an employee matters agreement that addressed the transfer of employees from
us to DISH Network, including certain benefit and compensation matters and the allocation of responsibility for
employee related liabilities relating to current and past employees of the transferred businesses. DISH Network
assumed employee-related liabilities relating to the transferred businesses as part of the Share Exchange, except
that we are responsible for certain pre-Share Exchange employee related litigation, and compensation and benefits
for employees who transferred to DISH Network in connection with the Share Exchange.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 20. RELATED PARTY TRANSACTIONS - OTHER
Hughes Systique Corporation
We contract with Hughes Systique Corporation (“Hughes Systique”) for software development services. In addition
to our approximately 42% ownership in Hughes Systique, Mr. Pradman Kaul, the President of our subsidiary
Hughes Communications and a member of our board of directors, and his brother, who is the Chief Executive
Officer and President of Hughes Systique, own in the aggregate approximately 25%, on an undiluted basis, of
Hughes Systique’s outstanding shares as of December 31, 2021. 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 these Consolidated Financial Statements.
TerreStar Solutions
DISH Network owns more than 15% of TerreStar Solutions, Inc. (“TSI”). In May 2018, we and TSI entered into an
equipment and services agreement pursuant to which we design, manufacture and install upgraded ground
communications network equipment for TSI’s network and provide, among other things, warranty and support
services. We recognized revenue of $1.9 million, $4.4 million and $12.5 million for the years ended December 31,
2021, 2020 and 2019, respectively. As of December 31, 2020, we had $0.4 million of trade accounts receivable
from TSI.
Global IP
In May 2017, we entered into an agreement with Global-IP Cayman (“Global IP”) providing for the sale of certain
equipment and services to Global IP. Mr. William David Wade, a member of our board of directors, served as a
member of the board of directors of Global IP and as an executive advisor to the Chief Executive Officer of Global
IP from September 2017 until April 2019 and from September 2017 until December 2019, respectively. In August
2018, we and Global IP amended the agreement to: (i) change certain of the equipment and services to be provided
to Global IP, (ii) modify certain payment terms, (iii) provide Global IP an option to use one of our test lab facilities
and (iv) effectuate the assignment of the agreement from Global IP to one of its wholly-owned subsidiaries. In
February 2019, we terminated the agreement as a result of Global IP’s defaults resulting from its failure to make
payments to us as required under the terms of the agreement and we reserved our rights and remedies against
Global IP under the agreement. We have not recognized any revenue since the termination of this agreement. As of
December 31, 2021 and 2020, we were owed $7.5 million from Global IP.
Maxar Technologies Inc.
Mr. Jeffrey Tarr, who joined our board of directors in March 2019, served as a consultant and advisor to Maxar
Technologies Inc. and its subsidiaries (“Maxar Tech”) through May 2019. We previously entered into agreements
with Maxar Tech for the manufacture and certain other services of the EchoStar IX satellite, the EchoStar XVII
satellite, the EchoStar XIX satellite, the EchoStar XXI satellite and the EchoStar XXIV satellite and our former
EchoStar XI satellite, EchoStar XIV satellite, EchoStar XVI satellite and EchoStar XXIII satellite. Maxar Tech
provides us with anomaly support for these satellites once launched pursuant to the terms of the agreements.
Maxar Tech also provides a warranty on one of these satellites and may be required to pay us certain amounts
should the satellite not operate according to certain performance specifications. Our obligations to pay Maxar Tech
under these agreements during the design life of the applicable satellites may be reduced if the applicable satellites
do not operate according to certain performance specifications. We incurred aggregate costs payable to Maxar
Tech under these agreements of $19.7 million, $23.9 million and $90.3 million for the years ended December 31,
2021, 2020 and 2019, respectively. At both December 31, 2021 and 2020, we had no trade payable to Maxar Tech.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 21. COMMITMENTS AND CONTINGENCIES
Commitments
The following table summarizes our contractual obligations as of December 31, 2021:
Payments Due in the Years Ending December 31,
Long-term debt (1)
Interest on long-term debt (2)
Satellite-related commitments (3)
Operating lease obligations (4)
Finance lease obligations (5)
Total (6)(7)
$ 1,500,000 $
2022
2023
2024
2025
— $
— $
— $
2026
— $ 1,500,000 $
Thereafter
—
445,315
89,063
342,173
140,843
202,345
24,014
130
130
89,063
24,847
23,479
—
89,063
22,705
20,278
—
89,063
23,121
16,428
—
89,063
—
21,652
109,005
15,564
102,582
—
—
Total
$ 2,489,963 $ 254,050 $ 137,389 $ 132,046 $ 128,612 $ 1,626,279 $ 211,587
(1) Assumes all long-term debt is outstanding until scheduled maturity.
(2) Includes interest on long-term debt.
(3) Includes payments pursuant to: i) agreements for the construction of the EchoStar XXIV satellite, ii) the EchoStar XXIV launch contract, iii)
regulatory authorizations, non-lease costs associated with our finance lease satellites, in-orbit incentives relating to certain satellites and
commitments for satellite service arrangements.
(4) Operating leases consist primarily of leases for office space, data centers and satellite-related ground infrastructure.
(5) Finance leases consist primarily of leases for satellite capacity.
(6) The table excludes amounts related to deferred tax liabilities, unrecognized tax positions and certain other amounts recorded in our non-
current liabilities as the timing of any payments is uncertain.
(7) The table excludes long-term deferred revenue and other long-term liabilities that do not require future cash payments.
In certain circumstances, the dates on which we are obligated to pay our contractual obligations could change.
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 tripled.
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 parties 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 parties 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.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Certain Arrangements with DISH Network
In connection with our spin-off from DISH in 2008, we 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, we assumed certain liabilities that relate to 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 we will generally only be liable for our acts or omissions following
the Spin-off and DISH Network will indemnify us 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.
In connection with the Share Exchange and BSS Transaction, we entered into the Share Exchange Agreement and
the Master Transaction Agreement, respectively, 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 us and DISH Network for, in the case
of the Share Exchange, certain pre-existing liabilities and legal proceedings and, in the case of the BSS
Transaction, certain losses with respect to breaches of certain representations and covenants and certain liabilities.
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 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
legal proceedings are charged to expense as incurred.
For certain proceedings, 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, motions or other proceedings; (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, tribunal, other body 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”). In December 2019, we entered into a comprehensive settlement agreement with Elbit
pursuant to which we paid a total of $33.0 million in satisfaction of all amounts relating to these matters and all open
proceedings, including appeals, were dismissed with prejudice.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Shareholder Litigation
On July 2, 2019, the City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust,
purporting to sue on behalf of a class of EchoStar Corporation’s stockholders, filed a complaint in the District Court
of Clark County, Nevada against our directors, Charles W. Ergen, R. Stanton Dodge, Anthony M. Federico,
Pradman P. Kaul, C. Michael Schroeder, Jeffrey R. Tarr, William D. Wade, and Michael T. Dugan; our chief financial
officer, David J. Rayner; EchoStar Corporation; our subsidiary Hughes Satellite Systems Corporation (“HSSC”); our
former subsidiary BSS Corp.; and DISH and its subsidiary Merger Sub. On September 5, 2019, the defendants filed
motions to dismiss. On October 11, 2019, the plaintiffs filed an amended complaint removing Messrs. Dodge,
Federico, Kaul, Schroeder, Tarr and Wade as defendants. The amended complaint alleges that Mr. Ergen, as our
controlling stockholder, breached fiduciary duties to EchoStar Corporation’s minority stockholders by structuring the
BSS Transaction with inadequate consideration and improperly influencing our and HSSC’s boards of directors to
approve the BSS Transaction. The amended complaint also alleges that the other defendants aided and abetted
such alleged breaches. The plaintiffs seek equitable and monetary relief, including the issuance of additional DISH
Common Stock, and other costs and disbursements, including attorneys’ fees on behalf of the purported class. On
November 11, 2019, we and the other defendants filed separate motions to dismiss plaintiff’s amended complaint
and during a hearing on January 13, 2020 the court denied these motions. On February 10, 2020, we and the other
defendants filed answers to the amended complaint. The Court certified plaintiff’s class on January 11, 2021. On
June 18, 2021, the parties executed a settlement agreement to resolve all claims in this case. On the same day, the
parties filed a joint motion for preliminary approval of the settlement agreement. The motion was granted by an
order dated July 30, 2021. On December 9, 2021, the Court held a final settlement hearing. On December 10,
2021, the Court issued an Order granting final approval of the settlement agreement.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
License Fee Dispute with Government of India, Department of Telecommunications
In 1994, the Government of India promulgated a “National Telecommunications Policy” under which the government
liberalized the telecommunications sector and required telecommunications service providers to pay fixed license
fees. Pursuant to this policy, our subsidiary Hughes Communications India Private Limited (“HCIPL”), formerly
known as Hughes Escorts Communications Limited, obtained a license to operate a data network over satellite
using VSAT systems. In 2002, HCIPL’s license was amended pursuant to a new government policy that was first
established in 1999. The new policy eliminated the fixed license fees and instead required each telecommunications
service provider to pay license fees based on its adjusted gross revenue (“AGR”). In March 2005, the Indian
Department of Telecommunications (“DOT”) notified HCIPL that, based on its review of HCIPL’s audited accounts
and AGR statements, HCIPL must pay additional license fees and penalties and interest on such fees and penalties.
HCIPL responded that the DOT had improperly calculated its AGR by including revenue from licensed and
unlicensed activities. The DOT rejected this explanation and in 2006, HCIPL filed a petition with an administrative
tribunal (the “Tribunal”), challenging the DOT’s calculation of its AGR. The DOT also issued license fee
assessments to other telecommunications service providers and a number of similar petitions were filed by several
other such providers with the Tribunal. These petitions were amended, consolidated, remanded and re-appealed
several times. On April 23, 2015, the Tribunal issued a judgment affirming the DOT’s calculation of AGR for the
telecommunications service providers but reversing the DOT’s imposition of interest, penalties and interest on such
penalties as excessive. Over subsequent years, the DOT and HCIPL and other telecommunications service
providers, respectively, filed several appeals of the Tribunal’s ruling. On October 24, 2019, the Supreme Court of
India (“Supreme Court”) issued an order (the “October 2019 Order”) affirming the license fee assessments imposed
by the DOT, including its imposition of interest, penalties and interest on the penalties, but without indicating the
amount HCIPL is required to pay the DOT, and ordering payment by January 23, 2020. On November 23, 2019,
HCIPL and other telecommunication service providers filed a petition asking the Supreme Court to reconsider the
October 2019 Order. The petition was denied on January 20, 2020. On January 22, 2020, HCIPL and other
telecommunication service providers filed an application requesting that the Supreme Court modify the October
2019 Order to permit the DOT to calculate the final amount due and extend HCIPL’s and the other
telecommunication service providers’ payment deadline. On February 14, 2020, the Supreme Court directed HCIPL
and the other telecommunication service providers to explain why the Supreme Court should not initiate contempt
proceedings for failure to pay the amounts due. During a hearing on March 18, 2020, the Supreme Court ordered
that all amounts that were due before the October 2019 Order must be paid, including interest, penalties and
interest on the penalties. The Supreme Court also ordered that the parties appear for a further hearing addressing,
potentially among other things, a proposal by the DOT to allow for extended or deferred payments of amounts due.
On June 11, 2020, the Supreme Court ordered HCIPL and the other telecommunication service providers to submit
affidavits addressing the proposal made by the DOT to extend the time frame for payment of the amounts owed and
for HCIPL and the other telecommunication providers to provide security for such payments. On September 1,
2020, the Supreme Court issued a judgment permitting a 10-year payment schedule. Under this payment schedule,
HCIPL is required to make an annual payment every March 31, through 2031. Following the Supreme Court of
India’s October 2019 judgment, HCIPL made payments during the first quarter of 2020, and an additional payment
on March 31, 2021.
The following table presents the components of the accrual:
Additional license fees
Penalties
Interest and interest on penalties
Less: Payments
Total accrual
As of December 31,
2020
2021
$
$
3,812 $
3,912
81,389
(8,451)
80,662 $
3,890
3,992
76,871
(2,975)
81,778
Any eventual payments made with respect to the ultimate outcome of this matter may be different from our accrual
and such differences could be significant.
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Other
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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, we are 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 we 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, we from time to time receive 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.
We also indemnify our directors, officers and employees for certain liabilities that might arise from the performance
of their responsibilities for us. Additionally, in the normal course of its business, we enter into contracts pursuant to
which we may make a variety of representations and warranties and indemnify the counterparty for certain losses.
Our possible exposure under these arrangements cannot be reasonably estimated as this involves the resolution of
claims made, or future claims that may be made, against us or our officers, directors or employees, the outcomes of
which are unknown and not currently predictable or estimable.
NOTE 22. SEGMENT REPORTING
Business segments are 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
operate in two business segments, Hughes segment and ESS segment.
The primary measure of segment profitability that is reported regularly to our CODM is earnings before interest,
taxes, depreciation and amortization, and net income (loss) attributable to non-controlling interests (“EBITDA”).
Total assets by segment have not been reported herein because the information is not provided to our CODM on a
regular basis.
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ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table presents total revenue, capital expenditures and EBITDA for each of our business segments:
For the year ended December 31, 2021
External revenue
Intersegment revenue
Total revenue
Capital expenditures
EBITDA
For the year ended December 31, 2020
External revenue
Intersegment revenue
Total revenue
Capital expenditures
EBITDA
For the year ended December 31, 2019
External revenue
Intersegment revenue
Total revenue
Capital expenditures
EBITDA
Hughes
ESS
Corporate and
Other
Consolidated
Total
$
1,956,226 $
17,295 $
12,199 $
1,985,720
—
384
(384)
—
$
1,956,226 $
17,679 $
11,815 $
1,985,720
$
$
296,303 $
— $
142,127 $
781,824 $
9,185 $
(88,468) $
438,430
702,541
$
1,860,834 $
16,237 $
10,836 $
1,887,907
—
1,161
(1,161)
—
$
1,860,834 $
17,398 $
9,675 $
1,887,907
$
$
355,197 $
41 $
53,560 $
727,608 $
7,873 $
(118,606) $
408,798
616,875
$
1,852,742 $
15,131 $
18,208 $
1,886,081
—
1,126
(1,126)
—
$
1,852,742 $
16,257 $
17,082 $
1,886,081
$
$
308,781 $
— $
109,293 $
625,660 $
6,994 $
(55,055) $
418,074
577,599
The following table reconciles Income (loss) from continuing operations before income taxes in the Consolidated
Statements of Operations to EBITDA:
For the years ended December 31,
2020
2019
2021
Income (loss) from continuing operations before income
taxes
$
Interest income, net
Interest expense, net of amounts capitalized
Depreciation and amortization
Net loss (income) attributable to non-controlling
interests
EBITDA
128,347 $
(22,801)
95,512
491,329
(27,835) $
(39,982)
147,927
525,011
10,154
11,754
$
702,541 $
616,875 $
F-70
(93,165)
(82,352)
251,016
490,765
11,335
577,599
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Geographic Information
The following table summarizes total long-lived assets attributed to the North America, South and Central America
and other foreign locations:
Long-lived assets:
North America
South and Central America
Other
Total long-lived assets
NOTE 23. SUPPLEMENTAL FINANCIAL INFORMATION
Research and Development
As of December 31,
2020
2021
$
2,959,316 $
2,954,421
267,429
106,376
311,063
133,621
$
3,333,121 $
3,399,105
The following table presents the research and development costs incurred in connection with customers’ orders:
For the years ended December 31,
2020
2019
2021
Cost of sales - equipment
Research and development expenses
$
$
29,636 $
31,777 $
19,788 $
29,448 $
24,495
25,739
Advertising Costs
We incurred advertising expense of $82.4 million, $65.1 million and $88.2 million for the years ended December 31,
2021, 2020 and 2019, respectively.
Cash and Cash Equivalents and Restricted Cash
The following table reconciles cash and cash equivalents and restricted cash, as presented in the Consolidated
Balance Sheets to the total of the same as presented in the Consolidated Statements of Cash Flows:
Cash and cash equivalents, including restricted
amounts, beginning of period:
Cash and cash equivalents
Restricted cash
Total cash and cash equivalents, included restricted
amounts, beginning of period
Cash and cash equivalents, including restricted
amounts, end of period:
Cash and cash equivalents
Restricted cash
Total cash and cash equivalents, included restricted
amounts, end of period
$
$
$
$
For the years ended December 31,
2021
2020
2019
896,005 $
1,519,431 $
928,306
807
2,458
1,189
896,812 $
1,521,889 $
929,495
535,894 $
980
896,005 $
807
1,519,431
2,458
536,874 $
896,812 $
1,521,889
F-71
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Other Current Assets, Net and Other Non-current Assets, Net
The following table presents the components of Other current assets, net and Other non-current assets, net:
As of December 31,
2020
2021
Other current assets, net:
Trade accounts receivable - DISH Network
$
4,244 $
Inventory
Prepaids and deposits
Other receivables - DISH Network
Other, net
Total other current assets
Other non-current assets, net:
Other receivables - DISH Network
Restricted marketable investment securities
Restricted cash
Deferred tax assets, net
Capitalized software, net
Contract acquisition costs, net
Contract fulfillment costs, net
Other, net
103,084
57,287
12,705
21,124
5,612
97,992
55,381
—
30,836
$
198,444 $
189,821
$
77,920 $
92,680
13,262
980
5,417
9,090
807
1,781
124,701
116,661
82,986
1,721
31,254
99,837
2,580
29,485
Total other non-current assets, net
$
338,241 $
352,921
The following table presents the activity in our allowance for doubtful accounts, which is included within Other, net in
each of Other current assets, net and Other non-current assets, net in the table above:
For the years ended December 31,
2020
2021
Other current
assets, net
Other non-
current
assets, net
Other current
assets, net
Other non-
current
assets, net
Balance at beginning of period
$
1,747 $
12,869 $
— $
Credit losses (1)
Foreign currency translation
Deductions
—
(1,747)
3,328
1,159
—
(647)
1,595
152
—
—
13,378
(509)
—
Balance at end of period
1)
$
— $
16,709 $
1,747 $
12,869
The impact of adopting ASC 326 on January 1, 2020 was a net increase to our allowance for doubtful accounts largely driven by a
$13.4 million reclassification from Trade accounts receivables and contracts assets, net.
F-72
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Accrued Expenses and Other Current Liabilities and Other Non-Current Liabilities
The following table presents the components of Accrued expenses and other current liabilities and Other non-
current liabilities:
As of December 31,
2020
2021
Accrued expenses and other current liabilities:
Trade accounts payable - DISH Network
Accrued interest
Accrued compensation
Accrued taxes
Operating lease obligation
Accrual for license fee dispute
Other
$
503 $
39,395
63,935
11,738
16,781
11,178
65,912
Total accrued expenses and other current liabilities
$
209,442 $
752
42,388
62,299
20,297
14,699
81,778
77,786
299,999
Other non-current liabilities:
Accrual for license fee dispute
Other
Total other non-current liabilities
Inventory
The following table presents the components of inventory:
Raw materials
Work-in-process
Finished goods
Total inventory
$
$
69,484 $
66,942
136,426 $
—
70,893
70,893
As of December 31,
2020
2021
$
13,778 $
11,705
77,601
$
103,084 $
4,564
8,280
85,148
97,992
F-73
Table of Contents
ECHOSTAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Capitalized Software Costs
The following tables present the activity related to our capitalized software cost:
Net carrying amount of externally marketed software
$
Externally marketed software under development and not yet placed into service $
124,701 $
57,357 $
116,661
72,047
As of December 31,
2021
2020
For the years ended December 31,
2020
2019
2021
Capitalized costs related to development of externally
marketed software
Amortization expense relating to externally marketed
software
$
$
Weighted-average useful life (in years)
4
33,543 $
38,655 $
29,310
25,288 $
23,780 $
24,284
Supplemental and Non-cash Investing and Financing Activities
The following table presents the supplemental and non-cash investing and financing activities:
For the years ended December 31,
2020
2019
2021
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized
Cash paid for income taxes
Non-cash investing and financing activities:
Employee benefits paid in Class A common stock
Increase (decrease) in capital expenditures included in
accounts payable, net
Non-cash assets exchanged for BSS Transaction
Non-cash net assets received in exchange for a 20%
ownership interest in our existing Brazilian subsidiary
$
$
$
$
$
$
NOTE 24. SUBSEQUENT EVENT
87,901 $
29,420 $
139,280 $
195,331
15,254 $
3,575
7,125 $
6,921 $
6,654
381 $
— $
(6,935) $
— $
(11,111)
532,855
— $
— $
94,918
In May 2019, we entered into an agreement with Bharti Airtel Limited (“BAL”) and its subsidiary, Bharti Airtel
Services Limited (together with BAL, “Bharti”), pursuant to which Bharti will contribute its very small aperture
terminal (“VSAT”) telecommunications services and hardware business in India to our two existing Indian
subsidiaries that conduct our VSAT services and hardware business. On January 4, 2022, the formation of this joint
venture was announced, with Bharti obtaining a 33% ownership interest in the combined business. The joint
venture combines the VSAT businesses of both companies to offer flexible and scalable enterprise networking
solutions using satellite connectivity for primary transport, back-up and hybrid implementation.
F-74
COMPARATIVE PERFORMANCE
The following graph sets forth the cumulative total stockholder return on EchoStar Corporation’s Class A Shares
during the period from December 31, 2016 to December 31, 2021. The graph assumes the investment on
December 31, 2016 of $100 in (i) our Class A Shares, (ii) the NASDAQ Stock Market Index (US Companies), and (iii)
our chosen industry peer group for the year ended December 31, 2021 (the “Peer Group Index”). The graph reflects
(i) reinvestment of dividends, (ii) market capitalization weighting and (iii) the spin-off in 2019 of the portion of our
business that managed, marketed and provided (a) broadcast satellite services and (b) telemetry, tracking and
control services and certain related assets and business operations.
The Peer Group Index is comprised of the following publicly traded companies: Gilat Satellite Networks Ltd., ViaSat,
Inc., Intelsat S.A., SES S.A., and Eutelsat Communications S.A. Although the companies included in the Peer Group
Index were selected because of similar industry characteristics, they are not entirely representative of our business.
Historical point-in-time daily foreign currency exchange rates were utilized for the calculations for foreign entities
listed only on foreign exchanges included in the Peer Group Index. The stock price performance shown on this graph
is not necessarily indicative of future price performance of our Class A Shares.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2021
350.00
300.00
250.00
200.00
150.00
100.00
50.00
-
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
EchoStar Corp.
NASDAQ Stock Market
Peer Group Index
Total Return Analysis
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
EchoStar Corp.
$ 100.00
$ 116.56
$ 71.45
$ 104.04
$ 50.90
$ 63.30
NASDAQ Stock Market
Index (U.S. Companies)
$ 100.00
$ 128.24
$ 123.26
$ 166.68
$ 239.42
$ 290.63
Peer Group Index
$ 100.00
$ 93.80
$ 123.26
$ 148.58
$ 91.44
$ 99.30
[This page intentionally left blank]
CORPORATE PROFILE
ANNUAL MEETING
The 2022 Annual Meeting of
Shareholders will be held on
April 28, 2022.
For additional information,
contact:
Investor Relations Department
EchoStar Corporation
100 Inverness Terrace East
Englewood, Colorado 80112
echostar.com
EXECUTIVE OFFICERS
Charles W. Ergen
Chairman
Michael T. Dugan
Chief Executive Officer
and President
Pradman P. Kaul
President,
Hughes Communications, Inc.
Anders N. Johnson
Chief Strategy Officer and President,
EchoStar Satellite Services L.L.C.
Dean A. Manson
Executive Vice President,
General Counsel and Secretary
David J. Rayner
Executive Vice President,
Chief Financial Officer, Chief
Operating Officer and Treasurer
BOARD OF DIRECTORS
Charles W. Ergen
Chairman of the Board
Michael T. Dugan
Director
R. Stanton Dodge
Director
Lisa W. Hershman
Director
Pradman P. Kaul
Director
C. Michael Schroeder
Director
Jeffrey R. Tarr
Director
William D. Wade
Director
TRANSFER AGENT
Computershare
Investor Services
462 South 4th Street, Suite 1600
Louisville, KY 40202
EchoStar.com
NASDAQ: SATS | 100 Inverness Terrace East Englewood, CO 80113 | 303.706.4000