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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
FORM 10-Q
 
(Mark One)
 
ý☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 2017.2020.
 
OR

o☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM               TO                
 
Commission File Number:  001-33807
 
EchoStar Corporation
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)
its charter)
Nevada26-1232727
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
100 Inverness Terrace East,Englewood,Colorado80112-5308
(Address of principal executive offices)(Zip Code)
Nevada26-1232727
(State or Other Jurisdiction of Incorporation or Organization)(303)706-4000(I.R.S. Employer Identification No.)Not Applicable
(Registrant’s telephone number, including area code)(Former name, former address and former fiscal year, if changed since last report)
100 Inverness Terrace East, Englewood, Colorado80112-5308
(AddressSecurities registered pursuant to Section 12(b) of Principal Executive Offices)the Act:
Class A common stock $0.001 par valueThe NASDAQ Stock Market LLC
(Zip Code)Title of each class)(Name of each exchange on which registered)
SATS
(Ticker symbol)
(303) 706-4000
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý☒  No  o☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý☒  No  o☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):
Large accelerated filerý
☒
Accelerated filer o☐Emerging growth company☐
Non-accelerated filero
(Do not check is a smaller reporting company)
☐
Smaller reporting companyo
☐
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o☐ No  ý☒

As of October 31, 2017,July 30, 2020, the registrant’s outstanding common stock consisted of 48,039,77750,306,575 shares of Class A common stock and 47,687,039 shares of Class B common stock, each $0.001 par value.

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TABLE OF CONTENTS
 
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PART I - FINANCIAL INFORMATION
1
1
23
34
45
6
57
68
4248
6371
6471
PART II - OTHER INFORMATION
6572
6572
6674
6674
6674
6674
6775
6876


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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about our estimates, expectations, 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” and similar terms. These forward-looking statements are based on information available to us as of the date of this Form 10-Q and represent management’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: 


•significant risks related to the construction and operation of our satellites, such as the risk of not being able to timely complete the construction, or a 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;
•our ability and the ability of third parties with whom we engage in order to operate our business, including customers, suppliers, vendors, financing sources, governmental entities and others, to successfully or fully operate as a result of outbreaks of viruses or widespread illness, including existing, continuing and future impacts and consequences of the COVID-19 pandemic caused by the novel coronavirus;
•our ability to implement and/or realize benefits of our domestic and/or international investments, commercial alliances, partnerships, joint ventures, acquisitions, dispositions and other strategic initiatives and transactions;
•legal proceedings relating to the BSS Transaction or AGR matter (each as defined herein), which could result in substantial costs and material adverse effects on our business, results of operations, financial condition and prospects;
•our ability to realize the anticipated benefits of our current satellites and any future satellite we may construct or acquire;
•
our reliance on DISH Network Corporation and its subsidiaries (“DISH Network”) for a significant portion of our revenue;
•
significant risks related to the construction, launch and operation of our satellites, such as the risk of material malfunction on one or more of our satellites, risks resulting from delays or failures of launches of our satellites and potentially missing our regulatory milestones, changes in the space weather environment that could interfere with the operation of our satellites, and our general lack of commercial insurance coverage on our satellites;
•
our ability to realize the anticipated benefits of our current satellites and any future satellite we may construct or acquire;
•
our ability to implement our strategic initiatives;
•
the failure of third-party providers of components, manufacturing, installation services and customer support services to appropriately deliver the contracted goods or services;
•
our ability to bring advanced technologies to market to keep pace with our customers and competitors; and
risk related to our foreign operations and other uncertainties associated with doing business internationally, including changes in foreign exchange rates between foreign currencies and the United States (“U.S.”) dollar, economic instability, political disturbances and political disturbances.
the consequences of being subject to foreign regulation and foreign legal proceedings, including increased operations costs and potential fines and penalties for violations, which may be substantial;
•the failure of third-party providers of components, manufacturing, installation services and customer support services to appropriately deliver the contracted goods or services; and
•our ability to bring advanced technologies to market to keep pace with our customers and competitors.

Other factors that could cause or contribute to such differences include, but are not limited to, those discussed under the caption “Risk Factors”Risk Factors in Part II, Item 1A of this Form 10-Q and in Part I, Item 1A of our most recent Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission (“SEC”), those discussed in “Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations” hereinOperations in Part I, Item 2 of this Form 10-Q and in Part II, Item 7 of our Form 10-K and those discussed in other documents we file with the SEC.
 
All cautionary statements made herein should be read as being applicable to all forward-looking statements wherever they appear. Investors should consider the risks and uncertainties described herein and should not place undue reliance on any forward-looking statements. We do not undertake, and specifically disclaim, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


Although we believe that the expectations reflected in any forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievements. We do not assume responsibility
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for the accuracy and completeness of any forward‑lookingforward-looking statements. We assume no responsibility for updating forward‑lookingforward-looking information contained or incorporated by reference herein or in any documents we file with the SEC, except as required by law.


Should one or more of the risks or uncertainties described herein or in any documents we file with the SEC occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

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PART I — FINANCIAL INFORMATION


ItemITEM 1. FINANCIAL STATEMENTS


ECHOSTAR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(InAmounts in thousands, except share and per share amounts)
(Unaudited)
 As of
June 30,
2020		December 31,
2019
Assets
Current assets:  
Cash and cash equivalents$1,948,464  $1,519,431  
Marketable investment securities509,980  940,623  
Trade accounts receivable and contract assets, net183,379  196,629  
Other current assets, net185,699  179,531  
Total current assets2,827,522  2,836,214  
Non-current assets:  
Property and equipment, net2,399,711  2,528,738  
Operating lease right-of-use assets125,996  114,042  
Goodwill509,054  506,953  
Regulatory authorizations, net474,463  478,598  
Other intangible assets, net22,667  29,507  
Other investments, net275,873  325,405  
Other non-current assets, net340,904  334,841  
Total non-current assets4,148,668  4,318,084  
Total assets$6,976,190  $7,154,298  
Liabilities and Stockholders’ Equity  
Current liabilities:  
Trade accounts payable$112,748  $124,080  
Current portion of long-term debt, net896,386  —  
Contract liabilities89,831  101,060  
Accrued expenses and other current liabilities262,944  270,879  
Total current liabilities1,361,909  496,019  
Non-current liabilities:  
Long-term debt, net1,494,902  2,389,168  
Deferred tax liabilities, net349,973  351,692  
Operating lease liabilities110,899  96,941  
Other non-current liabilities74,239  74,925  
Total non-current liabilities2,030,013  2,912,726  
Total liabilities3,391,922  3,408,745  
Commitments and contingencies
  As of
  September 30, 2017 December 31, 2016
Assets  
  
Current Assets:  
  
Cash and cash equivalents $2,798,359
 $2,570,365
Marketable investment securities, at fair value 485,035
 522,516
Trade accounts receivable, net of allowance for doubtful accounts of $13,211 and $12,956, respectively 192,387
 182,527
Trade accounts receivable - DISH Network, net of allowance for doubtful accounts of zero 52,512
 19,417
Inventory 91,232
 62,620
Prepaids and deposits 53,536
 43,456
Other current assets 12,746
 10,862
Current assets of discontinued operations 145
 311,524
Total current assets 3,685,952
 3,723,287
Noncurrent Assets:  
  
Restricted cash and marketable investment securities 13,736
 12,926
Property and equipment, net of accumulated depreciation of $2,551,678 and $2,598,492, respectively 3,530,459
 3,398,195
Regulatory authorizations, net 545,557
 544,633
Goodwill 504,173
 504,173
Other intangible assets, net 62,635
 80,734
Investments in unconsolidated entities 165,290
 171,016
Other receivable - DISH Network 92,133
 90,586
Other noncurrent assets, net 207,221
 166,385
Noncurrent assets of discontinued operations —
 316,924
Total noncurrent assets 5,121,204
 5,285,572
Total assets $8,807,156
 $9,008,859
Liabilities and Stockholders’ Equity  
  
Current Liabilities:  
  
Trade accounts payable $120,436
 $170,297
Trade accounts payable - DISH Network 6,556
 1,072
Current portion of long-term debt and capital lease obligations 38,407
 32,984
Deferred revenue and prepayments 56,285
 59,989
Accrued interest 57,837
 46,487
Accrued compensation 37,096
 53,454
Accrued expenses and other 110,872
 95,726
Current liabilities of discontinued operations 542
 71,429
Total current liabilities 428,031
 531,438
Noncurrent Liabilities:  
  
Long-term debt and capital lease obligations, net of unamortized debt issuance costs 3,605,715
 3,622,463
Deferred tax liabilities, net 745,965
 746,667
Other noncurrent liabilities 131,626
 90,785
Noncurrent liabilities of discontinued operations —
 10,701
Total noncurrent liabilities 4,483,306
 4,470,616
Total liabilities 4,911,337
 5,002,054
Commitments and Contingencies (Note 14) 


 


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 September 30, 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, 53,564,095 shares issued and 48,031,777 shares outstanding at September 30, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016 54
 52
Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of September 30, 2017 and December 31, 2016 48
 48
Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of September 30, 2017 and December 31, 2016 —
 —
Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of September 30, 2017 and December 31, 2016 —
 —
Additional paid-in capital 3,660,696
 3,828,677
Accumulated other comprehensive loss (88,732) (124,803)
Accumulated earnings 408,079
 314,247
Treasury stock, at cost (98,162) (98,162)
Total EchoStar stockholders’ equity 3,881,983
 3,920,065
Noncontrolling interest in HSS Tracking Stock —
 73,910
Other noncontrolling interests 13,836
 12,830
Total stockholders’ equity 3,895,819
 4,006,805
Total liabilities and stockholders’ equity $8,807,156
 $9,008,859

Stockholders’ equity:  
Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both June 30, 2020 and December 31, 2019—  —  
Common stock, $0.001 par value, 4,000,000,000 shares authorized:  
Class A common stock, $0.001 par value, 1,600,000,000 shares authorized, 56,988,365 shares issued and 50,306,445 shares outstanding at June 30, 2020 and 56,592,251 shares issued and 50,107,330 shares outstanding at December 31, 201957  57  
Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both June 30, 2020 and December 31, 201948  48  
Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both June 30, 2020 and December 31, 2019—  —  
Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both June 30, 2020 and December 31, 2019—  —  
Additional paid-in capital3,311,861  3,290,483  
Accumulated other comprehensive income (loss)(206,810) (122,138) 
Accumulated earnings (losses)558,034  632,809  
Treasury stock, at cost(137,347) (131,454) 
Total EchoStar Corporation stockholders’ equity3,525,843  3,669,805  
Non-controlling interests58,425  75,748  
Total stockholders’ equity3,584,268  3,745,553  
Total liabilities and stockholders’ equity$6,976,190  $7,154,298  

The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.

1

ECHOSTAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(InAmounts in thousands, except per share amounts)
(Unaudited)
For the three months ended June 30,For the six months ended June 30,
 2020201920202019
Revenue:  
Services and other revenue$417,043  $402,786  $825,400  $805,454  
Equipment revenue42,423  57,645  99,732  109,359  
Total revenue459,466  460,431  925,132  914,813  
Costs and expenses:  
Cost of sales - services and other (exclusive of depreciation and amortization)141,019  142,680  286,271  286,027  
Cost of sales - equipment (exclusive of depreciation and amortization)32,542  46,549  78,450  91,556  
Selling, general and administrative expenses113,798  149,209  239,079  261,323  
Research and development expenses7,448  6,388  13,702  13,276  
Depreciation and amortization129,887  120,266  262,255  239,244  
Total costs and expenses424,694  465,092  879,757  891,426  
Operating income (loss)34,772  (4,661) 45,375  23,387  
Other income (expense):  
Interest income, net10,760  23,213  26,343  47,642  
Interest expense, net of amounts capitalized(38,258) (53,749) (74,491) (106,948) 
Gains (losses) on investments, net(6,090) 12,855  (52,762) 19,791  
Equity in earnings (losses) of unconsolidated affiliates, net(6,345) (4,754) (3,732) (11,107) 
Foreign currency transaction gains (losses), net1,560  1,753  (9,284) 593  
Other, net(391) 7  (670) (35) 
Total other income (expense), net(38,764) (20,675) (114,596) (50,064) 
Income (loss) from continuing operations before income taxes(3,992) (25,336) (69,221) (26,677) 
Income tax benefit (provision), net(10,851) (4,692) (3,359) (7,590) 
Net income (loss) from continuing operations(14,843) (30,028) (72,580) (34,267) 
Net income (loss) from discontinued operations—  24,968  —  44,215  
Net income (loss)(14,843) (5,060) (72,580) 9,948  
Less: Net loss (income) attributable to non-controlling interests3,431  (632) 6,873  (1,438) 
Net income (loss) attributable to EchoStar Corporation common stock$(11,412) $(5,692) $(65,707) $8,510  
Earnings (losses) per share - Class A and B common stock:  
Basic and diluted earnings (losses) from continuing operations per share$(0.12) $(0.32) $(0.67) $(0.37) 
Total basic and diluted earnings (losses) per share$(0.12) $(0.06) $(0.67) $0.09  
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
Revenue:  
  
  
  
Services and other revenue - DISH Network $111,135
 $115,127
 $339,824
 $347,440
Services and other revenue - other 310,973
 276,280
 865,817
 820,149
Equipment revenue - DISH Network 126
 2,138
 175
 7,008
Equipment revenue - other 58,999
 66,501
 173,644
 160,081
Total revenue 481,233
 460,046
 1,379,460
 1,334,678
Costs and Expenses:  
  
  
  
Cost of sales - services and other (exclusive of depreciation and amortization) 138,641
 131,594
 404,448
 384,942
Cost of sales - equipment (exclusive of depreciation and amortization) 52,051
 53,599
 153,854
 143,252
Selling, general and administrative expenses 91,003
 80,672
 263,820
 240,454
Research and development expenses 8,302
 9,030
 23,444
 23,524
Depreciation and amortization 134,822
 108,549
 379,939
 324,743
Total costs and expenses 424,819
 383,444
 1,225,505
 1,116,915
Operating income 56,414
 76,602
 153,955
 217,763
         
Other Income (Expense):  
  
  
  
Interest income 12,012
 6,259
 30,342
 13,726
Interest expense, net of amounts capitalized (55,646) (37,316) (156,498) (80,376)
Gains on investments, net 20,090
 230
 33,962
 8,179
Other-than-temporary impairment loss on available-for-sale securities —
 —
 (3,298) —
Equity in earnings of unconsolidated affiliates, net 4,381
 4,166
 15,620
 8,984
Other, net 4,686
 364
 8,211
 5,531
Total other expense, net (14,477) (26,297) (71,661) (43,956)
Income from continuing operations before income taxes 41,937
 50,305
 82,294
 173,807
Income tax provision (6,082) (17,394) (9,073) (61,258)
Net income from continuing operations 35,855
 32,911
 73,221
 112,549
Net income (loss) from discontinued operations (654) 4,499
 6,454
 29,213
Net income 35,201
 37,410
 79,675
 141,762
Less: Net income (loss) attributable to noncontrolling interest in HSS Tracking Stock —
 85
 (655) (926)
Less: Net income attributable to other noncontrolling interests 532
 524
 1,006
 946
Net income attributable to EchoStar 34,669
 36,801
 79,324
 141,742
Less: Net income (loss) attributable to Hughes Retail Preferred Tracking Stock —
 157
 (1,209) (1,709)
Net income attributable to EchoStar common stock $34,669
 $36,644
 $80,533
 $143,451
         
Amounts attributable to EchoStar common stock:        
Net income from continuing operations $35,323
 $32,145
 $74,079
 $114,238
Net income (loss) from discontinued operations (654) 4,499
 6,454
 29,213
Net income attributable to EchoStar common stock $34,669
 $36,644
 $80,533
 $143,451
         
Weighted-average common shares outstanding - Class A and B common stock:  
  
  
  
Basic 95,656
 93,898
 95,316
 93,661
Diluted 96,890
 94,401
 96,626
 94,189
         
Earnings (loss) per share - Class A and B common stock:  
  
  
  
Basic:        
Continuing operations $0.37
 $0.34
 $0.78
 $1.22
Discontinued operations (0.01) 0.05
 0.06
 0.31
Total basic earnings per share $0.36
 $0.39
 $0.84
 $1.53
Diluted:        
Continuing operations $0.36
 $0.34
 $0.77
 $1.21
Discontinued operations —
 0.05
 0.06
 0.31
Total diluted earnings per share $0.36
 $0.39
 $0.83
 $1.52



The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.

2

ECHOSTAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)Amounts in thousands)
(Unaudited)
For the three months ended June 30,For the six months ended June 30,
 2020201920202019
Net income (loss)$(14,843) $(5,060) $(72,580) $9,948  
Other comprehensive income (loss), net of tax:  
Foreign currency translation(20,153) 2,896  (100,515) 3,807  
Unrealized gains (losses) on available-for-sale debt securities3,091  4  (275) 3,291  
Other97  1,868  (2,578) (932) 
Amounts reclassified to net income (loss):
Realized losses (gains) on available-for-sale debt securities—  (17) —  (566) 
Total other comprehensive income (loss), net of tax(16,965) 4,751  (103,368) 5,600  
Comprehensive income (loss)(31,808) (309) (175,948) 15,548  
Less: Comprehensive loss (income) attributable to non-controlling interests5,804  (632) 25,569  (1,438) 
Comprehensive income (loss) attributable to EchoStar Corporation$(26,004) $(941) $(150,379) $14,110  
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
Comprehensive Income:  
  
  
  
Net income $35,201
 $37,410
 $79,675
 $141,762
Other comprehensive income (loss), net of tax:  
  
  
  
Foreign currency translation adjustments 9,373
 2,483
 33,162
 13,769
Unrealized gains (losses) on available-for-sale securities and other (12,037) 10,180
 2,369
 9,695
Recognition of realized gains on available-for-sale securities in net income —
 (10) (2,758) (5,584)
Recognition of other-than-temporary impairment loss on available-for-sale securities in net income —
 —
 3,298
 —
Total other comprehensive income (loss), net of tax (2,664) 12,653
 36,071
 17,880
Comprehensive income 32,537
 50,063
 115,746
 159,642
Less: Comprehensive income (loss) attributable to noncontrolling interest in HSS Tracking Stock —
 85
 (655) (926)
Less: Comprehensive income attributable to other noncontrolling interests 532
 524
 1,006
 760
Comprehensive income attributable to EchoStar $32,005
 $49,454
 $115,395
 $159,808































The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.

3

ECHOSTAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019
(InAmounts in thousands)
(Unaudited)

Common
Stock		Additional
Paid-In
Capital		Accumulated
Other
Comprehensive Income (Loss)		Accumulated
Earnings (Losses)		Treasury
Stock, at cost		Non-controlling
Interests		Total
Balance, March 31, 2019$102  $3,713,777  $(124,251) $709,928  $(131,454) $11,434  $4,179,536  
Issuances of Class A common stock:  
Exercise of stock options2  59,455  —  —  —  —  59,457  
Employee Stock Purchase Plan—  2,325  —  —  —  —  2,325  
Stock-based compensation—  2,205  —  —  —  —  2,205  
Other comprehensive income (loss)—  —  4,751  —  —  —  4,751  
Net income (loss)—  —  —  (5,692) —  632  (5,060) 
Other, net—  (263) —  —  —  —  (263) 
Balance, June 30, 2019$104  $3,777,499  $(119,500) $704,236  $(131,454) $12,066  $4,242,951  
Balance, March 31, 2020$105  $3,307,360  $(192,218) $569,446  $(137,347) $58,229  $3,605,575  
Issuances of Class A common stock:
Exercise of stock options—  328  —  —  —  —  328  
Employee Stock Purchase Plan—  2,376  —  —  —  —  2,376  
Stock-based compensation—  2,125  —  —  —  —  2,125  
Contribution by non-controlling interest holder—  —  —  —  —  6,000  6,000  
Other comprehensive income (loss)—  —  (14,592) —  —  (2,373) (16,965) 
Net income (loss)—  —  —  (11,412) —  (3,431) (14,843) 
Other, net—  (328) —  —  —  —  (328) 
Balance, June 30, 2020$105  $3,311,861  $(206,810) $558,034  $(137,347) $58,425  $3,584,268  
  
Class
A and B
Common
Stock
 
Hughes Retail
Preferred
Tracking
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Earnings
 
Treasury
Stock
 
Noncontrolling
Interest in
HSS Tracking
Stock
 
Other
Noncontrolling
Interests
 Total
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
 —
 4,678
 —
 —
 —
 —
 —
 4,679
Employee benefits —
 —
 11,126
 —
 —
 —
 —
 —
 11,126
Employee Stock Purchase Plan —
 —
 11,478
 —
 —
 —
 —
 —
 11,478
Stock-based compensation —
 —
 11,953
 —
 —
 —
 —
 —
 11,953
R&D tax credits utilized by DISH Network —
 —
 (1,511) —
 —
 —
 —
 —
 (1,511)
Other, net —
 —
 (334) —
 —
 —
 —
 —
 (334)
Net income (loss) —
 —
 —
 —
 141,742
 —
 (926) 946
 141,762
Foreign currency translation adjustment —
 —
 —
 13,955
 —
 —
 —
 (186) 13,769
Unrealized losses on available-for-sale securities, net and other —
 —
 —
 4,111
 —
 —
 —
 —
 4,111
Balance, September 30, 2016 $100
 $6
 $3,813,841
 $(99,167) $276,059
 $(98,162) $73,928
 $12,070
 $3,978,675
                   
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
 —
 34,104
 —
 —
 —
 —
 —
 34,106
Employee benefits —
 —
 11,200
 —
 —
 —
 —
 —
 11,200
Employee Stock Purchase Plan —
 —
 6,938
 —
 —
 —
 —
 —
 6,938
Stock-based compensation —
 —
 7,169
 —
 —
 —
 —
 —
 7,169
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) (226,815) —
 —
 —
 (73,255) —
 (300,076)
R&D tax credits utilized by DISH Network —
 —
 (577) —
 —
 —
 —
 —
 (577)
Net income (loss) —
 —
 —
 —
 79,324
 —
 (655) 1,006
 79,675
Foreign currency translation adjustment —
 —
 —
 33,162
 —
 —
 —
 —
 33,162
Unrealized gains and impairment on available-for-sale securities, net and other —
 —
 —
 2,909
 —
 —
 —
 —
 2,909
Balance, September 30, 2017 $102
 $—
 $3,660,696
 $(88,732) $408,079
 $(98,162) $—
 $13,836
 $3,895,819


The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.

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ECHOSTAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(Amounts in thousands)
(Unaudited)
Common StockAdditional
Paid-In
Capital		Accumulated
Other
Comprehensive Income (Loss)		Accumulated
Earnings (Losses)		Treasury
Stock, at cost		Non-controlling
Interests		Total
Balance, December 31, 2018$102  $3,702,522  $(125,100) $694,129  $(131,454) $15,275  $4,155,474  
Issuances of Class A common stock:       
Exercise of stock options2  61,501  —  —  —  —  61,503  
Employee benefits—  6,654  —  —  —  —  6,654  
Employee Stock Purchase Plan—  5,074  —  —  —  —  5,074  
Stock-based compensation—  4,833  —  —  —  —  4,833  
Purchase of non-controlling interest—  (2,666) —  —  —  (4,647) (7,313) 
Other comprehensive income (loss)—  —  5,600  —  —  —  5,600  
Net income (loss)—  —  —  8,510  —  1,438  9,948  
Other, net—  (419) —  1,597  —  —  1,178  
Balance, June 30, 2019$104  $3,777,499  $(119,500) $704,236  $(131,454) $12,066  $4,242,951  
Balance, December 31, 2019$105  $3,290,483  $(122,138) $632,809  $(131,454) $75,748  $3,745,553  
Cumulative effect of accounting changes—  —  —  (9,068) —  (240) (9,308) 
Balance, January 1, 2020105  3,290,483  (122,138) 623,741  (131,454) 75,508  3,736,245  
Issuances of Class A common stock:
Exercise of stock options—  506  —  —  —  —  506  
Employee benefits—  6,920  —  —  —  —  6,920  
Employee Stock Purchase Plan—  5,300  —  —  —  —  5,300  
Stock-based compensation—  4,509  —  —  —  —  4,509  
Issuance of equity and contribution of assets pursuant to the Yahsat JV formation—  4,338  —  —  —  (1,514) 2,824  
Contribution by non-controlling interest holder—  —  —  —  —  10,000  10,000  
Other comprehensive income (loss)—  —  (84,672) —  —  (18,696) (103,368) 
Net income (loss)—  —  —  (65,707) —  (6,873) (72,580) 
Treasury share repurchase—  —  —  —  (5,893) —  (5,893) 
Other, net—  (195) —  —  —  —  (195) 
Balance, June 30, 2020$105  $3,311,861  $(206,810) $558,034  $(137,347) $58,425  $3,584,268  
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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ECHOSTAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(InAmounts in thousands)
(Unaudited)
For the six months ended
June 30,
 20202019
Cash flows from operating activities:
Net income (loss)$(72,580) $9,948  
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization262,255  309,631  
Losses (gains) on investments, net52,762  (19,791) 
Equity in losses (earnings) of unconsolidated affiliates, net3,732  11,107  
Foreign currency transaction losses (gains), net9,284  (593) 
Deferred tax provision (benefit), net(2,452) 7,014  
Stock-based compensation4,509  4,833  
Amortization of debt issuance costs2,120  3,872  
Other, net(7,295) 2,742  
Changes in assets and liabilities, net:
Trade accounts receivable and contract assets, net(5,262) 167  
Other current assets, net(11,642) (129) 
Trade accounts payable(11,701) (225) 
Contract liabilities(11,229) 34,024  
Accrued expenses and other current liabilities27,050  16,800  
Non-current assets and non-current liabilities, net5,729  1,374  
Net cash flows from operating activities245,280  380,774  
Cash flows from investing activities:
Purchases of marketable investment securities(555,367) (504,264) 
Sales and maturities of marketable investment securities977,532  1,621,481  
Purchase of other investments(5,500) —  
Expenditures for property and equipment(196,904) (219,440) 
Expenditures for externally marketed software(19,237) (15,329) 
Net cash flows from investing activities200,524  882,448  
Cash flows from financing activities:
Repurchase and maturity of the 2019 Senior Secured Notes—  (920,923) 
Payment of finance lease obligations(421) (20,008) 
Payment of in-orbit incentive obligations(1,021) (3,778) 
Net proceeds from Class A common stock options exercised436  61,503  
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan5,300  5,074  
Treasury share purchase(5,893) —  
Contribution by non-controlling interest holder10,000  —  
Purchase of non-controlling interest—  (7,313) 
Other, net674  (267) 
Net cash flows from financing activities9,075  (885,712) 
Effect of exchange rates on cash and cash equivalents(19,232) 121  
Net increase (decrease) in cash and cash equivalents435,647  377,631  
Cash and cash equivalents, including restricted amounts, beginning of period1,521,889  929,495  
Cash and cash equivalents, including restricted amounts, end of period$1,957,536  $1,307,126  
  For the Nine Months Ended September 30,
  2017 2016
Cash Flows from Operating Activities:  
  
Net income $79,675
 $141,762
Adjustments to reconcile net income to net cash flows from operating activities:  
  
Depreciation and amortization 391,598
 370,872
Equity in earnings of unconsolidated affiliates, net (14,461) (11,181)
Gain and impairment on investments, net (30,664) (8,179)
Stock-based compensation 7,169
 11,953
Deferred tax provision 7,924
 71,422
Dividends received from unconsolidated entities 15,000
 15,000
Proceeds from sale of trading securities 8,922
 7,140
Changes in current assets and current liabilities, net 144,677
 (47,013)
Changes in noncurrent assets and noncurrent liabilities, net (23,474) 8,097
Other, net 5,570
 14,836
Net cash flows from operating activities 591,936
 574,709
Cash Flows from Investing Activities:  
  
Purchases of marketable investment securities (319,912) (883,288)
Sales and maturities of marketable investment securities 376,648
 643,865
Expenditures for property and equipment (422,661) (533,669)
Refunds and other receipts related to capital expenditures —
 24,087
Changes in restricted cash and marketable investment securities (810) 7,351
Investments in unconsolidated entities —
 (1,636)
Sale of investment in unconsolidated entity 17,781
 —
Expenditures for externally marketed software (25,447) (17,991)
Other, net —
 1,462
Net cash flows from investing activities (374,401) (759,819)
Cash Flows from Financing Activities:  
  
Proceeds from issuance of long-term debt —
 1,500,000
Payments of debt issuance costs (414) (6,275)
Repayment of debt and capital lease obligations (26,394) (30,615)
Net proceeds from Class A common stock options exercised 33,156
 4,679
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 6,938
 11,478
Cash exchanged for Tracking Stock (651) —
Other, net (3,968) (3,373)
Net cash flows from financing activities 8,667
 1,475,894
Effect of exchange rates on cash and cash equivalents 1,014
 684
Net increase in cash and cash equivalents 227,216
 1,291,468
Cash and cash equivalents, beginning of period 2,571,143
 924,240
Cash and cash equivalents, end of period $2,798,359
 $2,215,708
     
Supplemental Disclosure of Cash Flow Information:  
  
Cash paid for interest (including capitalized interest) $183,451
 $97,044
Capitalized interest $45,496
 $70,386
Cash paid for income taxes $10,071
 $9,187
Employee benefits paid in Class A common stock $11,200
 $11,126
Property and equipment financed under capital lease obligations $8,423
 $7,172
Increase (decrease) in capital expenditures included in accounts payable, net $(3,494) $21,951
Capitalized in-orbit incentive obligations $43,890
 $—
Noncash net assets exchanged for Tracking Stock $299,425
 $—



The accompanying notes are an integral part of these condensed consolidated financial statements.Condensed Consolidated Financial Statements.

6
5

ECHOSTAR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1NOTE. Organization and Business Activities1. ORGANIZATION AND BUSINESS ACTIVITIES

Principal Business
 
EchoStar Corporation (which, together with its subsidiaries, is referred to as “EchoStar,” the “Company,” “we,” “us” and/orand “our”) is a holding company that was organized in October 2007 as a corporation under the laws of the State of Nevada. We areNevada and has operated as a global provider of satellite service operations, video delivery solutions, broadband satellite technologies and broadband services for home and small office customers. We deliver innovative network technologies, managed services, and various communications solutions for enterprise and government customers.separately traded public company from DISH Network Corporation (“DISH”) since 2008. Our Class A common stock is publicly traded on the NasdaqNASDAQ Global Select Market (“Nasdaq”NASDAQ”) under the symbol “SATS.”

In February 2014, EchoStar Corporation entered into agreements with certain subsidiariesWe are a global provider of DISH Network Corporation (“DISH”) pursuantbroadband satellite technologies, broadband internet services for consumer customers, which include home and small to which, effective March 1, 2014, (i) EchoStar Corporation and our subsidiary Hughes Satellite Systems Corporation (“HSS”) issued the Tracking Stock (as defined below) to subsidiaries of 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 $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 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 the Hughes Retail Group). 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.
On January 31, 2017, EchoStar Corporation and certain of its subsidiaries entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with DISH and certain of its subsidiaries. Pursuant to the Share Exchange Agreement, on February 28, 2017, among other things, EchoStar Corporation and certain of its subsidiaries received all of the shares of the Tracking Stock in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of our EchoStar Technologiesmedium-sized businesses, and certain other assets (collectively, the “Share Exchange”). Following consummation of the Share Exchange, we no longer operate the EchoStar Technologies business segmentsatellite services. We also deliver innovative network technologies, managed services and the EchoStar Tracking Stockcommunications solutions for enterprise customers, which include aeronautical and HSS Tracking Stock were retired and are no longer outstanding and all agreements, arrangements and policy statements with respect to such tracking stock terminated and are of no further effect. As a result of the Share Exchange, the condensed 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 discontinued operations.

government enterprises. We currently operate in the following two2 business segments:
 
•
•Hughes — which provides broadband satellite technologies and broadband internet services to domestic and international consumer customers and broadband network technologies, managed services, equipment, hardware, satellite services and communication solutions to service providers and enterprise customers. The Hughes segment also designs, provides and installs gateway and terminal equipment to customers for other satellite systems. In addition, our Hughes segment designs, develops, constructs and provides telecommunication networks comprising satellite ground segment systems and terminals to mobile system operators and our enterprise customers.
•ESS — which uses certain of our owned and leased in-orbit satellites and related licenses to provide satellite services on a full-time and/or occasional-use basis to home and small office customers and network technologies, managed services, equipment, hardware, satellite services and communication solutions to domestic and international consumers and aeronautical, enterprise and government customers. The Hughes segment also designs, provides and installs gateway and terminal equipment to customers for other satellite systems. In addition, our Hughes segment provides satellite ground segment systems and terminals to mobile system operators.
•
EchoStar Satellite Services (“ESS”) — which uses certain of our owned and leased in-orbit satellites and related licenses to provide satellite service operations and video delivery 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, internet service providers, broadcast news organizations, content providers internet service providers, broadcast news organizations, programmers, and private enterprise customers. We also manage satellite operations for certain satellites owned by DISH Network.
 

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ECHOSTAR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development, Human Resources, IT, Finance, Accounting, Real Estate and Legal) as well asand other activities that have not been assigned to our operatingbusiness segments includingsuch as costs incurred in certain satellite development programs and other business development activities, our centralized treasury operations, and gains (losses)or losses from certain of our investments. These activities, costs and income, as well as eliminations of intersegment transactions, are accounted for in “CorporateCorporate and Other.”Other. We also divide our operations by primary geographic market as follows: (i) North America (the U.S. and its territories, Mexico, and Canada); (ii) South and Central America and; (iii) All other (Asia, Africa, Australia, Europe, India, and the Middle East). Refer to Note 14. Segment Reporting for further detail.
In 2008,September 2019, pursuant to a master transaction agreement (the “Master Transaction Agreement”) with DISH and a wholly-owned subsidiary of DISH (“Merger Sub”), (i) we transferred certain real property and the various businesses, products, licenses, technology, revenues, billings, operating activities, assets and liabilities primarily related to the former portion of our ESS segment that managed, marketed and provided (1) broadcast satellite services primarily to DISH and its subsidiaries (together with DISH, “DISH Network”) and our joint venture Dish Mexico, S. de R.L. de C.V. (“Dish Mexico”) and its subsidiaries, and (2) telemetry, tracking and control (“TT&C”) services for satellites owned by DISH Network completed its distributionand a portion of our other businesses (collectively, the “BSS Business”) to usone of its digital set-top box business, certain infrastructure,our former subsidiaries, EchoStar BSS Corporation (“BSS Corp.”), (ii) we distributed to each holder of shares of our Class A or Class B common stock entitled to receive consideration in the transaction an amount of shares of common stock of BSS Corp., par value $0.001 per share (“BSS Common Stock”), equal to one share of BSS Common Stock for each share of our Class A or Class B common stock owned by such stockholder (the “Distribution”); and other assets(iii) immediately after the Distribution, (1) Merger Sub merged with and related liabilities, including certaininto BSS Corp. (the “Merger”), such that BSS Corp. became a wholly-owned subsidiary of its satellites, uplinkDISH and satellite transmission assets,with DISH then owning and real estate (the “Spin-off”operating the BSS Business, and (2) each issued and outstanding share of BSS Common Stock owned by EchoStar stockholders was converted into the right to receive 0.23523769 shares of DISH Class A common stock, par value $0.001 per share (“DISH Common Stock”) ((i) - (iii) collectively, the “BSS Transaction”).  Since the Spin-off, EchoStar and DISH have operated as separate publicly-traded companies.  Prior to

Following the consummation of the Share Exchange on February 28, 2017, DISH Network heldBSS Transaction, we no longer operate the Tracking Stock discussed above. ABSS Business, which was a substantial majorityportion of our ESS segment. As a result of the voting powerBSS Transaction, the financial results of the sharesBSS Business, except for certain real estate that transferred in the transaction, are presented as discontinued operations
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ECHOSTAR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
and, DISH is owned beneficially by Charles W. Ergen, our Chairman,as such, excluded from continuing operations and by certain trusts established by Mr. Ergensegment results for the benefit of his family.three and six months ended June 30, 2019, as presented in these unaudited Condensed Consolidated Financial Statements and the accompanying notes (collectively, the “Condensed Consolidated Financial Statements”).


All amounts in the following footnotes reference results from continuing operations unless otherwise noted. Refer to Note 4. Discontinued Operations for further detail.

NoteNOTE 2. Summary of Significant Accounting PoliciesSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have beenThese Condensed Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles generally accepted in the (“U.S. (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statementsthey do not include all of the information and notes required for complete financial statements prepared in conformity with U.S. GAAP. In our opinion, all adjustments, (consistingconsisting of normal recurring adjustments)adjustments, considered necessary for a fair presentation have been included. OurHowever, our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer

All amounts presented in these Condensed Consolidated Financial Statements are expressed in thousands of U.S. dollars, except share and per share amounts and unless otherwise noted.

Refer to Note 2. Summary of Significant Accounting Policies to the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2016.

Principlesa summary and discussion of Consolidation
We consolidate all entities in which we have a controlling financial interest. We are deemed to have a controlling financial interest in variable interest entities where we are the primary beneficiary. We are deemed to have a controlling financial interest in other entities when we own more than 50 percent of the outstanding voting shares and other shareholders do not have substantive rights to participate in management. For entities we control but do not wholly own, we record a noncontrolling interest within stockholders’ equity for the portion of the entity’s equity attributed to the noncontrolling ownership interests.our significant accounting policies, except as updated below.
As of December 31, 2016, noncontrolling interests consisted primarily of HSS Tracking Stock previously owned by DISH Network. As a result of the Share Exchange, the noncontrolling interest in HSS Tracking Stock was extinguished as of February 28, 2017. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates

The preparation of financial statements in conformity with GAAP requires usWe are required to make certain estimates and assumptions that affect the amounts reported amounts of assetsin these Condensed Consolidated Financial Statements. The most significant estimates 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 condensed consolidated financial statements. Estimatesassumptions are used in accounting for, among other things,determining: (i) inputs used to recognize revenue over time, including amortization periods for deferred subscribercontract acquisition costs, revenue recognition using the percentage-of-completion method,costs; (ii) allowances for doubtful accounts, allowances for sales returns and rebates, warranty obligations, self-insurance obligations,accounts; (iii) deferred taxes and related valuation allowances, including uncertain tax positions,positions; (iv) loss contingencies,contingencies; (v) fair value of financial instruments, fair value of stock-based compensation awards,instruments; (vi) fair value of assets and liabilities acquired in business combinations, lease classifications,combinations; and (vii) asset impairment testing, useful lives and methods for depreciation and amortization of long-lived assets, and certain royalty obligations. testing.

We base our estimates and assumptions on historical experience, observable market inputs and on various other factors that we believe to be relevant under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results may differ from previously estimated amounts and such differences may be material to our condensed consolidated financial statements. ChangingAdditionally, changing economic and other conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. We review our estimates and assumptions periodically and the effects of revisions thereto are reflected in the period they occur or prospectively if the revised estimate affectsestimates or assumptions affect future periods.

Principles of Consolidation
 
We consolidate all entities in which we have a controlling financial interest. We are deemed to have a controlling financial interest in variable interest entities in which we are the primary beneficiary and in other entities in which we own more than 50% of the outstanding voting shares and other shareholders do not have substantive rights to participate in management. For entities we control but do not wholly own, we record a non-controlling interest within stockholders’ equity for the portion of the entity’s equity attributed to the non-controlling ownership interests. All significant intercompany balances and transactions have been eliminated in consolidation.
Reclassification

Certain prior period amounts have been reclassified to conform with the current period presentation.

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(Unaudited)

Fair Value Measurements
We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We utilize the highest level of inputs available according to the following hierarchy in determining fair value:
•
Level 1, defined as observable inputs being quoted prices in active markets for identical assets;
•
Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
•
Level 3, defined as unobservable inputs for which little or no market data exists, consistent with characteristics of the asset or liability that would be considered by market participants in a transaction to purchase or sell the asset or liability.
Transfers between levels in the fair value hierarchy are considered to occur at the beginning of the quarterly accounting period. There were no transfers between levels for each of the nine months ended September 30, 2017 or 2016.
As of September 30, 2017 and December 31, 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.
Fair values of our marketable investment securities are based on a variety of observable market inputs. For our investments in publicly traded equity securities and U.S. government securities, fair value ordinarily is determined based on a Level 1 measurement that reflects quoted prices for identical securities in active markets. Fair values of our investments in other marketable debt securities generally are based on Level 2 measurements, as the markets for such debt securities are less active. Trades of identical debt securities on or near the measurement date are considered a strong indication of fair value. Matrix pricing techniques that consider par value, coupon rate, credit quality, maturity and other relevant features also may be used to determine fair value of our investments in marketable debt securities.
Fair values for HSS’ 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 other 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 September 30, 2017 and December 31, 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 $113.5 million and $74.1 million, respectively. We use fair value measurements from time to time in connection with asset impairment testing and the assignment of purchase consideration to assets and liabilities of acquired companies. Those fair value measurements typically include significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy.
Research and Development
Costs incurred in research and development activities generally are expensed as incurred. A significant portion of our research and development costs are incurred in connection with the specific requirements of a customer’s order. In such instances, the amounts for these customer funded development efforts are included in cost of sales.

Cost of sales includes research and development costs incurred in connection with customers’ orders of approximately $7.0 million and $11.1 million for the three months ended September 30, 2017 and 2016, respectively, and $20.7 million and $17.2 million for the nine months ended September 30, 2017 and 2016, respectively. In addition, we incurred other research and development expenses of approximately $8.3 million and $9.0 million for the three months ended September 30, 2017 and 2016, respectively, and $23.4 million and $23.5 million for the nine months ended September 30, 2017 and 2016, respectively.

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Capitalized Software Costs
Costs related to the procurement and development of software for internal-use and externally marketed software are capitalized and amortized using the straight-line method over the estimated useful life of the software, not in excess of five years. Capitalized costs of internal-use software are included in “Property and equipment, net” and capitalized costs of externally marketed software are included in “Other noncurrent assets, net” in our condensed consolidated balance sheets. Externally marketed software generally is installed in the equipment we sell to customers. We conduct software program reviews for externally marketed capitalized software costs at least annually, or as events and circumstances warrant such a review, to determine if capitalized software development costs are recoverable and to ensure that costs associated with programs that are no longer generating revenue are expensed. As of September 30, 2017 and December 31, 2016, the net carrying amount of externally marketed software was $87.7 million and $76.3 million, respectively, of which $16.7 million and $50.1 million, respectively, was under development and not yet placed in service. We capitalized costs related to the development of externally marketed software of $8.3 million and $6.2 million for the three months ended September 30, 2017 and 2016, respectively, and $25.4 million and $18.5 million for the nine months ended September 30, 2017 and 2016, respectively. We recorded amortization expense relating to the development of externally marketed software of $5.5 million and $2.5 million for the three months ended September 30, 2017 and 2016, respectively, and $14.1 million and $7.2 million for the nine months ended September 30, 2017 and 2016, respectively. The weighted average useful life of our externally marketed software was approximately four years as of September 30, 2017.
NewRecently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issuedCredit Losses

On January 1, 2020, we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”)2016-13 - Financial Instruments - Credit Losses (Topic 326), as amended, 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 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.” Public entities are required to adopt theTopic 326 (“ASC 326”). ASC 326 introduces a new revenue standard in fiscal years beginning after December 15, 2017 and in interim periods within those fiscal years. The standard may be applied either retrospectively to prior periods or as a cumulative-effect adjustment as of the date of adoption. Early adoption is permitted, but not before fiscal years beginning after December 15, 2016. We plan to adopt the new revenue standard as of January 1, 2018 using the “modified retrospective method.” Under this method, we will apply the rules only to contracts that are not substantially completed as of January 1, 2018, recognizing in retained earnings an adjustment for the cumulative effect of the change and providing additional disclosures comparing results to previous accounting standards.

Upon initial evaluation, we do not expect the adoption of ASU 2014-09 to have a material impact on the timing or amount of revenue recognition. However, we do believe the new standard will impact our financial statements as it relatesapproach to the deferralperiodic estimation of sales commissions. We generally expense sales commissions as incurred under the current standard with the exception of the consumer business in our Hughes segment. The requirement to defer incremental contract acquisition costs and recognize them over the contract period or expected customer life will result in the recognition of a deferred charge on our consolidated balance sheets and corresponding impact to the consolidated statement of operations and comprehensive income (loss). In addition, we currently amortize our sales acquisition costs related to our consumer business in our Hughes segment over the contract term. We believe, under the new guidance, the amortization period for these contract acquisition costs will be over the estimated customer life which is a longer period of time.

We continue to evaluate the impact of the new standard on our consolidated financial statements and related disclosures. We are not able to reasonably estimate the impact of the new standard on our consolidated financial statements at this time.
In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This update substantially revises standards for the recognition, measurement and presentation of financial instruments, including requiring all equity investments, except for investments in consolidated subsidiaries and investments accounted for using the equity method, to be measured at fair value with changes in the fair value recognized through net income. The update permits an entity to elect to measure an equity security without a readily determinable fair value at its cost, adjusted for changes resulting from impairments and observable price changes in orderly transactions for identical or similar securities of the same issuer. It also amends certain disclosure requirements associated with

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equity investments and the fair value of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permittedcredit losses for certain requirements. We plan to adopt all applicable requirements of this update as of January 1, 2018. Upon adoption, we will adjust accumulated earnings to include unrealized gains or losses on any marketable equity securities then designated as available for sale, which historically have been recorded in accumulated other comprehensive loss except when an other-than-temporary impairment has occurred. Following adoption, all periodic changes in fair value of such securities will be recognized in net income or loss. As of September 30, 2017, we had recognized $13.6 million in net unrealized gains on such securities in accumulated other comprehensive loss. For our equity investments without a readily determinable fair value that we now account for using the cost method, we expect to elect to measure such securities at cost, adjusted for impairments and observable price changes. We expect our future net income or loss to be more volatile as a result of these changes in accounting for our investments in available-for-sale and cost method equity securities. We continue to assess the impact on our consolidated financial statements of certain requirements of ASU 2016-01 related to measurement of fair value of financial instruments, deferred tax assets related to available-for-sale debt securities, and financial statement presentation and disclosure.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”). This standard requires lessees to recognize assets and liabilities for all leases with lease terms more than 12 months, including leases classified as operating leases. The standard also modifies the definition of a lease and the criteria for classifying leases as operating leases or financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplifies the accounting for share-based payment awards. 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. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. The update specifies requirements for retrospective, modified retrospective or prospective application for the various amendments contained in the update. 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. We prospectively adopted amendments requiring presentation of excess tax benefits in operating activities in the statement of cash flows and dealing with the treatment of excess tax benefits in the calculation of diluted earnings per share. The inclusion of excess tax benefits in our income tax provision for the three and nine months ended September 30, 2017 resulted in increases in net income from continuing operations of $0.2 million and $1.6 million, respectively and increases in net income of $0.2 million and $4.8 million, respectively.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduces an approach based on expected losses to estimate credit losses on certain typesinstead of financial instruments rather than incurred losses. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets withthat have experienced credit deterioration since their origination.original purchase. We have elected to apply the requirements of the new standard prospectively and we recognized a cumulative effect of adoption of $9.1 million to Accumulated earnings (losses) as of January 1, 2020. Based on this election, we did not restate our comparative Condensed Consolidated Financial Statements and they continue to be reported under the accounting standards in effect for the periods before January 1, 2020.

The following describes the accounting impacts, by major balance sheet line item, of our adoption of this new standard based on the relevant types of losses that we and our equity method investees may be subject to:

•Trade Accounts Receivable and Contract Assets, Net —Our trade accounts receivables and contract assets consist of amounts due from both our consumer and enterprise customers. Our receivables and related credit losses for our consumer customers are limited due to policies that require advance payment for services, predominant use of credit card and ACH payment processes, and our ability to promptly terminate service when timely payments are not received. However, for our enterprise customers, we estimate expected credit losses on a collective basis based on our historical loss experience, as adjusted to reflect changes in relevant factors, such as macroeconomic conditions and customer mix, that can significantly impact collectability.

We apply our collective estimation processes separately to several pools of receivables that share common risk characteristics, generally based on the customers’ geographical location. Customers with significant past-due balances or other atypical characteristics are excluded from our collective analysis and evaluated on a case-by-case basis. Our estimates of expected credit losses for such receivables reflect significant judgments that consider customer-specific matters such as the customer’s financial condition, payment history, and recent developments in the customer’s business and industry. Due to the short-term nature of our trade receivables and contract assets, forecasts about the future have limited relevance to our expected credit loss estimates.

We record our customer related estimated credit losses as a component of our bad debt expense as reported in Selling, general and administrative expenses.

•Other Current Assets, Net, and Other Non-current Assets, Net —We estimate expected credit losses for receivables with payment terms longer than one year separately by borrower, due to the unique risk characteristics of such receivables. We generally use discounted cash flow techniques to estimate such credit losses. In applying such techniques, we may estimate principal and interest cash flows under probability-weighted scenarios that consider entity-specific matters and forecasted economic conditions. The majority of our other non-current receivables are from entities in the telecommunications industry. The collection of contractual principal and interest on these receivables is highly dependent on the future business operations of those entities. Our estimation of expected credit losses for such receivables requires significant judgment about matters specific to the borrower and their industry. Accordingly, our actual collection experience may differ from the assumptions reflected in our expected credit loss estimates.

We record our estimated credit losses as a component of our bad debt expense as reported in Selling, general and administrative expenses.

•Other Investments, Net — We estimate expected credit losses on our other debt investments with payment terms longer than one year separately by debtor, due to the unique risk characteristics of such debt investments. We generally use discounted cash flow techniques to estimate such credit losses. In
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applying such techniques, we may estimate principal and interest cash flows under probability-weighted scenarios that consider entity-specific matters and forecasted economic conditions. The majority of our other debt investments are with entities in the telecommunications industry. The collection of contractual principal and interest on these debt investments are highly dependent on the future business operations of those entities. Our estimation of expected credit losses for such debt investments require significant judgment about matters specific to the debtor and their industry. Accordingly, our actual collection experience may differ from the assumptions reflected in our expected credit loss estimates.

We record our other debt investments related estimated credit losses as a reduction of Interest income, net.

Financial Impact of Adoption. Our adoption of this new standard resulted in the following adjustments to our Condensed Consolidated Balance Sheet:
Balance at December 31, 2019Adoption of
ASC 326 Increase (Decrease)		Balance at
January 1, 2020
Trade accounts receivable and contract assets, net$196,629  $(13,672) $182,957  
Other current assets, net$179,531  $6,723  $186,254  
Other investments, net$325,405  $(7,381) $318,024  
Other non-current assets, net$334,841  $4,050  $338,891  
Total assets$7,154,298  $(10,280) $7,144,018  
Deferred tax liabilities, net$351,692  $(972) $350,720  
Accumulated earnings (losses)$632,809  $(9,068) $623,741  
Non-controlling interests$75,748  $(240) $75,508  
Total stockholders’ equity$3,745,553  $(9,308) $3,736,245  
Total liabilities and stockholders’ equity$7,154,298  $(10,280) $7,144,018  

The application of ASC 326 requirements did not materially affect our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13No. 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is part of the FASB’s overall simplification initiative and seeks to simplify the accounting for income taxes by updating certain guidance and removing certain exceptions. The updated guidance is effective for fiscal years beginning after December 15, 20192020 and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We early adopted ASU 2016-16 as of January 1, 2017. Our adoption of this update didguidance, but do not expect it to have a material impact on our condensed consolidated financial statements and related disclosures.statements.

In November 2016,March 2020, the FASB issued Accounting Standards UpdateASU No. 2016-18, Statement2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848 (“ASC 848”). The purpose of Cash Flows (Topic 230): Restricted CashASC 848 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates (“ASU 2016-18”IBORs”). This standard requires restricted cash to alternative reference rates. ASC 848 applies only to contracts, hedging relationships, and restricted cash equivalentsother transactions that reference a reference rate expected to be included with cash and cash equivalents in the statementdiscontinued because of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted and the standard mustreference rate reform. The guidance may be applied retrospectivelyupon issuance of ASC 848 through December 31, 2022. We are currently assessing the impact of adopting this new guidance, but do not expect it to all periods presented. We expect to adopt ASU 2016-18 as of January 1, 2018.  Following our adoption of this standard, the beginning and ending balances of cash and cash equivalents presented inhave a material impact on our consolidated statements of cashfinancial statements.

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NOTE 3.  REVENUE RECOGNITION
flows will include amounts for restricted cash and cash equivalents, which currently are not
Contract Balances

The following table presents the components of our contract balances:
 As of
June 30,
2020		December 31,
2019
Trade accounts receivable and contract assets, net:
Sales and services$157,459  $152,632  
Leasing4,110  4,016  
Total trade accounts receivable161,569  156,648  
Contract assets38,223  63,758  
Allowance for doubtful accounts(16,413) (23,777) 
Total trade accounts receivable and contract assets, net$183,379  $196,629  
Contract liabilities:
Current$89,831  $101,060  
Non-current11,048  10,572  
Total contract liabilities$100,879  $111,632  

The following table presents the revenue recognized in the Condensed Consolidated Statements of Operations that was previously included in such balances.  Changes in restricted cash and cash equivalents, which we have historically reported in cash flows from investing activities, will not be reportedwithin contract liabilities:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Revenue$7,614  $8,290  $59,786  $47,773  

The following table presents the activity in our consolidated statements of cash flows.  allowance for doubtful accounts:
For the six months ended June 30,
20202019
Balance at beginning of period$23,777  $16,604  
Credit losses (1)
4,393  18,862  
Deductions(10,546) (10,053) 
Foreign currency translation(1,211) 173  
Balance at end of period$16,413  $25,586  


(1)In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying amount, including goodwill, exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is to be applied on a prospective basis. We early adopted ASU 2017-04 as of January 1, 2017. Our adoption of this update did not have a material impact on our condensed consolidated financial statements and related disclosures, but it may impact the recognition and measurement of a goodwill impairment loss in future periods if we determine that the carrying amount of any reporting units including goodwill exceeds fair value of the reporting unit.

In March 2017, the FASB issued Accounting Standards Update No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). This update shortens the amortization period of premiums on certain purchased callable debt securities to the earliest call date, effectively reducing interest income on such securities prior to the earliest call date. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. We are assessing the The impact of adopting this new accounting standardASC 326 on January 1, 2020 was a net decrease to our consolidated financial statementsallowance for doubtful accounts largely driven by a $13.4 million reclassification to Other current assets, net and Other non-current assets, net, offset by a $2.9 million adjustment to Accumulated earnings (losses).

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Contract Acquisition Costs

The following table presents the activity in our contract acquisition costs, net:
For the six months ended June 30,
20202019
Balance at beginning of period$113,592  $114,306  
Additions49,366  47,277  
Amortization expense(51,265) (47,762) 
Foreign currency translation(4,607) 97  
Balance at end of period$107,086  $113,918  

We recognized amortization expenses related disclosures.to contract acquisition costs of $25.6 million and $24.3 million for the three months ended June 30, 2020 and 2019, respectively.

Transaction Price Allocated to Remaining Performance Obligations

As of June 30, 2020, the remaining performance obligations for our customer contracts with original expected durations of more than one year was $691.0 million. We expect to recognize 40.2% of our remaining performance obligations of these contracts as revenue in the next twelve months. This amount excludes agreements with consumer customers in our Hughes segment, our leasing arrangements and agreements with certain customers under which collectability of all amounts due through the term of contracts is uncertain.

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Disaggregation of Revenue

Geographic Information

The following table presents our revenue from customer contracts disaggregated by primary geographic market and by segment:
HughesESSCorporate and OtherConsolidated
Total
For the three months ended June 30, 2020
North America$384,623  $4,179  $2,015  $390,817  
South and Central America33,961  —  100  34,061  
Other34,588  —  —  34,588  
Total revenue$453,172  $4,179  $2,115  $459,466  
For the three months ended June 30, 2019
North America$372,398  $3,742  $4,739  $380,879  
South and Central America30,395  —  103  30,498  
Other49,054  —  —  49,054  
Total revenue$451,847  $3,742  $4,842  $460,431  
For the six months ended June 30, 2020
North America$767,338  $8,831  $4,455  $780,624  
South and Central America67,917  —  192  68,109  
Other76,399  —  —  76,399  
Total revenue$911,654  $8,831  $4,647  $925,132  
For the six months ended June 30, 2019
North America$740,227  $7,775  $9,611  $757,613  
South and Central America57,258  —  243  57,501  
Other99,699  —  —  99,699  
Total revenue$897,184  $7,775  $9,854  $914,813  

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Nature of Products and Services

The following tables presents our revenue disaggregated by the nature of products and services and by segment for the three and six months ended June 30, 2020 and 2019:
HughesESSCorporate and OtherConsolidated
Total
For the three months ended June 30, 2020
Services and other revenue:
Services$399,697  $2,564  $993  $403,254  
Lease revenue11,052  1,615  1,122  13,789  
Total services and other revenue410,749  4,179  2,115  417,043  
Equipment revenue:
Equipment18,518  —  —  18,518  
Design, development and construction services22,668  —  —  22,668  
Lease revenue1,237  —  —  1,237  
Total equipment revenue42,423  —  —  42,423  
Total revenue$453,172  $4,179  $2,115  $459,466  
For the three months ended June 30, 2019
Services and other revenue:
Services$381,608  $2,400  $1,715  $385,723  
Lease revenue12,594  1,342  3,127  17,063  
Total services and other revenue394,202  3,742  4,842  402,786  
Equipment revenue:
Equipment30,597  —  —  30,597  
Design, development and construction services25,860  —  —  25,860  
Lease revenue1,188  —  —  1,188  
Total equipment revenue57,645  —  —  57,645  
Total revenue$451,847  $3,742  $4,842  $460,431  

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HughesESSCorporate and OtherConsolidated
Total
For the six months ended June 30, 2020
Services and other revenue:
Services$789,697  $5,329  $2,281  $797,307  
Lease revenue22,225  3,502  2,366  28,093  
Total services and other revenue811,922  8,831  4,647  825,400  
Equipment revenue:
Equipment43,357  —  —  43,357  
Design, development and construction services54,225  —  —  54,225  
Lease revenue2,150  —  —  2,150  
Total equipment revenue99,732  —  —  99,732  
Total revenue$911,654  $8,831  $4,647  $925,132  
For the six months ended June 30, 2019
Services and other revenue:
Services$762,391  $5,217  $3,452  $771,060  
Lease revenue25,434  2,558  6,402  34,394  
Total services and other revenue787,825  7,775  9,854  805,454  
Equipment revenue:
Equipment56,557  —  —  56,557  
Design, development and construction services50,926  —  —  50,926  
Lease revenue1,876  —  —  1,876  
Total equipment revenue109,359  —  —  109,359  
Total revenue$897,184  $7,775  $9,854  $914,813  

Lease Revenue

The following table presents our lease revenue by type of lease:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Sales-type lease revenue:
Revenue at lease commencement$1,237  $1,188  $2,150  $1,876  
Interest income95  258  164  510  
Total sales-type lease revenue1,332  1,446  2,314  2,386  
Operating lease revenue13,694  16,805  27,929  33,884  
Total lease revenue$15,026  $18,251  $30,243  $36,270  

Substantially all of our net investment in sales-type leases consisted of lease receivables totaling $9.4 million and $6.5 million as of June 30, 2020 and December 31, 2019, respectively.

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The following table presents future operating lease payments to be received as of June 30, 2020:
Amounts
Year ending December 31,
2020 (remainder)$25,789  
202136,045  
202234,126  
202332,127  
202429,733  
2025 and beyond127,816  
Total lease payments$285,636  

The following table presents amounts for assets subject to operating leases, which are included in Property and equipment, net:
As of
June 30, 2020December 31, 2019
CostAccumulated DepreciationNetCostAccumulated DepreciationNet
Customer premises equipment$1,470,861  $(1,143,997) $326,864  $1,377,914  $(1,043,431) $334,483  
Satellites104,620  (34,847) 69,773  104,620  (31,360) 73,260  
Real estate47,978  (16,606) 31,372  46,930  (16,048) 30,882  
Total$1,623,459  $(1,195,450) $428,009  $1,529,464  $(1,090,839) $438,625  

The following table presents depreciation expense for assets subject to operating leases, which is included in Depreciation and amortization:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Customer premises equipment$54,845  $46,839  $100,566  $92,651  
Satellites1,743  1,738  3,487  3,475  
Real estate233  558  465  1,116  
Total$56,821  $49,135  $104,518  $97,242  

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ECHOSTAR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
NOTE 4. DISCONTINUED OPERATIONS
Note 3
BSS Business

The following table presents the financial results of our discontinued operations for the BSS Business:
For the three months ended June 30, 2019For the six months ended June 30, 2019
Revenue:
Services and other revenue - DISH Network$70,819  $141,645  
Services and other revenue - other5,874  11,748  
Total revenue76,693  153,393  
Costs and expenses:
Cost of sales - services and other (exclusive of depreciation and amortization)10,517  20,741  
Selling, general and administrative expenses3,421  3,441  
Depreciation and amortization35,144  70,387  
Total costs and expenses49,082  94,569  
Operating income (loss)27,611  58,824  
Other income (expense):
Interest expense(6,415) (13,098) 
Total other income (expense), net(6,415) (13,098) 
Income (loss) from discontinued operations before income taxes21,196  45,726  
Income tax benefit (provision), net3,772  (1,511) 
Net income (loss) from discontinued operations$24,968  $44,215  

No assets or liabilities attributable to our discontinued operations of the BSS Business were held by us as of June 30, 2020 or December 31, 2019.

The following table presents the significant supplemental cash flow information and adjustments to reconcile net income to net cash flow from operating activities for discontinued operations of the BSS Business for the six months ended June 30, 2019:
Amounts
Operating activities:
Net income (loss) from discontinued operations$44,215 
Depreciation and amortization$70,387 
Investing activities:
Expenditures for property and equipment$244 
Financing activities:
Payment of finance lease obligations$19,457 
Payment of in-orbit incentive obligations$3,127 

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ECHOSTAR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Terminated or Transferred Related Party Agreements

Effective September 10, 2019, the following agreements were terminated or transferred to DISH Network as part of the BSS Transaction. Unless noted differently below, we have no further obligations and have neither earned additional revenue nor incurred additional expense, as applicable, under or in connection with these agreements after the consummation of the BSS Transaction.

Satellite Capacity Leased to DISH Network. We entered into certain agreements to lease satellite capacity pursuant to which we provided satellite services to DISH Network on certain satellites, as listed below, owned or leased by us. The fees for the services provided under these agreements depended, among other things, upon the orbital location of the applicable satellite, the number of transponders that provided services on the applicable satellite and the length of the service arrangements. The terms of each of the agreements are set forth below:

•EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV — In March 2014, we began leasing certain satellite capacity to DISH Network on the EchoStar VII satellite, the EchoStar X satellite, the EchoStar XI satellite and the EchoStar XIV satellite.

•EchoStar XII — DISH Network leased satellite capacity from us on the EchoStar XII satellite.

•EchoStar XVI — In December 2009, we entered into an agreement to lease satellite capacity to DISH Network, pursuant to which DISH Network leased satellite capacity from us on the EchoStar XVI satellite beginning in January 2013.

•Nimiq 5 Agreement — In September 2009, we entered into an agreement with Telesat Canada to lease satellite capacity from Telesat Canada on all 32 direct broadcast satellite (“DBS”) transponders on the Nimiq 5 satellite at the 72.7 degree west longitude orbital location (the “Telesat Transponder Agreement”). In September 2009, we entered into an agreement with DISH Network, pursuant to which DISH Network leased satellite capacity from us on all 32 of the DBS transponders covered by the Telesat Transponder Agreement (the “DISH Nimiq 5 Agreement”). Under the terms of the DISH Nimiq 5 Agreement, DISH Network made certain monthly payments to us that commenced in September 2009, when the Nimiq 5 satellite was placed into service. Following the consummation of the BSS Transaction, we retained certain obligations related to DISH Network’s performance under the Telesat Transponder Agreement.

•QuetzSat-1 Agreement — In November 2008, we entered into an agreement to lease satellite capacity from SES Latin America, which provided, among other things, for the provision by SES Latin America to us of leased satellite capacity on 32 DBS transponders on the QuetzSat-1 satellite. Concurrently, in 2008, we entered into an agreement pursuant to which DISH Network leased from us satellite capacity on 24 of the DBS transponders on the QuetzSat-1 satellite. The QuetzSat-1 satellite was launched in September 2011 and was placed into service in November 2011 at the 67.1 degree west longitude orbital location. In January 2013, the QuetzSat-1 satellite was moved to the 77 degree west longitude orbital location. In February 2013, we and DISH Network entered into an agreement pursuant to which we leased back from DISH Network certain satellite capacity on 5 DBS transponders on the QuetzSat-1 satellite.

TT&C Agreement. Effective January 2012, we entered into a TT&C agreement pursuant to which we provided TT&C services to DISH Network, which we subsequently amended (the “2012 TT&C Agreement”). The fees for services provided under the 2012 TT&C Agreement were calculated at either: (i) a fixed fee or (ii) cost plus a fixed margin, which varied depending on the nature of the services provided.

Real Estate Leases to DISH Network. Discontinued OperationsWe entered into lease agreements pursuant to which DISH Network leased certain real estate from us. The rent on a per square foot basis each of the leases or subsequent amendments was comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of the leases or subsequent amendments and DISH Network was responsible for its portion of the taxes, insurance, utilities and maintenance of the premises.These components of the BSS Transaction do not qualify for discontinued operations treatment, and therefore the revenue from these lease agreements has not been treated as discontinued operations. The terms of each of the leases are set forth below:

On January 31,
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
•Santa Fe Lease Agreement— DISH Network leased from us all of 5701 S. Santa Fe Dr., Littleton, Colorado. In connection with the BSS Transaction, we transferred this property to DISH Network.

•Cheyenne Lease Agreement — During 2017, EchoStar Corporationwe and certain of our subsidiaries entered into a share exchange agreement (the “Share Exchange Agreement”) with DISH and certain of its subsidiaries entered into the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, on February 28, 2017, among other things, EchoStar Corporationwhereby we and certain of itsour subsidiaries received all of the shares of the Tracking Stockpreferred tracking stock previously issued by us and one of our subsidiaries (the “Tracking Stock”) in exchange for 100% of the equity interests of certain EchoStarof our subsidiaries that held substantially all of our former EchoStar Technologies businesses and certain other assets. Following consummation ofassets (collectively, the “Share Exchange”). Prior to the Share Exchange, we no longer operate theleased to DISH Network certain space at 530 EchoStar Technologies business segment and the EchoStar Tracking Stock and HSS Tracking Stock were retired and are no longer outstanding and all agreements, arrangements and policy statementsDrive, Cheyenne, Wyoming. In connection with respect to such tracking stock terminated and are of no further effect.

As a result of the Share Exchange, we transferred ownership of a portion of this property to DISH Network and we and DISH Network amended this agreement to, among other things, provide for a continued lease to DISH Network of the historical financialportion of the property we retained (the “Cheyenne Data Center”). In connection with the BSS Transaction, we transferred the Cheyenne Data Center to DISH Network.

Real Estate Leases from DISH Network. We entered into a lease agreement pursuant to which we leased from DISH Network certain space at 801 N. DISH Dr. in Gilbert, Arizona for the Satellite Operations Center and Satellite Access Center. The rent on a per square foot basis was comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of the leases or subsequent amendments and included our portion of the taxes, insurance, utilities and certain maintenance of the premises. In connection with the BSS Transaction, we terminated this lease and transferred the Gilbert Satellite Operations Center, including any and all equipment, software, processes, software licenses, hardware licenses, furniture and technical documentation located within, to DISH Network.

NOTE5. BUSINESS COMBINATIONS

In May 2019, we entered into an agreement with Al Yah Satellite Communications Company PrJSC (“Yahsat”) pursuant to which, in November 2019, Yahsat contributed its satellite communications services business in Brazil to one of our Brazilian subsidiaries in exchange for a 20% equity ownership interest in that subsidiary (the “Yahsat Brazil JV Transaction”). The combined business provides broadband internet services and enterprise solutions in Brazil using the Telesat T19V satellite, the Eutelsat 65W satellite and Yahsat’s Al Yah 3 satellite. The results of our EchoStar Technologies segment prioroperations related to the business we acquired from Yahsat have been included in these Condensed Consolidated Financial Statements from the date of acquisition. Through June 30, 2020, we have incurred $1.6 million of costs associated with the closing of the Share Exchange are reflected in our condensed consolidated financial statements as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. The noncontrolling interest in HSS Tracking Stock, as reflected in our stockholders equity, was extinguished as of February 28, 2017 as a result of the Share Exchange.Yahsat Brazil JV Transaction.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

All assets and liabilities acquired from Yahsat have been recorded at fair value. The following table presents our updated preliminary allocation of the operating results ofpurchase price:
Amounts
Assets:
Cash and cash equivalents$7,858 
Other current assets, net7,106 
Property and equipment86,983��
Regulatory authorization4,498 
Goodwill6,328 
Other non-current assets, net1,502 
Total assets$114,275 
Liabilities:
Trade accounts payable$3,879 
Accrued expenses and other current liabilities4,796 
Total liabilities$8,675 
Total purchase price (1)
$105,600 
(1) Based on the value determined for the equity ownership interest issued by our discontinued operations:Brazilian subsidiary as consideration for the business acquired by us in the Yahsat Brazil JV Transaction.
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
  (In thousands)
Revenue:        
Equipment, services and other revenue - DISH Network $—
 $260,829
 $143,063
 $892,333
Equipment, services and other revenue - other (45) 21,474
 10,344
 89,326
Total revenue (45) 282,303
 153,407
 981,659
Costs and Expenses:        
Cost of equipment, services and other 19
 229,414
 121,973
 800,801
Selling, general and administrative expenses (590) 20,869
 5,502
 55,923
Research and development expenses —
 11,556
 4,635
 38,237
Depreciation and amortization —
 15,085
 11,659
 46,129
Total costs and expenses (571) 276,924
 143,769
 941,090
Operating income 526
 5,379
 9,638
 40,569
Other Income (Expense):        
Interest expense —
 (41) (15) (116)
Equity in earnings (losses) of unconsolidated affiliates, net —
 998
 (1,159) 2,197
Other, net 2
 281
 (61) 369
Total income (expense), net 2
 1,238
 (1,235) 2,450
Income from discontinued operations before income taxes 528
 6,617
 8,403
 43,019
Income tax provision (1,182) (2,118) (1,949) (13,806)
Net income (loss) from discontinued operations $(654) $4,499
 $6,454
 $29,213


Expenditures for property and equipment of our discontinued operations totaled zero and $17.2 million for the three months ended September 30, 2017 and 2016, respectively, and $12.5 million and $31.8 million for the nine months ended September 30, 2017 and 2016, respectively.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

The following table presentspreliminary valuation of the aggregate carrying amounts ofacquired assets was derived using primarily unobservable Level 3 inputs, which require significant management judgment and liabilities of our discontinued operations:estimation:
Amounts
Satellite payload$49,363 
Regulatory authorization4,498 
Total$53,861 
  As of
  September 30, 2017 December 31, 2016
  (In thousands)
Assets:    
Cash and cash equivalents $—
 $778
Trade accounts receivable, net 5
 27,261
Trade accounts receivable - DISH Network 140
 259,198
Inventory —
 9,824
Prepaids and deposits —
 14,463
Current assets of discontinued operations 145
 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 $145
 $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


The satellite payload and regulatory authorization were valued using an income approach and are being amortized over seven and 11 years, respectively.
The goodwill we recognized was allocated entirely to our Hughes segment and attributed to expected synergies, projected long-term business growth in current and new markets and an assembled workforce.

Note 4.Earnings per ShareNOTE 6. EARNINGS PER SHARE
 
We present basic and diluted earnings or losses per share (“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 “NetNet income (loss) attributable to EchoStar Corporation common stock” 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 wasis computed using the treasury stock method based on the average market value of our Class A common stock during the period.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
The following table presents the calculation of ourbasic and diluted weighted-average common shares outstanding excludedEPS:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Net income (loss) attributable to EchoStar Corporation common stock:
Net income (loss) from continuing operations$(11,412) $(30,660) $(65,707) $(35,705) 
Net income (loss) from discontinued operations—  24,968  —  44,215  
Net income (loss) attributable to EchoStar Corporation common stock$(11,412) $(5,692) $(65,707) $8,510  
Weighted-average common shares outstanding:
Class A and B common stock:
Basic and diluted97,879  96,415  97,845  95,903  
Earnings (losses) per share:
Class A and B common stock:
Basic and diluted:
Continuing operations$(0.12) $(0.32) $(0.67) $(0.37) 
Discontinued operations—  0.26  —  0.46  
Total basic and diluted earnings (losses) per share$(0.12) $(0.06) $(0.67) $0.09  

The following table presents the number of anti-dilutive options to purchase shares of our Class A common stock whose effect would be anti-dilutive,which have been excluded from the calculation of 1.0 millionour diluted weighted-average common shares for the three and nine months ended September 30, 2017 and 3.6 million shares for the three and nine months ended September 30, 2016.outstanding:

For the three months ended June 30,For the six months ended June 30,
2020201920202019
Number of shares4,8783,3874,8783,387

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

NOTE 7. MARKETABLE INVESTMENT SECURITIES
Prior to the Share Exchange, the EchoStar Tracking Stock was a participating security that shared in our consolidated earnings and therefore, we applied the two-class method to calculate EPS for periods prior to March 1, 2017. Under the two-class method, we allocated net income or loss attributable to EchoStar between common stock and the EchoStar Tracking Stock considering both dividends declared on each class of stock and the participation rights of each class of stock in undistributed earnings. Based on the 51.89% economic interest in the Hughes Retail Group represented by the EchoStar Tracking Stock, we allocated undistributed earnings to the EchoStar Tracking Stock based on 51.89% of the attributed net income or loss of the Hughes Retail Group. Moreover, because the reported amount of “Net income attributable to EchoStar” in our condensed consolidated statements of operations excluded DISH Network’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 excluded an aggregate 80.0% of the attributed net loss of the Hughes Retail Group.

The following table presents basic and diluted EPS amounts for all periods and the corresponding weighted-average shares outstanding used in the calculations.our Marketable investment securities:
As of
June 30,
2020		December 31,
2019
Marketable investment securities:
Debt securities:
Available-for-sale:
Corporate bonds$381,201  $568,442  
Other debt securities89,924  335,580  
Total available-for-sale debt securities471,125  904,022  
Fair value option - corporate bonds12,038  9,128  
Total debt securities483,163  913,150  
Equity securities27,548  35,566  
Total marketable investment securities, including restricted amounts510,711  948,716  
Less: Restricted marketable investment securities(731) (8,093) 
Total marketable investment securities$509,980  $940,623  
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
  (In thousands, except per share amounts)
Amounts attributable to EchoStar common stock:        
Net income attributable to EchoStar $34,669
 $36,801
 $79,324
 $141,742
Less: Net income (loss) attributable to EchoStar Tracking Stock —
 157
 (1,209) (1,709)
Net income attributable to EchoStar common stock $34,669
 $36,644
 $80,533
 $143,451
         
Net income from continuing operations $35,323
 $32,145
 $74,079
 $114,238
Net income (loss) from discontinued operations (654) 4,499
 6,454
 29,213
Net income attributable to EchoStar common stock $34,669
 $36,644
 $80,533
 $143,451
         
Weighted-average common shares outstanding :        
Class A and B common stock:        
Basic 95,656
 93,898
 95,316
 93,661
Dilutive impact of stock awards outstanding 1,234
 503
 1,310
 528
Diluted 96,890
 94,401
 96,626
 94,189
         
Earnings per share:        
Class A and B common stock:        
Basic:        
Continuing operations $0.37
 $0.34
 $0.78
 $1.22
Discontinued operations (0.01) 0.05
 0.06
 0.31
Total basic earnings per share $0.36
 $0.39
 $0.84
 $1.53
         
Diluted:        
Continuing operations $0.36
 $0.34
 $0.77
 $1.21
Discontinued operations —
 0.05
 0.06
 0.31
Total diluted earnings per share $0.36
 $0.39
 $0.83
 $1.52



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

Note 5.    Other Comprehensive Income (Loss) and Related Tax Effects
Except in unusual circumstances, we do not recognize tax effects on foreign currency translation adjustments because they are not expected to result in future taxable income or deductions. We have not recognized any tax effects on unrealized gains or losses on available-for-sale securities because such gains or losses would affect the amount of unrealized capital losses for which the related deferred tax asset has been fully offset by a valuation allowance.
Accumulated other comprehensive loss includes net cumulative foreign currency translation losses of $102.3 million and $135.4 million as of September 30, 2017 and December 31, 2016, 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 zero and $7.3 million for the three and nine months ended September 30, 2017, respectively.
Reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2017 and 2016 were as follows:
Accumulated Other Comprehensive 
Loss Components
 Affected Line Item in our Condensed Consolidated Statements of Operations For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
    (In thousands)
Recognition of realized gains on available-for-sale securities in net income (1) Gains on investments, net $—
 $(10) $(2,758) $(5,584)
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
 —
Total reclassifications, net of tax and noncontrolling interests   $—
 $(10) $540
 $(5,584)
(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 on investments, net” in our condensed consolidated statements of operations.
(2)We recorded an other-than-temporary impairment loss on shares of certain common stock included in our strategic equity securities.

Note 6.    Investment Securities
Our marketable investment securities and restricted cash and cash equivalents consisted of the following:
  As of
  September 30, 2017 December 31, 2016
  (In thousands)
Marketable investment securities—current, at fair value:    
Corporate bonds $245,419
 $402,670
Strategic equity securities 139,373
 94,816
Other 100,243
 25,030
Total marketable investment securities—current 485,035
 522,516
Restricted marketable investment securities (1) 12,961
 12,203
Total $497,996
 $534,719
     
Restricted cash and cash equivalents (1) $775
 $723
(1)Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” in our condensed consolidated balance sheets.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

Marketable InvestmentDebt Securities
 
Our marketable investment securities portfolio consists of various debt and equity instruments, which generally are classified as 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.
Corporate Bonds
Our corporate bond portfolio includes debt instruments issued by individual corporations, primarily in the industrial and financial services industries.
Strategic Equity Securities
Our strategic investment portfolio consists of investments in shares of common stock of public companies, which are highly speculative and have experienced and continue to experience volatility. We received dividend income of $2.3 million and $5.8 million for the three and nine months ended September 30, 2017, respectively, and de minimis dividend income for the three and nine months ended September 30, 2016. We recognized a $3.3 million other-than-temporary impairment for the nine months ended September 30, 2017 on one of our investments. This investment had been in a continuous loss position for more than 12 months and experienced a decline in market value as a result of adverse developments during the three months ended March 31, 2017.

Prior to September 2017, we had an investment in the preferred stock of a privately-held company which had a carrying amount of $4.1 million and was accounted for using the cost method. In connection with the company’s initial public offering of its Class A common stock in September 2017, our shares of preferred stock were converted into the company’s Class B common stock. We have the right to convert such shares of Class B common stock to shares of Class A common stock and to sell such shares following the expiration of a lock-up period. For periods following the initial public offering, we account for this investment as a trading security at fair value in our strategic equity security portfolio.
For the three months ended September 30, 2017 and 2016, “Gains on investments, net” included gains of $19.9 million and zero, respectively, related to trading securities that we held as of September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, “Gains on investments, net” included gains of $19.9 million and losses of $1.0 million, respectively, related to trading securities that we held as of September 30, 2017 and 2016, respectively. The fair values of our trading securities were $23.9 million and $7.2 million as of September 30, 2017 and December 31, 2016, respectively.
Other
Our other current marketable investmentdebt securities portfolio includes investments in various debt instruments, including U.S. government bonds, commercial paper and mutual funds.

Restricted Cash and Marketable Investment SecuritiesAvailable-for-Sale

AsThe following table presents the components of September 30, 2017 and December 31, 2016, our restricted marketable investment securities, together withavailable-for-sale debt securities:
AmortizedUnrealizedEstimated
CostGainsLossesFair Value
As of June 30, 2020
Corporate bonds$381,071  $132  $(2) $381,201  
Other debt securities89,923  1  —  89,924  
Total available-for-sale debt securities$470,994  $133  $(2) $471,125  
As of December 31, 2019
Corporate bonds$567,926  $518  $(2) $568,442  
Other debt securities335,572  8  —  335,580  
Total available-for-sale debt securities$903,498  $526  $(2) $904,022  

The following table presents the activity on our restricted cash, included amounts required as collateral for our letters of credit or surety bonds.available-for-sale debt securities:
 For the three months ended June 30,For the six months ended June 30,
 2020201920202019
Proceeds from sales$—  $—  $10,000  $435,978  
Gains (losses) on sales, net$—  $—  $—  $549  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

Unrealized Gains (Losses) on Available-for-Sale Securities
The componentsAs of June 30, 2020, all $471.1 million of our available-for-sale securities are summarized in the table below.
  Amortized Unrealized Estimated
  Cost Gains Losses Fair Value
  (In thousands)
As of September 30, 2017        
Debt securities:        
Corporate bonds $245,426
 $38
 $(45) $245,419
Other (including restricted) 107,823
 1
 (30) 107,794
Equity securities - strategic 101,808
 14,439
 (802) 115,445
Total available-for-sale securities $455,057
 $14,478
 $(877) $468,658
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 September 30, 2017, restricted and non-restricted available-for-sale securities included debt securities of $350.6 million withhad contractual maturities of one year or less and $2.6 million with contractual maturities greater than one year. We may realize proceeds from certain investments prior to their contractual maturity as a result ofless.

Fair Value Option

The following table presents the activity on our ability to sell these securities prior to their contractual maturity.fair value option corporate bonds:
 For the three months ended June 30,For the six months ended June 30,
 2020201920202019
Proceeds from sales$—  $46,717  $—  $46,717  
Gains (losses) on investments, net$(298) $224  $(4,506) $4,422  

Available-for-SaleEquity Securities in a Loss Position
 
The following table reflectspresents the lengthactivity 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 that changes in the estimated fair values of these securities are primarily related to temporary market conditions.equity securities:
 For the three months ended June 30,For the six months ended June 30,
 2020201920202019
Proceeds from sales$4,719  $29,051  $4,853  $79,928  
Gains (losses) on investments, net$2,512  $13,028  $(8,603) $43,277  
  As of
  September 30, 2017 December 31, 2016
  
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
  (In thousands)
Less than 12 months $225,437
 $(871) $154,826
 $(2,760)
12 months or more 23,233
 (6) 1,571
 (2)
Total $248,670
 $(877) $156,397
 $(2,762)

Sales of Available-for-Sale SecuritiesFair Value Measurements
 
We recognized de minimis gains fromThe following table presents our marketable investment securities categorized by the salesfair value hierarchy, certain of our available-for-sale securities for each of the three months ended September 30, 2017 and 2016. We recognized gains from the sales of our available-for-sale securities of $2.8 million and $5.6 million for the nine months ended September 30, 2017 and 2016, respectively. We recognized de minimis losses from the sales of our available-for-sale securities for each of the three and nine months ended September 30, 2017 and 2016.which have historically experienced volatility:
As of
June 30, 2020December 31, 2019
Level 1Level 2TotalLevel 1Level 2Total
Debt securities:
Available-for-sale:
Corporate bonds$—  $381,201  $381,201  $—  $568,442  $568,442  
Other debt securities731  89,193  89,924  8,093  327,487  335,580  
Total available-for-sale debt securities731  470,394  471,125  8,093  895,929  904,022  
Fair value option - corporate bonds—  12,038  12,038  —  9,128  9,128  
Total debt securities731  482,432  483,163  8,093  905,057  913,150  
Equity securities19,872  7,676  27,548  27,933  7,633  35,566  
Total marketable investment securities, including restricted amounts20,603  490,108  510,711  36,026  912,690  948,716  
Less: Restricted marketable investment securities(731) —  (731) (8,093) —  (8,093) 
Total marketable investment securities$19,872  $490,108  $509,980  $27,933  $912,690  $940,623  
Proceeds from sales of our available-for-sale securities totaled zero and $4.0 million for the three months ended September 30, 2017 and 2016, respectively, and $31.0 million and $35.8 million for the nine months ended September 30, 2017 and 2016, respectively.

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(Unaudited)

Fair Value Measurements
Our current marketable investment securities are measured at fair value on a recurring basis as summarized in the table below. As of SeptemberJune 30, 20172020 and December 31, 2016,2019, we did not have any investments that were categorized within Level 3 of the fair value hierarchy.
  As of
  September 30, 2017 December 31, 2016
  Total Level 1 Level 2 Total Level 1 Level 2
  (In thousands)
Cash equivalents (including restricted) $2,736,932
 $17,355
 $2,719,577
 $2,490,168
 $62,332
 $2,427,836
Debt securities:            
Corporate bonds $245,419
 $—
 $245,419
 $402,670
 $—
 $402,670
Other (including restricted) 113,204
 13,298
 99,906
 37,233
 13,517
 23,716
Equity securities - strategic 139,373
 139,373
 —
 94,816
 94,816
 —
Total marketable investment securities $497,996
 $152,671
 $345,325
 $534,719
 $108,333
 $426,386

Investments in Unconsolidated Entities — Noncurrent

We have 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’ 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.

Our investments in unconsolidated entities consisted of the following:
  As of
  September 30, 2017 December 31, 2016
  (In thousands)
Investments in unconsolidated entities—noncurrent:    
Cost method $65,438
 $80,052
Equity method 99,852
 90,964
Total investments in unconsolidated entities—noncurrent $165,290
 $171,016

We recorded cash distributions from our investments accounted for using the equity method of $7.5 million and $5.0 million for the three months ended September 30, 2017 and 2016, respectively. For each of the nine months ended September 30, 2017 and 2016, we recorded cash distributions from one of these investments accounted for using the equity method of $15.0 million. These cash distributions were determined to be a return on investment and reported in cash flows from operating activities in our condensed consolidated statements of cash flows.

In January 2017, we sold our investment in Invidi Technologies Corporation to an entity owned in part by DISH Network. Our investment was accounted for using the cost method and had a carrying amount of $10.5 million on the date of sale. We recognized a gain of $8.9 million and received cash proceeds of $17.8 million in connection with this transaction for the nine months ended September 30, 2017. See Note 16 for additional information about this transaction.

In connection with the Share Exchange, our equity interests in NagraStar L.L.C. and SmarDTV SA, which we accounted for using the equity method, and our equity interest in Sling TV Holding L.L.C., which we accounted for using the cost method, were transferred to DISH Network as of February 28, 2017. See Notes 3 and 16 for additional information about the Share Exchange and related party transactions with these companies in which we held equity interests.


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(Unaudited)

Note 7.    Trade Accounts Receivable
Our trade accounts receivable consisted of the following:
  As of
  September 30, 2017 December 31, 2016
  (In thousands)
Trade accounts receivable $181,555
 $159,313
Contracts in process, net 24,043
 36,170
Total trade accounts receivable 205,598
 195,483
Allowance for doubtful accounts (13,211) (12,956)
Trade accounts receivable - DISH Network 52,512
 19,417
Total trade accounts receivable, net $244,899
 $201,944

As of September 30, 2017 and December 31, 2016, progress billings offset against contracts in process amounted to $17.4 million and $14.6 million, respectively.
Note 8.    Inventory
Our inventory consisted of the following:
  As of
  September 30, 2017 December 31, 2016
  (In thousands)
Finished goods $74,693
 $49,755
Raw materials 6,901
 6,678
Work-in-process 9,638
 6,187
Total inventory $91,232
 $62,620


Note 9.    Property and EquipmentNOTE 8. PROPERTY AND EQUIPMENT

The following tables presents the components of Property and equipment, consisted of the following:net:
As of
June 30,
2020		December 31,
2019
Property and equipment, net:
Satellites, net$1,648,744  $1,749,576  
Other property and equipment, net750,967  779,162  
Total property and equipment, net$2,399,711  $2,528,738  
  Depreciable Life (In Years) As of
   September 30, 2017 December 31, 2016
    (In thousands)
Land — $33,682
 $35,815
Buildings and improvements 1-40 184,511
 175,593
Furniture, fixtures, equipment and other 1-12 680,428
 514,056
Customer rental equipment 2-4 859,596
 689,579
Satellites - owned 2-15 2,764,153
 2,381,120
Satellites acquired under capital leases 10-15 794,705
 781,761
Construction in progress — 765,062
 1,418,763
Total property and equipment   6,082,137
 5,996,687
Accumulated depreciation   (2,551,678) (2,598,492)
Property and equipment, net   $3,530,459
 $3,398,195

Satellites
As of June 30, 2020, our operating satellite fleet consisted of 10 satellites, 7 of which are owned and 3 of which are leased. They are all in geosynchronous orbit, approximately 22,300 miles above the equator.

The following table presents our operating satellite fleet as of June 30, 2020 which consists of both owned and leased satellites:
SatelliteSegmentLaunch DateNominal Degree Orbital Location (Longitude)Depreciable Life (In Years)
Owned:
SPACEWAY 3 (1)
HughesAugust 200795 W10
EchoStar XVIIHughesJuly 2012107 W15
EchoStar XIXHughesDecember 201697.1 W15
Al Yah 3 (2)
HughesJanuary 201820 W7
EchoStar IX (3)
ESSAugust 2003121 W12
EUTELSAT 10A (4)
Corporate and OtherApril 200910 E-
EchoStar XXICorporate and OtherJune 201710.25 E15
Finance leases:
Eutelsat 65 West AHughesMarch 201665 W15
Telesat T19VHughesJuly 201863 W15
EchoStar 105/SES-11ESSOctober 2017105 W15
(1) Depreciable life represents the remaining useful life as of June 8, 2011, the date EchoStar completed its acquisition of Hughes Communications, Inc. and its subsidiaries (the “Hughes Acquisition”).
(2) Upon consummation of our joint venture with Yahsat in Brazil in November 2019, we acquired the Brazilian Ka-band payload on this satellite. Depreciable life represents the remaining useful life as of November 2019.
(3) We own the Ka-band and Ku-band payloads on this satellite.
(4) We acquired the S-band payload on this satellite in December 2013. Prior to acquisition, the S-band payload experienced an anomaly at the time of launch and, as a result, is not fully operational.

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The following table presents the components of our satellites, net:
Construction in progress consisted of the following:
 Depreciable Life
(In Years)		As of
 June 30,
2020		December 31,
2019
Satellites, net:
Satellites - owned7 to 15$1,801,847  $1,816,303  
Satellites - acquired under finance leases15347,146  381,163  
Construction in progress—384,298  365,133  
Total satellites2,533,291  2,562,599  
Accumulated depreciation:
Satellites - owned(823,487) (756,635) 
Satellites - acquired under finance leases(61,060) (56,388) 
Total accumulated depreciation(884,547) (813,023) 
Total satellites, net$1,648,744  $1,749,576  
  As of
  September 30, 2017 December 31, 2016
  (In thousands)
Progress amounts for satellite construction, including prepayments under capital leases and launch services costs $661,250
 $1,235,577
Satellite related equipment 83,907
 152,737
Other 19,905
 30,449
Construction in progress $765,062
 $1,418,763

The following table presents the depreciation expense and capitalized interest associated with our satellites, net:
 For the three months ended June 30,For the six months ended June 30,
 2020201920202019
Depreciation expense:
Satellites - owned$32,073  $32,015  $64,147  $64,029  
Satellites acquired under finance leases7,205  6,402  13,218  12,892  
Total depreciation expense$39,278  $38,417  $77,365  $76,921  
Capitalized interest$6,897  $5,456  $13,578  $10,356  

Construction in progress includedProgress

In August 2017, we entered into a contract for the following owneddesign and leased satellites under construction or undergoing in-orbit testingof the EchoStar XXIV satellite, a new, next-generation, high throughput geostationary satellite. The EchoStar XXIV satellite is primarily intended to provide additional capacity for our HughesNet satellite internet service (“HughesNet service”) in North, Central and South America as well as enterprise broadband services. In the first quarter of September 30, 2017.

SatellitesSegmentExpected Launch Date
EchoStar XXICorporate and OtherJune 2017 (1)
EchoStar 105/SES-11ESSOctober 2017 (2)
Telesat T19V (“63 West”) (3)HughesSecond quarter of 2018
2020, Space Systems/Loral, LLC (“SS/L”), the manufacturer of our EchoStar XXIV satellite, invoked the “force majeure” clause of our contract and notified us of a possible delay in completion of the satellite due to “shelter-in-place” orders affecting personnel at SS/L and its subcontractors, and other potential impacts of the COVID-19 pandemic.  Since that time, we have continued to work with SS/L to monitor the impact of COVID-19 on the anticipated delivery schedule for our EchoStar XXIVCorporate and Other2021
(1)This satellite was launched in June 2017 and is expected to be placed in service during the fourth quarter of 2017.
(2)This satellite was launched in October 2017 and is expected to be placed in service during the fourth quarter of 2017.
(3)
We entered into a satellite services agreement for certain capacity on this satellite once launched, but are not party to the construction contract.

Depreciation expense. We currently expect the EchoStar XXIV satellite to be launched no earlier than the second half of 2021. Capital expenditures associated with our propertythe construction and equipment consistedlaunch of the following:EchoStar XXIV satellite are included in Corporate and Other in our segment reporting.
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
  (In thousands)
Satellites $61,078
 $46,965
 $173,293
 $140,895
Furniture, fixtures, equipment and other 22,423
 18,443
 61,178
 50,198
Customer rental equipment 39,104
 28,652
 103,781
 86,789
Buildings and improvements 1,729
 1,721
 5,287
 5,198
Total depreciation expense $124,334
 $95,781
 $343,539
 $283,080

SatellitesSatellite Commitments
 
As of SeptemberJune 30, 2017,2020 and December 31, 2019, our satellite fleet consisted of 18 of our ownedsatellite-related obligations were $385.1 million and leased satellites in geosynchronous orbit, approximately 22,300 miles above$419.0 million, respectively. These primarily include payments pursuant to agreements for the equator. We have not included the EchoStar XXI and EchoStar 105/SES-11 satellites in our satellite fleet as of September 30, 2017 since they had not been placed into service as of this date. We depreciate our owned satellites on a straight-line basis over the estimated useful life of each satellite. As of September 30, 2017, three of our satellites are accounted for as capital leases and are depreciated on a straight-line basis over their respective lease terms. We accounted for one satellite as an operating lease that is not included in property and equipment as of September 30, 2017.
Recent Developments

EchoStar III. In July 2017, the EchoStar III satellite experienced an anomaly that caused communications with the satellite to be interrupted resulting in a loss of control.  We regained communications with and controlconstruction of the EchoStar IIIXXIV satellite, payments pursuant to regulatory authorizations, non-lease costs associated with our finance lease satellites, in-orbit incentives relating to certain satellites and retired it in August 2017. The EchoStar IIIcommitments for satellite was a fully depreciated, non-revenue generating asset.service arrangements.

In certain circumstances, the dates on which we are obligated to pay our contractual obligations could change.

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EchoStar VIII.During the second quarter of 2017, the EchoStar VIII satellite was removed from its orbital locationSatellite Anomalies 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.

EchoStar XIX. The EchoStar XIX satellite was launched in December 2016 and was placed into service in March 2017 at the 97.1 degree west longitude orbital location. The EchoStar XIX satellite provides additional capacity for the Hughes broadband services to our customers in North America and added capacity in certain Central and South American countries and has added capability for aeronautical, enterprise and international broadband services. We contributed the EchoStar XIX satellite to our Hughes segment in February 2017.

EchoStar XXI. The EchoStar XXI satellite was launched in June 2017 and is anticipated to be placed into service in the fourth quarter of 2017 at the 10.25 degree east longitude orbital location. The EchoStar XXI satellite is expected to provide space segment capacity to EchoStar Mobile Limited in Europe.

EchoStar 105/SES-11.The EchoStar 105/SES-11 satellite was launched in October 2017 and is anticipated to be placed into service in the fourth quarter of 2017 at the 105 degree west longitude orbital location. Our Ku-band payload on the EchoStar 105/SES-11 satellite will replace our current capacity on the AMC-15 satellite.

EchoStar XXIII. The EchoStar XXIII satellite, a Ku-band broadcast satellite services satellite, was launched in March 2017 and placed into service at the 45 degree west longitude orbital location in the second quarter of 2017.

Satellite AnomaliesImpairments
 
Our satellites may experience anomalies from time to time, some of which may have a significant adverse impact on their remaining useful lives, the commercial operation of the satellites or our operating results or financial position. We are not aware of any anomalies with respect to our owned or leased satellites or payloads that have had any such materialsignificant adverse effect duringon their remaining useful lives, the ninecommercial operation of the satellites or payloads or our operating results or financial position as of and for the three and six months ended SeptemberJune 30, 2017. There can be no assurance, however, that anomalies will2020.

Satellite Insurance

We generally do not have any such adverse impacts in the future. In addition, there can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail.

We historically have not carriedcarry in-orbit insurance on our satellites or payloads because we have assessed that the cost of insurance was uneconomicalis not economical relative to the risk of failures. Therefore, we generally bear the risk of any in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our indebtedness,long-term debt and our joint venture agreements with Yahsat, we are required, subject to certain limitations on coverage, to maintain in-orbit insuranceonly for ourthe SPACEWAY 3 EchoStar XVI, andsatellite, the EchoStar XVII satellites. Based on economic analysissatellite and the Al Yah 3 Brazilian payload, insurance or other contractual arrangements during the commercial in-orbit service of the current insurance market we obtained launch plus one year in-orbit insurance, subject to certain limitations, for the EchoStar XIX, EchoStar XXIsuch satellite or payload. Our other satellites and EchoStar XXIII satellites. Additionally, we obtained certain launch and in-orbit insurance for our interest in the EchoStar 105/SES-11 satellite. All other satellites,payloads, either in orbit or under construction, are not covered by launch or in-orbit insurance.insurance or other contractual arrangements. We will continue to assess circumstances going forward and make insuranceinsurance-related decisions on a case by casecase-by-case basis.


Note 10.    Goodwill, Regulatory Authorizations and Other Intangible Assets
Goodwill
Fair Value of In-Orbit Incentives
The excess
As of the cost of an acquired business overJune 30, 2020 and December 31, 2019, the fair values of net tangible and identifiable intangible assets at the timeour in-orbit incentive obligations from our continuing operations, based on measurements categorized within Level 2 of the acquisition is recorded as goodwill. Goodwill is assigned tofair value hierarchy, approximated their carrying amounts of $55.9 million and $57.0 million, respectively.

NOTE 9. REGULATORY AUTHORIZATIONS

The following table presents the reporting units withincomponents of our operating segments andRegulatory authorizations, net:
Finite lived
CostAccumulated AmortizationTotalIndefinite livedTotal
Balance, December 31, 2018$46,787  $(16,790) $29,997  $400,042  $430,039  
Disposals—  —  —  (43) (43) 
Amortization expense—  (1,756) (1,756) —  (1,756) 
Foreign currency translation(294) 101  (193) —  (193) 
Balance, June 30, 2019$46,493  $(18,445) $28,048  $399,999  $428,047  
Balance, December 31, 2019$58,451  $(20,144) $38,307  $440,291  $478,598  
Amortization expense—  (2,134) (2,134) —  (2,134) 
Foreign currency translation(1,156) (51) (1,207) (794) (2,001) 
Balance, June 30, 2020$57,295  $(22,329) $34,966  $439,497  $474,463  
Weighted average useful life13 years

Finite Lived Assets

In November 2019, we were granted an S-Band spectrum license for terrestrial rights in Mexico for $7.9 million. The acquired asset is subject to impairment testing annually, or more frequently when events or changes in circumstances indicate the fair valueamortization over a period of a reporting unit is more likely than not less than its carrying amount.15 years.

As of September 30, 2017 and December 31, 2016, all goodwill related to our continuing operations was assigned to reporting units of our Hughes segment. We test this goodwillIn November 2019, we also acquired Ka-band spectrum rights for impairment annually in the second quarter. Based on our qualitative assessment of impairment in the second quarter of 2017, we determined that it was not more likely than not that the fair values$4.5 million, upon consummation of the Hughes segment reporting units were less than the corresponding carrying amounts.Yahsat Brazil JV Transaction, which are subject to amortization over a period of 11 years.


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NOTE 10.  OTHER INVESTMENTS
Regulatory Authorizations
The following table presents the components of Other investments, net:
As of
June 30,
2020		December 31,
2019
Other investments, net:
Equity method investments$146,232  $166,209  
Other equity investments35,057  66,627  
Other debt investments, net94,584  92,569  
Total other investments, net$275,873  $325,405  

Equity Method Investments

Dish Mexico
 
Regulatory authorizations included amounts with finiteWe own 49% of Dish Mexico and indefinite useful lives, as follows:
  As of December 31, 2016 Additions 
Currency
Translation
Adjustment
 As of
September 30, 2017
  (In thousands)
Finite useful lives:        
Cost $87,959
 $—
 $6,086
 $94,045
Accumulated amortization (14,983) (3,751) (1,411) (20,145)
Net 72,976
 (3,751) 4,675
 73,900
Indefinite lives 471,657
 —
 —
 471,657
Total regulatory authorizations, net $544,633
 $(3,751) $4,675
 $545,557

Regulatory authorizations with finite lives include our Brazilian license, which hadits subsidiaries, a carrying amountjoint venture that we entered into in 2008 to provide direct-to-home satellite services in Mexico. Historically, we provided certain satellite services to Dish Mexico. However, following the consummation of $38.4 million and $38.6 million as of September 30, 2017 and December 31, 2016, respectively. 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 frequency bands.  We have met our regulatory milestone for the Ku-band.  On October 5, 2017, ANATEL, the Brazilian regulatory authority, declined our request to extend our milestone deadlines for the S-band and Ka-band and, as a result,BSS Transaction, we no longer haveprovide these services.

Deluxe/EchoStar LLC

We own 50% of Deluxe/EchoStar LLC (“Deluxe”), a joint venture that we entered into in 2010 to build an advanced digital cinema satellite distribution network targeting delivery to digitally equipped theaters in the rightU.S. and Canada.

Broadband Connectivity Solutions (Restricted) Limited

In August 2018, we entered into an agreement with Yahsat to use such frequency bands.  We may be subjectestablish a new entity, Broadband Connectivity Solutions (Restricted) Limited (together with its subsidiaries, “BCS”), to penalties asprovide commercial Ka-band satellite broadband services across Africa, the Middle East and southwest Asia operating over Yahsat’s Al Yah 2 and Al Yah 3 Ka-band satellites. The transaction was consummated in December 2018 when we invested $100.0 million in cash in exchange for a result of our failure to meet these milestones. The loss of our right to use20% interest in BCS. Under the S- and Ka-bands in October 2017 is an event that may affect the recoverabilityterms of the carrying value of our Brazilian license and related assets. Accordingly,agreement, we expect to test our Brazilian license and related assetsmay also acquire, for recoverabilityfurther cash investments, additional ownership interests in BCS in the fourth quarter of 2017.future provided certain conditions are met. We may be requiredsupply network operations and management services and equipment to record an impairment loss if we determine that the carrying value of such license or its related assets are not recoverable and their fair values are lower than such carrying amounts.BCS.

Other Intangible Assets
Our other intangible assets, which are subject to amortization, consisted of the following:
  Weighted Average Useful Life (in Years) As of
   September 30, 2017 December 31, 2016
   Cost 
Accumulated
Amortization
 
Carrying
Amount
 Cost 
Accumulated
Amortization
 
Carrying
Amount
    (In thousands)
Customer relationships 8 $270,300
 $(228,355) $41,945
 $270,300
 $(214,544) $55,756
Technology-based 6 61,300
 (60,905) 395
 60,835
 (57,266) 3,569
Trademark portfolio 20 29,700
 (9,405) 20,295
 29,700
 (8,291) 21,409
Total other intangible assets   $361,300
 $(298,665) $62,635
 $360,835
 $(280,101) $80,734

Financial Information for Our Equity Method Investments
Customer relationships are amortized predominantly in relation to the expected contribution of cash flow to the business over the life of the intangible asset. Other intangible assets are amortized on a straight-line basis over the periods the assets are expected to contribute to our cash flows. Intangible asset amortization expense, including amortization of regulatory authorizations with finite lives and externally marketed capitalized software, was $10.5 million and $12.8 million for the three months ended September 30, 2017 and 2016, respectively, and $36.4 million and $41.7 million for the nine months ended September 30, 2017 and 2016, respectively.
The following table presents revenue recognized:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Deluxe$1,026  $877  $2,281  $1,754  
BCS$2,784  $2,262  $4,453  $4,546  

The following table presents trade accounts receivable:
As of
June 30,
2020		December 31,
2019
Deluxe$680  $631  
BCS$5,725  $5,171  

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Other Equity Investments
Note 11
.    Debt and Capital Lease Obligations
The following table summarizespresents reductions to the carrying amount of our investments based on circumstances that indicated the fair value of the investments was less than their carrying amount:

For the three months ended June 30,For the six months ended June 30,
2020201920202019
Loss (gain) on investments, net$8,486  $—  $29,833  $28,653  

Other Debt Investments, Net

The following table presents our other debt investments, net:
As of
June 30,
2020		December 31,
2019
Other debt investments, net:
Cost basis$107,259  $102,878  
Discount(10,353) (10,309) 
Allowance for credit losses(2,322) —  
Total other debt investments, net$94,584  $92,569  

The following table presents the activity in our allowance for credit losses for these investments:
For the six months ended June 30, 2020
Balance at beginning of period$— 
Credit losses(1)
2,322 
Deductions— 
Balance at end of period$2,322 

(1) The impact of adopting ASC 326 on January 1, 2020 was a $2.1 million adjustment to Accumulated earnings (losses).

The following table presents the interest income, net related to our other debt investments, net:
For the three months ended June 30, 2020For the six months ended June 30, 2020
Interest income, net
Interest income$3,564  $6,904  
Credit losses(89) (176) 
Total interest income, net3,475  6,728  

We did 0t recognize any interest income, net related to our other debt investments, net for the three and six months ended June 30, 2019.

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NOTE11. LONG-TERM DEBT

The following table presents the carrying amounts and fair values of our debt:Current portion of long-term debt, net and Long-term debt, net:
Effective interest ratesAs of
June 30, 2020December 31, 2019
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Senior Secured Notes:
5 1/4% Senior Secured Notes due 20265.320%$750,000  $776,625  $750,000  $825,308  
Senior Unsecured Notes:
7 5/8% Senior Unsecured Notes due 20218.062%900,000  928,485  900,000  963,783  
6 5/8% Senior Unsecured Notes due 20266.688%750,000  785,985  750,000  833,903  
Less: Unamortized debt issuance costs(8,712) —  (10,832) —  
Total long-term debt2,391,288  2,491,095  2,389,168  2,622,994  
Less: Current portion, net(896,386) (928,485) —  —  
Long-term debt, net$1,494,902  $1,562,610  $2,389,168  $2,622,994  
  Effective Interest Rate As of
   September 30, 2017 December 31, 2016
   
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
    (In thousands)
Senior Secured Notes:          
6 1/2% Senior Secured Notes due 2019 6.959% $990,000
 $1,056,825
 $990,000
 $1,084,050
5 1/4% Senior Secured Notes due 2026 5.320% 750,000
 783,038
 750,000
 739,688
Senior Unsecured Notes:          
7 5/8% Senior Unsecured Notes due 2021 8.062% 900,000
 1,023,408
 900,000
 990,189
6 5/8% Senior Unsecured Notes due 2026 6.688% 750,000
 806,910
 750,000
 760,245
Less: Unamortized debt issuance costs   (26,756) —
 (31,821) —
Subtotal   3,363,244
 $3,670,181
 3,358,179
 $3,574,172
Capital lease obligations   280,878
   297,268
  
Total debt and capital lease obligations   3,644,122
   3,655,447
  
Less: Current portion   (38,407)   (32,984)  
Long-term debt and capital lease obligations, net of unamortized debt issuance costs   $3,605,715
   $3,622,463
  

The fair values of our debt are estimates categorized within Level 2 of the fair value hierarchy.

Pursuant to the terms of a registration rights agreement, HSS registered notes having substantially identical terms as the 2026 Notes with the SEC as part of an offer to exchange registered notes for the 2026 Notes. This exchange offer expired May 11, 2017 with 99.98% of the 2026 Notes being tendered for exchange.

NoteNOTE 12. Income TaxesINCOME TAXES
 
Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.
 
Our quarterlyinterim income tax provision and our quarterlyinterim estimate of our annual effective tax rate is subject to significant volatility due toare influenced by several factors, including incomeforeign losses and capital gains and losses from investments for which we haverelated deferred tax assets are partially offset by a full valuation allowance, changes in tax laws and relative changes in unrecognized tax benefits. Additionally, our effective tax rate can be more or less volatile based onaffected by the amount of pre-tax income.income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income or loss is lower.

IncomeOur income tax expenseprovision was $6.1$10.9 million for the three months ended SeptemberJune 30, 20172020 compared to an$4.7 million of income tax expense of approximately $17.4 millionprovision for the three months ended SeptemberJune 30, 2016.2019. Our estimated effective income tax rate was 14.5%(271.8)% and 34.6%(18.5)% for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively.  The variations in our current year effective tax rate from the U.S. federal statutory rate for the three months ended September 30, 2017 was primarily due to various permanent tax differences, the increase in our valuation allowance associated with unrealized gains that are capital in nature, and a change in the amount of unrecognized tax benefit from uncertain tax positions. The variations in our effective tax rate from the U.S. federal statutory rate for the three months ended SeptemberJune 30, 2016 was2020 were primarily due to research and experimentation credits, partially offset by state and local taxes.

Income tax expense was approximately $9.1 million for the nine months ended September 30, 2017 compared to an income tax expense of approximately $61.3 million for the nine months ended September 30, 2016. Our estimated effective income tax rate was 11.0% and 35.2% for the nine months ended September 30, 2017 and 2016, respectively. The variations in our

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effective tax rate from the U.S. federal statutory rate for the nine months ended September 30, 2017 was primarily due to the recognition of a one-time tax benefit for the revaluation of our deferred tax assets and liabilities due to a change in our state effective tax rate as a result of the Share Exchange, the increase in our valuation allowance associated with unrealized gains that are capital in nature, and change in the amount of unrecognized tax benefit from uncertain tax positions. The tax benefit recognized from the change in our effective tax rate was partially offset by the increase in our valuation allowance associated with certain foreign losses and the impact of state and foreign losses.local taxes, partially offset by research and experimentation credits. The variations in our effective tax rate from the U.S. federal statutory rate for the ninethree months ended SeptemberJune 30, 20162019 were primarily due tothe change in net unrealized gains that are capital in nature and research and experimentation credits, partially offset by the impact of state and local taxes.

Note 13.    Stock-Based Compensation
We maintain stock incentive plans to attracttaxes and retain officers, directors and key employees. Stock awards under these plans include both performance based and non-performance based stock incentives. We granted stock options and other incentive awards tothe increase in our employees and nonemployee directors to acquire 62,600 shares and 137,470 shares of our Class A common stockvaluation allowance associated with certain foreign losses. Additionally, during the three months ended SeptemberJune 30, 2017 and 2016, respectively, and 1,263,350 shares and 722,350 shares2019, we recorded additional tax expense of our Class A common stock$2.0 million on deemed mandatory repatriation of certain deferred foreign earnings as the result of new treasury regulations.

Our income tax provision was $3.4 million for the ninesix months ended SeptemberJune 30, 20172020 compared to $7.6 million of income tax provision for the six months ended June 30, 2019. Our estimated effective income tax rate was (4.9)% and 2016,(28.5)% for the six months ended June 30, 2020 and 2019, respectively. On April 24, 2017, Mr. Ergen,The variations in our Chairman, voluntarily forfeited optionseffective tax rate from the U.S. federal statutory rate for the six months ended June 30, 2020 were primarily due to purchase 600,000 sharesthe increase in our valuation allowance associated with certain foreign losses and the impact of Class A common stockstate and local taxes, partially offset by the change in net unrealized losses that are capital in nature and research and experimentation credits. The variations in our effective tax rate from the U.S. federal statutory rate for the six months ended June 30, 2019 were grantedprimarily due to himthe change in net unrealized gains that are capital in nature and research and experimentation credits, partially offset by the impact of state and local taxes and the increase in our valuation allowance associated with certain foreign losses. Additionally, during the three months ended June 30, 2019, we recorded additional tax
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expense of $2.0 million on April 1, 2017,deemed mandatory repatriation of certain deferred foreign earnings as the result of new treasury regulations.

The Coronavirus Aid, Relief, and we canceled such forfeited options.
Total non-cash, stock-based compensation expense is shownEconomic Security Act (the “CARES Act”) was enacted in March 2020. The CARES Act features significant tax provisions and other measures to assist individuals and businesses impacted by the following tableeconomic effects of the COVID-19 pandemic, including a five-year carryback of net operating losses, relaxation of Section 163(j) interest deduction limitations, acceleration of Alternative Minimum Tax refunds, relief for payroll tax and tax credits for employers who retain employees. These provisions did not affect our income tax provision for the three and ninesix months ended SeptemberJune 30, 2017 and 2016 and was assigned to the same expense categories as the base compensation for such employees:2020.
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
  (In thousands)
Research and development expenses $297
 $297
 $774
 $827
Selling, general and administrative expenses 2,965
 2,311
 7,932
 7,627
Total stock-based compensation $3,262
 $2,608
 $8,706
 $8,454

As of September 30, 2017, total unrecognized stock-based compensation cost, net of estimated forfeitures, related to our unvested stock awards was $22.8 million.

Note 14.    Commitments and ContingenciesNOTE 13. CONTINGENCIES
 
Commitments
As of September 30, 2017, our satellite-related obligations were approximately $1.01 billion. Our satellite-related obligations primarily include payments pursuant to agreements for the construction of the EchoStar XXIV satellite; payments pursuant to launch services contracts and regulatory authorizations; executory costs for our capital lease satellites; costs under satellite service agreements; and in-orbit incentives relating to certain satellites; as well as commitments for long-term satellite operating leases and satellite service arrangements.

Contingencies
Patents and Intellectual Property

Many entities, including some of our competitors, have or may have in the future obtain patents and other intellectual property rights that cover or affect products or services directly or indirectly related to those that we offer. We may not be aware of all patents and other intellectual property rights that our products and services may potentially infringe. Damages in patent infringement cases can be substantial, and in certain circumstances can be trebled.tripled. Further, we cannot estimate the extent to which we may be required in the future to obtain licenses with respect to intellectual property rights held by others and the availability and cost of any such licenses. Various parties have asserted patent and other intellectual property rights with respect to our products and services. We cannot be certain that these personsparties 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

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from these personsparties on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be able to redesign our products and services to avoid infringement.


Separation Agreement; Share ExchangeCertain Arrangements with DISH Network
 
In connection with the Spin-off,our spin-off from DISH in 2008 (the “Spin-off”), we entered into a separation agreement with DISH Network that provides, among other things, for the division of certain liabilities, including liabilities resulting from litigation. Under the terms of the separation agreement, we assumed certain liabilities that relate to our business, including certain designated liabilities for acts or omissions that occurred prior to the Spin-off. Certain specific provisions govern intellectual property related claims under which generally, we will generally only be liable for our acts or omissions following the Spin-off and DISH Network will indemnify us for any liabilities or damages resulting from intellectual property claims relating to the period prior to the Spin-off as well as DISH Network’s acts or omissions following the Spin-off. Additionally, inIn connection with the Share Exchange and the BSS Transaction, we entered into the Share Exchange Agreement and the Master Transaction Agreement, respectively, and other agreements which provide, among other things, for the division of certain liabilities, including liabilities relating to taxes, intellectual property and employees and liabilities resulting from litigation and the assumption of certain liabilities that relate to the transferred businesses and assets. These agreements also contain additional indemnification provisions between us and DISH Network for, in the case of the Share Exchange, certain pre-existing liabilities and legal proceedings.
Litigation
proceedings and, in the case of the BSS Transaction, certain losses with respect to breaches of certain representations and covenants and certain liabilities.

Litigation

We are involved in a number of legal proceedings (including those described below)against us concerning matters arising in connection with the conduct of our business activities. Many of these proceedings are at preliminary stages and/or seek an indeterminate amount of damages. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate. We record an accrual for litigation and other loss contingencies when we determine that a loss is probable and the amount of the loss can be reasonably estimated. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made. There can be no assurance that legal proceedings against us will be resolved in amounts that will not differ from the amounts of our recorded accruals. Legal fees and other costs of defending litigationlegal proceedings are charged to expense as incurred.

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For certain cases described below,proceedings, management is unable to predict with any degree of certainty the outcome or provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons,reasons: (i) the proceedings are in various stages; (ii) damages have not been sought or specified; (iii) damages are unsupported, indeterminate and/or exaggerated in management’s opinion; (iv) there is uncertainty as to the outcome of pending trials, appeals, motions or motions;other proceedings; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties are involved (as with many patent-related cases). Except as described below, for these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material effect on our financial condition, operating results or cash flows, though there is no assurance that the resolution and outcomes of these proceedings, individually or in the aggregate, will not be material to our financial condition, operating results or cash flows for any particular period, depending, in part, upon the operating results for such period.
 
We intend to vigorously defend the proceedings against us. In the event that a court, tribunal, other body or jury ultimately rules against us, we may be subject to adverse consequences, including, without limitation, substantial damages, which may include treble damages, fines, penalties, compensatory damages and/or other equitable or injunctive relief that could require us to materially modify our business operations or certain products or services that we offer to our consumers.

Elbit

On January 23, 2015, Elbit Systems Land and C4I LTD and Elbit Systems of America Ltd. (together referred to as “Elbit”) filed a complaint against our subsidiary Hughes Network Systems, L.L.C. (“HNS”), as well as against Black Elk Energy Offshore Operations, LLC, Bluetide Communications, Inc. and Helm Hotels Group, in the United StatesU.S. District Court for the Eastern District of Texas, alleging infringement of United StatesU.S. Patent Nos. 6,240,073 (the “073 patent”) and 7,245,874 (“874 patent”). The 073 patent is entitled “Reverse Link forIn December 2019, we entered into a comprehensive settlement agreement with Elbit pursuant to which we paid a total of $33.0 million in satisfaction of all amounts relating to these matters and all open proceedings, including appeals, were dismissed with prejudice.

Shareholder Litigation

On July 2, 2019, the City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust, purporting to sue on behalf of a class of EchoStar Corporation’s stockholders, filed a complaint in the District Court of Clark County, Nevada against our directors, Charles W. Ergen, R. Stanton Dodge, Anthony M. Federico, Pradman P. Kaul, C. Michael Schroeder, Jeffrey R. Tarr, William D. Wade, and Michael T. Dugan; our officer, David J. Rayner; EchoStar Corporation; our subsidiary Hughes Satellite Communication Network”Services Corporation (“HSSC”); our former subsidiary BSS Corp.; and DISH and its subsidiary Merger Sub. On September 5, 2019, the 874 patent is entitled “Infrastructure for Telephony Network.” Elbit alleges thatdefendants filed motions to dismiss. On October 11, 2019, the 073 patent is infringed by broadband satellite systems that practice the Internet Protocol Over Satellite standard. Elbit alleges that the 874 patent is infringed by the manufacture and sale of broadband satellite systems that provide cellular backhaul service via connections to E1 or T1 interfaces at cellular backhaul base stations. On April 2, 2015, Elbitplaintiffs filed an amended complaint removing Helm Hotels GroupMessrs. Dodge, Federico, Kaul, Schroeder, Tarr and Wade as defendants. The amended complaint alleges that Mr. Ergen, as our controlling stockholder, breached fiduciary duties to EchoStar Corporation’s minority stockholders by structuring the BSS Transaction with inadequate consideration and improperly influencing our and HSSC’s boards of directors to approve the BSS Transaction. The amended complaint also alleges that the other defendants aided and abetted such alleged breaches. The plaintiffs seek equitable and monetary relief, including the issuance of additional DISH Common Stock, and other costs and disbursements, including attorneys’ fees on behalf of the purported class. On November 11, 2019, we and the other defendants filed separate motions to dismiss plaintiff’s amended complaint and during a defendant, but making similarhearing on January 13, 2020 the court denied these motions. On February 10, 2020, we and the other defendants filed answers to the amended complaint. We intend to vigorously defend this case. We cannot predict its outcome with any degree of certainty.

License Fee Dispute with Government of India, Department of Telecommunications

In 1994, the Government of India promulgated a “National Telecommunications Policy” under which the government liberalized the telecommunications sector and required telecommunications service providers to pay fixed license fees. Pursuant to this policy, our subsidiary Hughes Communications India Private Limited (“HCIPL”), formerly known as Hughes Escorts Communications Limited, obtained a license to operate a data network over satellite using VSAT systems. In 1999, HCIPL’s license was amended pursuant to a new government policy that eliminated the fixed license fees and instead required each telecommunications service provider to pay license fees based on its adjusted gross revenue (“AGR”). In March 2005, the Indian Department of Telecommunications (“DOT”) notified
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allegations againstHCIPL that, based on its review of HCIPL’s audited accounts and AGR statements, HCIPL must pay additional license fees, interest on such fees and penalties and interest on the penalties. HCIPL responded that the DOT had improperly calculated its AGR by including revenue from licensed and unlicensed activities. The DOT rejected this explanation and in 2006, HCIPL filed a new defendant, Country Home Investments, Inc.petition with an administrative tribunal (the “Tribunal”), challenging the DOT’s calculation of its AGR. The DOT also issued license fee assessments to other telecommunications service providers and a number of similar petitions were filed by several other such providers with the Tribunal. These petitions were amended, consolidated, remanded and re-appealed several times. On April 23, 2015, the Tribunal issued a judgment affirming the DOT’s calculation of AGR for the telecommunications service providers but reversing the DOT’s imposition of interest, penalties and interest on such penalties as excessive. Over subsequent years, the DOT and HCIPL and other telecommunications service providers, respectively, filed several appeals of the Tribunal’s ruling. On October 24, 2019, the Supreme Court of India (“Supreme Court”) issued an order (the “October 2019 Order”) affirming the license fee assessments imposed by the DOT, including its imposition of interest, penalties and interest on the penalties, but without indicating the amount HCPIL is required to pay the DOT, and ordering payment by January 23, 2020. On November 323, 2019, HCIPL and 4, 2015, andother telecommunication service providers filed a petition asking the Supreme Court to reconsider the October 2019 Order. The petition was denied on January 20, 2020. On January 22, 2016,2020, HCIPL and other telecommunication service providers filed an application requesting that the defendants filed petitionsSupreme Court modify the October 2019 Order to permit the DOT to calculate the final amount due and extend HCPIL’s and the other telecommunication service providers’ payment deadline. On February 14, 2020, the Supreme Court directed HCIPL and the other telecommunication service providers to explain why the Supreme Court should not initiate contempt proceedings for failure to pay the amounts due. During a hearing on March 18, 2020, the Supreme Court ordered that all amounts that were due before the United States PatentOctober 2019 Order must be paid, including interest, penalties and Trademark Office challenginginterest on the validitypenalties. The Supreme Court also ordered that the parties appear for a further hearing addressing, potentially among other things, a proposal by the DOT to allow for extended or deferred payments of amounts due. On June 11, 2020, the Supreme Court ordered HCIPL and the other telecommunication service providers to submit affidavits addressing the proposal made by the DOT to extend the time frame for payment of the patents in suit, whichamounts owed and for HCIPL and the Patentother telecommunication providers to provide security for such payments. On July 17, 2020, the Supreme Court reaffirmed its March 18, 2020, order and Trademark Office subsequently declinedreserved judgment on the DOT proposal to institute. On April 13, 2016,allow for extended or deferred payments. To date, HCIPL has paid 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 not willful and that the 874 patent was not infringed. HNS intends to vigorously pursue its post-trial rights, including appeals. We cannot predict with certainty the outcome of any post-trial motions or appeals. For the nine months ended September 30, 2017, we have recorded a charge of $2.5DOT $2.9 million with respect to this matter. As a result of the Supreme Court’s orders, HCIPL’s payments to date and the impact of foreign exchange rates, we have recorded an accrual of $79.6 million as of June 30, 2020, comprised of $3.8 million for additional license fees, $3.9 million for penalties and $72.0 million for interest and interest on penalties. We had recorded an accrual of $80.2 million as of December 31, 2019. Any eventual payments made with respect to the ultimate outcome of this matter may be different from our accrualsaccrual and such differences could be significant.

Michael Heskiaoff, Marc Langenohl, and Rafael Mann
On July 10, 2015, Messrs. Michael Heskiaoff and Marc Langenohl, purportedly on behalf of themselves and all others similarly situated, filed suit against our now former subsidiary Sling Media, Inc. in the United States District Court for the Southern District of New York. The complaint 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 plaintiffs filed an amended complaint, and Mr. Rafael Mann, purportedly on behalf of himself and all others similarly situated, filed an additional complaint alleging similar causes of action. On November 16, 2015, the cases were consolidated. On August 12, 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 appeal to the United States Court of Appeals for the Second Circuit.
Realtime Data LLC
On May 8, 2015, Realtime Data LLC (“Realtime”) filed suit against EchoStar Corporation and our subsidiary HNS in the United States District Court for the Eastern District of Texas 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. 9,116,908 (the “908 patent”), entitled “System and Methods for Accelerated Data Storage and Retrieval.” Realtime generally alleges that the asserted patents are infringed by certain HNS data compression products and services. Over April 29, 2016 and May 5, 2016, the defendants filed petitions before the United States Patent and Trademark Office (“USPTO”) challenging the validity of the asserted patents. The USPTO instituted proceedings on each of those petitions. The USPTO invalidated the asserted claims of the 513 patent, but Realtime is still asserting this patent against us and may appeal this ruling. Realtime is no longer asserting the 992 patent 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 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 February 14, 2017, Realtime filed a second suit against EchoStar Corporation and our subsidiary HNS in the same District Court, alleging infringement of four additional United States Patents, Nos. 7,358,867, entitled “Content Independent Data Compression Method and System;” 8,502,707, entitled “Data Compression Systems and Methods;” 8,717,204, entitled “Methods for Encoding and Decoding Data;” and 9,054,728, entitled “Data Compression System and Methods.” On June 6, 2017, Realtime filed an amended complaint, adding claims of infringement against EchoStar Technologies, L.L.C., a wholly-owned subsidiary of DISH, DISH, DISH Network L.L.C., Sling TV L.L.C., Sling Media L.L.C., and Arris Group, Inc., as well as additionally alleging infringement of United States Patent No. 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. Trial is scheduled for January 21, 2019. Realtime is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

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Shareholder Derivative Litigation
On December 5, 2012, Greg Jacobi, purporting to sue derivatively on behalf of EchoStar Corporation, filed suit (the “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’ fiduciary duties, resulted in unjust enrichment, and constituted a waste of corporate assets.
On December 18, 2012, Chester County Employees’ Retirement Fund, derivatively on behalf of EchoStar Corporation, filed a suit (the “Chester County 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’ fiduciary duties, resulted in unjust enrichment, and constituted a waste of corporate assets.
On February 22, 2013, the Chester County Litigation was transferred to the District of Nevada, and on April 3, 2013, the Chester County Litigation was consolidated into the Jacobi Litigation. Oral argument on a motion to dismiss the Jacobi Litigation was held February 21, 2014. On March 30, 2015, the Court dismissed the Jacobi Litigation, with leave for Jacobi to amend his complaint by April 20, 2015. On April 20, 2015, Jacobi filed an amended complaint, which on June 12, 2015, we moved to dismiss. On March 17, 2016, the Court dismissed the amended complaint. On July 31, 2017, a motion from the Chester County Employee’s Retirement Fund seeking attorneys’ fees and expenses was denied. Jacobi appealed the amended complaint’s dismissal to 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 entered the Court of Appeal’s mandate. The Chester County and Jacobi matters are now concluded.
Other

In addition to the above actions, we are subject to various other legal proceedings and claims, which arise in the ordinary course of our business. As part of our ongoing operations, the Company iswe are subject to various inspections, audits, inquiries, investigations and similar actions by third parties, as well as by governmental/regulatory authorities responsible for enforcing the laws and regulations to which the Companywe may be subject. Further, under the federal False Claims Act, private parties have the right to bring qui tam, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the federal government. Some states have adopted similar state whistleblower and false claims provisions. In addition, the Companywe from time to time receivesreceive inquiries from federal, state and foreign agencies regarding compliance with various laws and regulations.


In our opinion, the amount of ultimate liability with respect to any of these other actions is unlikely to materially affect our financial position, results of operations or cash flows, though the resolutions and outcomes, individually or in the aggregate, could be material to our financial position, operating results or cash flows for any particular period, depending, in part, upon the operating results for such period.


The Company indemnifies itsWe also indemnify our directors, officers and employees for certain liabilities that might arise from the performance of their responsibilities for the Company.us. Additionally, in the normal course of its business, the Company enterswe enter into contracts pursuant to which the Companywe may make a variety of representations and warranties and indemnify the counterparty for certain losses. The Company’sOur possible exposure under these arrangements cannot be reasonably estimated as this involves the resolution of claims made, or future claims that may be made, against the Companyus or itsour officers, directors or employees, the outcomes of which are unknown and not currently predictable or estimable.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

Note 15.    Segment ReportingNOTE 14. SEGMENT REPORTING
 
OperatingBusiness segments are business components of an enterprise for which separate financial information is available and regularly evaluated by theour chief operating decision maker (“CODM”), who for EchoStar is the Company’sour Chief Executive Officer. Prior to March 2017, we operatedWe operate in three primary2 business segments, Hughes EchoStar Technologies and ESS. Following consummation of the Share ExchangeESS, as described in Note 31 of these condensed consolidated financial statements, we no longer operate the EchoStar Technologies business segment. . Organization and Business Activities.

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 EBITDA disclosures have been restated to reflect this change.

As of March 2017, our two primary business segments are Hughes and ESS, as described in Note 1 of these condensed consolidated financial statements.

Our operations also include various 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, our centralized treasurynet income (loss) from discontinued operations and gains (losses) from certain of our investments. Costs andnet income associated with these departments and activities are accounted for in the “Corporate and Other” column in the table below or in the reconciliation of EBITDA below.(loss) attributable to non-controlling interests (“EBITDA”).


Transactions between segments were not significant for the three and nine months ended September 30, 2017 or 2016, respectively. Total assets by segment have not been reported herein because the information is not provided to our CODM on a regular basis.
 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

The following table presents revenue, EBITDA and capital expenditures for each of our operating segments:business segments. Capital expenditures are net of refunds and other receipts related to our property and equipment.
HughesESSCorporate and OtherConsolidated
Total
For the three months ended June 30, 2020
External revenue$453,172  $3,786  $2,508  $459,466  
Intersegment revenue—  393  (393) —  
Total revenue$453,172  $4,179  $2,115  $459,466  
EBITDA$186,619  $1,543  $(31,338) $156,824  
Capital expenditures$83,479  $—  $8,821  $92,300  
For the three months ended June 30, 2019
External revenue$451,847  $3,434  $5,150  $460,431  
Intersegment revenue—  308  (308) —  
Total revenue$451,847  $3,742  $4,842  $460,431  
EBITDA$131,765  $1,486  $(8,417) $124,834  
Capital expenditures$74,090  $—  $33,252  $107,342  
For the six months ended June 30, 2020
External revenue$911,654  $8,153  $5,325  $925,132  
Intersegment revenue—  678  (678) —  
Total revenue$911,654  $8,831  $4,647  $925,132  
EBITDA$341,260  $3,573  $(96,778) $248,055  
Capital expenditures$174,996  $—  $21,908  $196,904  
For the six months ended June 30, 2019
External revenue$897,184  $7,286  $10,343  $914,813  
Intersegment revenue—  489  (489) —  
Total revenue$897,184  $7,775  $9,854  $914,813  
EBITDA$292,897  $3,215  $(25,677) $270,435  
Capital expenditures$147,911  $—  $71,285  $219,196  
  Hughes EchoStar
Satellite
Services		 Corporate and Other Consolidated
Total
  (In thousands)
For the Three Months Ended September 30, 2017        
External revenue $379,702
 $96,743
 $4,788
 $481,233
Intersegment revenue $359
 $350
 $(709) $—
Total revenue $380,061
 $97,093
 $4,079
 $481,233
EBITDA $131,817
 $78,345
 $9,699
 $219,861
Capital expenditures $108,428
 $8,203
 $75,500
 $192,131
         
For the Three Months Ended September 30, 2016        
External revenue $355,090
 $101,308
 $3,648
 $460,046
Intersegment revenue $786
 $172
 $(958) $—
Total revenue $355,876
 $101,480
 $2,690
 $460,046
EBITDA $125,522
 $84,257
 $(20,477) $189,302
Capital expenditures $75,682
 $15,730
 $48,162
 $139,574
         
For the Nine Months Ended September 30, 2017        
External revenue $1,070,715
 $294,839
 $13,906
 $1,379,460
Intersegment revenue $1,428
 $946
 $(2,374) $—
Total revenue $1,072,143
 $295,785
 $11,532
 $1,379,460
EBITDA $342,693
 $241,873
 $3,472
 $588,038
Capital expenditures $270,624
 $21,351
 $118,170
 $410,145
         
For the Nine Months Ended September 30, 2016        
External revenue $1,019,203
 $305,401
 $10,074
 $1,334,678
Intersegment revenue $2,248
 $518
 $(2,766) $—
Total revenue $1,021,451
 $305,919
 $7,308
 $1,334,678
EBITDA $353,505
 $257,181
 $(45,506) $565,180
Capital expenditures $261,241
 $50,762
 $165,815
 $477,818

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The following table reconciles total consolidated EBITDA to reported “Income from continuing operations before income taxes” in our condensed consolidated statements of operations:
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2017 2016 2017 2016
  (In thousands)
EBITDA $219,861
 $189,302
 $588,038
 $565,180
Interest income and expense, net (43,634) (31,057) (126,156) (66,650)
Depreciation and amortization (134,822) (108,549) (379,939) (324,743)
Net income attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests 532
 609
 351
 20
Income from continuing operations before income taxes $41,937
 $50,305
 $82,294
 $173,807



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

The following table reconciles Income (loss) from continuing operations before income taxes in the Condensed Consolidated Statements of Operations to EBITDA:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Income (loss) from continuing operations before income taxes$(3,992) $(25,336) $(69,221) $(26,677) 
Interest income, net(10,760) (23,213) (26,343) (47,642) 
Interest expense, net of amounts capitalized38,258  53,749  74,491  106,948  
Depreciation and amortization129,887  120,266  262,255  239,244  
Net loss (income) attributable to non-controlling interests3,431  (632) 6,873  (1,438) 
EBITDA$156,824  $124,834  $248,055  $270,435  
Note 16
NOTE 15. RELATED PARTY TRANSACTIONS - DISH NETWORK
.    Related Party Transactions
Overview
 
DISH Network
Following the Spin-off, weEchoStar Corporation and DISH have operated as separate publicly-traded companies. However, prior to the consummation of the Share Exchange on February 28, 2017, DISH Network owned the Tracking Stock representing an aggregate 80.0% economic interest in the residential retail satellite broadband business of our Hughes segment. Following the consummation of the Share Exchange, the Tracking Stock was retired. In addition, acompanies since 2008. A substantial majority of the voting power of the shares of each of EchoStar Corporation and DISH is owned beneficially by Charles W. Ergen, our Chairman, and by certain trustsentities established by Mr. Ergen for the benefit of his family. In addition, prior to March 2017, DISH Network owned the Tracking Stock, which in the aggregate represented an 80% economic interest in the residential retail satellite broadband business of our Hughes segment. The Tracking Stock was retired in March 2017.

In connection with and following both the Spin-off, and the Share Exchange and the BSS Transaction, we and DISH Network entered into certain agreements pursuant to which we obtain certain products, services and rights from DISH Network;Network, DISH Network obtains certain products, services and rights from us; and we and DISH Network indemnify each other against certain liabilities arising from our respective businesses. We also may enter into additional agreements with DISH Network in the future. Generally, the amounts we or DISH Network pay for products and services provided under the agreements are based on cost plus a fixed margin (unless noted differently below or in our most recent Annual Report on Form 10-K)below), which varies depending on the nature of the products and services provided.

 We may also enter into additional agreements with DISH Network in the future.

The following is a summary of the transactions and the terms of ourthe underlying principal agreements with DISH Network that have had or may have an impact on our consolidated financial condition and results of operations.


Equipment revenueServices and Other Revenue — DISH Network

Receiver AgreementThe following table presents our . Effective January 2012, one of our subsidiaries and DISH Network entered into a receiver agreement (the “2012 Receiver Agreement”), pursuant to which DISH Network had the right, but not the obligation, to purchase digital set-top boxes, related accessories, and other equipment from us for the period from January 2012 through December 2014. The 2012 Receiver Agreement replaced the receiver agreement one of our subsidiaries entered into with DISH Network in connection with the Spin-off. The 2012 Receiver Agreement allowed DISH Network to purchase digital set-top boxes, related accessories, and other equipment from us either: (i) at cost (decreasing as we reduced costs and increasing as costs increased) plus a dollar mark-up which depended upon the cost of the product subject to a collar on our mark-up; or (ii) at cost plus a fixed margin, which depended on the nature of the equipment purchased. Under the 2012 Receiver Agreement, our margins would have increased if we were able to reduce the costs of our digital set-top boxes and our margins would have reduced if these costs increased. One of our subsidiaries provided DISH Network with standard manufacturer warranties for the goods sold under the 2012 Receiver Agreement. Additionally, the 2012 Receiver Agreement included an indemnification provision, whereby the parties agreed to indemnify each other for certain intellectual property matters. In November 2016, one of our subsidiaries and DISH Network amended this agreement to extend its term for one year through December 2017. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
Services and other revenue — from DISH NetworkNetwork:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Services and other revenue - DISH Network$9,028  $14,238  $19,341  $29,300  
Broadcast Agreement
. Effective January 2012, one of our subsidiaries and DISH Network entered into a broadcast agreement (the “2012 Broadcast Agreement”), pursuant to which we provided certain broadcast services to DISH Network, including teleport services such as transmission and downlinking, channel origination services, and channel management services, for
The following table presents the period from January 2012 through December 2016. In November 2016, one of our subsidiaries and DISH Network amended the 2012 Broadcast Agreement to extend the term for one year through December 2017. The fees for the services provided under the 2012 Broadcast Agreement were calculated at either: (a) our cost of providing the relevant service plus a fixed dollar fee, which was subject to certain adjustments; or (b) our cost of providing the relevant service plus a fixed margin, depending on the nature of the services provided. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).related trade accounts receivable:
As of
June 30,
2020		December 31,
2019
Trade accounts receivable - DISH Network$13,465  $10,683  

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(Unaudited)

Broadcast Agreement for Certain Sports Related ProgrammingSatellite Capacity Leased to DISH Network. . In May 2010, one of our subsidiariesWe have entered into an agreement and DISH Networkhave previously entered into a broadcastnow terminated agreement to lease satellite capacity pursuant to which we have provided certain broadcastsatellite services to DISH Network in connection with its carriage of certain sports related programming. The term of this agreement was ten years. The fees for the broadcast services provided under this agreement depended, among other things, upon the cost to develop and provide such services. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).

RUS Implementation Agreement. In September 2010, DISH Broadband L.L.C. (“DISH Broadband”), DISH’s indirect, wholly-owned subsidiary, was selected by the Rural Utilities Service (“RUS”) of the 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, HNS is required to continue providing services to DISH Broadband’s customers activated prior to the expiration of the RUS Agreement in accordance with the terms and conditions of the RUS Agreement.

Satellite Services Provided to DISH Network. Since the Spin-off, we have entered into certain satellite service agreements pursuant to which DISH Network receives satellite services on certain satellites owned or leased by us. The fees for the services provided under these satellite service agreements may depend upon, among other things, upon the orbital location of the applicable satellite, the number of transponders that are providing services on the applicable satellite, and the length of the service arrangements.arrangements and any third-party costs associated with the satellite capacity. The terms of each service arrangement isthese agreements are set forth below:

EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV. As part of the Satellite and Tracking Stock Transaction, described below, in March 2014, we began providing certain satellite services to DISH Network on the 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’s life. There can be no assurance that any options to renew such agreements will be exercised. In December 2016, DISH Network renewed the satellite services agreement relative to the EchoStar VII satellite for one year to June 2018.
 
•EchoStar IX. — Effective January 2008, DISH Network began receivingleasing satellite servicescapacity from us on the EchoStar IX satellite. Subject to availability, DISH Network generally has the right to continue to receiveleasing satellite servicescapacity from us on the EchoStar IX satellite on a month-to-month basis.
  
EchoStar XII•. DISH Network received satellite services from us on the EchoStar XII satellite. The term of the satellite services agreement terminated at the end of September 2017.
EchoStar XVI. In December 2009, we entered into an initial ten-year transponder service agreement with DISH Network, pursuant to which DISH Network has received satellite services from us on the EchoStar XVI satellite since January 2013. Effective December 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. In July 2016, we and DISH Network further amended the transponder service agreement to, among other things, extend the initial term by one additional year through January 2018 and to reduce the term of the first renewal option by one year. In May 2017, DISH Network renewed the satellite services agreement relative to the EchoStar XVI satellite for five-years to January 2023. DISH Network has the option to renew for an additional five-year period prior to expiration of the term. There can be no assurance that such option to renew this agreement will be exercised. In the event that DISH Network does not exercise its five-year renewal option, DISH Network has the option to purchase the EchoStar XVI satellite for a certain price. If DISH Network does not elect to purchase the EchoStar XVI satellite at that time, we may sell the EchoStar XVI satellite to a third party and DISH Network is required to pay us a certain amount in the event we are not able to sell the EchoStar XVI satellite for more than a certain amount.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

Nimiq 5 Agreement. In September 2009, we entered into a fifteen-year satellite service agreement with Telesat Canada (“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 Transponder Agreement”). In September 2009, we also entered into a satellite service agreement (the “DISH Nimiq 5 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.
Under the terms of the DISH Nimiq 5 Agreement, DISH Network makes certain monthly payments to us that commenced in September 2009, when the Nimiq 5 satellite was placed into service, and continue through the service term. Unless earlier terminated under the terms and conditions of the DISH Nimiq 5 Agreement, the service term will expire in October 2019. Upon expiration of the initial term, DISH Network has the option to renew the DISH Nimiq 5 Agreement on a year-to-year basis through the end of life of the Nimiq 5 satellite. Upon in-orbit failure or end of life of the Nimiq 5 satellite, and in certain other circumstances, DISH Network has certain rights to receive service from us on a replacement satellite. There can be no assurance that any options to renew the DISH Nimiq 5 Agreement will be exercised or that DISH Network will exercise its option to receive service on a replacement satellite.
QuetzSat-1 Agreement. 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 the QuetzSat-1 satellite. The QuetzSat-1 satellite was launched in September 2011 and was placed into service in November 2011 at the 67.1 degree west longitude orbital location. In February 2013, we and DISH Network entered into an agreement pursuant to which we 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.
Under the terms of our contractual arrangements with DISH Network, we began to provide service to DISH Network on the QuetzSat-1 satellite in February 2013 and will continue to provide service through the remainder of the service term. Unless extended or earlier terminated under the terms and conditions of our agreement with DISH Network for the QuetzSat-1 satellite, the initial service term will expire in November 2021. Upon expiration of the initial service term, DISH Network has the option to renew the agreement for the QuetzSat-1 satellite on a year-to-year basis through the end of life of the QuetzSat-1 satellite. Upon an in-orbit failure or end of life of the QuetzSat-1 satellite, and in certain other circumstances, DISH Network has certain rights to receive service from us on a replacement satellite. There can be no assurance that any options to renew this agreement will be exercised or that DISH Network will exercise its option to receive service on a replacement satellite.
103 Degree Orbital Location/SES-3.SES-3 — In May 2012, we entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree west longitude orbital location (the “103 Spectrum Rights”). In June 2013, we and DISH Network entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which DISH Network may use and develop the 103 Spectrum Rights. Unless earlier terminated under the terms and conditions ofEffective in March 2018, DISH Network exercised its right to terminate the DISH 103 Spectrum Development Agreement the term generally will continue for the duration ofand we exercised our right to terminate the 103 Spectrum Rights.Development Agreement.
 
In connection with the 103 Spectrum Development Agreement, in May 2012, we also entered into a ten-year serviceten-year agreement with Ciel pursuant to which we receiveleased certain satellite servicescapacity from Ciel on the SES-3 satellite at the 103 degree west longitude orbital location.location (the “Ciel 103 Agreement”). In June 2013, we and DISH Network entered into an agreement pursuant to which DISH Network receivesleased certain satellite servicescapacity from us on the SES-3 satellite (the “DISH 103 Service Agreement”). Under the terms of the DISH 103 Service Agreement, DISH Network makesmade certain monthly payments to us through the service term. Unless earlier terminated under the terms and conditions ofEffective in March 2018, DISH Network exercised its right to terminate the DISH 103 Service Agreement and we exercised our right to terminate 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) 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.Ciel 103 Agreement.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

TT&CTelesat Obligation Agreement. We transferred the Telesat Transponder Agreement. Effective January 2012, we entered into a telemetry, tracking and control (“TT&C”) agreement pursuant to which we provide TT&C services to DISH Network for a period ending in December 2016 (the “2012 TT&C Agreement”).as part of the BSS Transaction; however, we retained certain obligations related to DISH Network’s performance under that agreement. In November 2016,September 2019, we and DISH Network amended the 2012 TT&C Agreement to extend the term for one year through December 2017. The 2012 TT&C Agreement replaced the TT&C agreement we entered into withan agreement whereby DISH Network in connection with the Spin-off. The feescompensates us 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’ notice.retaining such obligations.
In connection with the Satellite and Tracking Stock Transaction, in February 2014, we amended the TT&C Agreement to cease the provision of TT&C services to DISH Network for the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. Effective March 2014, we provide TT&C services for the D-1 and EchoStar XV satellites; however, for the period that we received satellite services on the EchoStar XV satellite from DISH Network, we waived the fees for the TT&C services on the EchoStar XV satellite. Effective August 2016, we provide TT&C services to DISH Network for the EchoStar XVIII satellite.
Real Estate Leases to DISH NetworkNetwork. . 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,leases or subsequent amendments and includes DISH Network is responsible for itsNetwork’s portion of the taxes, insurance, utilities andand/or maintenance of the premises. The termterms of each of the leases isare set forth below:
 
•100 Inverness LeaseOccupancy License Agreement. In connection with the Share Exchange, effective— Effective March 2017, DISH Network leases from usis licensed to use certain of our space at 100 Inverness CircleTerrace East, Englewood, Colorado for a period ending in December 2020. This agreement may be terminated by either party upon 180 days’ prior notice. This agreement may be extended by mutual consent, in which case this agreement will be converted to a month-to-month lease agreement. Upon extension, either party has the right to terminate this agreement upon 30 days’ notice.

90 Inverness Lease Agreement. The lease for certain space at 90 Inverness Circle East, Englewood, Colorado was for a period ending in December 2016. In February 2016,connection with the BSS Transaction, we transferred to DISH Network terminated this lease effectivethe Englewood Satellite Operations Center located at 100 Inverness Terrace East, including any and all equipment, hardware licenses, software, processes, software licenses, furniture and technical documentation associated with the satellites transferred in August 2016.the BSS Transaction.

•Meridian Lease Agreement. —The lease for all of 9601 S. Meridian Blvd., Englewood, Colorado was originally for a period ending in December 2016. Effective December 2016, weWe and DISH Network have amended this lease over time to, among other things, extend the term for one year through December 2017. This2020. After December 2020, this agreement may be extendedconverted by mutual consent in which case this agreement will be converted to a month-to-month lease agreement. Upon extension,agreement with either party hashaving the right to terminate this agreement upon 30 days’ notice.
Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr., Littleton, Colorado was for a period ending in December 2016. Effective December 2016, we and DISH Network amended this lease to, among other things, extend the term for one year through December 2017. This agreement may be extended by mutual consent, in which case this agreement will be converted to a month-to-month lease agreement. Upon extension, either party has the right to terminate this agreement upon 30 days’ notice.
36
Atlanta Sublease Agreement. The sublease for certain space at 211 Perimeter Center, Atlanta, Georgia terminated in October 2016.

Gilbert Lease Agreement. The lease for certain space at 801 N. DISH Drive, Gilbert, Arizona was for a period ending July 2016. Effective November 2016, we and DISH Network amended this lease to extend the term for one year through July 2017. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
Cheyenne Lease Agreement. Prior to the Share Exchange, we leased to DISH Network certain space at 530 EchoStar Drive, Cheyenne, Wyoming. In connection with the Share Exchange, we transferred ownership of a portion of this property to DISH Network and we and DISH Network amended this agreement to (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 in December 2031. This agreement may be extended by mutual consent, in which case this agreement will be converted to

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

a month-to-month lease agreement. Upon extension, either party has the right to terminate this agreement upon 30 days’ notice.

Product Support Agreement. In connection with the Spin-off, one of our subsidiaries entered into a product support agreement pursuant to which DISH Network had 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 accessories that we had previously sold to DISH Network. The fees for the services provided under the product support agreement were calculated at cost plus a fixed margin, which varied depending on the nature of the services provided. The term of the product support agreement was the economic life of such set-top boxes and related accessories, unless terminated earlier. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
DISHOnline.com Services Agreement. Effective January 2010, DISH Network entered into a two-year agreement with one of our subsidiaries pursuant to which DISH Network received certain services associated with an online video portal. The fees for the services provided under this services agreement depended, among other things, upon the cost to develop and operate such services. In November 2016, one of our subsidiaries and DISH Network amended this agreement to, among other things, extend the term for one year through December 2017. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
DISH Remote Access Services Agreement. Effective February 2010, one of our subsidiaries entered into an agreement with DISH Network pursuant to which DISH Network received, among other things, certain remote digital video recorder (“DVR”) management services. The fees for the services provided under this services agreement depended, among other things, upon the cost to develop and operate such services. This agreement automatically renewed in February 2017 for an additional one-year period until February 2018. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
SlingService Services Agreement. Effective February 2010, one of our subsidiaries entered into an agreement with DISH Network pursuant to which DISH Network received certain services related to placeshifting. The fees for the services provided under this services agreement depended, among other things, upon the cost to develop and operate such services. This agreement automatically renewed in February 2017 for an additional one-year period until February 2018. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
TerreStar AgreementAgreement. . In March 2012, DISH Network completed its acquisition of substantially all the assets of TerreStar Networks Inc. (“TerreStar”). Prior to DISH Network’s acquisition of substantially all the assets of TerreStar and our completion of the Hughes Acquisition, TerreStar and HNS entered into various agreements pursuant to which our Hughes segment provides,we provide, among other things, warranty, operations and maintenance and hosting services for TerreStar’s ground-based communications equipment. TerreStarequipment (the “TerreStar Agreements”). In December 2017, we and DISH Network amended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DISH Network generally has the right to continue to receive warranty services from us for one of our products on a month-to-month basis. The provision of warranty services for our other product will continue until March 2018 and will automatically renew in March 2018 for an additional one-year period,basis unless terminated by TerreStarDISH Network upon at least 6021 days’ written notice to us priorus. DISH Network generally has the right to the end of the term. The provision ofcontinue to receive operations and maintenance services will continue until April 2018from us on a quarter-to-quarter basis unless operations and will automatically renew in April 2018 for an additional one-year period, unlessmaintenance services are terminated by TerreStar or usDISH Network upon at least 90 days’ written notice prior to the end of the term.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.2022. In addition, TerreStarDISH Network generally may terminate suchany and all services for convenience subject to providing us with prior notice and/or payment of termination charges. In March 2020, we entered into an agreement with DISH Network pursuant to which we perform certain work and provide certain credits to amounts owed to us under the TerreStar Agreements in exchange for DISH Network’s granting us rights to use certain satellite capacity under the Amended and Restated Professional Services Agreement (as defined below). As a result, we and DISH Network amended the TerreStar Agreements to suspend our provision of warranty services to DISH Network from April 2020 through December 2020. Following the expiration of this suspension, we will continue to provide warranty services to DISH Network.


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Hughes Broadband Distribution AgreementAgreement. . Effective October 2012, HNSwe and dishNET Satellite Broadband L.L.C. (“dishNET”), a wholly-owned subsidiary of DISH Network, entered into a distribution agreement (the “Distribution Agreement”) pursuant to which dishNETDISH Network has the right, but not the obligation, to market, sell and distribute the Hughes satellite internet service (the “Hughes service”). dishNETour HughesNet service. DISH Network pays HNSus a monthly per subscriber wholesale service fee for the HughesHughesNet service based upon a subscriber’s service level and based upon certain volume subscription thresholds. The Distribution Agreement also provides that dishNETDISH Network has the right, but not the obligation, to purchase certain broadband equipment from us to support the sale of the HughesHughesNet service. The Distribution Agreement had an initial term of five years with automatic renewal for successive one year terms unless terminated by either party with a written notice at least 180 daysdays’ before the expiration of the then-current term. In February 2014, HNSwe and dishNETDISH Network entered into an amendment to the Distribution Agreement which, among other things, extended the initial term of the Distribution Agreement until March 2024. Upon expiration or termination of the Distribution Agreement, the partieswe and DISH Network will continue to provide the Hughesour HughesNet service to the then-current dishNETDISH Network subscribers pursuant to the terms and conditions of the Distribution Agreement.

Set-Top Box Application Development Agreement. In November 2012, one of our subsidiaries and DISH Network entered into a set-top box application development agreement (the “Application Development Agreement”) pursuant to which we provided DISH Network with certain services relating to the development of web-based applications for set-top boxes. The fees for services provided under the Application Development Agreement were calculated at our cost of providing the relevant service plus a fixed margin, which depended on the nature of the services provided. The Application Development Agreement automatically renewed in February 2017 for a one-year period ending in February 2018. This agreement was transferred to DISH Network as part of the Share Exchange and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
XiP Encryption Agreement. In July 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 provided 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 XiP Encryption Agreement’s term ended on the same day as the 2012 Receiver Agreement and therefore was automatically extended through December 2017 when we and DISH Network extended the 2012 Receiver Agreement. The fees for the services provided under the XiP Encryption Agreement were calculated on a monthly basis based on the number of receivers utilizing such security measures each month. Effective March 2017 in connection with the Share Exchange, we and DISH Network terminated the XiP Encryption Agreement and EchoStar has no further obligations and will earn no additional revenue under these agreements after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
DBSD North America AgreementAgreement. . In March 2012, DISH Network completed its acquisition of 100% all of the equity of reorganized DBSD North America, Inc. (“DBSD North America”). Prior to DISH Network’s acquisition of DBSD North America and our completion of the Hughes Acquisition, DBSD North America and HNS entered into various agreements pursuant to which our Hughes segment provides,we provide, among other things, warranty, operations and maintenance and hosting services of DBSD North America’s gateway and ground-based communications equipment. In December 2017, we and DBSD North America generallyamended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DBSD North America has the right to continue to receive operations and maintenance services from us on a quarter-to-quarter basis, unless terminated by DBSD North America upon at least 120 days’ written notice to us. In February 2019, we further amended these agreements to provide DBSD North America with the right to continue to receive warranty services from us on a month-to-month basis until February 2019. The provision of operations and maintenance services will continue until April 2018 and will automatically renew in April 2018 for an additional one-year period,December 2023, unless terminated by DBSD North America upon at least 12021 days’ written notice to us prior to the end of the term.us. The provision of hosting services will continue until February 2022 and will automatically renew for an additional five-yearfive-year period until February 2027 unless terminated by DBSD North America upon at least 180 days’ written notice to us prior to the end of the term.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.

Sling TV Holding L.L.C. (“Sling TV Holding”)Hughes Equipment and Services Agreement. Effective July 2012,In February 2019, we and DISH Network formed Sling TV Holding, which was owned two-thirds by DISH Network and one-third by us. Sling TV Holding was formed to develop and commercialize certain advanced technologies. At that time, we, DISH Network and Sling TV Holding entered into the following agreements with respect to Sling TV Holding: (i) a contributionan agreement pursuant to which we andwill sell to DISH Network contributed certain assets in exchange for our respective ownership interests in Sling TV Holding; (ii) a limited liability company operating agreement (“Operating Agreement”), which providedHughesNet Service and HughesNet equipment that has been modified to meet DISH Network’s internet-of-things specifications for the governancetransfer of Sling TV Holding; and (iii) a commercialdata to DISH Network’s network operations centers. This agreement (“Commercial Agreement”) pursuanthas an initial term of five years expiring February 2024 with automatic renewal for successive one-year terms unless terminated by DISH Network with at least 180 days’ written notice to which, among other things, Sling TV Holding had: (a) certain rights and corresponding obligationsus or by us with respectat least 365 days’ written notice to its business; and (b) the right, but not the obligation, to receive certain services fromDISH Network.

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us and DISH Network, respectively. Additionally, the spouse of Mr. Vivek Khemka, who was the President - EchoStar Technologies L.L.C. during portions of 2016 and through February 2017, was employed during 2016 as Vice President of Business Development and Operations of Sling TV Holding.

Effective August 2014, we and Sling TV Holding entered into an exchange agreement (“Exchange Agreement”) pursuant to which, among other things, Sling TV Holding distributed certain assets to us and we reduced our interest in Sling TV Holding to a 10.0% non-voting interest. As a result, DISH Network had a 90.0% equity interest and a 100% voting interest in Sling TV Holding. In addition, we, DISH Network and Sling TV Holding amended and restated the Operating Agreement, primarily to reflect the changes implemented by the Exchange Agreement. Finally, we, DISH Network and Sling TV Holding amended and restated the Commercial Agreement, pursuant to which, among other things, Sling TV Holding: (1) had certain rights and corresponding obligations with respect to its business; (2) had the right, but not the obligation, to receive certain services from us and DISH Network; and (3) had a license from us to use certain of the assets distributed to us as part of the Exchange Agreement. Effective March 2017 following the consummation of the Share Exchange, we no longer hold our investment in Sling TV Holding. Effective March 2017 in connection with the Share Exchange, we and DISH Network terminated the Exchange Agreement and the Commercial Agreement and EchoStar has no further obligations and will earn no additional revenue under these agreements after February 2017. Historical transactions under these agreements are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
Cost of sales — equipment and services and otherExpenses — DISH Network

Remanufactured Receiver and Services Agreement. In connection with the Spin-off, one ofThe following table presents our subsidiaries entered into a remanufactured receiver and services agreement with DISH Network pursuant to which we had the right, but not the obligation, to purchase remanufactured receivers andoperating expenses related components from DISH Network at cost plus a fixed margin, which varied depending on the nature of the equipment purchased. In November 2016, one of our subsidiaries and DISH Network amended this agreement to extend its term for one year through December 2017. This agreement was transferred to DISH Network as part ofNetwork:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Operating expenses - DISH Network$1,481  $1,351  $2,936  $2,267  

The following table presents the Share Exchange and EchoStar has no further obligations and will incur no additional expenses under this agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).related trade accounts payable:
As of
June 30,
2020		December 31,
2019
Trade accounts payable - DISH Network$2,317  $1,923  


General and administrative expenses — DISH Network
Amended and Restated Professional Services Agreement. In connection with the Spin-off, we entered into various agreements with DISH Network including the Transition Services Agreement, Satellite Procurement Agreementa transition services agreement, satellite procurement agreement and Services Agreement,services agreement, all of which all expired in January 2010 and were replaced by a Professionalprofessional services agreement (the “Professional Services Agreement.Agreement”). 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:a transition services agreement: information technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration, program acquisition services and other support services. 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)a satellite procurement agreement), receive logistics, procurement and quality assurance services from us (previously provided under the Services Agreement)a services agreement) and provide other support services. In connection with the consummation of the Share Exchange, we and DISH amended and restated the Professional Services Agreement (as amended to date, the “Amended and Restated Professional Services Agreement”) to provide that we and DISH Network shall have the right to receive additional services that either we or DISH Network may require as a result of the Share Exchange, including access to antennas owned by DISH Network for our use in performing TT&C services and maintenance and support services for our antennas (collectively, the “TT&C Antennas”). In September 2019, in connection with the BSS Transaction, we and DISH further amended the Amended and Restated Professional Services Agreement to provide that we and DISH Network shall have the right to receive additional services that either we or DISH Network may require as a result of the Share Exchange.BSS Transaction and to remove our access to and the maintenance and support services for the TT&C Antennas. The term of the Amended and Restated Professional Services Agreement is through January 20192021 and renews automatically for successive one-yearone-year periods thereafter, unless the agreement is terminated earlier by either party upon at least 60 days’ notice. However, either partyWe or DISH Network may generally terminate the Amended and Restated Professional Services Agreement in part with respect to any particular service it receives for any reason upon at least 30 days’ notice.notice, unless the statement of work for particular services states otherwise. Certain services being provided for under the Amended and Restated Professional Services Agreement may survive the termination of the agreement.

Real Estate Leases from DISH Network. We have entered into lease agreements pursuant to which we lease certain real estate from DISH Network. The rent on a per square foot basis is comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of the leases or subsequent amendments and, for certain properties, we are responsible forincludes our portion of the taxes, insurance, utilities andand/or maintenance of the premises. The terms of each of the leases are set forth below:


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El Paso Lease Agreement•. The lease for certain space at 1285 Joe Battle Blvd., El Paso, Texas, was for an initial period ending in August 2015, and provided us with renewal options for four consecutive three-year terms. Effective August 2015, we exercised our first renewal option for a period ending in August 2018.

90 Inverness Lease Agreement. In connection with the Share Exchange, effective March 2017 we lease from DISH Network certain space at 90 Inverness Circle East in Englewood, Colorado for a period ending in December 2022. EchoStar has the option to renew this lease for four three-year periods.

Cheyenne Lease Agreement. In connection with the Share Exchange, effective — Effective March 2017, we entered into a lease fromwith DISH Network for certain space at 530 EchoStar Drive in Cheyenne, Wyoming for a period ending in MarchFebruary 2019. EchoStar has theIn August 2018, we exercised our option to renew this lease for thirteen one-year periods.

Gilbert Lease Agreement.a one year period ending in February 2020. In connection with the Share Exchange, effective March 2017BSS Transaction, we lease fromtransferred the Cheyenne Satellite Operations Center, including
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any equipment, software licenses, and furniture located within, to DISH Network certainand amended this lease to reduce the space at 801 N. DISH Dr. in Gilbert, Arizonaprovided to us for the Cheyenne Satellite Access Center for a period ending in March 2019. EchoStar hasSeptember 2021, with the option for us to renew this lease for thirteen one-year periods.a one year period upon 180 days’ written notice prior to the end of the term.

•American Fork Occupancy License Agreement. In connection with the Share Exchange, effective — Effective March 2017, we sublease fromentered into an agreement with DISH Network for certain space at 796 East Utah Valley Drive in American Fork, Utah for a period ending in August 2017. We have exercised our option to renew this subleaseagreement for a five-yearfive-year period ending in August 2022.

Employee Matters Agreement. Effective March 2017 in connection with the Share Exchange, we We and DISH Network entered into an Employee Matters Agreement that addresses the transfer of employees from EchoStaramended this agreement to, DISH Network, including certain benefit and compensation matters and the allocation of responsibility for employee related liabilities relating to current and past employees of the transferred businesses. DISH Network assumed employee-related liabilities relating to the transferred businesses as part of the Share Exchange, except that we are responsible for certain existing employee related litigation as well as certain pre-Share Exchange compensation and benefits for employees transferring to DISH Networkamong other things, terminate this agreement in connection with the Share Exchange.March 2019.

Collocation and Antenna Space Agreements. We and DISH Network have entered into an agreement pursuant to which DISH Network provides us with collocation space in El Paso, Texas. This agreement was for an initial period ending in August 2015, and provides us with renewal options for four consecutive years. Effective August 2015, we exercised our first renewal option for a period ending in August 2018 and in April 2018 we exercised our second renewal option for a period ending in August 2021. In connection with the Share Exchange, effective March 2017, we also entered into certain agreements pursuant to which DISH Network will provideprovides collocation and antenna space to EchoStar through MarchFebruary 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New Braunfels, Texas; Monee, Illinois; Spokane, Washington; and Englewood, Colorado. In October 2019, we provided a termination notice for our New Braunfels, Texas agreement to be effective May 2020. In August 2017, we and DISH Network also entered into certain other agreements pursuant to which DISH Network will provideprovides additional collocation and antenna space to EchoStarus in Monee, Illinois and Spokane, Washington through August 2022. EchoStarGenerally, we may renew each of theseour collocation and antenna space agreements for four three-year periods by providing DISH Network with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term. EchoStarWe may terminate certain of these agreements with 180 days’ prior written notice. In September 2019, in connection with the BSS Transaction, we entered into an agreement pursuant to which DISH Network provides us with certain additional collocation space in Cheyenne, Wyoming for a period ending in September 2020. The fees for the services provided under these agreements depend on the number of racks leasedlocated at the location.


Other agreements —Also in connection with the BSS Transaction, in September 2019, we entered into an agreement pursuant to which DISH Network

 will provide us with antenna space and power in Cheyenne, Wyoming for a period of five years commencing no later than October 2020, with 4 three-year renewal terms, with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term.
Satellite and Tracking Stock Transaction
Hughes Broadband Master Services Agreement.  In February 2014,March 2017, we and DISH Network entered into agreements with DISH Network to implement a transactionmaster service agreement (the “Hughes Broadband MSA”) pursuant to which DISH Network, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders and upgrades for our HughesNet service and related equipment and other telecommunication services and (ii) installs HughesNet service equipment with respect to activations generated by DISH Network.  Under the Hughes Broadband MSA, we and DISH Network make certain payments to each other relating to sales, upgrades, purchases and installation services. The Hughes Broadband MSA has an initial term of five years through March 2022 with automatic renewal for successive one-year terms. Either party has the ability to terminate the Hughes Broadband MSA, in March 2014,whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the Hughes Broadband MSA, we will continue to provide our HughesNet service to subscribers and make certain payments to DISH Network pursuant to the terms and conditions of the Hughes Broadband MSA. We incurred sales incentives and other costs under the Hughes Broadband MSA totaling $4.4 million and $4.8 million for the three months ended June 30, 2020 and 2019, respectively, and $9.0 million and $9.5 million for the six months ended June 30, 2020 and 2019, respectively.

2019 TT&C Agreement.  In September 2019, in connection with the BSS Transaction, we entered into an agreement pursuant to which DISH Network provides TT&C services to us for a period ending in September 2021, with the option for us to renew for a one-year period upon written notice at least 90 days prior to the initial expiration (the “2019 TT&C Agreement”). The fees for services provided under the 2019 TT&C Agreement are calculated at either: (i) a fixed fee or (ii) cost plus a fixed margin, which will vary depending on the nature of the services provided.  Any party is able to terminate the 2019 TT&C Agreement for any reason upon 12 months’ notice.

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Other Receivables - DISH Network

The following table presents our other receivables owed from DISH Network:
As of
June 30,
2020		December 31,
2019
Other receivables - DISH Network$93,705  $92,892  

Tax Sharing Agreement. Effective December 2007, we and DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) in connection with the Spin-off. This agreement governs our and DISH Network’s respective rights, responsibilities and obligations after the Spin-off with respect to taxes for the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes, including any taxes that are incurred as a result of restructuring activities undertaken to implement the Spin-off, are borne by DISH Network and DISH Network indemnifies us for such taxes. However, DISH Network is not liable for and does not indemnify us for any taxes that are incurred as a result of the Spin-off or certain related transactions failing to qualify as tax-free distributions pursuant to any provision of Section 355 or Section 361 of the Code, because of: (i) a direct or indirect acquisition of any of our stock, stock options or assets; (ii) any action that we take or fail to take or (iii) any action that we take that is inconsistent with the information and representations furnished to the IRS in connection with the request for the private letter ruling, or to counsel in connection with any opinion being delivered by counsel with respect to the Spin-off or certain related transactions. In such case, we will be solely liable for, and will indemnify DISH Network for any resulting taxes, as well as any losses, claims and expenses. The Tax Sharing Agreement will terminate after the later of the full period of all applicable statutes of limitations, including extensions, or once all rights and obligations are fully effectuated or performed.
In light of the Tax Sharing Agreement, among other things, and in connection with our consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, in September 2013, we and DISH Network agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’s examination of our consolidated tax returns. Prior to the agreement with DISH Network in 2013, the federal tax benefits were reflected as a deferred tax asset for depreciation and amortization, which was netted in our non-current deferred tax liabilities. The agreement with DISH Network in 2013 requires DISH Network to pay us the federal tax benefit it receives at such time as we would have otherwise been able to realize such tax benefit. We recorded a non-current receivable from DISH Network in Other receivables - DISH Network and a corresponding increase in our Deferred tax liabilities, net to reflect the effects of this agreement in September 2013. In addition, in September 2013, we and DISH Network agreed upon a tax sharing arrangement for filing certain combined state income tax returns and a method of allocating the respective tax liabilities between us and DISH Network for such combined returns, through the taxable period ending on December 31, 2017 (the “State Tax Arrangement”).
In August 2018, we and DISH Network amended the Tax Sharing Agreement and the 2013 agreements (the “Tax Sharing Amendment”). Under the Tax Sharing Amendment, to the extent permitted by applicable tax law, DISH Network is entitled to apply the benefit of our 2009 net operating losses (the “SATS 2009 NOLs”) to DISH Network’s federal tax return for the year ended December 31, 2008, in exchange for DISH Network paying us over time the value of the net annual federal income taxes paid by us that would have been otherwise offset by the SATS 2009 NOLs. The Tax Sharing Amendment also requires us and DISH Network to pay the other for the benefits of certain past and future federal research and development tax credits that we or DISH Network receive or received as a result of being part of a controlled group under the Code, and requires DISH Network to compensate us for certain past tax losses utilized by DISH Network and for certain past and future excess California research and development tax credits generated by us and used by DISH Network. In addition, the Tax Sharing Amendment extends the term of the State Tax Arrangement to the earlier to occur of termination of the Tax Sharing Agreement, a change in control of either us or DISH Network or, for any particular state, if we and DISH Network no longer file a combined tax return for such state.

We and DISH Network file combined income tax returns in certain states. We have earned and recognized tax benefits for certain state income tax credits that we would be unable to utilize currently if we had filed separately from DISH Network. We have charged Additional paid-in capital in prior periods when DISH Network has utilized
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such tax benefits. We expect to increase Additional paid-in capital upon receipt of any consideration that DISH Network pays to us in exchange for these tax credits.

Other Agreements

Master Transaction Agreement. In May 2019, we and BSS Corp. entered into the Master Transaction Agreement with DISH and Merger Sub with respect to the BSS Transaction. Pursuant to the terms of the Master Transaction Agreement, on September 10, 2019: (i) we transferred the BSS Business to BSS Corp.; (ii) we completed the Distribution; and (iii) immediately after the Distribution, (1) BSS Corp. became a wholly-owned subsidiary of DISH such that DISH owns and operates the BSS Business and (2) each issued and outstanding share of BSS Common Stock owned by EchoStar stockholders was converted into the right to receive 0.23523769 shares of DISH Common Stock. Following the consummation of the BSS Transaction, we no longer operate the BSS Business, which was a substantial portion of our ESS segment. The Master Transaction Agreement contained customary representations and warranties by us and DISH Network, including our representations relating to the assets, liabilities and financial condition of the BSS Business, and representations by DISH Network relating to its financial condition and liabilities.  We and DISH Network have agreed to indemnify each other against certain losses with respect to breaches of certain representations and covenants and certain retained and assumed liabilities, respectively.

BSS Transaction Intellectual Property and Technology License Agreement.Effective September 2019, in connection with the BSS Transaction, we and DISH Network entered into an intellectual property and technology license agreement (the “BSS IPTLA”) pursuant to which we and DISH Network license to each other certain intellectual property and technology. The BSS IPTLA will continue in perpetuity, unless mutually terminated by the parties. Pursuant to the BSS IPTLA, we granted to DISH Network a license to our intellectual property and technology for use by DISH Network, among other things, in connection with its continued operation of the BSS Business acquired pursuant to the BSS Transaction, including a limited license to use the “ESS” and “ECHOSTAR SATELLITE SERVICES” trademarks during a transition period.  EchoStar retains full ownership of the “ESS” and “ECHOSTAR SATELLITE SERVICES” trademarks. In addition, DISH Network granted a license back to us, among other things, for the continued use of all intellectual property and technology that is used in our retained businesses but the ownership of which was transferred to DISH Network pursuant to the BSS Transaction.

BSS Transaction Tax Matters Agreement. Effective September 2019, in connection with the BSS Transaction, we, BSS Corp. and DISH entered into a tax matters agreement. This agreement governs certain of our rights, responsibilities and obligations with respect to taxes of the BSS Business transferred pursuant to the BSS Transaction. Generally, we are responsible for all tax returns and tax liabilities for the BSS Business for periods prior to the BSS Transaction and DISH is responsible for all tax returns and tax liabilities for the BSS Business from and after the BSS Transaction. Both we and DISH made certain tax-related representations and are subject to various tax-related covenants after the consummation of the BSS Transaction. Both we and DISH Network have agreed to indemnify each other for certain losses if there is a breach of any the tax representations or violation of any of the tax covenants in the tax matters agreement and that breach or violation results in the failure of the BSS Transaction being treated as a transaction that is tax-free for EchoStar or its stockholders for U.S. federal income tax purposes. In addition, DISH Network has agreed to indemnify us if the BSS Business is acquired, either directly or indirectly (e.g., via an acquisition of DISH Network), by one or more persons, where either it took an action, or knowingly facilitated, consented to or assisted with an action by its stockholders, that resulted in the failure of the BSS Transaction being treated as a transaction that is tax-free for EchoStar and HSS issued sharesits stockholders for U.S. federal income tax purposes. This tax matters agreement supplements the Tax Sharing Agreement outlined above and the Share Exchange Tax Matters Agreement outlined below, both of which continue in full force and effect.

BSS Transaction Employee Matters Agreement. Effective September 2019, in connection with the BSS Transaction, we and DISH Network entered into an employee matters agreement that addressed the transfer of employees from us to DISH Network, including certain benefit and compensation matters and the allocation of responsibility for employee related liabilities relating to current and past employees of the Tracking StockBSS Business. DISH Network assumed employee-related liabilities relating to the BSS Business as part of the BSS Transaction, except that we are responsible for certain pre-BSS Transaction compensation and benefits for employees who transferred to DISH Network in exchange for five satellites owned by DISH Network (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV) (including assumptionconnection with the BSS Transaction.

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Table of related in-orbit incentive obligations) and approximately $11.4 million in cash; and (ii) in March 2014, DISH Network began receiving certain satellite services as discussed above on these five satellites from us (collectively, the “Satellite and Tracking Stock Transaction.”) The Tracking Stock was retired in March 2017 and is no longer outstanding and all agreements, arrangements and policy statements with respect to such Tracking Stock terminated and are of no further effect. See Note 3 for further information.Contents

ECHOSTAR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Share Exchange Agreement. OnIn January 31, 2017, EchoStar Corporationwe and certain of itsour subsidiaries entered into the Share Exchange Agreement with DISH and certain of its subsidiaries pursuant to which, onin February 28, 2017, EchoStar Corporation and its subsidiarieswe received all of the shares of the Tracking Stock in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of our EchoStar Technologies businesses and certain other assets. Following consummation of the Share Exchange, on February 28, 2017, EchoStarwe no longer operatesoperate the transferred EchoStar Technologies businesses and the Tracking Stock was retired and is no longer outstanding and all agreements, arrangements and policy statements with respect to such Tracking Stock terminated and are of no further effect. Pursuant to the Share Exchange

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Agreement, EchoStarwe transferred certain assets, investments in joint ventures, spectrum licenses and real estate properties and DISH Network assumed certain liabilities relating to the transferred assets and businesses. The Share Exchange Agreement containscontained customary representations and warranties by the parties, including representations by EchoStarus related to the transferred assets, assumed liabilities and the financial condition of the transferred businesses. EchoStarWe 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 itus or DISH causes the transaction to be taxable to the other party after closing. See Note 3 for further information.

Hughes Broadband Master Services Agreement.  In March 2017, HNS and DISH Network L.L.C. (“DNLLC”), a wholly-owned subsidiary of DISH, entered into a master service agreement (the “MSA”) pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders and upgrades for the Hughes service and related equipment and other telecommunication services and (ii) installs Hughes service equipment with respect to activations generated by DNLLC.  Under the MSA, HNS and DNLLC will make certain payments to each other relating to sales, upgrades, purchases and installation services. The MSA has an initial term of five years until March 2022 with automatic renewal for successive one-year terms. After the first anniversary, either party has the ability to terminate the MSA, in whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the MSA, HNS will continue to provide the Hughes service to subscribers and make certain payments to DNLLC pursuant to the terms and conditions of the MSA.

Intellectual Property Matters Agreement. We entered into an Intellectual Property Matters Agreement with DISH Network in connection with the Spin-off. The Intellectual Property Matters Agreement governed our relationship with DISH Network with respect to patents, trademarks and other intellectual property. Pursuant to the Intellectual Property Matters Agreement, DISH Network irrevocably assigned to us all right, title and interest in certain patents, trademarks and other intellectual property necessary for the operation of our set-top box business. In addition, the agreement permitted us to use, in the operation of our set-top box business, certain other intellectual property currently owned or licensed by DISH Network. In addition, DISH Network was prohibited from using the “EchoStar” name as a trademark, except in certain limited circumstances. Similarly, the Intellectual Property Matters Agreement provided that we would not make any use of the name or trademark “DISH Network” or any other trademark owned by DISH Network, except in certain circumstances. Effective March 2017 in connection with the Share Exchange we and DISH Network terminated this agreement and EchoStar has no further obligations and will earn no additional revenue nor incur additional expenses under this agreement after February 2017.

Intellectual Property and Technology License Agreement.Effective March 2017, in connection with the Share Exchange, we and DISH Network entered into an Intellectual Propertyintellectual property and Technology License Agreementtechnology license agreement (“IPTLA”) pursuant to which we and DISH and their respective subsidiariesNetwork 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.

Tax Sharing Agreement. Effective December 2007, we and DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) in connection with the Spin-off. This agreement governs our respective rights, responsibilities and obligations after the Spin-off with respect to taxes for the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes, including any taxes that are incurred as a result of restructuring activities undertaken to implement the Spin-off, are borne by DISH Network, and DISH Network indemnifies us for such taxes. However, DISH Network is not liable for and does not indemnify us for any taxes that are incurred as a result of the Spin-off or certain related transactions failing to qualify as tax-free distributions pursuant to any provision of Section 355 or Section 361 of the 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 counsel with respect to the Spin-off or certain related transactions. In such case, we will be solely liable for, and will indemnify DISH Network for, any resulting taxes, as well as any losses, claims and expenses. The Tax Sharing Agreement will terminate after the later of the full period of all applicable statutes of limitations, including extensions, or once all rights and obligations are fully effectuated or performed.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

In light of the Tax Sharing Agreement, among other things, and in connection with our consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, in September 2013, we and DISH Network agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’s examination of our consolidated tax returns. Prior to the agreement with DISH Network in 2013, the federal tax benefits were reflected as a deferred tax asset for depreciation and amortization, which was netted in our noncurrent deferred tax liabilities. The agreement with DISH Network in 2013 requires DISH Network to pay us the federal tax benefit it receives at such time as we would have otherwise been able to realize such tax benefit. We recorded a noncurrent receivable from DISH Network in “Other receivable — DISH Network” and a corresponding increase in our net noncurrent deferred tax liabilities to reflect the effects of this agreement in September 2013. In addition, in September 2013, we and DISH Network agreed upon a tax sharing arrangement for filing certain combined state income tax returns and a method of allocating the respective tax liabilities between us and DISH Network for such combined returns, through the taxable period ending on December 31, 2017 (the “State Tax Arrangement”).
We and DISH Network file combined income tax returns in certain states. In 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. We expect to increase additional paid-in capital upon receipt of any consideration paid to us by DISH Network in exchange for these tax credits.

Share Exchange Tax Matters Agreement. Effective March 2017, in connection with the Share Exchange, we and DISH entered into a tax matters agreement. This agreement governs certain of our rights, responsibilities and obligations with respect to taxes of the transferred businesses pursuant to the Share Exchange. Generally, we are responsible for all tax returns and tax liabilities for the transferred businesses and assets for periods prior to the Share Exchange and DISH Network is responsible for all tax returns and tax liabilities for the transferred businesses and assets from and after the Share Exchange. Both we and DISH Network have made certain tax-related representations and are subject to various tax-related covenants after the consummation of the Share Exchange. Both we and DISH Network have agreed to indemnify each other if there is a breach of any such tax representation or violation of any such tax covenant and that breach or violation results in the Share Exchange not qualifying for tax free treatment for the other party. In addition, DISH Network has agreed to indemnify us if the transferred businesses are acquired, either directly or indirectly (e.g., via an acquisition of DISH Network), by one or more persons and such acquisition results in the Share Exchange not qualifying for tax free treatment. The tax matters agreement supplements the Tax Sharing Agreement outlined above, which continues in full force and effect.

TiVoShare Exchange Employee Matters Agreement. In April 2011, we and DISH Network entered into a settlement agreement with TiVo, Inc. (“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. 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 were 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. Subsequent payments were allocated between us and DISH Network based on historical sales of certain licensed products, with EchoStar being responsible for 5% of each annual payment. Effective March 2017, in connection with the Share Exchange, EchoStar has no further obligationswe and will incur no additional costs under this settlement agreement after February 2017. Historical transactions under this agreement are reported in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).
Sling Trademark License Agreement. In December 2014, Sling TV HoldingDISH Network entered into an employee matters agreement with Sling Media, Inc., our subsidiary, pursuantthat addressed the transfer of employees from us to which Sling TV Holding hadDISH Network, including certain benefit and compensation matters and the right,allocation of responsibility for a fixed fee,employee related liabilities relating to use certain trademarks, domain namescurrent and other intellectual property relatedpast employees of the transferred businesses. DISH Network assumed employee-related liabilities relating to the “Sling” trademark. In December 2016, Sling TV Holding and Sling Media, Inc. amended this agreement to extend the term thereof on a month-to-month basis. This agreement was transferred to DISH Networkbusinesses as part of the Share Exchange, except that we are responsible for certain existing employee related litigation as well as certain pre-Share Exchange compensation and EchoStar has no further obligations and will earn no additional revenue under this agreement after February 2017. Historical transactions under this agreement are reportedbenefits for employees who transferred to DISH Network in “Net income (loss) from discontinued operations” in our condensed consolidated statements of operations (see Note 3).connection with the Share Exchange.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - ContinuedCONTINUED
(Unaudited)

NOTE 16. RELATED PARTY TRANSACTIONS - OTHER
gTLD Bidding Agreement. In April 2015, we and DISH Network entered into a gTLD Bidding Agreement whereby, among other things: (i) DISH Network obtained rights from us to participate in a generic top level domain (“gTLD”) auction, assuming all rights and obligations from us related to our application with the Internet Corporation for Assigned Names and Numbers (“ICANN”) for a particular gTLD; (ii) DISH Network agreed to reimburse us for our ICANN application fee and certain out-of-pocket expenses related to the application and the auction; and (iii) we and DISH Network agreed to split equally the net proceeds obtained by DISH Network as the losing bidder in the auction, less such fee reimbursement and out-of-pocket expenses.
Patent Cross-License Agreements. In December 2011, we 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 2017 and aggregate payments under both Cross-License Agreements total less than $10.0 million. Each Cross-License Agreement contained an option to extend each Cross-License Agreement to include patents acquired by the respective party prior to January 2022. In December 2016, both we and DISH Network exercised our renewal options, resulting in aggregate additional payments to such third party totaling less than $3.0 million. 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.
Caltech. On October 1, 2013, Caltech Institute of Technology (“Caltech”) filed complaints against two of our subsidiaries, Hughes Communications, Inc. and HNS, as well as against DISH and certain of its subsidiaries, in the 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 asserted that encoding data as specified by the DVB-S2 standard infringed each of the asserted patents. Caltech claimed that certain of our Hughes segment’s satellite broadband products and services, infringed the asserted patents by implementing the DVB-S2 standard. Pursuant to a settlement agreement among us, DISH and Caltech, in May 2016, Caltech dismissed with prejudice all of its claims in these actions.

Orange, NJ. In October 2016, we and DISH Network sold two parcels of real estate owned separately by us and DISH Network in Orange, NJ to a third party pursuant to a purchase and sale agreement. Pursuant to the agreement, we and DISH Network separately received our respective payments from the buyer.

Invidi. In November 2010 and April 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.

Other Agreements
Hughes Systique Corporation (“Hughes Systique”)
 
We contract with Hughes Systique Corporation (“Hughes Systique”) for software development services. In 2008, Hughes Communications, Inc. loaned $1.5 million to Hughes Systique pursuant to a term loan facility. The initial interest rate on the outstanding loans was 6%, payable annually, and the accrued and unpaid interest was added to the principal amount outstanding under the loan facility in certain circumstances. The loans were convertible into shares of Hughes Systique upon non-payment or an event of default. In May 2014, we amended the term loan facility to increase the interest rate from 6% to 8%, payable annually, to reflect then-current market conditions and extend the maturity date of the loans to May 1, 2015, and in April 2015, we extended the maturity date of the loans to May 1, 2016 on the same terms. In 2015, Hughes Systique repaid $1.5 million of the outstanding principal of the loan facility. In 2016, Hughes Systique repaid $0.6 million of the outstanding principal of the loan facility. As of September 30, 2017, the principal amount outstanding of the loan facility was zero. In addition to our 43.7%approximately 43% ownership in Hughes Systique, Mr. Pradman Kaul, the President of our subsidiary Hughes Communications, Inc. and a member of our board of directors, and his brother, who is the CEOChief Executive Officer and President of Hughes Systique, in the aggregate, own approximately 25.7%25%, on an undiluted basis, of Hughes Systique’s outstanding shares as of SeptemberJune 30, 2017.2020. Furthermore, Mr. Pradman Kaul serves on the board of directors of Hughes Systique. Hughes Systique is a variable interest entity and we are considered the primary beneficiary of

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)

Hughes Systique due to, among other factors, our ability to direct the activities that most significantly impact the economic performance of Hughes Systique. As a result, we consolidate Hughes Systique’s financial statements in our condensed consolidated financial statements.these Condensed Consolidated Financial Statements.

NagraStar L.L.C.
TerreStar Solutions, Inc.
Prior
DISH Network owns more than 15% of TerreStar Solutions, Inc. (“TSI”). In May 2018, we and TSI entered into an equipment and services agreement pursuant to March 2017,which we owned 50.0% of NagraStar L.L.C. (“NagraStar”), a joint venture that was the primary provider of encryptiondesign, manufacture and related security technology used in the set-top boxes produced by our former EchoStar Technologies segment. We accountedinstall upgraded ground communications network equipment for our investment in NagraStar using the equity method. Following the consummation of the Share Exchange, we no longer hold this investment in NagraStar.
Dish Mexico
We own 49.0% of an entity that provides direct-to-home satellite services in Mexico known as Dish Mexico. WeTSI’s network and provide, certain satellite services to Dish Mexicoamong other things, warranty and prior to the Share Exchange we also provided certain broadcast services and sold hardware such as digital set-top boxes and related equipment to Dish Mexico.support services. We recognized revenue from sales of services we provided to Dish Mexico in continuing operations of approximately $5.8$0.9 million and $3.1 million for each of the three months ended SeptemberJune 30, 20172020 and 20162019, respectively, and $17.5$3.1 million and $8.2 million for each of the ninesix months ended SeptemberJune 30, 20172020 and 2016.2019, respectively. As of SeptemberJune 30, 20172020 and December 31, 2016,2019, we had trade accounts receivable from continuing operations from Dish MexicoTSI of approximately $7.6$0.0 million and $10.7$2.7 million, respectively.

Deluxe/EchoStar LLC

Global-IP Cayman
We own 50.0% of Deluxe/EchoStar LLC (“Deluxe”), a joint venture that
In May 2017, 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 accountagreement with Global-IP Cayman (“Global IP”) providing for our investment in Deluxe using the equity method. We recognized revenue from Deluxe for transponder services and the sale of broadbandcertain equipment of approximately $1.3 million and $0.7 million for the three months ended September 30, 2017 and 2016, respectively, and $3.6 million and $2.1 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017 and December 31, 2016, we had trade accounts receivable from Deluxe of approximately $1.3 million and $0.7 million, respectively.
SmarDTV
In May 2015, we acquired a 22.5% interest in SmarDTV, which we accounted for using the equity method. Pursuantservices to our agreements with SmarDTV and its subsidiaries, our former EchoStar Technologies segment purchased engineering services from and paid royalties to SmarDTV and its subsidiaries. Following the consummation of the Share Exchange, we no longer own our interest in the equity and subordinated debt of SmarDTV and no longer purchase engineering services from SmarDTV.

AsiaSat

We contract with AsiaSat Telecommunications Inc. (“AsiaSat”) for the use of transponder capacity on one of AsiaSat's satellites.Global IP. Mr. William David Wade, a member of our board of directors, served as a member of the board of directors of Global IP and as an executive advisor to the Chief Executive Officer of AsiaSat in 2016Global IP from September 2017 until April 2019 and from September 2017 until December 2019, respectively. In August 2018, we and Global IP amended the agreement to: (i) change certain of the equipment and services to be provided to Global IP, (ii) modify certain payment terms, (iii) provide Global IP an option to use one of our test lab facilities and (iv) effectuate the assignment of the agreement from Global IP to one of its wholly-owned subsidiaries. In February 2019, we terminated this agreement as a seniorresult of Global IP’s defaults resulting from its failure to make payments to us as required under the terms of this agreement. We have reserved our rights and remedies against Global IP under this agreement. We have not recognized any revenue since the termination of this agreement. As of June 30, 2020, we were owed $7.5 million from Global IP.

Maxar Technologies Inc.

Mr. Jeffrey Tarr, who joined our board of directors in March 2019, served as a consultant and advisor to Maxar Technologies Inc. and its subsidiaries (“Maxar Tech”) through May 2019. We previously entered into agreements with Maxar Tech for the CEOmanufacture and certain other services of AsiaSat through March 2017.the EchoStar IX satellite, the EchoStar XVII satellite, the EchoStar XIX satellite, the EchoStar XXI satellite and the EchoStar XXIV satellite and our former EchoStar XI satellite, EchoStar XIV satellite, EchoStar XVI satellite and EchoStar XXIII satellite. Maxar Tech provides us with anomaly support for these satellites once launched pursuant to the terms of the agreements. Maxar Tech also provides a warranty on one of these satellites and may be required to pay us certain amounts should the satellite not operate according to certain performance specifications. Our obligations to pay Maxar Tech under these agreements during the design life of the applicable satellites may be reduced if the applicable satellites do not operate according to certain performance specifications. We incurred expensesaggregate costs payable to AsiaSatMaxar Tech under this agreementthese agreements of approximately zero$0.9 million and $0.4$27.5 million for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively, and $0.1$8.8 million and $1.1$61.3 million for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively. At both June 30, 2020 and December 31, 2019, we had 0 trade accounts payable to Maxar Tech.


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ECHOSTAR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
NOTE 17. SUPPLEMENTAL FINANCIAL INFORMATION

Research and Development

The following table presents the research and development costs incurred in connection with customers’ orders:
For the three months ended June 30,For the six months ended June 30,
2020201920202019
Cost of sales - equipment (exclusive of depreciation and amortization)$3,913  $6,316  $10,605  $11,711  
Research and development expenses$7,448  $6,388  $13,702  $13,276  

Cash and Cash Equivalents and Restricted Cash

The following table reconciles Cash and cash equivalents and restricted cash, as presented in the Condensed Consolidated Balance Sheets, to the total of the same as presented in the Condensed Consolidated Statements of Cash Flows:
For the six months ended June 30,
20202019
Cash and cash equivalents, including restricted amounts, beginning of period:
Cash and cash equivalents$1,519,431  $928,306  
Restricted cash2,458  1,189  
Total cash and cash equivalents, included restricted amounts, beginning of period$1,521,889  $929,495  
Cash and cash equivalents, including restricted amounts, end of period:
Cash and cash equivalents$1,948,464  $1,298,005  
Restricted cash9,072  9,121  
Total cash and cash equivalents, included restricted amounts, end of period$1,957,536  $1,307,126  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Other Current Assets, Net and Other Non-Current Assets, Net

The following table presents the components of Other current assets, net and Other non-current assets, net:
As of
June 30,
2020		December 31,
2019
Other current assets, net:
Trade accounts receivable - DISH Network$13,465  $10,683  
Inventory83,559  79,621  
Prepaids and deposits47,614  50,145  
Contract acquisition costs, net16,380  16,869  
Other, net24,681  22,213  
Total other current assets, net$185,699  $179,531  
Other non-current assets, net:
Other receivables - DISH Network$93,705  $92,892  
Restricted marketable investment securities731  8,093  
Restricted cash9,072  2,458  
Deferred tax assets, net9,311  7,251  
Capitalized software, net109,091  101,786  
Contract acquisition costs, net90,706  96,723  
Contract fulfillment costs, net2,677  3,010  
Other, net25,611  22,628  
Total other non-current assets, net$340,904  $334,841  

The following table presents the activity in our allowance for doubtful accounts, which is included within Other, net in each of Other current assets, net and Other non-current assets, net in the table above:

For the six months ended June 30, 2020
Other current assets, netOther non-current assets, net
Balance at beginning of period$—  $—  
Credit losses (1)
1,595  13,378  
Foreign currency translation152  (572) 
Balance at end of period$1,747  $12,806  

(1) The impact of adopting ASC 326 on January 1, 2020 was a net increase to our allowance for doubtful accounts largely driven by a $13.4 million reclassification from Trade accounts receivables and contracts assets, net.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Accrued Expenses and Other Current Liabilities

The following table presents the components of Accrued expenses and other current liabilities:
As of
June 30,
2020		December 31,
2019
Accrued expenses and other current liabilities:
Trade accounts payable - DISH Network$2,317  $1,923  
Accrued interest41,633  42,622  
Accrued compensation49,042  50,787  
Accrued taxes19,175  18,525  
Operating lease obligation14,305  14,651  
Other136,472  142,371  
Total accrued expenses and other current liabilities$262,944  $270,879  

Inventory
The following table presents the components of inventory:
As of
June 30,
2020		December 31,
2019
Raw materials$6,508  $4,240  
Work-in-process7,553  6,979  
Finished goods69,498  68,402  
Total inventory$83,559  $79,621  

Supplemental and Non-cash Investing and Financing Activities

The following table presents the supplemental and non-cash investing and financing activities:
For the six months ended June 30,
 20202019
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized$72,450  $120,625  
Cash paid for income taxes$2,422  $1,217  
Non-cash investing and financing activities:
Employee benefits paid in Class A common stock$6,920  $6,654  
Increase (decrease) in capital expenditures included in accounts payable, net$2,055  $(15,839) 
Non-cash net assets received in exchange for a 20% ownership interest in our existing Brazilian subsidiary$2,824  $—  

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ItemITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context indicates otherwise, as used herein, the terms “we,” “us,” “EchoStar,” the “Company” and “our” refer to EchoStar Corporation and its subsidiaries. References to “$” are to United States dollars.  The following management’s discussionManagement’s Discussion and analysisAnalysis of our financial conditionFinancial Condition and resultsResults of operationsOperations (“Management’s Discussion and Analysis”) should be read in conjunction with the condensed consolidated financial statementsour accompanying Condensed Consolidated Financial Statements and notes to our financial statements included elsewherethereto (“Accompanying Condensed Consolidated Financial Statements”) in Item 1 of this Quarterly Report on Form 10-Q.10-Q (“Form 10-Q”).  This management’s discussionManagement’s Discussion and analysisAnalysis is intended to help provide an understanding of our financial condition, changes in our financial condition and our results of operations.  Many of the statements in this management’s discussionManagement’s Discussion and analysisAnalysis 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 “DisclosureRefer to the Disclosure Regarding Forward-Looking Statements”Statements in this Quarterly Report on Form 10-Q for further discussion.  For a discussion of additional risks, uncertainties and other factors that could impact our results of operations or financial condition, seerefer to the caption “Risk Factors”Risk Factors in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our most recent Annual Report on Form 10-K for(“Form 10-K”) filed with the year ended December 31, 2016.Securities and Exchange Commission (“SEC”).  Further, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and we undertake no obligation to update them.
 
EXECUTIVE SUMMARY
 
EchoStar is a global provider of satellite service operations, video delivery solutions, broadband satellite technologies, and broadband internet services for consumer customers, which include home and small office customers.to medium-sized businesses, and satellite services. We also deliver innovative network technologies, managed services and various communications solutions for enterprise customers, which include aeronautical and government customers.

enterprises.
Prior
In September 2019, pursuant to March 2017, we operated in three primary business segments, Hughes, EchoStar Technologies and EchoStar Satellite Services (“ESS”). On January 31, 2017, EchoStar Corporation and certain of its subsidiaries entered into a Share Exchange Agreementmaster transaction agreement (the “Share Exchange“Master Transaction Agreement”) with DISH and a wholly-owned subsidiary of DISH (“Merger Sub”), (i) we transferred certain real property and the various businesses, products, licenses, technology, revenues, billings, operating activities, assets and liabilities primarily related to the former portion of our ESS segment that managed, marketed and provided (1) broadcast satellite services primarily to DISH and its subsidiaries (together with DISH, “DISH Network”) and our joint venture Dish Mexico, S. de R.L. de C.V. (“Dish Mexico”) and its subsidiaries, and (2) telemetry, tracking and control (“TT&C”) services for satellites owned by DISH Network and a portion of our other businesses (collectively, the “BSS Business”) to one of our former subsidiaries, EchoStar BSS Corporation (“DISH”BSS Corp.”) and certain of its subsidiaries. Pursuant, (ii) we distributed to the Share Exchange Agreement, on February 28, 2017, among other things, EchoStar Corporation and certaineach holder of its subsidiaries received all of the shares of our Class A or Class B common stock entitled to receive consideration in the Hughes Retail Preferred Trackingtransaction an amount of shares of common stock of BSS Corp., par value $0.001 per share (“BSS Common Stock”), equal to one share of BSS Common Stock for each share of our Class A or Class B common stock owned by such stockholder (the “Distribution”); and (iii) immediately after the Distribution, (1) Merger Sub merged with and into BSS Corp. (the “Merger”), such that BSS Corp. became a wholly-owned subsidiary of DISH and with DISH then owning and operating the BSS Business, and (2) each issued and outstanding share of BSS Common Stock owned by EchoStar Corporation (the “EchoStar Trackingstockholders was converted into the right to receive 0.23523769 shares of DISH Class A common stock, par value $0.001 per share (“DISH Common Stock”) and((i) - (iii) collectively, the Hughes Retail Preferred Tracking Stock issued by Hughes Satellite Systems Corporation (“HSS”) (the “HSS Tracking Stock”, together with the EchoStar Tracking Stock, the “Tracking Stock”) in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of our EchoStar Technologies businesses and certain other assets (collectively, the “Share Exchange”“BSS Transaction”).

Following the consummation of the Share Exchange,BSS Transaction, we no longer operate the EchoStar Technologies business segment and the EchoStar Tracking Stock and HSS Tracking Stock were retired and are no longer outstanding and all agreements, arrangements and policy statements with respect to such tracking stock terminated and areBSS Business, which was a substantial portion of no further effect.our ESS segment. As a result of the Share Exchange,BSS Transaction, the condensed consolidated financial statementsresults of the EchoStar Technologies businesses have beenBSS Business, except for certain real estate that transferred in the transaction, are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. Seethe three and six months ended June 30, 2019 in our Accompanying Condensed Consolidated Financial Statements. Refer to Note 34. Discontinued Operations in the notes to condensed consolidated financial statementsour Accompanying Condensed Consolidated Financial Statements in Item 1 of this report for further discussion of our discontinued operations.Form 10-Q.

As a consequence, weWe currently operate in two business segments, which are differentiated primarily by their operational focus:segments: Hughes and ESS. These segments are consistent with the way we make decisions regarding the allocation of resources, are made, as well as how operating results are reviewed by our chief operating decision maker, (“CODM”), who for EchoStar is the Company’s Chief Executive Officer.

In addition, as of March 2017, we also changed our overhead allocation methodology used in our segment disclosures 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 EBITDA disclosures have been restated to reflect this change.
Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development, Human Resources, IT, Finance, Accounting, Real Estate and Legal) as well asand other activities that have not been assigned to our operatingbusiness segments includingsuch as costs incurred in certain satellite development programs and other business development activities, our centralized treasury operations, and gains (losses)or losses from certain of our investments. These activities, costs and income, as well as eliminations of intersegment transactions, are accounted for in “CorporateCorporate and Other.”

Other.
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All amounts presented in this Management’s Discussion and Analysis reference results from continuing operations unless otherwise noted and are expressed in thousands of United States (“U.S.”) dollars, except share and per share amounts and unless otherwise noted.

Highlights from our financial results are as follows:
 
2017 Third Quarter Consolidated Results of Operations for the Three Months Ended June 30, 2020:
 
•
•Revenue of $481.2 million
•
Operating income of $56.4 million
•
Net income from continuing operations of $35.9 million
•
Net income attributable to EchoStar common stock of $34.7 million and basic earnings per share of common stock of $0.36
EBITDA of $219.9$459.5 million (see
•Operating income (loss) of $34.8 million
•Net income (loss) from continuing operations of $(14.8) million
•Net income (loss) attributable to EchoStar common stock of $(11.4) million and basic earnings (loss) per share of common stock of $(0.12)
•Earnings before interest, taxes, depreciation and amortization, net income (loss) from discontinued operations and net income (loss) attributable to non-controlling interests (“EBITDA”) of $156.8 million (refer to the reconciliation of this non-GAAP measure on page 51)in Results of Operations)
 
Consolidated Financial Condition as of SeptemberJune 30, 20172020:
 
•
Total assets of $8.81
•Total assets of $7.0 billion
•Total liabilities of $3.4 billion
•Total stockholders’ equity of $3.6 billion
•Cash and cash equivalents and marketable investment securities of $2.5 billion

•
Total liabilities of $4.91 billion
•
Total stockholders’ equity of $3.90 billion
•
Cash, cash equivalents and current marketable investment securities of $3.28 billion

Hughes Segment
 
Our Hughes segment is a global provider of broadband satellite technologies and broadband internet services for hometo consumer customers and small office customers. We deliverbroadband network technologies, managed services, equipment, hardware, satellite services and communications solutions to domesticconsumer and international consumers and aeronautical, enterprise and government customers. In addition, ourThe Hughes segment also designs, provides and installs gateway and terminal equipment to customers for other satellite systemssystems. In addition, our Hughes segment designs, develops, constructs and provides telecommunication networks comprising satellite ground segment systems and terminals for other satellite systems, includingto mobile system operators.operators and our enterprise customers.
 
We incorporate advances in technology to reduce costs and to increase the functionality and reliability of our products and services.  Through advanced and proprietary methodologies, technologies, software and techniques, we continue to improve the efficiency of our networks.  We invest in technologies to enhance our system and network management capabilities, specifically our managed services for enterprises.  We also continue to invest in next generation technologies that can be applied to our future products and services.

We continue to focus our efforts on growing our Hughes segment consumer revenue by maximizing utilization of our existing satellites while planning for new satellites to be launched.launched or acquired. Our consumer revenue growth depends on our success in adding new and retaining existing subscribers in our domestic and driving higher average revenue per subscriberinternational markets across our wholesale and retail channels. Service costs related to ongoing support for our direct and indirect customers and partners are typically impacted most significantly by our growth. The growth of our enterprise businesses relies heavily on global economic conditions and the competitive landscape for pricing relative to competitors and alternative technologies. As a result of the COVID-19 pandemic, in accordance with instructions received from some of our enterprise customers, we have deferred or canceled the delivery of some products or services. We expect to recognize revenue for those deferred products and services in the second half of 2020 and in 2021.


Our Hughes segment currently uses capacity from three of our satellites the(the SPACEWAY 3 satellite, the EchoStar XVII satellite and the EchoStar XIX satellite,satellite), our Al Yah 3 Brazilian payload and additional satellite capacity acquired from multiple third-party providers to provide satellite broadband internet access and communications services to our customers. Growth of our consumer subscriber base
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in certain areas in the U.S. continues to be constrained where we are nearing or have reached maximum capacity.  While these constraints are not expected to be resolved until we launch new satellites, we continue to focus on revenue growth in all areas and consumer subscriber growth in the areas where we have available capacity. 

In December 2016,May 2019, we launchedentered into an agreement with Al Yah Satellite Communications Company PrJSC (“Yahsat”) pursuant to which, in November 2019, Yahsat contributed its satellite communications services business in Brazil to us in exchange for a 20% ownership interest in our EchoStar XIXexisting Brazilian subsidiary that conducts our satellite communications services business in Brazil (the “Yahsat Brazil JV Transaction”). The combined business provides broadband internet services and enterprise solutions in Brazil using the Telesat T19V satellite, the Eutelsat 65W satellite and Yahsat’s Al Yah 3 satellite.  Under the terms of the agreement, Yahsat may also acquire, for further cash investments, additional minority ownership interests in the business in the future provided certain conditions are met. 

In May 2019, we also entered into an agreement with Bharti Airtel Limited (“BAL”) and its subsidiary, Bharti Airtel Services Limited (together with BAL, “Bharti”), pursuant to which Bharti will contribute its very small aperture terminal (“VSAT”) telecommunications services and hardware business in India to our two existing Indian subsidiaries that conduct our VSAT services and hardware business. The combined entities will provide broadband satellite and hybrid solutions for enterprise networks. Upon consummation of the transaction, Bharti will have a next-generation, high throughput geostationary33% ownership interest in the combined business. The completion of the transaction is subject to customary regulatory approvals and closing conditions. No assurance can be given that the transaction will be consummated on the terms agreed to or at all.

In August 2018, we entered into an agreement with Yahsat to establish a new entity, Broadband Connectivity Solutions (Restricted) Limited (together with its subsidiaries, “BCS”), to provide commercial Ka-band satellite which provides significant capacity for continued subscriber growth. The EchoStar XIX satellite employs a multi-spot beam, bent pipe Ka-band architecture and provides additional capacity for the Hughes broadband services across Africa, the Middle East and southwest Asia operating over Yahsat’s Al Yah 2 and Al Yah 3 Ka-band satellites. The transaction was consummated in December 2018 when we invested $100.0 million in cash in exchange for a 20% interest in BCS. Under the terms of the agreement, we may also acquire, for further cash investments, additional ownership interests in BCS in the future provided certain conditions are met. We supply network operations and management services and equipment to our customers in North America and added capacity in certain Central and South American countries and has added capability for aeronautical, enterprise and international broadband services.BCS.


In August 2017, we entered into a contract for the design and construction of the EchoStar XXIV satellite, a new, next-generation, high throughput geostationary satellite. The EchoStar XXIV satellite with a planned 2021 launch, that is primarily intended to provide additional capacity for our HughesNet satellite internet service (“HughesNet service”) in North, Central and South America as well as aeronauticalenterprise broadband services. In the first quarter of 2020, Space Systems/Loral, LLC (“SS/L”), the manufacturer of our EchoStar XXIV satellite, invoked the “force majeure” clause of our contract and enterprise services.notified us of a possible delay in completion of the satellite due to “shelter-in-place” orders affecting personnel at SS/L and its subcontractors, and other potential impacts of the COVID-19 pandemic.  Since that time, we have continued to work with SS/L to monitor the impact of COVID-19 on the anticipated delivery schedule for our EchoStar XXIV satellite. We currently expect the EchoStar XXIV satellite to be launched no earlier than the second half of 2021. This or other delays or impediments to SS/L’s meeting its obligations as a result of the COVID-19 pandemic and various economic and other consequences or otherwise could have a material adverse impact on our business operations, future revenues, financial position and prospects, the completion of manufacture of the EchoStar XXIV satellite and our planned expansion of satellite broadband services throughout North, South and Central America. Capital expenditures associated with the construction and launch of thisthe EchoStar XXIV satellite will beare included in “CorporateCorporate and Other”Other in our segment reporting.

Our wholly-owned subsidiary, Hughes Network Systems, L.L.C.In March 2017, we and DISH Network L.L.C. (“DNLLC”), a wholly-owned subsidiary of DISH, have entered into a master service agreement (the “MSA”“Hughes Broadband MSA”) pursuant. Pursuant to which DNLLC,the Hughes Broadband MSA, DISH Network, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders and upgrades for the Hughes satellite internetour HughesNet service and related equipment and other telecommunication servicesservices; and (ii) will install Hughesinstalls HughesNet service equipment with respect to activations generated by DNLLC.DISH Network.  As a result of the Hughes Broadband MSA, we have not earned, and do not expect to earn in the future, significant equipment revenue from our Distribution Agreementdistribution agreement with dishNET Satellite Broadband L.L.C. (“dishNET”) in the future and we expect our subscriber acquisition costs to increase in future periods.DISH Network.


In additionWe continue our efforts to expand our broadband consumer service offerings, our Hughes segment also provides network technologies, managed services, hardware, equipment and satellite services to large enterprisebusiness outside of the U.S. We have been delivering high-speed consumer satellite broadband services in Brazil since July 2016 and government customers globally. Examples of such

are also providing satellite broadband internet service in several other Latin American countries. Additionally, in September 2015, we
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customers include lottery agencies, gas station operators and companies with multi-branch networks that rely on satellite or terrestrial networks for critical communication across wide geographies. Most of our enterprise customers have contracts with us for the services they purchase.

Developments toward the launch of next-generation satellite systems including low-earth orbit (“LEO”) and geostationary systems could provide additional opportunities to drive the demand for our network equipment and services. The growth of our enterprise and equipment businesses relies heavily on global economic conditions and the competitive landscape for pricing relative to competitors and alternative technologies. 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 mid-2018.
We continue to expand our efforts to grow our consumer satellite services business outside of the U.S. In April 2014, we entered into a satellite services agreement pursuant to which Eutelsat do Brasil provides us Ka-band capacity into Brazil on the EUTELSAT 65 West A satellite for a 15-year term. That satellite was launched in March 2016 and we began delivering high-speed consumer satellite broadband services in Brazil in July 2016. In September 2015, we entered into satellite services agreements pursuant to whichwith affiliates of Telesat Canada (“Telesat”) will provide to us thefor Ka-band capacity on athe Telesat T19V satellite to be located at the 63 degree west longitude orbital location, (“63 West”) for a 15-year term. We expect the satellite to bewhich was launched in July 2018. Telesat T19V was placed in service during the secondfourth quarter of 2018 and to augmentaugmented the capacity being provided by the EUTELSAT 65 West A satellite and the EchoStar XIX satellites. 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.America.

As of September 30, 2017 and December 31, 2016, our Hughes segment had approximately 1,140,000 and 1,036,000 broadband subscribers, respectively. TheseOur broadband subscribers include customers that subscribe to our HughesNet broadband servicesservice in North and Latin America through retail, wholesale and small/medium enterprise service channels. GrossIn connection with the COVID-19 pandemic, we voluntarily signed on to the Federal Communications Commissions’ (“FCC”) Keep Americans Connected Pledge (the “Pledge”), promising not to terminate residential or small business customers because of their inability to pay their bills due to the disruptions caused by the COVID-19 pandemic. As a result, we have provided HughesNet service to consumers who may not have the ability to pay for such services, but have excluded any subscribers whose HughesNet service would have ordinarily been terminated in the absence of the Pledge from our subscriber numbers as of March 31, 2020 and June 30, 2020.

The following table presents our approximate subscribers:
As of
June 30,
2020		March 31,
2020		December 31,
2019
Broadband subscribers in the United States1,221,000  1,249,000  1,239,000  
Broadband subscribers in Latin America321,000  267,000  238,000  
Total broadband subscribers1,542,000  1,516,000  1,477,000  

During the second quarter of 2020, our gross subscriber additions increased by approximately 9,000 in the third quarter of 20171,000 compared to the first quarter of 2020. Our net subscriber additions for the second quarter decreased by 13,000 compared to the first quarter of 2017 primarily2020, reflecting higher churn in the second quarter as compared to the first quarter of 2020. Multiple factors explain this higher churn. First, as more of our beams are operated at or near capacity particularly with the many customers working and attending class at home due to an increasethe COVID19 pandemic, the increased network congestion affects HughesNet customer satisfaction in new additions in our domestic retail channelsome cases. In addition, we count a number of HughesNet subscribers as having churned even though we continue to provide service to them as a result of the launch of the EchoStar XIX satellite, which was placed into service in March 2017. The increase was partially offset by a decrease in new subscribers additions in our international retail channel. Our average monthly subscriber churn percentage for the third quarter of 2017 decreased compared to the second quarter of 2017.  As a result of higher gross subscriber additions and lower churn, total net subscriber additions were approximately 53,000 for the quarter ended September 30, 2017 compared to approximately 41,000 for the second quarter of 2017. Subscriber additions and churn include only subscribers through our retail and wholesale channels.Pledge.

As of SeptemberJune 30, 20172020 and December 31, 2016,2019, our Hughes segment had approximately $1.74$1.1 billion and $1.52$1.4 billion respectively, of contracted revenue backlog.backlog, respectively. We define Hughes contracted revenue backlog as our expected future revenue under enterprise customer contracts that are non-cancelable, excluding agreementsincluding lease revenue. Our contracted revenue backlog as of June 30, 2020 decreased primarily due to the bankruptcy of a certain customer and the effects of the COVID-19 pandemic, including lengthened or delayed sales cycles with customers insome of our consumer market.enterprise customers.


EchoStar Satellite ServicesESS Segment
 
Our ESS segment isprovides satellite services on a global provider of satellitefull-time and/or occasional-use basis to U.S. government service operationsproviders, internet service providers, broadcast news organizations, content providers and video delivery solutions.private enterprise customers. We operate our ESS business using our ownedprimarily the EchoStar IX satellite and leased in-orbit satellitesthe EchoStar 105/SES-11 satellite and related licenses.infrastructure. Revenue growth in our ESS segment depends largely on our ability to continuously make use of our available satellite capacity available for sale. We providewith existing customers and our ability to enter into commercial relationships with new customers. Our ESS segment, like others in the fixed satellite services industry, has encountered, and may continue to encounter, negative pressure on a full-timetransponder rates 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, internet service providers, broadcast news organizations, programmers, and private enterprise customers. We also manage satellite operations for certain satellites owned by DISH Network.
demand.

As of June 30, 2020 and December 31, 2019, our ESS segment had contracted revenue backlog of $7.4 million and $11.4 million respectively. We depend on DISH Network for a significant portion of thedefine contracted revenue backlog 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’sas contracted future 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 are critical to its nationwide delivery of content to its customers across the U.S. While we expect to continue to provide satellite services to DISH Network, its satellite 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. lease revenue.


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Other Business Opportunities

We entered into: (i) a construction contract 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 the procurement of the related launch services; and (iii) an agreement with SES Americom Inc. (“SES”) pursuantOur industry continues to which we will transfer the title to the Ku-band payload to an affiliate of SES following in-orbit testing of the satellite and the title to the C-band and Ka-band payloads to an affiliate of SES and SES, respectively, by early 2018. SES will provide to us satellite service on the entire Ku-band payload on the EchoStar 105/SES-11 satellite 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 is expected to be placed into service in the fourth quarter of 2017. Our Ku-band payload on the EchoStar 105/SES-11 satellite will replace and augment our current capacity on the AMC-15 satellite, resulting in additional sales capacity. We expect to transfer activities from the AMC-15 satellite to the EchoStar 105/SES-11 satellite in the fourth quarter of 2017, which we expect will result in reduced operating costs associatedevolve with the lease of the AMC-15 satellite.

We continue to pursue expanding our business offerings by providing value added services such as telemetry, tracking, and control services to third parties, which leverages the ground monitoring networks and personnel currently within our ESS segment.

As of September 30, 2017 and December 31, 2016, our ESS segment had contracted revenue backlog attributable to satellites currently in orbit of approximately $1.26 billion and $1.16 billion, respectively.
New Business Opportunities
Our industry is evolving with the increase inincreasing worldwide demand for broadband internet access for information, entertainment and commerce. The current COVID-19 pandemic has made even more evident the worldwide need and demand for connectivity and communications to facilitate an ever-increasing virtual global community and workplace. In addition to fiber and wireless systems, other technologies such as geostationary high throughput satellites, LEOlow-earth orbit (“LEO”) networks, medium-earth orbit (“MEO”) systems, balloons and High Altitude Platform Systems have begunare expected to continue to play significant roles in enabling global broadband access, networks and services. We intend to use our expertise, technologies, capital, investments, global presence, relationships and other capabilities to continue to provide broadband internet systems, equipment, networks and services for information, the internet-of-things, entertainment, education, remote-connectivity and commerce across many industries and communities in North America and internationally for consumers, enterprisesconsumer and governments.enterprise customers. We are closely tracking the developments in next-generation satellite businesses, and we are seeking to utilize our services, technologies, licenses and expertise to find new commercial opportunities for our business.


We intend to continue to selectively explore opportunities to pursue investments, commercial alliances, partnerships, joint ventures, acquisitions, dispositions and other strategic acquisitions,initiatives and transactions, domestically and internationally, that we believe may allow us to increase our existing market share, increase our satellite capacity, expand into new satellite and other technologies, markets and new customers, broaden our portfolio of services, products and intellectual property, make our business more valuable, align us for future growth and expansion, maximize the return on our investments and strengthen our business and relationships with our customers. We may allocate or dispose of significant resources for long-term initiativesvalue that may not have a short or medium-term or any positive impact on our revenue, results of operations, or cash flow.

S-Band Strategy
In 2012, we acquired
We continue to explore the right to use various frequencies atdevelopment and deployment of S-band technologies and believe that our products and services will be integrated into new global, hybrid networks that leverage multiple satellites and terrestrial technologies. The current COVID-19 pandemic has made even more evident the 45 degree west longitude orbital location (“Brazilian Authorization”) from ANATEL, the Brazilian communications regulatory agency. The Brazilian Authorization currently provides us the rights to utilize Ku-band spectrum. In April 2014, we entered into an agreement with Space Systems Loral, LLCworldwide need and demand for the construction of the EchoStar XXIII satellite, a high powered broadcast satellite service 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-, Ku- and S-band frequency bands. We have met our regulatory milestone for the Ku-band. 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 no longer have the right to use such frequency bands.  We may be subject to penalties as a result of our failure to meet these milestones.

networks. In December 2013, we acquired 100% of SolarisEchoStar Mobile which isLimited (“EML”), an entity based in Dublin, Ireland, andwhich is licensed by the European Union and its member states (“EU”) to provide mobile satellite servicesservice (“MSS”) and complementary ground component (“CGC”) services covering the entire EUEuropean Union and its member states (“EU”) using the S-band spectrum. Solaris Mobile changed its name to EchoStar Mobile Limited (“EchoStar Mobile”)EML’s services in the first quarter of 2015. WeEU are insupported by the process of developing commercial services utilizing the operable payload we own onEchoStar XXI satellite and the EUTELSAT 10A payload. In October 2019, we acquired Sirion Global Pty Ltd., which we have renamed EchoStar Global Australia Pty Ltd (“EchoStar Global”), which holds global S-band non-geostationary satellite alongspectrum rights for MSS. Additionally, we have entered into a contract with our EchoStar XXITyvak Nano-Satellite Systems, Inc. for the design and construction of S-band satellite. The EchoStar XXI satellite will provide space segment capacitynano-satellites. We expect to EchoStar Mobilelaunch two nano-satellites in the EU.third quarter of 2020.  We believeexpect our nano-satellites to facilitate our continued growth in the global S-band market and enable us to leverage our acquisition of EchoStar Global. In addition, in November 2019, we are in a unique position to deploy a European wide MSS/CGC network and maximize the long-term value of ourwere granted an S-band spectrum license for terrestrial rights in EuropeMexico.As of June 30, 2020, we have no material future commitments in connection with these acquisitions or satellites.

Cybersecurity

As a global provider of satellite technologies and services, internet services and communications equipment and networks, we may be prone to more targeted and persistent levels of cyber-attacks than other businesses. These risks may be more prevalent as we continue to expand and grow our business into other areas of the world outside of North America, some of which are still developing their cybersecurity infrastructure maturity. Detecting, deterring, preventing and mitigating incidents caused by hackers and other regions withinparties may result in significant costs to us and may expose our customers to financial or other harm that have the scope ofpotential to significantly increase our licenses. The EchoStar XXI satellite launched in June 2017 and is anticipated to be placed in service in the fourth quarter of 2017. We intend to launch commercial service in the fourth quarter of 2017.liability.

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Due to the COVID-19 pandemic, a large portion of our workforce has been working remotely and we expect certain portions of our workforce to continue to do so from time to time.  While we have cybersecurity risk management tools to help protect our technology, information and networks that our employees access remotely, we cannot guarantee the security of the network that they will be using, the security status of the other non-company managed devices that might be on the network to which they are connected or the devices or networks used by third parties with whom our employees conduct business, such as customers, suppliers, vendors and other persons.  Additionally, there continues to be a significant amount of COVID-19 related cyber-fraud and phishing attacks that continue to target our employees, vendors, suppliers, customers and others. Accordingly, we continue to focus our efforts and resources on improving cybersecurity as a result of the COVID-19 pandemic. 

We treat cybersecurity risk seriously and are focused on maintaining the security of our and our partners’ systems, networks, technologies and data. We regularly review and revise our relevant policies and procedures, invest in and maintain internal resources, personnel and systems and review, modify and supplement our defenses through the use of various services, programs and outside vendors. Additionally, we provide resources to assist employees in better securing their home networks and remote connections.  We also maintain agreements with third party vendors and experts to assist in our remediation and mitigation efforts if we experience or identify a material incident or threat. In addition, senior management and the Audit Committee of our Board of Directors are regularly briefed on cybersecurity matters.

We are tracking closelynot aware of any cyber-incidents with respect to our owned or leased satellites or other networks, equipment or systems that have had a material adverse effect on our business, costs, operations, prospects, results of operation or financial position during the developmentsthree and six months ended June 30, 2020 and through August 6, 2020. There can be no assurance, however, that any such incident can be detected or thwarted or will not have such a material adverse effect in next-generation satellite businesses, and we are seeking to utilize our services, technologies and expertise to find new commercial opportunities for our business. In June 2015, we made an equity investment in OneWeb.the future.

Capital expenditures associated with the construction and launch of the EchoStar XXIII, EchoStar XXI and EchoStar XXIV satellites are included in “Corporate and Other” in our segment reporting.

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RESULTS OF OPERATIONS
 
Three Months Ended SeptemberJune 30, 20172020 Compared to the Three Months Ended SeptemberJune 30, 20162019

The following table presents our consolidated results of operations for the three months ended June 30, 2020 compared to the three months ended June 30, 2019:
  For the Three Months
Ended September 30,		 Variance
Statements of Operations Data (1)  2017 2016 Amount %
  (Dollars in thousands)
Revenue:  
  
  
  
Services and other revenue - DISH Network $111,135
 $115,127
 $(3,992) (3.5)
Services and other revenue - other 310,973
 276,280
 34,693
 12.6
Equipment revenue - DISH Network 126
 2,138
 (2,012) (94.1)
Equipment revenue - other 58,999
 66,501
 (7,502) (11.3)
Total revenue 481,233
 460,046
 21,187
 4.6
Costs and Expenses:  
  
  
  
Cost of sales - services and other 138,641
 131,594
 7,047
 5.4
% of Total services and other revenue 32.8% 33.6%  
  
Cost of sales - equipment 52,051
 53,599
 (1,548) (2.9)
% of Total equipment revenue 88.0% 78.1%  
  
Selling, general and administrative expenses 91,003
 80,672
 10,331
 12.8
% of Total revenue 18.9% 17.5%  
  
Research and development expenses 8,302
 9,030
 (728) (8.1)
% of Total revenue 1.7% 2.0%  
  
Depreciation and amortization 134,822
 108,549
 26,273
 24.2
Total costs and expenses 424,819
 383,444
 41,375
 10.8
Operating income 56,414
 76,602
 (20,188) (26.4)
         
Other Income (Expense):  
  
  
  
Interest income 12,012
 6,259
 5,753
 91.9
Interest expense, net of amounts capitalized (55,646) (37,316) (18,330) 49.1
Gains and impairment on investment, net 20,090
 230
 19,860
 *
Equity in earnings of unconsolidated affiliates, net 4,381
 4,166
 215
 5.2
Other, net 4,686
 364
 4,322
 *
Total other expense, net (14,477) (26,297) 11,820
 (44.9)
Income from continuing operations before income taxes 41,937
 50,305
 (8,368) (16.6)
Income tax provision (6,082) (17,394) 11,312
 (65.0)
Net income from continuing operations 35,855
 32,911
 2,944
 8.9
Net income (loss) from discontinued operations (654) 4,499
 (5,153) *
Net income 35,201
 37,410
 (2,209) (5.9)
Less: Net income attributable to noncontrolling interest in HSS Tracking Stock —
 85
 (85) (100.0)
Less: Net income attributable to other noncontrolling interests 532
 524
 8
 1.5
Net income attributable to EchoStar $34,669
 $36,801
 $(2,132) (5.8)
         
Other Data:  
  
  
  
EBITDA (2) $219,861
 $189,302
 $30,559
 16.1
Subscribers, end of period 1,140,000
 1,018,000
 122,000
 12.0
For the three months ended June 30,Variance
Statements of Operations Data20202019Amounts%
Revenue:    
Services and other revenue$417,043  $402,786  $14,257  3.5  
Equipment revenue42,423  57,645  (15,222) (26.4) 
Total revenue459,466  460,431  (965) (0.2) 
Costs and expenses:    
Cost of sales - services and other141,019  142,680  (1,661) (1.2) 
% of total services and other revenue33.8 %35.4 % 
Cost of sales - equipment32,542  46,549  (14,007) (30.1) 
% of total equipment revenue76.7 %80.8 % 
Selling, general and administrative expenses113,798  149,209  (35,411) (23.7) 
% of total revenue24.8 %32.4 % 
Research and development expenses7,448  6,388  1,060  16.6  
% of total revenue1.6 %1.4 % 
Depreciation and amortization129,887  120,266  9,621  8.0  
Total costs and expenses424,694  465,092  (40,398) (8.7) 
Operating income (loss)34,772  (4,661) 39,433  *
Other income (expense):    
Interest income, net10,760  23,213  (12,453) (53.6) 
Interest expense, net of amounts capitalized(38,258) (53,749) 15,491  (28.8) 
Gains (losses) on investments, net(6,090) 12,855  (18,945) *
Equity in earnings (losses) of unconsolidated affiliates, net(6,345) (4,754) (1,591) 33.5  
Foreign currency transaction gains (losses), net1,560  1,753  (193) (11.0) 
Other, net(391) 7  (398) *
Total other income (expense), net(38,764) (20,675) (18,089) 87.5  
Income (loss) from continuing operations before income taxes(3,992) (25,336) 21,344  (84.2) 
Income tax benefit (provision), net(10,851) (4,692) 6,159  *
Net income (loss) from continuing operations(14,843) (30,028) 15,185  (50.6) 
Net income (loss) from discontinued operations—  24,968  (24,968) (100.0) 
Net income (loss)(14,843) (5,060) (9,783) *
Less: Net loss (income) attributable to non-controlling interests3,431  (632) 4,063  *
Net income (loss) attributable to EchoStar Corporation common stock$(11,412) $(5,692) $(5,720) *
Other data:    
EBITDA (1)
$156,824  $124,834  $31,990  25.6  
Subscribers, end of period1,542,000  1,415,000  127,000  9.0  
* Percentage is not meaningful.
(1)    An explanation of our key metrics is included on pages 61 and 62 under the heading “Explanation of Key Metrics and Other Items.”
(1)(2) A reconciliation of EBITDA to “NetNet income” (loss), the most directly comparable GAAPgenerally accepted accounting principles in the U.S. (“U.S. GAAP”) measure in the accompanying financial statements,our Accompanying Condensed Consolidated Financial Statements, is included on page 51. in Results of Operations. For further information on our use of EBITDA, see “Explanationrefer to the Explanation of Key Metrics and Other Items” on page 62.Items.

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The following discussion relates to our continuing operations for the three months ended June 30, 2020 and 2019 unless otherwise stated.

Services and other revenue - DISH Network.  “ServicesServices and other revenue - DISH Network” totaled $111.1$417.0 million for the three months ended SeptemberJune 30, 2017, a decrease2020, an increase of $4.0$14.3 million, or 3.5%, compared to the same period in 2016 primarily from our Hughes segment. The decrease in revenue was primarily attributable to a decrease in wholesale subscribers.2019. 

•Services and other revenue - other.  “Services and other revenue - other” totaled $311.0 million for the three months ended September 30, 2017, an increase of $34.7 million or 12.6%, compared to the same period in 2016.
Services and other revenue - other from our Hughes segment for the three months ended SeptemberJune 30, 20172020 increased by $38.2$16.5 million, or 14.5%4.2%, to $301.1$410.7 million compared to the same period in 2016.2019.  The increase was primarily attributable to increases in sales of broadband services of $31.5 million to our domestic and international consumers, $5.8consumer customers of $27.2 million, to our domestic enterprise customers and $1.7 million to our telecom systems customers, partially offset by a decrease in sales of $1.0 millionbroadband services to our international enterprise customers.customers of $9.4 million. Both of these variances reflect the negative impact of exchange rate fluctuations.

•Services and other revenue - other from our ESS segmentCorporate and Other for the three months ended SeptemberJune 30, 20172020 decreased by $3.9$2.7 million, or 26.8%56.3%, to $10.6$2.1 million compared to 2019, primarily attributable to a decrease in income from certain real estate previously leased to DISH Network and transferred as part of the same period in 2016.BSS Transaction.

Equipment revenue. Equipment revenue totaled $42.4 million for the three months ended June 30, 2020, a decrease of $15.2 million, or 26.4%, compared to 2019.  The decrease was primarily attributable to a decrease in sales of transponder services due to expired service contracts.

Equipment revenue - DISH Network. “Equipment revenue - DISH Network” totaled $0.1 million for the three months ended September 30, 2017, a decrease of $2.0 million or 94.1%, compared to the same period in 2016 primarily from our Hughes segment.  The decrease in revenue was primarily due to the decrease in unit sales of broadband equipment to dishNET as a result of the MSA. See Note 16 in the notes to condensed consolidated financial statements in Item 1 of this report for additional information about the MSA.
Equipment revenue - other. “Equipment revenue - other” totaled $59.0 million for the three months ended September 30, 2017, a decrease of $7.5 million or 11.3%, compared to the same period in 2016 primarily from our Hughes segment.  The decrease was primarily due to a decrease in sales of broadband equipment to telecom systems customers of $6.1 million, our international enterprise customers and the bankruptcy of $3.3 million, and our government customers of $1.2 million, partially offset by an increase in sales of broadband equipment to our domestic consumers and enterprise customers of $2.8 million.a certain customer.

Cost of sales - services and other.  “CostCost of sales - services and other”other totaled $138.6$141.0 million for the three months ended SeptemberJune 30, 2017, an increase2020, a decrease of $7.0$1.7 million, or 5.4%1.2%, compared to the same period in 2016 primarily from our Hughes segment.2019. The increasedecrease was primarily attributable to an increase inour Hughes segment due to the costs of broadband services provided to our domestic and international consumers and domestic enterprise customers as a result of the increasedecrease in sales of broadband services.services to our enterprise customers, partially offset by increases in sales of broadband services to our consumer customers.

Cost of sales - equipment. equipment“.  Cost of sales - equipment”equipment totaled $52.1$32.5 million for the three months ended SeptemberJune 30, 2017,2020, a decrease of $1.5$14.0 million, or 2.9%30.1%, compared to the same period in 2016 primarily from our Hughes segment.2019. The decrease was primarily attributable to a decrease of $3.9 millionthe corresponding reduction in equipment costs related to the decrease in sales to dishNET, telecom systems customers, and international enterprise customers. The decrease was partially offset by an increase of $2.6 million in equipment costs related to the increase in sales to our domestic consumers and domestic enterprise customers. revenue.

Selling, general and administrative expensesexpenses.. “Selling, general and administrative expenses”expenses totaled $91.0$113.8 million for the three months ended SeptemberJune 30, 2017, an increase2020, a decrease of $10.3$35.4 million, or 12.8%23.7%, compared to the same period in 2016.2019. The increasedecrease was primarily dueattributable to an increase(i) expenses related to certain legal proceedings of $15.2$24.5 million in 2019, (ii) decreased marketing and promotional costs primarily attributable to our domesticexpenses in 2020 of $6.6 million, and international consumer broadband sales(iii) decreases in our Hughes segment, partially offset by a decreasebad debt expense of $4.9$4.5 million in general2020.

Depreciation and administrative expenses.amortization.

Research  Depreciation and development expenses.  “Research and development expenses”amortization expenses totaled $8.3$129.9 million for the three months ended SeptemberJune 30, 2017, a decrease2020, an increase of $0.7$9.6 million, or 8.1%8.0%, compared to 2019.  The increase was primarily from our Hughes segment and due to increases in depreciation expense of $8.0 million relating to our customer premises equipment and $2.4 million relating to the same perioddepreciation of assets acquired in 2016. Our research and development activities vary based on the activity level and scope of other engineering and customer related development contracts.Yahsat Brazil JV Transaction.
 
Depreciation and amortization.Interest income, net  “Depreciation and amortization” expenses.  Interest income, net totaled $134.8$10.8 million for the three months ended SeptemberJune 30, 2017, an increase2020, a decrease of $26.3$12.5 million, or 24.2%53.6%, compared to the same period in 2016.  The increase2019, which was primarily relatedattributable to an increasedecreases in the yield of $15.3our marketable investment securities and a decrease in our marketable investment securities balance.

Interest expense, net of amounts capitalized.  Interest expense, net of amounts capitalized totaled $38.3 million for the three months ended June 30, 2020, a decrease of $15.5 million, or 28.8%, compared to 2019.  The decrease was primarily due to a decrease of $13.0 million in depreciationinterest expense and in amortization of deferred financing cost as a result of the EchoStar XIXrepurchase and EchoStar XXIII satellites that were placed into servicematurity in the first and second quartersJune 2019 of 2017, respectively, an increase of $10.5 million in depreciation expense of domestic and international customer rental equipment, an increase of $4.0 million in depreciation expense relating to machinery and equipment,our 6 1/2% Senior Secured Notes due 2019 and an increase of $2.9$1.4 million in amortization expense relatingcapitalized interest in 2020 related to the developmentEchoStar XXIV satellite and its related infrastructure.

Gains (losses) on investments, net. Gains (losses) on investments, net were $(6.1) million for the three months ended June 30, 2020, compared to $12.9 million for the three months ended June 30, 2019, a decrease of externally marketednet gains

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software, partially offset by a decrease of $5.0$18.9 million. The change was primarily attributable to $12.0 million of net negative variances on marketable investment securities compared to 2019 and an $8.5 million loss in amortization expense from certain fully amortized other intangible assetsOther Equity Investments in our Hughes segment.2020.
 
Interest incomeEquity in earnings (losses) of unconsolidated affiliates, net. “Interest income”Equity in earnings (losses) of unconsolidated affiliates, net totaled $12.0$6.3 million in losses for the three months ended June 30, 2020, an increase in losses of $1.6 million, or 33.5%, compared to 2019. The increase in losses was related to increased losses from our investments in our equity method investees.

Income tax benefit (provision), net.  Income tax benefit (provision), net was $(10.9) million for the three months ended SeptemberJune 30, 2017, an increase of $5.8 million or 91.9%,2020 compared to the same period in 2016.  The increase was primarily attributable to the increase in our marketable investments and an increase in yield percentage for the three months ended September 30, 2017 when compared to the same period in 2016.

Interest expense, net of amounts capitalized.  “Interest expense, net of amounts capitalized” totaled $55.6$(4.7) million for the three months ended SeptemberJune 30, 2017, an increase of $18.3 million or 49.1%, compared to the same period in 2016.  The increase was primarily due to a decrease of $11.6 million in capitalized interest relating to the EchoStar XIX and EchoStar XXIII satellites that were placed into service in the first and second quarters of 2017, respectively, and an increase of $6.4 million in interest expense relating to the issuance of 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 2026 Senior Secured Notes, the “2026 Notes”) in the third quarter of 2016.

Gains and impairment on investments, net. “Gains and impairment on investments, net” totaled $20.1 million in gains for the three months ended September 30, 2017, an increase of $19.9 million, compared to the same period in 2016.  The increase in gains was primarily a result of gains on our trading securities in the third quarter of 2017.

Equity in earnings of unconsolidated affiliates, net. “Equity in earnings of unconsolidated affiliates, net” totaled $4.4 million in earnings for the three months ended September 30, 2017, an increase of $0.2 million or 5.2%, compared to the same period in 2016. The increase was primarily related to an increase in earnings from our investment in Dish Mexico, partially offset by a decrease in earnings from our investment in Deluxe/EchoStar LLC.

Other, net.  “Other, net” totaled $4.7 million in income for the three months ended September 30, 2017, an increase of $4.3 million, compared to the same period in 2016.  The increase was primarily related to a favorable foreign exchange impact of $2.5 million in the third quarter of 2017 and dividends of $2.3 million received from certain strategic equity investments in the third quarter of 2017. 

Income tax provision.  Income tax expense was $6.1 million for the three months ended September 30, 2017, a decrease in expense of $11.3 million or 65.0%, compared to the same period in 2016.2019. Our effective income tax rate was 14.5%(271.8)% and 34.6%(18.5)% for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively.  The variations in our current year effective tax rate from the U.S. federal statutory rate for the three months ended September 30, 2017 was primarily due to various permanent tax differences, the increase in our valuation allowance associated with unrealized gains that are capital in nature, and a change in the amount of unrecognized tax benefit from uncertain tax positions. The variations in our effective tax rate from the U.S. federal statutory rate for the three months ended SeptemberJune 30, 2016 was2020 were primarily due to the increase in our valuation allowance associated with certain foreign losses and the impact of state and local taxes, partially offset by research and experimentation credits. The variations in our effective tax rate from the U.S. federal statutory rate for the three months ended June 30, 2019 were primarily due to the change in net unrealized gains that are capital in nature and research and experimentation credits, partially offset by the impact of state and local taxes.taxes and the increase in our valuation allowance associated with certain foreign losses. Additionally, during the three months ended June 30, 2019, we recorded additional tax expense of $2.0 million on deemed mandatory repatriation of certain deferred foreign earnings as the result of new treasury regulations.

Net income (loss) attributable to EchoStar Corporation common stock.  “Net incomeloss attributable to EchoStar” was $34.7 Corporation common stock totaled $11.4 million for the three months ended SeptemberJune 30, 2017, a decrease of $2.1 million or 5.8%,2020, compared to the same period in 2016.  The decrease was primarily duenet loss attributable to (i) a decrease in operating income, including depreciation and amortization,EchoStar Corporation common stock of $20.2 million, (ii) an increase of $18.3 million in interest expense and (iii) a decrease of $5.2 million in net income from discontinuing operations in 2017. The decrease was partially offset by (i) an increase of $19.9 million in gains on our trading securities, (ii) a decrease in income tax expense of $11.3 million, (iii) an increase of $5.8 million in interest income, and (iv) an increase in other income of $4.3 million.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”).  EBITDA was $219.9$5.7 million for the three months ended SeptemberJune 30, 2017, an increase of $30.6 million or 16.1%, compared to the same period in 2016.  The increase was primarily due to (i) an increase of $19.9 million in gains on our trading securities, (ii)2019, an increase in operating income, excluding depreciation and amortization,loss of $6.1$5.7 million and (iii) an increaseas set forth in otherthe following table:
Amounts
Net income (loss) attributable to EchoStar Corporation for the three months ended June 30, 2019$(5,692)
Increase (decrease) in operating income, including depreciation and amortization39,433 
Decrease (increase) in interest expense, net of amounts capitalized15,491 
Decrease (increase) in net income attributable to non-controlling interests4,063 
Increase (decrease) in foreign currency transaction gains, net(193)
Increase (decrease) in other, net(398)
Decrease (increase) in equity in losses of unconsolidated affiliates, net(1,591)
Decrease (increase) in income tax provision, net(6,159)
Increase (decrease) in interest income, net(12,453)
Increase (decrease) in gains on investments, net(18,945)
Increase (decrease) in net income from discontinued operations(24,968)
Net income (loss) attributable to EchoStar Corporation for the three months ended June 30, 2020$(11,412)

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

EBITDA.  EBITDA is a non-GAAP financial measure and is described under Explanation of Key Metrics and Other Items below.  The following table reconciles EBITDA to Net income (loss), the most directly comparable U.S. GAAP measure in the accompanying financial statements.our Accompanying Condensed Consolidated Financial Statements, to EBITDA:
 For the three months ended June 30,Variance
 20202019Amounts%
Net income (loss)$(14,843) $(5,060) $(9,783) *
Interest income, net(10,760) (23,213) 12,453  (53.6) 
Interest expense, net of amounts capitalized38,258  53,749  (15,491) (28.8) 
Income tax provision (benefit), net10,851  4,692  6,159  *
Depreciation and amortization129,887  120,266  9,621  8.0  
Net loss (income) from discontinued operations—  (24,968) 24,968  (100.0) 
Net loss (income) attributable to non-controlling interests3,431  (632) 4,063  *
EBITDA$156,824  $124,834  $31,990  25.6  
*  Percentage is not meaningful.

EBITDA was $156.8 million for the three months ended June 30, 2020, an increase of $32.0 million, or 25.6%, compared to 2019 as set forth in the following table:
Amounts
EBITDA for the three months ended June 30, 2019$124,834 
Increase (decrease) in operating income, excluding depreciation and amortization49,054 
Decrease (increase) in net income attributable to non-controlling interests4,063 
Increase (decrease) in foreign currency transaction gains, net(193)
Increase (decrease) in other, net(398)
Decrease (increase) in equity in losses of unconsolidated affiliates, net(1,591)
Increase (decrease) in gains on investments, net(18,945)
EBITDA for the three months ended June 30, 2020$156,824 
Segment Operating Results and Capital Expenditures

The following tables present our operating results, capital expenditures and EBITDA by segment for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. Capital expenditures in the table below are net of refunds and other receipts related to our property and equipment.
HughesESSCorporate and OtherConsolidated
Total
For the three months ended June 30, 2020   
Total revenue$453,172  $4,179  $2,115  $459,466  
Capital expenditures83,479  —  8,821  92,300  
EBITDA186,619  1,543  (31,338) 156,824  
For the three months ended June 30, 2019   
Total revenue$451,847  $3,742  $4,842  $460,431  
Capital expenditures74,090  —  33,252  107,342  
EBITDA131,765  1,486  (8,417) 124,834  

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  For the Three Months
Ended September 30,		 Variance
  2017 2016 Amount %
  (Dollars in thousands)
Net income $35,201
 $37,410
 $(2,209) (5.9)
         
Interest income and expense, net 43,634
 31,057
 12,577
 40.5
Income tax provision 6,082
 17,394
 (11,312) (65.0)
Depreciation and amortization 134,822
 108,549
 26,273
 24.2
Net (income) loss from discontinued operations 654
 (4,499) 5,153
 *
Net income attributable to noncontrolling interests (532) (609) 77
 (12.6)
EBITDA $219,861
 $189,302
 $30,559
 16.1
*    Percentage is not meaningful.

Segment Operating Results and Capital Expenditures
Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016CONTINUED

  Hughes 
EchoStar
Satellite
Services
 Corporate and Other 
Consolidated
Total
  (In thousands)
For the Three Months Ended September 30, 2017  
  
  
  
Total revenue $380,061
 $97,093
 $4,079
 $481,233
Capital expenditures $108,428
 $8,203
 $75,500
 $192,131
EBITDA $131,817
 $78,345
 $9,699
 $219,861
         
For the Three Months Ended September 30, 2016  
  
  
  
Total revenue $355,876
 $101,480
 $2,690
 $460,046
Capital expenditures $75,682
 $15,730
 $48,162
 $139,574
EBITDA $125,522
 $84,257
 $(20,477) $189,302
Hughes Segment
 For the Three Months Ended September 30, Variance
 2017 2016 Amount % For the three months ended June 30,Variance
 (Dollars in thousands) 20202019Amounts%
Total revenue $380,061
 $355,876
 $24,185
 6.8Total revenue$453,172  $451,847  $1,325  0.3  
Capital expenditures $108,428
 $75,682
 $32,746
 43.3Capital expenditures83,479  74,090  9,389  12.7  
EBITDA $131,817
 $125,522
 $6,295
 5.0EBITDA186,619  131,765  54,854  41.6  
 
Revenue
Hughes segment totalTotal revenue was $453.2 million for the three months ended SeptemberJune 30, 2017 increased by $24.22020, an increase of $1.3 million, or 6.8%0.3%, compared to the same period in 2016.2019.  The increase was primarily due to an increaseincreases of $27.2 million in sales of broadband equipment and services to our domesticconsumer customers, partially offset by decreased hardware sales of $15.2 million and international consumers and domesticdecreased sales of broadband services to our enterprise customers of $40.5$9.4 million. TheThese variances reflect the negative impact of exchange rate fluctuations.

Capital expenditures were $83.5 million for the three months ended June 30, 2020, an increase of $9.4 million, or 12.7%, compared to 2019, primarily due to increases in expenditures associated with our consumer business.
EBITDA was partially offset by a decrease$186.6 million for the three months ended June 30, 2020, an increase of $54.9 million, or 41.6%, compared to 2019 as set forth in salesthe following table: 
Amounts
EBITDA for the three months ended June 30, 2019$131,765 
Increase (decrease) in operating income, excluding depreciation and amortization52,136 
Decrease (increase) in net income attributable to non-controlling interests4,063 
Decrease (increase) in equity in losses of unconsolidated affiliates, net179 
Increase (decrease) in gains on investments, net43 
Increase (decrease) in other, net(355)
Increase (decrease) in foreign currency transaction gains, net(1,212)
EBITDA for the three months ended June 30, 2020$186,619 

ESS Segment
 For the three months ended June 30,Variance
 20202019Amounts%
Total revenue$4,179  $3,742  $437  11.7  
EBITDA1,543  1,486  57  3.8  

Total revenue was $4.2 million for the three months ended June 30, 2020, an increase of broadband equipment and$0.4 million, or 11.7%, compared to 2019, primarily due to an increase in transponder services provided to DISH Networkthird parties.

EBITDA was $1.5 million for the three months ended June 30, 2020, an increase of $6.5$0.1 million, a decreaseor 3.8%, compared to 2019, primarily due to the increase in sales of broadband equipment to telecom systems customers of $6.1 million, and a decrease in sales of broadband equipment and services of $4.3 million to our international enterprise customers.revenue.

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Corporate and Other
 For the three months ended June 30,Variance
 20202019Amounts%
Total revenue$2,115  $4,842  $(2,727) (56.3) 
Capital expenditures8,821  33,252  (24,431) (73.5) 
EBITDA(31,338) (8,417) (22,921) *
* Percentage is not meaningful

Total revenue was $2.1 million for the three months ended June 30, 2020, a decrease of $2.7 million, or 56.3%, compared to 2019, primarily attributable to a decrease in income from certain real estate previously leased to DISH Network and transferred as part of the BSS Transaction.

Capital Expenditures
Hughes segment capital expenditures for the three months ended SeptemberJune 30, 2017 increased2020 decreased by $32.7$24.4 million, or 43.3%73.5%, compared to the same period in 2016,2019, primarily as a result of an increase of $56.2 million in expenditures in our domestic and international businesses. The increase was mainly associated with customer rental equipment for consumer services provided on the EUTELSAT 65 West A and EchoStar XIX satellites that were placed into service in the third quarter of 2016 and the first quarter of 2017, respectively. The increase was partially offset by a decrease of $23.5 million in expenditures on satellites and related ground infrastructure, primarily resulted from the launch of service on EUTELSAT 65 West A and EchoStar XIX satellites.
EBITDA
Hughes segment EBITDA for the three months ended September 30, 2017 was $131.8 million, an increase of $6.3 million, or 5.0%, compared to the same period in 2016.  The increase was due to an increase of $18.9 million in gross margin which we define as revenue less cost of sales, a favorable foreign exchange impact of $1.9 million in the third quarter 2017 and a decrease of $0.7 million in research and development expenses, partially offset by an increase of $15.2 million in marketing and promotional costs primarily attributable to our domestic and international consumer broadband sales.

EchoStar Satellite Services Segment
  For the Three Months Ended September 30, Variance
  2017 2016 Amount %
  (Dollars in thousands)
Total revenue $97,093
 $101,480
 $(4,387) (4.3)
Capital expenditures $8,203
 $15,730
 $(7,527) (47.9)
EBITDA $78,345
 $84,257
 $(5,912) (7.0)
Revenue

ESS segment total revenue for the three months ended September 30, 2017 decreased by $4.4 million, or 4.3%, compared to the same period in 2016, primarily due to a decrease in sales of transponder services due to expired service contracts.
Capital Expenditures

ESS segment capital expenditures for the three months ended September 30, 2017 decreased by $7.5 million, or 47.9%, compared to the same period in 2016, primarily related to a decrease in expenditures on the EchoStar 105/SES-11XXIV satellite.

EBITDA

ESS segment EBITDA was a loss of $31.3 million for the three months ended SeptemberJune 30, 2017 was $78.32020, an increase in loss of $22.9 million a decrease of $5.9 million, or 7.0%, compared to 2019 as set forth in the same period in 2016.  The decrease in EBITDA for our ESS segment was due to the decrease of $4.4 million in revenues and an increase of $1.3 million in general and administrative expenses.following table:
Amounts
EBITDA for the three months ended June 30, 2019$(8,417)
Increase (decrease) in foreign currency transaction gains, net1,020 
Increase (decrease) in other, net(43)
Decrease (increase) in equity in losses of unconsolidated affiliates, net(1,770)
Increase (decrease) in operating income, excluding depreciation and amortization(3,139)
Increase (decrease) in gains on investments, net(18,989)
EBITDA for the three months ended June 30, 2020$(31,338)

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Corporate and Other
Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019
Corporate and Other is comprised
The following table presents our consolidated results of various corporate departments (primarily Executive, Strategic Development, Human Resources, IT, Finance, Real Estate, and Legal) as well as other activities that have not been assignedoperations for the six months ended June 30, 2020 compared to our operating segments, including costs incurred in certain satellite development programs and other business development activities, our centralized treasury activities and gains (losses) from certain of our investments.the six months ended June 30, 2019:
  For the Three Months Ended September 30, Variance
  2017 2016 Amount %
  (Dollars in thousands)
Total revenue $4,079
 $2,690
 $1,389
 51.6
Capital expenditures $75,500
 $48,162
 $27,338
 56.8
EBITDA $9,699
 $(20,477) $30,176
 *
For the six months ended June 30,Variance
Statements of Operations Data 20202019Amounts%
Revenue:    
Services and other revenue$825,400  $805,454  $19,946  2.5  
Equipment revenue99,732  109,359  (9,627) (8.8) 
Total revenue925,132  914,813  10,319  1.1  
Costs and expenses:    
Cost of sales - services and other286,271  286,027  244  0.1  
% of total services and other revenue34.7 %35.5 % 
Cost of sales - equipment78,450  91,556  (13,106) (14.3) 
% of total equipment revenue78.7 %83.7 % 
Selling, general and administrative expenses239,079  261,323  (22,244) (8.5) 
% of total revenue25.8 %28.6 % 
Research and development expenses13,702  13,276  426  3.2  
% of total revenue1.5 %1.5 % 
Depreciation and amortization262,255  239,244  23,011  9.6  
Total costs and expenses879,757  891,426  (11,669) (1.3) 
Operating income (loss)45,375  23,387  21,988  94.0  
Other income (expense):    
Interest income, net26,343  47,642  (21,299) (44.7) 
Interest expense, net of amounts capitalized(74,491) (106,948) 32,457  30.3  
Gains (losses) on investments, net(52,762) 19,791  (72,553) *
Equity in earnings (losses) of unconsolidated affiliates, net(3,732) (11,107) 7,375  (66.4) 
Foreign currency transaction gains (losses), net(9,284) 593  (9,877) *
Other, net(670) (35) (635) *
Total other income (expense), net(114,596) (50,064) (64,532) *
Income (loss) from continuing operations before income taxes(69,221) (26,677) (42,544) *
Income tax benefit (provision), net(3,359) (7,590) (4,231) 55.7  
Net income (loss) from continuing operations(72,580) (34,267) 38,313  *
Net income (loss) from discontinued operations—  44,215  (44,215) (100.0) 
Net income (loss)(72,580) 9,948  (82,528) *
Less: Net loss (income) attributable to non-controlling interests6,873  (1,438) 8,311  *
Net income (loss) attributable to EchoStar Corporation common stock$(65,707) $8,510  $(74,217) *
Other data:    
EBITDA (1)
$248,055  $270,435  $(22,380) (8.3) 
Subscribers, end of period1,542,000  1,415,000  127,000  9.0  
* Percentage is not meaningful.

Capital Expenditures
(1) A reconciliation of EBITDA to Net income (loss), the most directly comparable U.S. GAAP measure in our Accompanying Condensed Consolidated Financial Statements, is included in Results of Operations. For further information on our use of EBITDA, refer to the three months ended September 30, 2017, CorporateExplanation of Key Metrics and Other capital expenditures increased by $27.3 million, or 56.8%, compared to the same period in 2016, primarily related to an increase in satellite expenditures of $61.9 million on the EchoStar XXIV satellite and an increase in satellite expenditures of $6.8 million on the EchoStar XXI satellite, partially offset by a decrease in satellite expenditures of $33.6 million on the EchoStar XIX satellite and a decrease in satellite expenditures of $8.9 million on the EchoStar XXIII satellite.  The EchoStar XIX satellite was launched in December 2016 and placed into service in the first quarter of 2017. The EchoStar XXIII satellite was launched in March 2017 and was placed into service in the second quarter of 2017. The EchoStar XXI satellite is intended to be used by EchoStar Mobile in providing mobile satellite services in the EU. It was launched in June 2017 and is anticipated to be placed into service in the fourth quarter of 2017. The EchoStar XXIV satellite is intended to provide additional capacity for the Hughes broadband services in North America and certain Latin American countries.Items.

EBITDA
For the three months ended September 30, 2017, Corporate and Other EBITDA was a gain of $9.7 million compared to a loss of $20.5 million for the three months ended September 30, 2016.  The change of $30.2 million was primarily related to (i) an increase of $19.9 million in gains on our trading securities in the third quarter of 2017 , (ii) a decrease of $6.2 million in general and administrative expenses, (iii) dividends of $2.3 million received from certain strategic equity investments in the third quarter of 2017, (iv) an increase of $1.0 million in revenue from DISH Network primarily attributable to rental income relating to our lease agreements pursuant to which DISH Network leases certain real estate from us, and (v) a favorable foreign exchange impact of $0.4 million in 2017.


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The following discussion relates to our continuing operations for the six months ended June 30, 2020 and 2019 unless otherwise stated.
Nine Months Ended September
Services and other revenue.  Services and other revenue totaled $825.4 million for the six months ended June 30, 2017 Compared2020, an increase of $19.9 million, or 2.5%, compared to 2019.

•Services and other revenue from our Hughes segment for the six months ended June 30, 2020 increased by $24.1 million, or 3.1%, to $811.9 million compared to 2019.  The increase was primarily attributable to increases in sales of broadband services to our consumer customers of $46.6 million, partially offset by a decrease in sales of broadband services to our enterprise customers of $22.0 million. Both of these variances reflect the negative impact of exchange rate fluctuations.

•Services and other revenue from Corporate and Other for the six months ended June 30, 2020 decreased by $5.2 million, or 52.8%, to $4.6 million compared to 2019 primarily attributable to a decrease in income from certain real estate previously leased to DISH Network and transferred as part of the BSS Transaction.

Equipment revenue. Equipment revenue totaled $99.7 million for the six months ended June 30, 2020, a decrease of $9.6 million, or 8.8%, compared to 2019.  The decrease was primarily attributable to decreased hardware sales to our international enterprise customers of $15.8 million and the bankruptcy of a certain customer, partially offset by increased sales to our domestic enterprise customers of $7.7 million.

Cost of sales - services and other.  Cost of sales - services and other totaled $286.3 million for the six months ended June 30, 2020, an increase of $0.2 million, or 0.1%, compared to 2019. The increase was primarily attributable to our Hughes segment due to an increase in sales of broadband services to our consumer customers, partially offset by a decrease in sales of broadband services to our enterprise customers.
Cost of sales - equipment.  Cost of sales - equipment totaled $78.5 million for the six months ended June 30, 2020, a decrease of $13.1 million, or 14.3%, compared to 2019. The decrease was primarily attributable to the Nine Months Ended Septembercorresponding reduction in equipment revenue.

Selling, general and administrative expenses.  Selling, general and administrative expenses totaled $239.1 million for the six months ended June 30, 20162020, a decrease of $22.2 million, or 8.5%, compared to 2019. The decrease was primarily attributable to expenses related to certain legal proceedings of $24.5 million in 2019 and decreases in bad debt expense of $2.7 million in 2020, partially offset by increased selling, general and administrative expenses of $2.2 million attributable to the Yahsat Brazil JV and increased promotional expenses of $1.6 million mainly associated with our consumer business in Latin America.

Depreciation and amortization.  Depreciation and amortization expenses totaled $262.3 million for the six months ended June 30, 2020, an increase of $23.0 million, or 9.6%, compared to 2019.  The increase was primarily from our Hughes segment and due to increases in depreciation expense of $14.3 million relating to our customer premises equipment and $6.6 million relating to the depreciation of assets acquired in the Yahsat Brazil JV Transaction.
Interest income, net.  Interest income, net totaled $26.3 million for the six months ended June 30, 2020, a decrease of $21.3 million, or 44.7%, compared to 2019 primarily attributable to decreases in the yield on our marketable investment securities and a decrease in our marketable investment securities balance.

Interest expense, net of amounts capitalized.  Interest expense, net of amounts capitalized totaled $74.5 million for the six months ended June 30, 2020, a decrease of $32.5 million, or 30.3%, compared to 2019.  The decrease was primarily due to a decrease of $29.0 million in interest expense and in amortization of deferred financing cost as a result of the repurchase and maturity in June 2019 of our 6 1/2% Senior Secured Notes due 2019 and an increase of $3.2 million in capitalized interest in 2020 relating to the construction of the EchoStar XXIV satellite and its related infrastructure.

Gains (losses) on investments, net. Gains (losses) on investments, net were $(52.8) million for the six months ended June 30, 2020, compared to $19.8 million for the six months ended June 30, 2019, a decrease in gains of
60
  For the Nine Months
Ended September 30,		 Variance
Statements of Operations Data (1)  2017 2016 Amount %
  (Dollars in thousands)
Revenue:  
  
  
  
Services and other revenue - DISH Network $339,824
 $347,440
 $(7,616) (2.2)
Services and other revenue - other 865,817
 820,149
 45,668
 5.6
Equipment revenue - DISH Network 175
 7,008
 (6,833) (97.5)
Equipment revenue - other 173,644
 160,081
 13,563
 8.5
Total revenue 1,379,460
 1,334,678
 44,782
 3.4
Costs and Expenses:  
  
  
  
Cost of sales - services and other 404,448
 384,942
 19,506
 5.1
% of Total services and other revenue 33.5% 33.0%  
 

Cost of sales - equipment 153,854
 143,252
 10,602
 7.4
% of Total equipment revenue 88.5% 85.7%  
  
Selling, general and administrative expenses 263,820
 240,454
 23,366
 9.7
% of Total revenue 19.1% 18.0%  
 

Research and development expenses 23,444
 23,524
 (80) (0.3)
% of Total revenue 1.7% 1.8%  
 

Depreciation and amortization 379,939
 324,743
 55,196
 17.0
Total costs and expenses 1,225,505
 1,116,915
 108,590
 9.7
Operating income 153,955
 217,763
 (63,808) (29.3)
         
Other Income (Expense):  
  
  
  
Interest income 30,342
 13,726
 16,616
 *
Interest expense, net of amounts capitalized (156,498) (80,376) (76,122) 94.7
Gains and impairment on investments, net 30,664
 8,179
 22,485
 *
Equity in earnings of unconsolidated affiliates, net 15,620
 8,984
 6,636
 73.9
Other, net 8,211
 5,531
 2,680
 48.5
Total other expense, net (71,661) (43,956) (27,705) 63.0
Income from continuing operations before income taxes 82,294
 173,807
 (91,513) (52.7)
Income tax provision (9,073) (61,258) 52,185
 (85.2)
Net income from continuing operations 73,221
 112,549
 (39,328) (34.9)
Net income (loss) from discontinued operations 6,454
 29,213
 (22,759) (77.9)
Net income 79,675
 141,762
 (62,087) (43.8)
Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (655) (926) 271
 (29.3)
Less: Net income attributable to other noncontrolling interests 1,006
 946
 60
 6.3
Net income attributable to EchoStar $79,324
 $141,742
 $(62,418) (44.0)
         
Other Data:  
  
  
  
EBITDA (2) $588,038
 $565,180
 $22,858
 4.0
Subscribers, end of period 1,140,000
 1,018,000
 122,000
 12.0
*    Percentage is not meaningful.
(1)    An explanation of our key metrics is included on pages 61 and 62 under the heading “Explanation of Key Metrics and Other Items.”
(2)    A reconciliation of EBITDA to “Net income,” the most directly comparable GAAP measure in the accompanying financial statements, is included on page 56. For further information on our use of EBITDA see “Explanation of Key Metrics and Other Items” on page 62.

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Services and other revenue - DISH Network.  “Services and other revenue - DISH Network” totaled $339.8 million for the nine months ended September 30, 2017, a decrease of $7.6 million or 2.2%, compared to the same period in 2016.

Services and other revenue - DISH Network from our Hughes segment for the nine months ended September 30, 2017 decreased by $9.2 million, or 12.4%, to $65.4 million compared to the same period in 2016.$72.6 million. The decreasechange was primarily attributable to a decrease in wholesale subscribers.

Services and other revenue - DISH Network from Corporate and Other for the nine months ended September 30, 2017 increased by $2.6$71.4 million or 23.5%, to $13.9 million compared to the same period in 2016.  The increase was primarily attributable to an increase in rental income relating to certain lease agreements pursuant to which DISH Network leases certain real estate from us.
Services and other revenue - other.  “Services and other revenue - other” totaled $865.8 million for the nine months ended September 30, 2017, an increase of $45.7 million or 5.6%, compared to the same period in 2016.
Services and other revenue - other from our Hughes segment for the nine months ended September 30, 2017 increased by $53.9 million, or 6.9%, to $833.1 million compared to the same period in 2016.  The increase was primarily attributable to increases in sales of broadband services of $51.5 million to our domestic and international consumers, $8.2 million to our domestic enterprise customers and $3.8 million to our telecom systems customers, partially offset by a decrease of $9.8 million to our international enterprise customers.

Services and other revenue - other from our ESS segment for the nine months ended September 30, 2017 decreased by $9.1 million, or 20.6%, to $35.2 million compared to the same period in 2016.  The decrease was primarily attributable to decreases in sales of transponder services due to expired service contracts.

Equipment revenue - DISH Network. “Equipment revenue - DISH Network” totaled $0.2 million for the nine months ended September 30, 2017, a decrease of $6.8 million or 97.5%, compared to the same period in 2016 primarily from our Hughes segment.  The decrease in revenue was primarily due to the decrease in unit sales of broadband equipment to dishNET as a result of the MSA. See Note 16 in the notes to condensed consolidated financial statements in Item 1 of this report for additional information about the MSA.
Equipment revenue - other. “Equipment revenue - other” totaled $173.6 million for the nine months ended September 30, 2017, an increase of $13.6 million or 8.5%, compared to the same period in 2016 primarily from our Hughes segment.  The increase was mainly due to an increase of $23.7 million in sales of broadband equipment to our domestic enterprise customers and an increase of $6.1 million to our domestic and international consumers. The increase was partially offset by a decrease in sales of broadband equipment to our telecom systems customers of $11.3 million, our international enterprise customers of $2.9 million, and our government customers of $2.8 million.

Cost of sales - services and other.  “Cost of sales - services and other” totaled $404.4 million for the nine months ended September 30, 2017, an increase of $19.5 million or 5.1%, compared to the same period in 2016.
Cost of sales - services and other from our Hughes segment for the nine months ended September 30, 2017 increased by $18.5 million, or 5.5%, to $352.9 million compared to the same period in 2016.  The increase was primarily attributable to an increase in the costs of broadband services provided to our domestic and international consumers, domestic enterprise customers, and telecom systems customers primarily due to the increase in sales of broadband services.
Cost of sales - services and other from our ESS segment for the nine months ended September 30, 2017 increased by $0.8 million, or 1.7%, to $48.9 million compared to the same period in 2016.  The increase was primarily due to rental expenses for the lease of certain real estate and collocation and antenna space from DISH Network in 2017.

Cost of sales - equipment. “Cost of sales - equipment” totaled $153.9 million for the nine months ended September 30, 2017, an increase of $10.6 million or 7.4%, compared to the same period in 2016 primarily from our Hughes segment. The increase was primarily attributable to an increase of $20.8 million in equipment costs related to the increase in sales to our domestic and international consumers and enterprise customers, partially offset by a decrease of $10.7 million in equipment costs related to the decrease in sales to dishNET and our telecom systems customers.

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Selling, general and administrative expenses.  “Selling, general and administrative expenses” totaled $263.8 million for the nine months ended September 30, 2017, an increase of $23.4 million or 9.7%, compared to the same period in 2016.  The increase was primarily related to an increase of $28.9 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 $8.1 million in general and administrative expenses.

Research and development expenses.  “Research and development expenses” totaled $23.4 million for the nine months ended September 30, 2017, a decrease of $0.1 million or 0.3%, compared to the same period in 2016.  Our research and development activities vary basednet negative variances on the activity level and scope of other engineering and customer related development contracts.

Depreciation and amortization.  “Depreciation and amortization” expenses totaled $379.9 million for the nine months ended September 30, 2017, an increase of $55.2 million or 17.0%, compared to the same period in 2016.  The increase was primarily related to an increase of $34.4 million in depreciation expense of the EUTELSAT 65 West A, EchoStar XIX and EchoStar XXIII satellites that were placed into service in the third quarter of 2016, and the first and second quarters of 2017, respectively, an increase of $17.0 million in depreciation expense relating to domestic and international customer rental equipment, an increase of $11.0 million in depreciation expense relating to machinery and equipment and an increase of $6.9 million in amortization expense relating to the development of externally marketed software, partially offset by a decrease of $11.4 million in amortization expense from certain fully amortized other intangible assets in our Hughes segment and Corporate and Other.
Interest income.  “Interest income” totaled $30.3 million for the nine months ended September 30, 2017, an increase of $16.6 million compared to the same period in 2016.  The increase was primarily attributable to the increase in our marketable investments and an increase in yield percentage in 2017 when compared to 2016.

Interest expense, net of amounts capitalized.  “Interest expense, net of amounts capitalized” totaled $156.5 million for the nine months ended September 30, 2017, an increase of $76.1 million or 94.7%, compared to the same period in 2016.  The increase was primarily due to an increase in interest expense of $51.0 million relating to the issuance of 2026 Notes in the third quarter of 2016 and a decrease of $24.9 million in capitalized interest relating to the EchoStar XIX and EchoStar XXIII satellites that were placed into service in the first and second quarters of 2017, respectively.

Gains and impairment on investments, net. “Gains and impairment on investments, net” totaled $30.7 million in gains for the nine months ended September 30, 2017, an increase of $22.5 million, compared to the same period in 2016.  The increase was primarily due to an increase of $19.9 million in gains on our trading securities in the third quarter of 2017, a gain of $8.9 million from the sale of our investment in Invidi Technologies Corporation to an entity owned in part by DISH Network in the first quarter of 2017, partially offset by an other than temporary impairment loss of $3.3 million on certain strategic equity securities in our marketable investment securities in 2017 and a decrease of $2.8 million in realized gains on our securities classified as available-for-sale in 2017.compared to 2019.

Equity in earnings (losses) of unconsolidated affiliates, net. “EquityEquity in earnings (losses) of unconsolidated affiliates, net”net totaled $15.6$3.7 million in earningsloss for the ninesix months ended SeptemberJune 30, 2017, an increase2020, a decrease in losses of $6.6$7.4 million, or 73.9%66.4%, compared to the same period2019. The decrease in 2016. The increaselosses was primarily related to decreased losses from our investments in our equity method investees.

Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), nettotaled $9.3 million in losses for the six months ended June 30, 2020, an increase in earnings from our investment in Dish Mexico, partially offset by a decrease in earnings from our investment in Deluxe/EchoStar LLC.

Other, net.  “Other, net” totaled $8.2losses of $9.9 million in income for the nine months ended September 30, 2017, an increase of $2.7 million or 48.5%, compared to 2019. The change was due to the same periodnet strengthening of the U.S. dollar against certain foreign currencies in 2016. The increase was primarily related2020 compared to dividends of $5.8 million received from certain strategic equity investments in 2017, a favorable foreign exchange impact of $2.0 million in 2017, and $1.5 million in a protective put associated with our trading securities in 2016, partially offset by a $6.8 million for a provision recorded in the first half of 2015 in connection with Federal Communications Commission (“FCC”) regulatory fees, which was reversed in the first quarter of 2016.2019.

Income tax provisionbenefit (provision), net.  Income tax expensebenefit (provision) was $9.1$(3.4) million for the ninesix months ended SeptemberJune 30, 2017, a decrease in expense of $52.2 million or 85.2%,2020 compared to $(7.6) million for the same period in 2016.six months ended June 30, 2019. Our effective income tax rate was 11.0%(4.9)% and 35.2%(28.5)% for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively. The variations in our current year effective tax rate from the U.S. federal statutory rate for the nine months ended September 30, 2017 were primarily due to the recognition of a one-time tax benefit for the revaluation of our deferred tax assets and liabilities due to a change in our state effective tax rate as a

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result of the Share Exchange, the increase in our valuation allowance associated with unrealized gains that are capital in nature, and change in the amount of unrecognized tax benefit from uncertain tax positions. The tax benefit recognized from the change in our effective tax rate was partially offset by the increase in our valuation allowance associated with certain state and foreign losses. The variations in our effective tax rate from the U.S. federal statutory rate for the ninesix months ended SeptemberJune 30, 20162020 were primarily due to the increase in our valuation allowance associated with certain foreign losses and the impact of state and local taxes, partially offset by the change in net unrealized losses that are capital in nature and research and experimentation credits. The variations in our effective tax rate from the U.S. federal statutory rate for the six months ended June 30, 2019 were primarily due to the change in net unrealized gains that are capital in nature and research and experimentation credits, partially offset by the impact of state and local taxes.taxes and the increase in our valuation allowance associated with certain foreign losses. Additionally, during the three months ended June 30, 2019, we recorded additional tax expense of $2.0 million on deemed mandatory repatriation of certain deferred foreign earnings as the result of new treasury regulations.
 
Net income (loss) attributable to EchoStar Corporation common stock.  “Net loss attributable to EchoStar Corporation common stock totaled $65.7 million for the six months ended June 30, 2020, compared to net income attributable to EchoStar” was $79.3 Corporation common stock of $8.5 million for the ninesix months ended SeptemberJune 30, 2017,2019, a decreasechange of $62.4$74.2 million or 44.0%, compared toas set forth in the same period in 2016.  The decrease was primarily due to (i) an increasefollowing table:
Amounts
Net income (loss) attributable to EchoStar Corporation for the six months ended June 30, 2019$8,510 
Decrease (increase) in interest expense, net of amounts capitalized32,457 
Increase (decrease) in operating income, including depreciation and amortization21,988 
Decrease (increase) in net income attributable to non-controlling interests8,311 
Decrease (increase) in equity in losses of unconsolidated affiliates, net7,375 
Decrease (increase) in income tax provision, net4,231 
Increase (decrease) in other, net(635)
Increase (decrease) in foreign currency transaction gains, net(9,877)
Increase (decrease) in interest income, net(21,299)
Increase (decrease) in net income from discontinued operations(44,215)
Increase (decrease) in gains on investments, net(72,553)
Net income (loss) attributable to EchoStar Corporation for the six months ended June 30, 2020$(65,707)

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Table of $76.1 million, (ii) a decrease in operating income, including depreciation and amortization, of $63.8 million and (iii) a decrease of $22.8 million in income from discontinued operations in 2017. The decrease was partially offset by (i) a decrease in income tax expense of $52.2 million, (ii) an increase of $22.5 million in gains on investments, net of losses and impairments, (iii) an increase of $16.6 million in interest income, (iv) an increase of $6.6 million in equity in earnings of unconsolidated affiliates, net, and (v) an increase in other income of $2.7 million.Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
Earnings before interest, taxes, depreciation and amortization (“EBITDA”)
EBITDA.  EBITDA was $588.0 million for the nine months ended September 30, 2017, an increase of $22.9 million or 4.0%, compared to the same period in 2016.  The increase was primarily due to (i) an increase of $19.3 million in gains on our trading securities, (ii) an increase of $6.6 million in equity in earnings of unconsolidated affiliates, net and (iii) an increase in other income of $2.7 million. The increase was partially offset by a decrease in operating income, excluding depreciation and amortization, of $8.6 million.  EBITDA is a non-GAAP financial measure and is described under Explanation of Key Metrics and Other Items below.  The following table reconciles EBITDA to Net income (loss), the most directly comparable U.S. GAAP measure in the accompanying financial statements.our Accompanying Condensed Consolidated Financial Statements, to EBITDA:
 For the six months ended June 30,Variance
 20202019Amounts%
Net income (loss)$(72,580) $9,948  $(82,528) *
Interest income, net(26,343) (47,642) 21,299  (44.7) 
Interest expense, net of amounts capitalized74,491  106,948  (32,457) (30.3) 
Income tax provision (benefit), net3,359  7,590  (4,231) (55.7) 
Depreciation and amortization262,255  239,244  23,011  9.6  
Net loss (income) from discontinued operations—  (44,215) 44,215  (100.0) 
Net loss (income) attributable to non-controlling interests6,873  (1,438) 8,311  *
EBITDA$248,055  $270,435  $(22,380) (8.3) 
  For the Nine Months
Ended September 30,		 Variance
  2017 2016 Amount %
  (Dollars in thousands)
Net income $79,675
 $141,762
 $(62,087) (43.8)
         
Interest income and expense, net 126,156
 66,650
 59,506
 89.3
Income tax provision 9,073
 61,258
 (52,185) (85.2)
Depreciation and amortization 379,939
 324,743
 55,196
 17.0
Net income from discontinued operations (6,454) (29,213) 22,759
 (77.9)
Net income attributable to noncontrolling interests (351) (20) (331) *
EBITDA $588,038
 $565,180
 $22,858
 4.0

*    Percentage is not meaningful.EBITDA was $248.1 million for the six months ended June 30, 2020, a decrease of $22.4 million, or 8.3%, compared to 2019 as set forth in the following table:
Amounts
EBITDA for the six months ended June 30, 2019$270,435 
Increase (decrease) in operating income, excluding depreciation and amortization44,999 
Decrease (increase) in net income attributable to non-controlling interests8,311 
Decrease (increase) in equity in losses of unconsolidated affiliates, net7,375 
Increase (decrease) in other, net(635)
Increase (decrease) in foreign currency transaction gains, net(9,877)
Increase (decrease) in gains on investments, net(72,553)
EBITDA for the six months ended June 30, 2020$248,055 

Segment Operating Results and Capital Expenditures

Nine Months Ended SeptemberThe following tables present our operating results, capital expenditures and EBITDA by segment for the six months ended June 30, 2017 Compared2020 compared to the Nine Months Ended Septembersix months ended June 30, 20162019. Capital expenditures in the table below are net of refunds and other receipts related to our property and equipment.
HughesESSCorporate and OtherConsolidated
Total
For the six months ended June 30, 2020   
Total revenue$911,654  $8,831  $4,647  $925,132  
Capital expenditures174,996  —  21,908  196,904  
EBITDA341,260  3,573  (96,778) 248,055  
For the six months ended June 30, 2019   
Total revenue$897,184  $7,775  $9,854  $914,813  
Capital expenditures147,911  —  71,285  219,196  
EBITDA292,897  3,215  (25,677) 270,435  

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  Hughes EchoStar
Satellite
Services		 Corporate and Other Consolidated
Total
  (In thousands)
For the Nine Months Ended September 30, 2017  
  
  
  
Total revenue $1,072,143
 $295,785
 $11,532
 $1,379,460
Capital expenditures $270,624
 $21,351
 $118,170
 $410,145
EBITDA $342,693
 $241,873
 $3,472
 $588,038
         
For the Nine Months Ended September 30, 2016  
  
  
  
Total revenue $1,021,451
 $305,919
 $7,308
 $1,334,678
Capital expenditures $261,241
 $50,762
 $165,815
 $477,818
EBITDA $353,505
 $257,181
 $(45,506) $565,180

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CONTINUED

Hughes Segment
 For the Nine Months
Ended September 30,		 Variance
 2017 2016 Amount % For the six months ended June 30,Variance
 (Dollars in thousands) 20202019Amounts%
Total revenue $1,072,143
 $1,021,451
 $50,692
 5.0
Total revenue$911,654  $897,184  $14,470  1.6  
Capital expenditures $270,624
 $261,241
 $9,383
 3.6
Capital expenditures174,996  147,911  27,085  18.3  
EBITDA $342,693
 $353,505
 $(10,812) (3.1)EBITDA341,260  292,897  48,363  16.5  
 
Revenue
Hughes segment totalTotal revenue was $911.7 million for the ninesix months ended SeptemberJune 30, 2017 increased by $50.72020 an increase of $14.5 million, or 5.0%1.6%, compared to the same period in 2016.2019.  The increase was primarily due to an increaseincreases of $57.6$46.6 million in sales of broadband equipment and services to our domesticconsumer customers, partially offset by decreased hardware sales of $9.6 million and international consumers,decreased sales of broadband services to our enterprise customers of $22.0 million. These variances reflect the negative impact of exchange rate fluctuations.

Capital expenditures were $175.0 million for the six months ended June 30, 2020, an increase of $31.9$27.1 million, or 18.3%, compared to 2019, primarily due to net increases in sales of broadband equipment and services toexpenditures associated with our domestic enterprise customers, andconsumer business.
EBITDA was $341.3 million for the six months ended June 30, 2020, an increase of $3.8 million in sales of services to our telecom systems customers. The increase was partially offset by a decrease of $16.1 million in sales of broadband equipment and services to DISH Network, a decrease of $14.1 million in sales of broadband equipment to our telecom systems customers and government customers, and a decrease of $12.7 million in sales of broadband equipment and services to our international enterprise customers.
Capital Expenditures
Hughes segment capital expenditures for the nine months ended September 30, 2017 increased by $9.4$48.4 million, or 3.6%16.5%, compared to 2019 as set forth in the same period in 2016, primarily as a resultfollowing table:
Amounts
EBITDA for the six months ended June 30, 2019$292,897 
Increase (decrease) in operating income, excluding depreciation and amortization49,139 
Decrease (increase) in net income attributable to non-controlling interests8,311 
Increase (decrease) in gains on investments, net612 
Increase (decrease) in other, net(547)
Decrease (increase) in equity in losses of unconsolidated affiliates, net(194)
Increase (decrease) in foreign currency transaction gains, net(8,958)
EBITDA for the six months ended June 30, 2020$341,260 

ESS Segment
 For the six months ended June 30,Variance
 20202019Amounts%
Total revenue$8,831  $7,775  $1,056  13.6  
EBITDA3,573  3,215  358  11.1  

Total revenue was $8.8 million for the six months ended June 30, 2020, an increase of $95.4 million in expenditures in our domestic and international businesses. The increase was mainly associated with customer rental equipment for consumer services provided on the EUTELSAT 65 West A and EchoStar XIX satellites that were placed into service in the third quarter of 2016 and the first quarter of 2017, respectively. The increase was partially offset by a decrease of $84.6 million in expenditures on other satellites and related ground infrastructure, primarily resulted from the launch of service on EUTELSAT 65 West A and EchoStar XIX satellites.
EBITDA
Hughes segment EBITDA for the nine months ended September 30, 2017 was $342.7 million, a decrease of $10.8$1.1 million, or 3.1%13.6%, compared to the same period in 2016.  The decrease was2019, primarily due to an increase of $28.9in transponder services provided to third parties.

EBITDA was $3.6 million in marketing and promotional costs mainly attributable our domestic and international consumer broadband sales and an other than temporary impairment loss of $3.3 million on certain strategic equity securities in our marketable investment securities in 2017. The decrease was partially offset byfor the six months ended June 30, 2020, an increase of $22.1 million in gross margin.

EchoStar Satellite Services Segment
  For the Nine Months
Ended September 30,		 Variance
  2017 2016 Amount %
  (Dollars in thousands)
Total revenue $295,785
 $305,919
 $(10,134) (3.3)
Capital expenditures $21,351
 $50,762
 $(29,411) (57.9)
EBITDA $241,873
 $257,181
 $(15,308) (6.0)
Revenue
ESS segment total revenue for the nine months ended September 30, 2017 decreased by $10.1$0.4 million, or 3.3%11.1%, compared to the same period in 2016,2019, primarily attributable to decreases in sales of transponder services due to expired service contracts.the increase in revenue.

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Corporate and Other
 For the six months ended June 30,Variance
 20202019Amounts%
Total revenue$4,647  $9,854  $(5,207) (52.8) 
Capital expenditures21,908  71,285  (49,377) (69.3) 
EBITDA(96,778) (25,677) (71,101) *
Capital Expenditures
* Percentage is not meaningful.
ESS segment capital expenditures
Total revenue was $4.6 million for the ninesix months ended SeptemberJune 30, 2017 decreased by $29.42020, a decrease of $5.2 million, or 57.9%52.8%, compared to 2019 primarily attributable to a decrease in income from certain real estate previously leased to DISH Network and transferred as part of the same period in 2016,BSS Transaction.

Capital expenditures were $21.9 million for the six months ended June 30, 2020 decreased by $49.4 million, or 69.3%, compared to 2019, primarily relateddue to a decrease in expenditures on the EchoStar 105/SES-11XXIV satellite.

EBITDA
ESS segment EBITDA was a loss of $96.8 million for the ninesix months ended SeptemberJune 30, 2017 was $241.9 million, a decrease of $15.3 million, or 6.0%, compared to the same period in 2016.  The decrease in EBITDA for our ESS segment was primarily due to a decrease of $10.9 million in gross margin and a decrease of $3.8 million due to a provision recorded in the first half of 2015 in connection with FCC regulatory fees, which was reversed in the first quarter of 2016.
Corporate and Other
Corporate and Other is comprised of various 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, our centralized treasury activities and gains (losses) from certain of our investments.
  For the Nine Months
Ended September 30,		 Variance
  2017 2016 Amount %
  (Dollars in thousands)
Total revenue $11,532
 $7,308
 $4,224
 57.8
Capital expenditures $118,170
 $165,815
 $(47,645) (28.7)
EBITDA $3,472
 $(45,506) $48,978
 *
*    Percentage is not meaningful.

Capital Expenditures
For the nine months ended September 30, 2017, Corporate and Other capital expenditures decreased by $47.6 million, or 28.7%, compared to the same period in 2016, primarily related to a decrease in satellite expenditures of $72.7 million on the EchoStar XIX satellite, a decrease in satellite expenditures of $26.2 million on the EchoStar XXIII satellite, and a decrease in satellite expenditures of $10.3 million on the EchoStar XXI satellite, partially offset by2020, an increase in satellite expendituresloss of $61.9 million on the EchoStar XXIV satellite.  The EchoStar XIX satellite was launched in December 2016 and placed into service in the first quarter of 2017. The EchoStar XXIII satellite was launched in March 2017 and was placed into service in the second quarter of 2017. The EchoStar XXI satellite is intended to be used by EchoStar Mobile in providing mobile satellite services in the EU. It was launched in June 2017 and is anticipated to be placed into service in the fourth quarter of 2017. The EchoStar XXIV satellite is intended to provide additional capacity for the Hughes broadband services in North America and certain Latin American countries.

EBITDA
For the nine months ended September 30, 2017, Corporate and Other EBITDA was a gain of $3.5$71.1 million compared to a loss of $45.5 million for the nine months ended September 30, 2016.  The change of $49.0 million was primarily related to (i) an increase of $19.9 million in gains on our trading securities2019 as set forth in the third quarter of 2017, (ii) a gain of $8.9 million from the sale of our investment in Invidi Technologies Corporation to an entity owned in part by DISH Network in the first quarter of 2017, (iii) a decrease of $7.9 million in general and administrative expenses, (iv) an increase of $6.6 million in equity in earnings of unconsolidated affiliates, net in 2017, (v) dividends of $5.8 million received from certain strategic equity investments in 2017, (vi) an increase of $2.3 million in rental income relating to certain lease agreements pursuant to which DISH Network leases certain real estate from us, and (vii) a favorable foreign exchange impact of $1.7 million in 2017. The reduction in loss was partially offset by $3.0 million attributable to a provision recorded in the first half of 2015 in connection with FCC regulatory fees, which was reversed in the first quarter of 2016.following table:

Amounts
EBITDA for the six months ended June 30, 2019$(25,677)
Decrease (increase) in equity in losses of unconsolidated affiliates, net7,569 
Increase (decrease) in other, net(93)
Increase (decrease) in foreign currency transaction gains, net(918)
Increase (decrease) in operating income, excluding depreciation and amortization(4,494)
Increase (decrease) in gains on investments, net(73,165)
EBITDA for the six months ended June 30, 2020$(96,778)

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LIQUIDITY AND CAPITAL RESOURCES
 
Cash, Cash Equivalents and Current Marketable Investment Securities
 
We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. See “Quantitative and Qualitative Disclosures about Market Risk” for further discussion regarding our marketable investment securities. As of SeptemberJune 30, 20172020 and December 31, 2016,2019, our cash, cash equivalents and current marketable investment securities totaled $3.28$2.5 billion and $3.09$2.5 billion, respectively.
Asrespectively, of September 30, 2017which $510.0 million and December 31, 2016,$940.6 million, respectively, we held $485.0 million and $522.5 million, respectively, ofas marketable investment securities, consisting of various debt and equity instruments including corporate bonds, corporate equity securities, government bonds and mutual funds. We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.

Cash Flow Activities

The following discussion highlights our cash flow activities, which include results from continuing and discontinued operations, for the ninesix months ended SeptemberJune 30, 2017.2020.
 
Cash flowsFlows from operating activitiesOperating Activities
. We typically reinvest the cash flow from operating activities in our business. For the ninesix months ended SeptemberJune 30, 2017,2020, we reported net cash inflows from operating activities of $591.9$245.3 million, an increasea decrease of $17.2$135.5 million, compared to the same period in 2016.2019. The increasedecrease in cash inflows was primarily attributable to an increase of $160.1 million resulting from changes in operating assets and liabilities related to timing differences, partially offset by lower net income of $142.9$76.4 million, adjusted to exclude: (i) “DepreciationDepreciation and amortization;”amortization; (ii) “EquityLosses (gains) on investments, net, (iii) Equity in earningslosses (earnings) of unconsolidated affiliates, net;” (iii) “Gain and impairment on investments, net;”net; (iv) “Stock-based compensation;”Foreign currency transaction losses (gains), net; (v) “DeferredDeferred tax provision;”provision (benefit), net; (vi) “Other, net;”Stock-based compensation; (vii) “Dividends received from unconsolidated entities;”Amortization of debt issuance costs; and (viii) “ProceedsOther, net. The decrease in cash inflows was also attributable to decreases of $59.1 million resulting from sale of trading securities”.timing differences in operating assets and liabilities.
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Cash flowsFlows from investing activitiesInvesting Activities

.
Our investing activities generally include purchases and sales of marketable investment securities, capital expenditures, acquisitions and strategic investments. For the ninesix months ended SeptemberJune 30, 2017,2020, we reported net cash outflowsinflows from investing activities of $374.4$200.5 million, a decrease in cash inflows of $385.4$681.9 million compared to 2019.

For the same period in 2016. The decrease in cash outflows was primarily related to a decreasesix months ended June 30, 2020, we had net sales and maturities of $296.2marketable securities of $977.5 million, inpartially offset by net purchases of marketable investment securities of $555.4 million and expenditures for property and equipment of $196.9 million.

For the six months ended June 30, 2019, we had net of sales and maturities and a decrease of $86.9 million in capital expenditures, netmarketable securities of related refunds, in 2017 when compared to the same period in 2016 and cash proceeds of $17.8 million from the sale of our investment in Invidi Technologies Corporation to an entity owned in part by DISH Network in the first quarter of 2017. The decrease was$1.6 billion, partially offset by a decreasenet purchases of $8.2marketable securities of $504.3 million in restricted cash and marketable investment securities and an increase of $7.5 million in expenditures for externally marketed software.property and equipment of $219.4 million.
 
Cash flowsFlows from financing activitiesFinancing Activities

.
Our financing activities generally include proceeds related to the issuance of debt and cash used for the repurchase, redemption or payment of debt and capitalfinance lease obligations, payments relating to stock and debt repurchases and the proceeds from Class A common stock options exercised and stock issued under our stock incentive plans and employee stock purchase plan. For the ninesix months ended SeptemberJune 30, 2017,2020, we reported net cash inflows from financing activities of $8.7$9.1 million a decrease incompared to net cash outflows of $885.7 million for the six months ended June 30, 2019. Net cash inflows of $1.47 billion, compared tofor the same period in 2016. The decrease in cash inflows was primarily due to proceeds of $1.5 billion fromsix months ended June 30, 2020 included $10.0 million for the issuance of the 2026 Notes in the third quarter of 2016contribution by non-controlling interest holder and a decrease of $4.5$0.4 million in net proceeds from Class A common stock issued under our employee stock purchase plan in 2017, partially offset by an increase of $28.5 million in net proceedsreceived from Class A common stock options exercised, issued underpartially offset by our stock incentive plans in 2017, a decrease of $6.6 million in capital lease obligation payments relating to our uplink equipment, and a decreaserepurchase of $5.9 million in paymentsof shares of our Class A common stock. Net cash outflows for the six months ended June 30, 2019 included $920.9 million for the repurchasing and maturity of debt, issuance costs$20.0 million for the payment of finance lease obligations and $7.3 million for the purchase of non-controlling shareholder interests in 2017.a subsidiary of ours that were held by an unaffiliated third party, partially offset by $61.5 million in net proceeds received from Class A common stock options exercised.
 
Obligations and Future Capital Requirements
 
Contractual Obligations
 
As of SeptemberJune 30, 2017,2020, our satellite-related obligations were approximately $1.01 billion. Our satellite-related obligations$385.1 million. These primarily include payments pursuant to agreements for the construction of the EchoStar XXIV satellite;satellite, payments pursuant to launch services contracts and regulatory authorizations; executoryauthorizations, non-lease costs forassociated with our capitalfinance lease satellites; costs under satellite service agreements; andsatellites, in-orbit incentives relating to certain satellites; as well assatellites and commitments for long-term satellite operating leases and satellite service arrangements.


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Off-Balance Sheet Arrangements
 
Other than the transactions described below, weWe generally do not engage in off-balance sheet financing activities or use derivative financial instruments for hedge accounting or speculative purposes.
 
As
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

Letters of Credit

The following table presents the components of our letters of credit and insurance bonds. Of this amount, $12.9 million was secured by restricted cash, $0.4 million was related to insurance bonds, and $22.1 million was issued under credit arrangements available to our foreign subsidiaries. as of June 30, 2020:
Amounts
Restricted cash$8,966 
Insurance bonds3,773 
Credit arrangement available to our foreign subsidiaries28,122 
Total letters of credit$40,861 

Certain letters of credit are secured by assets of our foreign subsidiaries.
As of September 30, 2017, we had foreign currency forward contracts with a notional value of $6.5 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.
Satellite Insurance
We historically have not carried in-orbit insurance on our 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 in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our indebtedness, we are required, subject to certain limitations on coverage, to maintain in-orbit insurance for our SPACEWAY 3, EchoStar XVI, and EchoStar XVII satellites. 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. All other satellites, either in orbit or under construction, are not covered by launch or in-orbit insurance. We will continue to assess circumstances going forward and make insurance decisions on a case by case basis.

Future Capital Requirements

We primarily rely on our existing cash and marketable investment securities balances, as well as cash flow generated through our operations to fund our business. We currently depend on DISH Network for a significant portion of our revenue. 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. There can be no assurance that we will have positive cash flows from operations. Furthermore, if we experience negative cash flows, our existing cash and marketable investment securities balances may be reduced.

We have a significant amount of outstanding indebtedness. As of September 30, 2017, our total indebtedness was $3.64 billion, of which $280.9 million related to capital lease obligations. See our most recent Form 10-K for a discussion of the terms of our indebtedness. Our liquidity requirements will be significant, primarily due to our debt service requirements. In addition, our future capital expenditures are likely to increase if we make acquisitions or additional investments in infrastructure or joint ventures necessary to support and expand our business, or if we decide to purchase or build one or more additional satellites. Furthermore, we expect to be a federal cash taxpayer for 2017 which will require additional liquidity. 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, which may not be available on acceptable terms or at all.

We anticipate that our existing cash and marketable investment securities are sufficient to fund the currently anticipated operations of our business through the next twelve months.

Satellites

As our satellite fleet ages, we will be required to evaluate replacement alternatives such as acquiring, leasing or constructing additional satellites, with or without customer commitments for capacity. We may also construct, acquire or lease additional satellites in the future to provide satellite services at additional orbital locations or to improve the quality of our satellite services.

Satellite Insurance
We generally do not carry in-orbit insurance on our satellites or payloads because we have assessed that the cost of insurance is not economical relative to the risk of failures. Therefore, we generally bear the risk of any in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our long-term debt and our joint venture agreements with Yahsat, we are required, subject to certain limitations on coverage, to maintain only for the SPACEWAY 3 satellite, the EchoStar XVII satellite and the Al Yah 3 Brazilian payload, insurance or other contractual arrangements during the commercial in-orbit service of such satellite or payload. Our other satellites and payloads, either in orbit or under construction, are not covered by launch or in-orbit insurance or other contractual arrangements. We will continue to assess circumstances going forward and make insurance-related decisions on a case-by-case basis.

Future Capital Requirements

We primarily rely on our existing cash and marketable investment securities balances, as well as cash flow generated through our operations to fund our business. Revenue in our ESS segment depends largely on our ability to continuously make use of our available satellite capacity with existing customers and our ability to enter into commercial relationships with new customers. Consumer revenue in our Hughes segment depends on our success in adding new and retaining existing subscribers and driving higher average revenue per subscriber across our wholesale and retail channels. Revenue in our enterprise and equipment businesses relies heavily on global economic conditions and the competitive landscape for pricing relative to competitors and alternative technologies. Service costs related to ongoing support of our direct and indirect customers and partners are typically impacted most significantly by our growth. There can be no assurance that we will have positive cash flows from operations.  As a result of the COVID-19 pandemic, in accordance with instructions received from some of our enterprise customers, we have deferred or canceled the delivery of some products or services. We expect to realize the cash flow from those deferred products and services in the second half of 2020 and in 2021. Our cash flow could be further adversely impacted the longer the COVID-19 pandemic impacts domestic and global activity. Furthermore, if we experience negative cash flows, our existing cash and marketable investment securities balances may be reduced.

We have a significant amount of outstanding indebtedness. As of June 30, 2020, our total long-term debt was $2.4 billion. Refer to our Form 10-K for a discussion of the terms of our long-term debt. Our liquidity requirements will be continue to be significant, primarily due to our remaining debt service requirements and the design and construction of our new EchoStar XXIV satellite. Our 7 5/8% Senior Unsecured Notes due 2021 (the “2021 Notes”) with an outstanding principal balance of $900.0 million mature and are due and payable in June 2021. We may from time to time seek to purchase amounts of our outstanding debt in open market purchases, privately negotiated transactions or otherwise, depending on market conditions, our liquidity needs and other factors. The amounts we
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may repurchase may be material. In addition, our future capital expenditures are likely to increase if we make acquisitions or additional investments in infrastructure, technologies or joint ventures to support and expand our business, or if we decide to purchase or build additional satellites or other technologies or assets. Other aspects of our business operations may also require additional capital. We also expect to owe U.S. Federal income tax for 2020.

We anticipate that our existing cash and marketable investment securities are sufficient to repay our 2021 Notes that mature and are due and payable in June 2021 and to fund the currently anticipated operations of our business through the next twelve months.

Stock Repurchases

Pursuant to a stock repurchase program approved by our boardBoard of directors,Directors on October 29, 2019, we are authorized to repurchase up to $500.0 million of our outstanding shares of Class A common stock through December 31, 2018. As2020.  During the six months ended June 30, 2020, we repurchased 196,999 shares of Septemberour common stock at an average price per share of $29.90 for a total purchase price of $5.9 million. During the six months ended June 30, 2017,2019, we havedid not repurchasedrepurchase any common stockstock.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting policies are those that involve a high degree of estimation, judgment and complexity. Our critical accounting policies are those related to (i) contingent liabilities, (ii) revenue recognition and (iii) impairment of assets.

Our critical accounting policies are described in our Form 10-K under this program.the heading Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. There have been no significant changes in our critical accounting policies from those presented in our Form 10-K.

SeasonalityNEW ACCOUNTING PRONOUNCEMENTS

For a discussion of new and recently issued accounting pronouncements, refer to Note 2. Summary of Significant Accounting Policies in our Accompanying Condensed Consolidated Financial Statements.

SEASONALITY
 
For our Hughes segment, service revenue is generally not impacted by seasonal fluctuations other than those associated with fluctuations related to sales and promotional activities. However, like many communications infrastructure equipment vendors, a higher amount of our hardware revenue occurs in the second half of the year due to our 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.
 
Our ESS segment is generally not generally affected by seasonal impacts.

InflationWhile the above-described trends have been observed consistently in recent years, we cannot predict with any certainty whether they will continue in the near future as the economy and our customers react to the COVID-19 pandemic and experience associated disruptions and dislocations.
INFLATION
 
Inflation has not materially affected our operations during the past three years.years but we are unable to predict the extent or nature of any future inflationary pressure at this time. We believe that our ability to increase the prices charged for our products and services in future periods will depend primarily on competitive pressures or contractual terms. However, we may not be able to maintain pricing levels consistent with inflationary pressure on expenses.

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EXPLANATION OF KEY METRICS AND OTHER ITEMS

Services and other revenue - DISH Network. “ServicesServices and other revenue - DISH Network” primarily includes the sales of consumer and enterprise broadband services, maintenance and other contracted services, revenue associated with satellite and transponder leases and services, telemetry, tracking and control, professional services, facilities rental revenue and other services provided to DISH Network. “Services and other revenue - DISH Network” also includessatellite uplinking/downlinking, subscriber wholesale service fees for the HughesHughesNet service sold to dishNET.professional services and facilities rental revenue.
Services and other revenue - other
. “Services and other revenue - other” primarily includes the sales of enterprise and consumer broadband services, as well as maintenance and other contracted services. “Services and 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.
Equipment revenue - DISH Network. “Equipment revenue - DISH Network” primarily includes sales of satellite broadband equipment and related equipment, related to the Hughes service, to DISH Network.
Equipment revenue - other. “Equipment revenue - other” primarily includes broadband equipment and networks sold to customers in our enterpriseconsumer and consumerenterprise markets.

Cost of sales - services and other. “CostCost of sales - services and other”other primarily includes the cost of broadband services provided to our consumer and enterprise and consumer customers, and to DISH Network, as well as the cost of providing maintenance and other contracted services. “Cost of sales - services, and other” also includes the costs associated with satellite and transponder services, telemetry, trackingleases and control,services, professional services and facilities rental costs, and other services provided to our customers, including DISH Network.rental.
 
Cost of sales - equipment. “CostCost of sales - equipment”equipment consists primarily of the cost of broadband equipment and networks sold to customers in our consumer and enterprise and consumer markets, andmarkets. It also includes certain other costs associated with the deployment of equipment to DISH Network.our customers.

Selling, general and administrative expenses. “Selling,Selling, general and administrative expenses”expenses primarily includes selling and marketing costs and employee-related costs associated with administrative services (e.g., information systems, human resources and other services), includingservices and stock-based compensation expense.expense). It also includes professional fees (e.g. legal, information systems and accounting services) and, other itemsexpenses associated with facilities and administrative services provided by DISH Network and other third parties.credit losses, which include customer related estimated credit losses and estimated credit losses on non-current receivables.
 

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Research and development expenses. “ResearchResearch and development expenses”expenses primarily includes costs associated with the design and development of products to support future growth and provide new technology and innovation to our customers.

Interest income, net. “Interest income”Interest income, net primarily includes interest earned on our cash, cash equivalents and marketable investment securities, and other investments including premium amortization and discount accretion on debt securities.securities, offset by estimated credit losses on our other debt investments.
 
Interest expense, net of amounts capitalized. “InterestInterest expense, net of amounts capitalized”capitalized primarily includes interest expense associated with our debt and capitalfinance lease obligations (net of capitalized interest), and amortization of debt issuance costs.costs and interest expense related to certain legal proceedings.
 
Gains and impairment(losses) on investments, net. “Gains and impairmentGains (losses) on investments, net”net primarily includes changes in fair value of our marketable equity securities and other investments for which we have elected the fair value option. It may also include realized gains net of anyand losses on the sale or exchange of investments,our available-for-sale debt securities, other-than-temporary impairment on certain of our marketable investment securities and unrealized gainslosses on our trading securities.available-for-sale debt securities, realized gains and losses on the sale or exchange of other equity investments and other debt investments without readily determinable fair value, adjustments to the carrying amount of investments in unconsolidated affiliates and marketable equity securities resulting from impairments and observable price changes and estimated credit losses.
 
Equity in earnings (losses) of unconsolidated affiliates, net. “EquityEquity in earnings (losses) of unconsolidated affiliates, net”net includes earnings or losses from our investments accounted for underusing the equity method.
 
Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net include gains and losses resulting from the re-measurement of transactions denominated in foreign currencies.

Other, net. “Other, net”Other, net primarily includes foreign exchange gains and losses, dividends received from our marketable investment securities and other non-operating income orand expense items that are not appropriately classified elsewhere in the Condensed Consolidated Statements of Operations in our condensed consolidated statements of operations.Accompanying Condensed Consolidated Financial Statements.
 
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Net income (loss) from discontinued operations. operations“Income. Net income (loss) from discontinued operations”operations includes the condensed consolidated financial statementsresults of the EchoStar Technologies businesses andBSS Business transferred in the BSS Transaction, except for certain other assets exchanged as a result ofreal estate that transferred in the Share Exchange.transaction.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”)EBITDA. EBITDA is defined as “Net income”Net income (loss) excluding “InterestInterest income, net, Interest expense, net of amounts capitalized,” “Interest Income tax benefit (provision), net, Depreciation and amortization, Net income” “Income tax provision,” (loss) from discontinued operations and “Depreciation and amortization.”Net income (loss) attributable to non-controlling interests. EBITDA is not a measure determined in accordance with U.S. GAAP. This non-GAAP measure is reconciled to “Net income”Net income (loss) in our discussion of “ResultsResults 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 U.S. GAAP. EBITDA is used by our management as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes EBITDA provides meaningful supplemental information regarding the underlying operating performance of our business.business and is appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate the performance of companies in our industry.
 
Subscribers. “Subscribers”Subscribers include customers that subscribe to our Hughes segment’s HughesNet broadband services,service, through retail, wholesale and small/medium enterprise service channels.

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ItemITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Refer to our Form 10-K, under the heading Part II - Item 7A. Quantitative and Qualitative Disclosures About Market Risks Associated with Financial Instruments and Foreign Currency
Our investments and debt are exposed to market risks, discussed below.
Cash, Cash Equivalents and Current Marketable Investment Securities
Risk, for a more complete discussion of our risks. As of SeptemberJune 30, 2017,2020, other than as explained below, our cash, cash equivalents and current marketable investment securities had a fair value of $3.28 billion. Of this amount, a total of $3.14 billion was invested in: (a) cash; (b) commercial paper and corporate notes with an overall average maturity of less than one year and rated in one of the four highest rating categories by at least two nationally recognized statistical rating organizations; (c) debt instruments of the U.S. government and its agencies; and/or (d) instruments with similarmarket 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 usednot changed materially from those presented in our business. The value of this portfolio may be negatively impacted by credit losses; however, this risk is mitigated through diversification that limits our exposure to any one issuer.
Interest Rate Risk
A change in interest rates would not affect the fair value of our cash, or materially affect the fair value of our cash equivalents due to their maturities of less than 90 days. A change in interest rates would affect the fair value of our current marketable debt securities portfolio; however, we normally hold these investments to maturity. Based on our current non-strategic investment portfolio of $3.14 billion as of September 30, 2017, a hypothetical 10% change in average interest rates during 2017 would not have had a material impact on the fair value of our cash, cash equivalents and debt securities portfolio due to the limited duration of our investments.
Our cash, cash equivalents and current marketable debt securities had an average annual rate of return for the nine months ended September 30, 2017 of 1.9%. 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 2017 would have resulted in a decrease of approximately $5.6 million in annual interest income.
Strategic Marketable Investment Securities
As of September 30, 2017, we held current strategic investments in the publicly traded common stock of several companies with a fair value of $139.4 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 have resulted in a decrease of approximately $13.9 million in the fair value of these investments.

Form 10-K.
Restricted cash and marketable investment securities and investments in unconsolidated entities
Restricted cash and marketable investment securities
As of September 30, 2017, we had $13.7 million of restricted cash and marketable investment securities invested in: (a) cash; (b) debt instruments of the U.S. government and its agencies; (c) 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; (d) mutual funds; and (e) instruments with similar risk, duration and credit quality characteristics to the commercial paper described above. Based on our investment portfolio as of September 30, 2017, a hypothetical 10% increase in average interest rates would not have had a material impact on the fair value of our restricted cash and marketable investment securities.

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Investments in unconsolidated entities
As of September 30, 2017, we had $165.3 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 adverse change equal to 10% of the carrying amount of these equity instruments would have resulted in a decrease of approximately $16.5 million in the value of these investments.
Our ability to realize value from our strategic investments in companies that are privately held depends on the success of those companies’ businesses and their ability to obtain sufficient capital to execute their business plans. Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able to obtain fair value for them.
Foreign Currency Exchange Risk
We generally conduct our business in U.S. dollars. Our international business is conducted in a variety of foreign currencies with our largest exposures being to the Brazilian real, the Indian rupee, and the 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.
Our objective in managing our exposure to foreign currency changes is to reduce earnings and cash flow volatility associated with foreign exchange rate fluctuations. Accordingly, we may enter into foreign currency forward contracts, or take other measures, to mitigate risks associated with foreign currency denominated assets, liabilities, commitments and anticipated foreign currency transactions. As of September 30, 2017, we had $16.4 million of net foreign currency denominated receivables and payables outstanding, and foreign currency forward contracts with a notional value of $6.5 million in place to partially mitigate foreign currency exchange risk. The estimated fair values of the foreign exchange contracts were not material as of September 30, 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 have been an estimated loss to the cumulative translation adjustment of $27.9 million as of September 30, 2017.
Derivative Financial Instruments
We generally do not use derivative financial instruments for speculative purposes and we generally do not apply hedge accounting treatment to our derivative financial instruments. We evaluate our derivative financial instruments from time to time but there can be no assurance that we will not enter into additional foreign currency forward contracts, or take other measures, in the future to mitigate our foreign exchange risk.

ItemITEM 4. CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended)amended (the “Exchange Act”)) as of the end of the period covered by this report.Form 10-Q. 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 reportForm 10-Q such that the information required to be disclosed in our SECSecurities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in the SECSecurities and Exchange Commission rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In November 2019, we consummated the Yahsat Brazil JV Transaction. As a result, we are reviewing the internal controls of the business we acquired from Yahsat in the Yahsat Brazil JV Transaction and we may make appropriate changes as deemed necessary.
 
Changes in Internal Control overOver Financial Reporting
 
ThereExcept as noted above, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Securities Exchange Act of 1934, as amended)Act) that occurred during the third quarter of 2017six months ended June 30, 2020 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.


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PART II — OTHER INFORMATION

ItemITEM 1. LEGAL PROCEEDINGS
 
For a discussion of legal proceedings, seerefer to Part I, Item 1. Financial Statements — Note 14Note 13. Contingencies “Commitments and Contingencies — Litigation”Litigation in this Form 10-Q.

ItemITEM 1A. RISK FACTORS
 
The following information updates, and should be read in conjunction with, the information in Part I, Item 1A, “RiskRisk Factors,” of our Form 10-K for the year ended December 31, 2016 includes a detailed discussion of our risk factors. Except as provided below, for the nine months ended September 30, 2017, there were no material changes in our risk factors as previously disclosed.

10-K.
The failure to adequately anticipate the need for satellite capacity or the inability to obtain satellite capacity for our Hughes segment could harm our results of operations.

RISKS RELATED TO THE COVID-19 PANDEMIC
Our Hughes segment has made substantial contractual commitments for satellite capacity based on our existing customer contracts
The COVID-19 pandemic, its economic impacts and backlog.  If our 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 marginsrelated government and results of operations. Alternatively, we may not have sufficient satellite capacity to meet demand.  We generally only purchase satellite capacity based on existing contracts and 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 for those services.  Our ability to provide capacity for subscriber growth in our North American consumer market could also be adversely affected by regulations and/or legislation in the U.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 other bands in which we may operate in the future. 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 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 fixed satellite services (“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.  Our business and results of operations could be adversely affected if we are not able to renew our capacity leases at economically viable rates, if capacity is not available due to problems experienced by these FSS providers or if frequencies are not available to us.

Our business is subject to risks of adverse government regulation.

Our business is subject to varying degrees of regulation in the U.S. by the FCC, and other federal, state and local entities, and in foreign countries by similar entities, and internationally by the ITU.  These regulations are subject to the administrative and political process and do change, for political and other reasons, from time to time.  For example, the FCC recently adopted an order in its “Spectrum Frontiers” proceeding under which a portion of the Ka-band, in which we operate our broadband gateway earth stations, has been enabled for 5G mobile terrestrial services, which could limit our flexibility to change the way in which we use Ka-band in the future and/or limit our access to and ability to use the Ka-band and/or other bands in the future. Other countries in which we currently, or may in the future, operate are also considering regulations that could limit access to the Ka-band or other frequency bands. The FCC has also opened a proceeding on non-geostationary satellites, which may adversely impact our ability to use certain spectrum for user terminals. Moreover, 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 other 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 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 operationsprivate sector responsive actions could have a material adverse effect our business operations. As a result of the COVID-19 pandemic, many countries, including the U.S., and other governmental authorities have imposed restrictions on travel, as well as general movement and gathering restrictions, business closures and other measures imposed to slow the spread of COVID-19.

We have set forth below key risks from the COVID-19 pandemic that we have identified to date. The situation continues to develop, however, and it is impossible to predict the effect and ultimate impact of the COVID-19 pandemic on our ability to generate revenue and our overall competitive position and could result in our suffering serious harm to our reputation.


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Our business depends on regulatory authorizations issued byoperations.  We cannot estimate or determine the FCC and state and foreign regulators that can expire, be revoked or modified, and applications for licensesduration of the quarantine, social distancing and other authorizationsregulatory measures instituted or recommended in response to the COVID-19 pandemic, whether they will recur or the duration or degree of the business disruptions, and related financial impact. The COVID-19 pandemic has evolved into a worldwide health crisis that may not be granted.

Generally all satellite, earth stations and other licenses granted by the FCC and most other countries are subject to expiration unless renewed by the regulatory agency.  Our satellite licenses are currently set to expire at various times.  In addition, we occasionally receive special temporary authorizations that are grantedcontinue for limited periodsan extended period of time (e.g., 180 days or less) and subjectthat has adversely affected economies and financial markets throughout the world, resulting in a significant economic downturn and changes in global economic policy that is expected to possible renewal.  Generally, our licenses and special temporary authorizations have been renewed on a routine basis, but there can be no assurance that this will continue.  In addition, we must obtain new licenses from the FCC and other countries’ regulatorscontinue for the operation of new satellites that we may build and/or acquire. There can be no assurance that the FCC or other regulators will continue granting applications for new licenses 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, itforeseeable future and could have a material adverse effect on our business, financial condition andor results of operations.  Specifically, loss

Our operations and those of our customers and other third parties with whom we conduct business are located in areas impacted by the COVID‑19 pandemic, and those operations have been, and may continue to be, adversely affected by the COVID‑19 pandemic.

We conduct our product development, manufacturing, installation and customer support and services in areas where, in order to attempt to mitigate the COVID-19 pandemic, (a) states of emergency related to the spread of COVID-19 have been declared and (b) various levels of “shelter-in-place” or “safer-at-home” orders have been issued, which (i) direct individuals living in those locations to shelter at their places of residence (subject to limited exceptions), (ii) direct businesses and governmental agencies to cease or limit non-essential operations at physical locations, (iii) limit the number of employees that may be present in a frequency authorizationparticular location; (iv) prohibit or limit non-essential gatherings of various number of individuals, and (v) order cessation of non-essential travel. The effects of the COVID-19 pandemic and the actions from applicable governmental authorities has negatively impacted productivity, increased cybersecurity risks as a large portion of our workforce has been working remotely, disrupted our and our customers’, suppliers’, vendors’ and other business partners’ and investees’ businesses and finances, delayed regulatory and other timelines, and delayed the manufacture and deployment of our satellites. Additionally, some regulatory bodies have furloughed employees, reduced activities and temporarily closed their offices. Such measures may materially delay the review and/or approval of licenses or authorizations we need to operate our business. The magnitude of these impacts will depend, in part, on the length and severity of the pandemic, associated restrictions and resulting economic and financial consequences and other limitations and impediments on the conduct of business in the ordinary course.

Extended periods of interruption to our corporate, development or manufacturing facilities due to the COVID-19 pandemic could cause us to lose revenue, which would depress our financial performance and could be difficult to recapture. Our business may also be harmed if travel continues to be restricted or inadvisable or if members of management and other employees are unable to work because they contract COVID-19, they elect not to come to work due to the illness affecting others in our office or other facilities, or they are subject to quarantines or other governmentally imposed restrictions. Additionally, many of our subscribers are working remotely or engaging in distance learning. These activities have increased the usage on our HughesNet service so that there is
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little or no capacity remaining for subscriber growth in our most popular geographic areas. In addition, the limitation on capacity may result in our subscribers experiencing slower speeds. This, in turn, could result in higher churn and may negatively affect our financial results.

A portion of the expected sales of our products or services have been, and additional sales may be, delayed or canceled as a result of effects of the COVID-19 pandemic on the operations of our customers.

Our customers’ business operations have been, and are continuing to be, subject to business interruptions arising from the COVID-19 pandemic. Due to the downturn in financial markets arising from the COVID-19 pandemic, a number of our current enterprise customers are facing uncertain futures. In the event any of these enterprise customers fail or seek reorganization under the bankruptcy laws, we may be obliged to pay for satellite capacity for which we are not being paid. Further, the COVID-19 pandemic has resulted in increased unemployment, which could result in reduced demand and increased inability to pay from our consumer customers. Any resulting financial impact cannot be reasonably estimated at this time but may materially affect our subscriber numbers, business, financial condition, results of operations, and cash flows. We are diligently working to ensure that we can operate with minimal disruption and address potential business interruptions on ourselves and our customers. However, the full extent to which the COVID-19 pandemic could affect the global economy and our business will depend on future developments and factors that cannot be predicted and there can be no assurance that the COVID-19 pandemic will not result in further delays, or possibly reductions, in our recognition of revenue.

Our supply chain may be materially adversely impacted due to the COVID-19 pandemic.

We rely upon the facilities of our domestic and foreign suppliers to support our business. The COVID-19 pandemic has resulted in significant governmental measures in many countries being implemented to control the spread of COVID-19, including restrictions on manufacturing and the movement of employees. As a result, our suppliers may not have the materials, capacity, or capability to supply our components according to our schedule and specifications. Further, there may be logistics issues, including our ability and our supply chain’s ability to quickly ramp up production, and transportation demands that may cause further delays. If our suppliers’ operations are curtailed, we may need to seek alternate sources of supply, which may be more expensive. Alternate sources may not be available or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations. The duration of the disruptions and restrictions on the ability to travel, quarantines and temporary closures of the facilities of our suppliers, as well as general limitations on movement in the region, are unknown and they may recur and the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time. Should the production and distribution closures continue for an extended period of time or recur, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows. Business disruptions could also negatively affect the sources and availability of components and materials that are essential to the operation of our business.

The COVID-19 pandemic could negatively impact our planned or potential strategic initiatives.

Our strategy includes a number of plans to support the growth of our core businesses, including continuing to selectively explore opportunities to pursue investments, commercial alliances, partnerships, joint ventures, acquisitions, dispositions and other strategic initiatives and transactions, domestically and internationally. The extent to which the COVID-19 pandemic impacts these potential strategic initiatives will depend on future developments that are highly uncertain. If the disruptions posed by the COVID-19 pandemic and related government measures, economic downturns or other matters of global concern continue for an extensive period of time or recur, our ability to use the frequencies we currently use and/pursue and consummate planned 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 replacement spectrum.  In addition, the legislative and executive branches of the U.S. government and foreign governments often consider legislation and regulatory requirements thatpotential strategic initiatives could affect us, as could the actions that the FCC and foreign regulatory bodies take.  We cannot predict the outcomes of these legislative or regulatory proceedings or their effect on our business.be materially adversely affected.


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In addition, third parties have or may oppose some of our license applications and pending and future requests for extensions, modifications, waivers and approvals of our licenses.  Even if we have fully complied with all of the required reporting, filing and other requirements in connection with our authorizations, it is possible a regulator could decline to grant certain of our applications or requests for authority, or could revoke, terminate, condition or decline to modify, extend or renew certain of our authorizations or licenses.

ItemITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
Issuer Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 
There were noPursuant to a stock repurchase program approved by our board of directors, we are authorized to repurchase up to $500.0 million of our Class A common stock through December 31, 2020. During the year ended December 31, 2019, we did not repurchase any common stock.

The following table provides information regarding repurchases of our Class A common stock forduring the ninethree months ended SeptemberJune 30, 2017.2020:
PeriodTotal Number of Shares (Or Units) PurchasedAverage Price Paid Per Share (or Unit)Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Program
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The Plans or Program (1)
April 1 - 30— $— — $494,109 
May 1 - 31— — — 494,109 
June 1 - 30— — — 494,109 
Total— $— — $494,109 
(1) On October 29, 2019, our Board of Directors authorized us to repurchase up to $500 million of our Class A common stock through and including December 31, 2020.  Purchases under our repurchase authorization may be made through privately negotiated transactions, open market repurchases, one or more trading plans in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or otherwise, subject to market conditions and other factors.  We may elect to purchase some or all, or not to purchase the maximum amount or any of, the remaining shares allowable under this program and we may also enter into additional share repurchase programs authorized by our Board of Directors. All shares repurchased reflected in the table above have been converted to treasury shares.

ItemITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
Not applicable
 
ItemITEM 4. MINE SAFETY DISCLOSURES
 
Not applicable
 
ItemITEM 5. OTHER INFORMATION

Our BoardFinancial Results

On August 6, 2020, we issued a press release (the “Press Release”) announcing our financial results for the quarter ended June 30, 2020. A copy of Directors previously authorized usthe Press Release is furnished herewith as Exhibit 99.1. The foregoing information, including the exhibits related thereto, are furnished in response to repurchase up to $500.0 millionItem 2.02 of our Class A common stock through December 31, 2017.  On November 1, 2017, our BoardForm 8-K and shall not be deemed filed for the purposes of Directors extended this authorization to repurchase up to $500.0 millionSection 18 of outstanding shares of our Class A common stock through open market repurchases including, without limitation, one or more trading plans in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended through(the “Exchange Act”), or otherwise, and including December 31, 2018.shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.




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ItemITEM 6. EXHIBITS
Exhibit No.Description
31.1(H)
31.2(H)
32.1(I)
101.INS
99.1(I)
101.INSXBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema.
101.CALXBRL Taxonomy Extension Calculation Linkbase.
101.DEFXBRL Taxonomy Extension Definition Linkbase.
101.LABXBRL Taxonomy Extension Label Linkbase.
101.PREXBRL Taxonomy Extension Presentation Linkbase.

(H)Filed herewith.
(I)Furnished herewith
*Incorporated by reference.
**Constitutes a management contract or compensatory plan or arrangement.
***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.



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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this reportForm 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
 
ECHOSTAR CORPORATION
Date: November 8, 2017August 6, 2020By:
/s/ Michael T. Dugan
Michael T. Dugan
Chief Executive Officer, President and Director
(Principal Executive Officer)
Date: November 8, 2017August 6, 2020By:
/s/ David J. Rayner
David J. Rayner
Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer
(Principal Financial and Accounting Officer)


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