Item 5. Item 10. Index to Consolidated Financial Statements Securities and Exchange Commission (“SEC”). law. “SATS.” segments: Other.” customers. We also intend to selectively explore opportunities to pursue investments, commercial alliances, partnerships, joint ventures, acquisitions and other strategic initiatives, domestically and internationally that we believe may allow us to increase our market share, expand into new markets, obtain new customers, broaden our portfolio of services, products and intellectual property and strengthen our relationships with our customers. XIX satellites in Central and South America. We launched our consumer satellite broadband service in Colombia in the third quarter of 2017 and we expect to launch similar services in various other Central and South American countries in 2018. capacity requirements may change for a variety of reasons, including its ability to construct and launch its own satellites. Any termination or reduction in the services we provide to DISH Network may cause us to have unused capacity on our satellites and require that we aggressively pursue alternative sources of revenue for this business. services for information, entertainment and commerce in North America and internationally for consumers as well as aeronautical, enterprise and government customers. We may allocate significant resources for long-term initiatives that may not have a short or medium-term or any positive impact on our revenue, results of operations, or cash flow. Ka- band frequencies and, as a result, we do not have the right to use such frequency bands in Brazil. We may be subject to penalties as a result of our failure to meet these milestones. the EchoStar XXI, EchoStar XXIII and EchoStar XXIV satellites are included in “Corporate and Other” in our segment reporting. Owned: Nimiq EchoStar our results of operations or financial position. satellite. 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. Some countries may have restrictions on the services we provide and how we provide them. In addition, certain countries 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. 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. systems. business and/or environmental compliance costs, capital or other expenditures. systems, hardware, software, and firmware used in our products and services. Charles W. Ergen Michael T. Dugan David J. Rayner Pradman P. Kaul subsidiaries, most recently serving as the Chief Executive Officer of DISH Network from March 2015 to December 2017. advisor. 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 Network and 2013. or if frequencies are not available to us. products on a timely basis, which could damage our relationships with current and prospective customers and harm our business, resulting in a loss of market share, and The Tax Cuts and Jobs Act of 2017 enacted in December 2017 (the “2017 Tax Act”) limits the deductibility of interest expense for U.S. federal income tax purposes. While the 2017 Tax Act generally is likely to reduce our federal income tax obligations, if these limitations or other newly enacted provisions become applicable to us, they could minimize such reductions or otherwise require us to pay additional federal income taxes, which in turn could result in additional liquidity needs. space and cyber-attacks or physical attacks on our satellites. capacity earlier than planned and could have a material adverse effect on our business, financial condition and results of operations. their design lives. satellites and adversely affect our business and financial condition. these respects. patent claim is valid and whether a particular product infringes a valid patent claim often involves expensive and protracted litigation, even if we are ultimately successful on the merits. could be subject to regulatory penalties, fines, sanctions, enforcement actions, remediation obligations, and/or private litigation by parties whose information was improperly accessed, disclosed or misused which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, the amount and scope of insurance that we maintain against losses resulting from these events may not be sufficient to compensate us adequately for any disruptions to our business or otherwise cover our losses, including reputational harm and negative publicity as well as any litigation liability. In addition, our ability to expand and update our information technology infrastructure in response to our growth and changing needs is important to the Universal Service Fund. contribution obligations and those of third parties that provide communication services to our business. Any such change to the USF contribution rules could adversely affect our costs of providing service to our customers. In addition, changes to the USF distribution rules could intensify the competition we face by offering subsidies to competing firms and/or technologies. ownership. power to elect all of our directors and control shareholder decision on matters on which all classes of our common stock vote together. San Diego, California Englewood, Colorado (1)(4) Southfield, Las Vegas, Sao Paulo, Brazil Gurgaon, New Delhi, India Milton Keynes, United Kingdom Germantown, Black Hawk, South Englewood, Colorado First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter Revenue Total costs and expenses Operating income Net income attributable to EchoStar common stock Basic weighted-average common shares outstanding Diluted weighted-average common shares outstanding Basic earnings per share Diluted earnings per share Cash, cash equivalents and current marketable securities Total assets Total debt and capital lease obligations Total stockholders' equity Net cash flows from: Operating activities Investing activities Financing activities Other.” terminals to mobile system operators. U.S. In April 2014, we entered into a satellite services agreement pursuant to which Eutelsat do Brasil various other Central and South American countries in 2018. 2017. customers in our consumer market.The increase in contracted revenue backlog is primarily due to an increase in customer contracts from our international markets. Of the total contracted revenue backlog as of December 31, We also manage satellite operations for certain satellites owned by DISH Network. the future. operations, or cash flow. location in the second quarter of 2017. We had regulatory obligations to meet certain in-service milestones by the second quarter of 2017 for our Brazilian license at the 45 degree west longitude orbital location for the Ka-, Ku- and S-band frequencies. We have satisfied our regulatory obligations for the Ku-band frequency. On October 5, 2017, ANATEL declined our request to extend our milestone deadlines for the S- band and Ka- band frequencies and, as a result, we do not have the right to use such frequency bands in Brazil. We may be subject to penalties as a result of our failure to meet these milestones. Revenue: Equipment revenue—DISH Network Equipment revenue—other Services and other revenue—DISH Network Services and other revenue—other Total revenue Costs and Expenses: Cost of sales—equipment % of Total equipment revenue Cost of sales—services and other % of Total services and other revenue Selling, general and administrative expenses % of Total revenue Research and development expenses % of Total revenue Depreciation and amortization Impairment of long-lived asset Total costs and expenses Operating income Other Income (Expense): Interest income Interest expense, net of amounts capitalized Realized gains on marketable investment securities and other investments, net Equity in earnings (losses) of unconsolidated affiliates, net Other, net Total other expense, net Income (loss) before income taxes Income tax benefit (provision), net Net income Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock Less: Net income attributable to other noncontrolling interests Net income attributable to EchoStar Other Data: EBITDA Subscribers, end of period systems customers. 2015. to our investment in EBITDA Interest income and expense, net Depreciation and amortization Net loss attributable to noncontrolling interest in HSS Tracking Stock Net income attributable to other noncontrolling interests Income (loss) before income taxes Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA Revenue: Equipment revenue—DISH Network Equipment revenue—other Services and other revenue—DISH Network Services and other revenue—other Total revenue Costs and Expenses: Cost of sales—equipment % of Total equipment revenue Cost of sales—services and other % of Total services and other revenue Selling, general and administrative expenses % of Total revenue Research and development expenses % of Total revenue Depreciation and amortization Impairment of long-lived assets Total costs and expenses Operating income Other Income (Expense): Interest income Interest expense, net of amounts capitalized Realized gains on marketable investment securities and other investments, net Equity in losses of unconsolidated affiliates, net Other, net Total other income (expense), net Income (loss) before income taxes Income tax benefit, net Net income Less: Net income (loss) attributable to other noncontrolling interests Net income attributable to EchoStar Other Data: EBITDA Subscribers, end of period EBITDA Interest income and expense, net Depreciation and amortization Net income attributable to other noncontrolling interests Income (loss) before income taxes Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA Total revenue Capital expenditures EBITDA December 31, mutual funds. 2015. Cash flows from operating activities reflects a benefit from the disposition of the EchoStar Technologies businesses as a result of the Share Exchange. liabilities. trading securities 2017. in the first quarter of 2015 of $3.4 million. payments of debt issuance costs in 2017. Long-term debt Capital lease obligations Interest on long-term debt and capital lease obligations Satellite-related obligations Operating lease obligations Purchase and other obligations Total capital, which may not be available on acceptable terms or at all. The 2017 Tax Act limits the deductibility of interest expense for U.S. federal income tax purposes. While the 2017 Tax Act generally is likely to reduce our federal income tax obligations, if these limitations or other newly enacted provisions become applicable to us they could minimize such reductions or otherwise require us to pay additional federal income taxes, which in turn could result in additional liquidity needs. may also construct or lease additional satellites in the future to provide satellite services at additional orbital locations or to improve the quality of our satellite services. statements, business plans and current economic conditions for factors that may indicate an impairment of our investments. When we determine that an investment is impaired and the impairment is We early adopted ASU 2017-04 as of January 1, 2017. See Note 2 in our notes to consolidated financial statements in Item 15 of this report for further information. We may bypass the quantitative impairment test when we determine based on a qualitative assessment that it is not more likely than not that an indefinite-lived intangible asset is impaired. . “Services and other DISH Network. investments, other-than-temporary impairment on certain of our marketable investment securities and unrealized gains on our trading securities. certain other assets exchanged as a result of the Share Exchange. in unconsolidated entities 2017. report such that the information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC 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. generally accepted accounting principles in the United States (“GAAP”). 2017. 22, 2018 Internal Control Over Financial Reporting 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. Assets Current Assets: Cash and cash equivalents Marketable investment securities Trade accounts receivable, net of allowance for doubtful accounts of $14,188 and $13,237, respectively Trade accounts receivable—DISH Network, net of allowance for doubtful accounts of zero Inventory Prepaid expenses Deferred tax assets Other current assets Total current assets Noncurrent Assets: Restricted cash and marketable investment securities Property and equipment, net of accumulated depreciation of $2,899,353 and $2,499,889, respectively Regulatory authorizations, net Goodwill Other intangible assets, net Other investments Other receivable—DISH Network Other noncurrent assets, net Total noncurrent assets Total assets Liabilities and Stockholders' Equity Current Liabilities: Trade accounts payable Trade accounts payable—DISH Network Current portion of long-term debt and capital lease obligations Deferred revenue and prepayments Accrued compensation Accrued royalties Accrued expenses and other Total current liabilities Noncurrent Liabilities: Long-term debt and capital lease obligations, net of current portion Deferred tax liabilities Other noncurrent liabilities Total noncurrent liabilities Total liabilities Commitments and Contingencies (Note 16) Stockholders' Equity: Preferred Stock, $.001 par value, 20,000,000 shares authorized: Hughes Retail Preferred Tracking Stock, $.001 par value, 13,000,000 shares authorized, 6,290,499 issued and outstanding and zero shares issued and outstanding at December 31, 2014 and 2013, respectively Common Stock, $.001 par value, 4,000,000,000 shares authorized: Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 49,576,247 shares issued and 44,043,929 shares outstanding at December 31, 2014 and 48,370,956 shares issued and 42,838,638 shares outstanding at December 31, 2013 Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of December 31, 2014 and 2013 Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2014 and 2013 Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2014 and 2013 Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Treasury stock, at cost Total EchoStar stockholders' equity Noncontrolling interest in HSS Tracking Stock Other noncontrolling interests Total stockholders' equity Total liabilities and stockholders' equity Revenue: Equipment revenue—DISH Network Equipment revenue—other Services and other revenue—DISH Network Services and other revenue—other Total revenue Costs and Expenses: Cost of sales—equipment (exclusive of depreciation and amortization) Cost of sales—services and other (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 Other Income (Expense): Interest income Interest expense, net of amounts capitalized Realized gains on marketable investment securities and other investments (includes reclassification of realized gains on available-for-sale ("AFS") securities out of accumulated other comprehensive loss of $41, $36,312, and $175,223, respectively), net Equity in earnings (losses) of unconsolidated affiliates, net Other, net Total other income (expense), net Income (loss) before income taxes Income tax benefit (provision), net Net income Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock Less: Net income (loss) attributable to other noncontrolling interests Net income attributable to EchoStar Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (Note 2) Net income attributable to EchoStar common stock Weighted-average common shares outstanding—Class A and B common stock: Basic Diluted Earnings per share—Class A and B common stock: Basic Diluted Comprehensive Income (Loss) Net income Other comprehensive income (loss), net of tax: Foreign currency translation adjustments Unrealized gains (losses) on AFS securities and other Recognition of previously unrealized gains on AFS securities in net income Total other comprehensive loss, net of tax Comprehensive income (loss) Less: Comprehensive loss attributable to noncontrolling interest in HSS Tracking Stock Less: Comprehensive income (loss) attributable to other noncontrolling interests Comprehensive income (loss) attributable to EchoStar COMPREHENSIVE INCOME Balance, January 1, 2011 Issuances of Class A common stock: Exercise of stock options Employee benefits Employee Stock Purchase Plan Stock-based compensation Other, net Net income (loss) Unrealized losses on AFS securities, net and other Foreign currency translation adjustment Balance, December 31, 2012 Issuances of Class A common stock: Exercise of stock options Employee benefits Employee Stock Purchase Plan Stock-based compensation Excess tax benefit from stock option exercises Other, net Net income Unrealized losses on AFS securities, net and other Foreign currency translation adjustment Balance, December 31, 2013 Issuances of Class A common stock: Exercise of stock options Employee benefits Employee Stock Purchase Plan Stock-based compensation Issuance of Hughes Retail Preferred Tracking Stock (Note 2) DISH Digital exchange (Note 6) EchoStar XXI option payment, net (Note 9) Excess tax benefit from stock option exercises R&D credits utilized by DISH Network, net Net income (loss) Unrealized losses on AFS securities, net and other Foreign currency translation adjustment Balance, December 31, 2014 Cash Flows from Operating Activities: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Equity in (earnings) losses of unconsolidated affiliates, net Realized gains on marketable investment securities and other investments, net Impairment of long-lived assets Stock-based compensation Deferred tax provision (benefit) Changes in current assets and current liabilities, net: Trade accounts receivable Allowance for doubtful accounts Trade accounts receivable—DISH Network Inventory Other current assets Trade accounts payable Trade accounts payable—DISH Network Accrued expenses and other Changes in noncurrent assets and noncurrent liabilities, net Other, net Net cash flows from operating activities Cash Flows from Investing Activities: Purchases of marketable investment securities Sales and maturities of marketable investment securities Purchases of property and equipment Changes in restricted cash and marketable investment securities Capital contribution to DISH Digital Acquisition of regulatory authorizations Proceeds from asset transfer to DISH Network Purchase of strategic investments Distribution received from investment in affiliates Other, net Net cash flows from investing activities Cash Flows from Financing Activities: Net proceeds from Class A common stock options exercised and stock issued under the Employee Stock Purchase Plan Repayment of long-term debt and capital lease obligations Net proceeds from issuance of Tracking Stock (Note 2) Excess tax benefit from stock option exercises Other Net cash flows from financing activities Effect of exchange rates on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental Disclosure of Cash Flow Information: Cash paid for interest (including capitalized interest) Capitalized interest Cash paid for income taxes Employee benefits paid in Class A common stock Satellites and other assets financed under capital lease obligations Increase (decrease) in capital expenditures included in accounts payable, net Net noncash assets transferred from DISH Network in exchange for Tracking Stock (Note 2) Assets received from DISH Digital (Note 6) Capitalized in-orbit incentive obligations Reduction of capital lease obligation for AMC-16 Liabilities assumed in regulatory authorization acquisition Contribution of assets to Dish Digital Other.” Cash Property and equipment, net Current liabilities Noncurrent liabilities Transferred net assets Transferred net assets Offering costs, net of tax Deferred income taxes Reallocation based on relative liquidation values Net increase in stockholders' equity operations. Except in certain uncommon circumstances, we have not recorded deferred income taxes related to our foreign currency translation adjustments. unprofitable operations, negative cash flow, material litigation, violations of debt covenants, bankruptcy and changes in business strategy. When we determine that an investment is impaired, and the impairment is We recognize losses within operating income when we determine that the cost of inventory and commitments to purchase inventory exceed net realizable value. lives. ” We determine deferred tax assets and liabilities separately for each taxing jurisdiction and report the net amount for each jurisdiction as a noncurrent asset or liability in our consolidated balance sheets. 2016. identical debt securities on or near the measurement date are considered a strong indication of fair value. Matrix pricing techniques that consider par value, coupon rate, credit quality, maturity and other relevant features also may be used to determine fair value of our investments in marketable debt securities. Services and other revenue includes revenue from leases of satellite capacity and equipment. We agreement. Profit margins on long-term contracts 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. operations. We report unamortized debt issuance costs as a reduction of the related long-term debt in our consolidated balance sheets. Equipment Cost of sales - equipment primarily consists of inventory costs, including freight and royalties. Cost of sales - equipment generally is recognized as products are delivered to customers and related revenue is recognized. software was approximately four years as of December 31, 2017. We adopted ASU 2016-09 prospectively as of January 1, 2017. This update requires all excess tax benefits and deficiencies to be recognized as income tax expense or benefit and permits an entity to make an entity-wide policy election to either estimate forfeitures or recognize forfeitures as they occur. Upon adoption of this standard as of January 1, 2017, we recorded a $14.5 million deferred tax asset and a corresponding credit to accumulated earnings for excess tax benefits that had not previously been recognized because the related tax deductions had not reduced taxes payable. We did not change our accounting policy to estimate forfeitures in determining compensation cost. Net income attributable to EchoStar Net loss attributable to EchoStar Tracking Stock Net income attributable to EchoStar common stock Weighted-average common shares outstanding : Class A and B common stock: Basic Dilutive impact of stock awards outstanding Diluted Earnings per share: Class A and B common stock: Basic Diluted Marketable investment securities—current: Corporate bonds VRDNs Strategic equity securities Other Total marketable investment securities—current Restricted marketable investment securities(1) Total Restricted cash and cash equivalents(1) Other investments—noncurrent: Cost method. Equity method Total other investments—noncurrent Total marketable investment securities, restricted cash and cash equivalents, and other investments. available-for-sale or trading securities depending on our investment strategy for those securities. The value of our investment portfolio depends on the value of such securities and other instruments comprising the portfolio. trading securities were $46.7 million and $7.2 million as of December 31, 2017 and 2016, respectively. bonds, commercial paper and mutual funds. As of December 31, 2014 Debt securities: Corporate bonds. VRDNs Other (including restricted) Equity securities—strategic Total marketable investment securities. As of December 31, 2013 Debt securities: Corporate bonds VRDNs Other (including restricted) Equity securities—strategic Total marketable investment securities. Less than 12 months Total Cash equivalents (including restricted) Debt securities: Corporate bonds VRDNs Other (including restricted) Equity securities—strategic Total marketable investment securities Trade accounts receivable Contracts in process, net. Total trade accounts receivable Allowance for doubtful accounts Trade accounts receivable—DISH Network Total trade accounts receivable, net Finished goods Raw materials Work-in-process Total inventory Land Buildings and improvements Furniture, fixtures, equipment and other Customer rental equipment Satellites—owned Satellites acquired under capital leases Construction in progress Total property and equipment Accumulated depreciation Property and equipment, net Progress amounts for satellite construction, including prepayments under capital leases and launch costs: EchoStar XIX EchoStar XXI EchoStar XXIII EUTELSAT 65 West A EchoStar 105/SES-11 Other Uplinking equipment Other Construction in progress construction of $52.0 million, $94.4 million and $63.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. Satellites. Furniture, fixtures, equipment and other Customer rental equipment Buildings and improvements Total depreciation expense Owned: Nimiq EchoStar its Hughes segment in February 2017. Balance as of December 31, 2012 Impairment Balance as of December 31, 2013 DISH Digital exchange Balance as of December 31, 2014 Finite useful lives: Cost Accumulated amortization Net Indefinite lives Total regulatory authorizations, net Customer relationships Contract-based Technology-based Trademark portfolio Favorable leases Total other intangible assets. For the Years Ending December 31, 2015 2016 2017 2018 2019 Thereafter Total 61/2% Senior Secured Notes due 2019 75/8% Senior Notes due 2021 Other Subtotal Capital lease obligations Total debt and capital lease obligations Less: Current portion Long-term portion of debt and capital lease obligations As of December 31, 2017 and 2016, the outstanding principal balance on the 2021 Senior Unsecured Notes was $900.0 million. HSS or its subsidiaries. 2017. For the Years Ending December 31, 2015 2016 2017 2018 2019 Thereafter Total minimum lease payments Less: Amount representing lease of the orbital location and estimated executory costs (primarily insurance and maintenance) including profit thereon, included in total minimum lease payments Net minimum lease payments Less: Amount representing interest Present value of net minimum lease payments Less: Current portion Long-term portion of capital lease obligations The subleases have a remaining weighted average term of three years. Domestic Foreign Total income (loss) before income taxes Current benefit (provision): Federal State Foreign Total current benefit (provision) Deferred benefit (provision): Federal State Foreign Total deferred benefit (provision) Total income tax benefit (provision), net Statutory rate State income taxes, net of Federal benefit Dividend received deduction Permanent differences Tax credits Valuation allowance Other Total effective tax rate Deferred tax assets: Net operating losses, credit and other carryforwards Unrealized losses on investments, net Accrued expenses Stock-based compensation Other asset 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 Current portion of net deferred tax assets Noncurrent portion of net deferred tax liabilities Total net deferred tax liabilities subsidiaries and a decrease associated with unrealized gains that are capital in nature. 2018. 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 Reductions based on tax settlements Reductions based on expirations of statute of limitations Balance as of end of period 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. See Note 19 for additional information about the Share Exchange. including December 31, Held by EchoStar employees Held by DISH Network employees Total outstanding stock awards Exercise prices for stock options outstanding and exercisable as of December 31, $0.00 - $10.00 $10.01 - $15.00 $15.01 - $20.00 $20.01 - $25.00 $25.01 - $30.00 $30.01 - $35.00 $35.01 - $40.00 $40.01 and above Total options outstanding, beginning of period Granted Exercised Forfeited and cancelled Total options outstanding, end of period Performance-based options outstanding, end of period(1) Exercisable at end of period our stock options exercised was $19.6 million, $7.9 million and $14.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. Total restricted stock units outstanding, beginning of period Granted Vested Forfeited and cancelled Total restricted stock units outstanding, end of period Restricted Performance Units outstanding, end of period(1) RSUs vested and in February 2016 the remaining 33,334 RSUs vested. Research and development expenses Selling, general and administrative expenses Total stock-based compensation We do not currently intend to pay dividends on our common stock and accordingly, the dividend yield Long-term debt Capital lease obligations Interest on long-term debt and capital lease obligations Satellite-related obligations Operating lease obligations Purchase and other obligations Total and Agreement; Share Exchange 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 certain pre-existing liabilities and legal proceedings. entitled this matter may be different from our accruals and such differences could be significant. consolidated. On August matter is now concluded. Technologies business segment. The primary measure of segment profitability that is reported regularly to our CODM is earnings before interest, taxes, depreciation and amortization, or EBITDA. Effective in March 2017, we also changed our overhead allocation methodology to reflect how the CODM evaluates our segments. Historically, the costs of all corporate functions were included on an allocated basis in each of the business segments’ EBITDA. Under the revised allocation methodology, these costs are now reported and analyzed as part of “Corporate and Other” (previously “All Other and Eliminations”). Our prior period segment For the Year Ended December 31, 2014 External revenue Intersegment revenue Total revenue EBITDA Capital expenditures(1) For the Year Ended December 31, 2013 External revenue Intersegment revenue Total revenue EBITDA Capital expenditures(1) For the Year Ended December 31, 2012 External revenue Intersegment revenue Total revenue EBITDA Capital expenditures(1) The following table reconciles total consolidated EBITDA to reported EBITDA Interest income and expense, net Depreciation and amortization Net loss attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests Income (loss) before income taxes North America: United States Other All other Total North America: United States Other All other Total Total revenue: DISH Network: EchoStar Technologies segment Hughes segment EchoStar Satellite Services segment Other Total DISH Network All other Total revenue Percentage of total revenue: DISH Network All other Year ended December 31, 2014: Total revenue Operating income Net income attributable to EchoStar common stock Basic earnings per share Diluted earnings per share Year ended December 31, 2013: Total revenue Operating income Net income (loss) attributable to EchoStar common stock Basic earnings (loss) per share Diluted earnings (loss) per share the EchoStar VII satellite past such date. the event we are not able to sell the EchoStar XVI satellite for more than a certain amount. Rights. XV satellite. Effective August 2016, we provide TT&C services to DISH Network for the EchoStar XVIII satellite. this lease effective in August 2016. Effective December 2016, we and DISH Network amended this lease to, among other things, extend the term for one year through December 2017. In December 2017, we and DISH Network further amended this lease to, among other things, extend the term for one year through December 2018. convenience subject to providing us with prior notice and/or payment of termination charges. 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 amended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DBSD North America generally has the right to continue to receive warranty services from us on a month-to-month basis until February 2019 unless terminated by DBSD upon at least 21 days’ written notice to us and the right to continue to receive operations and maintenance services a period ending in February 2019. EchoStar has the option to renew this lease for thirteen one-year periods. 2017 (the “State Tax Arrangement”). Under the settlement agreement, all pending litigation was dismissed with prejudice and all injunctions that permanently restrain, enjoin or compel any action by us or DISH Network were dissolved. We and DISH Network Purchases from NagraStar Due to NagraStar Commitments to purchase from NagraStar Digital set-top boxes and related accessories Satellite services Uplink services Other services Due from Dish Mexico Assets Current Assets: Cash and cash equivalents Marketable investment securities Total current assets Noncurrent Assets: Investments in consolidated subsidiaries, including intercompany balances Restricted cash and marketable investment securities Deferred tax assets Other intangible assets, net Other investments Other receivable—DISH Network Total noncurrent assets Total assets Liabilities and Stockholders' Equity Current Liabilities: Accrued expenses and other Deferred tax liabilities Total current liabilities Noncurrent Liabilities: Long-term deferred revenue and other long-term liabilities Total noncurrent liabilities Total liabilities Commitments and Contingencies Stockholders' Equity: Preferred Stock, $.001 par value, 20,000,000 shares authorized: Hughes Retail Preferred Tracking Stock, $.001 par value, 13,000,000 shares authorized, 6,290,499 issued and outstanding and zero shares issued and outstanding at December 31, 2014 and 2013, respectively Common Stock, $.001 par value, 4,000,000,000 shares authorized: Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 49,576,247 shares issued and 44,043,929 shares outstanding at December 31, 2014 and 48,370,956 shares issued and 42,838,638 shares outstanding at December 31, 2013 Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of December 31, 2014 and 2013 Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2014 and 2013 Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2014 and 2013 Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Treasury stock, at cost Total stockholders' equity Total liabilities and stockholders' equity Costs and Expenses: Selling, general and administrative expenses Depreciation and amortization Total costs and expenses Operating loss Other Income (Expense): Interest income and expense, net Realized gains on marketable investment securities and other investments, net Equity in losses of unconsolidated affiliates, net Other, net Total other income, net Income (loss) before income taxes and equity in earnings of consolidated subsidiaries, net Equity in earnings (losses) of consolidated subsidiaries, net Income tax benefit (provision), net Net income Comprehensive Income (Loss): Net income Other comprehensive loss, net of tax: Foreign currency translation adjustments Unrealized gains (losses) on AFS securities and other Recognition of previously unrealized gains on AFS securities in net income Total other comprehensive loss, net of tax Comprehensive income (loss) Cash Flows from Operating Activities: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Equity in losses of unconsolidated affiliates, net Equity in losses (earnings) of consolidated subsidiaries, net Realized gains on marketable investment securities and other investments, net Deferred tax provision (benefit) Changes in current assets and current liabilities, net Changes in noncurrent assets and noncurrent liabilities, net Other, net Net cash flows from operating activities Cash Flows from Investing Activities: Purchases of marketable investment securities Sales and maturities of marketable investment securities Contributions to subsidiaries and affiliates, net Capital contribution to DISH Digital Distribution received from investments in affiliates Changes in restricted cash and marketable investment securities Net cash flows from investing activities Cash Flows from Financing Activities: Net proceeds from Class A common stock options exercised and stock issued under the Employee Stock Purchase Plan Other Net cash flows from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period For the years ended: December 31, 2014 December 31, 2013 December 31, 2012Use these links to rapidly review the document
(Mark One)(Mark One)ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM TO .Nevada 26-1232727 (State or Other Jurisdiction of
Incorporation or Organization) 26-1232727
(I.R.S. Employer
Identification No.)100 Inverness Terrace East, Englewood, Colorado 80112-5308 (Address of Principal Executive Offices)
80112-5308
(Zip Code)Registrant'sTitle of each class Name of each exchange on which registered Class A common stock, $0.001 par value The NASDAQ Stock Market LLC registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. oor a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):ýx
smaller Smaller reporting companyo2014,2017, the aggregate market value of Class A common stock held by non-affiliates of the registrant was $2.29$2.86 billion 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.13, 2015,12, 2018, the registrant'sregistrant’s outstanding common stock consisted of 44,109,04548,146,076 shares of Class A common stock and 47,687,039 shares of Class B common stock, each $0.001 par value.registrant'sregistrant’s definitive Proxy Statement to be filed in connection with its 20152018 Annual Meeting of Shareholders are incorporated by reference in Part III.i PART I Business Item 1A.Risk Factors 18Unresolved Staff Comments37Item 2.Properties38Item 3.Legal Proceedings39Item 4.Mine Safety Disclosures39 PART II Item 9A.Controls and Procedures 78Other Information79 PART III PART IV 89("(“Form 10-K"10-K”) contains "forward-looking statements"“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, plans, objectives, strategies, and 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," "continue," "future," "will," "would," "could," "can," "may"“anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate,” “expect,” “predict,” “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'smanagement’s current views and assumptions. Forward-looking statements are not guarantees of future performance, events or results and involve potential known and unknown risks, uncertainties and other factors, many of which may be beyond our control and may pose a risk to our operating and financial condition. 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:•our reliance on our primary customer, DISH Network Corporation ("DISH Network"), for a significant portion of our revenue;•the impact of variable demand and the adverse pricing environment for digital set-top boxes;•dependence on our ability to successfully manufacture and sell our digital set-top boxes in increasing volumes on a cost-effective basis and with acceptable quality;•our ability to bring advanced technologies to market to keep pace with our competitors;•significant risks related to the construction, launch and operation of our satellites, such as the risk of material malfunction on one or more of our satellites, changes in the space weather environment that could interfere with the operation of our satellites, and our general lack of commercial insurance coverage on our satellites;•the failure to adequately anticipate the need for satellite capacity or the inability to obtain satellite capacity for our Hughes segment; and•the failure of third-party providers of components, manufacturing, installation services and customer support services to appropriately deliver the contracted goods or services.• • • • • • • Management's— 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 SEC.to reflect the occurrencewhether as a result of anticipated or unanticipatednew information, future events or circumstances after the date of such statements,otherwise, except as required by federal securities laws."EchoStar,"“EchoStar,” the "Company," "we," "us"“Company,” “we,” “us” and/or "our"“our”) is a holding company that was organized in October 2007 as a corporation under the laws of the State of Nevada. We are a global provider of satellite service operations, video delivery solutions, digital set-top boxes, and broadband satellite technologies and broadband internet services for home and small office deliveringcustomers. We also deliver innovative network technologies, managed services, and various communications solutions for enterprisesaeronautical, enterprise and governments.government customers. Our Class A common stock is publicly traded on the Nasdaq Global Select Market ("Nasdaq"(“Nasdaq”) under the symbol "SATS."threethe following two business segments.•EchoStar Technologies ("ETC")—which designs, develops and distributes digital set-top boxes and related products and technology, primarily for satellite TV service providers, telecommunication companies and international cable companies. Our EchoStar Technologies segment also provides digital broadcast operations, including satellite uplinking/downlinking, transmission services, signal processing, conditional access management, and other services, primarily to DISH Network Corporation and its subsidiaries ("DISH Network"). In addition, we provide our Slingboxes directly to consumers via retail outlets and online, as well as the payTV operator market via our partnership with Arris Group, Inc. ("Arris").•Hughes—which provides satellite broadband internet access to North American consumers and broadband network services and equipment to domestic and international enterprise markets. The Hughes segment also provides managed services to large enterprises and solutions to customers for mobile satellite systems.•EchoStar Satellite Services ("ESS")—which uses certain of our owned and leased in-orbit satellites and related licenses to provide satellite services on a full-time and occasional-use basis primarily to DISH Network, Dish Mexico, S. de R.L. de C.V. ("Dish Mexico"), a joint venture we entered into in 2008, United States ("U.S.") government service providers, state agencies, internet service providers, broadcast news organizations, programmers, and private enterprise customers.• • real estatevarious corporate departments (primarily Executive, Strategic Development, Human Resources, IT, Finance, Real Estate and Legal) as well as other activities that have not been assigned to our operating segments, including costs incurred in certain satellite development programs and other business development activities, expenses of various corporate departments, and our centralized treasury operations, includingand gains (losses) from certain of our investments. These activities, costs and income from our investment portfolioare accounted for in “Corporate and interest expense on our debt.theirits satellites, uplink and satellite transmission assets, and real estate (the "Spin-off"“Spin-off”). Since the Spin-off, EchoStar and DISH Network have operated as separate publicly-traded companies. However, as a result ofPrior to February 28, 2017, DISH Network held the Satellite and Tracking Stock Transaction, described in Note 2 in the notes to consolidated financial statements in Item 15 of this report, DISH Network owns shares of our and our subsidiary's preferred tracking stock representing an aggregate 80.0% economic interest in the residential retail satellite broadband business of our Hughes segment. In addition, adiscussed below. A substantial majority of the voting power of the shares of each of EchoStar Corporation and DISH Network and EchoStarCorporation (“DISH”) is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family.2011,February 2014, we completedentered into agreements with certain subsidiaries of DISH pursuant to which, effective March 1, 2014: (i) EchoStar and our subsidiary Hughes Satellite Systems Corporation (“HSS”) issued the acquisitionTracking Stock (as defined below) to subsidiaries of Hughes Communications, Inc.DISH in exchange for five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI, and EchoStar XIV) (including the assumption of related in-orbit incentive obligations) and approximately $11.4 million in cash; and (ii) DISH and certain of its subsidiaries began receiving certain satellite services on these five satellites from us. The Tracking Stock tracked the economic performance of the residential retail satellite broadband business of our Hughes segment, including certain operations, assets and liabilities attributed to such business (collectively, the “Hughes Retail Group” or “HRG”), and represented an aggregate 80.0% economic interest in HRG (the Hughes Retail Preferred Tracking Stock issued by EchoStar Corporation (the “EchoStar Tracking Stock”) represented a 51.89% economic interest in HRG and the Hughes Retail Preferred Tracking Stock issued by HSS (the “HSS Tracking Stock”, together with the EchoStar Tracking Stock, the “Tracking Stock”) represented a 28.11% economic interest in HRG). In addition to the remaining 20.0% economic interest in HRG, EchoStar retained all economic interest in the wholesale satellite broadband business and other businesses of EchoStar.financing transactions ("Hughes Acquisition"products and technology, primarily for satellite TV service providers and telecommunication companies and provided digital broadcast operations, including satellite uplinking/downlinking, transmission services, signal processing, conditional access management, and other services. Following consummation of the Share Exchange, we no longer operate the EchoStar Technologies businesses, the Tracking Stock was retired and is no longer outstanding and all agreements, arrangements and policy statements with respect to the Tracking Stock terminated and are of no further effect. As a result of the Share Exchange, the consolidated financial statements of the EchoStar Technologies businesses have been presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. See Note 3 in the notes to consolidated financial statements in Item 15 of this report for further discussion of our discontinued operations.services.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, increased satellite capacity, access to spectrum resources, and high-quality, reliable service to continuedrive growth in consumer subscribers and the enterprise market. Our During 2017, we significantly increased our satellite capacity in North America and certain Central and South American countries and added capability for aeronautical, enterprise and international broadband internet services. We also commenced the design and construction of a new, next-generation, high throughput geostationary satellite, with a planned 2021 launch, that is primarily intended to provide additional capacity for our HughesNet service in North, Central and South America as well as aeronautical and 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 acquireddeveloped infrastructure, will provide opportunities to cross sellenter new international markets and enhance our services bundleto our existing customers. We currently provide satellite broadband internet service in Brazil and videoColombia and expect to launch similar services in other Central and explore opportunitiesSouth American countries in new markets.2018. We believe market opportunities exist that will facilitate the acquisition or leasing of additional satellite capacity which will enable us to provide services to a broader customer base, including providers of pay-TV services, satellite-delivered broadband, corporate communications, and government services. Weareremain in a unique position to deploy a European wide mobile satellite service ("MSS"(“MSS”)/complementary ground component ("CGC"(“CGC”) network and maximize the long termlong-term value of our S-band spectrum, in Europe and other regions within the scope of our licenses.Exploit international opportunities. We believe that direct-to-home ("DTH") satellite and satellite broadband services are particularly well-suited for countries without extensive telecommunications and cable infrastructure. We intend to selectively pursue partnerships, joint ventures and strategic acquisition opportunities that allow us to capitalize on our extensive experience in delivering end-to-end satellite broadband and pay-TV consumer services.Expand our set-top box and customer premise equipment sales. With our extensive experience in designing, developing, manufacturing and distributing digital set-top boxes and related products, we believe we can leverage the broader adoption of advanced technologies such as whole home digital video recorder ("DVR"), placeshifting functionality, hybrid internet offerings and other in-home solutions to create opportunities for us. Therefore, wewill also continue to explore opportunities, including partnerships, joint ventures and strategic acquisitions, to expand our existing markets or enter newdevelopment of S-band similar spectrum assets in additional international markets. In addition, we intend to seek opportunities to license our technology to other original equipment manufacturers and pay-TV providers.technologies. Theand new technologies. Our engineering capabilities of our combined business units providesprovide 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.ECHOSTAR TECHNOLOGIES SEGMENTDigital Set-Top Boxes. Our EchoStar Technologies segment offers a wide range of digital set-top boxes that allow consumerswatchselectively explore new domestic and control their television programming and contain a variety of other capabilities and functionality. Our current digital set-top boxes include:
. We intend to •High-definition ("HD") digital set-top boxes. These devices allow consumers who subscribeinternational strategic initiativestelevision services from multi-channel video distributorscontinue to access the enhanced picture quality and sound of high-definition content, in additionselectively explore opportunities to the standard-definition ("SD") functionality of our SD digital set-top boxes.•SD digital set-top boxes. These devices allow consumers who subscribe to television service from multi-channel video distributors to access encrypted digital video and audio content.Certain models of our HD digital set-top boxes and SD digital set-top boxes also contain certain of the following advanced capabilities and functionalities:•Interactive Applications. Include an on-screen program guide, pay-per-view offerings, video content/meta-data enhancing user applications, social media, games, and shopping.•Digital Video Recorder ("DVR"). Enables subscribers to pause, stop, reverse, fast forward, record, and replay digital television content using a built-in and/or external hard drive capable of storing content. Our whole-home HD DVR receiver provides subscribers a variety of features that a consumer can use, at his or her option, to control, and/or record programming.•Broadband Internet Connectivity. Provides internet protocol television ("IPTV") functionality, which supports on-demand services that allow consumers to download television programming, movies, music, applications,pursue investments, commercial alliances, partnerships, joint ventures, acquisitions and other content.•Slingbox "placeshifting" functionality. Allows a customer, at his or her option, to watchstrategic initiatives, domestically and control their digital television content anywhere in the world via a broadband internet connection.In addition to digital set-top boxes,internationally, that we also design and develop related products such as satellite dishes and remote controls. We are also exploring the development of other in-home products and applications.Digital Broadcast Operations. We operate a number of digital broadcast centers in the U.S. Our principal digital broadcast centers are located in Cheyenne, Wyoming and Gilbert, Arizona. We also have multiple regional and micro digital broadcast centers thatbelieve may allow us to maximize the useincrease our existing market share, expand into new markets and new customers, broaden our portfolio of the spot beam capabilities ofservices, products and intellectual property, and strengthen our satellites andrelationships with our customers' satellites. Programming and other data are received at these centers by fiber optic cable or satellite. The data is then processed, compressed, encrypted and then uplinked tocustomers. For example, our satellites and our customers' satellites for transmission to end-users.The primary customer of our EchoStar Technologies segment is DISH Network. DISH Network accounted for 88.6%, 90.1% and 76.9% of the EchoStar Technologies segment's revenue for the years ended December 31, 2014, 2013 and 2012, respectively. We expect DISH Network will continue to be the primary customer and the key revenue contributor for our EchoStar Technologies segment. See Note 19 in the notes to consolidated financial statements in Item 15 of this report for further discussion of our related party transactions with DISH Network.We also currently sell our digital set-top boxes to other international DTH satellite and cable providers, including Bell TV, a DTH satellite services provider in Canada, and Dish Mexico. The majority of our EchoStar Technologies segment's international revenue during each of the years ended December 31, 2014, 2013 and 2012 was attributable to sales of digital set-top boxes and accessories to Bell TV and Dish Mexico. In 2012, we amended our pricingcurrent agreement with Bell TV, which among other things entitles us to be Bell TV's exclusive provider of digital set-top boxes, subject to certain limited exceptions, and provides fixed pricing over the term of the agreement as well as providing for future engineering development for enhanced Bell TVWorldVu Satellites Limited (“OneWeb”), a global low-earth orbit (“LEO”) satellite service offerings. In January 2014, we further amended the agreement, which extended our exclusivity rights under the pricing agreement until December 31, 2015.The set-top box industry is highly competitive, and market leadership changes frequently as a result of new products, designs and pricing. As we seek to grow our revenue and market share in the digitalset-top box industry, we face substantial competition. Many of our primary competitors, such as Arris, Cisco Systems, Inc. ("Cisco"), Pace Micro Technology Plc. ("PACE"), Samsung, and Technicolor S.A. ("Technicolor"), have established longstanding relationships with their customers. In addition, a number of rapidly growing companies have recently entered the market with set-top box offerings similar to our existing satellite set-top box products. The entry of these new competitors may result in increased pricing pressure in the market. We may also face competition from international developers of digital set-top box systems that may be able to develop and manufacture products and services at costs that are substantially lower than our costs. Furthermore, we depend heavily on our ability to successfully bring advanced technologies to the market, including internet delivery of video content and our Slingbox placeshifting functionality, to keep pace with our competitors.Our use of proprietary technology, together with our in-house engineering expertise,company, enables us to innovateprovide certain equipment and bring new features and enhancements quickly to our customers. In addition, our end-to-end video solutions allow us to provide a more cost-effective solutionservices in connection with the ground network system for a pay-TV operator who may have to negotiate hardware, middleware and a conditional access system separately. We have a long-standing relationship with DISH Network and provide them with technologically advanced set-top boxes, including advanced hybrid satellite and internet protocol over-the-top delivery solutions, Slingbox placeshifting functionality, and whole-home DVR features.Although we design, engineer and distribute digital set-top boxes and related products, we are not directly engaged in the manufacturing process. Rather, we outsource the manufacturing of our digital set-top boxes and related products to third parties who manufacture our products according to specifications supplied by us. We depend on a few manufacturers, and in some cases a single manufacturer, for the production of digital set-top boxes and related products. Although there can be no assurance, we do not believe that the loss of any single manufacturer would materially impact our business. Sanmina-SCI Corporation, Shanghai DD&TT Electronic Enterprise Co., LTD and Jabil Circuit, Inc. currently manufacture the majority of our digital set-top boxes and accessories.uses its two owned satellites, SPACEWAY 3is a global provider of broadband satellite technologies and EchoStar XVII, and additional satellite capacity acquired from multiple third-party providers, to provide satellite broadband internet access to North American consumers, which we refer to as the consumer market, and broadband network services and equipment to domestic and international home and small office customers and broadband network technologies, managed services, equipment, hardware, satellite services and communications solutions to domestic and international consumers and aeronautical, enterprise markets. Ourand government customers. The Hughes segment also designs, provides managed services to large enterprises and solutionsinstalls gateway and terminal equipment to customers for mobileother satellite systems. In addition, our Hughes segment provides satellite ground segment systems and terminals to mobile system operators.the usage of advanced spectrally efficient modulation and codingproprietary methodologies, proprietarytechnologies, software web acceleration and compression 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. BeginningOctober 2012,adding new and retaining existing subscribers in our domestic and international markets across our wholesale and retail channels. The growth of our enterprise, including aeronautical, 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 for our direct and indirect customers and partners are typically impacted most significantly by our growth.introduced HughesNet Gen4expect it to continue to provide significant capacity for consumer subscriber growth, capacity for the Hughes broadband internet services to our customers in North America, capacity in certain Central and South American countries and capability for aeronautical and domestic and international enterprise broadband services.XVII.serviceservices and broadband satellite technologies to North American consumers.domestic and international home and small office customers. It also providesdelivers broadband network technologies, managed services, equipment, hardware, satellite network products and services and managed networkcommunications solutions to domestic and international consumers and aeronautical, enterprise and government customers. Examples of our enterprise, government and aeronautical customers include 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 and equipment toenterprises and broadband service providers worldwide.they purchase. In addition, our Hughes segment designs, provides and installs gateway and terminal equipment totofor other satellite systems, including mobile system operators."Distribution Agreement"“Distribution Agreement”) with dishNET Satellite Broadband L.L.C. ("dishNET"(“dishNET”), a wholly-owned subsidiary of DISH Network, pursuant to which dishNET marketed, sold and distributed our Hughes satellite internet service (the “Hughes service”) under the dishNET brand. In March 2017, we entered into a master service agreement (the “MSA”) with DISH Network L.L.C. (“DNLLC”), a wholly-owned subsidiary of DISH pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, sellpromote and distributesolicit orders and upgrades for the Hughes satellite internet service (the "Hughes service") underand related equipment and other telecommunication services and (ii) will install Hughes service equipment with respect to activations generated by DNLLC. As a result of the dishNET brand. In February 2014,MSA, we amended thehave not earned and do not expect to earn significant equipment revenue from our Distribution Agreement which, among other things, extendedin the term of the agreement through March 1, 2024.future. DISH Network accounted for 8.5%5.6%, 9.3%,7.7% and 2.9%7.8% of our total Hughes segment revenue for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively. See Note 19 in the notes to consolidated financial statements in Item 15 of this report for further discussion of our related party transactions with DISH Network.2014, 20132017, 2016 and 2012,2015, our Hughes segment had approximately 977,000, 860,000,1,208,000, 1,036,000 and 636,0001,035,000 broadband subscribers, respectively. These broadband subscribers include customers that subscribe to our HughesNet broadband services in the U.S. and South America through retail, wholesale and small/medium enterprise service channels.20142017 and 2013, 2016,our Hughes segment had approximately $1.26$1.62 billion and $1.15and $1.52 billion, respectively, of contracted revenue backlog. We define Hughes contracted revenue backlog as our expected future revenue under customer contracts that are non-cancelable, excluding agreements with customers in our consumer market. Of the total contracted revenue backlog as of December 31, 2014,2017, we expect to recognize approximately $407.9$424.7 million of revenue in 2015.data network technologies, products and services, our Hughes segment competes with a large number of telecommunications service providers. This increasingly competitive environment has putproviders, which puts pressure on prices and margins. To compete effectively, we emphasize our network quality, our customization capability, our offering of networks as a turnkey managed service, our position as a single point of contact for products and services and our competitive prices.market,markets, we compete against traditional telecommunications and wireless carriers, other satellite internet providers, as well as digital subscriber line ("DSL"(“DSL”), fiber and cable internet service providers offering competitive services in many communitiesmarkets we seek to serve. Cost, speed and accessibility are key determining factors in the selection of a service provider by the consumer. Our primary satellite competitor in our North American consumer market is ViaSat Communications, Inc. ("(“ViaSat Communications"Communications”), which is owned by ViaSat, Inc. ("ViaSat"(“ViaSat”). We seek to differentiate ourselves based on the ubiquitous availability of our service, quality, proprietary technology, and distribution channels.market, ourand government markets, we compete against providers of satellite-based and terrestrial-based networks, including fiber, DSL, cable modem service, multiprotocol label switching and interest protocol-based virtual private networks.("VSAT"(“VSAT”) satellite networks are Gilat Satellite Networks Ltd, ViaSat, SageNet LLC, Newtec Cy N.V. and VT iDirect, Inc. (formerly known as iDirect Technologies, ("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.Our broadband networks generally have an advantage over terrestrial networks where the network must reach many locations over large distances, where the customer has a "last mile" or a congestion problem that cannot be solved easily with terrestrial facilities and where there is a need for transmission to remote locations or emerging markets. By comparison, ground-based facilities(e.g., fiber optic cables) often have an advantage for carrying large amounts of bulk traffic between a small number of fixed locations. Our relative competitive position is constantly changing as we and our competitors strive to improve our respective positions. While our current competitive position provides us the opportunity to grow our business, we cannot be certain of its continuing effects on our business as our competitors modify or adapt their strategies and service offerings.EchoStar Satellite ServicesESS segment operates itsis a global provider of satellite service operations and video delivery solutions. We operate our business using its 16our owned and leased in-orbit satellites.satellites and related licenses. Revenue growth in our ESS segment depends largely on our ability to continuously make satellite capacity available for sale. We provide satellite servicesservice operations and video delivery solutions on a full-time and occasional-use basis primarily to DISH Network, Dish Mexico, U.S. government service providers, state agencies, internet service providers, broadcast news organizations, programmers, and private enterprise customers. We also manage satellite operations for certain satellites owned by DISH Network. Our satellite capacity is currently used by our customers for a variety of applications:•DTH Services.• • • transmissionconstruction of live sporting events, internet access, disaster recovery,the EchoStar 105/SES-11 satellite with C-, Ku- and Ka-band payloads; (ii) an agreement with SES Satellite Leasing Limited for the procurement of the related launch services; and (iii) an agreement with SES Americom Inc. (“SES”) pursuant to which we transferred the title to the payloads to two affiliates of SES. We retained the right to use the entire Ku-band payload on the satellite news gathering services.•Government Services.for an initial ten-year term, with an option for us to renew the agreement on a year-to-year basis. The EchoStar 105/SES-11 satellite was launched in October 2017 and placed into service in November 2017 at the 105 degree west longitude orbital location. Our Ku-band payload on the EchoStar 105/SES-11 satellite replaces and augments the capacity we had on the AMC-15 satellite, resulting in additional sales capacity. We providetransferred activities from the AMC-15 satellite services and technical services to U.S. government service providers and directly to some state agencies. We believe the U.S. government may increase its useEchoStar 105/SES-11 satellite in the fourth quarter of commercial satellites for homeland security, emergency response, continuing education, distance learning, and training.•Network Services. We provide satellite capacity and terrestrial network services to companies. These networks are dedicated 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.state agencies, internet service providers, broadcast news organizations, programmers and private enterprise customers. For the years ended December 31, 2014, 20132017, 2016 and 2012,2015, DISH Network accounted for approximately 84.1%87.9%, 74.9%85.7% and 72.4%86.3% of our total EchoStar Satellite ServicesESS segment revenue. We have entered into certain commercial agreements with DISH Network pursuant to which we are obligated to provide DISH Network with satellite services at fixed prices for varying lengths of time depending on the satellite. See Note 19 in the notes to consolidated financial statements in Item 15 of this report for further discussion of our related party transactions with DISH Network. We depend on DISH Network for a significant portion of the revenue for our ESS segment, and we expect that DISH Network will continue to be the primary source of revenue for our ESS segment. Therefore, the results of operations of our ESS segment are linked to changes in DISH Network’s satellite capacity requirements. DISH Network’s capacity requirements have been driven by the addition of new channels and migration ofWe currentlyThe agreement with DISH Network for satellite services relative to the EchoStar VII satellite expires in June 2018. DISH Network has not renewed the agreement past such date which may have available satellite capacity. Our other satellite service sales generally are characterized by shorter-term contracts or spot market sales.Asa significant impact on our operating results in the future.20142017 and 2013,2016, our EchoStar Satellite ServicesESS segment had contracted revenue backlog attributable to satellites currently in orbit of approximately $1.71 billion and $1.14 billion, respectively. The increase in backlog is primarily the result of additional satellite services on EchoStar I, EchoStar VII, EchoStar X, EchoStar XI, and EchoStar XIV provided to DISH Network beginning March 1, 2014, as part of the Satellite and Tracking Stock Transaction. See Note 2 in the notes to consolidated financial statements in Item 15 of this report for a further discussion of the Satellite and Tracking Stock Transaction.$1.16 billion. Of the total contracted revenue backlog as of December 31, 2014,2017, we expect to recognize approximately $398.1$332.9 million of revenue in 2015.EchoStar Satellite Servicesour ESS segment competes against larger, well-established satellite service companies, such as Intelsat S.A. ("Intelsat"(“Intelsat”), SES S.A. ("SES"), Inmarsat plc, Telesat, Canada ("Telesat"), and Eutelsat Communications S.A. ("Eutelsat"(“Eutelsat”), Asia Satellite Telecommunications Company Limited and the direct-to-home (DTH) satellite business of AT&T, Inc., in an industry that is characterized by long-term contracts and high costs for customers to change service providers. Therefore, it will be difficult to displace customers from their current relationships withSeveral of our competitors. Intelsat and SEScompetitors maintain key North American and other international orbital slots that may further limit competition and competitive pricing.While we believe that there may be opportunitiescapture new business as a result of market trendsevolve with the increasing worldwide demand for broadband internet access for information, entertainment and commerce. In addition to fiber and wireless systems, other technologies such as the increased communications demands of homeland security initiatives, there can be no assurance that we will be ablegeostationary high throughput satellites, LEO networks, balloons, and High Altitude Platform Systems are playing significant roles in enabling global broadband access, networks and services. We intend to effectively compete againstuse our competitors dueexpertise, technologies, capital, investments, global presence, relationships and other capabilities to their significant resourcescontinue to provide broadband internet systems, equipment, networks and operating history.exploringexplore opportunities to pursue investments, commercial alliances, partnerships, joint ventures, acquisitions and other strategic acquisition opportunities,initiatives, domestically and internationally, that we believe may allow us to increase our existing market share, expand into new markets and new customers, broaden our portfolio of services, products and intellectual property, and strengthen our relationships with our customers.("(“Brazilian Authorization"Authorization”) from ANATEL, the Brazilian communications regulatory agency. The Brazilian Authorization currently provides us the rights to utilize Ku-band spectrumspectrum. In April 2014, we entered into an agreement with Space Systems Loral, LLC for the construction of the EchoStar XXIII satellite, a high powered broadcast satellite service ("BSS")satellite. The EchoStar XXIII satellite was launched in March 2017 and placed into service at the 45 degree west longitude orbital location in the second quarter of 2017. We had regulatory obligations to meet certain in-service milestones by the second quarter of 2017 for our Brazilian license at the 45 degree west longitude orbital location for the Ka-, Ka-band spectrumKu- and S-band spectrum. With regards tofrequencies. We have satisfied our regulatory obligations for the Ku-band BSS spectrum, we continuefrequency. On October 5, 2017, ANATEL declined our request to pursue various opportunities to support a Brazilian service and remain focused on delivering a pay-TV service to Brazil via a high-powered BSS satellite. We are exploring optionsextend our milestone deadlines for the Ka-bandS- band and S-band spectrums.100.0%100% of Solaris Mobile, which is based in Dublin, Ireland and licensed by the European Union ("EU") and individual EU Member Statesits member states (“EU”) to provide MSS/MSS and CGC services covering the entire EU using S-band spectrum. We are in the process of developing commercial services, expectedSolaris Mobile changed its name to beginEchoStar Mobile Limited (“EchoStar Mobile”) in the first halfquarter of 2016, utilizing our existing EUTELSAT 10A (also known as "W2A")2015. The EchoStar XXI satellite along withwas launched in June 2017 and placed into service in November 2017. Commercial service has been available on our EchoStar XXI S-band satellite. We are currently constructing, and have contracted to launch,satellite since the fourth quarter of 2017. The EchoStar XXI to providesatellite provides space segment capacity to SolarisEchoStar Mobile in the first half of 2016.EU. We believe we are in a unique position to deploy an EUa European wide MSS/CGC network and maximize the long termlong-term value of our S-band spectrum in Europe and other regions within the scope of our licenses.TableContentsbelow.below as of December 31, 2017.Satellites Segment Launch Date Nominal Degree
Orbital Location
(Longitude)Depreciable
Life(In (In Years)SPACEWAY 3 (1) Hughes August 2007 95 W 12 EchoStar XVII Hughes July 2012 107 W 15 EchoStar XIX Hughes December 2016 97.1 W 15 EchoStar I (2)(3)(4)(7) ESS December 1995 77 W — EchoStar VI (4)(7) ESS July 2000 96.2 W 12 EchoStar VII (2)(3)(4) ESS February 2002 119 W 3 EchoStar IX (2)(4) ESS August 2003 121 W 12 EchoStar X (2)(3) ESS February 2006 110 W 7 EchoStar XI (2)(3) ESS July 2008 110 W 9 EchoStar XII (2)(4)(5) ESS July 2003 61.5 W 2 EchoStar XIV (2)(3) ESS March 2010 119 W 11 EchoStar XVI (2) ESS November 2012 61.5 W 15 EchoStar XXI Corporate and Other June 2017 10.25 E 15 EchoStar XXIII Corporate and Other March 2017 45 W 15 EUTELSAT 10A (“W2A”) (6) Corporate and Other April 2009 10 E — SPACEWAY 3(1)HughesAugust 2007Capital Leases: 95 W12EchoStar XVIIHughesJuly 2012 107 W15EchoStar I(2)(3)(4)ESSDecember 1995 77 W—EchoStar III(4)ESSOctober 199761.5 W12EchoStar VI(4)ESSJuly 200096.2 W12EchoStar VII(2)(3)ESSFebruary 2002119 W3EchoStar VIII(2)ESSAugust 200277 W12EchoStar IX(2)ESSAugust 2003121 W12EchoStar X(2)(3)ESSFebruary 2006110 W7EchoStar XI(2)(3)ESSJuly 2008110 W9EchoStar XII(2)(4)(5)ESSJuly 200361.5 W2EchoStar XIV(2)(3)ESSMarch 2010119 W11EchoStar XVI(2)ESSNovember 201261.5 W15EUTELSAT 10A ("W2A")(6)OtherApril 200910 E—Capital Leases:AMC-16(4)ESSDecember 200485 W105(2) ESS September 2009 72.7 W 15 QuetzSat-1(2) ESS September 2011 77 W 10 Operating Leases: Hughes March 2016
65 W 15 XV ESS October 200445 W—AMC-15ESSOctober 20042017 105 W —15the Hughes Acquisition.(2)See Note 19 in the notes to consolidated financial statements in Item 15 of this report for further discussion of our transactions with DISH Network.(2) See Note 19 in the notes to consolidated financial statements in Item 15 of this report for discussion of related party transactions with DISH Network. 219 in the notes to consolidated financial statements in Item 15 of this report).assets.EchoStar XXIII. In April 2014, we2018.Satellites Segment Expected Launch Date Telesat T19V (“63 West”) (1) Hughes Second quarter of 2018 EchoStar XXIV Corporate and Other 2021 with Space Systems Loral, LLC ("SS/L") for certain capacity on this satellite once launched, but are not party to the construction contract.XXIIIVI satellite a high powered BSS satellite which will use some of the components from CMBStar, a satellite that we suspended construction in 2008. EchoStar XXIII is expected to launch in the second half of 2016its orbital location and will be initially deployed at 45 degree west longitude orbital location.EUTELSAT 65 West A. In April 2014, we entered into a satellite services agreement pursuant to which Eutelsat do Brasil will provide to Hughes Telecomunicações do Brasil Ltda, our subsidiary, a fixed broadband service using the Ka-band capacity into Brazil on the EUTELSAT 65 West A satellite for a 15-year term. The satellite services agreement requires us to make prepayments during the satellite construction period. The satellite is scheduled to be placed intoretire it from commercial service in the second quarter of 2016 and will deliver consumer satellite broadband services in Brazil and create2018. This retirement is not expected to have a platform to potentially allow for further development of our spectrum in Brazil.EchoStar XIX. In February 2012 and September 2013, ViaSat and its subsidiary ViaSat Communications, filed lawsuits in the U.S. District Court for the Southern District of California against SS/L, the manufacturer of EchoStar XVII and EchoStar XIX. Those cases, to which we were not a party, were settled in 2014 with no material impact on our results of operations or financial position. design, construction or planned operations105 degree west longitude orbital location. Our leased Ku-band payload on the EchoStar 105/SES-11 satellite has replaced the capacity we had on the AMC-15 satellite. Our agreement for satellite services on certain transponders on the AMC-15 satellite terminated according to its terms in December 2017.EchoStar XIX.EchoStar I, EchoStar VII, EchoStar X, EchoStar XI,control. We regained communications with and EchoStar XIV. As discussed in Note 2 in the notes to consolidated financial statements in Item 15 of this report, we received five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV) from DISH Network as partcontrol of the SatelliteEchoStar III satellite and Tracking Stock Transaction. These satellites are BSS satellites operatingretired the satellite from commercial service in Ku-band frequenciesAugust 2017. This retirement has not had, and DISH Network began receiving certain services from usis not expected to have, a material impact on these satellites effective March 1, 2014. In May 2013, DISH Network began receiving During the second quarter of 2017, the EchoStar VIII satellite was removed from its orbital location and retired from commercial service. This retirement has not had, and is not expected to have, a material impact on our results of operations or financial position.from us on EchoStar VIII as an in-orbit spare. Effectivesatellite, was launched in March 1, 2014, this2017 and placed into service arrangement was converted to a month-to-month service agreement. Both parties have the right to terminate this agreement upon 30 days' notice.EchoStar XV. In May 2013, we began receiving satellite services from DISH Network on EchoStar XV and relocated the satellite toat the 45 degree west longitude orbital location. Effective March 1, 2014, this service arrangementlocation in May 2017.converted to a month-to-month service agreement. Both parties have the right to terminate this agreement upon 30 days' notice.EchoStar 105/SES-11. In August 2014, we entered into: (i) a construction contract with Airbus Defencelaunched in December 2016 and Space SAS for the construction of the EchoStar 105/SES-11 satellite with C-band, Ku-band and Ka-band payloads; (ii) an agreement with SES Satellite Leasing Limited for the procurement of the related launch services; and (iii) an agreement with SES Americom Inc. ("SES") pursuant to which we will transfer the title to the C-band and Ka-band payloads to SES Satellite Leasing Limited at launch and transfer the title to the Ku-band payload to SES following in-orbit testing of the satellite. Additionally, SES will provide to us satellite services on the entire Ku-band payload on EchoStar 105/SES-11 for an initial ten-year term, with an option for us to renew the agreement on a year-to-year basis. The satellite is scheduled to be placed into service in March 2017 at the first half of 2017. We expect to account97.1 degree west longitude orbital location. The EchoStar XIX satellite provides capacity for the Hughes broadband services to our customers in North America, capacity in certain Central and South American countries and capability for aeronautical, enterprise and international broadband services. EchoStar contributed the EchoStar XIX satellite services we receive from SES on the Ku-band payload as a prepaid capital lease with a term equal to the 15-year estimated life of the satellite.AMC-15 and AMC-16. In August 2014, in connection with the execution of agreements related to EchoStar 105/SES-11, we entered into amendments that extend the terms of our existing agreements with SES for satellite services on AMC-15 and AMC-16. As amended, our agreement for satelliteservices on certain transponders on AMC-15 was extended from December 2014 through the in-service date of EchoStar 105/SES-11. The amended agreement for AMC-16 satellite services extends the term for the satellite's entire communications capacity, subject to available power, for one year following expiration of the initial termits Hughes segment in February 2015. The extended terms of these agreements are being accounted for as operating leases.EchoStar XXI. In August 2013, we and DISH Network entered into a development agreement ("T2 Development Agreement") with respect to the TerreStar-2 ("T2") satellite under which we reimbursed DISH Network for amounts it paid to SS/L in connection with the construction of the T2 satellite. As amended in December 2013, the T2 Development Agreement provided EchoStar an option to purchase DISH Network's rights and obligations under the T2 satellite construction agreement. In December 2014, we exercised our option to purchase DISH Network's rights and obligations under the T2 satellite construction agreement (including the right to take delivery of the T2 satellite, now renamed EchoStar XXI) for $55.0 million in cash. In accordance with accounting principles that apply to transfers of assets between companies under common control, we recorded a $9.6 million charge to additional-paid-in-capital, net of related deferred income taxes. EchoStar XXI is designed to provide mobile satellite services using S-band frequencies and we intend to use this satellite in conjunction with our S-band spectrum in Europe as well as to develop opportunities in other parts of the world. EchoStar XXI is expected to launch in 2016.Certain of ourhave experiencedmay experience anomalies from time to time, some of which may have had a significant adverse impacteffect on their remaining useful lives, and/or the commercial operation of the satellites.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, 2017. There can be no assurance, however, that existing and future anomalies will not further impacthave any such adverse impacts in the remaining useful life and/or the commercial operation of any of the satellites in our fleet.future. In addition, there can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail.generally dohistorically have not carrycarried in-orbit insurance on our satellites; therefore,satellites because we assessed that the cost of insurance was uneconomical relative to the risk of failures. Therefore, we generally bear the risk of any uninsured in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our indebtedness, we are required, subject to certain limitations on coverage, to maintain launch and in-orbit insurance for our SPACEWAY 3, EchoStar XVI, and EchoStar XVII. In addition, althoughXVII satellites. Based on economic analysis of the current insurance market we obtained launch plus one year in-orbit insurance, subject to certain limitations, for the EchoStar XIX, EchoStar XXI and EchoStar XXIII satellites. Additionally, we obtained certain launch and in-orbit insurance for our interest in the EchoStar 105/SES-11 satellite. Our other satellites, either in orbit or underrequiredcovered by launch or in-orbit insurance. We will continue to maintain in-orbitassess circumstances going forward and make insurance pursuant todecisions on a case by case basis.service agreement with DISH Networksatellites for EchoStar XV, we are liableimpairment and test for any damage caused by our userecoverability 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, and therefore we carry third-party insurance on EchoStar XV.The five satellites received from DISH Network pursuant to the Satellite and Tracking Stock Transaction have experienced certain anomalies prior to March 1, 2014, the effective date of the Satellite and Tracking Stock Transaction as described below.EchoStar I. During the first quarter of 2012, DISH Network determined that EchoStar I experienced a communications receiver anomaly. The communications receivers process signals sent from the uplink center for transmission by the satellite to customers. While this anomaly did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not impact its future commercial operation. EchoStar I was fully depreciated prior to the date of the Satellite and Tracking Stock Transaction.EchoStar VII. Prior to 2012, EchoStar VII experienced certain thruster failures. During the fourth quarter of 2012, DISH Network determined that EchoStar VII experienced an additional thruster failure. Thrusters control the satellite's location and orientation. While this anomaly did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.EchoStar X. During the second and third quarters of 2010, EchoStar X experienced anomalies which affected seven solar array circuits reducing the number of functional solar array circuits to 17. While these anomalies did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.EchoStar XI. During the first quarter of 2012, DISH Network determined that EchoStar XI experienced solar array anomalies that reduced the total power available for use by the satellite. While these anomalies did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.EchoStar XIV. During the third quarter of 2011 and the first quarter of 2012, DISH Network determined that EchoStar XIV experienced solar array anomalies that reduced the total power available for use by the satellite. While these anomalies did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.We are not awarenecessarily considered to be significant events that would require a test of any anomalies that have occurred on any of our owned or leased satellites in 2014 as of the date of this report that affected the commercial operation of satellites.Federal Communications Commission ("FCC")FCC for our domestic, as well as somevarious international, satellite and telecommunications operations and equipment businesses. We are also regulated by other U.S. federal agencies, state and local authorities, the International Telecommunication Union ("ITU"(“ITU”), and certain foreign governments, including those in the EU.EU and North, South and Central 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. Depending upon the circumstances, noncompliance 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.adversely affectimpact 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.Operations.Operations. Non-governmental, 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"“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 an existing satellite with a 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.• • • • • ("DBS"(“DBS”) licenses is 10 years, and our U.S. fixed satellite services ("FSS"(“FSS”) licenses generally have 15 year terms. We hold licenses and authorizations for satellite and earth stations as well as other services, including terrestrial wireless services. To obtain and operate under such FCC licenses and authorizations, for satellites and earth stations, satellite operatorswe must satisfy legal, technical qualification requirements and financial qualification requirements. Once issued, these licenses and authorizations may be subject to a number ofother conditions including, among other things, satisfaction of certain technical and ongoing due diligence obligations, implementation bonds, annual regulatory fees and various reporting requirements, 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 arequirements. A license must be obtained prior to launching or operating the satellite, or that a license be obtained before interconnecting with the local switched telephone network.FCC Jurisdiction over Set-Top Box Operations. Our digital set-top boxes and similar devices must also comply with FCC technical standards and requirements, including accessibility and other requirements. The FCC has specific Part 15 regulations for television broadcast receivers and television interface devices.("USF"(“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 ("CALEA"(“CALEA”). CALEA generally requires telecommunications carriers to ensure that law enforcement agencies are able to conduct lawfully-authorizedl("VOIP"(“VOIP”), 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.may beare 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.Administrations'Administrations’ Jurisdiction Over Satellite and Terrestrial Operations.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 a U.S. satellite, 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 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,International Telecommunications Union ("ITU").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 BSSbroadcast satellite service (“BSS”) 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.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.("UN"(“UN”) Convention on the Registration of Objects Launched into Outer Space ("(“UN Convention"Convention”). The UN Convention requires a satellite'ssatellite’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.("ITAR"(“ITAR”), the Export Administration Regulations ("EAR"(“EAR”), and the trade sanctions laws and regulations administered by the U.S. Department of the Treasury'sTreasury’s Office of Foreign Assets Control ("OFAC"(“OFAC”).Commerce'sCommerce’s Bureau of Industry and Security ("BIS"(“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'sState’s Directorate of Defense Trade Controls ("DDTC"(“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 other similar foreign regulations, which generally prohibits companies and their intermediaries from making improperwaterwaste-water discharge and waste management, hazardous chemicals and product disposal, most significantly the Resource Conservation and Recovery Act ("RCRA"(“RCRA”) and the Emergency Planning and Community Right-to-Know Act ("EPCRA"(“EPCRA”). Under the RCRA, our Hughes segment is considered a small quantity generator.periodicannual reports with regulatorsregulatory agencies covering four areas: Emergency Planning, Emergency Release, Hazardous Chemical Storage, and Toxic Chemical Release.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 SARA Title III regulatory requirements and annually report quantities of onsite material storage using Tier II, reporting requirements of the Departmentstate DEQ (Department of Environmental Quality which requiresQuality) reporting the storage of hazardous materials in large quantities and if they've changed from year to year. These are state run programs and each state may have slightly different requirements.currently have no reason to believe that such costs will become material in the foreseeable future. We do not expect capital or other expenditures for environmental compliancethem to be material in 2015.2018. However, environmental requirements are complex, change frequently, and have become more stringent over time. Accordingly, we cannot provide assurance that these requirements will not change or become more stringent in the future in a manner that could have a material adverse effect on our business.In addition, we have pioneered numerous advances in the area of wireless communication systems, techniques and methodologies, television broadcasting, video placeshifting, video copy protection, and digital video recording.satellite TV set-top receivers and dual mode satellite and wireless handsets.customers'customers’ technicians and operators.Researchefforts not directly funded by our customersactivities generally are expensed as incurred. A significant portion of our research and development efforts have generally been conductedcosts are incurred in direct response toconnection with the specific requirements of a customer's order and, accordingly,customer’s order. In such instances, the amounts for these customer funded development efforts are charged to the customer and included in cost of sales. The portionCost of our cost of sales which includes research and development funded by customers for the years ended December 31, 2014, 2013 and 2012 wascosts incurred in connection with customers’ orders of approximately $68.4$27.9 million, $65.3$23.7 million and $60.9 million, respectively. In addition, we incurred $60.9 million, $67.9 million and $69.6$19.6 million for the years ended December 31, 2014, 20132017, 2016 and 2012, respectively, for2015, respectively. In addition, we incurred other research and development expenses funded byof approximately $31.7 million, $31.2 million and $26.4 million for the Company.2014, 20132017, 2016 and 2012,2015, see Note 17 in the notes to consolidated financial statements in Item 15 of this report. See Item 1A—1A. — Risk Factors for information regarding risks related to our foreign operations.2014,2017, we had approximately 4,4002,100 employees and generally consider relations with them to be good. Other than approximately 100170 of our employees located in Italy and Brazil, none are represented by a union.("SEC"(“SEC”). The public may read and copy any materials filed with the SEC at the SEC'sSEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information on the operation of the Public Reference Room. As an electronic filer, our public filings are also maintained on the SEC'sSEC’s internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is http://www.sec.gov.senior financial officers,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.officer'sofficer’s business experience during at least the past five years:Name Age Position 6164 Chairman 6669 Chief Executive Officer, President and Director 5760 Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer Mark W. Jackson 5460 President, EchoStar Technologies L.L.C.Anders N. Johnson57Chief Strategy Officer and President, EchoStar Satellite Services L.L.C. 6871 President, Hughes Communications, Inc. and Director Kenneth G. Carroll 5952 Executive Vice President Corporate and Business DevelopmentSandra L. Kerentoff 61Executive Vice President, Global Human ResourcesKranti K. Kilaru49Executive Vice President, Business Systems, IT and OperationsDean A. Manson4851 Executive Vice President, General Counsel and Secretary subsidiaries.Dugan.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 Network and from 1990 to 2006 served in several executive roles at DISH Network, alternatelyincluding as President, Chief Operating Officer, Chief Technical Officer and senior advisor from time to time. Mr. Dugan served as a director of Frontier Corporation from October 2006 until November 2009.Rayner.Rayner. Mr. Rayner has served as our Executive Vice President, Chief Financial Officer, and Treasurer since December 2012.2012 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 Chiefhad previously held the position ofas Chief Financial Officer of DISH Network from December 2004 to September 2006.Network. Before joining DISH Network in December 2004, Mr. Rayner served as Senior Vice President and Chief Financial Officer of Time Warner Telecom in Denver, beginning in June 1998.Mark W. Jackson. Mr. Jackson has served as President of EchoStar Technologies L.L.C. since 2004 and oversees all day to day operations of our EchoStar Technologies segment. Mr. Jackson served as President of EchoStar Technologies Corporation from June 2004 through December 2007.Johnson.Johnson. Mr. Johnson has served as President of EchoStar Satellite Services L.L.C. since June 2011.2011 and as our Chief Strategy Officer since September 2016. Before joining EchoStar, Mr. Johnson was previouslymost 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.Kaul.Kaul. Mr. Kaul has served as President of Hughes Communications, Inc. (“Hughes Communications”) since its formation in February 2006.2006, and as President of Hughes Network Systems, LLC, a wholly owned subsidiary of Hughes Communications (“HNS” 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 ("HNS" and, together with Hughes Communications, "Hughes"), a wholly owned subsidiary of Hughes Communications.Kenneth G. Carroll.HNS.CarrollKilaru has served as ouran Executive Vice President Corporate and Business Development since December 2012. Mr. Carroll served as our Executive Vice President and Chief Financial Officer from November 2011 to November 2012. Mr. Carroll, a 20-year veteran in the satellite TV and satellite broadband industry, served as Chief Operating Officer of EchoStar Satellite Services from August 2010 to June 2011, and as Executive Vice President, Business Development and International, of EchoStar Corporation from June 2011 to November 2011. Prior to joining EchoStar, from 2003 to 2010, Mr. Carroll served as President and Chief Operating Officer of WildBlue Communications, Inc., a nationwide satellite broadband company. In addition, Mr. Carroll previously served as Chief Financial Officer for Liberty Satellite & Technology and DTH satellite TV provider, PrimeStar.Sandra L. Kerentoff. Ms. Kerentoff has served as our Executive Vice President, Global Human Resources since February 2012, following her appointment as head of Global Human Resources in October 2011. Ms. Kerentoff also has served as Senior Vice President, Administration and Human Resources of Hughes Network Systems, LLC since April 2000. Ms. Kerentoff joined Hughes Network Systems, LLC in 1977May 2017 and from 1977 to 2000, held various positions of increasing responsibility.Kranti K. Kilaru. Mr. Kilaru has servedJuly 2013 until May 2017 as our Executive Vice President, Business Systems, IT and Operations since July 2013.Operations. Mr. Kilaru served as our Senior Vice President of our systems engineering group from April 2005 to July 2013 and was responsible for all broadcast centers, systems engineering, and global information technology infrastructure and operations. Mr. Kilaru joined EchoStar Technologies L.L.C. in 1989 and, from 1989 to 2005, held various positions of increasing responsibility.Manson.Manson. Mr. Manson has served as our Executive Vice President, General Counsel and Secretary since November 2011,2011. Mr. Manson also serves as Executive Vice President, General Counsel and is responsible for all legal and government affairsSecretary of EchoStar Corporation and its subsidiaries.Hughes Communications. Mr. Manson joined 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 of Hughes Communications in 2004.or results of operation, prospects or ability to fund a share 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. our primary customer, DISH Network. The loss of, or a significant reduction in, orders from, or a decrease in selling prices of digital set-top boxes,satellite services, broadband equipment and services, provision of satellite services and digital broadcast services, and/or other productsservices or servicesproducts to DISH Network would significantly reduce our revenue and materially adversely impact our results of operations.57.3%23.7%, 58.8%26.1% and 49.5%29.4% of our total revenue for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively. currently ourthe primary customer of digital set-top boxes, digital broadcast operationthe satellite services andprovided by our satellite services. These products and services are provided pursuant to contracts that expire onESS segment. For the years ended December 31, 20152017, 2016 and December 31, 2016, respectively.2015, DISH Network is also a wholesale distributor of the Hughes satellite internet service,accounted for 87.9%, 85.7% and in connection with such wholesale distribution, purchases certain broadband equipment from us to support the sale of the Hughes service. In addition, DISH Network has no obligations to continue to purchase our products and only certain obligations to continue to purchase certain86.3% of our services. Therefore, our relationshiptotal ESS segment revenue. We have entered into certain commercial agreements with DISH Network couldpursuant to which we provide DISH Network with satellite services at fixed prices for varying lengths of time depending on the satellite. See Note 19 in the notes to consolidated financial statements in Item 15 of this report for further discussion of our related party transactions with DISH Network. We depend on DISH Network for a significant portion of the revenue for our ESS segment, and we expect that DISH Network will continue to be terminatedthe primary source of revenue for our ESS segment. DISH Network may terminate or substantially curtailedcurtail its purchase of satellite services from us with little or no advance notice. Any material reduction in or terminationThe results of operations of our salesESS segment are linked to changes in DISH Network’s satellite capacity requirements. DISH Network’s capacity requirements have been driven by the addition of new channels and migration of programming to high-definition TV and video on demand services. The services that we provide to DISH Network or reduction in the prices it pays for the products and services it purchases from us could have a significant adverse effect on our business, resultsare critical to its nationwide delivery of operations, and financial position.As previously disclosed by DISH Network, in May 2012, Fox Broadcasting Company, Twentieth Century Fox Film Corp. and Fox Television Holdings, Inc. filed a lawsuit against DISH Network Corporation andcontent to its wholly owned subsidiary, DISH Network, L.L.C., incustomers across the U.S. District Court for the Central District of California, allegingThere is no assurance that certainwe will continue to provide satellite services provided by DISH Network, including Slingbox placeshifting functionality infringe their copyrights and breach their carriage contracts. An adverse decision against DISH Network could decrease the number of Sling Media technology enabled set-top boxes we sell to DISH Network which could have an adverse impact on the business operationsand DISH Network’s satellite capacity requirements may change for a variety of reasons, including its ability to construct and launch its own satellites. The success of our EchoStar Technologies segment.In addition, because a significant portion of our revenue is derived from DISH Network, our successESS segment also depends to a significant degree on the continued success of DISH Network in attracting new subscribers and marketing programming packages and other services. If DISH Network is unable to develop and effectively market compelling reasons for its subscribers to purchase its pay-TV services, and features to subscribers that will resultDISH Network’s need for our satellite services may decrease. Any termination, curtailment or reduction in the purchase of new digital set-top boxes, and in particular, new digital set-top boxes at the high-end of our product range that incorporate high-definition, multiple tuners, and other advanced technology.In addition, the timing of orders for digital set-top boxes fromsatellite services we provide to DISH Network could vary significantly depending on equipment promotions offered to its subscribers, changes in technology, and its use of remanufactured digital set-top boxes, whichor the prices that DISH Network pays us for such services may cause our revenue to vary significantly quarter over quarter and could expose us to the riskshave unused capacity on our satellites, require us to aggressively pursue alternative sources of inventory shortages or excess inventory. These inventory risks are particularly acute during product end-of-life transitions in whichrevenue for this business and have a new generationmaterial adverse effect on our business, results of digital set-top boxes is being deployedoperation and inventory of older generation digital set-top boxes is at a higher risk of obsolescence. This in turn could cause our operating results to fluctuate significantly.There are a relatively small number of potential new customers for our digital set-top boxes, and digital broadcast operations, and we expect this customer concentration to continue for the foreseeable future. asbecause there are a relatively small number of potential customers for our specialized services, and we have had limited success in attracting such potential new customers in the past. Furthermore, becauseHistorically, many potential customers of the maturing and competitive nature of the digital set-top box business, the limited number ofour ESS segment have 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 new customers and the short-term naturewho are competitors of our purchase ordersDISH Network (particularly if we continue to be perceived as affiliated with DISH Network we could in the future experience downward pricing pressure on our digital set-top boxes sold to DISH Network, which in turn would adversely affect our gross marginsas a result of common ownership and profitability.certain shared services). If we do not develop relationships with new customers, we may not be able to expand our customer base or maintain or increase our revenue.•The digital set-top box market ismarket leadership changes frequently asrapidly changing environment and competes with a resultgrowing number of new products, designs and pricing. We currently face competition from well-established companies, from new, rapidly growing companies, and from digital video providers who have developed their own digital set-top boxes, and in the future we may face competition from new and existing companies that do not currently compete in the market for set-top boxes. Ifprovide products and services to consumers. There can be no assurance that we do not distinguish our products, particularly our retail products, through distinctive, technologically advanced features and design, as well as build and strengthen our brand recognition, our business could be harmed as we may notwill be able to effectively compete on price alone against new low cost market entrants. Increased pricing pressure may also make it particularly difficult for usour competitors due to make profitable sales in international markets where new competitors are presenttheir significant resources and in which we have not previously made sales of set-top boxes. In addition, it can be difficultoperating history. Risks to acquire additional market share in the digital set-top box market because gaining additional market share would require displacing well-established companies who have had long term contracts with major cable operators in the U.S., which results in relatively high costs for cable operators to change set-top box providers making it more difficult for us to displace potential customers from their current relationships with our competitors. Any of these competitive threats, alone or in combination with others, could harm our business operating results and financial condition.•Our satellite services business competes against larger, well-established satellite service companies, such as Intelsat, SES, Telesat, and Eutelsat. Becausefrom competition include, but are not limited to, the satellite services industry is relatively mature, our growth strategy depends largely on our ability to displace current incumbent providers, which often have the benefit of long-term contracts with customers. These long-term contracts and other factors result in relatively high costs for customers to change service providers, making it more difficult for us to displace customers from their current relationships with our competitors. In addition, the supply of satellite capacity available in the market has increased in recent years, which makes it more difficult for us to sell our services in certain markets and to price our capacity at acceptable levels. Competition may cause downward pressure on prices and further reduce the utilization of our capacity, both of which could have an adverse effect on our financial performance. Our satellite services business also competes with fiber optic cable and other terrestrial delivery systems, which may have a cost advantage, particularly in point-to-point applications where such delivery systems have been installed.•In our consumer market, we face competition primarily from DSL and cable internet service providers. Also, other telecommunications, satellite and wireless broadband companies have launched or are planning the launch of consumer internet access services in competition with our service offerings in North America. Some of these competitors offer consumer services and hardware at lower prices than ours. In addition, terrestrial alternatives do not require ourexternal dish, which may limit customer acceptance of our products. We may be unsuccessful in competing effectively against DSL and cable service providers and other satellite broadband providers, which could harm our business, operating results and financial condition.•• • we faceour Hughes segment faces competition from providers of terrestrial-based networks, such as fiber, DSL, cable modem service, multiprotocol label switching and internet protocol-based virtual private networks, which may have advantages over satellite networks for certain customer applications. Although we also sell terrestrial services to this market, we may not be as cost competitive and it may become more difficult for us to compete. The network communications industry is characterized by competitive pressures to provide enhanced functionality for the same or lower price with each new generation of technology. Terrestrial-based networks are offered by telecommunications carriers and other large companies, many of which have substantially greater financial resources and greater name recognition than us. As the prices of our products decrease, we will need to sell more products and/or reduce the per-unit costs to improve or maintain our results of operations. The costs of a satellite network may exceed those of a terrestrial-based network or other networks, especially in areas that have experienced significant DSL and cable internet build-out. It may become more difficult for us to competeThe average selling price and gross margins of our digital set-top boxes have been decreasing and may decrease even further, which could negatively impact our financial position and results of operations.The average selling price and gross margins of our digital set-top boxes have been decreasing and may decrease even further due to, among other things, an increase in the sales of lower-priced digital set-top boxes to DISH Network and increased competitive pricing pressure. Furthermore, our ability to increase the average selling prices of our digital set-top boxes is limited and our average selling price may decrease even further in response to competitive pricing pressures, new product introductions by us or our competitors, lack of demand for our new product introductions or other factors. If we are unable to increase or at least maintain the average selling prices of our digital set-top boxes, or if such selling prices further decline, and we are unable to respond in a timely manner by developing and introducing new products and continually reducing our product costs, our revenue and gross margin may be negatively affected, which will harm our financial position and results of operations.If significant numbers of television viewers are unwilling to pay for pay-TV services that utilize digital set-top boxes, we may not be able to sustain our current revenue level.We are substantially dependent upon the ability of our customers to promote the delivery of pay-TV services, including, among others, premium programming packages and services that utilize technology incorporated into our digital set-top boxes, such as HD technology and IPTV, to generate future revenue.However, our customers may be unsuccessful in promoting value-added services or may promote alternative packages, such as free programming packages, in lieu of promoting packages that utilize our high-end digital set-top box offerings. If our customers are unable to develop and effectively market compelling reasons for their subscribers to continue to purchase their pay-TV services that utilize our more advanced digital set-top boxes, it will be difficult for us to sustain our historical revenue. Furthermore, as technologies develop, other means of delivering information and entertainment to television viewers are evolving and contributing to increasing consumer demand for online platforms that provide for the distribution and viewing of movies, television and other video programming that competes with our customers' pay-TV services. that these online platforms and other new technologies compete successfully against our customers for viewers, the ability of our existing customer base to attract and retain subscribers may be adversely affected. As a result, demand for our satellitetelevision digital set-top boxes could decline and we may not be able to sustain our current revenue levels.We may have available satellite capacity in our EchoStar Satellite ServicesESS segment, and our results of operations may be materially adversely affected if we are not able to leaseprovide satellite services on this capacity to third parties, including DISH Network.We have available satellite capacity in our EchoStar Satellite Services segment. we do not have firm plans to utilize all of our satellite capacity. Therethere can be no assurance that we can successfully develop thethese business opportunities we currently plan to pursue to utilize this capacity.opportunities. If we are unable to leaseutilize our available satellite capacity for providing satellite services to third parties, including DISH Network, our margins could be negatively impacted, and we may be required to record impairments related to our satellites.backlog, as well as anticipated future business.backlog. If future demand does not meet our expectations,existing customer contracts were to be terminated prior to their respective expiration dates, we may be committed to maintaining excess satellite capacity for which we will have insufficient revenue to cover our costs, which would have a negative impact on our margins and results of operations oroperations. Alternatively, we may not have sufficient satellite capacity to meet demand. We have satellite capacity commitments, generally for two to five year terms, withavailable from our satellites or purchased from third parties to cover different geographical areas or support different applicationsmeet demand and features; therefore, we may not be able to quickly or easily adjust our capacity to changes in demand. If weAs capacity becomes full on our existing satellites, significant delays in the construction or launch of new satellites and/or satellite anomalies or failures could materially and adversely affect our ability to provide services to customers. We generally only purchase satellite capacity based on existing contracts and bookings,bookings. Therefore, capacity for certain types of coverage in the future may not be readily available to us, and we may not be able to satisfy certain needs of our customers, which could result in a loss of possible new business and could negatively impact the margins earned for those services. At present, untilOur ability to provide additional capacity for subscriber growth in our North American consumer market could also be adversely affected by regulations and/or legislation in the launchU.S. that enable or propose to enable the use of a portion of the frequency bands, we currently use or in the future intend to use for satellite services, 5G mobile terrestrial services or other uses. These bands include the Ka-band, where we operate our broadband gateway earth stations, and operation of additional satellites, there is limited availability of capacity onother bands in which we may operate in the frequenciesfuture. Such regulation or legislation could limit our ability to use the Ka-band and/or other bands, limit our flexibility to change the way in which we use the Ka-band and/or adversely impact our ability to use additional bands in North America.the future. Other countries in which we currently, or may in the future, operate are also considering regulations that could similarly limit access to the Ka-band or other frequency bands. In addition, the FSS industry has seen consolidation in the past decade, and today, the main FSS providers in North America and a number of smaller regional providers own and operate the current satellites that are available for our capacity needs. The failure of any of these FSS providers to replace existing satellite assets at the end of their useful lives or a downturn in their industry as a whole could reduce or interrupt the satellite capacity available to us. IfOur business and results of operations could be adversely affected if we are not able to renew our capacity leases at economically viable rates, or if capacity is not available due to problems experienced by thethese FSS providers our business and results of operations could be adversely affected.•Components. A limited number of suppliers and in some cases a single supplier manufacture some of the key components required to build our products. Our reliance on a single or limited group of suppliers, particularly foreign suppliers, and our reliance on subcontractors, involves several risks. These risks include a potential inability to obtain an adequate supply of required components, and reduced control over pricing, quality, and timely delivery of these components. We do not generally maintain long-term agreements with any of our suppliers or subcontractors for our products. An inability to obtain adequate deliveries or any other circumstances requiring us to seek alternative• digital set-top boxesreducereduced revenue and income.•Commodity Price Risk. Fluctuations in pricing of raw materials have the ability to affect our product costs. To the extent that component pricing does not decline or increases, whether due to inflation, increased demand, decreased supply or other factors, we may not be able to pass on the impact of increasing raw materials prices or labor and other costs, to our customers, and we may not be able to operate profitably. Although we have been successful in offsetting or mitigating our exposure to these fluctuations, such changes could have an adverse impact on our product 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, then our customer relationships may be harmed.•Installation and customer support services. Each of our North American and international operations utilizes a network of third-party installers to deploy our hardware. In addition, a portion of our customer support and management is provided by offshore call centers. Since we provide customized services for our customers that are essential to their operations, 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 new business.• • • • regulatory risks and restrictions not present in our domestic operations.operationssales outside the U.S. are growing and accounted for approximately 14.1%19.3%, 14.1%18.2% and 23.0%17.3% of our revenue for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively. Collectively, we expect our foreign operations to continue to represent a significant and growing portion of our business. We have operations in Brazil, Canada, Germany, India, Italy, Mexico, the Russian Federation, the United Arab Emirates, Ireland and the United Kingdom, among other nations. Over the last 10 years, we have sold products in over 100 countries and began offering broadband internet services to consumers in Brazil and Colombia and intend to continue to do so in other Central and South American countries. 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. We may not be permitted to own our operations in some countries and may have to enter into partnership or joint venture relationships. Many foreign legal regimes 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 in certain circumstances. In such event, we will not have access to the cash flow and assets of our subsidiaries and joint ventures.•Difficulties in following a variety of laws and regulations related to foreign operations. Our international operations are subject to the laws of many different jurisdictions that may differ significantly from U.S. law. For example, local political or intellectual property law may hold us responsible for the data that is transmitted over our network by our customers. In addition, we are 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 officials and other individuals for the purpose of obtaining or retaining business or gaining a competitive advantage. Our policies mandate compliance with these laws. However, we operate in many parts of the world that have experienced corruption to some degree. Compliance with these laws may lead to increased operations costs or loss of business opportunities. Violations of these laws could result in fines or other penalties or sanctions, which could have a material adverse impact on our business, financial condition, and results of operations.• • • •Restrictions on space station landing rights/coordination. Satellite market access and landing rights are dependent on the national regulations established by foreign governments, including, but not limited to: (a) national authorization, coordination requirements and registration requirements for satellites; and (b) reporting requirements of national telecommunications regulators with respect to service provision and satellite performance. Because regulatory schemes vary by country, we may be subject to laws or regulations in foreign countries of which we are not presently aware. Non-compliance with these requirements may result in the loss of the authorizations and licenses to conduct business in these countries. If that were to be the case, we could be subject to sanctions by a foreign government that could materially and adversely affect our ability to operate in that country. There is no assurance that any current TheViolations of laws or regulations may result in various sanctions including fines, loss of authorizations and the denial of applications for new authorizations or for the renewal of existing authorizations, and the failure to obtain or comply with the authorizations necessary to operate satellites internationallyand regulations governing our international operations could have a material adverse effect on our ability to generate revenue and our overall competitive position.•Financial and legal constraints and obligations.• • • • • • certainprovide services at a fixed price for the term of the contract. To facilitate the provision of this access, we may enter into contracts with terrestrial platform providers. Our agreements with these subcontractors may allow for prices to be changed during the term of the contracts. We assume greater financial constraints and obligations, including, but not limited to: (a) tax liabilities that may or may not be dependentrisk on revenue; (b) the burdenthese customer contracts than on other types of creating and maintaining additional facilities and staffing in foreign jurisdictions; and (c) legal regulations requiring that we make certain satellite capacity available for "free," which may impact our revenue. In addition,contracts because if we ever need to pursue legal remedies againstdo not estimate costs accurately and there is an increase in our customers orsubcontractors’ prices, our business partners located outside of the U.S., itnet profit may be difficult for us to enforce our rights against them.•Compliance with applicable export control laws and regulations insignificantly reduced or there may be a loss on the U.S. and other countries. We must comply with all applicable export control laws and regulations of the U.S. and other countries. U.S. laws and regulations applicable to us include the Arms Export Control Act, the ITAR, the EAR and the trade sanctions laws and regulations administered by the OFAC. The export of certain hardware, technical data and services relating to satellites is regulated by BIS under EAR. Other items are controlled for export by the DDTC under ITAR. We cannot provide services to certain countries subject to U.S. trade sanctions unless we first obtain the necessary authorizations from OFAC. Violations of these laws or regulations could result in significant sanctions including fines, more onerous compliance requirements, debarments from export privileges, or loss of authorizations needed to conduct aspects of our international business. A violation of ITAR or the other regulations enumerated above could materially adversely affect our business, financial condition and results of operations.•Changes in exchange rates between foreign currencies and the U.S. dollar. We conduct our business and incur cost in the local currency of a number of the countries in which we operate. Accordingly, our results of operations are reported in the relevant local currency and then translated to U.S. dollars at the applicable currency exchange rate for inclusion in our financial statements. These fluctuations in currency exchange rates have affected, and may in the future affect, revenue, profits and cash earned on international sales. In addition, we sell our products and services and acquire supplies and components from countries that historically have been, and may continue to be, susceptible to recessions or currency devaluation.•Greater exposure to the possibility of economic instability, the disruption of operations from labor and political disturbances, expropriation or war. As we conduct operations throughout the world, we could be subject to regional or national economic downturns or instability, labor or political disturbances or conflicts of various sizes. Any of these disruptions could detrimentally affect our sales in the affected region or country or lead to damage to, or expropriation of, our property or danger to our personnel.•Competition with large or state-owned enterprises and/or regulations that effectively limit our operations and favor local competitors. 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 deregulated. The slower pace of deregulation in these countries, particularly in Asia and Latin America, has adversely affected the growth of our business in these regions.•Customer credit risks. Customer credit risks are exacerbated in foreign operations because there is often little information available about the credit histories of customers in certain of the foreign countries in which we operate.investments in North and South America, Asia, Europe and elsewhere.investments. These investments involve a high degree of risk and could diminish our financial condition or our ability to fund a share repurchase program, invest capital in our business or return capital to our shareholders. The overall sustained economic uncertainty, as well as financial, operational and other difficulties encountered by certain companies in which we have invested increases the risk that the actual amounts realized in the future on our debt and equity investments will differ significantly from the fair values currently assigned to them. In addition, the companies in which we invest or with whom we partner may not be able to compete effectively or there may be insufficient demand for the services and products offered by these companies. These investments could also expose us to significant financial losses and may restrict our ability to make other investments or limit alternative uses of our capital resources. If our investments suffer losses, our financial condition could be materially adversely affected. In addition, the companies in which we invest or with whom we partner may not be able to compete effectively or there may be insufficient demand for the services and products offered by these companies.acquisitions,investments, commercial alliances, partnerships, joint ventures, acquisitions or other business combinationstrategic initiatives or development activities, including, without limitation, the design, development, construction and launch of new satellites, to complement or expand our business.business and satellite fleet. Any such acquisitions, activities, transactions or investments that we are able to identify and complete which may become substantial over time, involve a high degree of risk, including, but not limited to, the following:•the diversion of our management's attention from our existing business to integrate the operations and personnel of the acquired or combined business or joint venture;•the ability and capacity of our management team to carry out all of our business plans, including with respect to our existing businesses and any businesses we acquire or embark on in the future;•possible adverse effects on our operating results during the integration process;•exposure to significant financial losses if the transactions and/or the underlying ventures are not successful; and/or we are unable to achieve the intended objectives of the transaction;•the inability to obtain in the anticipated time frame, or at all, any regulatory approvals required to complete proposed acquisitions, transactions or investments; and•the risks associated with complying with regulations applicable to the acquired business which may cause us to incur substantial expenses.• • • • • • • • • • acquisitions,investments, commercial alliances, partnerships, joint ventures, acquisitions, development activities, including, without limitation, the design, development, construction and launch of new satellites, and other transactionsstrategic initiatives may require the commitment of significant capital that may otherwise be directed to investments in our existing businesses or be distributed to shareholders. Commitment of this capital may cause us to defer or suspend any share repurchases or capital expenditures that we otherwise may have made.Hughes Satellite Systems Corporation ("HSS"),subsidiary that, together with its subsidiaries, operates our Hughes segment and our EchoStar Satellite Services segment, has incurred significant indebtedness. HSS currently has outstanding $1.10 billion of senior secured notes (the "Secured Notes") and $900.0 million of senior unsecured notes (the "Unsecured Notes" and, together with the Secured Notes, the "Notes"), which are due in 2019 and 2021, respectively. HSS'total indebtedness was approximately $3.63 billion. Our ability to make payments on or to refinance itsour indebtedness and to fund itsour operations will depend on itsour ability to generate cash in the future, which is subject in part to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. HSSWe may need to raise additional debtcapital in order to fund ongoing operations or to capitalize on business opportunities. HSSWe may notHSSus to service itsour indebtedness or to fund itsour operations or other liquidity needs. If HSS iswe are unable to generate sufficient cash, itwe may be forced to take actions such as revising or delaying itsour strategic plans, reducing or delaying capital expenditures and/or the development, design and construction of new satellites, selling assets, restructuring or refinancing itsour debt or seeking additional equity capital. HSSWe may not be able to implement any of these remediesactions on satisfactory terms, or at all. The indentures governing the Notes alsoour indebtedness limit HSS'our ability to dispose of assets and use the proceeds from such dispositions. Therefore, HSSwe may not be able to consummate those dispositions on satisfactory terms, or at all, or to use those proceeds in a manner itwe may otherwise prefer.weaknessconditions in the financial markets could make it difficult for us to access capital markets at acceptable terms or at all. Instability or other conditions in the equity markets could make it difficult for us to raise equity financing without incurring substantial dilution to our existing shareholders. In addition, sustained or increased economic weaknessweaknesses or pressures or new economic conditions may limit our ability to generate sufficient internal cash to fund investments, capital expenditures, acquisitions, and other strategic transactions.transactions and/or the development, design and construction of new satellites. We cannot predict with any certainty whether or not we will be impacted by sustained economic weakness.conditions. As a result, these conditions make it difficult for us to accurately forecast and plan future business activities because we may not have access to funding sources necessary for us to pursue organic and strategic business development opportunities.HSS'our indentures restrict itsour business in many ways.HSS'our ability and/or itsour restricted subsidiaries'subsidiaries’ ability to, among other things:•pay dividends or make distributions on HSS' capital stock or repurchase HSS' capital stock;•incur additional debt;•make certain investments;•create liens or enter into sale and leaseback transactions;•merge or consolidate with another company;•transfer and sell assets;•• • • • and• • •subsidiaries of HSSHSS’ subsidiaries to pay dividends, make distributions, make other payments, or transfer assets to HSS or its subsidiaries.HSS'our business, financial condition, results of operations or prospects. If an event of default occurs and is continuing under the respective indenture, the trustee under that indenture or the requisite holders of the Notesnotes under that indenture may declare all such Notesnotes to be immediately due and payable and, in the case of the indentureindentures governing the Secured Notes,any of our secured notes, could proceed against the collateral that secures the Secured Notes. HSS and certainapplicable secured notes. Certain of itsour subsidiaries have pledged a significant portion of theirour assets as collateral underto secure the indenture governing2019 Senior Secured Notes and the 2026 Senior Secured Notes. If HSS doeswe do not have enough cash to service itsour debt or fund other liquidity needs, itwe may be required to take actions such as requesting a waiver from the holders of the Notes,notes, reducing or delaying capital expenditures, selling assets, restructuring or refinancing all or part of the existing debt, or seeking additional equity capital. We cannot assure you that any of these remedies can be implemented on commercially reasonable terms or at all, which could result in the trustee declaring the Notesnotes to be immediately due and payable and/or foreclosing on the collateral.allsome of our key executives may have agreements limitingrelating to their equity compensation that limit their ability to work for or consult with competitors, if they leave us,under certain circumstances, we generally do not have employment agreements with them. To the extent Mr. Ergen or other officers are performing services tofor both DISH Network and us, their attention may be diverted away from our business and therefore adversely affect our business.Pursuantpreferred tracking stockbusiness is conducted in the EU, including the U.K., any of these and related agreementsother changes, implications and policies, weconsequences may adversely affect our business and results of operations.use assets attributed to one group to pay liabilities attributedexamination by the Internal Revenue Service (“IRS”), state, and foreign tax authorities. There can be no assurance as to the outcome of these examinations. If the ultimate determination of taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected.group.Even though we attribute, for financial reporting purposes, alltax laws, statutes, rules, regulations or ordinances could be enacted at any time, which, like the 2017 Tax Act, could affect the tax treatment of our consolidateddomestic and foreign earnings. Any new taxes could adversely affect our domestic and international business operations and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. The 2017 Tax Act contains many significant changes to U.S. tax laws, including changes in corporate tax rates, the availability of net deferred tax assets liabilities, revenue, expensesrelating to our U.S. operations, the taxation and repatriation of foreign earnings, and the deductibility of expenses. The 2017 Tax Act or other tax reform legislation has had and could have a material impact on the value of our deferred tax assets, has and could result in significant charges in the current or future taxable years, and could increase our future U.S. tax expense. Furthermore, changes to the taxation of undistributed foreign earnings could change our future intentions regarding reinvestment of such earnings. The foregoing items could have a material adverse effect on our business, cash flow, financial condition or results of operations.flowsflows.either the EchoStar Group or the Hughes Retail Group (see Note 2 in the notes to consolidated financial statements in Item 15 of this report for a further discussiontiming of the tracking stock, the EchoStar Groupenactment and the Hughes Retail Group)complexity involved in applying the provisions of the 2017 Tax Act, we made reasonable estimates of the effects and prepare separate attributed financial information for the Hughes Retail Group, we retain legal title to all of our assets and our capitalization will not limit our legal responsibility, or that of our subsidiaries, for the liabilities includedrecorded provisional amounts in our financial statements for the year ended December 31, 2017. The U.S. Treasury Department, the IRS and such attributed financial information.other standard-setting bodies may issue guidance on how the provisions of the 2017 Tax Act will be applied or otherwise administered that is different from our interpretation. As such,we collect and prepare necessary data, and interpret the assets attributed to one group are potentially subject2017 Tax Act and any additional guidance issued by the IRS or other standard-setting bodies, we may make adjustments to the liabilities attributed to the other group, even if those liabilities arise from lawsuits, contracts or indebtednessprovisional amounts that are attributed to such other group. Although the Policy Statement generally requires that all changescould materially affect our financial position and results of operations as well as our effective tax rate in the attribution of assets from one group toperiod in which the other group will be made on a fair value basis as determined in accordance with certain guiding principles, these policies and our articles of incorporation generally do not prevent us from satisfying liabilities of one group with assets of the other group, and our creditorsadjustments are not limited by our tracking stock capitalization from proceeding against any assets they could have proceeded against if we did not have a tracking stock capitalization.made.and general failures resulting from operating satellites in the harsh environment of space.relationshiprelationships with current customers and our ability to attract new customers. In particular, future anomalies or outages may result in, among other things, the loss of individual transponderstransponders/beams and/or functional solar array circuits on a satellite, a group of transponderstransponders/beams on that satellite or the entire satellite, depending on the nature of the anomaly.anomaly or outage. Anomalies or outages 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.spacecraftsatellites are in uncontrolled orbits, which pass through the geostationary belt at various points and present hazards to operational spacecraft,satellites, including our 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. The loss, damage or destruction of any of our satellites as a result of an electrostatic storm, collision with space debris, malfunction or other event could have a material adverse effect on our business, financial condition and results of operations.generally dohistorically have not carrycarried in-orbit insurance on anymany of our satellites other than SPACEWAY 3, EchoStar XV, EchoStar XVI and EchoStar XVII, and often do not use commercial insurance to mitigate the potential financial impact of launch or in-orbit failures because we believehave assessed that the cost of such insurance premiums is uneconomical relative to the risk of such failures. If one or more of our in-orbit uninsured satellites fail, we could be required to record significant impairment charges for the satellite.satellite'ssatellite’s functions, the efficiency of the launch vehicle used, and the remaining on-board fuel following orbit insertion.SuchAdditionally, such relocation would require FCCgovernmental approval. We cannot be certain that we could obtain such FCCgovernmental approval. In addition, we cannot guarantee that another satellite will be available for use as a replacement for a failed or lost satellite, or that such relocation can be accomplished without a substantial utilization of fuel. Any such utilization of fuel would reduce the operational life of the replacement satellite.satellites.CertainThe 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. There also can be no assurance that the technologies in our existing satellites or in new satellites that we design and build will work as we expect and/or will not become obsolete, that we will realize any or all of the anticipated benefits of our satellite designs or our new satellites, or that we will obtain all regulatory approvals required to operate our new satellites. In addition, certain launch vehicles that may be used by us have either unproven track records or have experienced launch failures in the past. The risks of launch delay, launch anomalies and launch failure are usually greater when the launch vehicle does not have a track record of previous successful flights. 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 more than three years, and to obtain other launch opportunities. Construction and launchSuch significant delays could materially and adversely affect our business, expenses and results of operations, 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 as capacity becomes full on existing satellites. 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. A customer’s termination of its service contracts with us as a result of a launch delay or failure would reduce our contracted backlog and our ability to generate revenue. One of our primary launch services providers is a Russian Federation state-owned company. RecentCertain ongoing political events including the imposition of sanctions, have created uncertainty as to the stability of U.S. and Russian Federation relations. This could add to risks relative to scheduling uncertainties and timing. Historically, we generally have not carriedIf a launch insurance for the launch of our satellites; if a launchdelay, anomaly or failure were to occur, it could result in the revocation of the applicable license to operate the satellite, undermine our ability to implement our business strategy or develop or pursue existing or future business opportunities with applicable licenses and otherwise have a material adverse effect on our business, expenses, assets, revenue, results of operations and ability to fund future satellite procurement and launch opportunities. In addition,Historically, we have not always carried launch insurance for the launch of our satellites and the occurrence of launch anomalies and failures, whether on our satellites or those of others, may significantly reduce our ability to place launch insurance for our satellites or make launch insurance premiums uneconomical.("MVDDS"(“MVDDS”) in the DBS band. Several MVDDS systems are now being commercially deployed. Despite regulatory provisions designed to protect DBS and FSS operations from harmful interference, there can be no assurance that operations by other satellites or terrestrial communication services in the DBS and FSS bands will not interfere with our DBS and FSS operations and adversely affect our business.SS/LSSL and Thales Alenia Space. There are also a limited number of launch service providers that are able to launch such satellites, including International Launch Services, Arianespace, UnitedLockheed Martin Commercial Launch Alliance,Services and Space Exploration and Sea Launch Company.Exploration. The loss or failure to perform of any of our manufacturers or launch service providers could increase the cost and result in the delay of the design, construction or launch of our satellites. Even if alternate suppliers for such services are available, we may have difficulty identifying them in a timely manner or we may incur significant additional expense in changing suppliers, and this could result in difficulties or delays in the design, construction or launch of our satellites. Any delays in the design, construction or launch of our satellites could have a material adverse effect on our business, financial condition and results of operations.wouldcould be adversely affected.retainmotivate these employees, we may not succeed in this respect.digital set-top boxesproducts will depend significantly on the growing demand for advanced technologies, such as Ultra HDTV, 3D TV, whole-home HD DVR features, mobile internet delivery of video content and broadband internet connectivity, and on digital television operators developing and building infrastructure to provide these advanced technologies.connectivity. If the deployment of, or demand for, advanced technologies is not as widespread or as rapid as we or our customers expect, our revenue growth will be limited.negatively impacted.operations.operations or prospects. Even if we believe any such challenges or claims areprove to be without merit, they can be time-consuming and costly to defend and may divert management'smanagement’s attention and resources away from our business. multiple patent infringement actions and may assert our own actions against parties we suspect of infringing our patents and trademarks. We cannot be certain the courts will conclude these companies 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. We also cannot be certain that we will be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be able to redesign our products and services to avoid infringement. The legal costs associated with defending patent suits and pursuing patent claims against others may be borne by us if we are not awarded reimbursement through the legal process. Please seeSee further discussion under Item 1. Business—- Business — Patents and Trademarks and Item 3. - Legal Proceedings of this Annual Report on Form 10-K.digital set-top boxesproducts is compromised, sales of our digital set-top boxesproducts may decline.digital set-top boxesproducts that they purchase from usto controlprotect their data and products from unauthorized access to their programming content.the features or functionalities of such products. Such encryption and related security technology has been compromised in the past and may be compromised in the future even though we continue to respond with significant investment in security measures, such as updates in security software, that are intended to make signaldata theft more difficult. It has been our prior experience that security measures may only be effective for short periods of time or not at all. We cannot ensure that we will be successful in reducing or controlling theft of our customers' programming content.customers’ data. As a result, sales of our digital set-top boxesproducts may decline, our reputation and customer relationship could be damaged and we may incur additional costs or financial liability in the future if security of our customers'customers’ system is compromised.or other destructive or disruptive software, process breakdowns,ransomware, unauthorized access, denial of service attacks or other malicious, activities. An increasing number of companies recently disclosed securitydestructive or disruptive events. Security breaches, attacks, viruses, unauthorized access and other malicious, destructive or disruptive events or activities have significantly increased in recent years, and some of whichthem have involved sophisticated and highly targeted attacks on their computer networks. Our networks, systems and technologies and those of our third-party service providers and our customers may also be vulnerable to such security breaches, attacks, malicious activities and unauthorized access, resulting in misappropriation, misuse, leakage, corruption, unscheduled downtime, falsification and accidental or intentional release or loss of information maintained on our and our third party service providers’ information technology systems and networks, including but not limited to customer, personnel and vendor data. If such risks were to materialize, we could be exposed to significant costs and interruptions, delays or malfunctions in our operations, any of which could damage our reputation and credibility and have a material adverse effect on our business, financial condition and results of operations. We may also be required to expend significant resources to protect against the threat of security breachesthese threats or to alleviate problems, including reputational harm and litigation, caused by any breaches. Although we have implementedsignificantly invested in and intend to continue to implement industry-standardgenerally recognized security measures, these measures may prove to be inadequate and weOur inabilityA security breach or attack could impact our ability to expand or upgrade our technology infrastructure which could have adverse consequences, which could includeincluding the delayed implementation of new offerings, product or service interruptions, and the diversion of development resources.set-top boxesour products may contain software "bugs"“bugs” that can unexpectedly interfere with their operation. 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'customers’ existing networks, each of which has different specifications and utilize multiple protocol standards. Our products and services must interoperate with the other products and services within our customers'customers’ networks, as well as with future products and services that might be added to these networks, to meet our customers'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 result in: (i) additional costs to correct such defects; (ii) cancellation of orders and lost revenue; (iii) a reduction in revenue backlog; (iv) product returns or recalls; (v) diversion of our resources; (vi) the issuance of credits to customers and other losses to us, our customers or end-users; (vii) liability for harm to persons and (vii)property caused by defects in or failures of our products or services; and (viii) harm to our reputation if we fail to detect or effectively address such issues through design, testing or warranty repairs. Any of these occurrences could also result in the loss of or delay in market acceptance of our products and services and loss of sales, which would harm our reputation and our business and materially adversely affect our revenue and profitability.time.time and may limit or constrain and/or have other adverse effects on and implications for our business and operations. The United States and 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. Moreover, the U.S. and a substantial number of foreign countries in which we have, or may in the future make, an investment, regulate, in varying degrees, the ownership of satellites and the distribution and ownership of programming servicesother telecommunication facilities/networks and foreign investment in telecommunications companies. Violations of laws or regulations may result in various sanctions including fines, loss of authorizations and the denial of applications for new authorizations or for the renewal of existing authorizations. Further material changes in law and regulatory requirements must be anticipated,may also occur, and there can be no assurance that our business and the business of our subsidiaries and affiliates will not be adversely affected by future legislation, new regulation or deregulation. The failure to obtain or comply with the authorizations and regulations governing our operations could have a material adverse effect on our ability to generate revenue and our overall competitive position and could result in our suffering serious harm to our reputation.earth stationslicenses or for the renewal of existing ones. If the FCC or other regulators were to cancel, revoke, suspend, or fail to renew any of our licenses or authorizations, or fail to grant our applications for FCC or other licenses, it could have a material adverse effect on our business, financial condition and results of operations. Specifically, loss of a frequency authorization or limitations on our ability to use the frequencies we currently use and/or intend to use in the future would reduce the amount of spectrum available to us, potentially reducing the amount of services we provide to our customers. The significance of such a loss of authorizations would vary based upon, among other things, the orbital location, the frequency band and the availability of a replacement spectrum. In addition, the legislative and executive branches of the U.S. government and foreign governments often consider legislation and regulatory requirements thatOur ability to sell our digital set-top boxes to certain operators depends on our ability to obtain licenses to use the conditional access systems utilized by these operators.Our commercial success in selling our digital set-top boxes to cable television and other operators depends significantly on our ability to obtain licenses to use the conditional access systems deployed by these operators in our digital set-top boxes. In many cases, the intellectual property rights to these conditional access systems are owned by the set-top box manufacturer that currently provides the system operator with its set-top boxes. We cannot assure you that we will be able to obtain required licenses on commercially favorable terms, or at all. If we do not obtain the necessary licenses, we may be delayed or prevented from pursuing the development of some potential products with cable or other television operators. Our failure to obtain a license to use the conditional access systems that we may require to develop or commercialize our digital set-top boxes with cable television or other operators, in turn, would harm our ability to grow our customer base and revenue.USF.34.1%45.9% of our total equity securities (assuming conversion of only the Class B Common Stock heldcommon stock beneficially owned by Mr. Ergen into Class A Common Stock)common stock and possessesgiving effect to the exercise of options held by Mr. Ergen that are either currently exercisable or may become exercisable within 60 days of February 12, 2018) and beneficially owns approximately 62.4%72.4% of the total voting power.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'sErgen that are either currently exercisable or may become exercisable within 60 days of February 12, 2018). Mr. Ergen’s beneficial ownership of us excludes 1,6361,640 shares of our Class A Common Stockcommon stock and 15,188,4459,777,751 shares of our Class A Common Stockcommon stock issuable upon conversion of shares of our Class B Common Stock,common stock, in each case, currently held by certain trusts established by Mr. Ergen for the benefit of his family. These trusts beneficially own approximately 15.5%16.9% of our total equity securities (assuming conversion of only the Class B Common Stock common stockCommon Stock)common stock) and possessbeneficially own approximately 29.1%18.6% of the total voting power of all classes of shares (assuming no conversion of any Class B common stock). Through his beneficial ownership of our total voting power. Thus,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'sErgen’s voting power, we are a "controlled company"“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 (iv)funding to retain compensation consultants and other advisors and/or (v) director nominees selected, or recommended for the Board'sBoard’s selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors.ownership and management.•Cross officerships, directorships and stock ownership. We have certain overlap in directors and executive officers with DISH Network, which may lead to conflicting interests. Our Board of Directors includes persons who are members of the Board of Directors of DISH Network, including Charles W. Ergen, who serves as the Chairman of DISH Network and us. The executive officers and the members of our Board of Directors who overlap with DISH Network also have fiduciary duties to DISH Network's shareholders. Therefore, these individuals 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, many of our directors and officers own DISH Network stock and options to purchase DISH Network stock, certain of which they acquired or were granted prior to the Spin-off, including Mr. Ergen. Furthermore, DISH Network holds shares of preferred tracking stock of us and HSS that in the aggregate represents an 80.0% economic interest in our residential retail satellite broadband business. 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. Furthermore, Charles W. Ergen, our Chairman is employed by both DISH Network and us.•Intercompany agreements with DISH Network. We have entered into agreements with DISH Network pursuant to which it provides us certain professional services, for which we pay DISHNetwork an amount equal to DISH Network's cost plus a fixed margin. In addition, we have entered into a number of intercompany agreements covering 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 Network 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 the separation and ancillary agreements we entered into with DISH Network did 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 favorable, or less favorable, to us. In addition, DISH Network or its affiliates will continue to enter into transactions with us or our subsidiaries or other affiliates. Although the terms of any such transactions will be established based upon negotiations between DISH Network and us and, when appropriate, subject to the approval of audit committee and committee of the 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 retains its 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. In addition, pursuant to a distribution agreement, DISH Network has the right, but not the obligation, to market, sell and distribute our Hughes segment's broadband internet service under the dishNET brand which could compete with sales by our Hughes segment. DISH Network also has a distribution agreement with ViaSat, a competitor of our Hughes segment, to sell services similar to those offered by our Hughes segment. We may also compete with DISH Network when we participate in auctions for spectrum or orbital slots for our satellites.• • • Except for certain arrangements with Sling TV Holding L.L.C. ("Sling TV", formerly DISH Digital Holding L.L.C.) that we entered into with DISH Network, which, subject to certain exceptions, limits DISH Network's and our ability to operate an IPTV service other than that operated by Sling TV, weNetwork that would prevent us from competing with each other.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, and certain shared management services)services and other arrangements with DISH Network).certificatearticles 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:•share,share; a Class B that entitles the holders to ten votes per share,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 shareshare; and a non-voting Class D;and a class of preferred stock, the Hughes Retail Tracking Stock, that entitles the holders to one-tenth of one vote per share;•"blank check"“blank check” preferred stock, which could be issued by our Boardboard of Directorsdirectors to increase the number of outstanding shares and thwart a takeover attempt;••Boardboard of Directorsdirectors or for proposing matters that can be acted upon by shareholders at shareholder meetings.The preferred tracking stock incapital structure may create conflicts of interest for our board of directors and management, and our board of directors may make decisions that could adversely affect only one group of holders.Our preferred tracking stock capital structure could give rise to occasions when the interests of holders of stock of one group might diverge or appear to diverge from the interests of holders of stock of the other group and our board of directors or officers could make decisions that could adversely affect only one group of holders. Nevada law requires that our board of directors and officers act in good faith and with a view to the interest of the company and are not required to consider, as a dominant factor, the effect of a proposed corporate action upon any particular group of stockholders. Decisions deemed to be in the interestChairman, beneficially owns approximately 45.9% of our company may not always align with the best interesttotal equity securities (assuming conversion of a particular group of our stockholders when considered independently. Examples include, but are not limited to:•decisions as to the terms of any business relationships that may be created between the EchoStar Group and the Hughes Retail Group and the terms of any reattributions of assets between the groups;•decisions as to the allocation of corporate opportunities between the groups, especially where the opportunities might meet the strategic business objectives of both groups;•decisions as to operational and financial matters that could be considered detrimental to one group but beneficial to the other;•decisions as to the internal or external financing attributable to businesses or assets attributed to either of our groups; and•decisions as to the disposition of assets of either of our groups.In addition, as the Tracking Stock is currently held by DISH Network, questions relating to conflicts of interest may also arise between DISH Network and us due to our common ownership and management.Provisions of Nevada law and our articles of incorporation may protect decisions of our board of directors and officers that have a disparate impact on one group of holders. Our stockholders may have limited or no legal remedies under Nevada law with respect to such decisions even if the actions of our directors or officers adversely affect the market value of our common stock.Our board of directors has the ability to change our attribution policies at any time without a vote of our common stockholders.Our board of directors has adopted a policy statement (the "Policy Statement") regarding the relationships between the EchoStar Group and the Hughes Retail Group with respect to matters such as the attribution and allocation of costs, tax liabilities and benefits, attribution of assets, corporate opportunities and similar items. Our board of directors may at any time change or make exceptions tothe Policy Statement with only the consent of holders of a majority of the outstanding shares of the EchoStar Tracking Stock. Because these policies relate to matters concerning the day-to-day management of our company as opposed to significant corporate actions, such as a merger involving the Company or a sale of substantially all of our assets, no approval from the holders of ourClass B common stock beneficially owned by Mr. Ergen into Class A common stock is required with respectand giving effect to the changesexercise of options held by Mr. Ergen that are either currently exercisable or exceptions to these policies. A decision to change, or make exceptionsmay become exercisable within 60 days of February 12, 2018) and beneficially owns approximately 72.4% of the total voting power of all classes of shares (assuming no conversion of any Class B common stock and giving effect to the Policy Statementexercise of options held by Mr. Ergen that are either currently exercisable or adopt additional policies could disadvantage one group while advantagingmay become exercisable within 60 days of February 12, 2018). Through his beneficial ownership of our equity securities, Mr. Ergen has the other.certificatearticles of incorporation we have a significant amount of authorized and unissued stock that would allow our Boardboard of Directorsdirectors 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.EchoStar Technologies segment ("ETC"), Hughes segment ("Hughes"(“Hughes”), and EchoStar Satellite Services segment ("ESS"(“ESS”) and to our other operations and administrative functions ("Other"(“Other”). as of December 31, 2017. We operate various facilities in the U.S. and abroad. We believe that our facilities are well maintained and are sufficient to meet our current and projected needs.Location(3)Location (3)(4) Segment(s)Leased/OwnedFunctionFoster City, California ETCSegment(s) Leased Engineering and data centerFunctionSuperior, ColoradoETCLeasedEngineering officesAtlanta, GeorgiaETCLeasedEngineering officesBangalore, IndiaETCLeasedEngineering officeKharkov, UkraineETCLeasedEngineering officeSteeton, EnglandETCOwnedEngineering office Hughes Leased Engineering and sales offices Hughes Leased Gateways Gaithersburg, Maryland Hughes Leased Manufacturing and testing facilities, engineering and logistics and administrative offices Michigan(1) Hughes Leased Shared hub and regional network management center Nevada(1) Hughes Leased Shared hub, antennae yards, gateway, backup network operation and control center for Hughes corporate headquarters Barueri, Brazil(1) Hughes Leased Shared hubOffice space, engineering offices Hughes Leased Hughes Brazil corporate headquarters, sales offices, and warehouse Griesheim, Germany(1) Hughes Leased Shared hub, operations, administrative officesEngineering office and warehouseoffice spaceIndia(1)India (1)(2) Hughes Leased Administrative offices, shared hub, operations, warehouse, and development center Hughes Leased Hughes India corporate headquarters Hughes Leased Hughes Europe corporate headquarters and operations American Fork, UtahHughes/OtherLeasedOffice space, engineering and operationsMaryland(1) Hughes Owned Hughes corporate headquarters, engineering offices, network operations and shared hubs Gilbert, Arizona(1) ETC/ESSHughes Owned Digital broadcastShared hub, operations, administrative offices and warehouseCheyenne, Wyoming (1) Hughes/ESS Leased Spacecraft operations center, satellite access center and gateway Gilbert, Arizona (1) Hughes/ESS Leased Spacecraft operations center, satellite access center and gateway Barueri, Brazil (1) Hughes/ESS Leased Shared hub, warehouse, operations center and spacecraft operations center Kankakee, Illinois(1)ETC/ESSOwnedRegional digital broadcast operations centerMonee, Illinois(1)ETC/ESSOwnedRegional digital broadcast operations centerOrange, New Jersey(1)ETC/ESSOwnedRegional digital broadcast operations centerNew Braunfels, Texas(1)ETC/ESSOwnedRegional digital broadcast operations centerMustang Ridge, Texas(1)ETC/ESSOwnedMicro digital broadcast operations centerMt. Jackson, Virginia(1)ETC/ESSOwnedRegional digital broadcast operations centerWinchester, Virginia(1)ETC/ESSOwnedRegional digital broadcast operations centerSpokane, Washington(1)ETC/ESSOwnedRegional digital broadcast operations centerCheyenne, Wyoming(1)ETC/ESSOwnedDigital broadcast operations centerDakota(1) Hughes/ESS Owned Spacecraft autotrackauto-track operations center Hughes/ETC/ ESS/Other Owned Corporate headquarters, engineering offices gatewaysCampinas, Brazil Other Leased Uplink facility Cheyenne, Wyoming Other Owned Data Center (1) We perform network services and customer support functions 24 hours a day, 365 days a year at these locations. (2) These properties are used by subsidiaries that are less than wholly-owned by the Company. (3) We also have multiple gateways throughout the EU that support the EchoStar XXI satellite. (4) We have multiple gateways throughout the Western part of the U.S., Mexico and Canada that support the SPACEWAY 3, EchoStar XVII, and EchoStar XIX satellites. (1)We perform network services and customer support functions 24 hours a day, 365 days a year at these locations.(2)These properties are used by subsidiaries that are less than wholly-owned by the Company.(3)In addition to the above properties, we have multiple gateways throughout the Western part of the U.S. that support the SPACEWAY 3, EchoStar XVII, and EchoStar XIX satellites.(4)In addition to the above properties, we lease rack and roof top space in 210 designated market areas throughout the U.S. as well as San Juan, Puerto Rico to collect and broadcast local channels that are used by the ETC segment.REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESRegistrant'sRegistrant’s Common Equity and Related Stockholder MattersInformation.Information. Our Class A common stock is quoted on the Nasdaq Global Select Market ("Nasdaq"(“Nasdaq”) under the symbol "SATS."“SATS.” The high and low closing sale prices of our Class A common stock during 20142017 and 20132016 on Nasdaq (as reported by Nasdaq) are set forth below. High Low 2017 High Low $ 51.90 $ 43.41 $ 56.95 $ 50.92 $ 53.73 $ 44.26 $ 62.25 $ 55.41 $ 53.42 $ 47.96 $ 61.49 $ 56.13 $ 54.18 $ 43.00 $ 60.65 $ 52.48 High Low 2016 High Low $ 39.99 $ 32.55 $ 45.89 $ 33.39 $ 40.98 $ 36.92 $ 43.94 $ 37.25 $ 45.50 $ 37.22 $ 43.83 $ 36.91 $ 51.60 $ 44.17 $ 53.35 $ 43.60 13, 2015,12, 2018, there were approximately 9,6968,440 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 13, 2015, 32,498,594 of the12, 2018, there were 47,687,039 shares outstanding shares of our Class B common stock of which: (i) 22,309,288 shares were held by Charles W. Ergen, our Chairman, and the remaining 15,188,445(ii) 15,600,000 shares were held in trusts established for the benefit of Mr. Ergen'sErgen’s family, with Mr. Ergen’s spouse, Cantey Ergen, serving as trustee, (iii) and the remaining 9,777,751 shares were held in other trusts established for the benefit of Mr. Ergen’s family. There is currently no established trading market for our Class B common stock.Dividends.Boardboard of Directorsdirectors considers appropriate. We currently intend to retain our earnings, if any, to support future growth and expansion although we expect tomay repurchase shares of our common stock from time to time. Our ability to declare dividends is affected by covenants in HSS’ indentures. See further discussion under Item 7. Management's— Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operations — Liquidity and Capital Resources in this Annual Report on Form 10-K.Plans.Plans. See Item 12. — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters in this Annual Report on Form 10-K.planprogram approved by our Boardboard of Directors,directors, we are authorized to repurchase up to $500.0 million of our outstanding shares of Class A common stock through December 31, 2015. For2018. During the years ended December 31, 2014, 20132017, 2016 and 2012,2015, we did not repurchase any common stock under this plan.program.20142017 included in our consolidated financial statements in Item 15 of this report have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"(“GAAP”) included in our ConsolidatedFinancial Statements in Item 15 of this report.. Certain prior period amounts have been reclassifiedadjusted to conform to the current period presentation.On June 8, 2011, we completed the acquisition of Hughes Communications, Inc. and its subsidiaries ("the Hughes Acquisition"). As a result, Hughes became a new segment and our historical financial statements on and after June 9, 2011 give effect to the Hughes Acquisition. Therefore, our financial position as of December 31, 2014, 2013, 2012, and 2011 is not comparable to our financial position as of December 31, 2010, and our results of operations for the years ended December 31, 2014, 2013 and 2012 are not comparable to our results of operations for the years ended December 31, 2011 and 2010.Consolidated Financial Statementsconsolidated financial statements and related notes thereto, and "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” included elsewhere in this report. Historical financial data presented below may not be indicative of future financial condition. See Notes 1, 3 and 19 in the notes to consolidated financial statements in Item 15 of this report for further discussion of the Share Exchange transaction. For the Years Ended December 31, 2014 2013 2012 2011 2010 (In thousands, except per share amounts) $ 3,445,578 $ 3,282,452 $ 3,121,704 $ 2,761,431 $ 2,350,369 3,117,488 3,178,865 3,021,818 2,680,593 2,208,044 $ 328,090 $ 103,587 $ 99,886 $ 80,838 $ 142,325 $ 165,268 $ 2,525 $ 211,048 $ 3,639 $ 204,358 91,190 89,405 87,150 86,223 85,084 92,616 90,952 87,959 87,089 85,203 $ 1.81 $ 0.03 $ 2.42 $ 0.04 $ 2.40 $ 1.78 $ 0.03 $ 2.40 $ 0.04 $ 2.40 For the Years Ended December 31, Statements of Operations Data: 2017(1) 2016 2015 2014 (2) 2013 (2) (In thousands, except per share amounts) Total revenue (3) $ 1,885,508 $ 1,810,466 $ 1,848,857 $ 1,822,238 $ 1,556,275 Total costs and expenses (3) 1,689,201 1,514,303 1,575,092 1,611,678 1,544,986 Operating income (3) $ 196,307 $ 296,163 $ 273,765 $ 210,560 $ 11,289 Net income (loss) from continuing operations to EchoStar common stock $ 385,261 $ 137,353 $ 102,421 $ 73,151 $ (52,987 ) Basic earnings (loss) per share - continuing operations $ 4.04 $ 1.46 $ 1.11 $ 0.80 $ (0.59 ) Diluted earnings (loss) per share - continuing operations $ 3.98 $ 1.45 $ 1.10 $ 0.79 $ (0.58 ) As of December 31, As of December 31, 2014 2013 2012 2011 2010 2017(1) 2016 2015 2014 (2) 2013 (2) (In thousands) (In thousands) $ 1,688,156 $ 1,620,652 $ 1,547,565 $ 1,696,442 $ 1,130,900 $ 3,245,617 $ 3,092,881 $ 1,527,883 $ 1,669,590 $ 1,554,174 $ 7,253,998 $ 6,701,963 $ 6,600,233 $ 6,543,737 $ 3,842,020 Total assets (4) $ 8,750,014 $ 9,008,859 $ 6,572,463 $ 6,601,292 $ 5,943,007 $ 2,367,687 $ 2,422,388 $ 2,488,499 $ 2,528,654 $ 406,570 $ 3,634,844 $ 3,655,447 $ 2,185,272 $ 2,326,143 $ 2,374,088 $ 3,623,638 $ 3,226,231 $ 3,150,227 $ 3,051,626 $ 3,013,190 Total stockholders’ equity $ 4,177,385 $ 4,006,805 $ 3,781,642 $ 3,623,638 $ 3,226,231 For the Years Ended December 31, For the Years Ended December 31, 2014 2013 2012 2011 2010 2017 2016 2015 2014 (2) 2013 (2) (In thousands) (In thousands) $ 840,131 $ 450,507 $ 505,149 $ 447,018 $ 404,015 $ 726,892 $ 803,343 $ 776,451 $ 840,131 $ 450,507 $ (887,590 ) $ (570,289 ) $ (346,781 ) $ (1,888,045 ) $ (238,558 ) $ (868,002 ) $ (632,267 ) $ (275,311 ) $ (887,590 ) $ (570,289 ) $ (35,096 ) $ 18,326 $ (43,976 ) $ 1,913,547 $ (46,973 ) $ 72 $ 1,475,689 $ (120,257 ) $ (35,096 ) $ 18,326 (1) The 2017 Tax Act increased the complexity of our income tax accounting and resulted in significant adjustments to our deferred income tax accounts in 2017. As a result, our results of operations and balance sheet data for the years ended December 31, 2017 are not comparable to our results of operations for the years ended December 31, 2016, 2015, 2014, and 2013. See Note 12 to our consolidated financial statements in Item 15 of this report for further information. (2) In March 2014, we issued preferred tracking stock to DISH Network in exchange for five satellites and $11.4 million in cash. Please see Note 19 in the notes to consolidated financial statements in Item 15 of this report. As a result, our results of operations and balance sheet data for the years ended December 31, 2017, 2016, 2015 and 2014 are not comparable to our results of operations for the year ended December 31, 2013. (3) As a result of the Share Exchange, the consolidated financial statements of the EchoStar Technologies businesses have been presented as discontinued operations and, as such, have been excluded from the selected financial data presented above for all periods presented. See Note 3 in the notes to consolidated financial statements in Item 15 of this report for further discussion of our discontinued operations. (4) In 2015, we prospectively adopted Accounting Standard Update No. 2015-17, Balance Sheet Classification of Deferred Taxes. As a result, our total assets as of December 31, 2017, 2016 and 2015 is not comparable to our total assets as reported in prior years. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"we," "us," "EchoStar,"“we,” “us,” “EchoStar,” the "Company"“Company” and "our"“our” refer to EchoStar Corporation and its subsidiaries. References to "$"“$” are to United States dollars. The following management'smanagement’s discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes to our financial statements included elsewhere in this Annual Report on Form 10-K. This management'smanagement’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'smanagement’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“Disclosure Regarding Forward-Looking Statements"Statements” in this Annual Report on 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 the caption "Risk Factors"“Risk Factors” in Item 1A of this Annual Report on Form 10-K. Further, such forward-looking statements speak only as of the date of this Annual Report on Form 10-K and we undertake no obligation to update them.and broadband satellite technologies and broadband internet services for the home and small office deliveringcustomers. We also deliver innovative network technologies, managed services, and various communications solutions for enterprisesaeronautical, enterprise and governments. Wegovernment customers.threetwo business segments, which are differentiated primarily by their operational focus: EchoStar Technologies, Hughes and EchoStar Satellite Services.ESS. These segments are consistent with the way decisions regarding the allocation of resources are made, as well as how operating results are reviewed by our chief operating decision maker ("CODM"(“CODM”), who for EchoStar is the Company'sCompany’s Chief Executive Officer.operating results do notEBITDA disclosures have been restated to reflect this change. real estatevarious corporate departments (primarily Executive, Strategic Development, Human Resources, IT, Finance, Real Estate and Legal) as well as other activities that have not been assigned to our operating segments, including costs incurred in certain satellite development programs and other business development activities, expenses of various corporate departments, and our centralized treasury operations, including incomeand gains (losses) from certain of our investment portfolio and interest expense on our debt.investments. These activities are accounted for in "All Other“Corporate and Eliminations."2014•Revenue of $3.45 billion•• $328.1$196.3 million•attributable to EchoStarfrom continuing operations of $152.9$385.0 million•Net income attributable to EchoStar common stock of $165.3 million and basic earnings per share of common stock of $1.81•EBITDA of $902.6 million (See non-GAAP reconciliation in Note 17 in the notes to consolidated financial statements in Item 15 of this report.)• • 2014
2017•Total assets of $7.25 billionItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued•Total liabilities of $3.11 billion•Total stockholders' equity of $3.62 billion•Cash, cash equivalents and current marketable investment securities of $1.69 billionOur EchoStar Technologies segment designs, develops and distributes digital set-top boxes and related products and technology, primarily for satellite TV service providers, telecommunication companies and international cable companies. The primary customer for our digital set-top boxes is DISH Network Corporation and its subsidiaries ("DISH Network"), and we also sell digital set-top boxes to a DTH satellite service provider in Canada ("Bell TV"), Dish Mexico, S. de R.L. de C.V. ("Dish Mexico"), a joint venture that we entered into in 2008, and other international customers. We depend on DISH Network for a substantial portion of our EchoStar Technologies segment revenue and we expect that DISH Network will continue to be the primary source of revenue for our EchoStar Technologies segment. In addition, our equipment revenue from DISH Network depends on the timing of orders for set-top boxes and accessories from DISH Network based on its actual and projected subscriber growth. Therefore, the results of operations of our EchoStar Technologies segment are, and are likely to continue to be, closely linked to the performance of DISH Network's pay-TV service.Our EchoStar Technologies segment also provides digital broadcast operations, including satellite uplinking/downlinking, transmission services, signal processing, conditional access management, and other services, primarily to DISH Network. In addition, we provide our Slingboxes directly to consumers via retail outlets and online, as well as the payTV operator market via our partnership with Arris. Sling Media "placeshifting" technology gives consumers the ability, at their option, to watch and control their home digital video and audio content via a broadband internet connection.We continue to focus on building and strengthening our brand recognition by providing unique and technologically advanced features and products. Products containing new technologies and features typically have higher initial selling prices, margins and volumes. The market for our digital set-top boxes, like other electronic products has also been characterized by regular reductions in selling prices and production costs. Our ability to sustain or increase profitability also depends in large part on our ability to control or reduce our costs of producing digital set-top boxes. Based on our experience, we expect our cost of manufacturing a specific set-top box model to decline over time as our contract manufacturers generate efficiencies with scale of production and engineering cost reductions. Overall, our success depends heavily on our ability to bring advanced technologies to market to keep pace with our competitors.The number of potential new customers for our EchoStar Technologies segment is small and may be limited as prospective customers that have been competitors of DISH Network may continue to view us as a competitor due to our common ownership with DISH Network. We believe that our best opportunities for developing potential new customers for our EchoStar Technologies segment over the near term lie in international markets, including through joint ventures. We have extended our exclusive equipment partnership with Bell TV through the end of 2015. Additionally, our joint venture with Dish Mexico continues to see growth. We are continuing to work with Dish Mexico on enhanced features and services that will help it respond to competitive pressures in Mexico. We are also exploring the development of other in-home products and applications.• • • • Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continuedfor theto domestic and international home and small office delivering innovativecustomers and broadband network technologies, managed services, equipment, hardware, satellite services and communications solutions to domestic and international consumers and aeronautical, enterprise and government customers. The Hughes segment also designs, provides and installs gateway and terminal equipment to customers for consumers, enterprisesother satellite systems. In addition, our Hughes segment provides satellite ground segment systems and governments.inon growing our consumer revenue whichby maximizing utilization of our existing satellites while planning for new satellites to be launched. Our consumer revenue growth depends on our success in adding new and retaining existing subscribers in our domestic and international markets across our wholesale and retail channels. The growth of our enterprise, including aeronautical, businesses relies heavily on our Hughes segment's satellite networks. The addition of new subscribersglobal economic conditions and the performance of our consumer service offering, primarily drive the revenue growth in our consumer business.competitive landscape for pricing relative to competitors and alternative technologies. Service costs related to ongoing support offor our direct and indirect customers and partners are typically impacted most significantly by our growth. Long term trendsbe influenced primarily by theprovide significant capacity for consumer subscriber growth, capacity for the Hughes broadband services to our customers in our consumer business. AdditionalNorth America, capacity provided in this business by new satellite launches provides impetuscertain Central and South American countries and capability for initial subscriber growth while we manage subscriber growth across our satellite platform. aeronautical and domestic and international enterprise broadband services. March 2013,August 2017, we entered into a contract for the design and construction of the EchoStar XIX satellite, which is expected to be launched in the second quarter of 2016. EchoStar XIX is a new, next-generation, high throughput geostationary satellite, with a planned 2021 launch, that will employ a multi-spot beam, bent pipe Ka-band architecture and willis primarily intended to provide additional capacity for the Hughes broadband services to the consumer marketour HughesNet service in North, America. The costsCentral and South America as well as aeronautical and enterprise services. Capital expenditures associated with the construction and launch of EchoStar XIX arethis satellite is included in "All Other“Corporate and Eliminations"Other” in our segment reporting.providesdelivers broadband network technologies, managed services, equipment, hardware, and satellite services and communications solutions to large enterprises. In addition, we provide gatewaydomestic and terminal equipment tointernational customers for mobile satellite systems. The fixed pricing natureand aeronautical, enterprise and government customers. Most of our long term enterprise customers have contracts minimizes significant quarterwith us for the services they purchase.quarter fluctuations. drive the demand for our equipment, hardware, technology and services. We have an agreement with WorldVu Satellites Limited (“OneWeb”), a global LEO satellite service company, to provide certain equipment and services in connection with the ground network system for OneWeb’s LEO satellites. In November 2017, we began the production of OneWeb’s ground network system equipment and expect to begin delivering this equipment in the second half of 2018.monitorexpand our efforts to grow our consumer satellite services business outside of the competitive landscape for pricing in relation to our competitors and alternative technologies. However, the growth of our enterprise businesses relies heavily on global economic conditions.will provide to Hughes Telecomunicações do Brasil Ltda., our subsidiary, fixed broadband service using theprovides us Ka-band capacity into Brazil on the EUTELSAT 65 West A satellite for a 15-year term. TheThat satellite service agreement requires us to make prepayments during the construction period. The satellite is scheduled to be placed into servicewas launched in the second quarter ofMarch 2016 and will deliverwe began delivering high-speed consumer satellite broadband services in Brazil in July 2016. In September 2015, we entered into satellite services agreements pursuant to which affiliates of Telesat Canada (“Telesat”) will provide to us the Ka-band capacity on a satellite to be located at the 63 degree west longitude orbital location (“63 West”) for a 15-year term. We expect the satellite to be launched in the second quarter of 2018 and creates a platform to potentially allow for further developmentaugment the capacity being provided by the EUTELSAT 65 West A and EchoStar XIX satellites in Central and South America. We launched our consumer satellite broadband service in Colombia in the third quarter of our spectrum2017 and we expect to launch similar services in Brazil.2014, 20132017, 2016 and 2012,2015, our Hughes segment had approximately 977,000, 860,0001,208,000, 1,036,000 and 636,0001,035,000 broadband subscribers, respectively. These broadband subscribers include subscriptions withcustomers that subscribe to our HughesNet broadband services in the U.S. and South America through retail, wholesale and small/medium enterprise service channels. Gross subscriber additions, decreasedincluding small/medium enterprise, increased by approximately 7,300 in 2014the fourth quarter of 2017 compared to the same periodthird quarter of 2017 primarily due to an increase in 2013 due primarily to satellite beams servicing certain areas reaching capacity.new additions in our domestic retail channel as a result of our marketing efforts. Our average monthly subscriber churn in 2014 remained atpercentage for the same level asfourth quarter of 2017 decreased compared to the same period in 2013, however, total disconnects increased due to the increased numberthird quarter of subscribers.2017. As a result for the year ended December 31, 2014, net subscriber additions of 117,000 were lower than the same period last year primarily reflecting the decrease inhigher gross subscriber additions and lower churn, ontotal net subscriber additions, including small/medium enterprise, were approximately 68,000 for the increasing basequarter ended December 31, 2017 compared to approximately 55,000 for the third quarter of subscribers.20142017 and 2013, 2016,our Hughes segment had approximately $1.26$1.62 billion and $1.15and $1.52 billion, respectively, of contracted revenue backlog. We define Hughes contracted revenue backlog as our expected future revenue under customer contracts that are non-cancelable, excluding agreements withItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued2014,2017, we expect to recognize approximately $407.9$424.7 million of revenue in 2015.EchoStar Satellite ServicesESS segment operates itsis a global provider of satellite service operations and video delivery solutions. We operate our business using its 16our owned and leased in-orbit satellites.satellites and related licenses. Revenue growth in our ESS segment depends largely on our ability to continuously make satellite capacity available for sale. We provide satellite servicesservice operations and video delivery solutions on a full-time and occasional-use basis primarily to DISH Network Corporation and its subsidiaries (“DISH Network”), Dish Mexico, S. de R.L. de C.V., a joint venture we entered into in 2008 (“Dish Mexico”), United States (“U.S.”) government service providers, state agencies, internet service providers, broadcast news organizations, programmers, and private enterprise customers.EchoStar Satellite ServicesESS segment, and we expect that DISH Network will continue to be the primary source of revenue for our EchoStar Satellite ServicesESS segment. Therefore, the results of operations of our EchoStar Satellite ServicesESS segment are linked to long-term changes in DISH Network'sNetwork’s satellite capacity requirements. WeDISH Network’s capacity requirements have been driven by the addition of new channels and migration of programming to high-definition TV and video on demand services. The services that we provide to DISH Network are critical to its nationwide delivery of content to its customers across the U.S. While we expect to continue to pursue expanding our business offerings by providing value added services such as telemetry, tracking and controlprovide satellite services to third parties. Revenue growth in our EchoStar Satellite Services segment is a function of availableDISH Network, its satellite capacity requirements may change for asell. The satellite we currently have under construction is expected to ultimately produce revenue once launched and placed into operation, and therefore, factors that interfere with our constructionconstruct and launch schedules will impactits own satellites. Any termination or reduction in the services we provide to DISH Network may cause us to have unused capacity on our expectedsatellites and require that we aggressively pursue alternative sources of revenue growth. In addition, any disruptionfor this business. The agreement with DISH Network for satellite services relative to the EchoStar VII satellite expires in planned renewals of our service arrangements could impact customer commitments andJune 2018. DISH Network has not renewed the agreement past such date which may have ana significant impact on our revenue and financial performance. Technical issues, regulatory and licensing issues, manufacturer performance/stability and availability of capital to continue to fund our programs also are factorsoperating results in achieving our business plans for this segment. construction contract with Airbus Defence and Space SAS for the construction of the EchoStar 105/SES-11 satellite with C-band, Ku-bandC-, Ku- and Ka-band payloads; (ii) an agreement with SES Satellite Leasing Limited for the procurement of the related launch services; and (iii) an agreement with SES Americom Inc. ("SES"(“SES”) pursuant to which we will transfertransferred the title to the C-band and Ka-band payloads to SES Satellite Leasing Limited at launch and transfertwo affiliates of SES. We retained the titleright to the Ku-band payload to SES following in-orbit testing of the satellite. Additionally, SES will provide to us satellite service onuse the entire Ku-band payload on EchoStar 105/SES-11the satellite for an initial ten-year term, with an option for us to renew the agreement on a year-to-year basis.As The EchoStar 105/SES-11 satellite was launched in October 2017 and placed into service in November 2017 at the 105 degree west longitude orbital location. Our Ku-band payload on the EchoStar 105/SES-11 satellite replaces and augments the capacity we had on the AMC-15 satellite, resulting in additional sales capacity. We transferred activities from the AMC-15 satellite to the EchoStar 105/SES-11 satellite in the fourth quarter of 2017.20142017 and 2013,2016, our EchoStar Satellite ServicesESS segment had contracted revenue backlog attributable to satellites currently in orbit of approximately $1.71 billion and $1.14 billion, respectively.$1.16 billion. The increase in backlogdecrease is primarily driven by the resultfixed-term nature of additionalthe satellite services on EchoStar I, EchoStar VII, EchoStar X, EchoStar XI, and EchoStar XIV provided toagreements with DISH Network beginning March 1, 2014, as part of the Satellite and Tracking Stock Transaction.Network. Of the total contracted revenue backlog as of December 31, 2014,2017, we expect to recognize approximately $398.1$332.9 million of revenue in 2015.exploringexplore opportunities to pursue investments, commercial alliances, partnerships, joint ventures, acquisitions and other strategic acquisition opportunities,initiatives, domestically and internationally, that we believe may allow us to increase our existing market share, expand into new markets and new customers, broaden our portfolio of services, products and intellectual property, and strengthen our relationships with our customers.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued("(“Brazilian Authorization"Authorization”) from ANATEL, the Brazilian communications regulatory agency. The Brazilian Authorization currently provides us the rights to utilize Ku-band spectrum for broadcast satellite service ("BSS"), Ka-band spectrum and S-band spectrum. With regards to the Ku-band BSS spectrum, we continue to pursue various opportunities to support a Brazilian service and remain focused on delivering a pay-TV service to Brazil via a high-powered BSS satellite. We are exploring options for the Ka-band and S-band spectrums. In April 2014, we entered into an agreement with Space Systems Loral, LLC ("SS/L") for the construction of the EchoStar XXIII satellite, a high powered BSSbroadcast satellite which will use some of the components from CMBStar, a satellite that we suspended construction of in 2008.service satellite. The EchoStar XXIII is expected to launchsatellite was launched in the second half of 2016March 2017 and will be initially deployedplaced into service at the 45 degree west longitude orbital location.100.0%100% of Solaris Mobile, which is based in Dublin, Ireland and licensed by the European Union ("EU") and individual EU Member Statesits member states (“EU”) to provide mobile satellite services ("MSS"(“MSS”) and complementary ground component ("CGC"(“CGC”) services covering the entire EU using S-band spectrum. We are in the process of developing commercial services, expectedSolaris Mobile changed its name to beginEchoStar Mobile Limited (“EchoStar Mobile”) in the first halfquarter of 2016, utilizing our existing EUTELSAT 10A (also known as "W2A")2015. The EchoStar XXI satellite along withwas launched in June 2017 and placed into service in November 2017. Commercial service has been available on our EchoStar XXI S-band satellite. We are currently constructing, and have contracted to launch,satellite since the fourth quarter of 2017. The EchoStar XXI to providesatellite provides space segment capacity to SolarisEchoStar Mobile in the first half of 2016.EU. We believe we are in a unique position to deploy ana European wide MSS/CGC network and maximize the long termlong-term value of our S-band spectrum in Europe and other regions within the scope of our licenses.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued20142017 Compared to the Year Ended December 31, 2013 For the Years
Ended December 31, Variance 2014 2013 Amount % (Dollars in thousands) $ 1,145,979 $ 1,311,446 $ (165,467 ) (12.6 ) 374,049 347,910 26,139 7.5 828,612 620,189 208,423 33.6 1,096,938 1,002,907 94,031 9.4 3,445,578 3,282,452 163,126 5.0 1,288,998 1,430,777 (141,779 ) (9.9 ) 84.8 % 86.2 % 838,918 776,121 62,797 8.1 43.6 % 47.8 % 372,010 358,499 13,511 3.8 10.8 % 10.9 % 60,886 67,942 (7,056 ) (10.4 ) 1.8 % 2.1 % 556,676 507,111 49,565 9.8 — 38,415 (38,415 ) (100.0 ) 3,117,488 3,178,865 (61,377 ) (1.9 ) 328,090 103,587 224,503 * 9,102 14,656 (5,554 ) (37.9 ) (171,349 ) (192,554 ) 21,205 (11.0 ) 41 38,341 (38,300 ) (99.9 ) 8,198 (5,024 ) 13,222 * 4,251 6,958 (2,707 ) (38.9 ) (149,757 ) (137,623 ) (12,134 ) 8.8 178,333 (34,036 ) 212,369 * (30,784 ) 37,437 (68,221 ) * 147,549 3,401 144,148 * (6,714 ) — (6,714 ) * 1,389 876 513 58.6 $ 152,874 $ 2,525 $ 150,349 * $ 902,581 $ 650,097 $ 252,484 38.8 977,000 860,000 117,000 13.6
2016 For the Years
Ended December 31, Variance Statements of Operations Data (1) 2017 2016 Amount % (Dollars in thousands) Revenue: Services and other revenue - other $ 1,200,321 $ 1,100,828 $ 99,493 9.0 Services and other revenue - DISH Network 445,698 463,442 (17,744 ) (3.8 ) Equipment revenue - other 239,199 237,356 1,843 0.8 Equipment revenue - DISH Network 290 8,840 (8,550 ) (96.7 ) Total revenue 1,885,508 1,810,466 75,042 4.1 Costs and Expenses: Cost of sales - services and other 546,327 521,220 25,107 4.8 % of Total services and other revenue 33.2 % 33.3 % Cost of sales - equipment 212,170 203,965 8,205 4.0 % of Total equipment revenue 88.6 % 82.8 % Selling, general and administrative expenses 366,007 325,044 40,963 12.6 % of Total revenue 19.4 % 18.0 % Research and development expenses 31,745 31,170 575 1.8 % of Total revenue 1.7 % 1.7 % Depreciation and amortization 522,190 432,904 89,286 20.6 Impairment of long-lived assets 10,762 — 10,762 * Total costs and expenses 1,689,201 1,514,303 174,898 11.5 Operating income 196,307 296,163 (99,856 ) (33.7 ) Other Income (Expense): Interest income 44,619 21,244 23,375 * Interest expense, net of amounts capitalized (217,240 ) (123,481 ) (93,759 ) 75.9 Gains and impairment on investments, net 53,453 9,767 43,686 * Equity in earnings (losses) of unconsolidated affiliates, net 16,973 10,802 6,171 57.1 Other, net 6,582 2,131 4,451 * Total other expense, net (95,613 ) (79,537 ) (16,076 ) 20.2 Income from continuing operations before income taxes 100,694 216,626 (115,932 ) (53.5 ) Income tax benefit (provision), net 284,286 (80,254 ) 364,540 * Net income from continuing operations 384,980 136,372 248,608 * Net income from discontinued operations 8,509 44,320 (35,811 ) (80.8 ) Net income 393,489 180,692 212,797 * Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (655 ) (944 ) 289 (30.6 ) Less: Net income attributable to other noncontrolling interests 1,583 1,706 (123 ) (7.2 ) Net income attributable to EchoStar $ 392,561 $ 179,930 $ 212,631 * Other Data: EBITDA (2) $ 794,577 $ 751,005 $ 43,572 5.8 Subscribers, end of period 1,208,000 1,036,000 172,000 16.6 7461 and 75.
(2) A reconciliation of EBITDA to “Net income,” the most directly comparable GAAP measure in the accompanying financial statements, is included on page 45. For further information on our use of EBITDA, see “Explanation of Key Metrics and Other Items” on page 62. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—OPERATIONS - ContinuedEquipment revenue—DISH Network. "Equipment revenue—DISH Network"$1.15$1.2 billion for the year ended December 31, 2014,2017, an increase of $99.5 million, or 9.0%, compared to the same period in 2016.$165.5$17.7 million, or 3.8%, compared to the same period in 2016.2013.Equipment revenue—2016. The increase was primarily related to an increase of $51.1 million in marketing and promotional costs primarily attributable to our domestic and international consumer broadband sales in our Hughes segment and an increase of $2.5 million in litigation expense in 2017, partially offset by a decrease of $12.7 million in general and administrative expenses.TechnologiesLLC. For the Years
Ended December 31, Variance 2017 2016 Amount % (Dollars in thousands) Net income $ 393,489 $ 180,692 $ 212,797 * Interest income and expense, net 172,621 102,237 70,384 68.8 Income tax (benefit) provision (284,286 ) 80,254 (364,540 ) * Depreciation and amortization 522,190 432,904 89,286 20.6 Net income from discontinued operations (8,509 ) (44,320 ) 35,811 (80.8 ) Net income attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests (928 ) (762 ) (166 ) 21.8 EBITDA $ 794,577 $ 751,005 $ 43,572 5.8 Hughes Corporate and Other (In thousands) For the Year Ended December 31, 2017 Total revenue $ 1,477,918 $ 392,244 $ 15,346 $ 1,885,508 Capital expenditures $ 376,502 $ 20,725 $ 169,157 $ 566,384 EBITDA $ 475,222 $ 315,285 $ 4,070 $ 794,577 For the Year Ended December 31, 2016 Total revenue $ 1,392,361 $ 407,660 $ 10,445 $ 1,810,466 Capital expenditures $ 322,362 $ 58,925 $ 247,223 $ 628,510 EBITDA $ 477,165 $ 341,516 $ (67,676 ) $ 751,005 For the Years
Ended December 31, Variance 2017 2016 Amount % (Dollars in thousands) Total revenue $ 1,477,918 $ 1,392,361 $ 85,557 6.1 Capital expenditures $ 376,502 $ 322,362 $ 54,140 16.8 EBITDA $ 475,222 $ 477,165 $ (1,943 ) (0.4 ) For the Years
Ended December 31, Variance 2017 2016 Amount % (Dollars in thousands) Total revenue $ 392,244 $ 407,660 $ (15,416 ) (3.8 ) Capital expenditures $ 20,725 $ 58,925 $ (38,200 ) (64.8 ) EBITDA $ 315,285 $ 341,516 $ (26,231 ) (7.7 ) For the Years
Ended December 31, Variance 2017 2016 Amount % (Dollars in thousands) Total revenue $ 15,346 $ 10,445 $ 4,901 46.9 Capital expenditures $ 169,157 $ 247,223 $ (78,066 ) (31.6 ) EBITDA $ 4,070 $ (67,676 ) $ 71,746 * For the Years
Ended December 31, Variance Statements of Operations Data (1) 2016 2015 Amount % (Dollars in thousands) Revenue: Services and other revenue - other $ 1,100,828 $ 1,093,674 $ 7,154 0.7 Services and other revenue - DISH Network 463,442 532,162 (68,720 ) (12.9 ) Equipment revenue - other 237,356 212,269 25,087 11.8 Equipment revenue - DISH Network 8,840 10,752 (1,912 ) (17.8 ) Total revenue 1,810,466 1,848,857 (38,391 ) (2.1 ) Costs and Expenses: Cost of sales - services and other 521,220 574,400 (53,180 ) (9.3 ) % of Total services and other revenue 33.3 % 35.3 % Cost of sales - equipment 203,965 195,360 8,605 4.4 % of Total equipment revenue 82.8 % 87.6 % Selling, general and administrative expenses 325,044 318,136 6,908 2.2 % of Total revenue 18.0 % 17.2 % Research and development expenses 31,170 26,377 4,793 18.2 % of Total revenue 1.7 % 1.4 % Depreciation and amortization 432,904 460,819 (27,915 ) (6.1 ) Total costs and expenses 1,514,303 1,575,092 (60,789 ) (3.9 ) Operating income 296,163 273,765 22,398 8.2 Other Income (Expense): Interest income 21,244 10,388 10,856 * Interest expense, net of amounts capitalized (123,481 ) (121,995 ) (1,486 ) 1.2 Gains (losses) and impairment on investments, net 9,767 (17,669 ) 27,436 * Equity in earnings of unconsolidated affiliates, net 10,802 (2,477 ) 13,279 * Other, net 2,131 (2,685 ) 4,816 * Total other expense, net (79,537 ) (134,438 ) 54,901 (40.8 ) Income from continuing operations before income taxes 216,626 139,327 77,299 55.5 Income tax benefit (provision), net (80,254 ) (51,235 ) (29,019 ) 56.6 Net income from continuing operations 136,372 88,092 48,280 54.8 Net income from discontinued operations 44,320 61,279 (16,959 ) (27.7 ) Net income 180,692 149,371 31,321 21.0 Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (944 ) (5,603 ) 4,659 (83.2 ) Less: Net income attributable to other noncontrolling interests 1,706 1,617 89 5.5 Net income attributable to EchoStar $ 179,930 $ 153,357 $ 26,573 17.3 Other Data: EBITDA (2) $ 751,005 $ 715,739 $ 35,266 4.9 Subscribers, end of period 1,036,000 1,035,000 1,000 0.1 2014 decreased2016 increased by $128.3$16.7 million, or 10.3%1.6%, to $1.11$1.05 billion compared to the same period in 2013. Our EchoStar Technologies segment offers multiple set-top boxes with different price points depending on their capabilities and functionalities.2015. The revenue and associated margins we earn onincrease was primarily attributable to an increase of $28.6 million in sales are determined largely throughof broadband services to our Receiver Agreement with DISH Network which could result in prices reflecting, among other things, the set-top boxes and other equipment that meet DISH Network's current sales and marketing priorities, the product and service alternatives available from other equipment suppliers, our ability to respond to DISH Network's requirements, and our ability to differentiate ourselves from other equipment suppliers on bases other than pricing. In addition, products containing new technologies and features typically have higher initial prices, which reduce over timedomestic consumer customers as a result of manufacturing efficiencies, demand decreases or as DISH Network's demand changes for new or refurbished units. Thean increase in retail subscribers and the average revenue per subscriber. This increase was partially offset by a decrease inof $10.8 million of broadband services to our international enterprise customers attributable to an unfavorable foreign exchange impact and non-renewal of certain service contracts.20142016 decreased by $9.0 million, or 13.4%, to $58.1 million compared to the same period in 2015. The decrease was primarily dueattributable to both the salea decrease in sales of set-top boxes and related accessories. In set-top boxes, the decrease wastransponder services due to a 15.0% decrease in the weighted average price offset bynumber of transponders available for use in providing service as our lease of the AMC-16 satellite ended in February 2016.4.3% increasedecrease of $68.7 million, or 12.9%, compared to the same period in the unit sales. In related accessories, the decrease was due to a 13.5% decrease in unit sales partially offset by a 5.4% increase in the weighted average price.Equipment revenue—2015.2014 decreased $37.22016 increased by $4.0 million, or 53.8%4.3%, to $31.9$98.5 million compared to the same period in 2013.2015. The increase was primarily attributable to an increase in the average revenue per subscriber as a result of an increase in wholesale subscribers receiving higher end service plans pursuant to our Distribution Agreement with dishNET, partially offset by a decrease in wholesale subscribers.Equipment revenue—other. "Equipment revenue—other"$374.0$521.2 million for the year ended December 31, 2014, an increase2016, a decrease of $26.1$53.2 million, or 7.5%9.3%, compared to the same period in 2013.Equipment revenue—other from our EchoStar Technologies segment for the year ended December 31, 2014 increased $10.0 million, or 6.5%, to $163.1 million compared to the same period in 2013. The increase was attributable to an increase of 64.1% in unit sales of set-top boxes and an increase of 74.3% in sales of related accessories to our international customers. The increase was partially offset by a 41.9% decrease in the weighted average price of set-top boxes and a 20.1% decrease in the weighted average price of related accessories. The decrease in the average price per unit was due to the high volume of remanufactured products and the mix of product models purchased by our international customers and the renewal of certain customer contracts at lower contract prices with volume commitments.Equipment revenue—other from our Hughes segment for the year ended December 31, 2014 increased by $16.1 million, or 8.3%, to $210.8 million compared to the same period in 2013. The increase was mainly due to a $27.2 million increase in sales of telecom systems equipment and a $4.8 million increase in sales to international enterprise customers, partially offset by a decrease in sales of broadband equipment of $15.5 million primarily due to lower sales to our consumer and domestic enterprise markets.Services and other revenue—DISH Network. "Services and other revenue—DISH Network" totaled $828.6 million for the year ended December 31, 2014, an increase of $208.4 million or 33.6%, compared to the same period in 2013.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedServices and other revenue—DISH Network from our EchoStar Technologies segment for the year ended December 31, 2014 increased by $8.1 million, or 2.7%, to $311.8 million compared to the same period in 2013. The increase was primarily due to an increase of $9.9 million related to application development for set-top boxes sold to DISH Network.Services and other revenue—DISH Network from our Hughes segment for the year ended December 31, 2014 increased by $36.0 million, or 80.4%, to $80.8 million compared to the same period in 2013. The increase was primarily attributable to an increase in wholesale subscribers receiving services pursuant to our Distribution Agreement with dishNET.Services and other revenue—DISH Network from our EchoStar Satellite Services segment for the year ended December 31, 2014 increased by $160.1 million, or 64.8%, to $407.2 million compared to the same period in 2013. The increase was mainly due to an increase of $147.9 million in revenue recognized from certain satellite services provided to DISH Network from the five satellites transferred to us from DISH Network as part of the Satellite and Tracking Stock Transaction and an increase of $15.7 million from the renewal of our satellite services agreement related to services provided by the EchoStar VIII satellite to DISH Network that expired in the first quarter of 2013 and was renewed in the second quarter of 2013. The increases were offset partially by a decrease of $3.5 million attributable to the amended telemetry, tracking and control ("TT&C") agreement where we no longer provide TT&C services to DISH Network on the five satellites transferred to us from DISH Network as part of the Satellite and Tracking Stock Transaction.Services and other revenue—other. "Services and other revenue—other" totaled $1.10 billion for the year ended December 31, 2014, an increase of $94.0 million or 9.4%, compared to the same period in 2013.Services and other revenue—other from our EchoStar Technologies segment for the year ended December 31, 2014 increased by $4.0 million, or 23.7%, to $20.8 million compared to the same period in 2013. The increase was primarily attributable to an increase of $5.4 million for system integration solutions, offset partially by a decrease of $1.8 million attributable to nonrecurring engineering projects and licenses.Services and other revenue—other from our Hughes segment for the year ended December 31, 2014 increased by $94.6 million, or 10.4%, to $1.00 billion compared to the same period in 2013. The increase was primarily attributable to an increase in sales of broadband services to our consumer and international customers.Services and other revenue—other from our EchoStar Satellite Services segment for the year ended December 31, 2014, decreased by $5.8 million, or 7.0%, to $77.1 million compared to the same period in 2013. The decrease was mainly due to a decrease of $5.4 million in sales of uplink services in 2014 compared to the same period in 2013.sales—equipment. "Cost of sales—equipment" totaled $1.29 billion for the year ended December 31, 2014, a decrease of $141.8 million, or 9.9%, compared to the same period in 2013.Cost of sales—equipment from our EchoStar Technologies segment for the year ended December 31, 2014 decreased by $113.8 million, or 9.5%, to $1.08 billion compared to the same period in 2013. The decrease was primarily attributable to a decrease in equipment costs of $120.5 million related to the decrease in sales of set-top boxes and related accessories toItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedDISH Network, offset partially by an increase of $7.8 million in cost of sales related to the increase in sales of set-top boxes and related accessories to our international customers.Cost of sales—equipment from our Hughes segment for the year ended December 31, 2014 decreased by $28.1 million, or 11.8%, to $209.0 million compared to the same period in 2013. The decrease was primarily attributable to reductions in (i) equipment costs of $28.6 million resulting from lower sales of broadband equipment to dishNET and (ii) equipment development costs of $6.0 million for DISH Network as compared to the same period in 2013. These decreases were partially offset by higher equipment costs associated with the increase in sales of broadband equipment to our international enterprise customers and telecom systems equipment.Cost of sales—services and other. "Cost of sales—services and other" totaled $838.9 million for the year ended December 31, 2014, an increase of $62.8 million, or 8.1%, compared to the same period in 2013.Cost of sales—services and other from our EchoStar Technologies segment for the year ended December 31, 2014 increased by $11.8 million, or 5.4%, to $231.5 million compared to the same period in 2013. The increase was primarily due to an increase in support costs of $17.4 million related to engineering and uplink services provided in 2014 compared to the same period in 2013, offset partially by a decrease in system integration solutions costs of $5.3 million.Cost of sales—— services and other from our Hughes segment for the year ended December 31, 2014 increased2016 decreased by $33.2$2.2 million, or 7.4%0.5%, to $483.4$454.5 million compared to the same period in 2013.2015. The decrease was primarily attributable to the decrease of Ku-band space segment costs as customers either terminated services or migrated to the Ka-band platform offset by the increase in service costs as a result of the increase in sales of broadband services to our domestic consumer customers.servicesequipment to our consumerdomestic enterprise and international customers.Costgovernment customers, partially offset by a decrease of sales—services and other$12.3 million in equipment costs related to our other operations and satellite development activities for the year ended December 31, 2014 increased by $18.0 million, or 36.6%, to $67.3 million compared to the same perioddecrease in 2013. The increase was primarily duesales to our acquisition ofinternational and mobile satellite services on the EchoStar XV satellite from DISH Network in May 2013.expenses. "Selling,expenses. “Selling, general and administrative expenses"expenses” totaled $372.0$325.0 million for the year ended December 31, 2014,2016, an increase of $13.5$6.9 million, or 3.8%2.2%, compared to the same period in 2013.2015. The increase was mainlyprimarily due to a $16.4an increase of $11.2 million increase in marketingother general and administrative expenses primarily in our Hughes segment and an increase of $1.8$3.8 million in professional fees,marketing and promotional costs from our Hughes segment, offset partially by a $4.0decrease of $8.0 million decreasedue to litigation settlements recorded in personnel and other employee-related expenses.development. "Researchdevelopment expenses. “Research and development" expensesdevelopment expenses” totaled $60.9$31.2 million for the year ended December 31, 2014, a decrease2016, an increase of $7.1$4.8 million, or 10.4%18.2%, compared to the same period in 2013. The decrease was primarily due to reductions of research and development related activities in our EchoStar Technologies and Hughes segments of $5.4 million and $1.7 million, respectively. The Company's2015. Our research and development activities vary based on the activity level and scope of other engineering and customer related development contracts. Research and development expenses within our EchoStar Technologies segment decreased primarily due to an increased amount of customer funded projects, which is included in cost of sales. Additionally, the decrease in research and development expenses in our Hughes segment was primarily due to a $6.1 million increase in the development of software projects for products and features to be marketed or sold to customers that were eligible to be capitalized.amortization. "Depreciationamortization. “Depreciation and amortization" expenseamortization” expenses totaled $556.7$432.9 million for the year ended December 31, 2014, an increase2016, a decrease of $49.6$27.9 million, or 9.8%6.1%, compared to the same period in 2013.2015. The decrease was primarily related to certain of our fully amortized other intangible assets in our Hughes segment and Corporate and Other and the fully depreciated EchoStar IX satellite as of October 2015 in our ESS segment.depreciationearnings from our investment in Dish Mexico.$39.7$4.8 million was primarily related to (i) $13.5 million for a provision recorded in the first half of 2015 in connection with FCC regulatory fees, which was reversed in the first quarter of 2016, (ii) $5.0 million loss was related to the partial redemption of the 2019 Senior Secured Notes in the second quarter of 2015 which included a $3.3 million redemption premium and a $1.7 million write off of related unamortized financing costs, and (iii) an unfavorable foreign exchange impact of $3.6 million in 2015 from our Hughes segment. The decrease was partially offset by (i) a decrease of $8.8 million related to a protective put associated with our trading securities in 2016 when compared to theMANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—OPERATIONS - ContinuedEchoStar Satellite Services segment, primarily due to the depreciation of the five satellites we received from DISH Network as part of the Satellite and Tracking Stock Transaction, an increase in depreciation of $18.6 million associated with customer rental equipment from our Hughes segment, and an increase of $4.5 million in amortization expense for the regulatory authorizations with finite useful lives. The increase in depreciation and amortization was partially offset by a decrease in depreciation of $5.7 million due to the impairment of the EchoStar XII satellite's carrying amount that occurred in the second quarter of 2013, a decrease in depreciation of $3.7 million attributable to EchoStar VIII satellite as it was fully depreciated as of September 2014 and a decrease in depreciation of $3.3 million relating to the retirement of certain machinery and equipment.Impairment of long-lived assets. "Impairment of long-lived assets" totaled zero for the year ended December 31, 2014, a decrease of $38.4 million, compared to the 2013, due to the impairment of our EchoStar XII satellite of $34.72015, (ii) a $4.5 million in June 2013 and a $3.8 million impairment of goodwill of our EchoStar Technologies segment in December 2013. See Note 10 in the notes to consolidated financial statements for further discussion of the impairment in the second quarter of 2013.Interest expense, net of amounts capitalized. "Interest expense, net of amounts capitalized" totaled $171.3 million for the year ended December 31, 2014, a decrease of $21.2 million, or 11.0%, compared to the same period in 2013. The decrease was due to higher capitalized interest of $19.8 million associated with the construction of our EchoStar XIX, EchoStar XXI, EchoStar XXIII, and EUTELSAT 65 West A satellites in the year ended December 31, 2014 compared to the same period in 2013.Realized gains on marketable investment securities and other investments, net. "Realized gains on marketable investment securities and other investments, net" totaled $41.3 thousand for the year ended December 31, 2014, a decrease of $38.3 million, compared to the same period in 2013. The decrease was primarily related to a gain of $35.9 million recognized from the sale of a strategic investment in a public company in 2013 and a gain of $2.6 million that resulted from the conversion of one of our investments into a marketable investment security in 2013.Equity in earnings (losses) of unconsolidated affiliates, net. "Equity in earnings (losses) of unconsolidated affiliates, net" totaled $8.2 million for the year ended December 31, 2014, an increase of $13.2 million, compared to the same period in 2013. The increase was primarily related to a $10.3 million non-recurring adjustment to increase our equity in earnings of Dish Mexico to reflect an increase from 24.0% to 49.0% in our interest in Dish Mexico's inception-to-date net income, offset partially by a $5.6 million increase in equity in losses in Dish Mexico when compared to the same period in 2013. In addition, the increase was also attributable to the decrease in equity in losses of $6.4 million from our investment in Sling TV, formerly DISH Digital Holding L.L.C, due to our exchange of our one-third voting interest in Sling TV which we accounted for using the equity method, for a 10.0% non-voting interest in Sling TV, which we account for using the cost method beginning in August 2014. See Note 6 in the notes to consolidated financial statements for more information regarding our investment in Dish Mexico and Sling TV.Other, net. "Other, net" totaled $4.3 million for the year ended December 31, 2014, a decrease of $2.7 million, or 38.9%, compared to the same period in 2013. The decrease was primarily attributable to a non-recurring gain of $6.7 million in 2013 resulting from a reduction of the capital lease obligation for the AMC-15 and AMC-16 satellite andsatellites recorded in the first quarter of 2015 as a result of anomalies that previously affected the operation of these satellites, (iii) a gain of $2.6$1.7 million on the exchange of accounts receivable for certain trading securities in the second quarter of 2015, (iv) proceeds of $1.3 million from a domain name auction in 2015, and (v) an income of $0.8 million in connection withcash distributions from the settlementindenture trustee in satisfaction of certain accounts receivables in 2013. This decrease was partially offset by a gain of $5.8 million in 2014our claims relatedItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedTerreStar. See Note 6TerreStar Networks Inc. in the notes to consolidated financial statements for further discussion of our investment in TerreStar.Earnings before interest, taxes, depreciation and amortization. EBITDADecember 2015. $902.6$80.3 million for the year ended December 31, 2014,2016, an increase of $252.5$29.0 million or 38.8%56.6%, compared to the same period in 2013.2015. Our effective income tax rate was 37.0% and 36.8% for the year ended December 31, 2016 and 2015, respectively. The variations in our current year effective tax rate from the U.S. federal statutory rate for the year ended December 31, 2016 were primarily due to state income taxes and various permanent tax differences, partially offset by research and experimentation credits. The variations in our effective tax rate from the U.S. federal statutory rate for the year ended December 31, 2015 were primarily due to research and experimentation tax credits.the(ii) a decrease of $4.7 million in net loss attributable to noncontrolling interests, of $280.3 million, an increase of $13.2 millioninterest in equity from earnings of unconsolidated affiliates, net and a gain of $5.8 million related to our investment in TerreStar for the year ended December 31, 2014. The increase was partially offset by a gain of $35.9 million recognized from the sale of a strategic investment in a public company in 2013, a non-recurring gain of $6.7 million recognized in 2013 resulting from a reduction of the capital lease obligation for the AMC-16 satellite, a gain of $2.6 million that resulted from the conversion of one of our investments into a marketable investment security in 2013 and a gain of $2.6 million in connection with the settlement of certain accounts receivables in 2013.HSS Tracking Stock. 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 Income (loss) beforeNet income taxes,, the most directly comparable GAAP measure in the accompanying financial statements. For the Years
Ended December 31, Variance 2014 2013 Amount % (Dollars in thousands) $ 902,581 $ 650,097 $ 252,484 38.8 (162,247 ) (177,898 ) 15,651 (8.8 ) (556,676 ) (507,111 ) (49,565 ) 9.8 (6,714 ) — (6,714 ) * 1,389 876 513 58.6 $ 178,333 $ (34,036 ) $ 212,369 * For the Years
Ended December 31, Variance 2016 2015 Amount % (Dollars in thousands) Net income $ 180,692 $ 149,371 $ 31,321 21.0 Interest income and expense, net 102,237 111,607 (9,370 ) (8.4 ) Income tax benefit 80,254 51,235 29,019 56.6 Depreciation and amortization 432,904 460,819 (27,915 ) (6.1 ) Net income from discontinued operations (44,320 ) (61,279 ) 16,959 (27.7 ) Net (income) loss attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests (762 ) 3,986 (4,748 ) * EBITDA $ 751,005 $ 715,739 $ 35,266 4.9 Income tax benefit (provision), net. Income tax expense was $30.8 million for the year ended December 31, 2014, compared to an income tax benefit of $37.4 million for the same period in 2013. Our effective income tax rate was 17.3% for the year ended December 31, 2014 compared to 110.0% for the same period in 2013. The variation in our current year effective tax rate from a U.S. federal statutory rate for the current period was primarily due to changes of our valuation allowance associated with realized and unrealized losses that are capital in nature, research and experimentation tax credits, and a lower state effective tax rate. For the same period in 2013, the variation in our effective tax rate from a U.S. federal statutory rate was primarily due to the decrease of our valuation allowance associated with realized and unrealized losses that are capital in nature, current year research and experimentation tax credits, and reinstatement of the research and experimentation tax credit for 2012, as provided by the American Taxpayer Relief Act enacted on January 2, 2013.Net income (loss) attributable to EchoStar. Net income attributable to EchoStar was $152.9 million for the year ended December 31, 2014, an increase of $150.3 million, compared to the same period in 2013. The increase was primarily due to higher operating income, including depreciation and amortization, of $224.5 million, an increase in capitalized interest of $19.8 million associated with theMANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—OPERATIONS - Continued Hughes Corporate and Other (In thousands) For the Year Ended December 31, 2016 Total revenue $ 1,392,361 $ 407,660 $ 10,445 $ 1,810,466 Capital expenditures $ 322,362 $ 58,925 $ 247,223 $ 628,510 EBITDA $ 477,165 $ 341,516 $ (67,676 ) $ 751,005 For the Year Ended December 31, 2015 Total revenue $ 1,347,340 $ 490,591 $ 10,926 $ 1,848,857 Capital expenditures $ 285,499 $ 101,215 $ 266,213 $ 652,927 EBITDA $ 444,342 $ 414,727 $ (143,330 ) $ 715,739 For the Years
Ended December 31, Variance 2016 2015 Amount % (Dollars in thousands) Total revenue $ 1,392,361 $ 1,347,340 $ 45,021 3.3 Capital expenditures $ 322,362 $ 285,499 $ 36,863 12.9 EBITDA $ 477,165 $ 444,342 $ 32,823 7.4 XXI,Satellite Services Segment For the Years
Ended December 31, Variance 2016 2015 Amount % (Dollars in thousands) Total revenue $ 407,660 $ 490,591 $ (82,931 ) (16.9 ) Capital expenditures $ 58,925 $ 101,215 $ (42,290 ) (41.8 ) EBITDA $ 341,516 $ 414,727 $ (73,211 ) (17.7 ) For the Years
Ended December 31, Variance 2016 2015 Amount % (Dollars in thousands) Total revenue $ 10,445 $ 10,926 $ (481 ) (4.4 ) Capital expenditures $ 247,223 $ 266,213 $ (18,990 ) (7.1 ) EBITDA $ (67,676 ) $ (143,330 ) $ 75,654 (52.8 ) EUTELSAT 65 West A satellites,certain Latin American countries and was contributed to the Hughes segment in the first quarter of 2017. The EchoStar XXI$6.7$5.6 million in therealized gains on our securities classified as available-for-sale in 2016. The increases were partially offset by a decrease of $4.7 million in net loss attributable to noncontrolling interest in HSS Tracking Stock. The increase in "Net income attributable to EchoStar" was partially offset by a decrease of $68.2 million in income tax benefit, a gain of $35.9 million recognized from the sale of a strategic investment in a public company in 2013, a non-recurring gain of $6.7 million resulting from a reduction of the capital lease obligation for the AMC-16 satellite in 2013, and a decrease of $5.6 million in interest income due to lower market interest rates.Segment Operating Results and Capital ExpendituresYear Ended December 31, 2014 Compared to the Year Ended December 31, 2013 EchoStar
Technologies Hughes EchoStar
Satellite
Services All
Other and
Eliminations Consolidated
Total (In thousands) $ 1,609,820 $ 1,327,718 $ 484,455 $ 23,585 $ 3,445,578 $ 48,616 $ 218,607 $ 28,734 $ 384,069 $ 680,026 $ 152,439 $ 356,871 $ 419,442 $ (26,171 ) $ 902,581
For the Years Ended December 31, 2013
$ 1,715,991 $ 1,218,126 $ 330,177 $ 18,158 $ 3,282,452 $ 56,935 $ 186,561 $ 12,700 $ 135,677 $ 391,873 $ 136,057 $ 281,513 $ 235,993 $ (3,466 ) $ 650,097 For the Years
Ended December 31, Variance 2014 2013 Amount % (Dollars in thousands) $ 1,609,820 $ 1,715,991 $ (106,171 ) (6.2 ) $ 48,616 $ 56,935 $ (8,319 ) (14.6 ) $ 152,439 $ 136,057 $ 16,382 12.0 RevenueEchoStar Technologies segment total revenue for the year ended December 31, 2014 decreased by $106.2 million, or 6.2%, compared to the same period in 2013, primarily resulting from a decrease of $128.3 million in equipment revenue earned from DISH Network, offset partially by an increase of $10.0 million in other equipment revenue, a $8.1 million increase in service revenue from DISH Network and a $4.0 million increase in other service revenue.Capital ExpendituresEchoStar Technologies segment capital expenditures for the year ended December 31, 2014 decreased by $8.3 million, or 14.6%, compared to the same period in 2013, primarily due to a decrease of $7.5 million in expenditures related to our digital broadcast center.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedEBITDAEchoStar Technologies segment EBITDA for the year ended December 31, 2014 was $152.4 million, an increase of $16.4 million or 12.0%, compared to the same period in 2013. The increase in EBITDA for our EchoStar Technologies segment was primarily driven by a decrease of $14.5 million in selling, general and administrative expenses, a decrease of $5.4 million in research and development, and a decrease of $3.8 million in impairment of goodwill, partially offset by a $4.2 million decrease in gross margin and an increase of $2.6 million in foreign exchange losses. For the Years Ended
December 31, Variance 2014 2013 Amount % (Dollars in thousands) $ 1,327,718 $ 1,218,126 $ 109,592 9.0 $ 218,607 $ 186,561 $ 32,046 17.2 $ 356,871 $ 281,513 $ 75,358 26.8 RevenueHughes segment total revenue for the year ended December 31, 2014 increased by $109.6 million, or 9.0%, compared to the same period in 2013, primarily due to an increase in service revenue of $94.6 million mainly attributable to an increase in sales of broadband services to our consumer and international customers, an increase of $36.0 million in service revenue from DISH Network as a result of the increase in wholesale subscribers on dishNET and an increase in other equipment revenue of $16.1 million. The increase in revenue was partially offset by a decrease in equipment revenue from DISH Network of $37.2 million.Capital ExpendituresHughes segment capital expenditures for the year ended December 31, 2014 increased by $32.0 million, or 17.2%, compared to the same period in 2013, primarily due to an increase in expenditures related to EUTELSAT 65 West A and the EchoStar XIX ground infrastructure. Capital expenditures for the construction and launch of EchoStar XIX are reported in "All Other and Eliminations" in our segment reporting.EBITDAHughes segment EBITDA for the year ended December 31, 2014 was $356.9 million, an increase of $75.4 million or 26.8%, compared to the same period in 2013. The increase was primarily attributable to a $104.6 million increase in gross margin, partially offset by a $26.0 million increase in selling, general and administrative expenses and a gain of $2.6 million in connection with the settlement of certain accounts receivables in 2013.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedEchoStar Satellite Services Segment For the Years Ended
December 31, Variance 2014 2013 Amount % (Dollars in thousands) $ 484,455 $ 330,177 $ 154,278 46.7 $ 28,734 $ 12,700 $ 16,034 * $ 419,442 $ 235,993 $ 183,449 77.7 RevenueEchoStar Satellite Services segment total revenue for the year ended December 31, 2014 increased by $154.3 million, or 46.7%, compared to the same period in 2013, due to a $154.3 million increase in service revenue, primarily related to satellite services provided to DISH Network on the satellites received as part of the Satellite and Tracking Stock Transaction.Capital ExpendituresEchoStar Satellite Services segment capital expenditures for the year ended December 31, 2014 increased by $16.0 million, compared to the same period in 2013, primarily due to an increase in the satellite expenditures related to the EchoStar 105/SES-11 satellite of $28.5 million in 2014, partially offset by a decrease in satellite expenditures related to the EchoStar XVI satellite of $12.3 million in 2013. Capital expenditures for our EchoStar XXI and EchoStar XXIII satellite programs are reported in our corporate and other activities.EBITDAEchoStar Satellite Services segment EBITDA for the year ended December 31, 2014 was $419.4 million, an increase of $183.4 million or 77.7%, compared to the same period in 2013. The increase in EBITDA for our EchoStar Satellite Services segment was primarily attributable to an increase of $154.4 million in gross margin and a $34.7 million decrease in loss on impairments due to the impairment of our EchoStar XII satellite in June 2013. The increase was partially offset by a non-recurring gain of $6.7 million in 2013 resulting from a reduction of the capital lease obligation for the AMC-16 satellite.Capital ExpendituresFor the year ended December 31, 2014, All Other and Eliminations capital expenditures increased by $248.4 million compared to the same period in 2013, primarily related to the increase in satellite expenditures on the EchoStar XXI satellite of $103.4 million, the EchoStar XIX satellite of $102.7 million, and the EchoStar XXIII satellite of $48.1 million. The increases in satellite expenditures were partially offset by a $4.8 million expenditure related to a launch contract in 2013. The EchoStar XIX satellite is expected to be used in the operations of our Hughes segment and the EchoStar XXI satellite is intended to be used by Solaris Mobile in providing mobile satellite services in the European Union. EchoStar XXIII is expected to launch in the second half of 2016 and will be initially deployed at 45 degree west longitude orbital location.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedEBITDAFor the year ended December 31, 2014, All Other and Eliminations EBITDA was a loss of $26.2 million, compared to a loss of $3.5 million for the same period in 2013. The $22.7 million decrease in EBITDA was primarily due to a gain of $35.9 million recognized from the sale of a strategic investment in a public company in 2013, an increase of $15.7 million in cost of sales relating to our acquisition of satellite services on the EchoStar XV satellite from DISH Network in May 2013, which has not been assigned to any of our segments, offset partially by an increase of $13.2 million in equity in earnings of unconsolidated affiliates, net, an increase of $6.7 million in the net loss attributable to noncontrolling interest in HSS Tracking Stock and a gain of $5.8 million related to our investment in TerreStar.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedYear Ended December 31, 2013 Compared to the Year Ended December 31, 2012 For the Years Ended
December 31, Variance 2013 2012 Amount % (Dollars in thousands) $ 1,311,446 $ 1,028,588 $ 282,858 27.5 347,910 621,495 (273,585 ) (44.0 ) 620,189 515,176 105,013 20.4 1,002,907 956,445 46,462 4.9 3,282,452 3,121,704 160,748 5.1 1,430,777 1,397,512 33,265 2.4 86.2 % 84.7 % 776,121 691,922 84,199 12.2 47.8 % 47.0 % 358,499 372,644 (14,145 ) (3.8 ) 10.9 % 11.9 % 67,942 69,649 (1,707 ) (2.5 ) 2.1 % 2.2 % 507,111 457,326 49,785 10.9 38,415 32,765 5,650 17.2 3,178,865 3,021,818 157,047 5.2 103,587 99,886 3,701 3.7 14,656 11,176 3,480 31.1 (192,554 ) (153,029 ) (39,525 ) 25.8 38,341 177,558 (139,217 ) (78.4 ) (5,024 ) (438 ) (4,586 ) * 6,958 59,531 (52,573 ) (88.3 ) (137,623 ) 94,798 (232,421 ) * (34,036 ) 194,684 (228,720 ) * 37,437 16,329 21,108 * 3,401 211,013 (207,612 ) (98.4 ) 876 (35 ) 911 * $ 2,525 $ 211,048 $ (208,523 ) (98.8 ) $ 650,097 $ 793,898 $ (143,801 ) (18.1 ) 860,000 636,000 224,000 35.2 *Percentage is not meaningful.(1)An explanation of our key metrics is included on pages 74 and 75.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedEquipment revenue—DISH Network. "Equipment revenue—DISH Network" totaled $1.31 billion for the year ended December 31, 2013, an increase of $282.9 million or 27.5%, compared to the same period in 2012.Equipment revenue—DISH Network from our EchoStar Technologies segment for the year ended December 31, 2013 increased by $237.5 million, or 23.6%, to $1.24 billion compared to the same period in 2012. The increase in revenue for the year ended December 31, 2013 was primarily due to an increase of 44.7% in unit sales of set-top boxes, offset partially by a 9.2% decrease in the weighted average price of set-top boxes. Additionally, unit sales of related accessories and the weighted average price of related accessories increased 5.8% and 4.5%, respectively. Our EchoStar Technologies segment offers multiple set-top boxes with different price points depending on their capabilities and functionalities. The revenue and associated margins we earn on sales are determined largely through periodic negotiations that could result in prices reflecting, among other things, the set-top boxes and other equipment that meet our customers' current sales and marketing priorities, the product and service alternatives available from other equipment suppliers, our ability to respond to customer requirements, and to differentiate ourselves from other equipment suppliers on bases other than pricing. In addition, products containing new technologies and features typically have higher initial prices, which decline over time as a result of manufacturing efficiencies.Equipment revenue—DISH Network from our Hughes segment for the year ended December 31, 2013 increased by $45.4 million to $69.1 million compared to the same period in 2012. The increase was primarily due to the commencement of broadband equipment sales to DISH Network pursuant to the Distribution Agreement we entered into with dishNET in October 2012 such that a full year of revenue has been included in the 2013 period.Equipment revenue—other. "Equipment revenue—other" totaled $347.9 million for the year ended December 31, 2013, a decrease of $273.6 million or 44.0%, compared to the same period in 2012.Equipment revenue—other from our EchoStar Technologies segment for the year ended December 31, 2013 decreased by $212.8 million, or 58.2%, to $153.1 million compared to the same period in 2012. The decrease was primarily attributable to a 54.7% decrease in unit sales and a 20.6% decrease in the weighted average price of set-top boxes sold to Bell TV and our other international customers. Additionally, unit sales and the weighted average price of related accessories sold to Bell TV and our other international customers decreased 16.1% and 38.8%, respectively, for the year ended December 31, 2013 compared to the same period in 2012. The sales to Bell TV and other international customers may remain at the current levels in the near term, due to customer utilization of refurbished set-top boxes and lower overall demand in the respective markets that we sell these products.Equipment revenue—other from our Hughes segment for the year ended December 31, 2013 decreased by $61.5 million, or 24.0%, to $194.7 million compared to the same period in 2012. The decrease was mainly due to a decrease in sales of mobile satellite systems equipment of $30.4 million and international broadband equipment of $29.5 million.Services and other revenue—DISH Network. "Services and other revenue—DISH Network" totaled $620.2 million for the year ended December 31, 2013, an increase of $105.0 million or 20.4%, compared to the same period in 2012.Services and other revenue—DISH Network from our EchoStar Technologies segment for the year ended December 31, 2013 increased by $31.5 million, or 11.6%, to $303.7 million compared to theItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continuedsame period in 2012. The increase was primarily due to an increase of $15.3 million in revenue earned from the sales of satellite uplink/downlink services and $16.9 million related to product support and development of applications for set-top boxes.Services and other revenue—DISH Network from our Hughes segment for the year ended December 31, 2013 increased by $34.5 million to $44.8 million compared to the same period in 2012. The increase was primarily attributable to revenue earned pursuant to the Distribution Agreement we entered into with dishNET in October 2012.Services and other revenue—DISH Network from our EchoStar Satellite Services segment for the year ended December 31, 2013 increased by $45.9 million, or 22.8%, to $247.2 million compared to the same period in 2012. The increase was mainly due to a $99.2 million increase in revenue related to the lease of capacity on the EchoStar XVI satellite which began in January 2013 and services provided on the lease of transponders of the Quetzsat-1 satellite to DISH Network beginning in February 2013. This increase was partially offset by a $43.7 million decrease relating to the expiration of our satellite capacity lease agreement for the EchoStar VI satellite, a $5.1 million decrease relating to the renewal of our satellite capacity agreement for the EchoStar VIII satellite, and a $5.3 million decrease in revenue related to DISH Network's use of our right to the 61.5 degree west longitude orbital location.Services and other revenue—other. "Services and other revenue—other" totaled $1.00 billion for the year ended December 31, 2013, an increase of $46.5 million or 4.9%, compared to the same period in 2012.Services and other revenue—other from our Hughes segment for the year ended December 31, 2013 increased by $41.1 million, or 4.7%, to $909.6 million compared to the same period in 2012. The increase was primarily due to an increase in sales of broadband services in our enterprise and consumer markets.Services and other revenue—other from our EchoStar Satellite Services segment for the year ended December 31, 2013 increased by $6.4 million, or 8.3%, to $82.9 million compared to the same period in 2012. The increase was mainly due to an increase of $6.4 million in sales of transponder services.Cost of sales—equipment. "Cost of sales—equipment" totaled $1.43 billion for the year ended December 31, 2013, an increase of $33.3 million, or 2.4%, compared to the same period in 2012.Cost of sales—equipment from our EchoStar Technologies segment for the year ended December 31, 2013 increased by $28.8 million, or 2.5%, to $1.19 billion compared to the same period in 2012. The increase was attributable to an increase in equipment costs of $199.3 million, related directly to the increase in sales of set-top boxes and related accessories to DISH Network. The increase was partially offset by a decrease in cost of sales of $168.9 million, primarily related to a decrease in sales of set-top boxes and related accessories to our international customers.Cost of sales—equipment from our Hughes segment for the year ended December 31, 2013 increased by $4.4 million, or 1.9%, to $237.1 million compared to the same period in 2012. The increase was primarily attributable to an increase in the cost of broadband equipment sold to our wholesale customers of $35.7 million. The increase was primarily offset by a decrease in cost of sales of $17.2 million, due to the decrease in cost of sales of mobile satellite systems equipment and a decrease of $14.3 million in cost of sales related to international broadband equipment.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedCost of sales—services and other. "Cost of sales—services and other" totaled $776.1 million for the year ended December 31, 2013, an increase of $84.2 million, or 12.2%, compared to the same period in 2012.Cost of sales—services and other from our EchoStar Technologies segment for the year ended December 31, 2013 increased by $31.0 million, or 16.4%, to $219.7 million compared to the same period in 2012. The increase was primarily attributable to a $22.8 million increase in engineering services costs provided in 2013 compared to 2012 and a $4.2 million increase in uplink/downlink costs.Cost of sales—services and other from our Hughes segment for the year ended December 31, 2013 increased by $28.4 million, or 6.7%, to $450.3 million compared to the same period in 2012. The increase includes a $23.9 million increase in cost of sales related to an increase in sales of broadband services in our consumer and enterprise markets and a $4.4 million increase in cost of sales primarily related to the Distribution Agreement we entered into with dishNET in October 2012.Cost of sales—services and other from our EchoStar Satellite Services segment for the year ended December 31, 2013 decreased by $4.0 million, or 6.5%, to $56.9 million compared to the same period in 2012. The decrease was primarily attributable to an $8.4 million decrease in lease expense due to the termination of our satellite lease agreement with DISH Network for EchoStar I in July 2012, partially offset by a $4.4 million increase in cost of sales related to the increase in transponder revenue in 2013.Cost of sales—services and other related to our other operations and business development activities for the year ended December 31, 2013 increased $28.8 million compared to the same period in 2012. The increase was primarily due to the commencement of our operating lease of the EchoStar XV satellite capacity from DISH Network in May 2013.Selling, general and administrative expenses. "Selling, general and administrative expenses" totaled $358.5 million for the year ended December 31, 2013, a decrease of $14.1 million or 3.8%, compared to the same period in 2012. The decrease was mainly due to a $21.6 million decrease in general and administrative expenses as a result of an increase in services billed to DISH Network, a $11.5 million decrease in other general and administrative expenses, a $3.9 million decrease in professional services, and a $3.8 million decrease in professional services provided to us by DISH Network pursuant to our related party agreements. These decreases in general and administrative expenses were partially offset by higher marketing and advertising expenses of $21.8 million incurred primarily by our Hughes segment and an increase of $4.8 million in personnel and other employee-related expenses.Depreciation and amortization. "Depreciation and amortization" expense totaled $507.1 million for the year ended December 31, 2013, an increase of $49.8 million or 10.9%, compared to the same period in 2012. The increase was primarily related to an increase in depreciation of $25.3 million from our Hughes segment related to depreciation from EchoStar XVII, which was placed into service in October 2012, an increase of $24.4 million in depreciation from our EchoStar Satellite Services segment, primarily due to the depreciation of EchoStar XVI, which was placed into service in January 2013, and a $17.4 million increase in depreciation associated with customer rental equipment. These increases in depreciation were partially offset by a decrease in depreciation of $13.5 million on EchoStar VI, which was fully depreciated in August 2012, and a decrease in depreciation of $5.7 million on EchoStar XII due to the impairment of the satellite's carrying amount in the second quarter of 2013.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedImpairment of long-lived assets. "Impairment of long-lived assets" totaled $38.4 million for the year ended December 31, 2013, an increase of $5.7 million or 17.2%, compared to the same period in 2012. Impairment losses in 2013 consisted of a $34.7 million impairment of our EchoStar XII satellite and a $3.8 million impairment of goodwill of our EchoStar Technologies segment. Impairment losses in 2012 consisted of a $22.0 million impairment of certain contract rights of our Hughes segment, a $6.6 million impairment of goodwill of our EchoStar Technologies segment, and a $4.2 million impairment of certain regulatory authorizations.Interest expense, net of amounts capitalized. "Interest expense, net of amounts capitalized" totaled $192.6 million for the year ended December 31, 2013, an increase of $39.5 million or 25.8%, compared to the same period in 2012. The increase was mainly due to a $45.1 million decrease in capitalized interest associated with the EchoStar XVII and EchoStar XVI satellites which were placed into service in October 2012 and January 2013, respectively, partially offset by the capitalization of interest expense of $4.0 million primarily related to the construction of the EchoStar XIX and the EchoStar XXI satellites in 2013.Equity in losses of unconsolidated affiliates, net. "Equity in losses of unconsolidated affiliates, net" was $5.0 million for the year ended December 31, 2013, a $4.6 million increase compared to the same period in 2012. The increase was primarily attributable to a $6.3 million increase in our one-third share of losses incurred by DISH Digital Holding, L.L.C., which commenced operations in July 2012.Realized gains on marketable investment securities and other investments, net. "Realized gains on marketable investment securities and other investments, net" totaled $38.3 million for the year ended December 31, 2013, a decrease of $139.2 million or 78.4%, compared to the same period in 2012. The decrease was mainly related to a decrease in gains of $136.4 million recognized on the sale of certain strategic investments in public companies in 2012.Other, net. "Other, net" totaled $7.0 million for the year ended December 31, 2013, a decrease of $52.6 million, or 88.3%, compared to the same period in 2012. The decrease was primarily related to a non-recurring dividend of $46.0 million received from a strategic investment in 2012 and a $5.9 million decrease in gains arising from reductions of the capital lease obligation for the AMC-16 satellite as a result of a partial loss of satellite capacity.Earnings before interest, taxes, depreciation and amortization. EBITDA was $650.1 million for the year ended December 31, 2013, a decrease of $143.8 million, or 18.1%, compared to the same period in 2012. The decrease was primarily due to a decrease in gains of $139.2 million recognized from the sale of certain strategic investments in several public companies in 2012, a non-recurring dividend of $46.0 million received from a strategic investment in 2012, a decrease in gains of $5.9 million arising from reductions of the capital lease obligation for the AMC-16 satellite when compared to the same period in 2012, and a decrease of $4.6 million in equity in earnings of unconsolidated affiliates. TheseItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continueddecreases were partially offset by a $53.5 million increase in operating income, exclusive of depreciation and amortization. The following table reconciles EBITDA to the accompanying financial statements. For the Years Ended
December 31, Variance 2013 2012 Amount % (Dollars in thousands) $ 650,097 $ 793,898 $ (143,801 ) (18.1 ) (177,898 ) (141,853 ) (36,045 ) 25.4 (507,111 ) (457,326 ) (49,785 ) 10.9 876 (35 ) 911 * $ (34,036 ) $ 194,684 $ (228,720 ) * *Percentage is not meaningful.Income tax benefit, net. Income tax benefit totaled $37.4 million for the year ended December 31, 2013, an increase of $21.1 million, compared to the same period in 2012. Our effective income tax rate was 110.0% for the year ended December 31, 2013 compared to (8.4%) for the same period in 2012. The variation in our current year effective tax rate from a U.S. federal statutory rate for the current period was primarily due to the release of the valuation allowance associated with capital loss carryforwards in conjunction with the sale of certain of our capital investments, current year research and experimentation credits, and the reinstatement of the research and experimentation tax credit for 2012, as provided by the American Taxpayer Relief Act enacted on January 2, 2013. For the same period in 2012, the variation from a U.S. federal statutory rate was primarily attributable to the release of the valuation allowance associated with the sale of certain capital investments. In addition, significant fluctuation in the effective tax rate from a U.S. federal statutory rate resulted from our pre-tax losses in the current year.Net income attributable to EchoStar. Net income attributable to EchoStar was $2.5 million for the year ended December 31, 2013, a decrease of $208.5 million, or 98.8%, compared to the same period in 2012. The change was primarily due to a decrease in gains of $139.2 million recognized from the sale of marketable investment securities and other investments in 2012, a gain recognized in 2012 associated with a non-recurring dividend of $46.0 million received from a strategic investment that was not received in 2013, a decrease in capitalized interest of $45.1 million associated with EchoStar XVII and EchoStar XVI, which were placed into service in October 2012 and January 2013, respectively, and a decrease in other income of $5.9 million as a result of a reduction of the capital lease obligation for the AMC-16 satellite when compared to the same period in 2012. These reductions were offset partially by an increase of $21.1 million in income tax benefit, the capitalization of interest expense of $4.0 million primarily related to the construction of the EchoStar XIX and the EchoStar XXI satellites in 2013, and an increase in operating income of $3.7 million.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedSegment Operating Results and Capital ExpendituresYear Ended December 31, 2013 Compared to the Year Ended December 31, 2012 EchoStar
Technologies Hughes EchoStar
Satellite
Services All
Other and
Eliminations Consolidated
Total (In thousands) $ 1,715,991 $ 1,218,126 $ 330,177 $ 18,158 $ 3,282,452 $ 56,935 $ 186,561 $ 12,700 $ 135,677 $ 391,873 $ 136,057 $ 281,513 $ 235,993 $ (3,466 ) $ 650,097
For the Years Ended December 31, 2012
$ 1,660,029 $ 1,158,714 $ 277,985 $ 24,976 $ 3,121,704 $ 69,809 $ 292,222 $ 118,998 $ 31,976 $ 513,005 $ 110,933 $ 265,756 $ 212,549 $ 204,660 $ 793,898 For the Years Ended
December 31, Variance 2013 2012 Amount % (Dollars in thousands) $ 1,715,991 $ 1,660,029 $ 55,962 3.4 $ 56,935 $ 69,809 $ (12,874 ) (18.4 ) $ 136,057 $ 110,933 $ 25,124 22.6 RevenueEchoStar Technologies segment total revenue for the year ended December 31, 2013 increased by $56.0 million, or 3.4%, compared to the same period in 2012, primarily as a result of a $269.0 million increase in both equipment and service revenue provided to DISH Network, offset partially by a $213.1 million decrease in other equipment and service revenue primarily due to a decrease in sales of set-top boxes and related accessories to Bell TV and our other international customers.Capital ExpendituresEchoStar Technologies segment capital expenditures for the year ended December 31, 2013 decreased by $12.9 million, or 18.4%, compared to the same period in 2012, primarily due to lower capital requirements related to our digital broadcast center and network operations.EBITDAEchoStar Technologies segment EBITDA for the year ended December 31, 2013 was $136.1 million, an increase of $25.1 million, or 22.6%, compared to the same period in 2012. The increase in EBITDA for our EchoStar Technologies segment was primarily driven by a $27.3 million increase in operating income offset partially by a decrease of $1.7 million in gains on the sale of investments compared to the same period in 2012.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued For the Years Ended
December 31, Variance 2013 2012 Amount % (Dollars in thousands) $ 1,218,126 $ 1,158,714 $ 59,412 5.1 $ 186,561 $ 292,222 $ (105,661 ) (36.2 ) $ 281,513 $ 265,756 $ 15,757 5.9 RevenueHughes segment total revenue for the year ended December 31, 2013 increased by $59.4 million, or 5.1%, compared to the same period in 2012. This increase was primarily due to an increase in both service and hardware revenue from DISH Network of $34.5 million and $45.4 million, respectively. This increase in revenue from DISH Network was primarily a result of an increase in sales of broadband equipment and services pursuant to the Distribution Agreement we entered into with dishNET in October 2012. Also contributing to the increase in our Hughes segment revenue was an increase of $41.1 million of other service revenue related to an increase in sales of broadband services. These increases were offset partially by a decrease of $61.5 million in equipment revenue as a result of a decrease in sales of mobile satellite systems equipment and international broadband equipment.Capital ExpendituresHughes segment capital expenditures for the year ended December 31, 2013 decreased by $105.7 million, or 36.2%, compared to the same period in 2012, primarily due to a decrease in satellite expenditures related to EchoStar XVII, which was launched in July 2012.EBITDAEBITDA for our Hughes segment for the year ended December 31, 2013 was $281.5 million, an increase of $15.8 million, or 5.9%, compared to the same period in 2012. The increase was due primarily to a $22.0 million impairment loss in 2012 on certain contract rights associated with the Hughes Acquisition that did not occur in 2013 and a gain of $2.6 million in connection with the settlement of certain accounts receivables in 2013. These increases were offset partially by a decrease in gains on marketable investment securities of $10.5 million compared to the same period in 2012.EchoStar Satellite Services Segment For the Years Ended
December 31, Variance 2013 2012 Amount % (Dollars in thousands) $ 330,177 $ 277,985 $ 52,192 18.8 $ 12,700 $ 118,998 $ (106,298 ) (89.3 ) $ 235,993 $ 212,549 $ 23,444 11.0 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedRevenueEchoStar Satellite Services segment total revenue for the year ended December 31, 2013 increased by $52.2 million, or 18.8%, compared to the same period in 2012, primarily due to an increase in sales of transponder services to DISH Network.Capital ExpendituresEchoStar Satellite Services segment capital expenditures for the year ended December 31, 2013 decreased by $106.3 million, or 89.3%, compared to the same period in 2012, primarily related to a decrease in satellite expenditures due to the launch of EchoStar XVI in November 2012.EBITDAEchoStar Satellite Services segment EBITDA for the year ended December 31, 2013 was $236.0 million, an increase of $23.4 million, or 11.0%, compared to the same period in 2012. The increase in EBITDA for our EchoStar Satellite Services segment was primarily due to a $64.1 million increase in operating income excluding depreciation and amortization and impairment losses primarily related to an increase in the sales of transponder services provided in 2013 compared to 2012 and a decrease in cost of sales related to the termination of our satellite lease contract with DISH Network on EchoStar I, which was effective in July 2012. The increase in operating income was partially offset by the impairment loss of our EchoStar XII satellite of $34.7 million in June 2013 and a decrease in gains of $5.9 million as a result of a reduction of the capital lease obligation for the AMC-16 satellite when compared to the same period in 2012.Capital ExpendituresFor the year ended December 31, 2013 capital expenditures increased by $103.7 million compared to the same period in 2012, primarily related to the increase in satellite expenditures on the EchoStar XIX satellite of $100.8 million and the EchoStar XXI satellite of $13.9 million. The EchoStar XIX satellite is expected to be used in the operations of our Hughes segment and the EchoStar XXI satellite is intended to be used by Solaris Mobile in providing mobile satellite services in the EU.EBITDAAll Other and Eliminations EBITDA for the year ended December 31, 2013 was a loss of $3.5 million, compared to income of $204.7 million for the same period in 2012. The $208.1 million decrease in EBITDA was primarily due to a decrease in gains of $126.1 million recognized from the sale of marketable investment securities and other investments in 2012 and non-recurring dividends of $46.0 million received from a strategic investment in 2012.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued2014,2017, our cash, cash equivalents and current marketable investment securities totaled $1.69$3.25 billion compared to $1.62$3.09 billion as of December 31, 2013,2016, an increase of $67.5$152.7 million.We have investments invariable rate demand notes ("VRDNs"). VRDNs are long term floating rate bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised of investments in municipalities and corporations, which are backed by financial institutions or other highly rated companies that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows VRDNs to be liquidated generally on the same day or on a five business day settlement basis. As of December 31, 2014 and 2013, we held VRDNs, within our current marketable investment securities portfolio, with fair values of $4.3 million and $34.7 million, respectively. Our other current marketable investment securities portfolio consists primarily of corporate and government bonds. As of December 31, 2014 and 2013, we held $1.09 billion and $918.2 million, respectively, of corporate and government bonds and other investment securities.2014, 20132017, 2016 and 2012.activities.activities. We typically reinvest the cash flow from operating activities in our business. For the years ended December 31, 2014, 20132017, 2016 and 2012,2015, we reported net cash inflows from operating activities of $840.1$726.9 million, $450.5$803.3 million and $505.1$776.5 million, respectively.flowsinflows from operating activities for the year ended December 31, 2014 increased2017 decreased by $389.6$76.5 million compared to the same period in 2013.2016. The increasedecrease in cash inflows was primarily attributable to highera lower net income of $252.9$184.5 million adjusted to exclude: (i) "Depreciation“Depreciation and amortization;"amortization;” (ii) "Equity“Impairment of long-lived assets;” (iii) “Equity in lossesearnings (losses) of unconsolidated affiliates, net;" (iii) "Realized gainsnet;” (iv) “Losses (gains) and impairment on marketable investment securities, net;” (v) “Stock-based compensation;” (vi) “Deferred tax provision (benefit);” (vii) “Other, net;” and other investments, net;" (iv) "Impairmentto include (viii) “Dividends received from unconsolidated entities;” and (ix) “Proceeds from sale of long-lived asset," (v) "Stock-based compensation;" (vi) "Deferred tax benefit (provision);" and (vii) "Other, net." In addition, nettrading securities.” The decrease in cash inflows were increasedwas partially offset by $136.7an increase in cash outflows of $108.0 million resulting from changestiming differences in operating assets and liabilities related to timing differences between the incurrence of expense and cash payments.flowsinflows from operating activities for the year ended December 31, 2013 decreased2016 increased by $54.6$26.9 million compared to the same period in 2012.2015. The decreaseincrease in cash inflows was primarily attributable to lowera decrease in cash outflows of $20.1 million resulting from timing differences in operating assets and liabilities and higher net income of $33.8$6.8 million adjusted to exclude: (i) "Depreciation“Depreciation and amortization;"amortization;” (ii) "Realized gains“Equity in earnings (losses) of unconsolidated affiliates, net;” (iii) “Losses (gains) and impairment on marketable investment securities, net;” (iv) “Loss from partial redemption of debt;” (v) “Stock-based compensation;” (vi) “Deferred tax provision (benefit);” (vii) “Other, net;” and other investments, net;" (iii) "Equity in losses (earnings)to include (viii) “Dividends received from unconsolidated entities;” and (ix) “Proceeds from sale of unconsolidated affiliates, net;" (iv) "Impairment of long-lived assets", (v) "Stock-based compensation;" (vi) "Deferred tax benefit;" and (vii) "Other, net." In addition, net cash inflows decreased by $20.8 million resulting from changes in operating assets and liabilities related to timing differences between the incurrence of expense and cash payments.activities.activities. Our investing activities generally include purchases and sales of marketable investment securities, capital expenditures, acquisitions, and strategic investments. For the years ended December 31, 2014, 20132017, 2016 and 2012,$887.6$868.0 million, $570.3$632.3 million and $346.8$275.3 million, respectively.20142017 increased by $317.3$235.7 million compared to the same period in 2013.2016. The increase in cash outflows primarily related to a $288.2decrease of $357.6 million in sales and maturities of marketable investment securities, net of purchases, and an increase of $8.1 million in expenditures for externally marketed software and a decrease of $6.0 million in restricted cash and marketable investment securities. The increase in cash outflows was partially offset by a decrease of $119.4 million in capital expenditures, net of related refunds, in 20142017 when compared to the same period in 2013, aTable2016 and cash proceeds of ContentsItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continueddecrease$17.8 million from the sale of $15.7 millionour investment in restricted cash and marketable investment securities, andInvidi Technologies Corporation to an increaseentity owned in part by DISH Network in the first quarter of $11.6 million in capital contributions to certain investees.20132016 increased by $223.5$357.0 million compared to the same period in 2012.2015. The increase in cash outflows primarily related to an increase of $446.0$440.7 million in net purchases of marketable investment securities. Thissecurities, net of sales and maturities. The increase in cash outflows was partially offset by a $121.1$64.7 million reductioninvestment in WorldVu and SmarDTV in the second quarter of 2015, a decrease of $9.1 million in restricted cash relating to a release in funds for certain satellite slots as a result of a FCC settlement in 2016, an decrease of $5.3 million in capital expenditures, decreasenet of $56.7 millionrelated refunds, in acquisitions of regulatory authorizations,2016 when compared to the same period in 2015 and proceeds of $40.4 million in 2013 from the transferacquisition of a regulatory authorization and satellite launch services contract to DISH Network.activities.activities. Our financing activities generally include proceeds related to the issuance of long-term debt and cash used for the repurchase, redemption or payment of long-term debt and capital lease obligations, and the proceeds from Class A common stock options exercised and stock issued under our Employee Stock Purchase Plan.stock incentive plans and employee stock purchase plan. For the years ended December 31, 2014, 20132017, 2016 and 2012,2015, we reported net cash outflowsinflows from financing activities of $35.1$0.1 million, net cash inflows from financing activities of $18.3 million and$1.48 billion, net cash outflows from financing activities of $44.0$120.3 million, respectively.outflowsinflows from financing activities increaseddecreased by $53.4 million$1.48 billion for the year ended December 31, 20142017 compared to the same period in 2013.2016. The increasedecrease in cash outflowsinflows was primarily due to lower proceeds of $42.4$1.5 billion from the issuance of the 2026 Notes in the third quarter of 2016 and a decrease of $5.6 million receivedin net proceeds from Class A common stock option exercises and stock issued under our Employee Stock Purchase Plan, a decrease of $19.9 millionemployee stock purchase plan in excess tax benefits from stock option exercises, and2017, partially offset by an increase of $5.7$22.5 million for in-orbitin net proceeds from Class A common stock options exercised issued under our stock incentive obligation payments, which was partially offset by proceeds of $11.4 million, net of offering costs of $3.9 million from the issuance of Hughes Retail preferred tracking stockplans in 2017 and a decrease of $5.5$6.7 million in capital lease obligation payments.to $18.3 millionby $1.60 billion for the year ended December 31, 20132016 compared to net cash outflows of $44.0 million for the same period in 2012.2015. The increase in cash inflows was primarily due to higherthe proceeds of $55.8$1.5 billion from the issuance of the 2026 Notes in the third quarter of 2016, the partial redemption of the 2019 Senior Secured Notes of $110.0 million receivedand related premium of $3.3 million in the second quarter of 2015, a decrease of $7.7 million in capital lease obligation payments relating to the expiration of the capital lease for the AMC-16 satellite, effective February 2015, partially offset by a decrease of $11.3 million in net proceeds from Class A common stock options exercised and stock issued under our Employee Stock Purchase Planstock incentive plans and an increaseemployee stock purchase plan, payments of debt issuance costs of $7.1 million in 2016, and a decrease of $3.1 million in excess tax benefit frombenefits recognized on the exercise of stock option exercises, which was partially offset by an increase in repayments of long-term debt of $8.2 million.options.MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—OPERATIONS - Continued2014:2017: Payments Due in the Year Ending December 31, Payments Due in the Year Ending December 31, Total 2015 2016 2017 2018 2019 Thereafter Total 2018 2019 2020 2021 2022 Thereafter (In thousands) (In thousands) $ 2,001,240 $ 1,234 $ 6 $ — $ — $ 1,100,000 $ 900,000 $ 3,390,000 $ — $ 990,000 $ — $ 900,000 $ — $ 1,500,000 366,447 40,678 29,724 32,697 36,232 40,114 187,002 269,701 40,631 40,740 45,096 46,450 31,985 64,799 962,957 176,044 173,085 169,924 166,410 126,962 150,532 1,235,317 248,840 212,466 175,899 136,730 98,282 363,100 1,265,685 569,895 251,177 74,479 59,802 54,727 255,605 923,910 342,065 139,312 111,662 57,691 124,411 148,769 66,117 21,731 16,757 11,614 5,126 3,776 7,113 84,944 15,423 14,385 14,089 11,547 7,588 21,912 189,452 186,118 1,667 1,667 — — — $ 4,851,898 $ 995,700 $ 472,416 $ 290,381 $ 267,570 $ 1,325,579 $ 1,500,252 $ 5,903,872 $ 646,959 $ 1,396,903 $ 346,746 $ 1,152,418 $ 262,266 $ 2,098,580 "obligations"obligations” primarily include payments pursuant to agreements for the construction of the EchoStar XIX, EchoStar XXI, EchoStar XXIII, EUTELSAT 65 West A and EchoStar 105/SES-11 satellites,XXIV satellite; payments pursuant to launch services contracts and regulatory authorizations,authorizations; executory costs for our capital lease satellites,satellites; costs under transponder agreementssatellite service agreements; and in-orbit incentives relating to certain satellites,satellites; as well as commitments for long termlong-term satellite operating leases and transponder capacitysatellite service arrangements.Our "Purchase and other obligations" primarily consists of binding purchase orders for digital set-top boxes and related components. Our purchase obligations can fluctuate significantly from period to period due to, among other things, management's control of inventory levels, and can materially impact our future operating asset and liability balances, and our future working capital requirements.2014,2017, we had $45.6$31.1 million of letters of credit and insurance bonds. Of this amount, $16.9$10.2 million was secured by restricted cash; $14.6cash, $0.8 million was related to insurance bonds;bonds, and $14.1$20.1 million was issued under credit arrangements available to our foreign subsidiaries. Certain letters of credit are secured by assets of our foreign subsidiaries.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued2014,2017, we had foreign currency forward contracts with a notional value of $5.0$4.7 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.generally dohistorically have not carrycarried in-orbit insurance for any of the in-orbiton our satellites that we use because we believeassessed that the premium costs arecost of insurance was uneconomical relative to the risk of satellite failure. However, pursuantfailures. Therefore, we generally bear the risk of any in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our indebtedness, we are required, subject to certain limitations on coverage, to maintain launch and in-orbit insurance for our SPACEWAY 3, EchoStar XVI, and EchoStar XVII. AlthoughXVII satellites. Based on economic analysis of the current insurance market we obtained launch plus one year in-orbit insurance, subject to certain limitations, for the EchoStar XIX, EchoStar XXI and EchoStar XXIII satellites. Additionally, we obtained certain launch and in-orbit insurance for our interest in the EchoStar 105/SES-11 satellite. Our other satellites, either in orbit or under construction, are not requiredcovered by launch or in-orbit insurance. We will continue to maintain in-orbitassess circumstances going forward and make insurance pursuant to our service agreement with DISH Network for EchoStar XV, we are liable for any damage causeddecisions on a case by our usecase basis.investment needs. Since we currently dependbusiness. The loss of, or a significant reduction in provision of satellite services would significantly reduce our revenue and materially adversely impact our results of operations. Revenue in our ESS segment depends largely on DISH Networkour ability to continuously make satellite capacity available for a substantial portionsale. Consumer revenue in our Hughes segment depends on our success in adding new and retaining existing subscribers and driving higher average revenue per subscriber across our wholesale and retail channels. Revenue in our aeronautical, 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 revenue,direct and indirect customers and partners are typically impacted most significantly by our cash flow from operations depends heavily on DISH Network's needs for equipment and services. To the extent that DISH Network's gross subscriber additions decrease or DISH Network experiences a net loss of subscribers, sales of our digital set-top boxes and related components as well as broadband services provided to DISH Network may decline, which in turn could have a material adverse effect on our financial position and results of operations.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.2014,2017, our total indebtedness was $2.37$3.63 billion, of which $366.4$269.7 million related to capital lease obligations. For a discussion of the terms of our indebtedness, see Note 11 in the notes to consolidated financial statements in Item 15 of this report. Our liquidity requirements will be significant, primarily due to our debt service requirements.requirements and the design and construction of our new EchoStar XXIV satellite. In addition, our future capital expenditures are likely to increase if we make acquisitions or additional investments in infrastructure necessaryor joint ventures to support and expand our business, or if we decide to purchase or build one or more additional satellites. Other aspects of our business operations may also require additional capital. We periodically evaluate various strategic initiatives, the pursuit of which could also require us to invest or raise significant additional capital.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continuedplanprogram approved by our Boardboard of Directors,directors, we are authorized to repurchase up to $500.0 million of our outstanding shares of Class A common stock through December 31, 2015. For2018. During the years ended December 31, 2014, 20132017, 2016 and 2012,2015, we did not repurchase any common stock under this plan.32 in the notes to consolidated financial statements in Item 15 of this report.available-for-sale;available for sale; accordingly, we report those securities at fair value on a recurring basis and generally recognize unrealized gains and losses in other comprehensive income (loss). Except in unusual circumstances, the estimated fair values of our marketable investment securities are determined by reference to quoted prices for identical securities or based primarily on other observable market inputs. Our investments in non-marketable securities typically are strategic investments in privately held companies and may be highly speculative. We account for such investments using the equity method when we exertexercise significant influence over the investee; otherwise, we account for such investments using the cost method.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continuedother-than-temporary,other than temporary, we adjust the carrying amount of the investmentsinvestment to its estimated fair value and recognize an impairment loss in earnings. In these circumstances, our fair value estimates may reflect significant unobservable inputs.other-than-temporary.other than temporary. Such events and changes in circumstances could result in our recognition of material investment impairment losses in the future.orand 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 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. Fair value is determined primarily using discounted 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, discountsdiscount rates and other assumptions could result in recognition of additional impairment losses in future periods.There are two steps to theThe goodwill impairment test. Step one comparestest involves a comparison of the fair value of a reporting unit with its carrying amount, including goodwill. We typically estimate fair value of reporting units using discounted cash flow techniques, which includes significant assumptions about prospective financial information, terminal value and discount rates (Level 3 inputs). If the reporting unit'sunit’s carrying amount exceeds its estimated fair value, it is necessarywe recognize an impairment loss equal to perform the second step of the impairment test, which compares the implied fair value of reporting unit goodwill withsuch excess, not to exceed the carrying amount of such goodwill to determine the amount of impairment loss.goodwill. We may bypass the two-step quantitative impairment test when we determine based on a qualitative assessment that it is more likely than not that the fair value of a reporting unit exceeds its2014,2017, our goodwill consisted primarily of goodwill assigned to reporting units of the Hughes segment. We test such goodwill annually in our second fiscal quarter. Based on our qualitative assessment of impairment of the goodwill assigned to the Hughes segment in the second quarter of 2014each of 2017 and 2013,2016, we determined that no further testing of goodwill for impairment was necessary as it was more likely than not that the fair values of the Hughes segment reporting units exceeded their corresponding carrying amounts. Our qualitative assessments considered the results ofItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continuedour quantitative annual impairment test in 2012 and generally favorable trends in the operations of the reporting units and in other significant inputs that would be used to determine fair value. Depending on our assessment of future events and changes in circumstances, we may be required to perform the two-step quantitative impairment test in the future. We may determine that some or all of our goodwill is impaired in connection with future impairment tests.the accompanyingour consolidated balance sheets, as well as for operating loss and tax credit carryforwards. Determining necessary valuation allowances for deferred tax assets 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 the need for valuation allowances based on both historical evidence, including trends, and future expectations. Our future operating results and other events and circumstances could have a significant effect on the realization of tax benefits. Those future events and circumstances could require significant adjustments to our valuation allowances in future periods, which could be material to our consolidated results of operations.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued32 in the notes to consolidated financial statements in Item 15 of this report. We are assessingcontinuing to assess the impact of adopting the recently issued accounting pronouncements on our consolidated financial statements and related disclosures.For our EchoStar Technologies segment, we are affected by seasonality to the extent it impacts our customers as a result of their sales and promotion activities, which can vary from year to year. Although the seasonal impacts have not been significant, historically, the first half of the year generally produces fewer new subscribers for the pay-TV industry than the second half of the year. However, we cannot provide assurance that this trend will continue in the future.customers'customers’ annual procurement and budget cycles. Large enterprises and operators often allocate their capital expenditure budgets at the beginning of their fiscal year (which often coincides with the calendar year). The typical sales cycle for large complex system procurements is six to 12 months, which often results in the customer expenditure occurring towards the end of the year. Customers often seek to expend the budgeted funds prior to the end of the year and the next budget cycle. In the Hughes consumer business, we see a similar seasonality for consumer acquisitions, and therefore hardware revenue, as is seen in the consumer and retail sectors where the first and fourth calendar quarters tend to be higher than the second and third quarters.EchoStar Satellite ServicesESS segment is not generally affected by seasonal impacts.Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—ContinuedEquipment revenue—DISH Network. "Equipment revenue—DISH Network" primarily includes sales of digital set-top boxes and related components, including Slingbox products and related hardware products, and sales of satellite broadband equipment and related equipment, primarily related to the Hughes service, to DISH Network.Equipment revenue—other. "Equipment revenue—other" primarily includes sales of digital set-top boxes and related components to Bell TV, Dish Mexico and other domestic and international customers, including sales of Slingbox products and related hardware products, and sales of broadband equipment and networks to customers in our enterprise and consumer markets.revenue—DISH Network. "Services andrevenue — other revenue—DISH Network" primarily includes revenue associated with satellite and transponder services, satellite uplinking/downlinking, signal processing, conditional access management, telemetry, tracking and control, development of web-based applications for set-top boxes, professional services, facilities rental revenue and other services provided to DISH Network. Beginning in October 2012, "Services and other revenue—DISH Network" also includes subscriber wholesale service fees for the Hughes service sold to dishNET.revenue—other. "Services andrevenue — other revenue—other"” primarily includes the sales of enterprise and consumer broadband services, as well as maintenance and other contracted services. "Services“Services and other revenue—other"revenue — other” also includes revenue associated with satellite and transponder services, satellite uplinking/downlinking and other services provided to customers other than DISH Network.Cost of sales—equipment. "Cost of sales—equipment" principallycostsrevenue associated with digital set-top boxessatellite and related componentstransponder services, telemetry, tracking and control, professional services, facilities rental revenue and other services provided to DISH Network. “Services and other revenue — DISH Network” also includes subscriber wholesale service fees for the Hughes service sold to DISH Network, Bell TV, Dish Mexico anddishNET. domestic and international customers, including costs associated with Slingbox products and related hardware products. "Cost of sales—equipment" also. “Equipment revenue — other” primarily includes the cost of broadband equipment and networks sold to customers in our enterprise and consumer markets,markets.sales—sales — services and other. "Costother. “Cost of sales—sales — services and other"other” primarily includes the cost of broadband services provided to our enterprise and consumer customers, and to DISH Network, as well as the cost of providing maintenance and other contracted services. "Cost“Cost of sales—sales — services and other"other” also includes the costs associated with satellite and transponder services, satellite uplinking/downlinking, signal processing, conditional access management, telemetry, tracking and control, product support and development of applications for set-top boxes, professional services, facilities rental costs, and other services provided to our customers, including DISH Network.Researchdevelopment expenses. "Researchnetworks sold to customers in our enterprise and development expenses" primarily includes costs associated with the designconsumer markets, and development of products to support future growth and provide new technology and innovation to our customers.expenses. "Selling,expenses. “Selling, general and administrative expenses"expenses” primarily includes selling and marketing costs and employee-related costs associated with administrative servicesItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Continued(e.g. (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 items associated with facilities and administrative services provided by DISH Network and other third parties.assets. "Impairmentassets. “Impairment of long-lived assets"assets” includes our impairment losses related to our property and equipment, goodwill and other intangible assets.income. "Interest income"income. “Interest income” primarily includes interest earned on our cash, cash equivalents and marketable investment securities, including premium amortization and discount accretion on debt securities.capitalized. "Interestcapitalized. “Interest expense, net of amounts capitalized"capitalized” primarily includes interest expense associated with our long-term debt and capital lease obligations (net of capitalized interest), and amortization of debt issuance costs.Equity in earnings (losses) of unconsolidated affiliates, net. "Equity in earnings (losses) of unconsolidated affiliates, net" includes earnings or losses from ouraccounted for under the equity method.Realized gainsnetmarketable investment securities and other investments, net. "Realized gains on marketable investment securities and other investments, net"net” primarily includes gains, net of any losses, on the sale or exchange of investments.net. "Other, net"net. “Other, net” primarily includes foreign exchange gains and losses, dividends received from our marketable investment securities, equity in earnings (losses) of unconsolidated affiliates, net, and other non-operating income or expense items that are not appropriately classified elsewhere in our Consolidated Statementsconsolidated statements of Operationsoperations.Comprehensive Income (Loss).("EBITDA"(“EBITDA”). EBITDA is defined as "Net“Net income (loss) attributable to EchoStar"” excluding "Interest“Interest expense, net of amounts capitalized" "Interest,” “Interest income" "Income,” “Income tax benefit (provision), net"net,” and "Depreciation“Depreciation and amortization."amortization.” EBITDA is not a measure determined in accordance with GAAP. This non-GAAP measure is reconciled to "Income (loss) before“Net income taxes"” in our discussion of "Results“Results of Operations"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 GAAP. Conceptually, EBITDA measures the amount of income generated each period that could be used to service debt, pay taxes and fund capital expenditures. 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 liquidity and the underlying operating performance of our business. 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 Hughes segment'ssegment’s HughesNet broadband services, through retail, wholesale and small/medium enterprise service channels.2014,2017, our cash, cash equivalents and current marketable investment securities had a fair value of $1.69$3.25 billion. Of this amount, a total of $1.65$3.11 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) VRDNs convertible into cash at par value plus accrued interest generally in five business days or less; (d) debt instruments of the U.S. government and its agencies; and/or (e)(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.$1.65$3.11 billion as of December 31, 2014,2017, a hypothetical 10% change in average interest rates during 20142017 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.20142017 of 0.6%1.3%. 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 20142017 would have resulted in a decrease of approximately $0.9$3.9 million in annual interest income.2014,2017, we held current strategic investments in the publicly traded common stock of several companies with a fair value of $41.7$133.7 million. These investments, which are held for strategic and financial purposes, are concentrated in a small number of companies, are highly speculative and have experienced and continue to experience volatility. The fair value of these investments 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. These investments are subject to significant fluctuations in fair value due to the volatility of the securities markets and of the underlying businesses. In general, our strategic marketable investment securities portfolio is not significantly impacted by interest rate fluctuations as it currently consists solely 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 would resulthave resulted in a decrease of approximately $4.2$13.4 million in the fair value of these investments.Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK—ContinuedRestricted Cash and Marketable Investment Securities and Other Restricted Cash and Marketable Investment Securities2014,2017, we had $18.9 million of restricted cash and marketable investment securities invested in: (a) cash; (b) VRDNs convertible into cash at par value plus accrued interest generally in five business days or less; (c) debt instruments of the U.S. government and its agencies; (d) 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; and (e) instruments with similar risk, duration and credit quality characteristics to the commercial paper described above. Based on our investment portfolio as of December 31, 2014, a hypothetical 10% increase in average interest rates would not have a material impact on the fair value of our restricted cash and marketable investment securities.Other InvestmentsAs of December 31, 2014, we had $160.0$161.4 million of noncurrent equity instruments that we hold for strategic business purposes and account for under the cost or equity methods of accounting. The fair value of these instruments is not readily determinable. We periodically review these investments and estimate fair value when there are indications of impairment. A hypothetical 10% adverse change inequal to 10% of the valuecarrying amount of these debt and equity instruments would resulthave resulted in a decrease of approximately $16.0$16.1 million in the value of these investments.not publicly tradedprivately held depends on the success of those companies'companies’ businesses and their ability to obtain sufficient capital to execute their business plans. Because private markets areit is therefore exposedthe British pound. This exposes us to fluctuations in foreign currency exchange rates. Transactions in foreign currencies are converted into U.S. dollars using exchange rates in effect on the dates of the transactions.exchangecurrency 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, 2014,2017, we had $16.8 million of net foreign currency denominated receivables and payables outstanding, and foreign currency forward contracts with a notional value of $5.0$4.7 million in place to partially mitigate foreign currency exchange risk. The estimated fair values of the foreign exchange contracts were not material as of December 31, 2014.2017. 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 would behave been an estimated loss to the cumulative translation adjustment of $20.1$26.3 million as of December 31, 2014.Consolidated Financial Statementsconsolidated financial statements are included in Item 15 of this report beginning on page F-4.None.1934)1934, as amended) as of the end of the period covered by this report. 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 report.1934)1934, as amended) that occurred during our most recent fiscal quarter of 2014ended December 31, 2017 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.GAAP.(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 GAAP, 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.(i) (ii) (iii) Item 9A. CONTROLS AND PROCEDURES—Continued2014.20142017 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 Annual Report on Form 10-K.None.20152018 Annual Meeting of Shareholders, which will be filed no later than 120 days after December 31, 2014,2017, under the caption "Election“Election of Directors,"” which information is hereby incorporated herein by reference.16-1813-14 of this report under the caption "Executive“Executive Officers of the Registrant."”20152018 Annual Meeting of Shareholders, which will be filed no later than 120 days after December 31, 2014,2017, under the caption "Executive“Executive Compensation and Other Information,"” which information is hereby incorporated herein by reference.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."20152018 Annual Meeting of Shareholders, which will be filed no later than 120 days after December 31, 2014,2017, under the captions "Election“Election of Directors," "Equity” “Equity Security Ownership"Ownership” and "Equity“Equity Compensation Plan Information,"” which information is hereby incorporated herein by reference.20152018 Annual Meeting of Shareholders, which will be filed no later than 120 days after December 31, 2014,2017, under the caption "Certain“Certain Relationships and Related Party Transactions,"” which information is hereby incorporated herein by reference.20152018 Annual Meeting of Shareholders, which will be filed no later than 120 days after December 31, 2014,2017, under the caption "Principal“Principal Accountant Fees and Services,"” which information is hereby incorporated herein by reference.Page (1) Consolidated Financial Statements F-8(2) Financial Statement Schedules (2)Financial Statement SchedulesSchedule I—Condensed Financial Information of Registrant (Parent Company Information Only): F-74Condensed Statements of OperationsF-75Condensed Statements of Cash FlowsF-76Schedule II—Valuation and Qualifying AccountsF-77(3)Exhibits2.1*Form of Separation Agreement between EchoStar Corporation and DISH Network Corporation (incorporated by reference to Exhibit 2.1 to Amendment No. 31 of EchoStar Corporation'sCorporation’s Form 10 datedfiled December 28,12, 2007, Commission File No. 001-33807). 2.2* 3.1* 3.2* 3.3*EchoStar Corporation Certificate of Designation Establishing the Voting Powers, Designations, Preferences, Limitations, Restrictions, and Relative Rights of the Hughes Retail Preferred Tracking Stock (incorporated by reference to Exhibit 3.1 to EchoStar Corporation's Current Report on Form 8-K filed March 3, 2014, Commission File No. 001-33807)4.1*Specimen Class A Common Stock Certificate of EchoStar Corporation (incorporated by reference to Exhibit 3.24.1 to Amendment No. 31 of EchoStar Corporation'sCorporation’s Form 10 datedfiled December 28,12, 2007, Commission File No. 001-33807). 4.2* 4.3* 4.4* 4.5* 4.6* 4.7* 4.8* 4.9* 4.10* 10.1* 10.2*Form of Employee Matters Agreement between EchoStar Corporation and DISH Network Corporation (incorporated by reference to Exhibit 10.3 to Amendment No. 3 of EchoStar Corporation's Form 10 dated December 28, 2007, Commission File No. 001-33807).**10.3*Form of Intellectual Property Matters Agreement between EchoStar Corporation, EchoStar Acquisition L.L.C., Echosphere L.L.C., DISH DBS Corporation, EIC Spain SL, EchoStar Technologies L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.4 to Amendment No. 3 of EchoStar Corporation's Form 10 dated December 28, 2007, Commission File No. 001-33807).10.5*Manufacturing Agreement, dated as of March 22, 1995, between HTS and SCI Technology, Inc. (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form S-1 of Dish Ltd., Commission File No. 33-81234).10.6*Agreement between HTS, DISH Network L.L.C. and ExpressVu Inc., dated January 8, 1997, as amended (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K of DISH Network Corporation for the year ended December 31, 1996, as amended, Commission File No. 0-26176).10.7*Agreement to Form NagraStar L.L.C., dated as of June 23, 1998, by and between Kudelski S.A., DISH Network Corporation and DISH Network L.L.C. (incorporated by reference to Exhibit 10.28 to the Annual Report on Form 10-K of DISH Network Corporation for the year ended December 31, 1998, Commission File No. 0-26176).10.8*Satellite Service Agreement, dated as of March 21, 2003, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended March 31, 2003, Commission File No. 0-26176).***10.9*Amendment No. 1 to Satellite Service Agreement dated March 31, 2003 between SES Americom Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended September 30, 2003, Commission File No. 0-26176).***10.10*Satellite Service Agreement dated as of August 13, 2003 between SES Americom Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended September 30, 2003, Commission File No. 0-26176).***10.11*Satellite Service Agreement, dated February 19, 2004, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended March 31, 2004, Commission File No. 0-26176).***10.12*Amendment No. 1 to Satellite Service Agreement, dated March 10, 2004, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended March 31, 2004, Commission File No. 0-26176).***10.13*Amendment No. 3 to Satellite Service Agreement, dated February 19, 2004, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended March 31, 2004, Commission File No. 0-26176).***10.14*Amendment No. 2 to Satellite Service Agreement, dated April 30, 2004, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended June 30, 2004, Commission File No. 0-26176).***10.15*Amendment No. 4 to Satellite Service Agreement, dated October 21, 2004, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.23 to the Annual Report on Form 10-K of DISH Network Corporation for the year ended December 31, 2004, Commission File No. 0-26176).***10.16*Amendment No. 3 to Satellite Service Agreement, dated November 19, 2004 between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-K of DISH Network Corporation for the year ended December 1, 2004, Commission File No. 0-26176).***10.17*Amendment No. 5 to Satellite Service Agreement, dated November 19, 2004, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K of DISH Network Corporation for the year ended December 31, 2004, Commission File No. 0-26176).***10.18*Amendment No. 6 to Satellite Service Agreement, dated December 20, 2004, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.26 to the Annual Report on Form 10-K of DISH Network Corporation for the year ended December 31, 2004, Commission File No. 0-26176).***10.19*Amendment No. 4 to Satellite Service Agreement, dated April 6, 2005, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended June 30, 2005, Commission File No. 0-26176).***10.20*Amendment No. 5 to Satellite Service Agreement, dated June 20, 2005, between SES Americom, Inc., DISH Network L.L.C. and DISH Network Corporation (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of DISH Network Corporation for the quarter ended June 30, 2005, Commission File No. 0-26176).***10.21*Form of EchoStar Corporation 2008 Class B CEO Stock Option Plan (incorporated by reference to Exhibit 10.25 to Amendment No. 31 of EchoStar Corporation'sCorporation’s Form 10 datedfiled December 28,12, 2007, Commission File No. 001-33807).** 10.22*Form of Satellite CapacityTransponder Service Agreement between EchoStar Corporation and DISH Network L.L.C. (incorporated by reference from Exhibit 10.28 to Amendment No. 2 to EchoStar Corporation’s Form 10 of EchoStar Corporation filed on December 26, 2007, Commission File No. 001-33807). 10.23*Pricing Agreement, dated March 11, 2008, by and among EchoStar Technologies L.L.C., Bell ExpressVu Inc., in its capacity as General Partner of Bell ExpressVu Limited Partnership, Bell Distribution Inc., and Bell Canada (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of EchoStar Corporation for the quarter ended March 31, 2008, Commission File No. 001-33807).***10.24* 10.25* 10.26*Bell TV Pricing Amendment, dated February 6, 2009, between EchoStar Corporation and Bell TV (incorporated by reference to Exhibit 10.26 to the Annual Report on Form 10-K of EchoStar Corporation for the year ended December 31, 2009, Commission File No. 001-33807).***10.27* 10.28*Amended and Restated EchoStar Corporation 2008 Stock Incentive Plan (incorporated by reference to EchoStar Corporation's Definitive Proxy Statement on Form 14 filed March 31, 2009, Commission File No. 001-33807).10.29*Amended and Restated EchoStar Corporation 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).10.30* 10.31* 10.32*Professional Services Agreement, dated August 4, 2009, between EchoStar Corporation and DISH Network Corporation (incorporated by reference from Exhibit 10.3 to the Quarterly Report on Form 10-Q of EchoStar Corporation for the quarter ended September 30, 2009, Commission File No. 001-33807).*** 10.36* 10.37*Assignment of Rights Under Launch Service Contract from EchoStar Corporation to DISH Orbital II L.L.C. (incorporated by reference to Exhibit 10.37 to the Annual Report on Form 10-K of EchoStar Corporation for the year ended December 31, 2009, Commission File No. 001-33807).10.38*Contract between Hughes Network Systems, LLC and Space Systems/Loral, Inc. for the Hughes Jupiter Satellite Program dated June 8, 2009 (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q of Hughes Communications, Inc. filed August 7, 2009 (File No. 001-33040)).***10.39*Launch Services Agreement by and between Hughes Network Systems, LLC and Arianespace dated April 30, 2010 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Hughes Network Systems, LLC filed August 4, 2010 (File No. 333-138009)).***10.40* 10.41*10.42*Memorandum of Understanding, dated May 6, 2011 among EchoStar Global B.V., EchoStar Technologies L.L.C., Bell ExpressVu Inc., Bell ExpressVu Limited Partnership, Bell Mobility Inc., and Bell CanadaPradman Kaul (incorporated by reference to Exhibit 10.1 to the QuarterlyEchoStar Corporation’s Current Report on Form 10-Q of EchoStar Corporation8-K, filed August 9, 2011,April 6, 2016, Commission File No. 001-33807).*** 10.43*Cost Allocation Agreement, dated April 29, 2011, between EchoStar Corporation and DISH Network Corporation (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of EchoStar Corporation filed August 9, 2011, Commission File No. 001-33807).10.44*Settlement and Patent License between TiVo Inc. and DISH Network Corporation and EchoStar Corporation, dated as of April 29, 2011 (incorporated by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q/A of EchoStar Corporation filed February 21, 2012, Commission File No. 001-33807).***10.45*Receiver Agreement dated January 1, 2012 between Echosphere L.L.C and EchoStar Technologies L.L.C. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of EchoStar Corporation filed May 7, 2012, Commission File No. 001-33807).***10.46*Broadcast Agreement dated January 1, 2012 between EchoStar Broadcasting Corporation and DISH Network L.L.C. (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of EchoStar Corporation, filed May 7, 2012, Commission File No. 001-33807).***10.47*First Amendment to EchoStar XVI Satellite Transponder Service Agreement, dated as of December 21, 2012 between EchoStar Satellite Operating Corporation and DISH Network L.L.C. (incorporated by reference to Exhibit 10.47 to theEchoStar Corporation’s Annual Report on Form 10-K of EchoStar Corporation,for the year ended December 31, 2012, filed February 20, 2013, Commission File No. 001-33807).*** 10.48*Transaction Agreement, dated as of February 20, 2014, by and among EchoStar Corporation, Hughes Satellite Systems Corporation, Alpha Company LLC, DISH Network, L.L.C., DISH Operating L.L.C. and EchoStar XI Holding L.L.C. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of EchoStar Corporation, filed May 9, 2014, Commission File No. 001-33807).***10.49*Investor Rights Agreement, dated as of February 20, 2014, by and among EchoStar Corporation, Hughes Satellite Systems Corporation, DISH Operating L.L.C. and DISH Network L.L.C. (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of EchoStar Corporation, filed May 9, 2014, Commission File No. 001-33807).***10.50* 21(H) 23(H) 24(H) 31.1(H) 31.2(H) 32.1(H)101.SCH 99.1(H)Unaudited Condensed Attributed Financial Information and Notes for Hughes Retail Group101.CAL 101101.DEF The following materials from the Annual Report on Form 10-K of EchoStar Corporation for the year ended December 31, 2014, filed on February 20, 2015, formatted in eXtensible Business Reporting Language ("XBRL"): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Consolidated Statement of Changes in Stockholders' Equity, (iv) Consolidated Statements of Cash Flows, and (v) related notes to these financial statements.101.LAB (H)Filed herewith.101.PRE XBRL Taxonomy Extension Presentation Linkbase. (H) Filed herewith. (I) Furnished herewith * Incorporated by reference. ** Constitutes a management contract or compensatory plan or arrangement. *** Certain portions of the exhibit have been omitted and separately filed with the Securities and Exchange Commission with a request for confidential treatment. **** Schedules and exhibits have been omitted pursuant to Item 601(b)(2) 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.
SIGNATURES*Incorporated by reference.**Constitutes a management contract or compensatory plan or arrangement.***Certain portions of the exhibit have been omitted and separately filed with the Securities and Exchange Commission with a request for confidential treatment.****Schedules and exhibits have been omitted pursuant to Item 601(b)(2) 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. ECHOSTAR CORPORATION
By:
By:
/s/ DAVID J. RAYNER
David J. RaynerDavid J. Rayner Executive Vice President, Chief Financial Officer, Chief Operating Officer, and Treasurer 20, 2015Signature TitleDate
Title
Date/s/ MICHAEL T. DUGAN
Michael T. Dugan Chief Executive Officer, President and Director (PrincipalFebruary 22, 2018 Michael T. Dugan (Principal Executive Officer) February 20, 2015/s/ DAVID J. RAYNER
David J. Rayner
Executive Vice President, Chief Financial Officer,David J. Rayner Chief Operating Officer and Treasurer (PrincipalFebruary 22, 2018 (Principal Financial and Accounting Officer)
February 20, 2015* Chairman February 22, 2018 Charles W. Ergen
Chairman
February 20, 2015*R. Stanton Dodge
Director
February 20, 2015
*Anthony M. FedericoDirectorFebruary 20, 2015*Pradman P. KaulDirectorFebruary 20, 2015SignatureTitleDate*Tom A. Ortolf Director February 20, 201522, 2018
R. Stanton Dodge* Director February 22, 2018 Anthony M. Federico * Director February 22, 2018 Pradman P. Kaul * Director February 22, 2018 Tom A. Ortolf * Director February 22, 2018 C. Michael Schroeder
Director
February 20, 2015*By:
* Director February 22, 2018 William David Wade * By: /s/ DEAN A. MANSON
Dean A. MansonAttorney-in-Fact
Dean A. MansonAttorney-in-Fact Page TableContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe BoardIndependent Registered Public Accounting FirmDirectorsdirectorsStockholdersEchoStar Corporation:20142017 and 2013, and2016, the related consolidated statements of operations, and comprehensive income (loss), changes in stockholders'stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2014,2017, and the related notes and financial statement schedules I andschedule II listed in Item 15.15, collectively, the “consolidated financial statements.” We also have audited EchoStar Corporation'sthe Company’s internal control over financial reporting as of December 31, 2014,2017, based on criteria established in Internal Control—Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). EchoStar Corporation's and financial statement schedules, 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.reporting. Our responsibility is to express an opinion on thesethe Company’s consolidated financial statements and financial statement schedules, and an opinion on EchoStar Corporation'sthe Company’s internal control over financial reporting based on our audits.Public Company Accounting Oversight Board (United States).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.supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall presentation of the consolidated financial statement presentation.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.company'scompany’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'scompany’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 thecompany'scompany’s assets that could have a material effect on the financial statements.In our opinion,/s/ KPMG LLP consolidated financial statements referred to above present fairly, in all material respects, the financial position of EchoStar Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.Company’s auditor since 2007.Denver, Colorado February 22, 2018 Also, in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also in our opinion, EchoStar Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework (2013) issued by the COSO./s/ KPMG LLPDenver, ColoradoFebruary 20, 2015 As of December 31, 2014 2013 $ 549,053 $ 634,119 1,139,103 986,533 163,232 159,292 251,669 355,135 62,963 66,084 67,164 55,400 87,208 69,633 7,699 29,930 2,328,091 2,356,126 18,945 16,137 3,194,793 2,546,377 568,378 583,900 510,630 504,173 195,662 262,039 159,962 169,771 90,241 89,811 187,296 173,629 4,925,907 4,345,837 $ 7,253,998 $ 6,701,963 $ 188,282 $ 201,416 32,474 55,743 41,912 69,791 71,708 57,592 32,117 30,940 27,590 24,010 123,650 118,953 517,733 558,445 2,325,775 2,352,597 679,524 488,206 107,328 76,484 3,112,627 2,917,287 3,630,360 3,475,732
6 — 50 48 48 48 — — — — 3,706,122 3,502,005 (55,856 ) (14,655 ) (19,040 ) (171,914 ) (98,162 ) (98,162 ) 3,533,168 3,217,370 80,457 — 10,013 8,861 3,623,638 3,226,231 $ 7,253,998 $ 6,701,963 As of December 31, 2017 2016 Assets Current Assets: Cash and cash equivalents $ 2,431,456 $ 2,570,365 Marketable investment securities, at fair value 814,161 522,516 Trade accounts receivable, net of allowance for doubtful accounts of $12,027 and $12,956, respectively 196,840 182,527 Trade accounts receivable - DISH Network, net of allowance for doubtful accounts of zero 43,295 19,417 Inventory 83,595 62,620 Prepaids and deposits 54,533 43,456 Other current assets 91,574 10,862 Current assets of discontinued operations 97 311,524 Total current assets 3,715,551 3,723,287 Noncurrent Assets: Property and equipment, net of accumulated depreciation of $2,661,129 and $2,598,492, respectively 3,465,471 3,398,195 Regulatory authorizations, net 536,936 544,633 Goodwill 504,173 504,173 Other intangible assets, net 58,955 80,734 Investments in unconsolidated entities 161,427 171,016 Other receivable - DISH Network 92,687 90,586 Other noncurrent assets, net 214,814 179,311 Noncurrent assets of discontinued operations — 316,924 Total noncurrent assets 5,034,463 5,285,572 Total assets $ 8,750,014 $ 9,008,859 Liabilities and Stockholders’ Equity Current Liabilities: Trade accounts payable $ 108,406 $ 170,297 Trade accounts payable - DISH Network 4,753 1,072 Current portion of long-term debt and capital lease obligations 40,631 32,984 Deferred revenue and prepayments 65,959 59,989 Accrued interest 47,616 46,487 Accrued compensation 47,756 53,454 Accrued expenses and other 98,227 95,726 Current liabilities of discontinued operations 542 71,429 Total current liabilities 413,890 531,438 Noncurrent Liabilities: Long-term debt and capital lease obligations, net of unamortized debt issuance costs 3,594,213 3,622,463 Deferred tax liabilities, net 436,023 746,667 Other noncurrent liabilities 128,503 90,785 Noncurrent liabilities of discontinued operations — 10,701 Total noncurrent liabilities 4,158,739 4,470,616 Total liabilities 4,572,629 5,002,054 Commitments and Contingencies (Note 16) Stockholders’ Equity: Preferred stock, $.001 par value, 20,000,000 shares authorized: Hughes Retail Preferred Tracking Stock, $.001 par value, zero authorized, issued and outstanding at December 31, 2017 and 13,000,000 shares authorized and 6,290,499 issued and outstanding at December 31, 2016 — 6 Common stock, $.001 par value, 4,000,000,000 shares authorized: Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 53,663,859 shares issued and 48,131,541 shares outstanding at December 31, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016 54 52 Class B convertible common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of December 31, 2017 and 2016 48 48 Class C convertible common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2017 and 2016 — — Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2017 and 2016 — — Additional paid-in capital 3,669,461 3,828,677 Accumulated other comprehensive loss (130,154 ) (124,803 ) Accumulated earnings 721,316 314,247 Treasury stock, at cost (98,162 ) (98,162 ) Total EchoStar stockholders’ equity 4,162,563 3,920,065 Noncontrolling interest in HSS Tracking Stock — 73,910 Other noncontrolling interests 14,822 12,830 Total stockholders’ equity 4,177,385 4,006,805 Total liabilities and stockholders’ equity $ 8,750,014 $ 9,008,859 AND COMPREHENSIVE INCOME (LOSS) For the Years Ended December 31, 2014 2013 2012 $ 1,145,979 $ 1,311,446 $ 1,028,588 374,049 347,910 621,495 828,612 620,189 515,176 1,096,938 1,002,907 956,445 3,445,578 3,282,452 3,121,704 1,288,998 1,430,777 1,397,512 838,918 776,121 691,922 372,010 358,499 372,644 60,886 67,942 69,649 556,676 507,111 457,326 — 38,415 32,765 3,117,488 3,178,865 3,021,818 328,090 103,587 99,886 9,102 14,656 11,176 (171,349 ) (192,554 ) (153,029 ) 41 38,341 177,558 8,198 (5,024 ) (438 ) 4,251 6,958 59,531 (149,757 ) (137,623 ) 94,798 178,333 (34,036 ) 194,684 (30,784 ) 37,437 16,329 147,549 3,401 211,013 (6,714 ) — — 1,389 876 (35 ) 152,874 2,525 211,048 (12,394 ) — — $ 165,268 $ 2,525 $ 211,048 91,190 89,405 87,150 92,616 90,952 87,959 $ 1.81 $ 0.03 $ 2.42 $ 1.78 $ 0.03 $ 2.40 $ 147,549 $ 3,401 $ 211,013 (31,935 ) (16,394 ) (2,501 ) (9,462 ) 18,413 30,799 (41 ) (36,312 ) (175,223 ) (41,438 ) (34,293 ) (146,925 ) 106,111 (30,892 ) 64,088 (6,714 ) — — 1,152 (10 ) 59 $ 111,673 $ (30,882 ) $ 64,029 For the Years Ended December 31, 2017 2016 2015 Revenue: Services and other revenue - other $ 1,200,321 $ 1,100,828 $ 1,093,674 Services and other revenue - DISH Network 445,698 463,442 532,162 Equipment revenue - other 239,199 237,356 212,269 Equipment revenue - DISH Network 290 8,840 10,752 Total revenue 1,885,508 1,810,466 1,848,857 Costs and Expenses: Cost of sales - services and other (exclusive of depreciation and amortization) 546,327 521,220 574,400 Cost of sales - equipment (exclusive of depreciation and amortization) 212,170 203,965 195,360 Selling, general and administrative expenses 366,007 325,044 318,136 Research and development expenses 31,745 31,170 26,377 Depreciation and amortization 522,190 432,904 460,819 Impairment of long-lived assets 10,762 — — Total costs and expenses 1,689,201 1,514,303 1,575,092 Operating income 196,307 296,163 273,765 Other Income (Expense): Interest income 44,619 21,244 10,388 Interest expense, net of amounts capitalized (217,240 ) (123,481 ) (121,995 ) Gains (losses) on investments, net 56,751 9,767 (6,443 ) Other-than-temporary impairment loss on available-for-sale securities (3,298 ) — (11,226 ) Equity in earnings (losses) of unconsolidated affiliates, net 16,973 10,802 (2,477 ) Other, net 6,582 2,131 (2,685 ) Total other expense, net (95,613 ) (79,537 ) (134,438 ) Income from continuing operations before income taxes 100,694 216,626 139,327 Income tax benefit (provision), net 284,286 (80,254 ) (51,235 ) Net income from continuing operations 384,980 136,372 88,092 Net income from discontinued operations 8,509 44,320 61,279 Net income 393,489 180,692 149,371 Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (655 ) (944 ) (5,603 ) Less: Net income attributable to other noncontrolling interests 1,583 1,706 1,617 Net income attributable to EchoStar 392,561 179,930 153,357 Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (1,209 ) (1,743 ) (10,343 ) Net income attributable to EchoStar common stock $ 393,770 $ 181,673 $ 163,700 Amounts attributable to EchoStar common stock: Net income from continuing operations $ 385,261 $ 137,353 $ 102,421 Net income from discontinued operations 8,509 44,320 61,279 Net income attributable to EchoStar common stock $ 393,770 $ 181,673 $ 163,700 Weighted-average common shares outstanding - Class A and B common stock: Basic 95,425 93,795 92,397 Diluted 96,741 94,410 93,466 Earnings per share - Class A and B common stock: Basic: Continuing operations $ 4.04 $ 1.46 $ 1.11 Discontinued operations 0.09 0.48 0.66 Total basic earnings per share $ 4.13 $ 1.94 $ 1.77 Diluted: Continuing operations $ 3.98 $ 1.45 $ 1.10 Discontinued operations 0.09 0.47 0.65 Total diluted earnings per share $ 4.07 $ 1.92 $ 1.75 CHANGES IN STOCKHOLDERS' EQUITYthousands)thousands, except per share amounts) Hughes
Retail
Preferred
Tracking
Stock Class A and B
Common
Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss) Accumulated
Deficit Treasury
Stock Noncontrolling
Interest in
HSS Tracking
Stock Other
Noncontrolling
Interests Total $ — $ 93 $ 3,360,301 $ 165,771 $ (385,487 ) $ (98,162 ) $ — $ 9,110 $ 3,051,626 — — 11,469 — — — — — 11,469 — — 4,282 — — — — — 4,282 — — 3,929 — — — — — 3,929 — — 14,585 — — — — — 14,585 — — 80 — — — — 168 248 — — — — 211,048 — — (35 ) 211,013 — — — (144,424 ) — — — — (144,424 ) — — — (2,595 ) — — — 94 (2,501 ) — 93 3,394,646 18,752 (174,439 ) (98,162 ) — 9,337 3,150,227 — 3 61,461 — — — — — 61,464 — — 4,761 — — — — — 4,761 — — 9,783 — — — — — 9,783 — — 18,353 — — — — — 18,353 — — 12,663 — — — — — 12,663 — — 338 — — — — (466 ) (128 ) — — — — 2,525 — — 876 3,401 — — — (17,899 ) — — — — (17,899 ) — — — (15,508 ) — — — (886 ) (16,394 ) — 96 3,502,005 (14,655 ) (171,914 ) (98,162 ) — 8,861 3,226,231 — 2 16,708 — — — — — 16,710 — — 10,316 — — — — — 10,316 — — 12,147 — — — — — 12,147 — — 14,683 — — — — — 14,683 6 — 163,510 — — — 87,171 — 250,687 — — 8,843 — — — — — 8,843 — — (9,569 ) — — — — — (9,569 ) — — (7,252 ) — — — — — (7,252 ) — — (5,269 ) — — — — — (5,269 ) — — — — 152,874 — (6,714 ) 1,389 147,549 — — — (9,503 ) — — — — (9,503 ) — — — (31,698 ) — — — (237 ) (31,935 ) $ 6 $ 98 $ 3,706,122 $ (55,856 ) $ (19,040 ) $ (98,162 ) $ 80,457 $ 10,013 $ 3,623,638 For the Years Ended December 31, 2017 2016 2015 Comprehensive Income: Net income $ 393,489 $ 180,692 $ 149,371 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 16,413 (11,315 ) (62,731 ) Recognition of foreign currency translation loss in net income — — 1,889 Unrealized gains (losses) on available-for-sale securities and other (21,895 ) 9,149 (12,046 ) Recognition of realized gains on available-for-sale securities in net income (2,758 ) (5,590 ) (35 ) Recognition of other-than-temporary impairment loss on available-for-sale securities in net income 3,298 — 11,226 Total other comprehensive loss, net of tax (4,942 ) (7,756 ) (61,697 ) Comprehensive income 388,547 172,936 87,674 Less: Comprehensive loss attributable to noncontrolling interest in HSS Tracking Stock (655 ) (944 ) (5,603 ) Less: Comprehensive income attributable to other noncontrolling interests 1,992 1,520 1,297 Comprehensive income attributable to EchoStar $ 387,210 $ 172,360 $ 91,980 CASH FLOWS
CHANGES IN STOCKHOLDERS’ EQUITY For the Years Ended December 31, 2014 2013 2012 $ 147,549 $ 3,401 $ 211,013 556,676 507,111 457,326 (8,198 ) 5,024 438 (41 ) (38,341 ) (177,558 ) — 38,415 32,765 14,683 18,353 14,585 31,742 (35,780 ) (1,075 ) (18,023 ) 42,580 1,357 950 (2,995 ) (1,590 ) 104,051 (77,790 ) (56,735 ) 2,608 16,529 (16,109 ) 9,930 5,182 10,447 (22,230 ) (76,497 ) 65,577 (26,508 ) 28,783 10,597 26,469 38,085 (18,197 ) (8,305 ) (41,650 ) (42,302 ) 28,778 20,097 14,610 840,131 450,507 505,149 (1,523,514 ) (1,080,437 ) (971,154 ) 1,353,157 912,030 1,248,748 (680,026 ) (391,873 ) (513,005 ) (2,808 ) 12,908 (4,759 ) (18,569 ) (7,000 ) — — (41,748 ) (98,477 ) — 40,398 — (35 ) (428 ) (2,608 ) — — 7,500 (15,795 ) (14,139 ) (13,026 ) (887,590 ) (570,289 ) (346,781 ) 28,857 71,247 15,398 (63,122 ) (68,225 ) (60,022 ) 7,526 — — (7,252 ) 12,663 — (1,105 ) 2,641 648 (35,096 ) 18,326 (43,976 ) (2,511 ) 3,961 3,187 (85,066 ) (97,495 ) 117,579 634,119 731,614 614,035 $ 549,053 $ 634,119 $ 731,614 $ 188,087 $ 188,331 $ 192,611 $ 23,774 $ 3,968 $ 45,497 $ 14,221 $ 16,728 $ 15,798 $ 10,316 $ 4,761 $ 4,282 $ 3,312 $ 5,316 $ 30,317 $ 11,436 $ (8,921 ) $ 16,812 $ 386,691 $ — $ — $ 34,075 $ — $ — $ — $ 18,000 $ 24,950 $ — $ 6,694 $ 12,599 $ — $ 10,304 $ — $ — $ — $ 44,712 Total Balance, January 1, 2015 $ 98 $ 6 $ 3,706,122 $ (55,856 ) $ (19,040 ) $ (98,162 ) $ 80,457 $ 10,013 $ 3,623,638 Issuances of Class A common stock: Exercise of stock options 1 — 24,840 — — — — — 24,841 Employee benefits — — 10,711 — — — — — 10,711 Employee Stock Purchase Plan — — 13,888 — — — — — 13,888 Stock-based compensation — — 21,839 — — — — — 21,839 Excess tax benefit from stock option exercises — — 3,929 — — — — — 3,929 R&D tax credits utilized by DISH Network — — (3,048 ) — — — — — (3,048 ) Other, net — — (1,830 ) 76 — — — — (1,754 ) Net income (loss) — — — — 153,357 — (5,603 ) 1,617 149,371 Foreign currency translation adjustment — — — (60,522 ) — — — (320 ) (60,842 ) Unrealized losses and impairment on available-for-sale securities, net — — — (931 ) — — — — (931 ) Balance, December 31, 2015 99 6 3,776,451 (117,233 ) 134,317 (98,162 ) 74,854 11,310 3,781,642 Issuances of Class A common stock: Exercise of stock options 1 — 13,065 — — — — — 13,066 Employee benefits — — 11,126 — — — — — 11,126 Employee Stock Purchase Plan — — 14,367 — — — — — 14,367 Stock-based compensation — — 15,234 — — — — — 15,234 Excess tax benefit from stock option exercises — — 848 — — — — — 848 R&D tax credits utilized by DISH Network — — (1,600 ) — — — — — (1,600 ) Other, net — — (814 ) (64 ) — — — — (878 ) Net income (loss) — — — — 179,930 — (944 ) 1,706 180,692 Foreign currency translation adjustment — — — (11,129 ) — — — (186 ) (11,315 ) Unrealized gains on available-for-sale securities, net — — — 3,623 — — — — 3,623 Balance, December 31, 2016 100 6 3,828,677 (124,803 ) 314,247 (98,162 ) 73,910 12,830 4,006,805 Issuances of Class A common stock: Exercise of stock options 2 — 36,503 — — — — — 36,505 Employee benefits — — 11,200 — — — — — 11,200 Employee Stock Purchase Plan — — 8,758 — — — — — 8,758 Stock-based compensation — — 10,103 — — — — — 10,103 R&D tax credits utilized by DISH Network — — 1,624 — — — — — 1,624 Cumulative effect of adoption of ASU 2016-09 as of January 1, 2017 — — — — 14,508 — — — 14,508 Reacquisition and retirement of Tracking Stock pursuant to Share Exchange Agreement — (6 ) (227,278 ) — — — (73,255 ) — (300,539 ) Other, net — — (126 ) 92 — — — — (34 ) Net income (loss) — — — — 392,561 — (655 ) 1,583 393,489 Foreign currency translation adjustment — — — 16,004 — — — 409 16,413 Unrealized gains and impairment on available-for-sale securities, net — — — (21,447 ) — — — — (21,447 ) Balance, December 31, 2017 $ 102 $ — $ 3,669,461 $ (130,154 ) $ 721,316 $ (98,162 ) $ — $ 14,822 $ 4,177,385 Table For the Years Ended December 31, 2017 2016 2015 Cash Flows from Operating Activities: Net income $ 393,489 $ 180,692 $ 149,371 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 533,849 495,068 528,158 Impairment of long-lived assets 10,762 — 2,400 Equity in earnings of unconsolidated affiliates, net (15,814 ) (13,310 ) (1,895 ) Losses (gains) and impairment on marketable investment securities, net (53,453 ) (9,767 ) 17,669 Loss from partial redemption of debt — — 5,044 Stock-based compensation 10,103 15,234 21,839 Deferred tax provision (benefit) (288,577 ) 98,148 56,132 Dividends received from unconsolidated entities 19,000 15,000 5,000 Proceeds from sale of trading securities 8,922 7,140 380 Changes in current assets and current liabilities, net: Trade accounts receivable, net 421 (26,942 ) (38,452 ) Trade accounts receivable - DISH Network 235,227 (1,456 ) (25,490 ) Inventory (19,291 ) (4,814 ) (4,906 ) Other current assets (15,352 ) 2,263 6,499 Trade accounts payable (78,419 ) (24,571 ) 37,228 Trade accounts payable - DISH Network 731 (19,650 ) (7,792 ) Accrued expenses and other 11,993 55,998 1,477 Changes in noncurrent assets and noncurrent liabilities, net (36,975 ) 9,459 1,616 Other, net 10,276 24,851 22,173 Net cash flows from operating activities 726,892 803,343 776,451 Cash Flows from Investing Activities: Purchases of marketable investment securities (855,717 ) (921,247 ) (536,430 ) Sales and maturities of marketable investment securities 578,051 1,001,166 1,057,034 Expenditures for property and equipment (583,211 ) (722,341 ) (809,270 ) Refunds and other receipts related to capital expenditures 4,311 24,087 105,750 Sale of investment in unconsolidated entity 17,781 — — Investments in unconsolidated entities �� — (1,636 ) (64,655 ) Expenditures for externally marketed software (31,331 ) (23,252 ) (22,327 ) Other, net 2,114 10,956 (5,413 ) Net cash flows from investing activities (868,002 ) (632,267 ) (275,311 ) Cash Flows from Financing Activities: Proceeds from issuance of long-term debt — 1,500,000 — Payments of debt issuance costs (414 ) (7,097 ) — Repayment of 6 1/2% Senior Secured Notes Due 2019 and related premium — — (113,300 ) Repayment of debt and capital lease obligations (37,670 ) (40,364 ) (44,804 ) Net proceeds from Class A common stock options exercised 35,536 13,065 24,841 Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 8,758 14,367 13,888 Cash exchanged for Tracking Stock (651 ) — — Other, net (5,487 ) (4,282 ) (882 ) Net cash flows from financing activities 72 1,475,689 (120,257 ) Effect of exchange rates on cash and cash equivalents 1,351 138 (5,696 ) Net increase (decrease) in cash and cash equivalents (139,687 ) 1,646,903 375,187 Cash and cash equivalents, beginning of period 2,571,143 924,240 549,053 Cash and cash equivalents, end of period $ 2,431,456 $ 2,571,143 $ 924,240 Supplemental Disclosure of Cash Flow Information: Cash paid for interest (including capitalized interest) $ 259,632 $ 172,707 $ 179,114 Capitalized interest $ 52,015 $ 94,395 $ 63,808 Cash paid for income taxes $ 11,033 $ 11,700 $ 6,394 Employee benefits paid in Class A common stock $ 11,200 $ 11,126 $ 10,711 Property and equipment financed under capital lease obligations $ 8,484 $ 7,652 $ 8,604 Increase (decrease) in capital expenditures included in accounts payable, net $ (3,831 ) $ 3,054 $ (7,123 ) Transfer of EchoStar 105/SES-11 payloads to SES in exchange for receivable $ 77,524 $ — $ — Capitalized in-orbit incentive obligations $ 43,890 $ — $ — Noncash net assets exchanged for Tracking Stock $ 299,888 $ — $ — "EchoStar,"“EchoStar,” the "Company," "we," "us"“Company,” “we,” “us” and/or "our"“our”) is a holding company that was organized in October 2007 as a corporation under the laws of the State of Nevada. We are a global provider of satellite service operations, video delivery solutions, digital set-top boxes, and broadband satellite technologies and broadband internet services for home and small office deliveringcustomers. We also deliver innovative network technologies, managed services, and various communications solutions for enterprisesaeronautical, enterprise and governments.government customers. Our Class A common stock is publicly traded on the Nasdaq Global Select Market ("Nasdaq"(“Nasdaq”) under the symbol "SATS."We currently operate“SATS.” threeexchange for five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI, and EchoStar XIV) (including the assumption of related in-orbit incentive obligations) and approximately $11.4 million in cash, and (ii) DISH and certain of its subsidiaries began receiving certain satellite services on these five satellites from us (the “Satellite and Tracking Stock Transaction”). The Tracking Stock tracked the economic performance of the residential retail satellite broadband business segments.•("ETC")—which designs, developsbusinesses and distributescertain other assets (collectively, the “Share Exchange”). Our former EchoStar Technologies businesses designed, developed and distributed secure end-to-end video technology solutions including digital set-top boxes and related products and technology, primarily for satellite TV service providers and telecommunication companies and international cable companies. Our EchoStar Technologies segment also providesprovided digital broadcast operations, including satellite uplinking/downlinking, transmission services, signal processing, conditional access management and other services, primarilyservices. Following consummation of the Share Exchange, we no longer operate the EchoStar Technologies businesses, the Tracking Stock was retired and is no longer outstanding and all agreements, arrangements and policy statements with respect to DISH Network Corporationthe Tracking Stock terminated and its subsidiaries ("DISH Network"). In addition, we provideare of no further effect. As a result of the Share Exchange, the consolidated financial statements of the EchoStar Technologies businesses have been presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. See Note 3 for further discussion of our Slingboxes directly to consumers via retail outletsdiscontinued operations.• • online,Legal) as well as other activities that have not been assigned to the payTV operator market via our partnership with Arris Group, Inc. ("Arris").•Hughes—which providesoperating segments, including costs incurred in certain satellite broadband internet access to North American consumers,development programs and broadband network servicesother business development activities, our centralized treasury operations, and equipment to domestic and international enterprise markets. The Hughes segment also provides managed services to large enterprises and solutions to customers for mobile satellite systems.•EchoStar Satellite Services ("ESS")—which usesgains (losses) from certain of our ownedinvestments. These activities, costs and leased in-orbit satellitesincome are accounted for in “Corporate and related licenses to provide satellite services on a full-time and occasional-use basis primarily to DISH Network, Dish Mexico, S. de R.L. de C.V. ("Dish Mexico"), a joint venture we entered into in 2008, United States ("U.S.") government service providers, state agencies, internet service providers, broadcast news organizations, programmers, and private enterprise customers.theirits satellites, uplink and satellite transmission assets, and real estate (the "Spin-off"“Spin-off”). Since the Spin-off, EchoStar and DISH Network have operated as separate publicly-traded companies. However, as a result ofPrior to February 28, 2017, DISH Network held the Satellite and Tracking Stock Transaction, described in Note 2, DISH Network owns shares of our and our subsidiary's preferred tracking stock representing an aggregate of 80.0% economic interest in the residential retail satellite broadband business of our Hughes segment. In addition, adiscussed above. A substantial majority of the voting power of the shares of each of EchoStar Corporation and DISH Network and EchoStarCorporation is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family.In 2011, we completed the acquisition of Hughes Communications, Inc. and its subsidiaries and related financing transactions ("Hughes Acquisition").Note 2. Hughes Retail Preferred Tracking StockSatellite and Tracking Stock TransactionOn February 20, 2014, EchoStar entered into agreements with certain subsidiaries of DISH Network pursuant to which, effective March 1, 2014, (i) EchoStar issued shares of its newly authorized HughesECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedRetail Preferred Tracking Stock (the "EchoStar Tracking Stock") and Hughes Satellite Systems Corporation ("HSS"), a subsidiary of EchoStar, also issued shares of its newly authorized Hughes Retail Preferred Tracking Stock (the "HSS Tracking Stock" and together with the EchoStar Tracking Stock, the "Tracking Stock") to DISH Network in exchange for five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI, and EchoStar XIV), including the assumption of related in-orbit incentive obligations, and $11.4 million in cash and (ii) DISH Network began receiving certain satellite services on these five satellites from us (the "Satellite and Tracking Stock Transaction"). The Tracking Stock tracks the residential retail satellite broadband business of our Hughes segment, including certain operations, assets and liabilities attributed to such business (collectively, the "Hughes Retail Group" or "HRG").EchoStar and HSS have adopted policy statements (the "Policy Statements") setting forth management and allocation policies for purposes of attributing all of the business and operations of EchoStar to either the Hughes Retail Group or the "EchoStar Group," which is defined as all other operations of EchoStar, including all existing and future businesses, other than the Hughes Retail Group. Among other things, the Policy Statements govern how assets, liabilities, revenue and expenses are attributed or allocated between HRG and the EchoStar Group. Such attributions and allocations generally do not affect the amounts reported in our consolidated financial statements, except for the attribution of stockholders' equity and net income or loss between the holders of Tracking Stock and common stock. The Policy Statements also do not significantly affect the way that management assesses operating performance and allocates resources within our Hughes segment.See Note 9 for information about the five satellites received from DISH Network and Note 19 for information regarding the related satellite services agreements with DISH Network. We provide unaudited attributed financial information for HRG and the EchoStar Group in an exhibit to our periodic reports on Form 10-Q and Form 10-K. Set forth below is information about certain terms of the Tracking Stock and the initial recording of the Satellite and Tracking Stock Transaction in our consolidated financial statements.Description of the Tracking StockTracking stock is a type of capital stock that the issuing company intends to reflect or "track" the economic performance of a particular business component within the company, rather than reflect the economic performance of the company as a whole. The Tracking Stock is intended to track the economic performance of the Hughes Retail Group. The shares of the Tracking Stock issued to DISH Network represent an aggregate 80.0% economic interest in the Hughes Retail Group (51.89% issued as EchoStar Tracking Stock and 28.11% issued as HSS Tracking Stock). In addition to the remaining 20.0% economic interest in the Hughes Retail Group, EchoStar retains all economic interest in the wholesale satellite broadband business and other businesses of EchoStar. The Hughes Retail Group is not a separate legal entity and therefore cannot own assets, issue securities or enter into legally binding agreements. Holders of the Tracking Stock have no direct claim to the assets of the Hughes Retail Group; rather, holders of the Tracking Stock are stockholders of its respective issuer (EchoStar or HSS) and are subject to all risks and liabilities of the issuer. Holders of shares of the Tracking Stock vote with holders of the outstanding shares of common stock of its respective issuer, as a single class, with respect to any and all matters presented to stockholders for their action or consideration. Each share of the Tracking Stock is entitled to one-tenth (1/10th) of one vote. The EchoStar Tracking Stock is a series of preferred stock consisting of 13,000,000 authorized shares with a par value of $0.001 per share, of which 6,290,499 shares were issued to DISH Network on March 1, 2014. The HSS Tracking Stock is a series of HSS preferred stock consisting of 300 authorized shares with a par value of $0.001ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedper share, of which 81.128 shares were issued to DISH Network on March 1, 2014. Following the issuance of the shares of the EchoStar Tracking Stock and the HSS Tracking Stock, DISH Network held 6.5% and 7.5% of the aggregate number of outstanding shares of EchoStar and HSS capital stock, respectively.In connection with the Satellite and Tracking Stock Transaction, EchoStar, HSS and DISH Network entered into an agreement (the "Investor Rights Agreement") setting forth certain rights and obligations of the parties with respect to the Tracking Stock. Among other provisions, the Investor Rights Agreement provides: (i) certain information and consultation rights for DISH Network; (ii) certain transfer restrictions on the Tracking Stock and certain rights and obligations to offer and sell under certain circumstances (including a prohibition on transfer of the Tracking Stock until March 1, 2015), with continuing transfer restrictions (including a right of first offer in favor of EchoStar) thereafter, an obligation to sell the Tracking Stock to us in connection with a change of control of DISH Network and a right to require us to repurchase the Tracking Stock in connection with a change of control of EchoStar, in each case subject to certain terms and conditions; and (iii) certain protective covenants afforded to holders of the Tracking Stock.In addition, the Investor Rights Agreement provides that DISH Network may, on or after September 1, 2016, require EchoStar to use its commercially reasonable efforts to register some or all of the outstanding shares of the Tracking Stock under the Securities Act of 1933, subject to certain terms and conditions (including our right, upon the receipt of a demand for registration, to offer to repurchase all of the Tracking Stock). In connection with any demand for registration, DISH Network may require any outstanding shares of the HSS Tracking Stock to be exchanged for shares of the EchoStar Tracking Stock with an equivalent economic interest in the Hughes Retail Group. In the event that a registration of shares of Tracking Stock is effected, EchoStar is required to use its reasonable best efforts to amend the terms of the Tracking Stock so that the Tracking Stock will be convertible or exchangeable for shares of EchoStar Class A Common Stock with equivalent market value.Initial Recording of the Satellite and Tracking Stock TransactionEchoStar and DISH Network are entities under common control. In accordance with accounting principles that apply to transfers of assets between entities under common control, EchoStar and HSS recorded the net assets received from DISH Network in the Satellite and Tracking Stock Transaction at their historical carrying amounts as reflected in DISH Network's consolidated financial statements as of February 28, 2014, the day prior to the effective date of the Satellite and Tracking Stock Transaction. DISH Network transferred the EchoStar I, EchoStar VII, and EchoStar X satellites to HSS andECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedtransferred the EchoStar XI and EchoStar XIV satellites to EchoStar. The historical carrying amounts of net assets transferred to EchoStar and HSS were as follows: EchoStar(1) HSS Total (In thousands) $ — $ 11,404 $ 11,404 349,243 82,837 432,080 (3,479 ) (3,076 ) (6,555 ) (30,121 ) (8,713 ) (38,834 ) $ 315,643 $ 82,452 $ 398,095 (1)All of the net assets received by EchoStar as part of the Satellite and Tracking Stock Transaction were immediately transferred to HSS and are being used by our EchoStar Satellite Services segment.The transferred net assets increased EchoStar stockholders' equity and HSS shareholders' equity by amounts that reflect the carrying amounts of net assets that would be distributed to holders of the Tracking Stock and common stock in a hypothetical liquidation, which would be in proportion to the relative market values (as defined in applicable agreements) of each class of stock. The amounts credited to equity were reduced by direct costs of the Tracking Stock issuance and deferred income tax liabilities arising from differences between the financial reporting carrying amounts and the tax bases of the transferred satellites.The net amounts credited to EchoStar stockholders' equity for the EchoStar Tracking Stock (primarily additional paid-in capital) and the noncontrolling interest in the HSS Tracking Stock were as follows: EchoStar
Stockholders Noncontrolling
Interest Total (In thousands) $ 315,643 $ 82,452 $ 398,095 (2,302 ) (610 ) (2,912 ) (114,525 ) (29,971 ) (144,496 ) (35,300 ) 35,300 — $ 163,516 $ 87,171 $ 250,687 majority owned subsidiaries, investments in entities in which we have a controlling financial interest. We are deemed to have a controlling financial interest andin variable interest entities where we are the primary beneficiary. We are deemed to have a controlling financial interest in other entities when we own more than 50 percent of the outstanding voting shares and other shareholders do not have substantive rights to participate in management. For entities we control but do not wholly-own,wholly own, we record a noncontrolling interest within stockholders'stockholders’ equity for the portion of the entity'sentity’s equity attributed to the noncontrolling ownership interests. ForAs of December 31, 2016, noncontrolling interests consist primarily of HSS Tracking Stock owned by DISH Network, as described in Note 4 below. As a result of the Share Exchange, the noncontrolling interest in the HSS Tracking Stock (see Note 2), we periodically attribute a portionwas extinguished as of HSS net income or loss to the noncontrolling interest in HSS Tracking Stock with such portion equal to the economic interest (28.11%) in the Hughes Retail Group represented by the HSS Tracking Stock, as determined in accordance with the Policy Statements and other documents governing the Tracking Stock. We use the equity method to account for investments in entities that we do not control but have the ability toECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedsignificantly influence the operating decisions of the investee. When we do not have the ability to significantly influence the operating decisions of the investee, the cost method is used.February 28, 2017. All significant intercompany balances and transactions have been eliminated in consolidation.("GAAP"(“GAAP”) requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheets, the reported amounts of revenue and expense for each reporting period, and certain information disclosed in the notes to our consolidated financial statements. Estimates are used in accounting for, among other things, amortization periods for deferred revenue and deferred subscriber acquisition costs, revenue recognition using the percentage-of-completion method, allowances for doubtful accounts, allowances for sales returns and rebates, warranty obligations, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of awards granted under our stock-based compensation plans,awards, fair value of assets and liabilities acquired in business combinations, lease classifications, asset impairments,impairment testing, useful lives and methods for depreciation and amortization of property, equipmentlong-lived assets, and intangible assets, goodwill impairment testing,certain royalty obligations, and allocations that affect the periodic determination of net income or loss attributable to the Tracking Stock.obligations. 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 consolidated financial statements. WeakenedChanging economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. We review our estimates and assumptions periodically and the effects of revisions are reflected in the period they occur or prospectively if the revised estimate affects future periods.recordedreported in other comprehensive income (loss) as "Foreign“Foreign currency translation adjustments"adjustments” in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss)."Other, net"“Other, net” in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss). We occasionally enter into forward exchange contracts to mitigate foreign currency exchange risks related to certain of our assets and liabilities and forecasted transactions. We have not designated such contracts as qualified hedges; therefore, changes in the fair values of these derivatives are recognized in earnings.operations. We recognized net foreignforei$3.0$0.5 million and $1.1losses of $4.3 million for the years ended December 31, 20142017, 2016 and 2013 and recognized a net gain of $0.5 million for the year ended December 31, 2012.20142017 and 20132016 primarily consisted of money marketECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedfunds,commercial paper, government bonds, corporate notes, and commercial paper.money market funds. The amortized cost of these investments approximates their fair value.available-for-sale,available for sale, except in certain instances where we have accounted fordesignated certain securities as trading securities. We report our available-for-saleall marketable investment securities at fair value in our consolidated balance sheets. We recognize periodic changes in the fair value of trading securities and generallyrealized gains and losses on sale of available-for-sale securities in “Gains (losses) on marketable investment securities,” a component of net income, in our consolidated statements of operations. For available-for-sale securities, we recognize periodic changes in the difference between fair value and amortized cost as "Unrealizedin other comprehensive income (loss). Realized gains (losses) on available-for-sale securities and other" in our Consolidated Statements of Operations and Comprehensive Income (Loss). Declines in the fair valuelosses upon sale of available-for-sale securities that are determined to be other-than-temporary arereclassified from other comprehensive income (loss) and recognized in earnings, thus establishing a newnet income on the trade date. We use the first-in, first-out (“FIFO”) method to determine the cost basis for the investment. We did not record any other-than-temporary losses during the years ended December 31, 2014, 2013, or 2012.on sales of marketable investment securities. Interest and dividend income from marketable investment securities is reported in "Interest income"“Interest income” and "Other,“Other, net",” respectively, in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss).operations. Dividend income is recognized on the ex-dividend date.marketable investmentavailable-for-sale securities portfolio on a quarterly basis to determine whether declines in the fair value of these securities are other-than-temporary.other than temporary. Our evaluation consists of reviewing, among other things:•••••other-than-temporaryother than temporary if any of the following factors apply:•••security'ssecurity’s entire amortized cost basis, even if there is no intent to sell the security.We usefirst-in, first-out ("FIFO") methodfair value of available-for-sale securities that are determined to determine thebe other than temporary are reclassified from other comprehensive income (loss) and recognized in net income, thus establishing a new cost basis on sales of marketable investment securities.Generally, weour non-marketable equity investments in entities that we do not control but have the ability to significantly influence the operating decisions of the investee. We use the cost method when we do not have the ability to significantly influence the operating decisions of the investee.of accounting. Itare not publicly traded and it is not practicable to regularly estimate the fair value of our equity securities that are not publicly traded.such investments. We evaluate these equity investments on a quarterly basis to determine whether an event or changes in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. As part of our evaluation, we review available information such as business plans and current financial statements of these companies for factors that may indicate an impairment of our investments. Such factors may include, but are not limited to,ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedother-than-temporary,otherearnings.Investments in which we own at least 20% of the voting securities or otherwise have significant influence are accounted for using thenet income. method. Equity method 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“Equity in earnings (losses) of unconsolidated affiliates, net"net” in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss).operations. The carrying amount of our investments may include a component of goodwill if the cost of our investment exceeds the fair value of the underlying identifiable assets and liabilities of the investee. Dividends received from equity method investees reduce the carrying amount of the investment. We defer, to the extent of our ownership interest in the investee, recognition of intra-entity profits on sales of equipment to the investee until the investee has charged the cost of the equipment to expense in a subsequent sale to a third party or through depreciation. In these circumstances, we report the gross amounts of revenue and cost of sales in the statement of operations and include the intra-entity profit eliminations within "Equity“Equity in earnings (losses) of unconsolidated affiliates, net.".”estimate allowances formake ongoing estimates relating to the potential non-collectabilitycollectibility of our accounts receivable and maintain an allowance for estimated losses resulting from the inability of our customers to make required payments. In determining the amount of the allowance, we consider historical levels of credit losses and make judgments about the creditworthiness of significant customers based upon past collection experience and consideration of other relevant factors. Past experience may not be indicative of future collections and therefore additional adjustments could be recognized in the future to reflect differences between estimated and actual collections.earnings.net income. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued2014 consists primarily of goodwill2017 and 2016 is assigned to reporting units of our Hughes segment. We test Hughessuch goodwill for impairment in the second fiscal quarter. There are two steps to theThe goodwill impairment test. Step one comparestest involves a comparison of the fair value of a reporting unit with its carrying amount, including goodwill. We typically estimate fair value of the reporting units using discounted cash flow techniques, which includes significant assumptions about prospective financial information, terminal value and discount rates.rates (Level 3 inputs). If the reporting unit'sunit’s carrying amount exceeds its estimated fair value, it is necessarywe recognize an impairment loss equal to perform the second step of the impairment test, which compares the implied fair value of reporting unit goodwill withsuch excess, not to exceed the carrying amount of such goodwill to determine the amount of impairment loss.goodwill. We maytwo-stepquantitative goodwill impairment test if we determine, based on a qualitative assessment, that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount including goodwill.thetheir useful life."Impairment“Impairment of Long-lived Assets."renewmaintain or extendrenew indefinite-lived intangible assets are expensed as incurred.("FCC"(“FCC”) authorizations and certain other contractual or regulatory rights to use spectrum at specified orbital locations (collectively "Regulatory Authorizations"“Regulatory Authorizations”). We have determined that our FCC authorizations generally have indefinite useful lives due to the following:••••regulatory authorizationsRegulatory Authorizations consist primarily of authorizations in Europe and Brazil that we acquired in 2013 and 2012, respectively. We have determined that those Regulatory Authorizations have finite lives due to the absence of largely perfunctory renewal provisions and uncertainties about the regulatory environments.ability to extend or renew their terms.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedmanagement'smanagement’s judgment, a tax filing position is more likely than not of beingto 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'smanagement’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 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. We classify interest and penalties, if any, associated with our unrecognized tax benefits as a component of income tax provision or benefit.•••forto purchase or sell the asset or liability.20142017 or 2013.20142017 and 2013,2016, the carrying amounts of our cash and cash equivalents, trade accounts receivable, net of allowance for doubtful accounts, accounts payable and accrued liabilities were equal to or approximated fair value due to their short-term nature or proximity to current market rates. current marketable investment securities are based on a variety of observable market inputs. For our investments in publicly traded equity securities and U.S. government securities, fair value ordinarily is determined based on a Level 1 measurement that reflects quoted prices for identical securities in active markets. Fair values of our investments in other marketable debt securities generally are based on Level 2 measurements, as the markets for such debt securities are less active. Trades ofECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedour publicly traded long-term debtHSS’ 6 1/2% Senior Secured Notes due 2019 (the “2019 Senior Secured Notes”), 7 5/8% Senior Unsecured Notes due 2021 (the “2021 Senior Unsecured Notes”), 5.250% Senior Secured Notes due 2026 (the “2026 Senior Secured Notes”) and 6.625% Senior Unsecured Notes due 2026 (the “2026 Senior Unsecured Notes” and together with the 2026 Senior Secured Notes, the “2026 Notes”) (see Note 11) are based on quoted market prices in less active markets and are categorized as Level 2 measurements. The fair values of our privately heldother debt are Level 2 measurements and are estimated to approximate their carrying amounts based on the proximity of their interest rates to current market rates. As of December 31, 20142017 and 2013,2016, the fair values of our in-orbit incentive obligations, based on measurements categorized within Level 2 of the fair value hierarchy, approximated their carrying amounts of $85.8$112.2 million and $48.4$74.1 million, respectively. We use fair value measurements from time-to-timetime to time in connection with asset impairment testing and the assignment of purchase consideration to assets and liabilities of acquired companies. Those fair value measurements typically include significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy.collectabilitycollectibility is reasonably assured, and the goods have been delivered or services have been rendered. If any of these criteria are not met, revenue recognition is deferred until such time as all of the criteria are met. Revenue from equipment sales generally is recognized upon shipment to customers. Revenue from recurring services generally is recognized ratably over the service term. Upfront fees collected in connection with services to consumer subscribers in our Hughes segment are deferred and recognized as revenue over the estimated subscriber life. We may offer a rebaterebates to qualifying new consumer subscribers in our Hughes segment andsegment. We reduce related revenue at inception of the subscriber contract based on an estimate of the number of rebates that will be redeemed. This estimate isOur estimates are based on historical experience and actual sales during the promotion.("VSOE"(“VSOE”), third-party evidence and estimated selling prices. Typically, we derive VSOE from service renewal rates and optional equipment prices specified in customer contracts or we estimate prices based on the gross margin that we ordinarily realize in transactions with similarly situated customers.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedConsolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss).operations. Since we primarily act as an agent for the governmental authorities, the amount charged to the customer is collected and remitted directly to the appropriate jurisdictional entity."Interest“Interest expense, net of amounts capitalized"capitalized” in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss).EquipmentSales - Services and Servicesequipment primarily consists of materials and direct labor costs associated with the procurement and manufacture of our products and indirect overhead incurred in the procurement and production process, including freight and royalties. Cost of equipment generally is recognized as products are delivered to customers and related revenue is recognized. Cost ofsales - services primarily consists of costs of digital broadcast operations, transpondersatellite capacity service agreements, satelliteand services, hub infrastructure, customer care, wireline and wireless capacity, and direct labor costs associated with the serviceservices provided. CostCosts of sales - services generally are charged to expense as incurred.Researchefforts not directly funded by our customersactivities generally are expensed as incurred. A significant portion of our research and development efforts have generally been conductedcosts are incurred in direct response toconnection with the specific requirements of a customer's order and, accordingly,customer’s order. In such instances, the amounts for these customer funded development efforts are included in cost of sales.The portionour cost of sales which includes research and development funded by customers for the years ended December 31, 2014, 2013 and 2012 wascosts incurred in connection with customers’ orders of approximately $68.4$27.9 million, $65.3$23.7 million and $60.9 million, respectively. In addition, we incurred $60.9 million, $67.9 million and $69.6$19.6 million for the years ended December 31, 2014, 20132017, 2016 and 2012, respectively, for2015, respectively. In addition, we incurred other research and development expenses funded byof approximately $31.7 million, $31.2 million and $26.4 million for the Company.("SAC"(“SAC”)SAC consists of costs paid to third-party dealers and customer service representative commissions on new service activations and hardware upgrades and, in certain cases, the cost of hardware and installation services provided to non-wholesale consumer customers at the inception of service or hardware upgrade. SAC is deferred when a customer enters into a service agreement and is subsequently amortized over the service agreement term in proportion to when the related service revenue is recognized. We monitor the recoverability of deferred SAC and are entitled to an early"Other“Other noncurrent assets, net"net” in our Consolidated Balance Sheets.consolidated balance sheets.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedDevelopment costsinternal useinternal-use and externally marketed software are capitalized and amortized using the straight-line method over the estimated useful life of the software, not in excess of five years. Internal use capitalizedCapitalized costs of internal-use software costs are included in "Property“Property and equipment, net"net” and capitalized costs of externally marketed capitalized software costs are included in "Other“Other noncurrent assets, net"net” in our Consolidated Balance Sheets.consolidated balance sheets. Externally marketed software generally is installed in the equipment we sell to customers. We conduct software program reviews for externally marketed capitalized software costs at least annually, or as events and circumstances warrant such a review, to determine if capitalized software development costs are recoverable and to ensure that costs associated with programs that are no longer generating revenue are expensed. As of December 31, 20142017 and 2013,2016, the net carrying amount of externally marketed software was $48.9$88.1 million and $31.4$76.3 million, respectively. Forrespectively, of which $19.6 million and $50.1 million, respectively, is under development and not yet placed in service. We capitalized costs related to the development of externally marketed software of $31.3 million, $23.3 million and $22.3 million for the years ended December 31, 2014, 20132017, 2016 and 2012, we capitalized $23.1 million, $17.0 million and $10.2 million, respectively, of costs related2015, respectively. We recorded amortization expense relating to the development of externally marketed software. Forsoftware of $19.5 million, $9.7 million and $8.4 million for the years ended December 31, 2014, 20132017, 2016 and 2012, we recorded $5.4 million, $1.7 million and $0.3 million, respectively,2015, respectively. The weighted average useful life of amortization expense relating to our externally marketed software.vest and is reduced for estimated forfeitures.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 only 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 a performance conditionconditions is recognized only when satisfaction of the performance condition is probable."Selling,“Selling, general and administrative expenses"expenses” in our Consolidated Statementsconsolidated statements of Operationsoperations. We incurred advertising expense of $64.2 million, $43.9 million and Comprehensive Income (Loss). For$44.3 million for the years ended December 31, 2014, 20132017, 2016 and 2012, we incurred advertising expense of $50.8 million, $47.4 million and $47.0 million,2015, respectively.("(“ASU 2014-09"2014-09”). and has modified the standard thereafter. It outlines a single comprehensive model, codified in Topic 606 of the FASB Accounting Standards Codification, for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that "an“an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services." ASU 2014-09 is effective for annual periods” Public entities are required to adopt the new revenue standard in fiscal years beginning after December 15, 20162017 and in interim periods within those annual periods andfiscal years. The standard may be applied either retrospectively to prior periods or as a cumulative-effect adjustment as of the date of adoption.not permitted. Management has not selected a transition method and isWe are assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures.STATEMENTS—STATEMENTS - Continued For the Years Ended December 31, 2017 2016 2015 (In thousands) Revenue: Equipment, services and other revenue - DISH Network $ 143,118 $ 1,127,610 $ 1,138,571 Equipment, services and other revenue - other 10,344 118,654 156,286 Total revenue 153,462 1,246,264 1,294,857 Costs and Expenses: Cost of equipment, services and other 121,967 1,010,421 1,034,960 Selling, general and administrative expenses 5,439 60,590 55,980 Research and development expenses 4,635 44,854 51,910 Depreciation and amortization 11,659 62,164 67,339 Impairment of long-lived assets — — 2,400 Total costs and expenses 143,700 1,178,029 1,212,589 Operating income 9,762 68,235 82,268 Other Income (Expense): Interest expense (15 ) (144 ) (30 ) Equity in earnings (losses) of unconsolidated affiliates, net (1,159 ) 2,508 4,372 Other, net (57 ) (381 ) (4,365 ) Total income (expense), net (1,231 ) 1,983 (23 ) Income from discontinued operations before income taxes 8,531 70,218 82,245 Income tax provision (22 ) (25,898 ) (20,966 ) Net income from discontinued operations $ 8,509 $ 44,320 $ 61,279 As of December 31, 2017 2016 (In thousands) Assets: Cash and cash equivalents $ — $ 778 Trade accounts receivable, net 4 27,261 Trade accounts receivable - DISH Network 93 259,198 Inventory — 9,824 Prepaids and deposits — 14,463 Current assets of discontinued operations 97 311,524 Property and equipment, net — 271,108 Goodwill — 6,457 Other intangible assets, net — 7,720 Investments in unconsolidated entities — 26,203 Other noncurrent assets, net — 5,436 Noncurrent assets of discontinued operations — 316,924 Total assets of discontinued operations $ 97 $ 628,448 Liabilities: Trade accounts payable $ 278 $ 19,518 Trade accounts payable - DISH Network — 3,960 Current portion of capital lease obligations — 4,323 Deferred revenue and prepayments — 2,967 Accrued compensation — 4,652 Accrued royalties — 23,199 Accrued expenses and other 264 12,810 Current liabilities of discontinued operations 542 71,429 Capital lease obligations — 416 Deferred tax liabilities, net — 7,353 Other noncurrent liabilities — 2,932 Noncurrent liabilities of discontinued operations — 10,701 Total liabilities of discontinued operations $ 542 $ 82,130 ("EPS"(“EPS”) and diluted 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 attributable to EchoStar 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 was 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, whose effect would be anti-dilutive, of 1.0 million, 3.5 million and 2.3 million shares for the years ended December 31, 2017, 2016 and 2015, respectively.iswas a participating security that sharesshared in our consolidated earnings and therefore, effective March 1, 2014, the issuance date of the EchoStar Tracking Stock, we applyapplied the two-class method to calculate EPS.EPS for periods prior to March 1, 2017. Under the two-class method, we allocateallocated net income or loss attributable to EchoStar between common stock and the EchoStar Tracking Stockcurrently outstanding asrepresented by the EchoStar Tracking Stock, we allocateallocated undistributed earnings to the EchoStar Tracking Stock based on 51.89% of the attributed net income or loss of the Hughes Retail Group. For the year ended December 31, 2014, we allocated a net loss of $12.4 million to the EchoStar Tracking Stock, reflecting DISH Network's 51.89% economic interest (represented by the EchoStar Tracking Stock) in the net loss of the Hughes Retail Group for the period from the issuance of the EchoStar Tracking Stock on March 1, 2014 to December 31, 2014. Moreover, because the reported amount of "Net“Net income (loss) attributable to EchoStar"EchoStar” in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss) excludesoperations excluded DISH Network'sNetwork’s 28.11% economic interest (represented by the HSS Tracking Stock) in the net loss of the Hughes Retail Group (reported as a noncontrolling interest), the amount of consolidated net income or loss allocated to holders of Class A and Class B common stock effectively excludesexcluded an aggregate 80.0% interest inof the attributed net loss of the Hughes Retail Group.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" by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if our common stock awards were exercised. The potential dilution from common stock awards was 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 (i) options to purchase shares of our Class A common stock, whose effect would be anti-dilutive, of 2.3 million, 2.7 million and 4.4 million shares for the years ended December 31, 2014, 2013 and 2012, respectively, and (ii) shares of our Class A common stock that are contingently issuable pursuant to our performance based stock incentive plan based upon meeting a company-specific performance measure by March 31, 2015, which was not probable of being achieved as of December 31, 2014, of 0.7 million shares for each of the years ended December 31, 2014, 2013 and 2012.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued For the Years Ended December 31, 2014 2013 2012 (In thousands, except per share amounts) $ 152,874 $ 2,525 $ 211,048 (12,394 ) — — $ 165,268 $ 2,525 $ 211,048 91,190 89,405 87,150 1,426 1,547 809 92,616 90,952 87,959 $ 1.81 $ 0.03 $ 2.42 $ 1.78 $ 0.03 $ 2.40 For the Years Ended December 31, 2017 2016 2015 (In thousands, except per share amounts) Amounts attributable to EchoStar common stock: Net income from continuing operations $ 385,261 $ 137,353 $ 102,421 Net income from discontinued operations 8,509 44,320 61,279 Net income attributable to EchoStar common stock $ 393,770 $ 181,673 $ 163,700 Weighted-average common shares outstanding : Class A and B common stock: Basic 95,425 93,795 92,397 Dilutive impact of stock awards outstanding 1,316 615 1,069 Diluted 96,741 94,410 93,466 Earnings per share: Class A and B common stock: Basic: Continuing operations $ 4.04 $ 1.46 $ 1.11 Discontinued operations 0.09 0.48 0.66 Total basic earnings per share $ 4.13 $ 1.94 $ 1.77 Diluted: Continuing operations $ 3.98 $ 1.45 $ 1.10 Discontinued operations 0.09 0.47 0.65 Total diluted earnings per share $ 4.07 $ 1.92 $ 1.75 We haverecognized anyrecognize tax effects on foreign currency translation adjustments because they are not expected to result in future taxable income or deductions. We have not recognized any tax effects on unrealized gains or losses on available-for-sale securities because such gains or losses would affect the amount of existingunrealized capital loss carryforwardslosses for which the related deferred tax asset has been fully offset by a valuation allowance.incomeloss includes net cumulative foreign currency translation losses of $63.8$119.4 million, $32.1$135.4 million and $16.6$124.3 million as of December 31, 2014, 20132017, 2016 and 2012,2015, respectively. Other comprehensive income includes deferred tax benefits for foreign currency translation losses related to assets that were transferred from a foreign subsidiary to a domestic subsidiary of $7.3 million for year ended December 31, 2017.STATEMENTS—STATEMENTS - Continued Affected Line Item in our Consolidated Statements of Operations For the Years Ended December 31, 2017 2016 2015 (In thousands) Recognition of realized gains on available-for-sale securities in net income (1) Gains (losses) on investments, net $ (2,758 ) $ (5,590 ) $ (35 ) Recognition of other-than-temporary impairment loss on available-for-sale securities in net income (2) Other-than-temporary impairment loss on available-for-sale securities 3,298 — 11,226 Recognition of foreign currency translation losses in net income (3) Other, net — — 1,889 Total reclassifications, net of tax and noncontrolling interests $ 540 $ (5,590 ) $ 13,080 (1) When available-for-sale securities are sold, the related unrealized gains and losses that were previously recognized in other comprehensive income (loss) are reclassified and recognized as “Gains (losses) on investments, net” in our consolidated statements of operations. (2) We recorded other-than-temporary impairment losses on shares of certain common stock included in our strategic equity securities. (3) As a result of the deconsolidation of several European subsidiaries of our discontinued operations in May 2015, the related cumulative translation adjustments that were previously recognized in other comprehensive income (loss) were reclassified and recognized as a loss within “Other income (expense)” in our consolidated statements of operations. 6.6. Investment SecuritiesOur marketable investment securities, restricted cash and cash equivalents, and other investments consisted of the following: As of December 31, 2014 2013 (In thousands) $ 1,049,139 $ 833,791 4,290 34,705 41,705 33,613 43,969 84,424 1,139,103 986,533 11,712 7,965 1,150,815 994,498 7,233 8,172 31,174 25,977 128,788 143,794 159,962 169,771 $ 1,318,010 $ 1,172,441 (1)Restrictedand cash equivalents are included in "Restricted cash and marketable investment securities" in our Consolidated Balance Sheets.consisted of the following: As of December 31, 2017 2016 (In thousands) Marketable investment securities—current, at fair value: Corporate bonds $ 542,573 $ 402,670 Strategic equity securities 133,736 94,816 Other 137,852 25,030 Total marketable investment securities—current 814,161 522,516 Restricted marketable investment securities (1) 10,019 12,203 Total $ 824,180 $ 534,719 (1) Restricted marketable investment securities are included in “Other noncurrent assets, net” in our consolidated balance sheets. all of which generally are classified as available-for-sale.Variable Rate Demand Notes ("VRDNs")VRDNs are long-term floating rate bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised of investments in municipalities and corporations, which are backed by financial institutions or other highly rated companies that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows VRDNs to be liquidated generally on a same day or on a five business day settlement basis.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedThe valueWe received dividend income of our investment portfolio depends on the value of such shares of common stock. We did not receive any dividend income$6.3 million, $0.1 million and de minimis for the years ended December 31, 20142017, 2016 and 2013.2015, respectively. For the yearyears ended2012,2017, 2016 and 2015 included gains of $42.6 million, gains of $0.6 million and losses of $6.5 million, respectively, related to trading securities that we received $46.0 million in dividend income from oneheld as of December 31, 2017, 2016 and 2015, respectively. The fair values of our strategic investments.bonds.20142017 and 2013,2016, our restricted marketable investment securities together with our restricted cash, included amounts required as collateral for our letters of credit or surety bonds. Amortized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) As of December 31, 2017 Debt securities: Corporate bonds $ 542,861 $ — $ (288 ) $ 542,573 Other (including restricted) 142,082 — (46 ) 142,036 Equity securities - strategic 97,519 7,937 (18,404 ) 87,052 Total available-for-sale securities $ 782,462 $ 7,937 $ (18,738 ) $ 771,661 As of December 31, 2016 Debt securities: Corporate bonds $ 402,472 $ 285 $ (87 ) $ 402,670 Other (including restricted) 32,488 3 (23 ) 32,468 Equity securities - strategic 77,149 13,120 (2,652 ) 87,617 Total available-for-sale securities $ 512,109 $ 13,408 $ (2,762 ) $ 522,755 As of December 31, 2017 2016 Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses (In thousands) Less than 12 months $ 733,635 $ (18,715 ) $ 154,826 $ (2,760 ) 12 months or more 6,715 (23 ) 1,571 (2 ) Total $ 740,350 $ (18,738 ) $ 156,397 $ (2,762 ) As of December 31, 2017 2016 Total Level 1 Level 2 Total Level 1 Level 2 (In thousands) Cash equivalents (including restricted) $ 2,354,998 $ 301 $ 2,354,697 $ 2,490,168 $ 62,332 $ 2,427,836 Debt securities: Corporate bonds $ 542,573 $ — $ 542,573 $ 402,670 $ — $ 402,670 Other (including restricted) 147,871 13,311 134,560 37,233 13,517 23,716 Equity securities - strategic 133,736 133,736 — 94,816 94,816 — Total marketable investment securities $ 824,180 $ 147,047 $ 677,133 $ 534,719 $ 108,333 $ 426,386 several strategic investments in certain non-publicly traded equity securities that are accounted for using either the equity or the cost method of accounting. Our ability to realize value from our strategic investments in companies that are not publicly traded depends on the success of those companies'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 desire to sell them we will not be able to obtain fair value for them.AsDecember 31, 2013,the following: As of December 31, 2017 2016 (In thousands) Investments in unconsolidated entities—noncurrent: Cost method $ 69,725 $ 80,052 Equity method 91,702 90,964 Total investments in unconsolidated entities—noncurrent $ 161,427 $ 171,016 investments included $18.0of $19.0 million, for our investment in DISH Digital Holding L.L.C. ("DISH Digital"), a joint venture between us and DISH Network. The carrying amount of our investment reflected the $44.7 million aggregate carrying amount of cash and certain noncash assets that we contributed to DISH Digital upon its formation on July 1, 2012 in exchange for a one-third equity interest in DISH Digital, less our equity in the net loss of DISH Digital of $16.5$10.0 million and $10.2 millionzero for the years ended December 31, 20132017, 2016 and 2012,2015, respectively. Effective August 1, 2014,These cash distributions were determined to be a return on investment and reported in cash flows from operating activities in our consolidated statements of cash flows. As of December 31, 2017 2016 Dish Mexico Aggregate Dish Mexico Aggregate (In thousands) Balance sheet data: Current assets $ 146,851 172,234 $ 139,349 183,732 Noncurrent assets 185,345 187,067 178,369 181,638 Total assets $ 332,196 359,301 $ 317,718 365,370 Current liabilities $ 129,087 130,443 $ 129,563 128,982 Noncurrent liabilities 109,428 110,472 111,501 111,501 Total liabilities $ 238,515 240,915 $ 241,064 240,483 As of December 31, 2017 2016 2015 Dish Mexico Aggregate Dish Mexico Aggregate Dish Mexico Aggregate (In thousands) Income statement data: Revenue $ 497,096 $ 535,153 $ 498,069 $ 541,066 $ 471,712 $ 513,378 Operating income $ 15,094 $ 31,919 $ 32,280 $ 52,656 $ 638 $ 20,878 Income before income taxes $ 18,267 $ 32,739 $ 10,195 $ 29,083 $ (26,201 ) $ (9,197 ) Net income $ 15,658 $ 30,130 $ 6,374 $ 25,262 $ (8,512 ) $ 8,492 Net income attributable to EchoStar $ 9,946 $ 16,973 $ 1,358 $ 10,802 $ (10,979 ) $ (2,477 ) DISH Digital entered into an exchange agreement (the "Exchange Agreement") pursuant tohad a carrying amount of $10.5 million on the date of sale and as a result we recognized a gain of $8.9 million in connection with this transaction for the year ended December 31, 2017. See Note 19 for additional information about this transaction. we exchanged our one-third voting interest in DISH Digital that we accounted for using the equity method, for a 10.0% non-votingand our equity interest in DISH Digital, thatSling TV Holding L.L.C., which we accountaccounted for using the cost method. As part of this transaction, we received a distribution of certain noncurrent assets associated with an internet protocol television technology business, including property and equipment, technology-related intangible assets and goodwill. Because we and DISH Digital are entities under common control, we recorded the distributed assets at their carrying amounts in DISH Digital's accounts, which totaled $34.1 million at the date of distribution, and we recorded our non-voting interest at $1.1 million, which represents 10.0% of the carrying amount of the remaining equity in DISH Digital. These amounts exceeded the carrying amount of our existing equity method, investment by $8.8 million, which was credited to additional paid-in capital because gain recognition generally is precluded by GAAP in exchanges between entities under common control. For the seven months ended July 31, 2014, we recognized equity in the net loss of DISH Digital of $10.2 million, further reducing our investment. In connection with our obligations associated with our interest prior to the Exchange Agreement, we contributed $18.6 million in cashwere transferred to DISH Digital during the third quarterNetwork as of 2014. DISH Digital recently changed its name to Sling TV Holding L.L.C. ("Sling TV"). WeECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedhave no obligation to contribute additional capital to Sling TV.February 28, 2017. See NoteNotes 1, 3 and 19 for moreadditional information regardingabout the Share Exchange Agreementand related party transactions with Sling TV.Our equity method investments as of December 31, 2014 include our 49.0% equity interestthese companies in Dish Mexico, which we acquired in 2008. On August 8, 2014,held equity interests.option providing for an unrelated party to acquire a 51.0% equity interest in Dish Mexico was terminated. Prior to that time, we accounted for our investment in Dish Mexico asWorldVu Satellites Limited (“OneWeb”), a 24.0% equity interest usingglobal low-earth orbit satellite service company. OneWeb plans to develop and operate a global network of low-earth orbit Ku-band satellites to provide internet access to fixed and mobile terminals. We do not exercise significant influence over the equity method based on assumed dilution that would occur upon the exercisemanagement of the option. Upon termination of the option, we recorded a $10.3 million adjustment to increase "Equity in earnings (losses) of unconsolidated affiliates" to reflect an increase from 24.0% to 49.0% in our interest in Dish Mexico's inception-to-date net income. For periods subsequent to the date of the termination of the option,OneWeb; accordingly, we account for ourthe investment in Dish Mexico as a 49.0% equity interest using the equitycost method.Unrealized Gains (Losses) on Marketable Investment SecuritiesThe components of our available-for-sale investments are summarized in the table below. Unrealized Amortized
Cost Estimated
Fair Value Gains Losses (In thousands) $ 1,050,803 $ 33 $ (1,697 ) $ 1,049,139 4,290 — — 4,290 55,687 1 (7 ) 55,681 32,081 12,849 (3,225 ) 41,705 $ 1,142,861 $ 12,883 $ (4,929 ) $ 1,150,815 $ 833,888 $ 227 $ (324 ) $ 833,791 34,705 — — 34,705 92,876 14 (501 ) 92,389 15,272 18,341 — 33,613 $ 976,741 $ 18,582 $ (825 ) $ 994,498 As of December 31, 2014, restricted and non-restricted marketable investment securities included debt securities of $882.5 million with contractual maturities of one year or less and $226.6 million with contractual maturities greater than one year. We may realize proceeds from certain investments prior to their contractual maturity as a result of our ability to sell these securities prior to their contractual maturity.Marketable Investment Securities in a Loss PositionThe following table reflects the length of time that our available-for-sale securities have been in an unrealized loss position. We do not intend to sell these securities before they recover or mature, and it is more likely than not that we will hold these securities until they recover or mature. We believe thatECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedthese changes in the estimated fair values of these securities are primarily related to temporary market conditions. As of December 31, 2014 2013 Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses (In thousands) $ 968,941 $ (4,929 ) $ 571,592 $ (825 ) $ 968,941 $ (4,929 ) $ 571,592 $ (825 ) Sales of Marketable Investment SecuritiesWe recognized gains from the sales of our available-for-sale marketable investment securities of $0.1 million, $36.3 million and $175.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. We recognized losses from the sales of our available-for-sale marketable investment securities of $0.1 million for the year ended December 31, 2014. We recognized minimal losses from the sales of our available-for-sale marketable investment securities for each of the years ended December 31, 2013 and 2012, respectively.Proceeds from sales of our available-for-sale marketable investment securities totaled $190.5 million, $177.5 million and $601.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.Our current marketable investment securities are measured at fair value on a recurring basis as summarized in the table below. As of December 31, 2014 and 2013, we did not have investments that were categorized within Level 3 of the fair value hierarchy. As of December 31, 2014 2013 Total Level 1 Level 2 Total Level 1 Level 2 (In thousands) $ 437,886 $ 58,108 $ 379,778 $ 548,714 $ 49,338 $ 499,376 $ 1,049,139 $ — $ 1,049,139 $ 833,791 $ — $ 833,791 4,290 — 4,290 34,705 — 34,705 55,681 5,630 50,051 92,389 — 92,389 41,705 41,705 — 33,613 33,613 — $ 1,150,815 $ 47,335 $ 1,103,480 $ 994,498 $ 33,613 $ 960,885 In 2008, we invested in certain debt securities ("Exchangeable Notes") of TerreStar Networks Inc. ("TerreStar"), which subsequently filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in 2010. We accounted for our investment in the Exchangeable Notes using the fairECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedvalue method and, as of December 31, 2011, our investment was stated at its estimated fair value of zero. Effective March 29, 2012, the Exchangeable Notes were cancelled pursuant to TerreStar's Chapter 11 plan of reorganization. In December 2014, we received a $5.8 million cash distribution from the indenture trustee in satisfaction of our claims related to the Exchangeable Notes. We recognized this distribution as a gain in "Other, net" within "Other Income (Expense)" in our Consolidated Statement of Operations and Comprehensive Income (Loss) and we reported the cash receipt in "Other, net" within "Cash Flows from Investing Activities" in our Consolidated Statement of Cash Flows for the year ended December 31, 2014. As of December 31, 2014 2013 (In thousands) $ 160,886 $ 164,900 16,534 7,629 177,420 172,529 (14,188 ) (13,237 ) 251,669 355,135 $ 414,901 $ 514,427 As of December 31, 2017 2016 (In thousands) Trade accounts receivable $ 197,294 $ 159,313 Contracts in process, net 11,573 36,170 Total trade accounts receivable 208,867 195,483 Allowance for doubtful accounts (12,027 ) (12,956 ) Trade accounts receivable - DISH Network 43,295 19,417 Total trade accounts receivable, net $ 240,135 $ 201,944 20142017 and 2013,2016, progress billings offset against contracts in process amounted to $2.5$22.8 million and $2.6$14.6 million, respectively. As of December 31, 2014 2013 (In thousands) $ 49,038 $ 50,357 6,192 8,658 7,733 7,069 $ 62,963 $ 66,084 As of December 31, 2017 2016 (In thousands) Finished goods $ 70,669 $ 49,755 Raw materials 5,484 6,678 Work in process 7,442 6,187 Total inventory $ 83,595 $ 62,620 STATEMENTS—STATEMENTS - Continued9.9. Property and Equipment As of December 31, Depreciable
Life (In
Years) Depreciable Life (In Years) As of December 31, 2014 2013 2017 2016 (In thousands) (In thousands) — $ 42,826 $ 42,850 — $ 33,713 $ 35,815 1 - 40 375,920 377,208 1-40 185,148 175,593 1 - 12 1,223,807 1,157,325 1-12 736,533 514,056 2 - 4 498,180 374,688 2-4 929,775 689,579 2 - 15 2,381,120 1,949,040 Satellites - owned 2-15 3,064,391 2,381,120 10 - 15 935,104 935,104 10-15 916,820 781,761 — 637,189 210,051 — 260,220 1,418,763 6,094,146 5,046,266 6,126,600 5,996,687 (2,899,353 ) (2,499,889 ) (2,661,129 ) (2,598,492 ) $ 3,194,793 $ 2,546,377 $ 3,465,471 $ 3,398,195 20142017 and 2013,2016, accumulated depreciation included amounts for satellites acquired under capital leases of $481.5$393.9 million and $421.8$328.2 million, respectively.As of December 31, 2014, our owned satellites included $432.1 million for the five satellites we received from DISH Network as part of the Satellite and Tracking Stock Transaction discussed in Note 2. This amount represents the net carrying amount of those satellites in DISH Network's consolidated financial statements as of February 28, 2014, the day prior to the effective date of the Satellite and Tracking Stock Transaction. Accumulated depreciation for those satellites as of December 31, 2014 was $39.7 million, representing depreciation expense recognized in our consolidated financial statements for the period subsequent to the effective date of the Satellite and Tracking Stock Transaction. As of December 31, 2017 2016 (In thousands) Progress amounts for satellite construction, including prepayments under capital leases and launch services costs $ 211,765 $ 1,235,577 Satellite related equipment 28,358 152,737 Other 20,097 30,449 Construction in progress $ 260,220 $ 1,418,763 As of December 31, Segment 2014 2013 (In thousands) Other $ 341,082 $ 122,070 Other 120,764 16,433 Other 63,072 19,210 Hughes 26,049 — ESS 28,470 — Other/ESS 4,440 4,950 ETC/Hughes 34,270 20,793 ETC/Hughes/ESS 19,042 26,595 $ 637,189 $ 210,051 Satellites Segment Expected Launch Date Telesat T19V (“63 West”) (1) Hughes Second quarter of 2018 EchoStar XXIV Corporate and Other 2021 ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedFor(1) We entered into an agreement for certain capacity on this satellite once launched, but are not party to the years ended December 31, 2014, 2013 and 2012, weconstruction contract. $23.8 million, $4.0 million and $45.5 million, respectively, of capitalized interest related to our satellites, satellite payloads and related ground facilities under construction. For the Years Ended December 31, 2014 2013 2012 $ 210,763 $ 180,517 $ 150,034 123,360 126,625 121,919 116,685 98,076 80,709 13,734 13,449 12,929 $ 464,542 $ 418,667 $ 365,591 For the Years Ended December 31, 2017 2016 2015 (In thousands) Satellites $ 239,072 $ 191,729 $ 197,469 Furniture, fixtures, equipment and other 82,668 65,350 77,946 Customer rental equipment 146,562 114,568 105,725 Buildings and improvements 7,004 6,922 7,845 Total depreciation expense $ 475,306 $ 378,569 $ 388,985 $59.7$66.1 million, $56.2 million and $56.2 million for each of the years ended December 31, 2014, 20132017, 2016 and 2012.2014, we utilized2017, our satellite fleet consisted of 19 of our owned and leased satellites in geosynchronous orbit, approximately 22,300 miles above the equator. ThreeWe depreciate our owned satellites on a straight-line basis over the estimated useful life of each satellite. As of December 31, 2017, four of our satellites are accounted for as capital leases and are depreciated on a straight-line basis over the terms of the satellite service agreements. Two of our satellites are accounted for as operating leases. We depreciate our owned satellites on a straight-line basis over the estimated useful life of each satellite.their respective lease terms.STATEMENTS—STATEMENTS - ContinuedInformation for ouris presented below.consists of both owned and leased satellites detailed in the table below as of December 31, 2017.Satellites Segment Launch Date Nominal Degree
Orbital Location
(Longitude)Depreciable
Life (In
Years) SPACEWAY 3 (1) Hughes August 2007 95 W 12 EchoStar XVII Hughes July 2012 107 W 15 EchoStar XIX Hughes December 2016 97.1 W 15 EchoStar I (2)(3)(4)(7) ESS December 1995 77 W — EchoStar VI (4)(7) ESS July 2000 96.2 W 12 EchoStar VII (2)(3)(4) ESS February 2002 119 W 3 EchoStar IX (2)(4) ESS August 2003 121 W 12 EchoStar X (2)(3) ESS February 2006 110 W 7 EchoStar XI (2)(3) ESS July 2008 110 W 9 EchoStar XII (2)(4)(5) ESS July 2003 61.5 W 2 EchoStar XIV (2)(3) ESS March 2010 119 W 11 EchoStar XVI (2) ESS November 2012 61.5 W 15 EchoStar XXI Corporate and Other June 2017 10.25 E 15 EchoStar XXIII Corporate and Other March 2017 45 W 15 EUTELSAT 10A (“W2A”) (6) Corporate and Other April 2009 10 E — SPACEWAY 3(1)HughesAugust 2007Capital Leases: 95 W 12 EchoStar XVIIHughesJuly 2012107 W15EchoStar I(2)(3)(4)ESSDecember 199577 W—EchoStar III(4)ESSOctober 199761.5 W12EchoStar VI(4)ESSJuly 200096.2 W12EchoStar VII(2)(3)ESSFebruary 2002119 W3EchoStar VIII(2)ESSAugust 200277 W12EchoStar IX(2)ESSAugust 2003121 W12EchoStar X(2)(3)ESSFebruary 2006110 W7EchoStar XI(2)(3)ESSJuly 2008110 W9EchoStar XII(2)(4)(5)ESSJuly 200361.5 W2EchoStar XIV(2)(3)ESSMarch 2010119 W11EchoStar XVI(2)ESSNovember 201261.5 W15EUTELSAT 10A ("W2A")(6)OtherApril 200910 E—Capital Leases:AMC-16(4)ESSDecember 200485 W105(2) ESS September 2009 72.7 W 15 QuetzSat-1(2) ESS September 2011 77 W 10 Operating Leases: Hughes March 2016
65 W 15 XV ESS October 200445 W—AMC-15ESSOctober 20042017 105 W —15 the Hughes Acquisition.(2)See Note 19 for further discussion of our transactions with DISH Network.(2) See Note 19 for discussion of related party transactions with DISH Network. 2)19).assets.XXIII. In April 2014, we entered into an agreement with Space Systems Loral, LLC ("SS/L") for the construction ofI satellite was retired in January 2018 and the EchoStar XXIIIVI satellite a high powered broadcast satellite service ("BSS")ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedsatellite which will use some of the components from CMBStar, a satellite that we suspended construction in 2008. EchoStar XXIII is expected to launchbe retired in the second halfquarter of 20162018.will be initially deployed at 45 degree west longituderetired from commercial service in January 2018. This retirement is not expected to have a material impact on our results of operations or financial position.location.EUTELSAT 65 West A. In April 2014, we entered into a satellite services agreement pursuant to which Eutelsat do Brasil will provide to Hughes Telecomunicações do Brasil Ltda., our subsidiary, fixed broadband service using the Ka-band capacity into Brazil on the EUTELSAT 65 West A satellite for a 15-year term. The satellite services agreement requires us to make prepayments during the satellite construction period. The satellite is scheduled to be placed intolocation and retire it from commercial service in the second quarter of 2016 and will deliver consumer satellite broadband services in Brazil and creates2018. This retirement is not expected to have a platform to potentially allow for further development of our spectrum in Brazil.EchoStar XIX. In February 2012 and September 2013, ViaSat and its subsidiary ViaSat Communications, filed lawsuits in the U.S. District Court for the Southern District of California against SS/L, the manufacturer of EchoStar XVII and EchoStar XIX. Those cases, to which we were not a party, were settled in 2014 with no material impact on our results of operations or financial position. design, construction or planned operations of EchoStar XIX.EchoStar I, EchoStar VII, EchoStar X, EchoStar XI, and EchoStar XIV. As discussed in Note 2, we received five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV) from DISH Network as part of the Satellite and Tracking Stock Transaction. These satellites are BSS satellites operating in Ku-band frequencies and DISH Network began receiving certain services from us on these satellites effective March 1, 2014.EchoStar VIII. In May 2013, DISH Network began receiving satellite services from us on EchoStar VIII as an in-orbit spare. Effective March 1, 2014, this service arrangement was converted to a month-to-month service agreement. Both parties have the right to terminate this agreement upon 30 days' notice.EchoStar XV. In May 2013, we began receiving satellite services from DISH Network on EchoStar XV and relocated the satellite to the 45105 degree west longitude orbital location. Effective March 1, 2014, this service arrangement was convertedPursuant to a month-to-month service agreement. Both parties have the right to terminate this agreement upon 30 days' notice.EchoStar 105/SES-11. Inagreements we entered into in August 2014, we entered into: (i) afunded substantially all construction, contractlaunch and other costs associated with Airbus Defence and Space SAS for the construction of the EchoStar 105/SES-11 satellite with C-band, Ku-band and Ka-band payloads; (ii) an agreement with SES Satellite Leasing Limited for transferredprocurement of the related launch services; and (iii) an agreement with SES Americom Inc. ("SES") pursuant to which we will transfer the title to the C-bandC-, Ku- and Ka-band payloads to two affiliates of SES Satellite Leasing Limited atAmericom, Inc. (“SES”) after the launch and transferdate, while retaining the titleright to the Ku-band payload to SES following in-orbit testing of the satellite. Additionally, SES will provide to us satellite services onuse the entire Ku-band payload on EchoStar 105/SES-11the satellite for an initial ten-year term, with an option for us to renew the agreement on a year-to-year basis. In October 2017, we recorded a $77.5 million receivable from SES in “Other current assets,” representing capitalized costs allocable to certain satellite payloads controlled by SES, and we reduced our carrying amount of the satellite by such amount. In January 2018, we received payment from SES for the receivable plus accrued interest. Our leased Ku-band payload on the EchoStar 105/SES-11 satellite has replaced the capacity we had on the AMC-15 satellite.is scheduled to bewas launched in June 2017 and was placed into service in November 2017 at the first half10.25 degree east longitude orbital location. The EchoStar XXI satellite provides space segment capacity to EchoStar Mobile Limited in Europe. We expectThis retirement has not had, and is not expected to accounthave, a material impact on our results of operations or financial position.services we receive from SES on the Ku-band payload as a prepaid capital lease with a term equal to the 15-year estimated life of the satellite.extendextended the terms of our then existing agreements with a subsidiary of SES for satellite services on the AMC-15 and AMC-16. As amended, ourAMC-16 satellites. Our agreement for satellite services on certain transponders on the AMC-15 satellite terminated according to its terms in December 2017. The AMC-15 satellite was extended from December 2014 through the in-serviceECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continueddate of EchoStar 105/SES-11. The amendedaccounted for as an operating lease. Our agreement for the AMC-16 satellite services extendsterminated according to its terms in February 2016.term for the satellite's entire communications capacity, subject to available power, for one year following expirationoperation of the initial term in FebruaryAMC-15 and AMC-16 satellites, our monthly recurring payments were reduced under the related capital lease agreements during the three months ending March 31, 2015. The extended terms of these agreements are beingWe have accounted for as operating leases.EchoStar XXI. In August 2013, we and DISH Network entered into a development agreement ("T2 Development Agreement") with respect tothese lease modifications generally by reducing the TerreStar-2 ("T2") satellite under which we reimbursed DISH Network forcarrying amounts it paid to SS/L in connection with the construction of the T2 satellite. As amended in December 2013,satellite and related capital lease obligation by the T2 Development Agreement provided EchoStar an option to purchase DISH Network's rights and obligations under the T2 satellite construction agreement. In December 2014, we exercised our option to purchase DISH Network's rights and obligations under the T2 satellite construction agreement (including the right to take deliverypresent value of the T2 satellite, now renamed EchoStar XXI) for $55.0 million in cash.payment reduction. In accordance with accounting principles that apply to transfers of assets between companies under common control, we recorded a $9.6 million charge to additional-paid-in-capital, net of related deferred income taxes. EchoStar XXI is designed to provide mobile satellite services using S-band frequencies and we intend to use this satellite in conjunction with our S-band spectrum in Europe as well as to develop opportunities in other partssuch instances where the carrying amount of the world. EchoStar XXI is expectedsatellite had been reduced to launchzero as a result of accumulated depreciation or impairments, we have recognized the reductions in 2016.Certain of ourhave experiencedmay experience anomalies from time to time, some of which may have had a significant adverse impacteffect on their remaining useful lives, and/or the commercial operation of the satellites.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, 2017. There can be no assurance, however, that existing and future anomalies will not further impacthave any such adverse impacts in the remaining useful life and/or the commercial operation of any of the satellites in our fleet.future. In addition, there can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail.generally dohistorically have not carrycarried in-orbit insurance on our satellites; therefore,satellites because we assessed that the cost of insurance was uneconomical relative to the risk of failures. Therefore, we generally bear the risk of any uninsured in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our indebtedness, we are required, subject to certain limitations on coverage, to maintain launch and in-orbit insurance for our SPACEWAY 3, EchoStar XVI, and EchoStar XVII. In addition, althoughXVII satellites. Based on economic analysis of the current insurance market we obtained launch plus one year in-orbit insurance, subject to certain limitations, for the EchoStar XIX, EchoStar XXI and EchoStar XXIII satellites. Additionally, we obtained certain launch and in-orbit insurance for our interest in the EchoStar 105/SES-11 satellite. Our other satellites, either in orbit or under construction, are not required to maintaincovered by launch or in-orbit insurance pursuant to our service agreement with DISH Network for EchoStar XV, we are liable for any damage caused by our use of the satellite and therefore we carry third-party insurance on EchoStar XV.Owned SatellitesEchoStar III. EchoStar III was originally designed to operate a maximum of 32 direct-broadcast satellite ("DBS") transponders in a mode that provides service to the entire continental United States ("CONUS"). As a result of the failure of traveling wave tube amplifiers ("TWTAs") in previous years, including failures in February 2013 and April 2013, only six transponders are currently available for use. It is likely that additional TWTA failures will occur from time to time in the future and such failures could further impact commercial operation of the satellite. EchoStar III was fully depreciated in 2009 and is currently used as an in-orbit spare.EchoStar VI. EchoStar VI was designed to operate 32 DBS transponders with a minimum 12-year useful life. Prior to 2012, EchoStar VI experienced solar array anomalies and the loss of TWTAs that did not reduce its useful life; however, these solar array anomalies impacted the commercial operation of the satellite. EchoStar VI lost (i) two additional TWTAs in March 2012, increasing the total number of TWTAs lost on the satellite to five out of 48 TWTAs and (ii) an additional solar array string duringECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedthe second quarter of 2012, reducing the total power available for use by the spacecraft. The anomalies in 2012 did not impact the current commercial operation or the estimated useful life of the satellite. However, there can be no assurance that these anomalies or any future anomalies will not reduce the satellite's useful life or impact its commercial operation. EchoStar VI was fully depreciated in August 2012.EchoStar XII. EchoStar XII was designed to operate 13 DBS transponders at 270 watts per channel in CONUS mode, or 22 spot beams using a combination of 135 and 65 watt TWTAs or hybrid CONUS/spot beam mode.insurance. We currently operate EchoStar XII in spot beam mode. In September 2012, November 2012, and January 2013, EchoStar XII experienced additional solar array anomalies, which further reduced the electrical power available to operate EchoStar XII. An engineering analysis completed in the second quarter of 2013 indicated further loss of available electrical power and resulting capacity loss was likely. As a result, we recognized a $34.7 million impairment loss in the second quarter of 2013. Additional solar array anomalies are likely and, if they occur, they will continue to degradeassess circumstances going forward and make insurance decisions on a case by case basis.operational capability of EchoStar XII and could leadanomalies previously disclosed may be considered to additional impairment chargesrepresent a significant adverse change in the future. EchoStar XII was fully depreciated in December 2014.The five satellites received from DISH Network pursuant tophysical condition of a particular satellite. However, based on the Satellite and Tracking Stock Transaction have experiencedredundancy designed within each satellite, certain anomalies prior to March 1, 2014, the effective date of the Satellite and Tracking Stock Transaction as described below.EchoStar I. During the first quarter of 2012, DISH Network determined that EchoStar I experienced a communications receiver anomaly. The communications receivers process signals sent from the uplink center for transmission by the satellite to customers. While this anomaly did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not impact its future commercial operation. EchoStar I was fully depreciated prior to the date of the Satellite and Tracking Stock Transaction.EchoStar VII. Prior to 2012, EchoStar VII experienced certain thruster failures. During the fourth quarter of 2012, DISH Network determined that EchoStar VII experienced an additional thruster failure. Thrusters control the satellite's location and orientation. While this anomaly did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.EchoStar X. During the second and third quarters of 2010, EchoStar X experienced anomalies which affected seven solar array circuits reducing the number of functional solar array circuits to 17. While these anomalies did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.EchoStar XI. During the first quarter of 2012, DISH Network determined that EchoStar XI experienced solar array anomalies that reduced the total power available for use by the satellite. While these anomalies did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.EchoStar XIV. During the third quarter of 2011 and the first quarter of 2012, DISH Network determined that EchoStar XIV experienced solar array anomalies that reduced the total power available for use by the satellite. While these anomalies did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedLeased SatellitesAMC-16. AMC-16, a fixed satellite service ("FSS") satellite, commenced commercial operation during February 2005. AMC-16 was designed to operate 24 Ku-band FSS transponders that operate at approximately 120 watts per channel and a Ka-band payload consisting of 12 spot beams. In each of February 2012, April 2012, and November 2012, AMC-16 experienced a solar-power anomaly, which caused additional partial loss of satellite capacity. As a result of prior period depreciation and adjustments associated with satellite anomalies, the net carrying amount of AMC-16 was reduced to zero as of December 31, 2010. Thereafter, subsequent reductions in our capital lease obligation resulting from reductions in our recurring lease payments are recognized as gains in "Other, net" on our Consolidated Statements of Operations and Comprehensive Income (Loss). Upon determination of related reductions in our monthly recurring payments, we reduced our capital lease obligation for AMC-16 and recognized corresponding gains of $12.6 million in 2012 and $6.7 million in 2013. In the third quarter of 2014, AMC-16 experienced further power degradation, however this anomaly did not affect the commercial operation of the satellite. There can be no assurance that the existing anomalies or any future anomalies will not reduce AMC-16's useful life or further impact its commercial operations.We are not awarenecessarily considered to be significant events that would require a test of any additional anomalies that have occurred on any of our owned or leased satellites in 2014 as of the date of this report that affected the commercial operation of these satellites.ourthe reporting units ofwithin our operating segments and is subject to impairment testing annually, or more frequently when events or changes in circumstances indicate the fair value of a reporting unit is more likely than not less than its carrying amount.Changes in the carrying amount of our goodwill by reportable segment for the years ended December 31, 2014 and 2013 are as follows: EchoStar
Technologies Hughes Corporate &
Other Consolidated
Total (In thousands) $ 3,751 $ 504,173 $ — $ 507,924 (3,751 ) — — (3,751 ) — 504,173 — 504,173 — — 6,457 6,457 $ — $ 504,173 $ 6,457 $ 510,630 2014, approximately $504.2 million of2017 and 2016, all goodwill related to our goodwillcontinuing operations was assigned to reporting units of theour Hughes segment. We test this goodwill for impairment annually in the second quarter. Based on our qualitative assessment of impairment of the goodwill assigned to the Hughes segment in the second quarter of 2014,2017, we determined that no further testing of goodwill for impairment was necessary as it was not more likely than not that the fair values of the Hughes segment reporting units were less than the corresponding carrying amounts.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedEffective August 1, 2014, we and DISH Digital entered into the Exchange Agreement pursuant to which, among other things, DISH Digital distributed certain assets to us, including an internet protocol television technology business with associated goodwill of $6.5 million. As of December 31, 2014, this business has not been integrated into any existing reporting unit. DISH Digital recently changed its name to Sling TV Holding L.L.C ("Sling TV"). See Notes 6 and 19 for more information regarding the Exchange Agreement with Sling TV.Prior to 2012, goodwill of $10.4 million was assigned to the Troppus reporting unit of our EchoStar Technologies segment. This goodwill was tested for impairment annually in the fourth quarter. In the fourth quarter of 2012, we determined that the goodwill was impaired and recognized a $6.6 million impairment loss to adjust the carrying amount of the goodwill to its implied fair value of $3.8 million. In the fourth quarter of 2013, we determined that the remaining goodwill balance was impaired and recognized a $3.8 million impairment loss to adjust the carrying amount to its implied fair value of zero. Our fair value estimates in 2013 were based on updated business plans and the application of probability-weighted discounted cash flow techniques. Our estimates included significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy. As of December 31, 2014 2013 As of
December 31,
2016 Additions Impairment As of
December 31,
2017 (In thousands) (In thousands) $ 103,499 $ 113,764 $ 87,959 $ — $ — $ 4,662 $ 92,621 (6,778 ) (1,521 ) (14,983 ) (5,097 ) — (1,262 ) (21,342 ) 96,721 112,243 (5,097 ) — 3,400 71,279 471,657 471,657 471,657 — (6,000 ) — 465,657 $ 568,378 $ 583,900 $ 544,633 $ (5,097 ) $ (6,000 ) $ 3,400 $ 536,936 In December 2013, we acquired 100.0% of Solaris Mobile which is based in Dublin, Ireland and licensed by the European Union ("EU") and individual Member States to provide mobile satellite services and a complementary ground component services covering the entire EU using S-band spectrum. On the acquisition date, Solaris Mobile lacked certain inputs and processes that would be necessary to be considered a business. Accordingly, we accounted for the transaction as an acquisition of net assets. The primary acquired asset was an EU regulatory authorization for S-band frequencies, which had a cost of $51.8 million, consisting of $43.4 million in cash payments and $10.3 million in assumed liabilities. The cost of the regulatory authorization is being amortized using the straight-line method over the remaining term of the authorization ending in May 2027.In June 2013 we entered into an agreement with DISH Network pursuant to which we conveyed to DISH Network certain of our rights under a Canadian regulatory authorization to develop certain spectrum rights at the 103 degree west longitude orbital location, which we acquired for $20.0 million in cash in 2012. In the third quarter of 2013, we received $23.1 million from DISH Network in exchange for these rights. In accordance with accounting principles that apply to transfers of assets between companies under common control, we did not recognize any gain on this transaction. Rather, we increased our additional paid-in capital to reflect the excess of the cash payment over the carrying amount of the derecognized intangible asset, net of related income taxes.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedIn May 2012, we acquired an authorization to use the 45 degree west longitude orbital location in the Ku, Ka, and S-band spectrums from ANATEL, the Brazilian communications regulatory authority (the "Brazil Authorization"), for cash of 145.2 million Brazilian reais (approximately $72.5 million based on the exchange rate at the time of payment). The Brazil Authorization has a 15-year initial term and a one-time 15-year renewal term, which we expect to renew. The cost of the Brazil Authorization, together with estimated renewal costs of approximately $5.6 million, is being amortized on a straight-line basis over the remaining expected term of 28 years commencing in June 2013, which is the date upon which a satellite was deployed in the orbital location for testing pursuant to the Brazil Authorization.useful lives was $6.1$5.1 million, $1.5$4.7 million and zero$4.7 million for the years ended December 31, 2014, 20132017, 2016 and 2012. As of December 31, 2014 2013 Weighted
Average
Useful life
(in Years) Cost Accumulated
Amortization Carrying
Amount Cost Accumulated
Amortization Carrying
Amount (In thousands) 8 $ 293,932 $ (185,393 ) $ 108,539 $ 293,932 $ (152,647 ) $ 141,285 10 255,366 (233,009 ) 22,357 255,366 (204,835 ) 50,531 7 140,837 (100,940 ) 39,897 126,272 (83,580 ) 42,692 20 29,700 (5,321 ) 24,379 29,700 (3,836 ) 25,864 4 4,707 (4,217 ) 490 4,707 (3,040 ) 1,667 $ 724,542 $ (528,880 ) $ 195,662 $ 709,977 $ (447,938 ) $ 262,039 As of December 31, 2017 2016 Cost Cost (In thousands) Customer relationships 8 $ 270,300 $ (231,642 ) $ 38,658 $ 270,300 $ (214,544 ) $ 55,756 Technology-based 6 61,300 (60,927 ) 373 60,835 (57,266 ) 3,569 Trademark portfolio 20 29,700 (9,776 ) 19,924 29,700 (8,291 ) 21,409 Total other intangible assets $ 361,300 $ (302,345 ) $ 58,955 $ 360,835 $ (280,101 ) $ 80,734 For the years ended December 31, 2014, 2013 and 2012, intangibleIntangible asset amortization expense, was $92.1 million, $88.4 million and $91.7 million, respectively, including amortization of regulatory authorizations with finite lives and externally marketed capitalized software.software, was $46.9 million, $54.3 million and $71.8 million for the years ended December 31, 2017, 2016 and 2015, respectively.2014,2017, our estimated future amortization of intangible assets, including regulatory authorizations with finite lives, was as follows: Amount (In thousands) $ 68,451 49,897 31,022 23,306 22,092 102,489 $ 297,257 Amount (In thousands) For the Years Ending December 31, 2018 $ 20,106 2019 20,106 2020 16,470 2021 9,831 2022 6,867 Thereafter 60,799 Total $ 134,179 Impairments of Intangible AssetsIn connection with the Hughes Acquisition, we acquired contractual rights to receive $44.0 million in cash discounts on future launch services ("Credits") and assigned an estimated fair value of $22.0 million to the Credits on the acquisition date. In November 2012, we entered into an agreement for alternative launch services and determined that the potential to realize value from the Credits was less than previously estimated. Based on an updated fair value estimate using unobservable inputs that considered factors such as the viability of the launch services provider and marketability of the Credits, we recognized a $22.0 million impairment loss to reduce the carrying amount of the Credits to their estimated fair value of zero as of December 31, 2012.In connection with our annual impairment test of our indefinite-lived intangible assets in the fourth quarter of 2012, we determined that certain terrestrial wireless spectrum assets had nominal value. As a result, we recognized a $4.2 million of impairment loss to reduce the carrying amount of the assets to their estimated fair value of zero.The impairment losses recognized in the fourth quarter of 2012 were based primarily on fair value estimates using probability-weighted discounted cash flow techniques and limited market data. Our fair value estimates included significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy.2014 and 2013,2017, our debt primarily consisted of ourthe 2019 Senior Secured Notes, the 2021 Senior Unsecured Notes, the 2026 Senior Secured Notes and the 2026 Senior Unsecured Notes, each as defined below, (collectively, the "Notes"), and our capital lease obligations. The Notes are registered with the Securities and Exchange Commission.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued As of December 31, 2014 2013 Interest Rates Carrying
Amount Fair Value Carrying
Amount Fair Value (In thousands) 6.500% $ 1,100,000 $ 1,177,000 $ 1,100,000 $ 1,193,500 7.625% 900,000 994,500 900,000 1,001,250 5.5% - 14.9% 1,240 1,240 1,588 1,588 2,001,240 $ 2,172,740 2,001,588 $ 2,196,338 366,447 420,800 2,367,687 2,422,388 (41,912 ) (69,791 ) $ 2,325,775 $ 2,352,597 Effective Interest Rate As of December 31, 2017 2016 (In thousands) Senior Secured Notes: 6 1/2% Senior Secured Notes due 2019 6.959% $ 990,000 $ 1,042,609 $ 990,000 $ 1,084,050 5 1/4% Senior Secured Notes due 2026 5.320% 750,000 769,305 750,000 739,688 Senior Unsecured Notes: 7 5/8% Senior Unsecured Notes due 2021 8.062% 900,000 992,745 900,000 990,189 6 5/8% Senior Unsecured Notes due 2026 6.688% 750,000 791,865 750,000 760,245 Less: Unamortized debt issuance costs (24,857 ) — (31,821 ) — Subtotal 3,365,143 $ 3,596,524 3,358,179 $ 3,574,172 Capital lease obligations 269,701 297,268 Total debt and capital lease obligations 3,634,844 3,655,447 Less: Current portion (40,631 ) (32,984 ) Long-term debt and capital lease obligations, net of unamortized debt issuance costs $ 3,594,213 $ 3,622,463 We estimatedof our publicly traded long-term debt using market prices in less active markets (Level 2).61/2%hierarchy.due 2019 and 75/8%2021 Senior Unsecured Notes due 2021 (the "Notes")Hughes Satellite Systems Corporation ("HSS"), our subsidiaryHSS issued $1.10 billion aggregate principal amount of its 61/2% 1/2% Senior Secured Notes due 2019 (the "Senior“2019 Senior Secured Notes"Notes”) at an issue price of 100.0%, pursuant to a Secured Indenture dated June 1, 2011, (the "Secured Indenture"(as amended the “2011 Secured Indenture”). The 2019 Senior Secured Notes mature on June 15, 2019. Interest accrues at an annual rate of 61/2% 1/2% and is payable semi-annually in cash, in arrears on June 15 and December 15 of each year. As of December 31, 2017 and 2016, the outstanding principal balance on the 2019 Senior Secured Notes was $990.0 million.its 75/8% 5/8% Senior Unsecured Notes due 2021 (the "Senior Notes") and together the "Senior Secured Notes", the "Notes"“2021 Senior Unsecured Notes,”) at an issue price of 100.0%, pursuant to an Unsecured Indenture dated June 1, 2011 (the "Unsecured Indenture", and together(together with the "Secured Indenture"“2011 Secured Indenture”, the "Indentures"“2011 Indentures”). The 2021 Senior Unsecured Notes mature on June 15, 2021. Interest accrues at an annual rate of 75/8% 5/8% and is payable semi-annually in cash, in arrears on June 15 and December 15 of each year."make-whole"“make-whole” premium, as defined in the Indentures,applicable Indenture, together with accrued and unpaid interest, if any, to the date of redemption. Prior to June 15, 2015, HSS may also redeem up to 10.0%10% of the outstanding 2026 Senior Secured Notes per year prior to August 1, 2020 at a redemption price equal to 103.0%103% of the principal amount thereof plus accrued and unpaid interest if any, to the date of redemption.The In addition, HSS may, at any time prior to August 1, 2019, with the net cash proceeds from certain equity offerings or capital contributions, redeem up to 35% of the 2026 Senior Secured Notes, at 105.250% of the principal amount, and up to 35% of the 2026 Senior Unsecured Notes, at a redemption price equal to 106.625% of the principal amount plus, in each case, accrued and unpaid interest on the 2026 Notes being redeemed to the date of redemption.•general •secured by a first priority security interest in substantially all of the assets of HSS and certain of its subsidiaries, subject to certain exceptions and Permitted Liens (as defined in the Secured Indenture);• • • • • • STATEMENTS—STATEMENTS - Continued•effectively junior to HSS' obligations that are secured by assets that are not part of the Collateral (as defined in the Secured Indenture) that is securing the Senior Secured Notes, in each case to the extent of the value of the Collateral securing such obligations;•effectively senior to HSS' existing and future unsecured obligations to the extent of the value of the Collateral securing the Senior Secured Notes, after giving effect to Permitted Liens;•senior in right of payment to• HSS that are expressly subordinated to the Senior Secured Notes;•structurally junior to any existing and future obligations of any non-Guarantor Subsidiaries (as defined in the Secured Indenture); and•unconditionally guaranteed, jointly and severally, on a general senior secured basis by each Guarantor (as defined in the Secured Indenture).The Senior Notes are:•general unsecured obligations of HSS;•effectively junior to HSS' 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 HSS that are expressly subordinated to the Senior Notes;•structurally junior to any existing and future obligations of any non-Guarantor Subsidiaries (as defined in the Unsecured Indenture); and•unconditionally guaranteed, jointly and severally, on a general senior basis by each Guarantor (as defined in the Unsecured Indenture).• • • • • theHSS’ ability of HSS and, in certain instances, the ability of its Restricted Subsidiaries (as defined in the Indentures),certain of HSS’ subsidiaries to:•pay dividends or make distributions on HSS' capital stock or repurchase HSS' capital stock;•incur additional debt;•make certain investments;•create liens or enter into sale and leaseback transactions;•merge or consolidate with another company;•transfer and sell assets;•enter into transactions with affiliates; and•• • • • • • • subsidiaries of HSSHSS’ subsidiaries to pay dividends, make distributions, make other payments, or transfer assets to us.changeChange of control,Control, as defined in the respective Indentures, HSS would be required to make an offer to repurchase all or any part of a holder'sholder’s Notes at a purchase price equal to 101.0% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon to the date of repurchase.STATEMENTS—STATEMENTS - ContinuedAs discussed above, HSS and certain of its subsidiaries have granted a first priority security interest in substantially all of their assets, subject to certain exceptions and permitted liens, in connection with HSS' issuance of $1.10 billion aggregate principal amount of its Senior Secured Notes.$58.1$7.5 million of debt issuance costs, which are included in "Other noncurrent assets, net" in our Consolidated Balance Sheets.costs. For the years ended December 31, 2014, 20132017, 2016 and 2012,2015, we amortized $5.8$7.4 million, $5.4$6.6 million and $5.0$6.0 million of debt issuance costs, respectively, which are included in "Interest“Interest expense, net of amounts capitalized"capitalized” in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss).9)9). These agreements require monthly recurring payments, which generally include principal, interest, an amount for use of the orbital location and estimated executory costs, such as insurance and maintenance. The monthly recurring payments generally are subject to reduction in the event of failures that reduce the satellite transponder capacity. Certain of these agreements provide for extension of the initial lease term at our option. The effective interest rates for our satellite capital lease obligations range from 7.73%6.0% to 10.97%11.2%, with a weighted average of 9.99%10.5% as of December 31, 2014. As discussed in Note 9, in August 2014, our existing capital lease agreements for the AMC-15 and AMC-16 satellites were extended and are being accounted for as operating leases for their extended terms.2014,2017, are as follows: Amount Amount (In thousands) (In thousands) $ 102,837 88,709 88,309 88,122 $ 93,038 87,899 88,739 2020 88,496 2021 84,371 2022 63,622 345,807 110,880 801,683 529,146 (240,566 ) (162,404 ) 561,117 366,742 (194,670 ) (97,041 ) 366,447 269,701 (40,678 ) (40,631 ) $ 325,769 $ 229,070 ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedFor the years ended December 31, 2014, 2013 and 2012, we of approximately $132.4 million, $126.7 million and $78.9 million, respectively, from the sublease of our capital lease satellites.satellites of approximately $132.4 million for each of the years ended December 31, 2017, 2016 and 2015. As of December 31, 2014,2017, our future minimum sublease rental income was $743.5$348.5 million relating to oursuch satellites.(loss)from continuing operations before income taxes are as follows: For the Years Ended
December 31, 2014 2013 2012 (In thousands) $ 172,276 $ (50,551 ) $ 172,612 6,057 16,515 22,072 $ 178,333 $ (34,036 ) $ 194,684 For the Years Ended December 31, 2017 2016 2015 (In thousands) Domestic $ 146,383 $ 236,200 $ 140,738 Foreign (45,689 ) (19,574 ) (1,411 ) Income from continuing operations before income taxes $ 100,694 $ 216,626 $ 139,327 benefit (provision)provision for income taxes are as follows: For the Years Ended
December 31, For the Years Ended December 31, 2014 2013 2012 2017 2016 2015 (In thousands) (In thousands) $ (2,593 ) $ 1,118 $ 21,086 $ (8,652 ) $ (19,385 ) $ — 9,006 6,531 1,943 (1,237 ) 267 (8,926 ) (5,455 ) (5,992 ) (7,775 ) (2,335 ) (2,481 ) (4,470 ) 958 1,657 15,254 (12,224 ) (21,599 ) (13,396 )
(31,905 ) 26,511 7,841 299,693 (58,250 ) (42,659 ) (1,283 ) 10,074 (6,720 ) 2,356 (6,232 ) 3,285 1,446 (805 ) (46 ) (5,539 ) 5,827 1,535 (31,742 ) 35,780 1,075 296,510 (58,655 ) (37,839 ) $ (30,784 ) $ 37,437 $ 16,329 $ 284,286 $ (80,254 ) $ (51,235 ) ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued2014, 20132017, 2016 and 20122015 reconcile to the amounts computed by applying the statutory federal tax rate to income (loss)from continuing operations before income taxes as shown below: For the Years Ended December 31, 2017 2016 2015 Statutory rate 35.0 % 35.0 % 35.0 % State income taxes, net of Federal benefit (12.2 )% 5.0 % 3.8 % Permanent differences (0.3 )% 1.4 % 1.7 % Tax credits (8.1 )% (4.2 )% (8.4 )% Valuation allowance 4.6 % (0.3 )% 1.4 % Enactment of Tax Cuts and Job Act of 2017 (301.4 )% — % — % Other 0.1 % 0.1 % 3.3 % Total effective tax rate (282.3 )% 37.0 % 36.8 % For the Years Ended
December 31, 2014 2013 2012 35.0 % 35.0 % 35.0 % (0.2 )% 21.0 % 0.8 % — — (1.8 )% 0.6 % (10.7 )% 1.1 % (18.6 )% 48.7 % (5.0 )% (0.9 )% 14.2 % (39.0 )% 1.4 % 1.8 % 0.5 % 17.3 % 110.0 % (8.4 )% theour deferred tax assets and liabilities are as follows: As of December 31, 2014 2013 (In thousands) $ 412,744 $ 419,646 30,248 31,067 34,632 33,215 8,445 8,117 12,157 12,247 498,226 504,292 (73,664 ) (79,370 ) 424,562 424,922 (1,014,812 ) (841,407 ) (748 ) (755 ) (1,015,560 ) (842,162 ) $ (590,998 ) $ (417,240 ) $ 87,208 $ 69,633 (678,206 ) (486,873 ) $ (590,998 ) $ (417,240 ) As of December 31, 2017 2016 (In thousands) Deferred tax assets: Net operating losses, credit and other carryforwards $ 278,540 $ 178,925 Unrealized losses on investments, net 22,260 47,737 Accrued expenses 23,583 39,596 Stock-based compensation 9,148 14,389 Other assets 11,890 15,008 Total deferred tax assets 345,421 295,655 Valuation allowance (66,886 ) (75,372 ) Deferred tax assets after valuation allowance 278,535 220,283 Deferred tax liabilities: Depreciation and amortization (708,599 ) (962,838 ) Other liabilities (1,509 ) (1,319 ) Total deferred tax liabilities (710,108 ) (964,157 ) Total net deferred tax liabilities $ (431,573 ) $ (743,874 ) ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued$73.7$66.9 million and $79.4$75.4 million as of December 31, 20142017 and 2013,2016, respectively. The change in the valuation allowance primarily relates to an increase in realized and unrealized gains that are capital in nature and an increase in the net operating loss carryforwards of certain foreign subsidiaries.NetAs of December 31, 2017, we had net operating loss carryforwards for tax purposes were $923.3of $798.5 million, asincluding $168.4 million of December 31, 2014.foreign net operating loss carryforwards. A substantial portion of these net operating loss carryforwards will begin to expire in 2020. Currently, we have a valuation allowance against all capital loss carryforwards that exist for tax purposes. Tax credits available to offset future tax liabilities are $52.1 million as2029. As of December 31, 2014. A substantial portion2017, we have tax credit carryforwards of these$126.2 million and $84.0 million for federal and state income tax creditspurposes, respectively. If not utilized, the federal tax credit carryforwards will begin to expire in 2026.Additionally,2026 and the state tax benefit from excess tax deductions attributablecredit carryforwards will begin to stock-based compensation has resultedexpire in $38.4 million of net operating loss carryforwards that will not be recognized as a credit to additional paid in capital until such deductions reduce taxes payable. We follow the tax law ordering rules, which assume that stock option deductions are realized when they have been used for tax purposes.2014,2017, 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.2014,2017, we are not currently under a U.S. federal income tax examination, for fiscalhowever, the IRS can perform tax examination as early as tax year 20092008. We are also subject to frequent state income tax audits and 2010.have open state examinations in years as early as 2008. We also file income tax returns in the United Kingdom, The Netherlands, Brazil, India and a number of other foreign jurisdictions. We generally are open to income tax examination in these foreign jurisdictions infor taxable years beginning in 2003. As of December 31, 2014,2017, we are currently being audited by the Indian tax authorities for fiscal years 2003 through 2012. We have no other on-going significant current income tax examinations in process in our foreign jurisdictions. For the Years Ended
December 31, For the Years Ended December 31, 2014 2013 2012 2017 2016 2015 (In thousands) (In thousands) $ 43,319 $ 34,677 $ 48,874 $ 63,502 $ 62,366 $ 44,839 3,806 81 158 1,116 2,132 11,748 4,643 9,929 3,723 258 3 5,779 (81 ) (1,253 ) (855 ) (852 ) (734 ) — (6,848 ) (115 ) (16,587 ) — (265 ) — — — (636 ) (728 ) — — $ 44,839 $ 43,319 $ 34,677 $ 63,296 $ 63,502 $ 62,366 ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued2014,2017, we had $44.8$63.3 million of unrecognized income tax benefits, all of which, if recognized, would affect our effective tax rate. As of December 31, 2013,2016, we had $43.3$63.5 million of unrecognized income tax benefits, all of which, $42.5 million, if recognized, would affect our effective tax rate. We do not believe that the total amount of unrecognized income tax benefits will significantly increase or decrease within the next twelve months due to the lapse of statute of limitations or settlement with tax authorities.2014, 20132017, 2016 and 2012,2015, our income tax provision or benefit included an insignificant amount of interest and penalties.Boardboard of Directorsdirectors is authorized to divide the 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 Boardboard of Directorsdirectors 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.Boardboard of Directorsdirectors authorized 13,000,000 shares of Hughes Retail Preferred Tracking Stock with a par value of $0.001 per share, of which 6,290,499 shares were issued to DISH Network on March 1, 2014 and remain outstanding as2014. Following consummation of December 31, 2014. See Note 2 for a discussion ofthe Share Exchange on February 28, 2017, the Hughes Retail Preferred Tracking Stock.Upon a change in control of DISH Network, each holder of outstanding shares of Class C common stock is entitled to 10 votes for each share of Class C common stock held. Our principal stockholder ownsand certain trusts established by him for the majoritybenefit of his family own all outstanding Class B common stock and, together with all other stockholders, owns outstanding Class A common stock. There are no shares of Class C common stock outstanding.matter. Each sharematter or to convert the shares of Class D common stock is entitled to receive dividends and distributions upon liquidation on a basis equivalent to thatinto any other class of the Class A common stock. There are no shares of Class D common stock outstanding.planprogram approved by our Boardboard of Directors,directors, we are authorized to repurchase up to $500.0 million of our outstanding shares of Class A common stock through andECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued2015.2018. For the years ended December 31, 2014, 20132017, 2016 and 2012,2015, we did not repurchase any common stock under this plan."ESPP"“ESPP”), under which we are authorized to issue 2.55.0 million shares of Class A common stock. As of December 31, 2014,2017, we had 1.12.7 million shares of Class A common stock which remain available for issuance under this plan.the ESPP. Substantially all full-time employees who have been employed by us 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, employeeseach employee’s deductions are limited so that the maximum they may not deduct an amount which would permit such employee to purchase our capital stock under all of our stock purchase plans at a rate which would exceedthe ESPP is $25,000 in fair value of capitalClass A common stock in any oneper year. The purchase priceStock purchases are made on the last business day of the stock iseach calendar quarter at 85.0% of the closing price of the Class A common stock on the last business day of each calendar quarter in which such shares of Class A common stock are deemed sold to an employee under the ESPP.that date. For the years ended December 31, 2014, 20132017, 2016 and 2012,2015, employee purchases of Class A common stock through the ESPP totaled 283,000approximately 176,000 shares, 268,000227,000 shares and 158,000228,000 shares, respectively.Prior to 2013, we had two 401(k) employee savings plans; one for eligible employees of Hughes Communications which was in place prior to the Hughes Acquisition (the "Hughes 401(k) Plan") and one for all of our other eligible employees (the "EchoStar 401(k) Plan"). Effective January 1, 2013, all participant account balances underwere transferred to (“the Hughes 401(k) Plan, which was then renamed, the EchoStar 401(k) Plan (the "Plan"Plan”), resulting in a single 401(k) employee savings plan for all of our eligible employees.Under the Plan, eligible employees mayare entitled to contribute up to 75.0% of their eligible compensation subject to the maximum contribution limit provided by the Internal Revenue Code of 1986, as amended (the “Code”). Eligible employees have the option to contribute up to 75% of their eligible compensation on a pre-tax and/or after-tax basis subject to the Internal Revenue Service ("IRS") limit of $17,500 in 2014. EmployeeCode limits. All employee contributions to the Plan are immediately vested. The Company will matchmatches 50 cents on the dollar for the first 6.0% of the employee'seach employee’s salary that they contributecontributions to the Plan for a total of 3.0% match. The Company will match on a pre-tax basis up to a maximum of $7,500.$7,500 annually. The Company match is calculated each pay period there is an employee contribution. Forfeitures of unvested participant balances which were retained byIn addition, the EchoStar 401(k) PlanCompany may be used to fund matching and discretionary contributions. Our Board of Directors may also authorizemake an annual discretionary contribution to the Plan, subject401(k) plan to the maximum deductible limit provided by the Internal Revenue Code of 1986, as amended. These contributions may be made in cash or in our stock. MatchingCompany contributions under the Plan vest at 20.0% per year and are 100.0% vested after an eligible employee has completed five years of service. Matching contributions for eligible employees who participated in the Hughes 401(k) Plan prioremployment. Forfeitures of unvested participant balances may be used to the conversion of the two plans, vest 100.0% after the eligible employees have completed three years of service.Forfund matching and discretionary contributions.20142017, 2016 and 2013,2015, we recognized matching contributions, net of forfeitures, of $6.8$5.1 million, $5.9 million and $6.1$5.6 million, respectively, and made discretionary contributions of shares of our Class A common stock, contributions, net of forfeitures, with a fair value of $10.2$6.7 million, $8.0 million and $10.3$7.7 million, respectively (approximately 130,000, 210,500 and 151,000 shares, respectively), to the Plan. For the year ended December 31, 2012, we recognized matching contributions, net of forfeitures, of $1.6 million and discretionary stock contributions, net of forfeitures of $4.7 million to the EchoStar 401(k) Plan. For the year ended December 31, 2012, we recognized $6.9 million of matching contributions to the Hughes 401(k) Plan.key employees. Stock awards under these plans may include both performance-based and non-performance based stock incentives. As of December 31, 2014,2017, we had outstanding under these plans, stock options to acquire 6.7approximately 5.0 million shares of our Class A common stock and 0.1 million restricted stock units.stock. Stock options granted prior to and on December 31, 20142017 were granted with exercise prices equal to or greater than the market value of our Class A common stock at the date of grant and generally with a maximum term of ten years.years for our officers and employees and five years for our non-employee directors. While historicallygenerally we have issuedissue stock awards subject to vesting, typically over three to five years, some stock awards have been granted with immediate or longer vesting and other stock awards vest also or only upon the achievement of certain company-wideperformance 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, 2014,2017, we had 4.68.1 million shares of our Class A common stock available for future grant under our stock incentive plans.In connection with the Spin-off, as permitted by DISH Network's existing stock incentive plans and consistent with the Spin-off exchange ratio, each DISH Network stock option was converted into two stock options as follows:•an adjusted DISH Network stock option for the same number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.831219.•a new EchoStar stock option for one-fifth of the number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.843907.Similarly, holders of DISH Network restricted stock units retained their DISH Network restricted stock units and received one EchoStar restricted stock unit for every five DISH Network restricted stock units that they held.Consequently, the fair value of the DISH Network stock award and the new EchoStar stock award immediately following the Spin-off was equivalent to the fair value of such stock award immediately prior to the Spin-off.As of December 31, 2014, the following stock awards were outstanding: As of December 31, 2014 EchoStar Awards DISH Network Awards Stock
Options Restricted
Stock
Units Stock
Options Restricted
Stock
Units 6,380,426 54,712 1,161,479 66,999 289,188 42,056 — — 6,669,614 96,768 1,161,479 66,999 We are responsible for fulfilling all stock awards related to EchoStar common stock and DISH Network is responsible for fulfilling all stock awards related to DISH Network common stock, regardless of whether such stock awards are held by our employees or DISH Network's employees. Notwithstanding the foregoing, our stock-based compensation expense, resulting from stock awards outstanding at the Spin-off date, is based on the stock awards held by our employees regardless of whether such stock awards were issued by EchoStar or DISH Network. Accordingly, stock-based compensation that we recognize with respect to DISH Network stock awards was included in "Additional paid-in capital" in our Consolidated Balance Sheets.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued20142017 are as follows: Options Outstanding Options Exercisable Price Range Number Outstanding as of December 31, 2017 Number Exercisable as of December 31, 2017 $0.00 - $20.00 57,359 3 $ 18.63 57,359 3 $ 18.63 $20.01 - $25.00 438,614 2 $ 20.18 438,614 2 $ 20.18 $25.01 - $30.00 10,210 2 $ 27.95 10,210 2 $ 27.95 $30.01 - $35.00 352,500 5 $ 34.22 352,500 5 $ 34.22 $35.01 - $40.00 2,019,000 5 $ 38.20 1,643,000 4 $ 38.03 $40.01 - $45.00 254,000 8 $ 43.93 33,200 8 $ 43.93 $45.01 - $50.00 807,173 7 $ 47.57 428,773 6 $ 47.68 $50.01 - $55.00 354,900 7 $ 51.98 150,000 7 $ 52.05 $55.01 - $60.00 595,000 9 $ 56.95 10,000 4 $ 56.95 $60.01 and over 62,500 8 $ 60.70 20,000 5 $ 60.70 4,951,256 6 $ 41.42 3,143,656 4 $ 36.98 Options Outstanding Options Exercisable Number
Outstanding as
of December 31,
2014 Weighted-
Average
Remaining
Contractual Term
(In Years) Weighted-
Average
Exercise
Price Number
Exercisable as
of December 31,
2014 Weighted-
Average
Remaining
Contractual Term
(In Years) Weighted-
Average
Exercise
Price 2,653 1 $ 1.98 2,653 1 $ 1.98 100,322 4 $ 14.83 100,322 4 $ 14.83 341,394 5 $ 18.96 206,794 5 $ 18.88 1,218,327 3 $ 22.63 615,227 4 $ 20.72 901,827 4 $ 28.81 736,627 3 $ 29.30 421,101 7 $ 33.98 329,001 7 $ 33.99 2,521,990 7 $ 37.88 1,019,490 7 $ 37.58 1,162,000 10 $ 47.80 3,000 9 $ 47.19 6,669,614 6 $ 34.02 3,013,114 5 $ 29.66 For the Years Ended December 31, 2014 2013 2012 Options Weighted-
Average
Exercise
Price Options Weighted-
Average
Exercise
Price Options Weighted-
Average
Exercise
Price 6,271,058 $ 30.43 7,908,300 $ 27.21 8,078,413 $ 26.30 1,161,000 $ 47.84 1,190,000 $ 38.75 771,000 $ 30.81 (697,544 ) $ 24.87 (2,494,893 ) $ 24.65 (569,073 ) $ 20.02 (64,900 ) $ 32.65 (332,349 ) $ 27.01 (372,040 ) $ 25.71 6,669,614 $ 34.02 6,271,058 $ 30.43 7,908,300 $ 27.21 623,100 $ 25.27 629,300 $ 25.27 632,100 $ 25.28 3,013,114 $ 29.66 2,712,891 $ 28.69 3,746,166 $ 25.98 For the Years Ended December 31, 2017 2016 2015 Options Options Options Total options outstanding, beginning of period 5,968,763 $ 39.30 5,893,241 $ 38.38 6,669,614 $ 34.02 Granted (1) 1,262,500 $ 57.12 732,000 $ 41.86 929,000 $ 51.59 Exercised (1,018,507 ) $ 35.84 (453,182 ) $ 28.83 (894,071 ) $ 27.78 Forfeited and canceled (1) (1,261,500 ) $ 51.63 (203,296 ) $ 45.15 (811,302 ) $ 29.45 Total options outstanding, end of period 4,951,256 $ 41.42 5,968,763 $ 39.30 5,893,241 $ 38.38 Exercisable at end of period 3,143,656 $ 36.98 3,551,063 $ 35.40 3,082,241 $ 32.61 These stock options are included in the caption "Total options outstanding, end On April 1, 2017, we granted to Mr. Ergen, our Chairman, an option to purchase 1.1 million shares of period." See discussionClass A common stock. On April 24, 2017, Mr. Ergen voluntarily forfeited a portion of the 2005 LTIP below.$7.2$3.1 million, $21.9$2.0 million and $3.1$6.1 million for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively.Table The aggregate intrinsic value of ContentsECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued For the Years Ended December 31, 2014 2013 2012 Restricted
Stock
Units Weighted-
Average
Grant Date
Fair Value Restricted
Stock
Units Weighted-
Average
Grant Date
Fair Value Restricted
Stock
Units Weighted-
Average
Grant Date
Fair Value 121,877 $ 29.93 151,683 $ 30.18 144,226 $ 29.22 — $ — — $ — 33,333 $ 34.22 (22,877 ) $ 33.08 (22,876 ) $ 33.08 (16,210 ) $ 32.61 (2,232 ) $ 25.51 (6,930 ) $ 24.88 (9,666 ) $ 25.84 96,768 $ 29.29 121,877 $ 29.93 151,683 $ 30.18 55,448 $ 27.00 57,680 $ 26.94 64,610 $ 26.72 For the Years Ended December 31, 2017 2016 2015 Total restricted stock units outstanding, beginning of period 6,667 $ 34.22 57,328 $ 42.31 96,768 $ 29.29 Granted — $ — — $ — 100,000 $ 50.00 Vested (6,667 ) $ 34.22 (50,661 ) $ 43.38 (83,992 ) $ 45.72 Forfeited and canceled — $ — — $ — (55,448 ) $ 27.01 Total restricted stock units outstanding, end of period — $ — 6,667 $ 34.22 57,328 $ 42.31 Restricted Performance Units outstanding, end of period — $ — — $ — 33,334 $ 50.00 (1)These Restricted Performance Units are included in the caption "Totaloutstanding, end of period." See discussion ofvested was $0.2 million, $2.2 million and $3.8 million for the 2005 LTIP below.2005 LTIP. During 2005, DISH Network adopted a long-term, performance-based stock incentive plan (the "2005 LTIP"). The 2005 LTIP provides stock optionsyears ended December 31, 2017, 2016 and 2015, respectively.either alone or in combination, which(“RSUs”). The RSUs vested over seven years atbased on the rateattainment of 10.0% per year duringcertain quarterly company performance criteria for the first four years,second, third and at the ratefourth quarters of 20.0% per year thereafter. As of December 31, 2014, all outstanding awards under the 2005 LTIP had satisfied applicable time-based vesting requirements and were subject only to a performance condition that a company-specific goal is achieved by March 31, 2015. It was determined that the goal can no longer be achieved under the termsIn 2015, 66,666 of the 2005 LTIP.2014, 20132017, 2016 and 20122015 and was assigned to the same expense categories as the base compensation for such employees: For the Years Ended
December 31, 2014 2013 2012 (In thousands) $ 2,403 $ 3,478 $ 2,755 12,280 14,875 11,830 $ 14,683 $ 18,353 $ 14,585 For the Years Ended December 31, 2017 2016 2015 (In thousands) Research and development expenses $ 1,010 $ 1,046 $ 1,420 Selling, general and administrative expenses 10,630 9,865 15,707 Total stock-based compensation $ 11,640 $ 10,911 $ 17,127 2014,2017, total unrecognized stock-based compensation cost, net of estimated forfeiture,forfeitures, related to our non-performance based unvested stock awards was $25.0$20.2 million. This costamount is based on an estimated future forfeiture rate of approximately 2.0% per year and will be recognized over a weighted-average period of approximately two years.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued2014, 20132017, 2016 and 20122015 was estimated at the date of the grant using a Black-Scholes option valuation model. The estimated grant-date fair values and related assumptions were as follows:For the Years Ended December 31, For the Years Ended December 31, Assumptions: 2017 2016 2015 Risk-free interest rate 1.98% - 2.05% 1.10% - 1.87% 1.38% - 1.80% Volatility factor 24.20% - 26.69% 27.22% - 27.37% 27.16% - 27.85% Expected term of options in years 5.7 - 5.8 5.7 - 5.8 5.3 - 5.4 Weighted-average grant-date fair value $15.25 - $16.49 $11.15 - $12.49 $12.25 - $15.05 Assumptions:201420132012Risk-free interest rate1.72% - 1.85%0.99% - 1.54%0.82% - 1.33%Volatility factor29.05% - 35.02%37.54% - 42.23%40.36% - 41.12%Expected term of options in years5.2 - 5.35.4 - 5.55.9 - 6.0Weighted-average grant-date fair value$13.79 - $17.21$15.59 - $17.20$10.60 - $13.70 percentage 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.2014,2017, the aggregate intrinsic value of our stock options was $123.2$91.5 million for options outstanding and $68.8$72.1 million for options exercisable as of December 31, 2014.2017.2014: Payments Due in the Year Ending December 31, Payments Due in the Year Ending December 31, Total 2015 2016 2017 2018 2019 Thereafter Total 2018 2019 2020 2021 2022 Thereafter (In thousands) (In thousands) $ 2,001,240 $ 1,234 $ 6 $ — $ — $ 1,100,000 $ 900,000 $ 3,390,000 $ — $ 990,000 $ — $ 900,000 $ — $ 1,500,000 366,447 40,678 29,724 32,697 36,232 40,114 187,002 269,701 40,631 40,740 45,096 46,450 31,985 64,799 962,957 176,044 173,085 169,924 166,410 126,962 150,532 1,235,317 248,840 212,466 175,899 136,730 98,282 363,100 1,265,685 569,895 251,177 74,479 59,802 54,727 255,605 923,910 342,065 139,312 111,662 57,691 124,411 148,769 66,117 21,731 16,757 11,614 5,126 3,776 7,113 84,944 15,423 14,385 14,089 11,547 7,588 21,912 189,452 186,118 1,667 1,667 — — — $ 4,851,898 $ 995,700 $ 472,416 $ 290,381 $ 267,570 $ 1,325,579 $ 1,500,252 $ 5,903,872 $ 646,959 $ 1,396,903 $ 346,746 $ 1,152,418 $ 262,266 $ 2,098,580 "obligations"obligations” primarily include payments pursuant to agreements for the construction of the EchoStar XIX, EchoStar XXI, EchoStar XXIII, EUTELSAT 65 West A and EchoStar 105/SES-11 satellites,XXIV satellite; payments pursuant to launch services contracts and regulatory authorizations,authorizations; executory costs for our capital lease satellites,satellites; costs under transponder agreementssatellite service agreements; and in-orbit incentives relating to certain satellites,satellites; as well as commitments for long termlong-term satellite operating leasesECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedtransponder capacitysatellite service arrangements. We incurred satellite-related expenses of $178.8$139.9 million, $181.2$144.2 million and $161.6$212.5 million for the years ended December 31, 2014, 20132017, 2016 and 2012,2015, respectively.Our "Purchase and other obligations" primarily consists of binding purchase orders for digital set-top boxes and related components. Our purchase obligations can fluctuate significantly from period to period due to, among other things, management's control of inventory levels, and can materially impact our future operating asset and liability balances, and our future working capital requirements.2014, 20132017, 2016 and 2012,2015, we recorded $21.3$29.8 million, $22.6$21.1 million and $23.4$17.9 million, respectively, of operating lease expense relating to the leases of office space, equipment, and other facilities.components within our DBS products and services. We cannot be certain that these persons do not own the rights they claim, that these rights are not valid or that our products and services do not infringe on these rights. Further, we cannot be certain that we would be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be able to redesign our products and services to avoid infringement.Agreementhave assumed certain liabilities that relate to our business, including certain designated liabilities for acts or omissions thatNetwork'sNetwork’s acts or omissions following the Spin-off.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedand many of these proceedingsand/or seek an indeterminate amount of damages. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made. We record an accrual for litigation and other loss contingencies when we determine that a loss is probable and the amount of the loss can be reasonably estimated. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made. There can be no assurance that legal proceedings against us will be resolved in amounts that will not differ from the amounts of our recorded accruals. Legal fees and other costs of defending litigation are charged to expense as incurred.sought;sought or specified; (iii) damages are unsupported, indeterminate and/or exaggerated in management'smanagement’s opinion; (iv) there is uncertainty as to the outcome of pending trials, appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties are involved (as with many patent-related cases). ForExcept as described below, for these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, operating results or cash flows, though there is no assurance that the resolution and outcomes couldof 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.California Institute of TechnologyOn October 1, 2013, the California Institute of Technology ("Caltech") filed suit against two of our indirect subsidiaries, Hughes Communications, Inc. and Hughes Network Systems, LLC, as well as against DISH Network, DISH Network L.L.C., and dishNET Satellite Broadband L.L.C., in the United States District Court for the Central District of California alleging infringement of United States Patent Nos. 7,116,710; 7,421,032; 7,916,781; and 8,284,833, each of which is entitled "Serial Concatenation of Interleaved Convolutional Codes forming Turbo-Like Codes." Caltech appears to assert that encoding data as specified by the DVB-S2 standard infringes each of the asserted patents. In the operative Amended Complaint, served on March 6, 2014, Caltech claims that the HopperTM set-top box that we design and sell to DISH Network, as well as certain of our Hughes segment's satellite broadband products and services, infringe the asserted patents by implementing the DVB-S2 standard. On September 26, 2014, Caltech requested leave to amend its Amended Complaint to add us and our subsidiary, EchoStar Technologies L.L.C. as defendants, as well as to allege that a number of additional set-top boxes infringe the asserted patents. On November 7, 2014, the Court rejected that request. Additionally, on November 4, 2014, the court ruled that the patent claims at issue in the suit are directed to patentable subject matter. On February 17, 2015, Caltech filed a second complaint against the same defendants as in the first litigation, in the same District. The second complaint alleges that Hughes' Gen4 HT1000 and HT1100 products infringe the same patents asserted in the first case. Trial in the first case is currently scheduled to commence on April 20, 2015.these cases.the proceedings against us. In the event that a court or jury ultimately determines that we infringe the asserted patents,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 an injunctionother equitable or injunctive relief that could require us to materially modify our business operations or certain featuresproducts or services that we currently offer to our consumers. We cannot predict with any degree of certainty the outcome of the suits or determine the extent of any potential liability or damages.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedClearPlay, Inc.On March 13, 2014, ClearPlay, Inc. ("ClearPlay") filed a complaint against us and our wholly-owned subsidiary, EchoStar Technologies L.L.C., as well as against DISH Network and DISH Network L.L.C. in the United States District Court for the District of Utah. The complaint alleges infringement of United States Patent Nos. 6,898,799, entitled "Multimedia Content Navigation and Playback;" 7,526,784, entitled "Delivery of Navigation Data for Playback of Audio and Video Content;" 7,543,318, entitled "Delivery of Navigation Data for Playback of Audio and Video Content;" 7,577,970, entitled "Multimedia Content Navigation and Playback;" and 8,117,282, entitled "Media Player Configured to Receive Playback Filters From Alternative Storage Mediums." ClearPlay alleges that the AutoHop™ feature of the HopperTM set-top box infringes the asserted patents. On February 11, 2015, the case was stayed pending various third-party challenges before the U.S. Patent and Trademark regarding the validity of certain patents asserted in the action.We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.CRFD Research, Inc. (a subsidiary of Marathon Patent Group, Inc.)On January 17, 2014, CRFD Research, Inc. ("CRFD") filed a complaint against us and our wholly-owned subsidiary, EchoStar Technologies L.L.C., as well as against DISH Network, DISH DBS and DISH Network L.L.C., in United States District Court for the District of Delaware, alleging infringement of United States Patent No. 7,191,233 (the "233 patent"). The 233 patent is entitled "System for Automated, Mid-Session, User-Directed, Device-to-Device Session Transfer System," and relates to transferring an ongoing software session from one device to another. CRFD alleges that certain of our set-top boxes infringe the 233 patent. On the same day, CRFD filed patent infringement complaints against AT&T Inc.; Comcast Corp.; DirecTV; Time Warner Cable Inc.; Cox Communications, Inc.; Level 3 Communications, Inc.; Akamai Technologies, Inc.; Cablevision Systems Corp. and Limelight Networks, Inc. On January 26, 2015, we and DISH Network filed a petition before the United States Patent and Trademark challenging the validity of the 233 patent. CRFD is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages."Elbit"“Elbit”) filed a complaint against our indirect subsidiary Hughes Network Systems, LLC,L.L.C. (“HNS”), as well as against Black Elk Energy Offshore Operations, LLC, Bluetide Communications, Inc. and Helm Hotels Group, in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 6,240,073 (the "073 patent"“073 patent”) and 7,245,874 ("(“874 patent"patent”). The 073 patent is entitled "Reverse“Reverse Link for a Satellite Communication Network"Network” and the 874 patent isECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued"Infrastructure“Infrastructure for Telephony Network."” Elbit alleges that the 073 patent is infringed by broadband satellite systems that practice the Internet Protocol Over Satellite ("IPoS") standard. Elbit alleges that the 874 patent is infringed by the manufacture and sale of broadband satellite systems that provide cellular backhaul service via connections to E1 or T1 interfaces at cellular backhaul base stations.We intend On April 2, 2015, Elbit filed an amended complaint removing Helm Hotels Group as a defendant, but making similar allegations against a new defendant, Country Home Investments, Inc. On November 3 and 4, 2015, and January 22, 2016, the defendants filed petitions before the United States Patent and Trademark Office challenging the validity of the patents in suit, which the Patent and Trademark Office subsequently declined to institute. On April 13, 2016, the defendants answered Elbit’s complaint. At Elbit’s request, on June 26, 2017, the court dismissed Elbit’s claims of infringement against all parties other than HNS. Trial commenced on July 31, 2017. On August 7, 2017, the jury returned a verdict that the 073 patent was valid and infringed, and awarded Elbit approximately $21.1 million. As a result of interest, costs and unit sales through the 073 patent’s expiration in November 2017, we estimate the jury verdict could result in a judgment of approximately $27 million if not overturned or modified by post-trial motions or appeals. The jury also found that such infringement of the 073 patent was notdefend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers.pursue its post-trial rights, including appeals. We cannot predict with any degree of certainty the outcome of any post-trial motions or appeals. For the suit or determinetwelve months ended December 31, 2017, we have recorded an accrual of $2.5 million with respect to this liability. Any eventual payments made with respect to the extentultimate outcome of any potential liability or damages.The Hopper LitigationMay 24, 2012, DISH Network L.L.C.,July 10, 2015, Messrs. Michael Heskiaoff and Marc Langenohl, purportedly on behalf of themselves and all others similarly situated, filed suit in the United States District Court for the Southern District of New York against American Broadcasting Companies,our now former subsidiary Sling Media, Inc. ("ABC"), CBS Corporation ("CBS"), Fox Entertainment Group, Inc., Fox Television Holdings, Inc., Fox Cable Network Services, L.L.C. (collectively, "Fox") and NBCUniversal Media, LLC ("NBC"). The lawsuit seeks a declaratory judgment that DISH Network L.L.C is not infringing any defendant's copyright, or breaching any defendant's retransmission consent agreement, by virtue of the PrimeTime Anytime™ and AutoHop™ features of the Hopper™ set-top boxes we design and sell to DISH Network. A consumer can use the PrimeTime Anytime feature at his or her option, to record certain primetime programs airing on ABC, CBS, Fox, and/or NBC up to every night, and to store those recordings for up to eight days. A consumer can use the AutoHop feature at his or her option, to watch certain recordings the subscriber made with our PrimeTime Anytime feature, commercial-free, if played back at a certain point after the show's original airing.Later on May 24, 2012, (i) Fox Broadcasting Company, Twentieth Century Fox Film Corp. and Fox Television Holdings, Inc. filed a lawsuit against DISH Network and DISH Network L.L.C. (collectively, "DISH") in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature, the AutoHop feature, as well as DISH's use of Slingbox placeshifting functionality infringe their copyrights and breach their retransmission consent agreements, (ii) NBC Studios LLC, Universal Network Television, LLC, Open 4 Business Productions LLC and NBCUniversal Media, LLC filed a lawsuit against DISH in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights, and (iii) CBS Broadcasting Inc., CBS Studios Inc. and Survivor Productions LLC filed a lawsuit against DISH in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights.As a result of certain parties' competing counterclaims and venue-related motions brought in both the New York and California actions, and certain networks filing various amended complaints, the claims have proceeded in the following venues: (1) the copyright and contract claims regarding the ABC and CBS parties in New York; and (2) the copyright and contract claims regarding the Fox parties and NBC parties in California.California Actions. On August 17, 2012, the NBC plaintiffs filed a first amended complaint in their California action adding us and our wholly-owned subsidiary EchoStar Technologies L.L.C. to the NBC litigation, alleging various claims of copyright infringement. We and our subsidiary answered on September 18, 2012.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedOn September 21, 2012, the United States District Court for the Central District of California heard the Fox plaintiffs' motion for a preliminary injunction to enjoin the Hopper set-top box's PrimeTime Anytime and AutoHop features and, on November 7, 2012, entered an order denying the motion. The Fox plaintiffs appealed and on July 24, 2013, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs' motion for a preliminary injunction as to the PrimeTime Anytime and AutoHop features. On August 7, 2013, the Fox plaintiffs filed a petition for rehearing and rehearing en banc, which was denied on January 24, 2014. The United States Supreme Court granted the Fox plaintiffs an extension until May 23, 2014 to file a petition for writ of certiorari, but they did not file. As a result, the stay of the NBC plaintiffs' action expired. On August 6, 2014, at the request of the parties, the Central District of California granted a further stay of all proceedings in the action brought by the NBC plaintiffs, pending a final judgment on all claims in the Fox plaintiffs' action. No trial date is currently set on the NBC claims.In addition, on February 21, 2013, the Fox plaintiffs filed a second motion for preliminary injunction against: (i) DISH Network, seeking to enjoin the Hopper Transfers™ feature in the second-generation Hopper set-top box, alleging breach of a retransmission consent agreement; and (ii) EchoStar Technologies L.L.C. and DISH Network, seeking to enjoin the Slingbox placeshifting functionality in the second-generation Hopper set-top box, alleging copyright infringement by both defendants, and breach of the earlier-mentioned retransmission consent agreement by DISH Network. The Fox plaintiffs' motion was denied on September 23, 2013. The Fox plaintiffs appealed, and on July 14, 2014, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs' motion. On October 17, 2014, the California court heard oral argument on the Fox plaintiffs' and our respective motions for summary judgment. On January 12, 2015, the Court entered an order ruling on the parties' respective summary judgment motions, holding that: (a) the Slingbox placeshifting functionality and the PrimeTime Anytime, AutoHop and Hopper Transfers features do not violate copyright law; (b) certain quality assurance copies (which were discontinued in November 2012) did violate copyright law; and (c) the Slingbox placeshifting functionality, the Hopper Transfers feature and certain quality assurance copies breach DISH's retransmission consent agreement with Fox. The only issue remaining for trial is to the amount of damages, if any, on the claims upon which the Fox plaintiffs prevailed, but the Court ruled that the Fox plaintiffs could not pursue disgorgement as a remedy. At the parties' joint request, the Court vacated the February 24, 2015 trial date, and has stayed the case until October 1, 2015 and no trial date has been set.New York Actions. On October 9, 2012, the ABC plaintiffs filed copyright counterclaims in the New York action against EchoStar Technologies, L.L.C., with the CBS plaintiffs filing similar copyright counterclaims in the New York action against EchoStar Technologies L.L.C. on October 12, 2012. Additionally, the CBS plaintiffs filed a counterclaim alleging that DISH Network fraudulently concealed the AutoHop feature when negotiating the renewal of its CBS retransmission consent agreement.On November 23, 2012, the ABC plaintiffs filed a motion for a preliminary injunction to enjoin the Hopper set-top box's PrimeTime Anytime and AutoHop features. On September 18, 2013, the New York court denied that motion. The ABC plaintiffs appealed, and oral argument on the appeal was heard on February 20, 2014 before the United States Court of Appeals for the Second Circuit. Pursuant to a settlement between us and the ABC parties, on March 4, 2014, the ABC parties withdrew their appeal to the United States Court of Appeals for the Second Circuit, and, on March 6, 2014, we and the ABC parties dismissed without prejudice all of our respective claims pending in the United States District Court for the Southern District of New York. The CBS claims incomplaint alleges that Sling Media Inc.’s display of advertising to its customers violates a number of state statutes dealing with consumer deception. On September 25, 2015, the New York action were set to be trial-readyplaintiffs filed an amended complaint, and Mr. Rafael Mann, purportedly on May 29, 2015. However, on December 6, 2014 the parties to theECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedCBS case reached a settlement agreementhimself and all claims pending in New York Courtothers similarly situated, filed an additional complaint alleging similar causes of action. On November 16, 2015, the cases were dismissed with prejudice on December 10, 2014.We intend to vigorously prosecute and defend our position in these cases. In the event that a court ultimately determines that we infringe the asserted copyrights, we may be subject to substantial damages, and/or an injunction that could require us to materially modify certain features that we currently offer to DISH Network. An adverse decision against DISH Network could decrease the number of Sling enabled set-top boxes we sell to DISH Network, which could have an adverse impact on the business operations of our EchoStar Technologies segment. In addition, to the extent that DISH Network experiences fewer gross new subscriber additions, sales of our digital set-top boxes and related components to DISH Network may further decline, which in turn could have a material adverse effect on our financial position and results of operations. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages.LightSquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy)6, 2013, Harbinger Capital Partners LLC and other affiliates12, 2016, the Court dismissed the consolidated case due to plaintiffs’ failure to state a claim. On September 12, 2016, the plaintiffs moved the Court for leave to file an amended complaint, which the Court denied on March 22, 2017. On April 17, 2017, the plaintiffs filed a notice of Harbinger (collectively, "Harbinger"), a shareholder of LightSquared Inc., filed an adversary proceeding against us, DISH Network, L-Band Acquisition, LLC ("LBAC"), Charles W. Ergen (our Chairman), SP Special Opportunities, LLC ("SPSO") (an entity controlled by Mr. Ergen), and certain other parties, in the LightSquared bankruptcy cases pending inappeal to the United States BankruptcyCourt of Appeals for the Second Circuit. On November 22, 2017, the United States Court of Appeals for the Second Circuit affirmed the ruling of the United States District Court for the Southern District of New York, (the "Bankruptcy Court"), which cases are jointly administered underand the caption In re LightSquared Inc., et. al., Case No. 12 12080 (SCC). Harbinger alleged, among other things, claims based on fraud, unfair competition, civil conspiracy and tortious interference with prospective economic advantage related to certain purchases of LightSquared secured debt by SPSO. Subsequently, LightSquared intervened to join in certain claims alleged against certain defendants other than us, DISH Network and LBAC.October 29, 2013, the Bankruptcy Court dismissed all of the claims against us in Harbinger's complaint in their entirety, but granted leave for LightSquared to file its own complaint in intervention. On November 15, 2013, LightSquared filed its complaint, which included various claims against us, DISH Network, Mr. Ergen and SPSO. On December 2, 2013, Harbinger filed an amended complaint, asserting various claims against SPSO. On December 12, 2013, the Bankruptcy Court dismissed several of the claims asserted by LightSquared and Harbinger. The surviving claims included, among others, LightSquared's claims against SPSO for declaratory relief, breach of contract and statutory disallowance; LightSquared's tortious interference claim against us, DISH Network and Mr. Ergen; and Harbinger's claim against SPSO for statutory disallowance. These claims proceeded to a non-jury trial on January 9, 2014, which concluded on January 17, 2014. The parties submitted post-trial briefs and a hearing for closing arguments occurred on March 17, 2014. In its Post-Trial Findings of Fact and Conclusions of Law entered on June 10, 2014, the Bankruptcy Court rejected all claims against us and DISH Network, and it rejected some but not all claims against the other defendants.We intend to vigorously defend this proceeding and cannot predict with any degree of certainty the outcome of this proceeding or determine the extent of any potential liability or damages.Nazomi Communications, Inc.On February 10, 2010, Nazomi Communications, Inc. ("Nazomi"May 8, 2015, Realtime Data LLC (“Realtime”) filed suit against Sling Media, Inc. ("Sling Media"),EchoStar Corporation and our indirect wholly owned subsidiary as well as Nokia Corp; Nokia Inc.; Microsoft Corp.; Amazon.com Inc.; Western Digital Corp.; Western Digital Technologies, Inc.; Garmin Ltd.;ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedGarmin Corp.; Garmin International, Inc.; Garmin USA, Inc.; Vizio Inc. and iOmega CorpHNS in the United States District Court for the CentralEastern District of CaliforniaTexas alleging infringement of United States Patent Nos. 7,378,992 (the “992 patent”), entitled “Content Independent Data Compression Method and System”; 7,415,530 (the “530 patent”), entitled “System and Methods for Accelerated Data Storage and Retrieval”; and 8,643,513 (the “513 patent”), entitled “Data Compression System and Methods.” On September 14, 2015, Realtime amended its complaint, additionally alleging infringement of United States Patent No. 7,080,3629,116,908 (the "362 patent"“908 patent”), entitled “System and Methods for Accelerated Data Storage and Retrieval.” Realtime generally alleges that the asserted patents are infringed by certain HNS data compression products and services. Over April 29, 2016 and May 5, 2016, the defendants filed petitions before the United States Patent No. 7,225,436 (the "436 patent"and Trademark Office (“USPTO”). challenging the validity of the asserted patents. The 362USPTO instituted proceedings on each of those petitions. The USPTO invalidated the asserted claims of the 513 patent, but Realtime is still asserting this patent against us and may appeal this ruling. Realtime is no longer asserting the 436992 patent relate to Java hardware acceleration.against us and additionally, the USPTO invalidated the claims of the 992 patent that had been asserted against us. The USPTO is still reviewing the 530 patent; however, two of the four claims from that patent asserted against us were invalidated in a separate litigation between Realtime and a third party, which Realtime may appeal. The USPTO did not invalidate the asserted claims of the 908 patent, but a third party has challenged these claims in a separate proceeding before the USPTO. On AugustFebruary 14, 2012,2017, Realtime filed a second suit against EchoStar Corporation and our subsidiary HNS in the same District Court, alleging infringement of four additional United States District CourtPatents, Nos. 7,358,867 (the “867 patent”), entitled “Content Independent Data Compression Method and System;” 8,502,707 (the “707 patent”), entitled “Data Compression Systems and Methods;” 8,717,204 (the “204 patent”), entitled “Methods for the Northern DistrictEncoding and Decoding Data;” and 9,054,728 (the “728 patent”), entitled “Data Compression System and Methods.” On June 6, 2017, Realtime filed an amended complaint, adding claims of California, to which the case had earlier been transferred, grantedinfringement against EchoStar Technologies, L.L.C., a wholly-owned subsidiary of DISH, DISH, DISH Network L.L.C., Sling Media's motion for summary judgment of non-infringement. On January 10, 2014, the United States Court of Appeals for the Federal Circuit affirmed the District Court's grant of summary judgment,TV L.L.C., Sling Media L.L.C., and the matter is now concluded.Network Acceleration Technologies, LLCOn November 30, 2012, Network Acceleration Technologies, LLC ("NAT") filed suit against Hughes Network Systems, LLC, our subsidiary, in the United States District Court for the District of DelawareArris Group, Inc., as well as additionally alleging infringement of United States Patent No. 6,091,710,8,553,759 (the “759 patent”), entitled “Bandwidth Sensitive Data Compression and Decompression.” The cases were consolidated and no trial date has been set. On July 20, 2017, the claims against the newly added parties, with the exception of EchoStar Technologies, L.L.C., were severed into a separate case. On September 1, 2017, EchoStar Technologies, L.L.C. was dismissed from the case. On October 10, 2017, Realtime informed us that it is not pursuing the 759 patent against us. In response to petitions filed by third parties, the USPTO has instituted proceedings regarding the validity of all but one asserted claim of the 867 patent, all but one asserted claim of the 728 patent, and all asserted claims of the 204 patent. Additional third party petitions challenging the validity of all claims asserted in the 204 and 728 patents are awaiting institution decisions. On February 13, 2018 we filed petitions before the USPTO challenging the validity of all claims asserted against us from the 707 and 204 patents, as well as the one asserted claim of the 728 patent for which the USPTO has not yet instituted a proceeding. These petitions are also awaiting institution decisions. Trial is entitled "System and Methodscheduled for Preventing Data Slow Down Over Asymmetric Data Transmission Links." NAT re-filed its case on July 19, 2013. NATJanuary 21, 2019. Realtime is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On May 22, 2014, NAT filed a stipulation dismissing the litigation without prejudice and the matter is now concluded.Personalized Media Communications, Inc.During 2008, Personalized Media Communications, Inc. ("PMC") filed suit against EchoStar Corporation, DISH Network and Motorola Inc. in the United States District Court for the Eastern District of Texas alleging infringement of United States Patent Nos. 5,109,414; 4,965,825; 5,233,654; 5,335,277; and 5,887,243, which relate to satellite signal processing. PMC is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Subsequently, Motorola Inc. settled with PMC, leaving DISH Network and us as defendants. On July 18, 2012, pursuant to a Court order, PMC filed a Second Amended Complaint that added Rovi Guides, Inc. (f/k/a/ Gemstar-TV Guide International, Inc.) and TVG-PMC, Inc. (collectively, "Gemstar") as a party, and added a new claim against all defendants seeking a declaratory judgment as to the scope of Gemstar's license to the patents in suit, under which DISH Network and we are sublicensees. On August��12, 2014, in response to the parties' respective summary judgment motions related to the Gemstar license issues, the Court ruled in favor of PMC and dismissed all claims by or against Gemstar and entered partial final judgment in PMC's favor as to those claims. On September 16, 2014, we and DISH Network filed a notice of appeal of that partial final judgment, which is pending. On November 5, 2014, PMC supplemented its expert report on damages, dropping a higher value damages theory and disclosing that it seeks damages ranging from $167 million to $447 million as of September 30, 2014, excluding pre-judgment interest and possible trebling under Federal law. PMC also has informed us that it will not pursue at trial its claim for infringement of United States Patent No. 5,109,414. On November 17, 2014 we filed a motion to continue the trial, and the Court subsequently approved a joint request to move the trial date from January 12, 2015 to May 18, 2015.We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause us to materially modify certain features that we currently offer to consumers. We are being indemnified by DISH Network for any potential liability or damages resulting from this suit relating to the period prior to the effective date of the Spin-off. WeSTATEMENTS—STATEMENTS - Continuedcannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages."Jacobi Litigation"“Jacobi Litigation”) against Charles W. Ergen, Michael T. Dugan, R. Stanton Dodge, Tom A. Ortolf, C. Michael Schroeder, Joseph P. Clayton, David K. Moskowitz, and EchoStar Corporation in the United States District Court for the District of Nevada. The complaint alleges that a March 2011 attempted grant of 1.5 million stock options to Charles Ergen breached defendants'defendants’ fiduciary duties, resulted in unjust enrichment, and constituted a waste of corporate assets.Employees'Employees’ Retirement Fund, derivatively on behalf of EchoStar Corporation, filed a suit (the "Chester“Chester County Litigation"Litigation”) against Charles W. Ergen, Michael T. Dugan, R. Stanton Dodge, Tom A. Ortolf, C. Michael Schroeder, Anthony M. Federico, Pradman P. Kaul, Joseph P. Clayton, and EchoStar Corporation in the United States District Court for the District of Colorado. The complaint similarly alleges that the March 2011 attempted grant of 1.5 million stock options to Charles Ergen breached defendants'defendants’ fiduciary duties, resulted in unjust enrichment, and constituted a waste of corporate assets.Oral argument on a motion to dismissOn March 30, 2015, the Court dismissed the Jacobi Litigation, was held February 21, 2014.with leave for Jacobi to amend his complaint. On April 11, 2014,20, 2015, Jacobi filed an amended complaint. On March 17, 2016, the Court dismissed the amended complaint. On July 31, 2017, a motion from the Chester County litigationEmployee’s Retirement Fund seeking attorneys’ fees and expenses was stayed pending resolution ofdenied. Jacobi appealed the motionamended complaint’s dismissal to dismiss.Of the attempted grant of 1.5 million options to Mr. Ergen in 2011, only 800,000 were validly granted and remain outstanding. We intend to vigorously defend these cases. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability.Technology Development and Licensing, LLCOn January 22, 2009, Technology Development and Licensing, LLC ("TDL") filed suit against us and DISH Network in the United States Court of Appeals for the Ninth Circuit. On October 9, 2017, Jacobi agreed to dismiss its appeal, with each party bearing its own costs. Accordingly, on October 10, 2017 the Court of Appeals granted a stipulated motion to voluntarily dismiss Jacobi’s appeal, and on October 17, 2017, the District Court for the Northern District of Illinois alleging infringement of United States Patent No. Re. 35,952, which relates to certain favorite channel features. TDL is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. The case has been stayed since July 2009, pending two reexamination petitions before the United States Patent and Trademark Office.We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause us to materially modify certain features that we currently offer to consumers. We are being indemnified by DISH Network for any potential liability or damages resulting from this suit relating to the period prior to the effective date of the Spin-off. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.TQ Beta LLCOn June 30, 2014, TQ Beta LLC ("TQ Beta") filed suit against DISH Network, DISH DBS Corporation, DISH Network L.L.C., as well as us and our subsidiaries, EchoStar Technologies, L.L.C, Hughes Satellite Systems Corporation, and Sling Media, Inc., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 7,203,456 ("theECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued'456 patent"), which is entitled "Method and Apparatus for Time and Space Domain Shifting of Broadcast Signals." TQ Beta alleges that the Hopper, Hopper with Sling, ViP 722 and ViP 722k DVR devices, as well as the DISH Anywhere service and DISH Anywhere mobile application, infringe the '456 patent, but has not specified the amount of damages that it is seeking in its suit. TQ Beta is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Trial is set for January 12, 2016.We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.TQP Development, LLCOn October 11, 2012, TQP Development, LLC ("TQP") filed suit against our indirect wholly owned subsidiary, Sling Media, in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent No. 5,412,730, which is entitled "Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys." On November 14, 2012, TQP filed suit in the same venue against Hughes Network Systems, LLC, our indirectly subsidiary, alleging infringement of the same patent. TQP is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On July 8, 2013,entered the Court granted a joint motion to dismiss the claims against Sling Media without prejudice. On February 24, 2014, the Court granted a joint motion to dismiss the claims against Hughes Network Systems, LLC, without prejudiceof Appeal’s mandate. The Chester County and the matter isJacobi matters are now concluded.liquidity,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.17.17. Segment Reporting("CODM"(“CODM”), who for EchoStar is the Company'sCompany’s Chief Executive Officer. Under this definition,Prior to March 2017, we operateoperated in three primary business segments.•EchoStar Technologies—which designs, develops and distributes digital set-top boxes and related products and technology, primarily for satellite TV service providers, telecommunication companies and international cable companies. Oursegments, Hughes, EchoStar Technologies segment also provides digital broadcast operations, including satellite uplinking/downlinking, transmission services, signal processing, conditional access management, and other services primarily to DISH Network. In addition,ESS. Following consummation of the Share Exchange described in Notes 1, 3 and 19 of these consolidated financial statements, we provide our Slingboxes directly to consumers via retail outlets and online, as well as tono longer operate the payTV operator market via our partnership with Arris.•Hughes—which provides satellite broadband internet access to North American consumers and broadband network services and equipment to domestic and international enterprise markets.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedThe Hughes segment also provides managed services to large enterprises and solutions to customers for mobile satellite systems.•Satellite Services—which uses certain of our owned and leased in-orbit satellites and related licenses to provide satellite services on a full-time and occasional-use basis primarily to DISH Network, Dish Mexico, U.S. government service providers, state agencies, internet service providers, broadcast news organizations, programmers, and private enterprise customers.operating results do notEBITDA disclosures have been restated to reflect this change.real estatevarious corporate departments (primarily Executive, Strategic Development, Human Resources, IT, Finance, Real Estate and Legal) as well as other activities that have not been assigned to our operating segments, including costs incurred in certain satellite development programs and other business development activities, expenses of various corporate departments, and our centralized treasury operations, includingand gains (losses) from certain of our investments. Costs and income from our investment portfolioassociated with these departments and interest expense on our debt. These activities are accounted for in the "All Other“Corporate and Eliminations"Other” column in the table below or in the reconciliation of EBITDA below. The Hughes Retail Group is included in our Hughes segment and our CODM reviews HRG financial information only to the extent such information is included in our periodic filings with the SEC. Therefore, we do not consider HRG to be a separate operating segment.For the years ended December 31, 2014, 2013 and 2012, transactions between segments were not significant. EchoStar
Technologies Hughes EchoStar
Satellite
Services All
Other and
Eliminations Consolidated
Total (In thousands) $ 1,609,280 $ 1,325,887 $ 481,579 $ 28,832 $ 3,445,578 $ 540 $ 1,831 $ 2,876 $ (5,247 ) $ — $ 1,609,820 $ 1,327,718 $ 484,455 $ 23,585 $ 3,445,578 $ 152,439 $ 356,871 $ 419,442 $ (26,171 ) $ 902,581 $ 48,616 $ 218,607 $ 28,734 $ 384,069 $ 680,026
$ 1,715,579 $ 1,215,783 $ 326,828 $ 24,262 $ 3,282,452 $ 412 $ 2,343 $ 3,349 $ (6,104 ) $ — $ 1,715,991 $ 1,218,126 $ 330,177 $ 18,158 $ 3,282,452 $ 136,057 $ 281,513 $ 235,993 $ (3,466 ) $ 650,097 $ 56,935 $ 186,561 $ 12,700 $ 135,677 $ 391,873
$ 1,658,203 $ 1,156,590 $ 275,280 $ 31,631 $ 3,121,704 $ 1,826 $ 2,124 $ 2,705 $ (6,655 ) $ — $ 1,660,029 $ 1,158,714 $ 277,985 $ 24,976 $ 3,121,704 $ 110,933 $ 265,756 $ 212,549 $ 204,660 $ 793,898 $ 69,809 $ 292,222 $ 118,998 $ 31,976 $ 513,005 (1)Capital expenditures consist of purchases of property and equipment reported in our Consolidated Statements of Cash Flows and do not include satellites transferred in the Satellite and Tracking Stock Transaction or other noncash capital expenditures. Hughes Corporate and Other (In thousands) For The Year Ended December 31, 2017 External revenue $ 1,476,131 $ 390,831 $ 18,546 $ 1,885,508 Intersegment revenue $ 1,787 $ 1,413 $ (3,200 ) $ — Total revenue $ 1,477,918 $ 392,244 $ 15,346 $ 1,885,508 EBITDA $ 475,222 $ 315,285 $ 4,070 $ 794,577 Capital expenditures (1) $ 376,502 $ 20,725 $ 169,157 $ 566,384 For The Year Ended December 31, 2016 External revenue $ 1,389,152 $ 406,970 $ 14,344 $ 1,810,466 Intersegment revenue $ 3,209 $ 690 $ (3,899 ) $ — Total revenue $ 1,392,361 $ 407,660 $ 10,445 $ 1,810,466 EBITDA $ 477,165 $ 341,516 $ (67,676 ) $ 751,005 Capital expenditures (1) $ 322,362 $ 58,925 $ 247,223 $ 628,510 For The Year Ended December 31, 2015 External revenue $ 1,344,945 $ 489,842 $ 14,070 $ 1,848,857 Intersegment revenue $ 2,395 $ 749 $ (3,144 ) $ — Total revenue $ 1,347,340 $ 490,591 $ 10,926 $ 1,848,857 EBITDA $ 444,342 $ 414,727 $ (143,330 ) $ 715,739 Capital expenditures (1) $ 285,499 $ 101,215 $ 266,213 $ 652,927 (1) Capital expenditures are net of refunds and other receipts related to capital expenditures and exclude capital expenditures from discontinued operations of $12.5 million, $69.7 million and $50.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued"Income (loss)“Income from continuing operations before income taxes"taxes” in our Consolidated Statementsconsolidated statements of Operations and Comprehensive Income (Loss): For the Years Ended December 31, 2017 2016 2015 (In thousands) EBITDA $ 794,577 $ 751,005 $ 715,739 Interest income and expense, net (172,621 ) (102,237 ) (111,607 ) Depreciation and amortization (522,190 ) (432,904 ) (460,819 ) Net income (loss) attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests 928 762 (3,986 ) Income from continuing operations before income taxes $ 100,694 $ 216,626 $ 139,327 For the Years Ended December 31, 2014 2013 2012 (In thousands) $ 902,581 $ 650,097 $ 793,898 (162,247 ) (177,898 ) (141,853 ) (556,676 ) (507,111 ) (457,326 ) (5,325 ) 876 (35 ) $ 178,333 $ (34,036 ) $ 194,684 As of December 31, 2014 2013 (In thousands) $ 4,313,649 $ 3,745,403 585 947 155,229 150,139 $ 4,469,463 $ 3,896,489 As of December 31, Long-lived assets: 2017 2016 (In thousands) North America: United States $ 4,193,432 $ 4,214,575 Canada and Mexico 28,360 16,630 All other 343,743 296,530 Total long-lived assets $ 4,565,535 $ 4,527,735 For the Years Ended December 31, 2014 2013 2012 (In thousands) $ 2,958,539 $ 2,819,968 $ 2,403,976 220,122 215,787 360,590 266,917 246,697 357,138 $ 3,445,578 $ 3,282,452 $ 3,121,704 For the Years Ended December 31, Revenue: 2017 2016 2015 (In thousands) North America: United States $ 1,522,421 $ 1,480,339 $ 1,528,352 Canada and Mexico 89,928 86,236 67,648 All other 273,159 243,891 252,857 Total revenue $ 1,885,508 $ 1,810,466 $ 1,848,857 ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued2014, 20132017, 2016 and 2012,2015, our revenue included sales to one major customer. The following table summarizes sales to this customer and its percentage of total revenue. For the Years Ended December 31, 2017 2016 2015 (In thousands) Total revenue: DISH Network: Hughes segment $ 82,625 $ 107,300 $ 105,181 EchoStar Satellite Services segment 344,841 349,549 423,465 Corporate and Other 18,522 15,433 14,268 Total DISH Network 445,988 472,282 542,914 All other 1,439,520 1,338,184 1,305,943 Total revenue $ 1,885,508 $ 1,810,466 $ 1,848,857 Percentage of total revenue: DISH Network 23.7 % 26.1 % 29.4 % All other 76.3 % 73.9 % 70.6 % For the Years Ended December 31, 2014 2013 2012 (In thousands) $ 1,425,872 $ 1,546,051 $ 1,277,038 112,692 113,869 34,017 407,236 247,174 201,300 28,791 24,541 31,409 1,974,591 1,931,635 1,543,764 1,470,987 1,350,817 1,577,940 $ 3,445,578 $ 3,282,452 $ 3,121,704 57.3 % 58.8 % 49.5 % 42.7 % 41.2 % 50.5 % For the Three Months Ended March 31 June 30 September 30 December 31 (In thousands, except per share amounts) $ 826,023 $ 879,828 $ 895,840 $ 843,887 $ 59,820 $ 92,470 $ 92,277 $ 83,523 $ 12,653 $ 33,794 $ 64,055 $ 54,766 $ 0.14 $ 0.37 $ 0.70 $ 0.60 $ 0.14 $ 0.36 $ 0.69 $ 0.59
$ 795,454 $ 830,003 $ 848,908 $ 808,087 $ 23,936 $ 6,088 $ 40,904 $ 32,659 $ 3,458 $ (9,759 ) $ 4,320 $ 4,506 $ 0.04 $ (0.11 ) $ 0.05 $ 0.05 $ 0.04 $ (0.11 ) $ 0.05 $ 0.05 For the Three Months Ended March 31 June 30 September 30 December 31 (2) (In thousands, except per share amounts) Year Ended December 31, 2017 Total revenue (1) $ 433,151 $ 465,076 $ 481,233 $ 506,048 Operating income (1) $ 51,651 $ 45,890 $ 56,414 $ 42,352 Net income $ 37,352 $ 7,122 $ 35,201 $ 313,814 Net income attributable to EchoStar common stock $ 38,924 $ 6,940 $ 34,669 $ 313,237 Basic earnings per share $ 0.41 $ 0.07 $ 0.36 $ 3.29 Diluted earnings per share $ 0.41 $ 0.07 $ 0.36 $ 3.23 Year Ended December 31, 2016 Total revenue (1) $ 431,974 $ 442,658 $ 460,046 $ 475,788 Operating income (1) $ 65,730 $ 75,431 $ 76,602 $ 78,400 Net income $ 48,443 $ 55,909 $ 37,410 $ 38,930 Net income attributable to EchoStar common stock $ 50,674 $ 56,133 $ 36,644 $ 38,222 Basic earnings per share $ 0.54 $ 0.60 $ 0.39 $ 0.41 Diluted earnings per share $ 0.54 $ 0.60 $ 0.39 $ 0.40 For the quarter ended December 31, 2014, our operating results included a gain of $5.8 million related to our investment in TerreStar (See Note 6).For the quarter ended December 31, 2013, our operating results included (i) $7.8 million in non-operating interest income and gains in connection with the settlement of certain accounts receivable and (ii) a goodwill impairment charge of $3.8 million.(1) As a result of the Share Exchange, the consolidated financial statements of the EchoStar Technologies businesses have been presented as discontinued operations and, as such, have been excluded from the quarterly financial data presented above for all periods presented. See Note 3 in the notes to consolidated financial statements for further discussion of our discontinued operations. (2) Net income and related per share amounts for the three months ended December 31, 2017 include a discrete income tax benefit of $303.5 million related to the enactment of federal tax legislation in December 2017, a gain of $22.8 million on our trading securities, and an impairment loss of $10.8 million relating to our regulatory authorizations with indefinite lives and certain projects in construction in progress. See Note 12 for additional information relating to the income tax benefit. weEchoStar and DISH Network have operated as separate publicly-traded companies. However, pursuantprior to the Satellite and Tracking Stock Transaction, described in Note 2 and below,consummation of the Share Exchange on February 28, 2017, DISH Network owns Hughes Retail Preferredowned the Tracking Stock representing an aggregate 80.0% economic interest in the residential retail satellite broadband business of our Hughes segment, including certain operations, assets and liabilities attributed to such business.segment. Following the consummation of the Share Exchange, the Tracking Stock was retired. In addition, a substantial majority of the voting power of the shares of both companieseach of EchoStar Corporation and DISH is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family. have 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 have indemnifiedindemnify each other against certain liabilities arising from our respective businesses. We also may enter into additional agreements with DISH Network in the future. Generally, the amounts we or DISH Network payspay for products and services provided under the agreements are based on our cost plus a fixed margin (unless noted differently below), which varies depending on the nature of the products and services provided."Equipment revenue—DISH Network"Receiver Agreement. Effective January 1, 2012, we and DISH Network entered intonew receiver agreement (the "2012 Receiver Agreement"), pursuant to which DISH Network hassummary of the right, but not the obligation, to purchase digital set-top boxes, related accessories, and other equipment from us for the period from January 1, 2012 to December 31, 2014. The 2012 Receiver Agreement replaced the receiver agreement we entered intoterms of our principal agreements with DISH Network in connection with the Spin-off. The 2012 Receiver Agreement allows DISH Network to purchase digital set-top boxes, related accessories, and other equipment from us either: (i) at cost (decreasing as we reduce costs and increasing as costs increase) plus a dollar mark-up which will depend upon the cost of the product subject to a collarthat may have an impact on our mark-up; or (ii) at cost plus a fixed margin, which will depend on the naturefinancial condition and results of the equipment purchased. Under the 2012 Receiver Agreement, our margins will be increased if we are able to reduce the costs of our digital set-top boxes and our margins will be reduced if these costs increase. We provide DISH Network with standard manufacturer warranties for the goods sold under the 2012 Receiver Agreement. Additionally, the 2012 Receiver Agreement includes an indemnification provision, whereby the parties indemnify each other for certain intellectual property matters. DISH Network is able to terminate the 2012 Receiver Agreement for any reason upon at least 60 days' notice to us. We are able to terminate the 2012 Receiver Agreement if certain entities acquire DISH Network. DISH Network has an option, but not the obligation, to extend the 2012 Receiver Agreement for one additional year upon 180 days' notice prior to the end of the term. On May 5, 2014, we received DISH Network's notice to extend the 2012 Receiver Agreement for one year to December 31, 2015."Services and other revenue—DISH Network"Broadcast Agreement. Effective January 1, 2012, we and DISH Network entered into a new broadcast agreement (the "2012 Broadcast Agreement") pursuant to which we provide certain broadcast services to DISH Network, including teleport services such as transmission and downlinking, channel origination services, and channel management services, for the period from January 1, 2012 to December 31, 2016. The 2012 Broadcast Agreement replaced the broadcast agreement that we entered into with DISHSTATEMENTS—STATEMENTS - Continuedin connection with the Spin-off. The fees for the services providedconsists primarily of sales of broadband equipment under the 2012 BroadcastHughes Broadband Distribution Agreement are calculated at either: (a) our cost of providing the relevant service plus a fixed dollar fee, which is subject to certain adjustments; or (b) our cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided.described below under Services and other revenue — DISH Network has the ability to terminate channel origination servicesNetwork.channel management services for any reason and without any liability upon at least 60 days' notice to us. Ifother revenue — DISH Network terminates the teleport services provided under the 2012 Broadcast Agreement for a reason other than our breach, DISH Network generally is obligated to reimburse us for any direct costs we incur related to any such termination that we cannot reasonably mitigate.Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and DISH Network entered into a broadcast agreement pursuant to which we provide certain broadcast services to DISH Network in connection with its carriage of certain sports related programming. The term of this agreement is ten years. If DISH Network terminates this agreement for a reason other than our breach, DISH Network generally is obligated to reimburse us for any direct costs we incur related to any such termination that we cannot reasonably mitigate. The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services.termterms of each service arrangement is set forth below:EchoStar I, discusseddescribed below, in Note 2, on March 1, 2014, we began providing certain satellite services to DISH Network on the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. The term of each satellite services agreement generally terminates upon the earlier of: (i) the end of life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. DISH Network generally has the option to renew each satellite service agreement on a year-to-year basis through the end of the respective satellite'ssatellite’s life. There can be no assurance that any options to renew such agreements will be exercised.EchoStar VIII. In May 2013,December 2016, DISH Network began receivingrenewed the satellite services from us onagreement relative to the EchoStar VIII as an in-orbit spare. Effective March 1, 2014, thisVII satellite services arrangement convertedfor one year to a month-to-month service agreement. Both parties haveJune 2018. DISH Network has not renewed the rightagreement relative to terminate this agreement upon 30 days' notice.IX.IX satellite. Subject to availability, DISH Network generally has the right to continue to receive satellite services from us on the EchoStar IX satellite on a month-to-month basis.receivesreceived satellite services from us on the EchoStar XII.XII satellite. The term of the satellite services agreement terminates upon the earlier of: (i)expired at the end of life of the satellite; (ii) the date the satellite fails or the date the transponder(s) on which the service was being provided under the agreement fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. DISH Network generally has the option to renewSeptember 2017.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedthe agreement on a year-to-year basis through the end of the satellite's life. There can be no assurance that any options to renew this agreement will be exercised. DuringIn December 2009, we entered into an initial ten-year transponder service agreement with DISH Network, pursuant to which DISH Network receiveshas received satellite services from us on the EchoStar XVI.XVI satellite since January 2013. Effective December 21, 2012, we and DISH Network amended the transponder service agreement to, among other things, change the initial term to generally expire upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite fails; (iii) the date the transponder(s) on which service is being provided under the agreement fails; or (iv) four years following the actual service commencement date. PriorIn July 2016, we and DISH Network further amended the transponder service agreement to, expiration ofamong other things, extend the initial term we, upon certain conditions,by one additional year through January 2018 and to reduce the term of the first renewal option by one year. In May 2017, DISH Network haverenewed the optionsatellite services agreement relative to renewthe EchoStar XVI satellite for an additional six-year period. If either we or DISH Network exercise our respective six-year renewal options,five-years to January 2023. DISH Network has the option to renew for an additional five-year period prior to expiration of the then-current term. There can be no assurance that anysuch option to renew this agreement will be exercised. We beganIn the event that DISH Network does not exercise its five-year renewal option, DISH Network has the option to provide satellite services onpurchase the EchoStar XVI tosatellite for a certain price. If DISH Network does not elect to purchase the EchoStar XVI satellite at that time, we may sell the EchoStar XVI satellite to a third party and DISH Network is required to pay us a certain amount in January 2013.Agreement. DuringAgreement. In September 2009, we entered into a fifteen-year satellite service agreement with Telesat Canada ("Telesat"(“Telesat”) to receive service on all 32 DBS transponders on the Nimiq 5 satellite at the 72.7 degree west longitude orbital location (the "Telesat“Telesat Transponder Agreement"Agreement”). DuringIn September 2009, we also entered into a satellite service agreement (the "DISH“DISH Nimiq 5 Agreement"Agreement”) with DISH Network, pursuant to which DISH Network receives satellite services from us on all 32 of the DBS transponders covered by the Telesat Transponder Agreement.ten years following the date it was placed into service.in October 2019. Upon expiration of the initial term, DISH Network has the option to renew the DISH Nimiq 5 Agreement on a year-to-yearyear-Agreement. DuringAgreement. In November 2008, we entered into a ten-year satellite service agreement with SES Latin America, which provides, among other things, for the provision by SES Latin America to us of service on 32 DBS transponders on the QuetzSat-1 satellite. Concurrently, in 2008, we entered into a transponder service agreement with DISH Network, pursuant to which DISH Network receives satellite services on 24 of the DBS transponders on QuetzSat-1.the QuetzSat-1 satellite. The QuetzSat-1 satellite was launched onin September 29, 2011 and was placed into service during the fourth quarter ofin November 2011 at the 67.1 degree west longitude orbital location. In the interim, we provided DISH Network with alternate capacity at the 77 degree west longitude orbital location. During the third quarter of 2012,February 2013, we and DISH Network entered into an agreement pursuant to which we receive certain satellite services from DISH Network on five DBS transponders on the QuetzSat-1 satellite. In January 2013, the QuetzSat-1 satellite was moved to the 77 degree west longitude orbital location and DISH Network commenced commercial operations at such location in February 2013.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedSES-3. DuringSES-3. In May 2012, we entered into a spectrum development agreement (the "103“103 Spectrum Development Agreement"Agreement”) with Ciel Satellite Holdings Inc. ("Ciel"(“Ciel”) to develop certain spectrum rights at the 103 degree west longitude orbital location (the "103“103 Spectrum Rights"Rights”). DuringIn June 2013, we and DISH Network entered into a spectrum development agreement (the "DISH“DISH 103 Spectrum Development Agreement"Agreement”) pursuant to which DISH Network may use and develop the 103 Spectrum Rights. Unless earlier terminated under the terms and conditions of the DISH 103 Spectrum Development Agreement, the term generally will continue for the duration of the 103 Spectrum Rights Agreement.duringin May 2012, we also entered into a ten-year service agreement with Ciel pursuant to which we receive certain satellite services from Ciel on the SES-3 satellite at the 103 degree orbital location (the "103 Service Agreement"). Duringlocation. In June 2013, we and DISH Network entered into an agreement pursuant to which DISH Network receives certain satellite services from us on the SES-3 satellite (the "DISH“DISH 103 Service Agreement"Agreement”). Under the terms of the DISH 103 Service Agreement, DISH Network makes certain monthly payments to us through the service term. Unless earlier terminated under the terms and conditions of the DISH 103 Service Agreement, the initial service term will expire on the earlier of: (i) the date the SES-3 satellite fails; (ii) the date the transponder(s) on which service was being provided under the agreement fails; or (iii) ten years following the actual service commencement date.June 2023. Upon in-orbit failure or end of life of the SES-3 satellite, and in certain other circumstances, DISH Network has certain rights to receive service from us on a replacement satellite. There can be no assurance that DISH Network will exercise its option to receive service on a replacement satellite.Satellite and Tracking Stock Transaction. On February 20, 2014, we entered into agreements with DISH Network to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, EchoStar and HSS issued shares of the Tracking Stock to DISH Network in exchange for five satellites owned by DISH Network (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV) (including related in-orbit incentive obligations and interest payments of approximately $58.9 million) and approximately $11.4 million in cash; and (ii) on March 1, 2014, DISH Network began receiving certain satellite services on these five satellites from us. See Note 2 for further information. 1, 2012, we entered into a new telemetry, tracking and control ("(“TT&C"&C”) agreement pursuant to which we provide TT&C services to DISH Network and its subsidiaries for a period ending onin December 31, 2016 (the "2012 TT“TT&C Agreement"Agreement”). The 2012In November 2016, we and DISH Network amended the TT&C Agreement replacedto extend the term for one year through December 2017. In December 2017, we and DISH Network amended the TT&C agreementAgreement to extend the term for one month through January 2018. In January and February 2018, we entered into withand DISH Network in connectionECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedwithamended the Spin-off.TT&C Agreement to extend the term through February 2018. The fees for services provided under the 2012 TT&C Agreement are calculated at either: (i) a fixed fee or (ii) cost plus a fixed margin, which will vary depending on the nature of the services provided. DISH Network is able to terminate the 2012 TT&C Agreement for any reason upon 60 days'days’ notice.onin February 20, 2014, we amended the TT&C Agreement to cease the provision of TT&C services to DISH Network for the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. Effective March 1, 2014, we continue to provide TT&C services for the D-1 and EchoStar XV satellites; however, for thereceivereceived satellite services on the EchoStar XV satellite from DISH Network, we have waived the fees for the TT&C services on the EchoStar XV.Lease Agreements.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 lease, and DISH Network is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each of the leases is set forth below:in Englewood, Colorado iswas for a period ending onin December 31, 2016. This agreement can beIn February 2016, DISH Network terminated by either party upon six months prior notice. in, Englewood, Colorado iswas for a period ending onin December 31, 2016. in, Littleton, Colorado iswas for a period ending onin December 31,2016. Effective December 2016, with a renewal optionwe and DISH Network amended this lease to, among other things, extend the term for one additional year.EchoStar Data Networksyear through December 2017. In December 2017, we and DISH Network further amended this lease to, among other things, extend the term for one year through December 2018.in Atlanta, Georgia is for a period ending on October 31, 2016.Gilbert Lease Agreement. The original lease for certain space at 801 N. DISH Dr. in Gilbert, Arizona was a month to month lease and could be terminated by either party upon 30 days' prior notice. The original lease was terminated in May 2014. Effective August 1, 2014,October 2016.began leasing this spaceleased to DISH Network under a new lease for a period ending July 31, 2016. DISH Network has renewal options for three additional one year terms.Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive, in Cheyenne, Wyoming isWyoming. 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 (i) terminate the lease for the transferred space and (ii) provide for a continued lease to DISH Network of the portion of the property we retained for a period ending onin December 31, 2031.Product Support Agreement. In connection with the Spin-off, we entered into This agreement may be extended by mutual consent, in which case this agreement will be converted to a product support agreement pursuant to which DISH Networkmonth-to-month lease agreement. Upon extension, either party has the right but not the obligation, to receive product support from us (including certain engineering and technical support services) for all set-top boxes and related components that our subsidiaries have previously sold and in the future may sell to DISH Network. The fees for the services provided under the product support agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided. The term of the product support agreement is the economic life of such set-top boxes and related components, unless terminated earlier. DISH Network may terminate the product support agreement for any reason upon at least 60 days' notice. In the event of an early termination of this agreement, DISH Network is entitled to a refund of any unearned fees paid to us for the services.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedDISHOnline.com Services Agreement. Effective January 1, 2010, DISH Network entered into a two-year agreement with us pursuant to which DISH Network receives certain services associated with an online video portal. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. DISH Network has the option to renew this agreement for successive one year terms and the agreement may be terminated by DISH Network for any reason upon at least 120 days' notice to us. In October 2014, DISH Network exercised its right to renew this agreement for a one-year period ending on December 31, 2015.DISH Remote Access Services Agreement. Effective February 23, 2010, we entered into an agreement with DISH Network pursuant to which DISH Network receives, among other things, certain remote digital video recorder ("DVR") management services. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms and may be terminated by DISH Network for any reason upon at least 120 days' notice to us.SlingService Services Agreement. Effective February 23, 2010, we entered into an agreement with DISH Network pursuant to which DISH Network receives certain services related to placeshifting. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms and may be terminated by DISH Network for any reason upon at least 120 days' notice to us.Blockbuster Agreements. On April 26, 2011, DISH Network acquired substantially all of the assets of Blockbuster, Inc. (the "Blockbuster Acquisition"). On June 8, 2011, we completed the acquisition of Hughes Communications, Inc. and its subsidiaries (the "Hughes Acquisition"). Hughes Network Systems, LLC ("HNS"), a wholly-owned subsidiary of Hughes Communications, Inc., provided certain broadband products and services to Blockbuster, Inc. ("Blockbuster") pursuant to an agreement that was entered into prior to the Blockbuster Acquisition and the Hughes Acquisition. Subsequent to both the Blockbuster Acquisition and the Hughes Acquisition, Blockbuster entered into a new agreement with HNS pursuant to which Blockbuster may continue to purchase broadband products and services from our Hughes segment (the "Blockbuster VSAT Agreement").Effective February 1, 2014, all services to all Blockbuster locations, including Blockbuster franchisee locations, terminated in connection with the closing of all of the Blockbuster retail locations.Radio Access Network Agreement. On November 29, 2012, HNS entered into an agreement with DISH Network L.L.C. pursuant to which HNS constructed for DISH Network a ground-based satellite radio access network ("RAN") for a fixed fee. The parties mutually agreed to terminate this agreement in the fourth quarter of 2014.RUS Implementation Agreement. In September 2010, DISH Broadband L.L.C. ("DISH Broadband"), DISH Network's wholly-owned subsidiary, was selected by the Rural Utilities Service ("RUS") of the United States Department of Agriculture to receive up to approximately $14.1 million in broadband stimulus grant funds (the "Grant Funds"). Effective November 2011, HNS and DISH Broadband entered into a RUS Implementation Agreement (the "RUS Agreement") pursuant to which HNS provided certain portions of the equipment and broadband service used to implement DISH Broadband's RUS program. While the RUS Agreement expired in June 2013 when the Grant Funds were exhausted, HSS is required to continue providing services to DISH Broadband's customers activated prior to the expiration of the RUS Agreement in accordance with the terms and conditions of the RUS Agreement.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued OnIn March 9, 2012, DISH Network completed its acquisition of substantially all the assets of TerreStar.TerreStar Networks Inc. (“TerreStar”). Prior to DISH Network'sNetwork’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 our Hughes segment provides, among other things, warranty, operations and maintenance and hosting services for TerreStar’s ground-based communications equipment. In December 2017, we and DISH Network amended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DISH Network generally has the right to continue to receive warranty services from us for our products on a month-to-month basis unless terminated by DISH Network upon at least 21 days’ written notice to us. DISH Network generally has the right to continue to receive operations and maintenance services for TerreStar's satellite gatewayfrom us on a quarter-to-quarter basis unless operations and associated ground infrastructure. These agreements generally may bemaintenance services are terminated by DISH Network upon at least 90 days’ written notice to us. The provision of hosting services will continue until May 2022 and will not renew beyond May 2022 unless the parties enter into a new agreement or amend the existing agreement. In addition, DISH Network generally may terminate any timeand all services for convenience. 1, 2012, HNS and dishNET Satellite Broadband L.L.C. ("dishNET"(“dishNET”), a wholly-owned subsidiary of DISH Network, entered into a distribution agreement (the "Distribution Agreement"“Distribution Agreement”) pursuant to which dishNET has the right, but not the obligation, to market, sell and distribute the Hughes satellite internet service (the "Hughes service"“Hughes service”). dishNET pays HNS a monthly per subscriber wholesale service fee for the Hughes service based upon a subscriber'ssubscriber’s service level and beginning January 1, 2014, based upon certain volume subscription thresholds. The Distribution Agreement also provides that dishNET has the right, but not the obligation, to purchase certain broadband equipment from us to support the sale of the Hughes service. The Distribution Agreement hashad 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. OnIn February 20, 2014, HNS and dishNET entered into an amendment to the Distribution Agreement which, among other things, extended the initial term of the Distribution Agreement throughuntil March 1, 2024. Upon expiration or termination of the Distribution Agreement, the parties will continue to provide the Hughes service to the then-current dishNET subscribers pursuant to the terms and conditions of the Distribution Agreement.Set-Top Box Application Development Agreement. During the fourth quarter of 2012, we and DISH Network entered into a set-top box application development agreement (the "Application Development Agreement") pursuant to which we provide DISH Network with certain services relating to the development of web-based applications for the period ending February 1, 2016. The Application Development Agreement renews automatically for successive one-year periods thereafter, unless terminated earlier by us or DISH Network at any time upon at least 90 days' notice. The fees for services provided under the Application Development Agreement are calculated at our cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided.XiP Encryption Agreement. During the third quarter of 2012, we entered into an encryption agreement with DISH Network for our whole-home HD DVR line of set-top boxes (the "XiP Encryption Agreement") pursuant to which we provide certain security measures on our whole-home HD DVR line of set-top boxes to encrypt the content delivered to the set-top box via a smart card and secure the content between set-top boxes. The term of the XiP Encryption Agreement is until December 31, 2015. Under the XiP Encryption Agreement, DISH Network has an option, but not the obligation to extend the XiP Encryption Agreement for one additional year upon at least 180 days' notice prior to the end of the term. We and DISH Network each have the right to terminate the XiP Encryption Agreement for any reason upon at least 180 days' notice and 30 days' notice, respectively. The fees for the services provided under the XiP Encryption Agreement are calculated on a monthly basis based on the number of receivers utilizing such security measures each month. OnIn March 9, 2012, DISH Network completed its acquisition of 100% of the equity of reorganized DBSD North America, Inc. ("(“DBSD North America"America”). Prior to DISH Network'sNetwork’s acquisition of DBSD North America and our completion of the Hughes Acquisition, DBSD North America and HNS entered into an agreementvarious agreements pursuant to which our Hughes segment provides,ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedof DBSD North America's satellite gateway and associated ground infrastructure. This agreement automatically renewed forfrom us on a one-year period ending on February 15, 2016, and will renew for one additional one-year periodquarter-to-quarter basis unless terminated by DBSD North America upon at least 30 days'120 days’ written notice to us. The provision of hosting services will continue until February 2022 and will automatically renew for an additional five-year period until February 2027 unless terminated by DBSD North America upon at least 180 days’ written notice to us. In addition, DBSD North America generally may terminate any and all such services for convenience, subject to providing us with prior notice and/or payment of termination charges.any renewal term.Sling TV Holding L.L.C. (formerly DISH Digital Holding L.L.C) Effective July 1, 2012, wethe RUS Agreement in accordance with the terms and DISH Network formed DISH Digital Holding L.L.C. ("DISH Digital"), which was owned two-thirds by DISH Network and one-third by EchoStar. DISH Digital was formed to develop and commercialize certain advanced technologies. At that time, we, DISH Network and DISH Digital entered into the following agreements with respect to DISH Digital: (i) a contribution agreement pursuant to which we and DISH Network contributed certain assets in exchange for our respective ownership interests in DISH Digital; (ii) a limited liability company operating agreement ("Operating Agreement"), which provided for the governance of DISH Digital; and (iii) a commercial agreement ("Commercial Agreement") pursuant to which, among other things, DISH Digital had: (a) certain rights and corresponding obligations with respect to its business; and (b) the right, but not the obligation, to receive certain services from us and DISH Network, respectively. Effective August 1, 2014, we and DISH Digital entered into the Exchange Agreement pursuant to which, among other things, DISH Digital distributed certain assets to us and we reduced our interest in DISH Digital to a 10.0% non-voting interest. As a result, DISH Network has a 90.0% equity interest and a 100% voting interest in DISH Digital. In addition, we, DISH Network and DISH Digital amended and restated the Operating Agreement, primarily to reflect the changes implemented by the Exchange Agreement. Finally, we, DISH Network and DISH Digital amended and restated the Commercial Agreement, pursuant to which, among other things, DISH Digital: (1) continues to have certain rights and corresponding obligations with respect to its business; (2) continues to have the right, but not the obligation, to receive certain services from us and DISH Network; and (3) has a license from us to use certainconditions of the assets distributed to us as part of the ExchangeRUS Agreement. As of December 31, 2014, we accounted for our investment in DISH Digital using the cost method. DISH Digital recently changed its name to Sling TV Holding L.L.C."Cost of sales—equipment—DISH Network"Remanufactured Receiver Agreement. In connection with the Spin-off, we entered into a remanufactured receiver agreement with DISH Network pursuant to which we have the right, but not the obligation, to purchase remanufactured receivers and related components from DISH Network at cost plus a fixed margin, which varies depending on the nature of the equipment purchased. In November 2014, we and DISH Network extended this agreement until December 31, 2015. We may terminate the remanufactured receiver agreement for any reason upon at least 60 days' notice to DISH Network. DISH Network may also terminate this agreement if certain entities acquire DISH Network."Cost of sales—services and other—DISH Network"Satellite Services Received from DISH Network. Since the Spin-off, we entered into certain satellite services agreements pursuant to which we receive satellite services from DISH Network on certain satellites owned or leased by DISH Network. The fees for the services provided under these satellite services agreements depend, among other things, upon the orbital location of the applicable satellite,ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedthe number of transponders that are providing services on the applicable satellite and the length of the service term. The term of each satellite service agreement is set forth below:D-1. In November 2012, HNS entered into a satellite service agreement pursuant to which HNS received satellite services from DISH Network on the D-1 satellite for research and development. This agreement terminated on June 30, 2014.EchoStar XV. In May 2013, we began receiving satellite services from DISH Network on EchoStar XV and relocated the satellite to the 45 degree west longitude orbital location for testing pursuant to our Brazilian authorization. Effective March 1, 2014, this satellite services agreement converted to a month-to-month service agreement. Both parties have the right to terminate this agreement upon 30 days' notice."expenses—expenses — DISH Network"Management Services Agreement. In connection with the Spin-off, we entered into a ManagementNetwork with DISH Network pursuant to which DISH Network made certain of its officers available to provide services (which were primarily accounting services) to us. Effective June 15, 2013, we terminated the Management Services Agreement.Professional Services Agreement.onin January 1, 2010 and were replaced by a Professional Services Agreement. During 2009,In January 2010, we and DISH Network agreed that we shall continue to have the right, but not the obligation, to receive the following services from DISH Network, among others, certain of which were previously provided under the Transition Services Agreement: information technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration, program acquisition services and other support services. Mr. Vivek Khemka, who remained employed as DISH Network’s Executive Vice President and Chief Technology Officer, provided services to us during portions of 2016 and through February 2017 pursuant to the Professional Services Agreement as President -- EchoStar Technologies L.L.C. 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 the Satellite Procurement Agreement), receive logistics, procurement and quality assurance services from us (previously provided under the Services Agreement) and other support services. TheIn connection with the consummation of the Share Exchange, we and DISH amended and restated the Professional Services Agreement automatically renewed onto 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. The term of the Amended and Restated Professional Services Agreement is through January 1, 2015 for an additional one-year period2019 and renews automatically for successive one-year periods thereafter, unless the agreement is terminated earlier by either party upon at least 60 days'days’ notice. However, either party may generally terminate the Amendeddays'days’ notice.Lease Agreements. Since the Spin-off, weLeases 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 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 lease,leases, and for certain properties, we are responsible for our portion of the taxes, insurance, utilities and maintenance of the premises. The term of each ofleases is set forth below:El Paso Lease Agreement. TheShare Exchange, effective March 2017 we lease forfrom DISH Network certain space at 1285 Joe Battle Blvd., El Paso, Texas is530 EchoStar Drive in Cheyenne, Wyoming for a period ending on August 1, 2015, and provides usin February 2019. EchoStar has the option to renew this lease for thirteen one-year periods.renewal optionsthe Share Exchange, effective March 2017 we lease from DISH Network certain space at 801 N. DISH Dr. in Gilbert, Arizona for four consecutive three year terms.Agreement. The license forAgreement. In connection with the Share Exchange, effective March 2017, we sublease from DISH Network certain space at 796 East Utah Valley Drive in American Fork, Utah is for a period ending in August 2017. We have exercised our option to renew this sublease for a five-year period ending in August 2022.Julythe number of racks leased at the location.subjectEchoStar Corporation and certain of its subsidiaries entered into the Share Exchange Agreement with DISH and certain of its subsidiaries pursuant to the termswhich, on February 28, 2017, EchoStar Corporation and its subsidiaries received all of the underlying lease agreement.shares of the Tracking Stock in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of our EchoStar Technologies businesses and certain other assets. FollowingSTATEMENTS—STATEMENTS - Continued"Other agreements—Network"Tax Sharing Agreement.Network assumed certain liabilities relating to the transferred assets and businesses. The Share Exchange Agreement contains customary representations and warranties by the parties, including representations by EchoStar related to the transferred assets, assumed liabilities and the financial condition of the transferred businesses. EchoStar and DISH Network have also agreed to customary indemnification provisions whereby each party indemnifies the other against certain losses with respect to breaches of representations, warranties or covenants and certain liabilities and if certain actions undertaken by it causes the transaction to be taxable to the other party after closing. See Note 3 for further information.Spin-off,Share Exchange, we and DISH Network entered into an Intellectual Property and Technology License Agreement (“IPTLA”) pursuant to which we and DISH and our and their respective subsidiaries license to each other certain intellectual property and technology. The IPTLA will continue in perpetuity, unless mutually terminated by the parties. Pursuant to the IPTLA, 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.DISH Network whichthe Spin-off. This agreement governs our 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 will indemnifyindemnifies us for such taxes. However, DISH Network is not liable for and willdoes 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 Internal Revenue Code of 1986, as amended, 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 counseltax sharing agreementTax Sharing Agreement will only 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.tax sharing agreement,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, during the third quarter ofin 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'sIRS’s examination of our consolidated tax returns. Prior to the agreement with DISH Network in 2013, the federal tax benefits of $83.2 million were reflected as a deferred tax asset for depreciation and amortization, which was netted in our noncurrent deferred tax liabilities. The agreement with DISH Network in 2013 requires DISH Network to pay us $83.2 million of the federal tax benefit it receives at such time as we would have otherwise been able to realize such tax benefit, which we currently estimate would be after 2015. Accordingly, webenefit. We recorded a noncurrent receivable from DISH Network for $83.2 million in "Other receivable—“Other receivable — DISH Network"Network” and a corresponding increase in our net noncurrent deferred tax liabilities to reflect the effects of this agreement in the third quarter ofSeptember 2013. In addition, during the third quarter ofin 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, 2017.2014,2016, we earned and recognized a tax benefit for certain state income tax credits that we would be unable to utilize currently if we had filed separately from DISH Network. DISH Network expects to utilize these tax credits to reduce its state income tax payable. Consistent with accounting principles that apply to transfers of assets between entities under common control, we recorded a charge of $5.3 million in additional paid-in capital, representing the amount that we estimate is more likely than not to be realized by DISH Network as a result of its utilization of the tax credits that we earned. We expect to creditincrease additional paid-in capital upon receipt of any consideration paid to us by DISH Network in exchange for these tax credits.TiVo.29,2011, we made investments in Invidi Technologies Corporation (“Invidi”) in exchange for shares of Invidi’s Series D Preferred Stock. In November 2016, DIRECTV, LLC, a wholly owned indirect subsidiary of AT&T Inc., DISH Network and Cavendish Square Holding B.V., an affiliate of WPP plc, entered into a series of agreements to acquire Invidi. As a result of the transaction, we sold our ownership interest in Invidi on the same terms offered to the other shareholders of Invidi. The transaction closed in January 2017.("TiVo"(“TiVo”). The settlement resolved all pending litigation between us and DISH Network, on the one hand, and TiVo, on the other hand, including litigation relating to alleged patent infringement involving certain DISH Network DVRs.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continuedarewere jointly responsible for making payments to TiVo in the aggregate amount of $500.0 million, including an initial payment of $300.0 million and the remaining $200.0 million in six equal annual installments between 2012 and 2017. Pursuant to the terms and conditions of the agreements entered into in connection with the Spin-off, DISH Network made the initial payment to TiVo in May 2011, except for the contribution from us totaling approximately $10.0 million, representing an allocation of liability relating to our sales of DVR-enabled receivers to an international customer. FutureSubsequent payments will bewere allocated between us and DISH Network based on historical sales of certain licensed products, with EchoStar being responsible for 5% of each annual payment. OnIn December 31, 2014, DISH Digital (now known as Sling TV)TV Holding entered into an agreement with Sling Media, Inc., our former subsidiary, pursuant to which Sling TV hasHolding had the right, for a fixed fee, to use certain trademarks, domain names and other intellectual property related to the "Sling" trademark for a period ending December 31, 2016.Patent Cross-License Agreements. During December 2011,“Sling” trademark.and DISH Network entered into separate patent cross-license agreements with the same third party whereby: (i) we and such third party licensed our respective patents to each other subject to certain conditions; and (ii) DISH Network and such third party licensed their respective patents to each other subject to certain conditions (each, a "Cross-License Agreement"). Each Cross-License Agreement covers patents acquired by the respective party prior to January 1, 2017 and aggregate payments under both Cross-License Agreements total less than $10.0 million. Each Cross-License Agreement also contains an option to extend each Cross-License Agreement to include patents acquired by the respective party prior to January 1, 2022. If both options are exercised, the aggregate additional payments to such third party would total less than $3.0 million. However, we and DISH Network may elect to extend our respective Cross-License Agreement independently of each other. Since the aggregate payments under both Cross-License Agreements were based on the combined annual revenue of us and DISH Network, we and DISH Network agreed to allocate our respective payments to such third party based on our respective percentage of combined total revenue.Voom Settlement Agreement. On October 21, 2012, DISH Network entered into the Voom Settlement Agreement with Voom and Cablevision, and for certain limited purposes, MSG Holdings, L.P., The Madison Square Garden Company and us. The Voom Settlement Agreement resolved the litigation between the parties relating to the Voom programming services. We were a party to the Voom Settlement Agreement solely for the purposes of executing a mutual release of claims with Voom, Cablevision, MSG Holdings, L.P. and The Madison Square Garden Company related to the lawsuit and Voom.TerreStar-2 Development Agreement. In August 2013, we and DISH Network entered into a development agreement ("T2 Development Agreement") with respect to the EchoStar XXI ("EchoStar XXI") satellite under which we reimburse DISH Network for amounts it pays pursuant to an authorization to proceed ("T2 ATP") with SS/L in connection with the construction of the EchoStar XXI satellite. In exchange, DISH Network granted us certain rights to purchase the EchoStar XXI satellite during the term of the T2 Development Agreement. The T2 Development Agreement was amended in December 2013 to provide for the ability to purchase DISH Network's rights and obligations under the T2 ATP and the related agreement for the construction of the EchoStar XXI satellite with SS/L. The purchase rights under the T2 Development Agreement were exercised in December 2014.ECHOSTAR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—ContinuedRoger J. Lynch Agreement. In November 2009, Mr. Roger J. Lynch became employed by both us and DISH Network as Executive Vice President. Mr. Lynch was responsible for the development and implementation of advanced technologies that are of potential utility and importance to both us and DISH Network. Mr. Lynch's compensation consisted of cash and equity compensation and was borne by both DISH Network and us. Mr. Lynch's employment with us terminated on December 31, 2014.Other AgreementsHughes Systique Corporation ("Hughes Systique")We contract with Hughes Systique for software development services. In February 2008, Hughes agreed to make available to Hughes Systique a term loan facility of up to $1.5 million. Also in 2008, Hughes funded an initial $0.5 million to Hughes Systique pursuant to the term loan facility. In 2009, HNS funded the remaining $1.0 million of its $1.5 million commitment under the term loan facility. The loans bear interest at 6%, payable annually, and are convertible into shares of Hughes Systique upon non-payment or an event of default. As a result, the Company is not obligated to provide any further funding to Hughes Systique under the term loan facility. In May 2014, Hughes and Hughes Systique entered into an amendment to the term loan facility to increase the interest rate from 6% to 8%, payable annually, to reflect current market conditions. The loans, as amended, mature on May 1, 2015. In addition to our 44.2% ownership in Hughes Systique, Mr. Pradman Kaul, the President of Hughes Communications, Inc. and a member of our Board of Directors and his brother, who is the CEO and President of Hughes Systique, in the aggregate, owned approximately 25.9%, on an undiluted basis, of Hughes Systique's outstanding shares as of December 31, 2014. Furthermore, Mr. Pradman Kaul serves on the board of directors of Hughes Systique. We are considered the "primary beneficiary" of Hughes Systique due to, among other factors, our ability to significantly influence and direct the operating and financial decisions of Hughes Systique and our obligation to provide financial support in the form of term loans. As a result, we are required to consolidate Hughes Systique's financial statements in our consolidated financial statements.We own 50%50.0% of NagraStar L.L.C. ("NagraStar"(“NagraStar”), a joint venture that is ourwas the primary provider of encryption and related security technology used in the set-top boxes produced by our set-top boxes.former EchoStar Technologies segment. We accountaccounted for our investment in NagraStar using the equity method.The table below summarizestransactionsagreements with NagraStar. For the Years Ended
December 31, 2014 2013 2012 $ 22,631 $ 14,901 $ 13,024 As of
December 31, 2014 2013 (In thousands) $ 3,180 $ 1,211 $ 5,408 $ 5,874 STATEMENTS—STATEMENTS - ContinuedDuring 2008, we entered into a joint venture for a direct-to-home satellite service in Mexico known as Dish Mexico. We provide certain broadcast services and satellite capacity and sell hardware such as digital set-top boxes and related equipment to Dish Mexico.The following table summarizes revenue from sales of hardware and services we provided to Dish Mexico. For the Years Ended
December 31, 2014 2013 2012 $ 60,464 $ 36,929 $ 58,097 $ 23,327 $ 22,638 $ 13,320 $ 6,251 $ 6,735 $ 9,144 $ — $ 127 $ 640 As of December 31, 2014 2013 (In thousands) $ 11,012 $ 3,506 Deluxe/EchoStar LLCWe 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. We account for our investment in Deluxe using the equity method. For the years ended December 31, 2014, 2013 and 2012, we recognized revenue from Deluxe for transponder services and the sale of broadband equipment of $3.3 million, $1.8 million and $1.6 million, respectively. As of December 31, 2014 and 2013, we have receivables from Deluxe of approximately $0.2 million and $1.1 million, respectively.
ECHOSTAR CORPORATIONSCHEDULE ICONDENSED BALANCE SHEETS(Parent Company Information Only—See notes to consolidated financial statements)(In thousands, except per share amounts) As of December 31, 2014 2013 $ 273,646 $ 399,838 744,112 869,673 1,017,758 1,269,511 2,547,478 1,933,533 1,293 1,023 340,852 77,664 22,185 39,150 25,319 37,296 87,937 87,972 3,025,064 2,176,638 $ 4,042,822 $ 3,446,149 $ 509,654 $ 225,325 — 2,444 509,654 227,769 — 1,010 — 1,010 509,654 228,779
6 — 50 48 48 48 — — — — 3,706,122 3,502,005 (55,856 ) (14,655 ) (19,040 ) (171,914 ) (98,162 ) (98,162 ) 3,533,168 3,217,370 $ 4,042,822 $ 3,446,149 ECHOSTAR CORPORATIONCONDENSED STATEMENTS OF OPERATIONS(Parent Company Information Only—See notes to consolidated financial statements)(In thousands) For the Years Ended December 31, 2014 2013 2012 $ 1,536 $ 1,598 $ 1,083 16,965 16,964 16,965 18,501 18,562 18,048 (18,501 ) (18,562 ) (18,048 ) 8,880 7,197 8,874 73 36,280 162,257 (4,389 ) (12,068 ) (7,224 ) 5,835 (598 ) 46,026 10,399 30,811 209,933 (8,102 ) 12,249 191,885 159,871 (2,251 ) 16,033 1,105 (7,473 ) 3,130 $ 152,874 $ 2,525 $ 211,048 $ 152,874 $ 2,525 $ 211,048 (31,698 ) (15,508 ) (2,595 ) (9,462 ) 18,413 30,799 (41 ) (36,312 ) (175,223 ) (41,201 ) (33,407 ) (147,019 ) $ 111,673 $ (30,882 ) $ 64,029 ECHOSTAR CORPORATIONCONDENSED STATEMENTS OF CASH FLOWS(Parent Company Information Only—See notes to consolidated financial statements)(In thousands) For the Years Ended December 31, 2014 2013 2012 $ 152,874 $ 2,525 $ 211,048 16,965 16,964 16,965 4,389 12,068 7,224 (159,871 ) 2,251 (16,033 ) (73 ) (36,280 ) (162,257 ) (267,175 ) 33,380 (95,982 ) 298,661 88,677 101,434 (975 ) (88,874 ) 1,912 18,319 24,494 16,893 63,114 55,205 81,204 (1,013,699 ) (957,142 ) (878,427 ) 1,118,187 857,139 931,317 (300,737 ) (98,387 ) (118,049 ) (18,569 ) — — — — 7,500 (270 ) (44 ) (233 ) (215,088 ) (198,434 ) (57,892 ) 28,857 71,247 15,398 (3,075 ) — — 25,782 71,247 15,398 (126,192 ) (71,982 ) 38,710 399,838 471,820 433,110 $ 273,646 $ 399,838 $ 471,820 2014, 20132017, 2016 and 20122015 were as follows:Allowance for doubtful accounts Deductions (In thousands) For the years ended: December 31, 2017 $ 12,955 $ 9,551 $ (10,479 ) $ 12,027 December 31, 2016 $ 11,687 $ 14,393 $ (13,125 ) $ 12,955 December 31, 2015 $ 12,294 $ 6,731 $ (7,338 ) $ 11,687 Balance at
Beginning
of Year Charged to
Costs and
Expenses Deductions Balance at
End of Year (In thousands) $ 13,237 $ 46,853 $ (45,902 ) $ 14,188 $ 16,894 $ 35,311 $ (38,968 ) $ 13,237 $ 18,484 $ 27,099 $ (28,689 ) $ 16,894