Document and Company Informatio
Document and Company Information (USD $) | ||||
In Thousands, except Share data | 6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
| Jul. 24, 2009
Class A common stock | Jul. 24, 2009
Class B common stock |
Entity Registrant Name | DISH Network Corporation | |||
Entity Central Index Key | 0001001082 | |||
Document Type | 10-Q | |||
Document Period End Date | 2009-06-30 | |||
Amendment Flag | false | |||
Current Fiscal Year End Date | --12-31 | |||
Entity Well-known Seasoned Issuer | Yes | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Filer Category | Large Accelerated Filer | |||
Entity Public Float | $5,900,000 | |||
Entity Common Stock, Shares Outstanding | 208,369,696 | 238,435,208 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Current Assets: | ||
Cash and cash equivalents | $112,861 | $98,574 |
Marketable investment securities | 1,208,054 | 460,558 |
Trade accounts receivable - other, net of allowance for doubtful accounts of $13,079 and $15,207, respectively | 826,148 | 799,139 |
Trade accounts receivable - EchoStar | 20,456 | 21,570 |
Inventories, net | 323,104 | 426,671 |
Deferred tax assets | 110,789 | 86,331 |
Income tax receivable | 0 | 148,747 |
Other current assets | 182,938 | 56,394 |
Total current assets | 2,784,350 | 2,097,984 |
Noncurrent Assets: | ||
Restricted cash and marketable investment securities | 145,289 | 83,606 |
Property and equipment, net of accumulated depreciation of $2,556,766 and $2,432,959, respectively | 2,794,368 | 2,663,289 |
FCC authorizations | 1,391,441 | 1,391,441 |
Marketable and other investment securities | 94,577 | 158,296 |
Other noncurrent assets, net | 55,735 | 65,431 |
Total noncurrent assets | 4,481,410 | 4,362,063 |
Total assets | 7,265,760 | 6,460,047 |
Current Liabilities: | ||
Trade accounts payable - other | 233,487 | 174,216 |
Trade accounts payable - EchoStar | 222,779 | 297,629 |
Deferred revenue and other | 810,748 | 830,529 |
Accrued programming | 961,416 | 1,020,086 |
Other accrued expenses | 748,544 | 619,210 |
3% Convertible Subordinated Note due 2011 | 25,000 | 25,000 |
Current portion of long-term debt and capital lease obligations | 22,866 | 13,333 |
Total current liabilities | 3,024,840 | 2,980,003 |
Long-Term Obligations, Net of Current Portion: | ||
Long-term debt and capital lease obligations, net of current portion | 5,078,790 | 4,969,423 |
Deferred tax liabilities | 289,700 | 235,551 |
Long-term deferred revenue, distribution and carriage payments and other long-term liabilities | 392,379 | 224,176 |
Total long-term obligations, net of current portion | 5,760,869 | 5,429,150 |
Total liabilities | 8,785,709 | 8,409,153 |
Stockholders' Equity (Deficit): | ||
Additional paid-in capital | 2,111,876 | 2,090,527 |
Accumulated other comprehensive income (loss) | (57,714) | (107,998) |
Accumulated earnings (deficit) | (2,116,700) | (2,492,804) |
Treasury stock, at cost | (1,462,380) | (1,443,786) |
Total stockholders' equity (deficit) | (1,519,949) | (1,949,106) |
Total liabilities and stockholders' equity (deficit) | 7,265,760 | 6,460,047 |
Class A common stock | ||
Stockholders' Equity (Deficit): | ||
Common Stock | 2,585 | 2,571 |
Class B common stock | ||
Stockholders' Equity (Deficit): | ||
Common Stock | 2,384 | 2,384 |
Common Stock Class C | ||
Stockholders' Equity (Deficit): | ||
Common Stock | $0 | $0 |
1_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
In Thousands, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Allowance for doubtful accounts on trade accounts receivable | $13,079 | $15,207 |
Accumulated depreciation on property and equipment | $2,556,766 | $2,432,959 |
Class A common stock | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 1,600,000,000 | 1,600,000,000 |
Common stock, shares issued | 258,465,402 | 257,117,733 |
Common stock, shares outstanding | 208,367,249 | 208,968,052 |
Class B common stock | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 238,435,208 | 238,435,208 |
Common stock, shares outstanding | 238,435,208 | 238,435,208 |
Common Stock Class C | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Revenue: | ||||
Subscriber-related revenue | $2,878,115 | $2,875,580 | $5,743,054 | $5,686,006 |
Equipment sales and other revenue | 19,137 | 28,785 | 51,483 | 53,837 |
Equipment sales - EchoStar | 2,526 | 3,462 | 5,209 | 6,100 |
Transitional services and other revenue - EchoStar | 3,923 | 7,163 | 9,276 | 13,441 |
Total revenue | 2,903,701 | 2,914,990 | 5,809,022 | 5,759,384 |
Costs and Expenses: | ||||
Subscriber-related expenses (exclusive of depreciation shown below - Note 11) | 1,532,076 | 1,423,997 | 3,082,154 | 2,868,638 |
Satellite and transmission expenses (exclusive of depreciation shown below - Note 11): | ||||
EchoStar | 87,198 | 77,697 | 167,955 | 155,950 |
Other | 8,718 | 7,575 | 15,739 | 15,239 |
Equipment, transitional services and other cost of sales | 27,094 | 30,359 | 67,593 | 62,173 |
Subscriber acquisition costs: | ||||
Cost of sales - subscriber promotion subsidies - EchoStar (exclusive of depreciation shown below - Note 11) | 71,786 | 32,284 | 95,922 | 63,071 |
Other subscriber promotion subsidies | 248,171 | 297,773 | 465,731 | 577,970 |
Subscriber acquisition advertising | 68,315 | 41,359 | 118,822 | 105,331 |
Total subscriber acquisition costs | 388,272 | 371,416 | 680,475 | 746,372 |
General and administrative expenses - EchoStar | 12,413 | 12,670 | 23,555 | 26,440 |
General and administrative expenses | 143,466 | 122,321 | 269,231 | 238,082 |
Tivo litigation expense | 196,405 | 0 | 196,405 | 0 |
Depreciation and amortization (Note 11) | 245,300 | 248,247 | 468,593 | 520,614 |
Total costs and expenses | 2,640,942 | 2,294,282 | 4,971,700 | 4,633,508 |
Operating income (loss) | 262,759 | 620,708 | 837,322 | 1,125,876 |
Other Income (Expense): | ||||
Interest income | 11,262 | 13,372 | 16,046 | 27,473 |
Interest expense, net of amounts capitalized | (91,132) | (93,231) | (175,069) | (183,043) |
Other, net | (44,334) | (11,500) | (40,157) | (18,528) |
Total other income (expense) | (124,204) | (91,359) | (199,180) | (174,098) |
Income (loss) before income taxes | 138,555 | 529,349 | 638,142 | 951,778 |
Income tax (provision) benefit, net | (75,135) | (193,464) | (262,038) | (357,310) |
Net income (loss) | 63,420 | 335,885 | 376,104 | 594,468 |
Comprehensive Income (Loss): | ||||
Foreign currency translation adjustments | 274 | 87 | (106) | (1,577) |
Unrealized holding gains (losses) on available-for-sale securities | 59,155 | (10,318) | 44,807 | (59,209) |
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss) | 7,171 | 0 | 5,455 | (4,523) |
Deferred income tax (expense) benefit | (103) | (1,999) | 128 | 19,224 |
Comprehensive income (loss) | $129,917 | $323,655 | $426,388 | $548,383 |
Weighted-average common shares outstanding - Class A and B common stock: | ||||
Basic | 446,752 | 449,724 | 446,813 | 449,263 |
Diluted | 447,421 | 460,853 | 448,263 | 460,682 |
Earnings per share - Class A and B common stock: | ||||
Basic net income (loss) per share | 0.14 | 0.75 | 0.84 | 1.32 |
Diluted net income (loss) per share | 0.14 | 0.73 | 0.84 | 1.3 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash Flows From Operating Activities: | ||
Net income (loss) | $376,104 | $594,468 |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and amortization | 468,593 | 520,614 |
Equity in losses (earnings) of affiliates | 4,149 | 1,069 |
Realized and unrealized losses (gains) on investments | 39,687 | 15,227 |
Non-cash, stock-based compensation | 7,275 | 7,801 |
Deferred tax expense (benefit) | 29,819 | 15,207 |
Other, net | 2,412 | 3,407 |
Change in noncurrent assets | 5,095 | 5,372 |
Change in long-term deferred revenue, distribution and carriage payments and other long-term liabilities | 47,606 | 72,086 |
Changes in current assets and current liabilities, net | 265,103 | 106,638 |
Net cash flows from operating activities | 1,245,843 | 1,341,889 |
Cash Flows From Investing Activities: | ||
Purchases of marketable investment securities | (1,767,305) | (1,574,637) |
Sales and maturities of marketable investment securities | 1,094,018 | 1,132,729 |
Purchases of property and equipment | (466,733) | (528,342) |
Change in restricted cash and marketable investment securities | (62,473) | (105) |
Deposit for 700 MHz wireless spectrum acquisition | 0 | (711,871) |
Other | (529) | (2,600) |
Net cash flows from investing activities | (1,203,022) | (1,684,826) |
Cash Flows From Financing Activities: | ||
Distribution of cash and cash equivalents to EchoStar in connection with the Spin-off | 0 | (585,147) |
Proceeds from issuance of 7 3/4% Senior Notes due 2015 | 0 | 750,000 |
Deferred debt issuance costs | 0 | (5,033) |
Repayment of long-term debt and capital lease obligations | (11,814) | (5,018) |
Class A common stock repurchases | (18,594) | 0 |
Net proceeds from Class A common stock options exercised and Class A common stock issued under the Employee Stock Purchase Plan | 1,874 | 18,478 |
Net cash flows from financing activities | (28,534) | 173,280 |
Net increase (decrease) in cash and cash equivalents | 14,287 | (169,657) |
Cash and cash equivalents, beginning of period | 98,574 | 919,542 |
Cash and cash equivalents, end of period | 112,861 | 749,885 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 177,614 | 180,783 |
Capitalized interest | 8,451 | 7,972 |
Cash received for interest | 8,321 | 20,978 |
Cash paid for income taxes | 245,976 | 251,282 |
Employee benefits paid in Class A common stock | 12,198 | 19,374 |
Vendor financing | 0 | 5,814 |
Satellites and other assets financed under capital lease obligations | 130,714 | 0 |
Net assets contributed in connection with the Spin-off, excluding cash and cash equivalents | $0 | $2,765,398 |
Organization and Business Activ
Organization and Business Activities | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Organization and Business Activities [Abstract] | |
Organization and Business Activities | 1. Organization and Business Activities Principal Business DISH Network Corporation is a holding company. Its subsidiaries (which together with DISH Network Corporation are referred to as DISH Network, the Company, we, us and/or our) operate the DISH Network direct broadcast satellite (DBS) subscription television service in the United States which had 13.610million subscribers as of June30, 2009. We have deployed substantial resources to develop the DISH Network DBS System. The DISH Network DBS System consists of our licensed Federal Communications Commission (FCC) authorized DBS and Fixed Satellite Service (FSS) spectrum, our owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, in-home service and call center operations and certain other assets utilized in our operations. Spin-off of Technology and Certain Infrastructure Assets On January1, 2008, we completed a tax-free distribution of our technology and set-top box business and certain infrastructure assets (the Spin-off) into a separate publicly-traded company, EchoStar Corporation (EchoStar). DISH Network and EchoStar now operate as separate publicly-traded companies, and neither entity has any ownership interest in the other. However, a substantial majority of the voting power of both companies is owned beneficially by Charles W. Ergen, our Chairman, President and Chief Executive Officer. The two entities consist of the following: DISH Network Corporation which retained its DISH Network subscription television business and EchoStar Corporation which sells equipment, including set-top boxes and related components, to DISH Network and international customers, and provides digital broadcast operations and satellite services to DISH Network and other customers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and with the instructions to Form 10-Q and Article10 of RegulationS-X for interim financial information. Accordingly, these statements do not include all of the information and notes required for complete financial statements prepared under GAAP. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June30, 2009 are not necessarily indicative of the results that may be expected for the year ending December31, 2009. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December31, 2008 (2008 10-K). Certain prior period amounts have been reclassified to conform to the current period presentation. Further, in connection with preparation of the condensed consolidated financial statements and in accordance with the recently issued Statement of Financial Accounting Standards No.165 Subsequent Events (SFAS 165), we evaluated subsequent events after the balance sheet date of June30, 2009 through August10, 2009. Principles of Consolidation We consolidate all majority owned subsidiaries and investments in entities in which we have controlling influence. Non-majority owned investments are accounted for using the equity method when we have the ability to significantly influence the operating decisions of the investee. When we do not have the ability to significantly influence the operating decisions of an investee, the cost method is used. For entities that are considered variable interest entities we apply the provisions of Financial Accounting Standards Board (FASB) Interpretation No.46R, Consolidation of Variable Interest Entities An Interpretation of ARB No.51 (FIN 46R). All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, inventory allowances, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair values of assets and liabilities acquired in business combinations, capital leases, asset impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Illiquid credit markets and general downward economic condition |
Basic and Diluted Income
Basic and Diluted Income (Loss) Per Share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Basic and Diluted Income (Loss) Per Share [Abstract] | |
Basic and Diluted Income (Loss) Per Share | 3. Basic and Diluted Income (Loss) Per Share Statement of Financial Accounting Standards No.128, Earnings Per Share (SFAS 128) requires entities to present both basic earnings per share (EPS) and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income (loss)by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock awards were exercised and convertible securities were converted to common stock. The potential dilution from our subordinated notes convertible into common stock was computed using the if converted method. The potential dilution from stock awards was computed using the treasury stock method based on the average market value of our ClassA common stock. The following table reflects the basic and diluted weighted-average shares outstanding used to calculate basic and diluted earnings per share. Earnings per share amounts for all periods are presented below in accordance with the requirements of SFAS 128. For the Three Months For the Six Months Ended June 30, Ended June 30, 2009 2008 2009 2008 Basic net income (loss) $ 63,420 $ 335,885 $ 376,104 $ 594,468 Interest on dilutive subordinated convertible notes, net of related tax effect 2,461 234 4,922 Diluted net income (loss) $ 63,420 $ 338,346 $ 376,338 $ 599,390 Weighted-average common shares outstanding ClassA and B common stock: Basic 446,752 449,724 446,813 449,263 Dilutive impact of stock awards outstanding 669 2,348 968 2,638 Dilutive impact of subordinated notes convertible into common shares 8,781 482 8,781 Diluted 447,421 460,853 448,263 460,682 Earnings per share ClassA and B common stock: Basic net income (loss)per share $ 0.14 $ 0.75 $ 0.84 $ 1.32 Diluted net income (loss)per share $ 0.14 $ 0.73 $ 0.84 $ 1.30 Shares of ClassA common stock issuable upon conversion of: 3% Convertible Subordinated Note due 2010 (repaid during third quarter 2008) 8,299 8,299 3% Convertible Subordinated Note due 2011 482 482 482 482 As of June30, 2009 and 2008, there were stock awards to purchase 10.7million and 3.6million shares of ClassA common stock outstanding, respectively, not included in the above denominator as their effect is antidilutive. In addition, during the three months ended June30, 2009, the convertible note is not included in the diluted EPS calculation as its conversion would be antidilutive. Vesting of options and rights to acquire shares of our ClassA common stock (Restricted performance units) granted pursuant to our long-term incentive plans is contin |
Marketable Investment Securitie
Marketable Investment Securities, Restricted Cash and Other Investment Securities | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Marketable Investment Securities Restricted Cash and Other Investment Securities [Abstract] | |
Marketable Investment Securities, Restricted Cash and Other Investment Securities | 4. Marketable Investment Securities, Restricted Cash and Other Investment Securities Our marketable investment securities, restricted cash and other investment securities consist of the following: As of June 30, December 31, 2009 2008 (In thousands) Marketable investment securities: Current marketable investment securities VRDNs $ 837,857 $ 239,611 Current marketable investment securities strategic 139,814 13,561 Current marketable investment securities other 230,383 207,386 Total current marketable investment securities 1,208,054 460,558 Restricted marketable investment securities (1) 12,936 22,407 Noncurrent marketable investment securities ARS and MBS (2) 91,772 113,394 Total marketable investment securities 1,312,762 596,359 Restricted cash and cash equivalents (1) 132,353 61,199 Other investment securities: Other investment securities cost method 2,805 15,795 Other investment securities equity method 26,784 Other investment securities fair value method 2,323 Total other investment securities (2) 2,805 44,902 Total marketable investment securities, restricted cash and other investment securities $ 1,447,920 $ 702,460 (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in Restricted cash and marketable investment securities on our Condensed Consolidated Balance Sheets. (2) Noncurrent marketable investment securities auction rate securities (ARS), mortgage backed securities (MBS) and other investment securities are included in Marketable and other investment securities on our Condensed Consolidated Balance Sheets. Marketable Investment Securities Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale. Current Marketable Investment Securities VRDNs Variable rate demand notes (VRDNs) are long-term floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised of many municipalities and financial institutions that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows for VRDNs to be liquidated on a same day or on a five business day settlement basis. Current Marketable Investment Securities Strategic Our strategic marketable investment securities are highly speculative and have experienced and continue to experience volatility. As of June30, 2009, a significant portion of our strategic investment portfolio consisted of securities of a few issuers and the value of that portfolio therefore depends on those issuers. We account for debt securities, pu |
Inventories
Inventories | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Inventories [Abstract] | |
Inventories | 5. Inventories Inventories consist of the following: As of June 30, December 31, 2009 2008 (In thousands) Finished goods DBS $ 166,840 $ 238,343 Raw materials 125,084 146,353 Work-in-process used 62,672 61,663 Work-in-process new 1,239 2,414 Subtotal 355,835 448,773 Inventory allowance (32,731 ) (22,102 ) Inventories, net $ 323,104 $ 426,671 |
Satellites
Satellites | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Satellites [Abstract] | |
Satellites | 6. Satellites We currently utilize twelve satellites in geostationary orbit approximately 22,300 miles above the equator, five of which are owned by us. Each of the owned satellites had an original estimated minimum useful life of at least 12years. We currently lease capacity on five satellites from EchoStar with terms of up to two years and we account for these as operating leases. (See Note 12 for further discussion of our satellite leases with EchoStar.) We also lease two satellites from third parties, which are accounted for as capital leases pursuant to Statement of Financial Accounting Standards No.13, Accounting for Leases (SFAS 13). The capital leases are depreciated over the shorter of the economic life or the term of the satellite agreement. Operation of our programming service requires that we have adequate satellite transmission capacity for the programming we offer. Moreover, current competitive conditions require that we continue to expand our offering of new programming, particularly by expanding local HD coverage and offering more HD national channels. While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity to recover the transmission of certain critical programming, our backup capacity is limited. In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as necessary to remain competitive and thus may have a material adverse effect on our business, financial condition and results of operations. Prior to 2009, certain satellites in our fleet have experienced anomalies, some of which have had a significant adverse impact on their remaining life or commercial operation. There can be no assurance that future anomalies will not cause further losses, which could further impact the remaining life or commercial operation of any of these satellites. See Long-Lived Satellite Assets below for further discussion of evaluation of impairment. 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 do not anticipate carrying insurance for any of the in-orbit satellites that we own, and we will bear the risk associated with any in-orbit satellite failures. Recent developments with respect to our satellites are discussed below. Owned Satellites EchoStar V. EchoStar V was originally designed with a minimum 12-year design life. Momentum wheel failures in prior years, together with relocation of the satellite between orbital locations, resulted in increased fuel consumption, as disclosed in previous SEC filings. During 2005, as a result of this increased fuel consumption, we reduced the remaining estimated useful life of the satellite and as of October2008, the satellite was fully depreciated. In late July2009, it was determined that the satellite had less fuel remaini |
Long Term Debt
Long Term Debt | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Long-Term Debt [Abstract] | |
Long-Term Debt | 7. Long-Term Debt Fair Value of our Long-Term Debt The following table summarizes the carrying value and fair values of our debt facilities as of June 30, 2009 and December31, 2008: As of June 30, 2009 December 31, 2008 Carrying Carrying Value Fair Value Value Fair Value (In thousands) 3% Convertible Subordinated Note due 2011 $ 25,000 $ 24,805 $ 25,000 $ 23,768 6 3/8% Senior Notes due 2011 1,000,000 975,000 1,000,000 899,000 7% Senior Notes due 2013 500,000 476,250 500,000 419,000 6 5/8% Senior Notes due 2014 1,000,000 922,500 1,000,000 840,300 7 3/4% Senior Notes due 2015 750,000 718,125 750,000 600,000 7 1/8% Senior Notes due 2016 1,500,000 1,403,445 1,500,000 1,246,890 Mortgages and other notes payable 44,429 44,429 46,211 46,211 Subtotal $ 4,819,429 $ 4,564,554 $ 4,821,211 $ 4,075,169 Capital lease obligations (1) 307,227 N/A 186,545 N/A Total long-term debt (including current portion) $ 5,126,656 $ 4,564,554 $ 5,007,756 $ 4,075,169 (1) Pursuant to SFAS 107 Disclosures about Fair Value of Financial Instruments, disclosure regarding fair value of capital leases is not required. Capital Lease Obligations Ciel II, a Canadian DBS satellite, was launched in December2008 and commenced commercial operation at the 129 degree orbital location in February2009. We have leased 100% of the capacity on the satellite for an initial term of ten years. Prior to the launch, we pre-paid $131million to SES Americom in connection with the lease agreement and we capitalized $16million of interest related to this satellite. In accordance with Statement of Financial Accounting Standards No. 13, Accounting for Leases (SFAS 13), we have accounted for this agreement as a capital lease asset by recording $277million as the estimated fair value of the satellite and recording a capital lease obligation in the amount of $130million. As of June30, 2009 and December31, 2008, we had $500million and $223million, respectively, capitalized for satellites acquired under capital leases included in Property and equipment, net with related accumulated depreciation of $45million and $26million, respectively. This increase during the six months ended June30, 2009 related to the Ciel II satellite discussed above. In our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), we recognized depreciation expense on satellites acquired under capital lease agreements as follows: For the Three Months For the Six Months Ended June 30, Ended June 30, 2009 2008 2009 2008 (In thousands) Depreciation expense capital leases $ 10,632 $ 3,724 $ 18,964 $ 7,447 Future minimum lease payments under our capital lease obligati |
Stockholders Equity
Stockholders Equity (Deficit) | |
1/1/2009 - 6/30/2009
USD / shares | |
Stockholders' Equity (Deficit) [Abstract] | |
Stockholders' Equity (Deficit) | 8. Stockholders Equity (Deficit) Common Stock Repurchase Program Our board of directors previously authorized stock repurchases of up to $1.0billion of our ClassA common stock. During the six months ended June30, 2009, we repurchased 1.9million shares of our common stock for $19million. As of June30, 2009, we may repurchase up to $981million under this plan. |
Stock Based Compensation
Stock Based Compensation | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | 9. Stock-Based Compensation Stock Incentive Plans In connection with the Spin-off, as permitted by our existing stock incentive plans and consistent with the Spin-off exchange ratio, each DISH Network stock option was converted into two stock options as follows: an adjusted DISH Network stock option for the same number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.831219. a new EchoStar stock option for one-fifth of the number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.843907. Similarly, each holder of DISH Network restricted stock units retained his or her DISH Network restricted stock units and received one EchoStar restricted stock unit for every five DISH Network restricted stock units that they held. Consequently, the fair value of the DISH Network stock award and the new EchoStar stock award immediately following the Spin-off was equivalent to the fair value of such stock award immediately prior to the Spin-off. We maintain stock incentive plans to attract and retain officers, directors and key employees. Stock awards under these plans include both performance and non-performance based stock incentives. As of June30, 2009, we had outstanding under these plans stock options to acquire 22.6million shares of our ClassA common stock and 0.9million restricted stock units. Stock options granted through June30, 2009 were granted with exercise prices equal to or greater than the market value of our ClassA common stock at the date of grant and with a maximum term of ten years. While historically we have issued stock awards subject to vesting, typically at the rate of 20% per year, some stock awards have been granted with immediate vesting and other stock awards vest only upon the achievement of certain company-wide objectives. As of June30, 2009, we had 80.0million shares of our ClassA common stock available for future grant under our stock incentive plans. The 2009 Stock Incentive Plan, which was approved at the annual meeting of shareholders on May11, 2009, allows us to grant new stock awards following the expiration of our 1999 Stock Incentive Plan on April16, 2009. As of June30, 2009, the following stock awards were outstanding: As of June 30, 2009 DISH Network Awards EchoStar Awards Restricted Restricted Stock Stock Stock Stock Stock Awards Outstanding Options Units Options Units Held by DISH Network employees 19,087,050 467,735 1,533,770 77,366 Held by EchoStar employees 3,534,866 410,374 N/A N/A Total 22,621,916 878,109 1,533,770 77,366 We are responsible for fulfilling all stock awards related to DISH Network common stock and EchoStar is responsible for fulfilling all stock awards related to EchoStar common |
Commitments and Contingencies
Commitments and Contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Commitments We have not yet procured a contract for the launch of our EchoStar XV satellite. While the cost of this launch will depend upon the terms and conditions of the contract, we estimate that the cost could range from approximately $90 million to $120 million. We anticipate incurring this cost between the current period and the expected launch of the satellite in late 2010. Guarantees In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar. We remain the guarantor under those capital leases for payments totaling approximately $465million over the next eight years. In addition, during the first quarter of 2008, EchoStar entered into a satellite transponder service agreement for Nimiq 5 for a total of $535million in payments through 2024. We sublease this capacity from EchoStar and have also guaranteed its obligation under this agreement. As of June30, 2009, the remaining obligation under this agreement was $532million. As of June30, 2009, we have not recorded a liability on the balance sheet for any of these guarantees. Contingencies In connection with the Spin-off, we entered into a separation agreement with EchoStar, which provides among other things for the division of certain liabilities, including liabilities resulting from litigation. Under the terms of the separation agreement, EchoStar has assumed certain liabilities that relate to its business including certain designated liabilities for acts or omissions prior to the Spin-off. Certain specific provisions govern intellectual property related claims under which, generally, EchoStar will only be liable for its acts or omissions following the Spin-off and we will indemnify EchoStar for any liabilities or damages resulting from intellectual property claims relating to the period prior to the Spin-off as well as our acts or omissions following the Spin-off. Acacia During 2004, Acacia Media Technologies (Acacia) filed a lawsuit against us and EchoStar in the United States District Court for the Northern District of California. The suit also named DirecTV, Comcast, Charter, Cox and a number of smaller cable companies as defendants. Acacia is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. The suit alleges infringement of United States Patent Nos. 5,132,992, 5,253,275, 5,550,863, 6,002,720 and 6,144,702, which relate to certain systems and methods for transmission of digital data. In March2008, the Court issued an order outlining a schedule for filing dispositive invalidity motions based on its claim constructions. Acacia has agreed to stipulate to invalidity based on the Courts claim constructions in order to proceed immediately to the Federal Circuit on appeal. The Court, however, has permitted us to file additional invalidity motions, which we have done. The Court has not yet ruled on those motions. We intend to vigorously defend this case. In the event that a Court ultimately determines that we infringe any of the patents, we may be subject to substantial damages, which may include treble damages, |
Depreciation and Amortization E
Depreciation and Amortization Expense | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Depreciation and Amortization Expense [Abstract] | |
Depreciation and Amortization Expense | 11. Depreciation and Amortization Expense Depreciation and amortization expense consists of the following: For the Three Months For the Six Months Ended June 30, Ended June 30, 2009 2008 2009 2008 (In thousands) Equipment leased to customers $ 207,382 $ 209,761 $ 399,950 $ 422,039 Satellites 22,181 23,564 42,064 50,015 Furniture, fixtures, equipment and other 14,205 13,620 23,503 41,857 Identifiable intangible assets subject to amortization 291 97 581 4,428 Buildings and improvements 1,241 1,205 2,495 2,275 Total depreciation and amortization $ 245,300 $ 248,247 $ 468,593 $ 520,614 Cost of sales and operating expense categories included in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to customers. |
Related Party Transactions with
Related Party Transactions with EchoStar | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Related Party Transactions with EchoStar [Abstract] | |
Related Party Transactions with EchoStar | 12. Related Party Transactions with EchoStar Following the Spin-off, EchoStar has operated as a separate public company and we have no continued ownership interest in EchoStar. However, a substantial majority of the voting power of the shares of both companies is owned beneficially by our Chairman, President and Chief Executive Officer, Charles W. Ergen. EchoStar is our primary supplier of set-top boxes and digital broadcast operations and our key supplier of transponder leasing. Generally the prices charged for products and services provided under the agreements entered into in connection with the Spin-off are based on pricing equal to EchoStars cost plus a fixed margin (unless noted differently below), which will vary depending on the nature of the products and services provided. Prior to the Spin-off, these products were provided and services were performed internally at cost. In connection with the Spin-off, we and EchoStar also entered into certain transitional services agreements pursuant to which we obtain certain services and rights from EchoStar, EchoStar obtains certain services and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our respective businesses. Subsequent to the Spin-off, we also entered into certain agreements with EchoStar and may enter into additional agreements with EchoStar in the future. The following is a summary of the terms of the principal agreements that we have entered into with EchoStar that may have an impact on our results of operations. Equipment sales EchoStar Remanufactured Receiver Agreement. We entered into a remanufactured receiver agreement with EchoStar under which EchoStar has the right to purchase remanufactured receivers and accessories from us for a two-year period ending, January1, 2010. In August 2009, we and EchoStar agreed to extend this agreement through January 1, 2011. Under the remanufactured receiver agreement, EchoStar has the right, but not the obligation, to purchase remanufactured receivers and accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased. EchoStar may terminate the remanufactured receiver agreement for any reason upon sixty days written notice to us. We may also terminate this agreement if certain entities acquire us. Transitional services and other revenue EchoStar Transition Services Agreement. We entered into a transition services agreement with EchoStar pursuant to which EchoStar has the right, but not the obligation, to receive the following services from us: finance, information technology, benefits administration, travel and event coordination, human resources, human resources development (training), program management, internal audit, legal, accounting and tax, and other support services. The fees for the services provided under the transition services agreement are cost plus a fixed margin, which varies depending on the nature of the services provided. The transition services agreement has a term of two years ending on January 1, 2010. EchoStar may terminate the transition services agreement with respect to a particula |