Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 09, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | DISH DBS CORP | |
Entity Central Index Key | 1,042,642 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,015 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 126,436 | $ 364,673 |
Marketable investment securities | 68,509 | 185,513 |
Trade accounts receivable, net of allowance for doubtful accounts of $12,897 and $15,056, respectively | 651,914 | 628,278 |
Inventory | 304,903 | 320,899 |
Other current assets | 125,871 | 189,480 |
Total current assets | 1,277,633 | 1,688,843 |
Noncurrent Assets: | ||
Restricted cash, cash equivalents and marketable investment securities | 67,199 | 72,407 |
Property and equipment, net | 1,446,165 | 1,632,161 |
FCC authorizations | 637,081 | 636,275 |
Other investment securities | 109,546 | 113,460 |
Other noncurrent assets, net | 284,681 | 236,041 |
Total noncurrent assets | 2,544,672 | 2,690,344 |
Total assets | 3,822,305 | 4,379,187 |
Current Liabilities: | ||
Trade accounts payable | 240,255 | 361,759 |
Deferred revenue and other | 674,113 | 693,595 |
Accrued programming | 1,535,187 | 1,571,273 |
Accrued interest | 187,788 | 236,509 |
Other accrued expenses (Note 8) | 781,896 | 759,639 |
Current portion of long-term debt and capital lease obligations | 1,363,415 | 1,064,474 |
Total current liabilities | 4,782,654 | 4,687,249 |
Long-Term Obligations, Net of Current Portion: | ||
Long-term debt and capital lease obligations, net of current portion | 10,635,643 | 12,046,173 |
Deferred tax liabilities | 470,164 | 485,099 |
Long-term deferred revenue and other long-term liabilities | 187,166 | 207,329 |
Total long-term obligations, net of current portion | 11,292,973 | 12,738,601 |
Total liabilities | 16,075,627 | 17,425,850 |
Commitments and Contingencies (Note 8) | ||
Stockholder's Equity (Deficit): | ||
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding | ||
Additional paid-in capital | 1,141,596 | 1,116,848 |
Accumulated other comprehensive income (loss) | (633) | 935 |
Accumulated earnings (deficit) | (13,394,572) | (14,168,047) |
Total DISH DBS stockholder's equity (deficit) | (12,253,609) | (13,050,264) |
Noncontrolling interests | 287 | 3,601 |
Total stockholder's equity (deficit) | (12,253,322) | (13,046,663) |
Total liabilities and stockholder's equity (deficit) | $ 3,822,305 | $ 4,379,187 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets: | |||
Allowance for doubtful accounts on trade accounts receivable | $ 12,897 | $ 15,056 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized | 1,000,000 | 1,000,000 | |
Common stock, shares issued | 1,015 | 1,015 | |
Common stock, shares outstanding | 1,015 | 1,015 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue: | ||||
Total Revenue | $ 3,334,444 | $ 3,491,559 | $ 10,110,973 | $ 10,606,330 |
Costs and Expenses (exclusive of depreciation shown separately below - Note 6): | ||||
Subscriber-related expenses | 2,088,244 | 2,182,555 | 6,347,849 | 6,543,542 |
Satellite and transmission expenses | 152,017 | 174,787 | 482,009 | 544,508 |
Cost of sales - equipment and other | 40,267 | 21,563 | 106,273 | 71,672 |
Subscriber acquisition costs: | ||||
Cost of sales - subscriber promotion subsidies | 7,914 | 15,660 | 32,952 | 58,144 |
Other subscriber acquisition costs | 73,614 | 153,465 | 219,420 | 419,023 |
Subscriber acquisition advertising | 105,350 | 146,565 | 313,779 | 390,319 |
Total subscriber acquisition costs | 186,878 | 315,690 | 566,151 | 867,486 |
General and administrative expenses | 161,577 | 182,679 | 506,855 | 487,287 |
Litigation expense (Note 8) | 295,695 | |||
Depreciation and amortization (Note 6) | 163,022 | 189,726 | 501,774 | 563,068 |
Total costs and expenses | 2,792,005 | 3,067,000 | 8,510,911 | 9,373,258 |
Operating income (loss) | 542,439 | 424,559 | 1,600,062 | 1,233,072 |
Other Income (Expense): | ||||
Interest income | 1,023 | 2,193 | 6,314 | 7,889 |
Interest expense, net of amounts capitalized | (196,039) | (212,655) | (597,911) | (655,889) |
Other, net | 25,470 | 40,259 | 12,088 | 43,684 |
Total other income (expense) | (169,546) | (170,203) | (579,509) | (604,316) |
Income (loss) before income taxes | 372,893 | 254,356 | 1,020,553 | 628,756 |
Income tax (provision) benefit, net | (90,689) | (94,426) | (246,999) | (321,325) |
Net income (loss) | 282,204 | 159,930 | 773,554 | 307,431 |
Less: Net income (loss) attributable to noncontrolling interests, net of tax | 932 | 1,506 | 2,399 | 2,948 |
Net income (loss) attributable to DISH DBS | 281,272 | 158,424 | 771,155 | 304,483 |
Comprehensive Income (Loss): | ||||
Net income (loss) | 282,204 | 159,930 | 773,554 | 307,431 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (1,372) | 232 | (1,629) | 1,078 |
Unrealized holding gains (losses) on available-for-sale securities | 18 | 118 | 108 | 53 |
Deferred income tax (expense) benefit, net | (4) | (43) | (47) | 24 |
Total other comprehensive income (loss), net of tax | (1,358) | 307 | (1,568) | 1,155 |
Comprehensive income (loss) | 280,846 | 160,237 | 771,986 | 308,586 |
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of tax | 932 | 1,506 | 2,399 | 2,948 |
Comprehensive income (loss) attributable to DISH DBS | 279,914 | 158,731 | 769,587 | 305,638 |
Subscriber-related | ||||
Revenue: | ||||
Total Revenue | 3,288,754 | 3,459,439 | 9,988,705 | 10,508,801 |
Costs and Expenses (exclusive of depreciation shown separately below - Note 6): | ||||
Subscriber-related expenses | 2,088,244 | 6,347,849 | ||
Equipment sales and other | ||||
Revenue: | ||||
Total Revenue | $ 45,690 | $ 32,120 | $ 122,268 | $ 97,529 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows From Operating Activities: | ||
Net income (loss) | $ 773,554 | $ 307,431 |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and amortization | 501,774 | 563,068 |
Realized and unrealized losses (gains) on investments | (13,134) | (41,509) |
Non-cash, stock-based compensation | 24,748 | 20,619 |
Deferred tax expense (benefit) | (15,762) | (9,025) |
Other, net | (76,333) | 4,714 |
Changes in current assets and current liabilities, net | (200,281) | 205,960 |
Net cash flows from operating activities | 994,566 | 1,051,258 |
Cash Flows From Investing Activities: | ||
(Purchases) Sales and maturities of marketable investment securities, net | 126,084 | (50,620) |
Purchases of property and equipment | (254,461) | (319,445) |
Purchases of strategic investments | (90,381) | |
Other, net | 15,998 | 19,300 |
Net cash flows from investing activities | (112,379) | (441,146) |
Cash Flows From Financing Activities: | ||
Redemption and repurchases of senior notes | (1,088,392) | (900,000) |
Payments made to parent of transferred businesses | (7,098) | |
Repayment of long-term debt and capital lease obligations | (29,275) | (29,858) |
Other, net | (2,760) | (349) |
Net cash flows from financing activities | (1,120,427) | (937,305) |
Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents | (238,240) | (327,193) |
Cash, cash equivalents, restricted cash and cash equivalents, beginning of period (Note 4) | 365,066 | 778,259 |
Cash, cash equivalents, restricted cash and cash equivalents, end of period (Note 4) | $ 126,826 | $ 451,066 |
Organization and Business Activ
Organization and Business Activities | 9 Months Ended |
Sep. 30, 2018 | |
Organization and Business Activities | |
Organization and Business Activities | 1. Principal Business DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our,” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. Our subsidiaries operate one business segment. Pay-TV We offer pay-TV services under the DISH ® brand and the Sling ® brand (collectively “Pay-TV” services). The DISH branded pay-TV service consists of, among other things, FCC licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, broadcast operations, customer service facilities, a leased fiber optic network, in-home service and call center operations, and certain other assets utilized in our operations (“DISH TV”). As a result of the completion of the Share Exchange with EchoStar, described below, we also design, develop and distribute receiver systems and provide digital broadcast operations, including satellite uplinking/downlinking, transmission and other services to third-party pay-TV providers. See Note 2 and Note 12 for further information. The Sling branded pay-TV services consist of, among other things, multichannel, live, linear streaming OTT Internet-based domestic, international and Latino video programming services (“Sling TV”). As of September 30, 2018, we had 12.656 million Pay-TV subscribers in the United States, including 10.286 million DISH TV subscribers and 2.370 million Sling TV subscribers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. 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 Article 10 of Regulation S-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. Our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. Certain prior period amounts have been reclassified to conform to the current period presentation. Principles of Consolidation We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary. Minority interests are recorded as noncontrolling interests or redeemable noncontrolling interests. See below for further information. Non-consolidated 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, these equity securities are classified as either marketable investment securities or other investments and recorded at fair value with changes recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation. On February 28, 2017, DISH Network and EchoStar and certain of their respective subsidiaries completed the transactions contemplated by the Share Exchange Agreement (the “Share Exchange Agreement”) that was previously entered into on January 31, 2017 (the “Share Exchange”). Pursuant to the Share Exchange Agreement, among other things, EchoStar transferred to us certain assets and liabilities of the EchoStar technologies and EchoStar broadcasting businesses, consisting primarily of the businesses that design, develop and distribute digital set-top boxes, provide satellite uplink services and develop and support streaming video technology, as well as certain investments in joint ventures, spectrum licenses, real estate properties and EchoStar’s ten percent non-voting interest in Sling TV Holding L.L.C. (the “Transferred Businesses”), and in exchange, we transferred to EchoStar the 6,290,499 shares of preferred tracking stock issued by EchoStar (the “EchoStar Tracking Stock”) and 81.128 shares of preferred tracking stock issued by Hughes Satellite Systems Corporation, a subsidiary of EchoStar (the “HSSC Tracking Stock,” and together with the EchoStar Tracking Stock, collectively, the “Tracking Stock”), that tracked the residential retail satellite broadband business of Hughes Network Systems, L.L.C. (“HNS”), a wholly-owned subsidiary of Hughes. In connection with the Share Exchange, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. See Note 12 for further information. As the Share Exchange was a transaction between entities that are under common control, accounting rules require that our Condensed Consolidated Financial Statements include the results of the Transferred Businesses for all periods presented, including periods prior to the completion of the Share Exchange. We initially recorded the Transferred Businesses at EchoStar’s historical cost basis. The difference between the historical cost basis of the Transferred Businesses and the net carrying value of the Tracking Stock was recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. The results of the Transferred Businesses were prepared from separate records maintained by EchoStar for the periods prior to March 1, 2017, and may not necessarily be indicative of the conditions that would have existed, or the results of operations, if the Transferred Businesses had been operated on a combined basis with our subsidiaries. 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 expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, 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 value of assets and liabilities acquired in business combinations, relative standalone selling prices of performance obligations, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, independent third-party retailer incentives, programming expenses and subscriber lives. Economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. Marketable Investment Securities Historically, we classified all marketable investment securities as available-for-sale, except for investments which were accounted for as trading securities, and adjusted the carrying amount of our available-for-sale securities to fair value and reported the related temporary unrealized gains and losses as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. Our trading securities were carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Subsequent to the adoption of ASU 2016-01 during the first quarter 2018, all equity securities are carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All debt securities are classified as available-for-sale. We adjust the carrying amount of our debt securities to fair value and report the related temporary unrealized gains and losses as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. Declines in the fair value of a marketable debt security which are determined to be “other-than-temporary” are recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), thus establishing a new cost basis for such investment. 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 apply 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; and quoted prices for identical or similar instruments in markets that are not active; and · Level 3, defined as unobservable inputs for which little or no market data exists, consistent with reasonably available assumptions made by other participants therefore requiring assumptions based on the best information available. As of September 30, 2018 and December 31, 2017, the carrying amount for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) was equal to or approximated fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are based on, among other things, available trade information, and/or an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. Revenue Recognition Our revenue is primarily derived from Pay-TV programming services that we provide to our subscribers. We also generate revenue from equipment rental fees and other hardware related fees, including DVRs and fees from subscribers with multiple receivers; advertising services; fees earned from our in-home service operations; warranty services; and sales of digital receivers and related equipment to third-party pay-TV providers. See Note 10 for further information, including revenue disaggregated by major source. Our residential video subscribers contract for individual services or combinations of services, as discussed above, the majority of which are generally capable of being distinct and are accounted for as separate performance obligations. We consider our installations for first time DISH TV subscribers to be a service. However, since we provide a significant integration service combining the installation with programming services, we have concluded that the installation is not distinct from programming and thus the installation and programming services are accounted for as a single performance obligation. We generally satisfy these performance obligations and recognize revenue as the services are provided, for example as the programming is broadcast to subscribers, as this best represents the transfer of control of the services to the subscriber. In cases where a subscriber is charged certain nonrefundable upfront fees, those fees are generally considered to be material rights to the subscriber related to the subscriber’s option to renew without having to pay an additional fee upon renewal. These fees are deferred and recognized over the estimated period of time during which the fee remains material to the customer, which we estimate to be less than one year. Revenues arising from our in-home service operations that are separate from the initial installation, such as mounting a TV on a subscriber’s wall, are generally recognized when these services are performed. For our residential video subscribers, we have concluded that the contract term under ASC 606 is one month and as a result the revenue recognized for these subscribers for a given month is equal to the amount billed in that month, except for certain nonrefundable upfront fees that are accounted for as material rights, as discussed above. Revenues from our advertising services are typically recognized as the advertisements are broadcast. Sales of equipment to subscribers or other third parties are recognized when control is transferred under the contract. Revenue from our commercial video subscribers typically follows the residential model described above, with the exception that the contract term for most of our commercial subscribers exceeds one month and can be multiple years in length. However, commercial subscribers typically do not receive time-limited discounts or free service periods and accordingly, while they may have multiple performance obligations, revenue is equal to the amount billed in a given month. Contract Balances The timing of revenue recognition generally differs from the timing of invoicing to customers. When revenue is recognized prior to invoicing, we record a receivable. When revenue is recognized subsequent to invoicing, we record deferred revenue. Our residential video subscribers are typically billed monthly, and the contract balances for those customers arise from the timing of the monthly billing cycle. We do not adjust the amount of consideration for financing impacts as we apply a practical expedient when we anticipate that the period between transfer of goods and services and eventual payment for those goods and services will be less than one year. See Note 11 for further information, including balance and activity detail about our allowance for doubtful accounts and deferred revenue related to contracts with subscribers. Assets recognized related to the Costs to Obtain a Contract with a Subscriber We recognize an asset for the incremental costs of obtaining a contract with a subscriber if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs, including those with our independent third-party retailers, meet the requirements to be capitalized, and payments made under these programs are capitalized and amortized to expense over the estimated subscriber life. During the three and nine months ended September 30, 2018, we capitalized $51 million and $141 million, respectively, under these programs. The amortization expense related to these programs was $9 million and $17 million, respectively, for the three and nine months ended September 30, 2018. As of September 30, 2018, we had a total of $138 million capitalized on our Condensed Consolidated Balance Sheets. These amounts are capitalized in “Other currents assets” and “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets, and then amortized in “Other subscriber acquisition costs” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Impact of Adoption of ASU 2014-09 On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”) and has modified the standard thereafter. We adopted ASU 2014-09, as modified, and now codified as Accounting Standard Codification Topic 606 (“ASC 606”) and Accounting Standard Codification Topic 340-40 (“ASC 340-40”) on January 1, 2018, using the modified retrospective method. Under that method, we applied the new guidance to all open contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change, which was $2 million, net of deferred taxes of $1 million. In addition, we are providing additional disclosures comparing the results under previous guidance to those as follows: Condensed Consolidated Statements of Operations DISH DBS (as would have been reported under previous standards) Impact of adopting ASU 2014-09 DISH DBS (as currently reported) (In thousands) For the Three Months Ended September 30, 2018 Subscriber-related revenue $ 3,291,452 $ (2,698) $ 3,288,754 Subscriber-related expenses $ 2,091,481 $ (3,237) $ 2,088,244 Total subscriber acquisition costs $ 227,686 $ (40,808) $ 186,878 Operating income (loss) $ 501,092 $ 41,347 $ 542,439 Income (loss) before income taxes $ 331,546 $ 41,347 $ 372,893 Income tax (provision) benefit, net $ (80,521) $ (10,168) $ (90,689) Net income (loss) attributable to DISH DBS $ 250,093 $ 31,179 $ 281,272 For the Nine Months Ended September 30, 2018 Subscriber-related revenue $ 10,003,045 $ (14,340) $ 9,988,705 Subscriber-related expenses $ 6,358,338 $ (10,489) $ 6,347,849 Total subscriber acquisition costs $ 691,216 $ (125,065) $ 566,151 Operating income (loss) $ 1,478,848 $ 121,214 $ 1,600,062 Income (loss) before income taxes $ 899,339 $ 121,214 $ 1,020,553 Income tax (provision) benefit, net $ (217,168) $ (29,831) $ (246,999) Net income (loss) attributable to DISH DBS $ 679,772 $ 91,383 $ 771,155 Condensed Consolidated Balance Sheets DISH DBS (as would have been reported under previous standards) Impact of adopting ASU 2014-09 DISH DBS (as currently reported) (In thousands) As of September 30, 2018 Inventory $ 273,186 $ 31,717 $ 304,903 Other current assets $ 87,262 $ 38,609 $ 125,871 Other noncurrent assets, net $ 185,775 $ 98,906 $ 284,681 Total assets $ 3,653,073 $ 169,232 $ 3,822,305 Deferred revenue and other $ 631,635 $ 42,478 $ 674,113 Deferred tax liabilities $ 439,541 $ 30,623 $ 470,164 Long-term deferred revenue and other long-term liabilities $ 184,739 $ 2,427 $ 187,166 Total liabilities $ 16,000,099 $ 75,528 $ 16,075,627 Total stockholder's equity (deficit) $ (12,347,026) $ 93,704 $ (12,253,322) Total liabilities and stockholder's equity (deficit) $ 3,653,073 $ 169,232 $ 3,822,305 The adoption of ASU 2014-09 had no impact to cash flows from operating, investing and financing activities on our Condensed Consolidated Statements of Cash Flows. Research and Development Research and development costs are expensed as incurred. Research and development costs totaled $6 million and $8 million for the three months ended September 30, 2018 and 2017, respectively. Research and development costs totaled $18 million and $24 million for the nine months ended September 30, 2018 and 2017, respectively. New Accounting Pronouncements Leases. In February 2016, the FASB issued ASU 2016-02 Leases (“ASU 2016-02”), and has modified the standard thereafter. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring that lessees recognize right of use assets and lease liabilities for the vast majority of leases. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. The accounting guidance for lessors remains largely unchanged. The effective date of this standard for us will be January 1, 2019, at which time we plan to adopt the standard using the modified retrospective approach with a cumulative-effect adjustment to opening retained earnings recorded at the beginning of the period of adoption. Therefore, upon adoption, we will recognize and measure leases without revising comparative period information or disclosure. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. While our assessment of the effect of ASU 2016-02 is ongoing, we currently believe the most significant impact will be the recognition of right of use assets and lease liabilities on our Condensed Consolidated Balance Sheets. The multidisciplinary team we have established to implement this guidance is currently collecting and validating lease data and implementing our selected lease accounting system. Financial Instruments – Credit Losses. On June 16, 2016, the FASB issued ASU 2016-13 Financial Instruments – Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net earnings. This standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact the adoption of ASU 2016-13 will have on our Condensed Consolidated Financial Statements and related disclosures. Fair Value Measurement. On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements by adding, modifying or removing certain disclosures. This standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. Certain disclosures in ASU 2018-13 are required to be applied on a retrospective basis and others on a prospective basis. We are evaluating the impact the adoption of ASU 2018-13 will have on our Condensed Consolidated Financial Statements and related disclosures. |
Supplemental Data - Statements
Supplemental Data - Statements of Cash Flows | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Data - Statements of Cash Flows | |
Supplemental Data - Statements of Cash Flows | 3. The following table presents our supplemental cash flow and other non-cash data. For the Nine Months Ended September 30, 2018 2017 (In thousands) Cash paid for interest $ 637,323 $ 696,379 Cash received for interest 3,434 7,889 Cash paid for income taxes 16,646 23,289 Cash paid for income taxes to DISH Network 242,087 323,588 Capitalized interest 806 — Assets financed under capital lease obligations 142 889 Our parent, DISH Network, provides a centralized system for the management of our cash and marketable investment securities as it does for all of its subsidiaries, among other reasons, to maximize yield of the portfolio. As a result, the cash and marketable investment securities included on our Condensed Consolidated Balance Sheets is a component or portion of the overall cash and marketable investment securities portfolio included on DISH Network’s Condensed Consolidated Balance Sheets and managed by DISH Network. We are reflecting the purchases and sales of marketable investment securities on a net basis for each period presented on our Condensed Consolidated Statements of Cash Flows as we believe the net presentation is more meaningful to our cash flows from investing activities. |
Marketable Investment Securitie
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 9 Months Ended |
Sep. 30, 2018 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 4. Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following: As of September 30, December 31, 2018 2017 (In thousands) Marketable investment securities: Current marketable investment securities: Trading/equity (Note 2) $ 11,236 $ 93,367 Other 57,273 92,146 Total current marketable investment securities 68,509 185,513 Restricted marketable investment securities (1) 66,809 72,014 Total marketable investment securities 135,318 257,527 Restricted cash and cash equivalents (1) 390 393 Other investment securities: Other investment securities - equity method 109,546 113,460 Total other investment securities 109,546 113,460 Total marketable investment securities, restricted cash and cash equivalents, and other investment securities $ 245,254 $ 371,380 (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Condensed Consolidated Balance Sheets. Marketable Investment Securities Our marketable investment securities portfolio consists of various debt and equity instruments. All debt securities are classified as available-for-sale. Subsequent to the adoption of ASU 2016-01 during the first quarter 2018, all equity securities are carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 2 for further information. Current Marketable Investment Securities - Trading/Equity We had an investment in non-marketable preferred shares of a non-public company, which was received for no cash consideration and was previously accounted for as a cost method investment and included in “Other investment securities” on our Condensed Consolidated Balance Sheets. During the third quarter 2017, our non-marketable preferred shares converted into common shares in conjunction with the issuer’s initial public offering, and accordingly we classified the new equity securities as “Marketable investment securities” on our Condensed Consolidated Balance Sheets. Subsequent to the adoption of ASU 2016-01 during the first quarter 2018, all equity securities are carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 2 for further information. Current Marketable Investment Securities – Other Our current other marketable investment securities portfolio includes investments in various debt instruments including, among others, commercial paper, corporate securities and United States treasury and/or agency securities. Commercial paper consists mainly of unsecured short-term, promissory notes issued primarily by corporations with maturities ranging up to 365 days. Corporate securities consist of debt instruments issued by corporations with various maturities normally less than 18 months. U.S. Treasury and agency securities consist of debt instruments issued by the federal government and other government agencies. Restricted Cash, Cash Equivalents and Marketable Investment Securities As of September 30, 2018 and December 31, 2017, our restricted marketable investment securities, together with our restricted cash and cash equivalents, included amounts required as collateral for our letters of credit. Other Investment Securities We have strategic investments in certain debt and/or equity securities that are included in noncurrent “Other investment securities” on our Condensed Consolidated Balance Sheets. Our debt securities are classified as available-for-sale and our equity securities are accounted for using the equity method of accounting or recorded at fair value. Certain of our equity method investments are detailed below. NagraStar L.L.C. As a result of the completion of the Share Exchange on February 28, 2017, we own a 50% interest in NagraStar L.L.C. (“NagraStar”), a joint venture that is our primary provider of encryption and related security systems intended to assure that only authorized customers have access to our programming. Invidi Technologies Corporation . In November 2016, we, DIRECTV, LLC, a wholly-owned indirect subsidiary of AT&T Inc., and Cavendish Square Holding B.V., an affiliate of WPP plc, entered into a series of agreements to acquire Invidi Technologies Corporation (“Invidi”), an entity that provides proprietary software for the addressable advertising market. The transaction closed in January 2017. Our ability to realize value from our strategic investments in securities that are not publicly traded depends on the success of the issuers’ businesses and their ability to obtain sufficient capital, on acceptable terms or at all, and 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. Unrealized Gains (Losses) on Marketable Investment Securities As of September 30, 2018 and December 31, 2017, we had accumulated net unrealized losses of less than $1 million. These amounts, net of related tax effect, were accumulated net unrealized losses of less than $1 million. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below. As of September 30, 2018 As of December 31, 2017 Marketable Marketable Investment Unrealized Investment Unrealized Securities Gains Losses Net Securities Gains Losses Net (In thousands) Debt securities (including restricted): U.S. Treasury and agency securities $ 66,569 $ — $ (49) $ (49) $ 74,788 $ 22 $ (141) $ (119) Commercial paper 4,606 — — — 24,407 — (2) (2) Corporate securities 52,648 28 (21) 7 63,809 — (29) (29) Other 259 — — — 1,156 — — — Total $ 124,082 $ 28 $ (70) $ (42) $ 164,160 $ 22 $ (172) $ (150) As of September 30, 2018, restricted and non-restricted marketable investment securities included debt securities of $99 million with contractual maturities within one year and $25 million with contractual maturities extending longer than one year through and including five years. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity. Fair Value Measurements Our investments measured at fair value on a recurring basis were as follows: As of September 30, 2018 December 31, 2017 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (In thousands) Cash equivalents (including restricted) $ 103,042 $ 74 $ 102,968 $ — $ 315,030 $ 140 $ 314,890 $ — Debt securities (including restricted): U.S. Treasury and agency securities $ 66,569 $ 66,569 $ — $ — $ 74,788 $ 74,788 $ — $ — Commercial paper 4,606 — 4,606 — 24,407 — 24,407 — Corporate securities 52,648 — 52,648 — 63,809 — 63,809 — Other 259 — 259 — 1,156 — 1,156 — Equity securities 11,236 11,236 — — 93,367 93,367 — — Total $ 135,318 $ 77,805 $ 57,513 $ — $ 257,527 $ 168,155 $ 89,372 $ — During the nine months ended September 30, 2018, we had no transfers in or out of Level 1 and Level 2 fair value measurements. Gains and Losses on Sales and Changes in Carrying Amounts of Investments “Other, net” within “Other Income (Expense)” included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, Other, net: 2018 2017 2018 2017 (In thousands) Marketable investment securities - realized and unrealized gains (losses) (1) $ 23,573 $ 39,706 $ 8,846 $ 41,509 Costs related to early redemption of debt — — (2,716) — Gain (loss) on sale of subsidiary 7,004 — 7,004 — Equity in earnings of affiliates (5,369) 501 (3,164) 895 Other 262 52 2,118 1,280 Total $ 25,470 $ 40,259 $ 12,088 $ 43,684 (1) During the three and nine months ended September 30, 2018, we recorded unrealized gains of $5 million and $3 million, respectively, related to equity securities held as of September 30, 2018. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2018 | |
Inventory | |
Inventory | 5. Inventory consisted of the following: As of September 30, December 31, 2018 2017 (In thousands) Finished goods $ 231,339 $ 248,233 Work-in-process and service repairs 55,910 54,445 Raw materials 17,654 18,221 Total inventory $ 304,903 $ 320,899 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment | |
Property and Equipment | 6. Property and equipment consisted of the following: Depreciable As of Life September 30, December 31, (In Years) 2018 2017 (In thousands) Equipment leased to customers 2-5 $ 2,065,102 $ 2,264,653 EchoStar XV 15 277,658 277,658 Satellites acquired under capital lease agreements 10-15 499,819 499,819 Furniture, fixtures, equipment and other 3-10 1,738,873 1,680,492 Buildings and improvements 4-40 293,152 292,191 Land - 14,057 14,057 Construction in progress - 100,676 92,946 Total property and equipment 4,989,337 5,121,816 Accumulated depreciation (3,543,172) (3,489,655) Property and equipment, net $ 1,446,165 $ 1,632,161 Depreciation and amortization expense consisted of the following: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 (In thousands) Equipment leased to customers $ 113,193 $ 139,702 $ 330,851 $ 411,247 Satellites 15,261 15,261 45,784 45,784 Buildings, furniture, fixtures, equipment and other 34,568 34,763 125,139 106,037 Total depreciation and amortization $ 163,022 $ 189,726 $ 501,774 $ 563,068 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. Pay-TV Satellites. We currently utilize 11 satellites in geostationary orbit approximately 22,300 miles above the equator, one of which we own and depreciate over its estimated useful life. We currently utilize certain capacity on seven satellites that we lease from EchoStar and one satellite that we lease from DISH Network, which are accounted for as operating leases. We also lease two satellites from third parties, which are accounted for as capital leases and are depreciated over the shorter of the economic life or the term of the satellite agreement. As of September 30, 2018, our pay-TV satellite fleet consisted of the following: Degree Estimated Useful Life Launch Orbital (Years) / Lease Satellites Date Location Termination Date Owned: EchoStar XV July 2010 61.5 15 Leased from DISH Network (1): EchoStar XVIII June 2016 61.5 Month to month Leased from EchoStar (2): EchoStar IX August 2003 121 Month to month EchoStar X (3) February 2006 110 February 2021 EchoStar XI (3) July 2008 110 September 2021 EchoStar XIV (3) March 2010 119 February 2023 EchoStar XVI (4) November 2012 61.5 January 2023 Nimiq 5 September 2009 72.7 September 2019 QuetzSat-1 September 2011 77 November 2021 Leased from Other Third Party: Anik F3 April 2007 118.7 April 2022 Ciel II (5) December 2008 129 January 2020 (1) See Note 12 for further information on our Related Party Transactions with DISH Network. (2) See Note 12 for further information on our Related Party Transactions with EchoStar. (3) We generally have the option to renew each lease on a year-to-year basis through the end of the useful life of the respective satellite. (4) We have the option to renew this lease for an additional five-year period. (5) During the fourth quarter 2018, we renewed this lease. |
Long-Term Debt and Capital Leas
Long-Term Debt and Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2018 | |
Long-Term Debt | |
Long-Term Debt and Capital Lease Obligations | 7. Fair Value of our Long-Term Debt The following table summarizes the carrying amount and fair value of our debt facilities as of September 30, 2018 and December 31, 2017: As of September 30, 2018 December 31, 2017 Carrying Fair Value Carrying Fair Value (In thousands) 4 1/4% Senior Notes due 2018 (1) $ — $ — $ 1,025,861 $ 1,031,596 7 7/8% Senior Notes due 2019 (2) 1,337,469 1,386,514 1,400,000 1,501,206 5 1/8% Senior Notes due 2020 1,100,000 1,112,320 1,100,000 1,127,588 6 3/4% Senior Notes due 2021 2,000,000 2,049,640 2,000,000 2,120,480 5 7/8% Senior Notes due 2022 2,000,000 1,958,480 2,000,000 2,014,140 5 % Senior Notes due 2023 1,500,000 1,366,665 1,500,000 1,432,335 5 7/8% Senior Notes due 2024 2,000,000 1,802,400 2,000,000 1,952,220 7 3/4% Senior Notes due 2026 2,000,000 1,891,620 2,000,000 2,118,400 Other notes payable 10,346 10,346 11,509 11,509 Subtotal 11,947,815 $ 11,577,985 13,037,370 $ 13,309,474 Unamortized deferred financing costs and debt discounts, net (25,105) (31,041) Capital lease obligations (3) 76,348 104,318 Total long-term debt and capital lease obligations (including current portion) $ 11,999,058 $ 13,110,647 (1) On April 2, 2018, we redeemed the principal balance of our 4 1/4% Senior Notes due 2018. (2) During the nine months ended September 30, 2018, we repurchased $62 million of our 7 7/8% Senior Notes due 2019 in open market trades. The remaining balance of $1.338 billion matures on September 1, 2019. (3) Disclosure regarding fair value of capital leases is not required. We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2). |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments DISH Network Spectrum Since 2008, DISH Network has directly invested over $11 billion to acquire certain wireless spectrum licenses and related assets and made over $10 billion in non-controlling investments in certain entities, for a total of over $21 billion, as described further below. DISH Network has directly invested over $11 billion to acquire certain wireless spectrum licenses and related assets. These wireless spectrum licenses are subject to certain interim and final build-out requirements. In March 2017, DISH Network notified the FCC that it plans to deploy a next-generation 5G-capable network, focused on supporting narrowband Internet of Things (“IoT”). DISH Network will need to make significant additional investments or partner with others to, among other things, commercialize, build-out and integrate these licenses and related assets, and any additional acquired licenses and related assets; and comply with regulations applicable to such licenses. Depending on the nature and scope of such commercialization, build-out, integration efforts and regulatory compliance, any such investments or partnerships could vary significantly. In addition, as DISH Network considers its options for the commercialization of its wireless spectrum, it will incur significant additional expenses and will have to make significant investments related to, among other things, research and development, wireless testing and wireless network infrastructure. DISH Network may also determine that additional wireless spectrum licenses may be required to commercialize its wireless business and to compete with other wireless service providers. In connection with the development of DISH Network’s wireless business, including, without limitation, the efforts described above, we have made cash distributions to partially finance these efforts to date and may make additional cash distributions to finance, in whole or in part, DISH Network’s future efforts. See Note 12 for further information regarding our dividends to DOC. There can be no assurance that DISH Network will be able to develop and implement a business model that will realize a return on these wireless spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by these wireless spectrum licenses. DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses Through its wholly-owned subsidiaries American AWS-3 Wireless II L.L.C. (“American II”) and American AWS-3 Wireless III L.L.C. (“American III”), DISH Network has made over $10 billion in certain non-controlling investments in Northstar Spectrum, LLC (“Northstar Spectrum”), the parent company of Northstar Wireless, LLC (“Northstar Wireless,” and collectively with Northstar Spectrum, the “Northstar Entities”), and in SNR Wireless HoldCo, LLC (“SNR HoldCo”), the parent company of SNR Wireless LicenseCo, LLC (“SNR Wireless,” and collectively with SNR HoldCo, the “SNR Entities”), respectively. On October 27, 2015, the FCC granted certain AWS-3 wireless spectrum licenses (the “AWS-3 Licenses”) to Northstar Wireless (the “Northstar Licenses”) and to SNR Wireless (the “SNR Licenses”), respectively. The Northstar Entities and/or the SNR Entities may need to raise significant additional capital in the future, which may be obtained from third party sources or from DISH Network, so that the Northstar Entities and the SNR Entities may commercialize, build-out and integrate these AWS-3 Licenses, comply with regulations applicable to such AWS-3 Licenses, and make any potential payments related to the re-auction of AWS-3 licenses retained by the FCC. Depending upon the nature and scope of such commercialization, build-out, integration efforts, regulatory compliance, and potential re-auction payments, any such loans, equity contributions or partnerships could vary significantly. For further information regarding the potential re-auction of AWS-3 licenses retained by the FCC, see Note 9 “ Commitments and Contingencies – Commitments – DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018. In connection with certain funding obligations related to the investments by American II and American III discussed above, in February 2015, we paid a dividend of $8.250 billion to DOC for, among other things, general corporate purposes, which included such funding obligations, and to fund other DISH Network cash needs. We may make additional cash distributions to finance, in whole or in part, loans or equity contributions that DISH Network may make to the Northstar Entities and the SNR Entities in the future related to DISH Network’s non-controlling investments in these entities. There can be no assurance that DISH Network will be able to obtain a profitable return on its non-controlling investments in the Northstar Entities and the SNR Entities. We may need to raise significant additional capital in the future, which may not be available on acceptable terms or at all, to among other things, make additional cash distributions to DISH Network, continue investing in our business and to pursue acquisitions and other strategic transactions. See Note 9 “Commitments and Contingencies – Commitments” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 for further information. Guarantees During the third quarter 2009, EchoStar entered into a satellite transponder service agreement for Nimiq 5 through 2024. We sublease this capacity from EchoStar and DISH Network guarantees a certain portion of EchoStar’s obligation under its satellite transponder service agreement through 2019. As of September 30, 2018, the remaining obligation of the DISH Network guarantee was $69 million. As of September 30, 2018, we have not recorded a liability on the balance sheet for this guarantee. Contingencies Separation Agreement On January 1, 2008, DISH Network completed the distribution of its technology and set-top box business and certain infrastructure assets (the “Spin-off”) into a separate publicly-traded company, EchoStar. In connection with the Spin-off, DISH Network entered into a separation agreement with EchoStar that 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 that occurred 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 DISH Network 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. On February 28, 2017, DISH Network and EchoStar completed the Share Exchange pursuant to which certain assets that were transferred to EchoStar in the Spin-off were transferred back to us. The Share Exchange Agreement contains additional indemnification provisions between us and EchoStar for certain liabilities and legal proceedings. Litigation We are involved in a number of legal proceedings (including those described below) concerning matters arising in connection with the conduct of our business activities. Many of these proceedings are at preliminary stages, and many of these proceedings seek an indeterminate amount of damages. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made. For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period. Blue Spike, LLC On July 6, 2018, Blue Spike, LLC (“Blue Spike”) filed a complaint against DISH Network and our wholly-owned subsidiaries DISH Network L.L.C. and Dish Network Service L.L.C. in the United States District Court for the Eastern District of Texas. The complaint alleges infringement of Reissued United States Patent RE44,222E1 (the “222 patent”), entitled “Methods, systems and devices for packet watermarking and efficient provisioning of bandwidth”; Reissued United States Patent RE44,307 (the “307 patent”), entitled “Methods, systems and devices for packet watermarking and efficient provisioning of bandwidth”; and United States Patent Nos. 7,287,275B2 (the “275 patent”), entitled “Methods, systems and devices for packet watermarking and efficient provisioning of bandwidth”; 8,473,746 (the “746 patent”), entitled “Methods, systems and devices for packet watermarking and efficient provisioning of bandwidth”; 8,224,705 (the “705 patent”), entitled “Methods, systems and devices for packet watermarking and efficient provisioning of bandwidth”; 7,475,246 (the “246 patent”), entitled “Secure personal content server”; 8,739,295B2 (the “295 patent”), entitled “Secure personal content server”; 9,021,602 (the “602 patent”), entitled “Data Protection and Device”; 9,104,842 (the “842 patent”), entitled “Data Protection and Device”; 9,934,408 (the “408 patent”), entitled “Secure personal content server”; 7,159,116B2 (the “116 patent”), entitled “Systems, methods and devices for trusted transactions”; and 8,538,011B2 (the “011 patent”), entitled “Systems, methods and devices for trusted transactions.” On September 5, 2018, pursuant to a joint motion of the parties, the Court ordered the case transferred to the United States District Court for the District of Delaware. In a First Amended Complaint filed on October 12, 2018, Blue Spike dropped its claims for infringement of the 222 patent, the 307 patent, the 275 patent, the 705 patent, and the 746 patent. Blue Spike is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. It has filed more than 170 patent infringement cases since 2011. We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. ClearPlay, Inc. On March 13, 2014, ClearPlay, Inc. (“ClearPlay”) filed a complaint against DISH Network, our wholly-owned subsidiary DISH Network L.L.C., EchoStar, and its then wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Utah. The complaint alleges infringement of United States Patent Nos. 6,898,799 (the “799 patent”), entitled “Multimedia Content Navigation and Playback”; 7,526,784 (the “784 patent”), entitled “Delivery of Navigation Data for Playback of Audio and Video Content”; 7,543,318 (the “318 patent”), entitled “Delivery of Navigation Data for Playback of Audio and Video Content”; 7,577,970 (the “970 patent”), entitled “Multimedia Content Navigation and Playback”; and 8,117,282 (the “282 patent”), entitled “Media Player Configured to Receive Playback Filters From Alternative Storage Mediums.” ClearPlay alleges that the AutoHop ™ feature of our Hopper set-top box infringes the asserted patents. On February 11, 2015, the case was stayed pending various third-party challenges before the United States Patent and Trademark Office regarding the validity of certain of the patents asserted in the action. In those third-party challenges, the United States Patent and Trademark Office found that all claims of the 282 patent are unpatentable, and that certain claims of the 784 patent and 318 patent are unpatentable. ClearPlay appealed as to the 784 patent and the 318 patent, and on August 23, 2016, the United States Court of Appeals for the Federal Circuit affirmed the findings of the United States Patent and Trademark Office. On October 31, 2016, the stay was lifted. No trial date has been set. We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. Contemporary Display LLC On June 4, 2018, Contemporary Display LLC (“Contemporary”) filed a complaint against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Western District of Texas. The complaint alleges infringement of In a First Amended Complaint filed on August 6, 2018, Contemporary added our wholly-owned subsidiary DISH Network L.L.C. as a defendant. In a Second Amended Complaint filed on October 9, 2018, Contemporary named only our wholly- owned subsidiary DISH Network L.L.C. as a defendant and dropped certain indirect infringement allegations. We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. Customedia Technologies, L.L.C. On February 10, 2016, Customedia Technologies, L.L.C. (“Customedia”) filed a complaint against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Eastern District of Texas. The complaint alleges infringement of four patents: United States Patent No. 8,719,090 (the “090 patent”); United States Patent No. 9,053,494 (the “494 patent”); United States Patent No. 7,840,437 (the “437 patent”); and United States Patent No. 8,955,029 (the “029 patent”). Each patent is entitled “System for Data Management And On-Demand Rental And Purchase Of Digital Data Products.” Customedia alleges infringement in connection with our addressable advertising services, our DISH Anywhere feature, and our Pay-Per-View and video-on-demand offerings. Customedia is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. In December 2016 and January 2017, DISH Network L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of the asserted claims of each of the asserted patents. On June 12, 2017, the United States Patent and Trademark Office agreed to institute proceedings on our petitions challenging the 090 patent and the 437 patent; on July 18, 2017, it agreed to institute proceedings on our petitions challenging the 029 patent; and on July 28, 2017, it agreed to institute proceedings on our petitions challenging the 494 patent. These instituted proceedings cover all asserted claims of each of the asserted patents. The litigation in the District Court has been stayed since August 8, 2017 pending resolution of the proceedings at the United States Patent and Trademark Office. Pursuant to an agreement between the parties, on December 20, 2017, DISH Network L.L.C. dismissed its petitions challenging the 029 patent in the United States Patent and Trademark Office, and on January 9, 2018, the parties dismissed their claims, counterclaims and defenses as to that patent in the litigation. On March 5, 2018, the United States Patent and Trademark Office conducted a trial on the remaining petitions. On June 11, 2018, the United States Patent and Trademark Office issued final written decisions on DISH Network L.L.C.’s petitions challenging the 090 patent and it invalidated all of the asserted claims. On July 25, 2018, the United States Patent and Trademark Office issued final written decisions on DISH Network L.L.C.’s petitions challenging the 437 patent and the 494 patent and it invalidated all of the asserted claims. Customedia has filed notices of appeal from all of the final written decisions adverse to it, and DISH Network L.L.C. has cross-appealed to the extent that its petitions were not successful. We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. Dragon Intellectual Property, LLC On December 20, 2013, Dragon Intellectual Property, LLC (“Dragon IP”) filed complaints against our wholly-owned subsidiary DISH Network L.L.C., as well as Apple Inc.; AT&T, Inc.; Charter Communications, Inc.; Comcast Corp.; Cox Communications, Inc.; DirecTV; Sirius XM Radio Inc.; Time Warner Cable Inc. and Verizon Communications, Inc., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 5,930,444 (the “444 patent”), which is entitled “Simultaneous Recording and Playback Apparatus.” Dragon IP alleges that various of our DVR receivers infringe the 444 patent. Dragon IP is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On December 23, 2014, DISH Network L.L.C. filed a petition before the United States Patent and Trademark Office challenging the validity of certain claims of the 444 patent. On April 10, 2015, the Court granted DISH Network L.L.C.’s motion to stay the action in light of DISH Network L.L.C.’s petition and certain other defendants’ petitions pending before the United States Patent and Trademark Office challenging the validity of certain claims of the 444 patent. On July 17, 2015, the United States Patent and Trademark Office agreed to institute a proceeding on our petition. Pursuant to a stipulation between the parties, on April 27, 2016, the Court entered an order of non-infringement and judgment in favor of DISH Network L.L.C. On June 15, 2016, the United States Patent and Trademark Office entered an order that the patent claims being asserted against DISH Network L.L.C. with respect to the 444 patent are unpatentable. On August 8, 2016, Dragon filed notices of appeal with respect to the Court’s judgment and the United States Patent and Trademark Office’s decision and, on October 5, 2017, the United States Court of Appeals for the Federal Circuit heard oral argument. On November 1, 2017, the United States Court of Appeals for the Federal Circuit affirmed the unpatentability of the 444 patent based on the petition filed in the United States Patent and Trademark Office by DISH Network L.L.C., and dismissed as moot the appeal of the order of non-infringement from the District Court. On December 1, 2017, Dragon IP filed a petition for panel rehearing with the United States Court of Appeals for the Federal Circuit, which the Court of Appeals denied on January 31, 2018. On March 16, 2018, Dragon IP filed a petition asking the United States Supreme Court to hear a further appeal on the constitutionality of the procedure by which the United States Patent and Trademark Office invalidated the asserted claims of the 444 patent. That petition was dismissed on June 18, 2018. We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. Grecia On March 27, 2015, William Grecia (“Grecia”) filed a complaint against our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. 8,533,860 (the “860 patent”), which is entitled “Personalized Digital Media Access System – PDMAS Part II.” Grecia alleges that we violate the 860 patent in connection with our digital rights management. Grecia is the named inventor on the 860 patent. On June 22, 2015, the case was transferred to the United States District Court for the Northern District of California. On November 18, 2015, Grecia filed an amended complaint adding allegations that we infringe United States Patent No. 8,402,555 (the “555 patent”), which is entitled “Personalized Digital Media Access System (PDMAS).” Grecia is the named inventor on the 555 patent. Grecia alleges that we violate the 555 patent in connection with our digital rights management. Grecia dismissed his action with prejudice on February 3, 2016. On February 3, 2016, Grecia filed a new complaint against our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Northern District of California, alleging infringement of United States Patent No. 8,887,308 (the “308 patent”), which is entitled “Digital Cloud Access – PDMAS Part III,” on which Grecia is also the named inventor. Grecia alleges that we violate the 308 patent in connection with our DISH Anywhere feature. On July 29, 2016, DISH Network L.L.C. filed a petition before the United States Patent and Trademark Office challenging the validity of certain claims of the 308 patent. On January 19, 2017, the United States Patent and Trademark Office declined to institute a proceeding on our petition. The litigation in the District Court, which had been stayed since June 13, 2016 pending resolution of DISH Network L.L.C.’s petition to the United States Patent and Trademark Office, was further stayed on February 23, 2017 pending a claim construction order from the United States District Court for the Southern District of New York in a separate action in which Grecia is asserting the same patent. On September 4, 2018, the Court entered a scheduling order, effectively lifting the stay. On November 12, 2018, the parties filed a stipulation to dismiss the matter with prejudice. This matter is now concluded. IPA Technologies Inc. On December 9, 2016, IPA Technologies Inc. (“IPA”) filed suit against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the District of Delaware. IPA alleges that our Voice Remote with Hopper 3 infringes United States Patent Number 6,742,021 (the “021 patent”), which is entitled “Navigating Network-based Electronic Information Using Spoken Input with Multimodal Error Feedback”; United States Patent Number 6,523,061 (the “061 patent”), which is entitled “System, Method, and Article of Manufacture for Agent-Based Navigation in a Speech-Based Data Navigation System”; and United States Patent Number 6,757,718 (the “718 patent”), which is entitled “Mobile Navigation of Network-Based Electronic Information Using Spoken Input.” IPA is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. On December 20, 2017, DISH Network and DISH Network L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of select claims of each of the asserted patents. On April 10, 2018, the litigation in the District of Delaware was dismissed with prejudice, and on April 23, 2018, DISH Network L.L.C.’s and our petitions before the United States Patent and Trademark Office were terminated. This matter is now concluded. LightSquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy) As previously disclosed in our public filings, L-Band Acquisition, LLC (“LBAC”), DISH Network’s wholly-owned subsidiary, entered into a Plan Support Agreement (the “PSA”) with certain senior secured lenders to LightSquared LP (the “LightSquared LP Lenders”) on July 23, 2013, which contemplated the purchase by LBAC of substantially all of the assets of LightSquared LP and certain of its subsidiaries (the “LBAC Bid”) that are debtors and debtors in possession in the LightSquared bankruptcy cases pending in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), which cases are jointly administered under the caption In re LightSquared Inc., et. al., Case No. 12 12080 (SCC). Pursuant to the PSA, LBAC was entitled to terminate the PSA in certain circumstances, certain of which required three business days’ written notice, including, without limitation, in the event that certain milestones specified in the PSA were not met. On January 7, 2014, LBAC delivered written notice of termination of the PSA to the LightSquared LP Lenders. As a result, the PSA terminated effective on January 10, 2014, and the LBAC Bid was withdrawn. On August 6, 2013, Harbinger Capital Partners LLC and other affiliates of Harbinger (collectively, “Harbinger”), a shareholder of LightSquared Inc., filed an adversary proceeding against DISH Network, LBAC, EchoStar, Charles W. Ergen (our Chairman), SP Special Opportunities, LLC (“SPSO”) (an entity controlled by Mr. Ergen), and certain other parties, in the Bankruptcy Court. Harbinger alleged, among other things, claims based on fraud, unfair competition, civil conspiracy and tortious interference with prospective economic advantage related to certain purchases of LightSquared secured debt by SPSO. Subsequently, LightSquared intervened to join in certain claims alleged against certain defendants other than DISH Network, LBAC and EchoStar. On October 29, 2013, the Bankruptcy Court dismissed all of the claims in Harbinger’s complaint in their entirety, but granted leave for LightSquared to file its own complaint in intervention. On November 15, 2013, LightSquared filed its complaint, which included various claims against DISH Network, EchoStar, Mr. Ergen and SPSO. On December 2, 2013, Harbinger filed an amended complaint, asserting various claims against SPSO. On December 12, 2013, the Bankruptcy Court dismissed several of the claims asserted by LightSquared and Harbinger. The surviving claims included, among others, LightSquared’s claims against SPSO for declaratory relief, breach of contract and statutory disallowance; LightSquared’s tortious interference claim against DISH Network, EchoStar and Mr. Ergen; and Harbinger’s claim against SPSO for statutory disallowance. These claims proceeded to a non-jury trial on January 9, 2014. In its Post-Trial Findings of Fact and Conclusions of Law entered on June 10, 2014, the Bankruptcy Court rejected all claims against DISH Network and EchoStar, and it rejected some but not all claims against the other defendants. On July 7, 2015, the United States District Court for the Southern District of New York denied Harbinger’s motion for an interlocutory appeal of certain Bankruptcy Court orders in the adversary proceeding. DISH Network intends to vigorously defend any claims against it in this proceeding and cannot predict with any degree of certainty the outcome of this proceeding or determine the extent of any potential liability or damages. 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 subsidiary Sling Media, Inc. (now known as “Sling Media L.L.C.,” which we acquired as a result of the completion of the Share Exchange on February 28, 2017) 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 granted our motion to dismiss the consolidated case. On September 12, 2016, the plaintiffs moved the Court for leave to file an amended complaint, which we opposed. On March 22, 2017, the Court denied the plaintiffs’ motion for leave to file an amended complaint and entered judgment in favor of Sling Media L.L.C. On April 17, 2017, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit, which heard oral argument on November 7, 2017. On November 22, 2017, the United States Court of Appeals for the Second Circuit affirmed the trial court’s judgment in favor of Sling Media L.L.C. This matter is now concluded. Multimedia Content Management LLC On July 25, 2018, Multimedia Content Management LLC (“Multimedia”) filed a complaint against DISH Network in the United States District Court for the Western District of Texas. Multimedia alleges that DISH Network infringes United States Patent No. 8,799,468 (the “468 patent”), entitled “System for Regulating Access to and Distributing Content in a Network,” and United States Patent No. 9,465,925 (the “925 patent”), entitled “System for Regulating Access to and Distributing Content in a Network,” in connection with impulse pay per view content offerings on certain set-top boxes. Multimedia is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. DISH Network intends to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. Realtime Data LLC and Realtime Adaptive Streaming LLC On June 6, 2017, Realtime Data LLC d/b/a IXO (“Realtime”) filed an amended complaint in the United States District Court for the Eastern District of Texas (the “Original Texas Action”) against DISH Network; our wholly-owned subsidiaries DISH Network L.L.C., DISH Technologies L.L.C. (then known as EchoStar Technologies L.L.C.), Sling TV L.L.C. and Sling Media L.L.C.; EchoStar, and EchoStar’s wholly-owned subsidiary HNS; and Arris Group, Inc. Realtime’s initial complaint in the Original Texas Action, filed on February 14, 2017, had named only EchoStar and HNS as defendants. The amended complaint in the Original Texas Action alleges infringement of United States Patent No. 8,717,204 (the “204 patent”), entitled “Methods for encoding and decoding data”; United States Patent No. 9,054,728 (the “728 patent”), entitled “Data compression systems and methods”; United States Patent No. 7,358,867 (the “867 patent”), entitled “Content independent data compression method and system”; United States Patent No. 8,502,707 (the “707 patent”), entitled “Data compression systems and methods”; United |
Financial Information for Subsi
Financial Information for Subsidiary Guarantors | 9 Months Ended |
Sep. 30, 2018 | |
Financial Information for Subsidiary Guarantors | |
Financial Information for Subsidiary Guarantors | 9. Our senior notes are fully, unconditionally and jointly and severally guaranteed by all of our subsidiaries other than minor subsidiaries, and the stand-alone entity DISH DBS has no independent assets or operations. Therefore, supplemental financial information on a condensed consolidating basis of the guarantor subsidiaries is not required. There are no restrictions on our ability to obtain cash dividends or other distributions of funds from the guarantor subsidiaries, except those imposed by applicable law. |
Disaggregation of Revenue
Disaggregation of Revenue | 9 Months Ended |
Sep. 30, 2018 | |
Disaggregation of Revenue | |
Disaggregation of Revenue | 10. Revenue is attributed to geographic regions based upon the location where the goods and services are provided. All subscriber-related revenue was derived from the United States. Substantially all of our long-lived assets reside in the United States. The following table summarizes revenue by geographic region: For the Three Months Ended For the Nine Months Ended September 30, September 30, Revenue: 2018 2017 2018 2017 (In thousands) United States $ 3,319,715 $ 3,479,791 $ 10,076,737 $ 10,573,536 Canada and Mexico 14,729 11,768 34,236 32,794 Total revenue $ 3,334,444 $ 3,491,559 $ 10,110,973 $ 10,606,330 The revenue from external customers disaggregated by major revenue source was as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, Category: 2018 2017 2018 2017 (In thousands) Pay-TV video and related revenue $ 3,288,754 $ 3,459,439 $ 9,988,705 $ 10,508,801 Equipment sales and other revenue 45,690 32,120 122,268 97,529 Total $ 3,334,444 $ 3,491,559 $ 10,110,973 $ 10,606,330 |
Contract Balances
Contract Balances | 9 Months Ended |
Sep. 30, 2018 | |
Contract Balances | |
Contract Balances | 11. Our valuation and qualifying accounts activity as of September 30, 2018 were as follows: Allowance for doubtful accounts Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period (In thousands) For the nine months ended September 30, 2018 $ 15,056 $ 73,698 $ (75,857) $ 12,897 Deferred revenue related to contracts with subscribers is recorded in “Deferred revenue and other” and “Long-term deferred revenue and other long-term liabilities” on our Condensed Consolidated Balance Sheets. Changes in deferred revenue related to contracts with subscribers were as follows: Contract Liabilities (In thousands) Balance as of December 31, 2017 $ 684,119 Recognition of unearned revenue (5,426,705) Deferral of revenue 5,402,154 Balance as of September 30, 2018 $ 659,568 We apply a practical expedient and do not disclose the value of the remaining performance obligations for contracts that are less than one year in duration, which represent a substantial majority of our revenue. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of our future revenue. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions with DISH Network Broadband, Wireless and Other Operations. We provide certain administrative, call center, installation, marketing and other services to DISH Network’s broadband, wireless and other operations. During the three months ended September 30, 2018 and 2017, the costs associated with these services were $10 million and $11 million, respectively. During the nine months ended September 30, 2018 and 2017, the costs associated with these services were $30 million and $40 million, respectively. EchoStar XVIII Satellite. The EchoStar XVIII satellite was launched on June 18, 2016 and became operational as an in-orbit spare at the 61.5 degree orbital location during the third quarter 2016, at which time we began leasing it from an indirect wholly-owned subsidiary of DISH Network. During each of the three months and nine months ended September 30, 2018 and 2017, we incurred $16 million and $50 million, respectively, of expense related to this satellite. This amount is recorded in “Satellite and transmission expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Related Party Transactions with EchoStar Following the Spin-off, DISH Network and EchoStar have operated as separate publicly-traded companies and neither entity has any ownership interest in the other. However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman, and by certain entities established by Mr. Ergen for the benefit of his family. In connection with and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our respective businesses. In connection with the Share Exchange, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. In addition, certain agreements that we had with EchoStar have terminated, and we entered into certain new agreements with EchoStar. As the Share Exchange was a transaction between entities that are under common control, accounting rules require that our Condensed Consolidated Financial Statements include the results of the Transferred Businesses for all periods presented, including periods prior to the completion of the Share Exchange. Intercompany transactions between the Transferred Businesses and us, including, among others, the sale of set-top boxes and broadcast services from EchoStar to us, have been eliminated to the extent possible, including the margin EchoStar received on those sales. See Note 2 for further information. We also may enter into additional agreements with EchoStar in the future. The following is a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial condition and results of operations. “Trade accounts receivable” As of September 30, 2018 and December 31, 2017, trade accounts receivable from EchoStar was $4 million and $2 million, respectively. These amounts are recorded in “Trade accounts receivable” on our Condensed Consolidated Balance Sheets. “Trade accounts payable” As of September 30, 2018 and December 31, 2017, trade accounts payable to EchoStar was $12 million and $29 million, respectively. These amounts are recorded in “Trade accounts payable” on our Condensed Consolidated Balance Sheets. “Equipment sales and other revenue” During each of the three months ended September 30, 2018 and 2017, we received $2 million and less than $1 million, respectively, for services provided to EchoStar. During the nine months ended September 30, 2018 and 2017, we received $7 million and $2 million, respectively, for services provided to EchoStar. These amounts are recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these revenues are discussed below. Real Estate Lease Agreements. DISH Network has entered into lease agreements pursuant to which DISH Network leases certain real estate to EchoStar. 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 areas, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: · El Paso Lease Agreement. During 2012, DISH Network began leasing certain space at 1285 Joe Battle Blvd., El Paso, Texas to EchoStar for an initial period ending on August 1, 2015, which also provides EchoStar with renewal options for four consecutive three-year terms. During the second quarter 2015, EchoStar exercised its first renewal option for a period ending on August 1, 2018 and in April 2018 EchoStar exercised its second renewal option for a period ending in August 2021. · 90 Inverness Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar leases certain space from us at 90 Inverness Circle East, Englewood, Colorado for a period ending in February 2022. EchoStar has the option to renew this lease for four three-year periods. · Cheyenne Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar leases certain space from us at 530 EchoStar Drive, Cheyenne, Wyoming for a period ending in February 2019. In August 2018, EchoStar exercised its option to renew this lease for a one-year period ending in February 2020. EchoStar has the option to renew this lease for twelve one-year periods. · Gilbert Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar leases certain space from us at 801 N. DISH Dr., Gilbert, Arizona for a period ending in March 2019. In August 2018, EchoStar exercised its option to renew this lease for a one-year period ending in February 2020. EchoStar has the option to renew this lease for twelve one-year periods. · American Fork Occupancy License Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, we acquired the lease for certain space at 796 East Utah Valley Drive, American Fork, Utah, and we sublease certain space at this location to EchoStar for a period ending in August 2017. In June 2017, EchoStar exercised its five-year renewal option for a period ending in August 2022. Collocation and Antenna Space Agreements . In connection with the completion of the Share Exchange, effective March 1, 2017, we entered into certain agreements pursuant to which we will provide certain collocation and antenna space to HNS through February 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New Braunfels, Texas; Monee, Illinois; Englewood, Colorado; and Spokane, Washington. During August 2017, we entered into certain other agreements pursuant to which we will provide certain collocation and antenna space to HNS through August 2022 at the following locations: Monee, Illinois and Spokane, Washington. HNS has the option to renew each of these agreements for four three-year periods. HNS may terminate certain of these agreements with 180 days’ prior written notice to us at the following locations: New Braunfels, Texas; Englewood, Colorado; and Spokane, Washington. The fees for the services provided under these agreements depend, among other things, on the number of racks leased and/or antennas present at the location. “Satellite and transmission expenses” During the three months ended September 30, 2018 and 2017, we incurred expenses of $71 million and $86 million, respectively, for satellite capacity leased from EchoStar and telemetry, tracking and control and other professional services provided to us by EchoStar. During the nine months ended September 30, 2018 and 2017, we incurred expenses of $238 million and $261 million, respectively, for satellite capacity leased from EchoStar and telemetry, tracking and control and other professional services provided to us by EchoStar. EchoStar is a supplier of the vast majority of our transponder capacity. These amounts are recorded in “Satellite and transmission expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below. Satellite Capacity Leased from EchoStar . We have entered into certain satellite capacity agreements pursuant to which we lease certain capacity on certain satellites owned or leased by EchoStar. The fees for the services provided under these satellite capacity agreements depend, among other things, upon the orbital location of the applicable satellite, the number of transponders that are leased on the applicable satellite and the length of the lease. See “Pay-TV Satellites” in Note 6 for further information. The term of each lease is set forth below: · EchoStar VII, X, XI and XIV. On March 1, 2014, we began leasing all available capacity from EchoStar on the EchoStar VII, X, XI and XIV satellites. The term of each satellite capacity 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. We generally have the option to renew each satellite capacity 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. The satellite capacity agreement for EchoStar VII expired on June 30, 2018. · EchoStar IX . We lease certain satellite capacity from EchoStar on EchoStar IX. Subject to availability, we generally have the right to continue to lease satellite capacity from EchoStar on EchoStar IX on a month-to-month basis. · EchoStar XII. The lease for EchoStar XII expired as of September 30, 2017. · EchoStar XVI. In December 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched in November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Effective December 21, 2012, we and EchoStar 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 EchoStar amended the transponder service agreement to, among other things, extend the initial term by one additional year and to reduce the term of the first renewal option by one year. Prior to expiration of the initial term, we had the option to renew for an additional five-year period. In May 2017, we exercised our first renewal option for an additional five-year period ending in January 2023. We also have the option to renew for an additional five-year period prior to expiration of the first renewal period in January 2023. There can be no assurance that the option to renew this agreement will be exercised. During 2018, we and EchoStar further amended the agreement to, among other things, allow us to place certain satellites at the 61.5 degree orbital location. Nimiq 5 Agreement . During 2009, EchoStar 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 orbital location (the “Telesat Transponder Agreement”). During 2009, EchoStar also entered into a satellite service agreement (the “DISH Nimiq 5 Agreement”) with us, pursuant to which we currently receive service from EchoStar on all 32 of the DBS transponders covered by the Telesat Transponder Agreement. DISH Network has also guaranteed certain obligations of EchoStar under the Telesat Transponder Agreement. See discussion under “Guarantees” in Note 8. Under the terms of the DISH Nimiq 5 Agreement, we make certain monthly payments to EchoStar that commenced in 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 ten years following the date the Nimiq 5 satellite was placed into service. Upon expiration of the initial term, we have 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, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that any options to renew the DISH Nimiq 5 Agreement will be exercised or that we will exercise our option to receive service on a replacement satellite. QuetzSat-1 Lease Agreement. During 2008, EchoStar entered into a ten-year satellite service agreement with SES Latin America S.A. (“SES”), which provides, among other things, for the provision by SES to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite. During 2008, EchoStar also entered into a transponder service agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we receive service from EchoStar on 24 DBS transponders. QuetzSat-1 was launched on September 29, 2011 and was placed into service during the fourth quarter 2011 at the 67.1 degree orbital location while we and EchoStar explored alternative uses for the QuetzSat-1 satellite. In the interim, EchoStar provided us with alternate capacity at the 77 degree orbital location. During the first quarter 2013, we and EchoStar entered into an agreement pursuant to which we sublease five DBS transponders back to EchoStar. In January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013. Unless earlier terminated under the terms and conditions of the QuetzSat-1 Transponder Agreement, the initial service term will expire in November 2021. Upon expiration of the initial term, we have the option to renew the QuetzSat-1 Transponder Agreement 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, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that any options to renew the QuetzSat-1 Transponder Agreement will be exercised or that we will exercise our option to receive service on a replacement satellite. 103 Degree Orbital Location/SES-3. In May 2012, EchoStar 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 orbital location (the “103 Spectrum Rights”). In June 2013, we and EchoStar entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which we may use and develop the 103 Spectrum Rights. Both the 103 Spectrum Development Agreement and DISH 103 Spectrum Development Agreement were terminated on March 31, 2018. In connection with the 103 Spectrum Development Agreement, in May 2012, EchoStar also entered into a ten-year service agreement with Ciel pursuant to which EchoStar leases certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree orbital location (the “103 Service Agreement”). In June 2013, we and EchoStar entered into an agreement pursuant to which we lease certain satellite capacity from EchoStar on the SES-3 satellite (the “DISH 103 Service Agreement”). Under the terms of the DISH 103 Service Agreement, we make certain monthly payments to EchoStar through the service term. Both the 103 Service Agreement and DISH 103 Service Agreement were terminated on March 31, 2018. TT&C Agreement. Effective January 1, 2012, we entered into a telemetry, tracking and control (“TT&C”) agreement pursuant to which we receive TT&C services from EchoStar for certain satellites (the “TT&C Agreement”). In February 2018, we amended the TT&C Agreement to, among other things, extend the term for one-year with four automatic one-year renewal periods. The fees for services provided under the TT&C Agreement are calculated at either: (i) a fixed fee; or (ii) cost plus a fixed margin, which will vary depending on the nature of the services provided. We and EchoStar are able to terminate the TT&C Agreement for any reason upon 12 months’ notice. “General and administrative expenses” During the three months ended September 30, 2018 and 2017, we incurred $5 million and $8 million, respectively, of general and administrative expenses for services provided to us by EchoStar. During the nine months ended September 30, 2018 and 2017, we incurred $16 million and $23 million, respectively, of general and administrative expenses for services provided to us by EchoStar. These amounts are recorded in “General and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below. Real Estate Lease Agreements. We have entered into lease agreements pursuant to which we lease certain real estate from EchoStar. 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, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: · Meridian Lease Agreement. The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado was for a period ending on December 31, 2017. In December 2017, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 31, 2018. · Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado was for a period ending on December 31, 2017. In December 2017, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 31, 2018. · Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. In connection with the completion of the Share Exchange, EchoStar transferred ownership of a portion of this property to us, and, effective March 1, 2017, we and EchoStar amended this lease agreement to (i) terminate the lease of certain space at the portion of the property that was transferred to us and (ii) provide for the continued lease to us of certain space at the portion of the property that EchoStar retained. · 100 Inverness Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, we lease certain space from EchoStar at 100 Inverness Terrace East, Englewood, Colorado for a period ending in December 2020. This agreement may be terminated by either party upon 180 days’ prior notice. Professional Services Agreement . Prior to 2010, in connection with the Spin-off, DISH Network entered into various agreements with EchoStar including the Transition Services Agreement, Satellite Procurement Agreement and Services Agreement, which all expired on January 1, 2010 and were replaced by a Professional Services Agreement. During 2009, DISH Network and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to receive the following services from DISH Network, among others, certain of which were previously provided under the Transition Services Agreement: information technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration, program acquisition services and other support services. Additionally, DISH Network and EchoStar agreed that DISH Network shall continue to have the right, but not the obligation, to engage EchoStar to manage the process of procuring new satellite capacity for DISH Network (previously provided under the Satellite Procurement Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided under the Services Agreement) and other support services. The Professional Services Agreement renewed on January 1, 2018 for an additional one-year period until January 1, 2019 and renews automatically for successive one-year periods thereafter, unless terminated earlier by either party upon at least 60 days’ notice. However, either party may terminate the Professional Services Agreement in part with respect to any particular service it receives for any reason upon at least 30 days’ notice. In connection with the completion of the Share Exchange on February 28, 2017, DISH Network and EchoStar amended the Professional Services Agreement to, among other things, provide certain transition services to each other related to the Share Exchange Agreement. Revenue for services provided by us to EchoStar under the Professional Services Agreement is recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Other Agreements - EchoStar Tax Sharing Agreement. In connection with the Spin-off, DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) with EchoStar which governs our respective rights, responsibilities and obligations after the Spin-off with respect to taxes for the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes, including any taxes that are incurred as a result of restructuring activities undertaken to implement the Spin-off, are borne by DISH Network, and DISH Network will indemnify EchoStar for such taxes. However, DISH Network is not liable for and will not indemnify EchoStar 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 (the “Code”) because of: (i) a direct or indirect acquisition of any of EchoStar’s stock, stock options or assets; (ii) any action that EchoStar takes or fails to take; or (iii) any action that EchoStar takes that is inconsistent with the information and representations furnished to the Internal Revenue Service (“IRS”) in connection with the request for the private letter ruling, or to counsel in connection with any opinion being delivered by counsel with respect to the Spin-off or certain related transactions. In such case, EchoStar is 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 only terminate after the later of the full period of all applicable statutes of limitations, including extensions, or once all rights and obligations are fully effectuated or performed. In light of the Tax Sharing Agreement, among other things, and in connection with DISH Network’s consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, during the third quarter 2013 DISH Network and EchoStar agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’ examination of these consolidated tax returns. In addition, during the third quarter 2013, DISH Network and EchoStar agreed upon a tax sharing arrangement for filing certain combined state income tax returns and a method of allocating the respective tax liabilities between DISH Network and EchoStar for such combined returns, through the taxable period ending on December 31, 2017 (the “State Tax Arrangement”). During the third quarter 2018, DISH Network and EchoStar amended the Tax Sharing Agreement and the 2013 agreements (the “Amendment”). Under the Amendment, among other things, DISH Network is entitled to apply the benefit of EchoStar’s 2009 net operating losses to its federal tax return for the year ended December 31, 2008, in exchange for paying EchoStar over time the value of the net annual federal income taxes paid by EchoStar that would have been otherwise offset by their 2009 net operating loss. In addition, the Amendment extends the term of the State Tax Arrangement for filing certain combined state income tax returns to the earlier to occur of (1) termination of the Tax Sharing Agreement, (2) a change in control of either DISH Network or EchoStar or, (3) for any particular state, if DISH Network and EchoStar no longer file a combined tax return for such state. Tax Matters Agreement . In connection with the completion of the Share Exchange, DISH Network and EchoStar entered into a Tax Matters Agreement, which governs certain rights, responsibilities and obligations with respect to taxes of the Transferred Businesses pursuant to the Share Exchange. Generally, EchoStar is responsible for all tax returns and tax liabilities for the Transferred Businesses for periods prior to the Share Exchange, and DISH Network are responsible for all tax returns and tax liabilities for the Transferred Businesses from and after the Share Exchange. Both DISH Network and EchoStar have made certain tax-related representations and are subject to various tax-related covenants after the consummation of the Share Exchange. Both DISH Network and EchoStar have agreed to indemnify each other if there is a breach of any such tax representation or violation of any such tax covenant and that breach or violation results in the Share Exchange not qualifying for tax free treatment for the other party. In addition, DISH Network has agreed to indemnify EchoStar if the Transferred Businesses are acquired, either directly or indirectly (e.g., via an acquisition of DISH Network), by one or more persons and such acquisition results in the Share Exchange not qualifying for tax free treatment. The Tax Matters Agreement supplements the Tax Sharing Agreement described above, which continues in full force and effect. TiVo. On April 29, 2011, DISH Network and EchoStar entered into a settlement agreement with TiVo Inc. (“TiVo”). The settlement resolved all pending litigation between DISH Network and EchoStar, on the one hand, and TiVo, on the other hand, including litigation relating to alleged patent infringement involving certain DISH TV digital video recorders, or DVRs. Under the settlement agreement, all pending litigation was dismissed with prejudice and all injunctions that permanently restrain, enjoin or compel any action by DISH Network or EchoStar were dissolved. DISH Network and EchoStar are jointly responsible for making payments to TiVo in the aggregate amount of $500 million, including an initial payment of $300 million and the remaining $200 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 of EchoStar from DISH Network, DISH Network made the initial payment to TiVo in May 2011, except for the contribution from EchoStar totaling approximately $10 million, representing an allocation of liability relating to EchoStar’s sales of DVR-enabled receivers to an international customer. Future payments were allocated between DISH Network and EchoStar based on historical sales of certain licensed products, with DISH Network being responsible for 95% of each annual payment. Pursuant to the Share Exchange Agreement, DISH Network was responsible for EchoStar’s allocation of the final payment to TiVo, which was paid July 31, 2017. Patent Cross-License Agreements . In December 2011, DISH Network and EchoStar entered into separate patent cross-license agreements with the same third party whereby: (i) EchoStar and such third-party licensed their respective patents to each other subject to certain conditions; and (ii) DISH Network and such third-party licensed their respective patents to each other subject to certain conditions (each, a “Cross-License Agreement”). Each Cross License Agreement covers patents acquired by the respective party prior to January 1, 2017 and aggregate payments under both Cross-License Agreements total less than $10 million. Each Cross License Agreement also contains an option to extend each Cross-License Agreement to include patents acquired by the respective party prior to January 1, 2022. In December 2016, DISH Network and EchoStar independently exercised their respective options to extend each Cross-License Agreement. The aggregate additional payments to such third-party was less than $3 million. Since the aggregate payments under both Cross-License Agreements were based on the combined annual revenues of DISH Network and EchoStar, DISH Network and EchoStar agreed to allocate their respective payments to such third party based on their respective percentage of combined total revenue. Rovi License Agreement. On August 19, 2016, we entered into a ten-year patent license agreement (the “Rovi License Agreement”) with Rovi Corporation (“Rovi”) and, for certain limited purposes, EchoStar. EchoStar is a party to the Rovi License Agreement solely with respect to certain provisions relating to the prior patent license agreement between EchoStar and Rovi. There are no payments between us and EchoStar under the Rovi License Agreement. Invidi. In November 2010 and April 2011, EchoStar made investments in Invidi in exchange for shares of Invidi’s Series D Preferred Stock. In November 2016, we, DIRECTV, LLC, a wholly-owned indirect subsidiary of AT&T Inc., 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, EchoStar sold its ownership interest in Invidi on the same terms offered to the other shareholders of Invidi. The transaction closed in January 2017. Hughes Broadband Master Services Agreement. In March 2017, DISH Network L.L.C. (“DNLLC”) and HNS entered into a Master Services Agreement (“MSA”) pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders for the Hughes broadband satellite service and related equipment; and (ii) installs Hughes service equipment with respect to activations generated by DNLLC. Under the MSA, HNS will make certain payments to DNLLC for each Hughes service activation generated, and installation performed, by DNLLC. Payments from HNS for services provided are recorded in “Subscriber-related revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The MSA has an initial term of five years with automatic renewal for successive one year terms. After the first anniversary of the MSA, 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. For the three months ended September 30, 2018 and 2017, we purchased broadband equipment from HNS of $1 million and $7 million, respectively, under the MSA. For the nine months ended September 30, 2018 and 2017, we purchased broadband equipment from HNS of $18 million and $17 million, respectively, under the MSA. Employee Matters Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, DISH Network and EchoStar entered into an Employee Matters Agreement that addresses the transfer of employees from EchoStar 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 EchoStar will be responsible for certain existing employe |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | 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 Article 10 of Regulation S-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. Our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. Certain prior period amounts have been reclassified to conform to the current period presentation. |
Principles of Consolidation | Principles of Consolidation We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary. Minority interests are recorded as noncontrolling interests or redeemable noncontrolling interests. See below for further information. Non-consolidated 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, these equity securities are classified as either marketable investment securities or other investments and recorded at fair value with changes recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation. On February 28, 2017, DISH Network and EchoStar and certain of their respective subsidiaries completed the transactions contemplated by the Share Exchange Agreement (the “Share Exchange Agreement”) that was previously entered into on January 31, 2017 (the “Share Exchange”). Pursuant to the Share Exchange Agreement, among other things, EchoStar transferred to us certain assets and liabilities of the EchoStar technologies and EchoStar broadcasting businesses, consisting primarily of the businesses that design, develop and distribute digital set-top boxes, provide satellite uplink services and develop and support streaming video technology, as well as certain investments in joint ventures, spectrum licenses, real estate properties and EchoStar’s ten percent non-voting interest in Sling TV Holding L.L.C. (the “Transferred Businesses”), and in exchange, we transferred to EchoStar the 6,290,499 shares of preferred tracking stock issued by EchoStar (the “EchoStar Tracking Stock”) and 81.128 shares of preferred tracking stock issued by Hughes Satellite Systems Corporation, a subsidiary of EchoStar (the “HSSC Tracking Stock,” and together with the EchoStar Tracking Stock, collectively, the “Tracking Stock”), that tracked the residential retail satellite broadband business of Hughes Network Systems, L.L.C. (“HNS”), a wholly-owned subsidiary of Hughes. In connection with the Share Exchange, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. See Note 12 for further information. As the Share Exchange was a transaction between entities that are under common control, accounting rules require that our Condensed Consolidated Financial Statements include the results of the Transferred Businesses for all periods presented, including periods prior to the completion of the Share Exchange. We initially recorded the Transferred Businesses at EchoStar’s historical cost basis. The difference between the historical cost basis of the Transferred Businesses and the net carrying value of the Tracking Stock was recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. The results of the Transferred Businesses were prepared from separate records maintained by EchoStar for the periods prior to March 1, 2017, and may not necessarily be indicative of the conditions that would have existed, or the results of operations, if the Transferred Businesses had been operated on a combined basis with our subsidiaries. |
Use of Estimates | 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 expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, 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 value of assets and liabilities acquired in business combinations, relative standalone selling prices of performance obligations, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, independent third-party retailer incentives, programming expenses and subscriber lives. Economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. |
Marketable Investment Securities | Marketable Investment Securities Historically, we classified all marketable investment securities as available-for-sale, except for investments which were accounted for as trading securities, and adjusted the carrying amount of our available-for-sale securities to fair value and reported the related temporary unrealized gains and losses as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. Our trading securities were carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Subsequent to the adoption of ASU 2016-01 during the first quarter 2018, all equity securities are carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All debt securities are classified as available-for-sale. We adjust the carrying amount of our debt securities to fair value and report the related temporary unrealized gains and losses as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. Declines in the fair value of a marketable debt security which are determined to be “other-than-temporary” are recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), thus establishing a new cost basis for such investment. |
Fair Value Measurements | Fair Value Measurements We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We apply 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; and quoted prices for identical or similar instruments in markets that are not active; and · Level 3, defined as unobservable inputs for which little or no market data exists, consistent with reasonably available assumptions made by other participants therefore requiring assumptions based on the best information available. As of September 30, 2018 and December 31, 2017, the carrying amount for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) was equal to or approximated fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are based on, among other things, available trade information, and/or an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. |
Revenue Recognition | Revenue Recognition Our revenue is primarily derived from Pay-TV programming services that we provide to our subscribers. We also generate revenue from equipment rental fees and other hardware related fees, including DVRs and fees from subscribers with multiple receivers; advertising services; fees earned from our in-home service operations; warranty services; and sales of digital receivers and related equipment to third-party pay-TV providers. See Note 10 for further information, including revenue disaggregated by major source. Our residential video subscribers contract for individual services or combinations of services, as discussed above, the majority of which are generally capable of being distinct and are accounted for as separate performance obligations. We consider our installations for first time DISH TV subscribers to be a service. However, since we provide a significant integration service combining the installation with programming services, we have concluded that the installation is not distinct from programming and thus the installation and programming services are accounted for as a single performance obligation. We generally satisfy these performance obligations and recognize revenue as the services are provided, for example as the programming is broadcast to subscribers, as this best represents the transfer of control of the services to the subscriber. In cases where a subscriber is charged certain nonrefundable upfront fees, those fees are generally considered to be material rights to the subscriber related to the subscriber’s option to renew without having to pay an additional fee upon renewal. These fees are deferred and recognized over the estimated period of time during which the fee remains material to the customer, which we estimate to be less than one year. Revenues arising from our in-home service operations that are separate from the initial installation, such as mounting a TV on a subscriber’s wall, are generally recognized when these services are performed. For our residential video subscribers, we have concluded that the contract term under ASC 606 is one month and as a result the revenue recognized for these subscribers for a given month is equal to the amount billed in that month, except for certain nonrefundable upfront fees that are accounted for as material rights, as discussed above. Revenues from our advertising services are typically recognized as the advertisements are broadcast. Sales of equipment to subscribers or other third parties are recognized when control is transferred under the contract. Revenue from our commercial video subscribers typically follows the residential model described above, with the exception that the contract term for most of our commercial subscribers exceeds one month and can be multiple years in length. However, commercial subscribers typically do not receive time-limited discounts or free service periods and accordingly, while they may have multiple performance obligations, revenue is equal to the amount billed in a given month. Contract Balances The timing of revenue recognition generally differs from the timing of invoicing to customers. When revenue is recognized prior to invoicing, we record a receivable. When revenue is recognized subsequent to invoicing, we record deferred revenue. Our residential video subscribers are typically billed monthly, and the contract balances for those customers arise from the timing of the monthly billing cycle. We do not adjust the amount of consideration for financing impacts as we apply a practical expedient when we anticipate that the period between transfer of goods and services and eventual payment for those goods and services will be less than one year. See Note 11 for further information, including balance and activity detail about our allowance for doubtful accounts and deferred revenue related to contracts with subscribers. Assets recognized related to the Costs to Obtain a Contract with a Subscriber We recognize an asset for the incremental costs of obtaining a contract with a subscriber if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs, including those with our independent third-party retailers, meet the requirements to be capitalized, and payments made under these programs are capitalized and amortized to expense over the estimated subscriber life. During the three and nine months ended September 30, 2018, we capitalized $51 million and $141 million, respectively, under these programs. The amortization expense related to these programs was $9 million and $17 million, respectively, for the three and nine months ended September 30, 2018. As of September 30, 2018, we had a total of $138 million capitalized on our Condensed Consolidated Balance Sheets. These amounts are capitalized in “Other currents assets” and “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets, and then amortized in “Other subscriber acquisition costs” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Impact of Adoption of ASU 2014-09 On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”) and has modified the standard thereafter. We adopted ASU 2014-09, as modified, and now codified as Accounting Standard Codification Topic 606 (“ASC 606”) and Accounting Standard Codification Topic 340-40 (“ASC 340-40”) on January 1, 2018, using the modified retrospective method. Under that method, we applied the new guidance to all open contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change, which was $2 million, net of deferred taxes of $1 million. In addition, we are providing additional disclosures comparing the results under previous guidance to those as follows: Condensed Consolidated Statements of Operations DISH DBS (as would have been reported under previous standards) Impact of adopting ASU 2014-09 DISH DBS (as currently reported) (In thousands) For the Three Months Ended September 30, 2018 Subscriber-related revenue $ 3,291,452 $ (2,698) $ 3,288,754 Subscriber-related expenses $ 2,091,481 $ (3,237) $ 2,088,244 Total subscriber acquisition costs $ 227,686 $ (40,808) $ 186,878 Operating income (loss) $ 501,092 $ 41,347 $ 542,439 Income (loss) before income taxes $ 331,546 $ 41,347 $ 372,893 Income tax (provision) benefit, net $ (80,521) $ (10,168) $ (90,689) Net income (loss) attributable to DISH DBS $ 250,093 $ 31,179 $ 281,272 For the Nine Months Ended September 30, 2018 Subscriber-related revenue $ 10,003,045 $ (14,340) $ 9,988,705 Subscriber-related expenses $ 6,358,338 $ (10,489) $ 6,347,849 Total subscriber acquisition costs $ 691,216 $ (125,065) $ 566,151 Operating income (loss) $ 1,478,848 $ 121,214 $ 1,600,062 Income (loss) before income taxes $ 899,339 $ 121,214 $ 1,020,553 Income tax (provision) benefit, net $ (217,168) $ (29,831) $ (246,999) Net income (loss) attributable to DISH DBS $ 679,772 $ 91,383 $ 771,155 Condensed Consolidated Balance Sheets DISH DBS (as would have been reported under previous standards) Impact of adopting ASU 2014-09 DISH DBS (as currently reported) (In thousands) As of September 30, 2018 Inventory $ 273,186 $ 31,717 $ 304,903 Other current assets $ 87,262 $ 38,609 $ 125,871 Other noncurrent assets, net $ 185,775 $ 98,906 $ 284,681 Total assets $ 3,653,073 $ 169,232 $ 3,822,305 Deferred revenue and other $ 631,635 $ 42,478 $ 674,113 Deferred tax liabilities $ 439,541 $ 30,623 $ 470,164 Long-term deferred revenue and other long-term liabilities $ 184,739 $ 2,427 $ 187,166 Total liabilities $ 16,000,099 $ 75,528 $ 16,075,627 Total stockholder's equity (deficit) $ (12,347,026) $ 93,704 $ (12,253,322) Total liabilities and stockholder's equity (deficit) $ 3,653,073 $ 169,232 $ 3,822,305 The adoption of ASU 2014-09 had no impact to cash flows from operating, investing and financing activities on our Condensed Consolidated Statements of Cash Flows. |
Research and Development | Research and Development Research and development costs are expensed as incurred. Research and development costs totaled $6 million and $8 million for the three months ended September 30, 2018 and 2017, respectively. Research and development costs totaled $18 million and $24 million for the nine months ended September 30, 2018 and 2017, respectively. |
New Accounting Pronouncements | New Accounting Pronouncements Leases. In February 2016, the FASB issued ASU 2016-02 Leases (“ASU 2016-02”), and has modified the standard thereafter. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring that lessees recognize right of use assets and lease liabilities for the vast majority of leases. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. The accounting guidance for lessors remains largely unchanged. The effective date of this standard for us will be January 1, 2019, at which time we plan to adopt the standard using the modified retrospective approach with a cumulative-effect adjustment to opening retained earnings recorded at the beginning of the period of adoption. Therefore, upon adoption, we will recognize and measure leases without revising comparative period information or disclosure. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. While our assessment of the effect of ASU 2016-02 is ongoing, we currently believe the most significant impact will be the recognition of right of use assets and lease liabilities on our Condensed Consolidated Balance Sheets. The multidisciplinary team we have established to implement this guidance is currently collecting and validating lease data and implementing our selected lease accounting system. Financial Instruments – Credit Losses. On June 16, 2016, the FASB issued ASU 2016-13 Financial Instruments – Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net earnings. This standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact the adoption of ASU 2016-13 will have on our Condensed Consolidated Financial Statements and related disclosures. Fair Value Measurement. On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements by adding, modifying or removing certain disclosures. This standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. Certain disclosures in ASU 2018-13 are required to be applied on a retrospective basis and others on a prospective basis. We are evaluating the impact the adoption of ASU 2018-13 will have on our Condensed Consolidated Financial Statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of additional disclosure comparing the results under previous guidance | Condensed Consolidated Statements of Operations DISH DBS (as would have been reported under previous standards) Impact of adopting ASU 2014-09 DISH DBS (as currently reported) (In thousands) For the Three Months Ended September 30, 2018 Subscriber-related revenue $ 3,291,452 $ (2,698) $ 3,288,754 Subscriber-related expenses $ 2,091,481 $ (3,237) $ 2,088,244 Total subscriber acquisition costs $ 227,686 $ (40,808) $ 186,878 Operating income (loss) $ 501,092 $ 41,347 $ 542,439 Income (loss) before income taxes $ 331,546 $ 41,347 $ 372,893 Income tax (provision) benefit, net $ (80,521) $ (10,168) $ (90,689) Net income (loss) attributable to DISH DBS $ 250,093 $ 31,179 $ 281,272 For the Nine Months Ended September 30, 2018 Subscriber-related revenue $ 10,003,045 $ (14,340) $ 9,988,705 Subscriber-related expenses $ 6,358,338 $ (10,489) $ 6,347,849 Total subscriber acquisition costs $ 691,216 $ (125,065) $ 566,151 Operating income (loss) $ 1,478,848 $ 121,214 $ 1,600,062 Income (loss) before income taxes $ 899,339 $ 121,214 $ 1,020,553 Income tax (provision) benefit, net $ (217,168) $ (29,831) $ (246,999) Net income (loss) attributable to DISH DBS $ 679,772 $ 91,383 $ 771,155 Condensed Consolidated Balance Sheets DISH DBS (as would have been reported under previous standards) Impact of adopting ASU 2014-09 DISH DBS (as currently reported) (In thousands) As of September 30, 2018 Inventory $ 273,186 $ 31,717 $ 304,903 Other current assets $ 87,262 $ 38,609 $ 125,871 Other noncurrent assets, net $ 185,775 $ 98,906 $ 284,681 Total assets $ 3,653,073 $ 169,232 $ 3,822,305 Deferred revenue and other $ 631,635 $ 42,478 $ 674,113 Deferred tax liabilities $ 439,541 $ 30,623 $ 470,164 Long-term deferred revenue and other long-term liabilities $ 184,739 $ 2,427 $ 187,166 Total liabilities $ 16,000,099 $ 75,528 $ 16,075,627 Total stockholder's equity (deficit) $ (12,347,026) $ 93,704 $ (12,253,322) Total liabilities and stockholder's equity (deficit) $ 3,653,073 $ 169,232 $ 3,822,305 |
Supplemental Data - Statement_2
Supplemental Data - Statements of Cash Flows (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Data - Statements of Cash Flows | |
Schedule of supplemental cash flow and other non-cash data | For the Nine Months Ended September 30, 2018 2017 (In thousands) Cash paid for interest $ 637,323 $ 696,379 Cash received for interest 3,434 7,889 Cash paid for income taxes 16,646 23,289 Cash paid for income taxes to DISH Network 242,087 323,588 Capitalized interest 806 — Assets financed under capital lease obligations 142 889 |
Marketable Investment Securit_2
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | |
Schedule of marketable investment securities, restricted cash and cash equivalents, and other investment securities | As of September 30, December 31, 2018 2017 (In thousands) Marketable investment securities: Current marketable investment securities: Trading/equity (Note 2) $ 11,236 $ 93,367 Other 57,273 92,146 Total current marketable investment securities 68,509 185,513 Restricted marketable investment securities (1) 66,809 72,014 Total marketable investment securities 135,318 257,527 Restricted cash and cash equivalents (1) 390 393 Other investment securities: Other investment securities - equity method 109,546 113,460 Total other investment securities 109,546 113,460 Total marketable investment securities, restricted cash and cash equivalents, and other investment securities $ 245,254 $ 371,380 (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Condensed Consolidated Balance Sheets. |
Schedule of components of available-for-sale investments | As of September 30, 2018 As of December 31, 2017 Marketable Marketable Investment Unrealized Investment Unrealized Securities Gains Losses Net Securities Gains Losses Net (In thousands) Debt securities (including restricted): U.S. Treasury and agency securities $ 66,569 $ — $ (49) $ (49) $ 74,788 $ 22 $ (141) $ (119) Commercial paper 4,606 — — — 24,407 — (2) (2) Corporate securities 52,648 28 (21) 7 63,809 — (29) (29) Other 259 — — — 1,156 — — — Total $ 124,082 $ 28 $ (70) $ (42) $ 164,160 $ 22 $ (172) $ (150) |
Schedule of investments measured at fair value on a recurring basis | As of September 30, 2018 December 31, 2017 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (In thousands) Cash equivalents (including restricted) $ 103,042 $ 74 $ 102,968 $ — $ 315,030 $ 140 $ 314,890 $ — Debt securities (including restricted): U.S. Treasury and agency securities $ 66,569 $ 66,569 $ — $ — $ 74,788 $ 74,788 $ — $ — Commercial paper 4,606 — 4,606 — 24,407 — 24,407 — Corporate securities 52,648 — 52,648 — 63,809 — 63,809 — Other 259 — 259 — 1,156 — 1,156 — Equity securities 11,236 11,236 — — 93,367 93,367 — — Total $ 135,318 $ 77,805 $ 57,513 $ — $ 257,527 $ 168,155 $ 89,372 $ — |
Gains and Losses on Sales and Changes in Carrying Amounts of Investments | For the Three Months Ended For the Nine Months Ended September 30, September 30, Other, net: 2018 2017 2018 2017 (In thousands) Marketable investment securities - realized and unrealized gains (losses) (1) $ 23,573 $ 39,706 $ 8,846 $ 41,509 Costs related to early redemption of debt — — (2,716) — Gain (loss) on sale of subsidiary 7,004 — 7,004 — Equity in earnings of affiliates (5,369) 501 (3,164) 895 Other 262 52 2,118 1,280 Total $ 25,470 $ 40,259 $ 12,088 $ 43,684 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory | |
Schedule of inventory | As of September 30, December 31, 2018 2017 (In thousands) Finished goods $ 231,339 $ 248,233 Work-in-process and service repairs 55,910 54,445 Raw materials 17,654 18,221 Total inventory $ 304,903 $ 320,899 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment | |
Schedule of property and equipment | Depreciable As of Life September 30, December 31, (In Years) 2018 2017 (In thousands) Equipment leased to customers 2-5 $ 2,065,102 $ 2,264,653 EchoStar XV 15 277,658 277,658 Satellites acquired under capital lease agreements 10-15 499,819 499,819 Furniture, fixtures, equipment and other 3-10 1,738,873 1,680,492 Buildings and improvements 4-40 293,152 292,191 Land - 14,057 14,057 Construction in progress - 100,676 92,946 Total property and equipment 4,989,337 5,121,816 Accumulated depreciation (3,543,172) (3,489,655) Property and equipment, net $ 1,446,165 $ 1,632,161 |
Schedule of depreciation and amortization expense | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 (In thousands) Equipment leased to customers $ 113,193 $ 139,702 $ 330,851 $ 411,247 Satellites 15,261 15,261 45,784 45,784 Buildings, furniture, fixtures, equipment and other 34,568 34,763 125,139 106,037 Total depreciation and amortization $ 163,022 $ 189,726 $ 501,774 $ 563,068 |
Schedule of pay-TV satellite fleet | Degree Estimated Useful Life Launch Orbital (Years) / Lease Satellites Date Location Termination Date Owned: EchoStar XV July 2010 61.5 15 Leased from DISH Network (1): EchoStar XVIII June 2016 61.5 Month to month Leased from EchoStar (2): EchoStar IX August 2003 121 Month to month EchoStar X (3) February 2006 110 February 2021 EchoStar XI (3) July 2008 110 September 2021 EchoStar XIV (3) March 2010 119 February 2023 EchoStar XVI (4) November 2012 61.5 January 2023 Nimiq 5 September 2009 72.7 September 2019 QuetzSat-1 September 2011 77 November 2021 Leased from Other Third Party: Anik F3 April 2007 118.7 April 2022 Ciel II (5) December 2008 129 January 2020 (1) See Note 12 for further information on our Related Party Transactions with DISH Network. (2) See Note 12 for further information on our Related Party Transactions with EchoStar. (3) We generally have the option to renew each lease on a year-to-year basis through the end of the useful life of the respective satellite. (4) We have the option to renew this lease for an additional five-year period. (5) During the fourth quarter 2018, we renewed this lease. |
Long-Term Debt and Capital Le_2
Long-Term Debt and Capital Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Long-Term Debt | |
Schedule of carrying and fair values of the entity's debt facilities | As of September 30, 2018 December 31, 2017 Carrying Fair Value Carrying Fair Value (In thousands) 4 1/4% Senior Notes due 2018 (1) $ — $ — $ 1,025,861 $ 1,031,596 7 7/8% Senior Notes due 2019 (2) 1,337,469 1,386,514 1,400,000 1,501,206 5 1/8% Senior Notes due 2020 1,100,000 1,112,320 1,100,000 1,127,588 6 3/4% Senior Notes due 2021 2,000,000 2,049,640 2,000,000 2,120,480 5 7/8% Senior Notes due 2022 2,000,000 1,958,480 2,000,000 2,014,140 5 % Senior Notes due 2023 1,500,000 1,366,665 1,500,000 1,432,335 5 7/8% Senior Notes due 2024 2,000,000 1,802,400 2,000,000 1,952,220 7 3/4% Senior Notes due 2026 2,000,000 1,891,620 2,000,000 2,118,400 Other notes payable 10,346 10,346 11,509 11,509 Subtotal 11,947,815 $ 11,577,985 13,037,370 $ 13,309,474 Unamortized deferred financing costs and debt discounts, net (25,105) (31,041) Capital lease obligations (3) 76,348 104,318 Total long-term debt and capital lease obligations (including current portion) $ 11,999,058 $ 13,110,647 (1) On April 2, 2018, we redeemed the principal balance of our 4 1/4% Senior Notes due 2018. (2) During the nine months ended September 30, 2018, we repurchased $62 million of our 7 7/8% Senior Notes due 2019 in open market trades. The remaining balance of $1.338 billion matures on September 1, 2019. (3) Disclosure regarding fair value of capital leases is not required. |
Disaggregation of Revenue (Tabl
Disaggregation of Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disaggregation of Revenue | |
Schedule of disaggregation of revenue | For the Three Months Ended For the Nine Months Ended September 30, September 30, Revenue: 2018 2017 2018 2017 (In thousands) United States $ 3,319,715 $ 3,479,791 $ 10,076,737 $ 10,573,536 Canada and Mexico 14,729 11,768 34,236 32,794 Total revenue $ 3,334,444 $ 3,491,559 $ 10,110,973 $ 10,606,330 The revenue from external customers disaggregated by major revenue source was as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, Category: 2018 2017 2018 2017 (In thousands) Pay-TV video and related revenue $ 3,288,754 $ 3,459,439 $ 9,988,705 $ 10,508,801 Equipment sales and other revenue 45,690 32,120 122,268 97,529 Total $ 3,334,444 $ 3,491,559 $ 10,110,973 $ 10,606,330 |
Contract Balances (Tables)
Contract Balances (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Contract Balances | |
Schedule of Contract balances | Allowance for doubtful accounts Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period (In thousands) For the nine months ended September 30, 2018 $ 15,056 $ 73,698 $ (75,857) $ 12,897 Deferred revenue related to contracts with subscribers is recorded in “Deferred revenue and other” and “Long-term deferred revenue and other long-term liabilities” on our Condensed Consolidated Balance Sheets. Changes in deferred revenue related to contracts with subscribers were as follows: Contract Liabilities (In thousands) Balance as of December 31, 2017 $ 684,119 Recognition of unearned revenue (5,426,705) Deferral of revenue 5,402,154 Balance as of September 30, 2018 $ 659,568 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of related party transaction | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 (In thousands) Purchases (including fees): Purchases from NagraStar $ 15,007 $ 17,897 $ 57,632 $ 54,328 As of September 30, December 31, 2018 2017 (In thousands) Amounts Payable and Commitments: Amounts payable to NagraStar $ 16,229 $ 16,685 Commitments to NagraStar $ 879 $ 4,927 |
Dish Mexico | |
Schedule of related party transaction | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 (In thousands) Sales: Digital receivers and related components $ 465 $ 413 $ 921 $ 1,596 Uplink services $ 1,187 $ 995 $ 3,385 $ 2,993 As of September 30, December 31, 2018 2017 (In thousands) Amounts Receivable: Amounts receivable from Dish Mexico $ 1,219 $ 3,027 |
Organization and Business Act_2
Organization and Business Activities (Details) customer in Thousands | Sep. 30, 2018customer |
DISH TV subscribers | |
Organization and Business Activities | |
Number of subscribers | 10,286 |
Sling TV subscribers | |
Organization and Business Activities | |
Number of subscribers | 2,370 |
Pay TV Subscribers | |
Organization and Business Activities | |
Number of subscribers | 12,656 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Principles of Consolidation and Research and Development (Details) - USD ($) $ in Millions | Feb. 28, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Research and Development | |||||
Research and Development Expense | $ 6 | $ 8 | $ 18 | $ 24 | |
EchoStar | Satellite and Tracking Stock Transaction | |||||
Significant accounting policies | |||||
Preferred tracking stock issued by related party | 6,290,499 | ||||
HSSC | Satellite and Tracking Stock Transaction | |||||
Significant accounting policies | |||||
Preferred tracking stock issued by related party | 81.128 | ||||
Sling TV Holding | EchoStar | |||||
Significant accounting policies | |||||
Ownership percentage owned by noncontrolling owners | 10.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Contract cost capitalized during the period | $ 51,000 | $ 141,000 | |||
Amortization of capitalized contract cost | 9,000 | 17,000 | |||
Capitalized Contract Cost | 138,000 | 138,000 | |||
Retained earnings | (13,394,572) | (13,394,572) | $ (14,168,047) | ||
Subscriber-related revenue | 3,334,444 | $ 3,491,559 | 10,110,973 | $ 10,606,330 | |
Subscriber-related expenses | 2,088,244 | 2,182,555 | 6,347,849 | 6,543,542 | |
Total subscriber acquisition costs | 186,878 | 315,690 | 566,151 | 867,486 | |
Operating income (loss) | 542,439 | 424,559 | 1,600,062 | 1,233,072 | |
Income (loss) before income taxes | 372,893 | 254,356 | 1,020,553 | 628,756 | |
Income tax (provision) benefit, net | (90,689) | (94,426) | (246,999) | (321,325) | |
Net income (loss) attributable to DISH DBS | 281,272 | 158,424 | 771,155 | 304,483 | |
Inventory | 304,903 | 304,903 | 320,899 | ||
Other current assets | 125,871 | 125,871 | 189,480 | ||
Other noncurrent assets, net | 284,681 | 284,681 | 236,041 | ||
Total assets | 3,822,305 | 3,822,305 | 4,379,187 | ||
Deferred revenue and other | 674,113 | 674,113 | 693,595 | ||
Deferred tax liabilities | 470,164 | 470,164 | 485,099 | ||
Long-term deferred revenue and other long-term liabilities | 187,166 | 187,166 | 207,329 | ||
Total liabilities | 16,075,627 | 16,075,627 | 17,425,850 | ||
Total stockholder's equity (deficit) | (12,253,322) | (12,253,322) | (13,046,663) | ||
Total liabilities and stockholder's equity (deficit) | 3,822,305 | 3,822,305 | $ 4,379,187 | ||
Subscriber-related | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Subscriber-related revenue | 3,288,754 | 9,988,705 | |||
Subscriber-related expenses | 2,088,244 | 6,347,849 | |||
Equipment sales and other | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Subscriber-related revenue | 45,690 | $ 32,120 | 122,268 | $ 97,529 | |
ASU 2014-09 | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Retained earnings | 2,000 | 2,000 | |||
Deferred taxes | 1,000 | 1,000 | |||
ASU 2014-09 | DISH DBS (as would have been reported under previous standards) | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Total subscriber acquisition costs | 227,686 | 691,216 | |||
Operating income (loss) | 501,092 | 1,478,848 | |||
Income (loss) before income taxes | 331,546 | 899,339 | |||
Income tax (provision) benefit, net | (80,521) | (217,168) | |||
Net income (loss) attributable to DISH DBS | 250,093 | 679,772 | |||
Inventory | 273,186 | 273,186 | |||
Other current assets | 87,262 | 87,262 | |||
Other noncurrent assets, net | 185,775 | 185,775 | |||
Total assets | 3,653,073 | 3,653,073 | |||
Deferred revenue and other | 631,635 | 631,635 | |||
Deferred tax liabilities | 439,541 | 439,541 | |||
Long-term deferred revenue and other long-term liabilities | 184,739 | 184,739 | |||
Total liabilities | 16,000,099 | 16,000,099 | |||
Total stockholder's equity (deficit) | (12,347,026) | (12,347,026) | |||
Total liabilities and stockholder's equity (deficit) | 3,653,073 | 3,653,073 | |||
ASU 2014-09 | Impact of adopting ASU 2014-09 | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Total subscriber acquisition costs | (40,808) | (125,065) | |||
Operating income (loss) | 41,347 | 121,214 | |||
Income (loss) before income taxes | 41,347 | 121,214 | |||
Income tax (provision) benefit, net | (10,168) | (29,831) | |||
Net income (loss) attributable to DISH DBS | 31,179 | 91,383 | |||
Inventory | 31,717 | 31,717 | |||
Other current assets | 38,609 | 38,609 | |||
Other noncurrent assets, net | 98,906 | 98,906 | |||
Total assets | 169,232 | 169,232 | |||
Deferred revenue and other | 42,478 | 42,478 | |||
Deferred tax liabilities | 30,623 | 30,623 | |||
Long-term deferred revenue and other long-term liabilities | 2,427 | 2,427 | |||
Total liabilities | 75,528 | 75,528 | |||
Total stockholder's equity (deficit) | 93,704 | 93,704 | |||
Total liabilities and stockholder's equity (deficit) | 169,232 | 169,232 | |||
ASU 2014-09 | Subscriber-related | DISH DBS (as would have been reported under previous standards) | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Subscriber-related revenue | 3,291,452 | 10,003,045 | |||
Subscriber-related expenses | 2,091,481 | 6,358,338 | |||
ASU 2014-09 | Subscriber-related | Impact of adopting ASU 2014-09 | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Subscriber-related revenue | (2,698) | (14,340) | |||
Subscriber-related expenses | $ (3,237) | $ (10,489) |
Supplemental Data - Statement_3
Supplemental Data - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Supplemental Data - Statements of Cash Flows | ||
Cash paid for interest | $ 637,323 | $ 696,379 |
Cash received for interest | 3,434 | 7,889 |
Cash paid for income taxes | 16,646 | 23,289 |
Cash paid for income taxes to DISH Network | 242,087 | 323,588 |
Capitalized interest | 806 | |
Assets financed under capital lease obligations | $ 142 | $ 889 |
Marketable Investment Securit_3
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Feb. 28, 2017 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Trading/equity (Note 2) | $ 11,236 | $ 93,367 | |
Total current marketable investment securities | 68,509 | 185,513 | |
Restricted marketable investment securities(1) | 66,809 | 72,014 | |
Total marketable investment securities | 135,318 | 257,527 | |
Restricted cash and cash equivalents (1) | 390 | 393 | |
Other investment securities - equity method | 109,546 | 113,460 | |
Total other investment securities | 109,546 | 113,460 | |
Total marketable investment securities, restricted cash and cash equivalents, and other investment securities | $ 245,254 | 371,380 | |
Maximum maturities of commercial paper | 365 days | ||
Maximum maturities of corporate securities | 18 months | ||
NagraStar L.L.C | |||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Ownership interest in equity method investment | 50.00% | ||
Current marketable investment securities - other | |||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Total current marketable investment securities | $ 57,273 | $ 92,146 |
Marketable Investment Securit_4
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Unrealized Gains (Losses) On Marketable Investment Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | $ (42) | $ (150) |
Accumulated net unrealized gains, net of tax, in accumulated other comprehensive income (loss) | (1,000) | (1,000) |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 28 | 22 |
Unrealized Losses | (70) | (172) |
Unrealized Gains Losses, Net | (42) | (150) |
Contractual maturities of restricted and non-restricted marketable investment securities | ||
Debt securities with contractual maturities within one year | 99,000 | |
Debt securities with contractual maturities extending longer than one year through and including five years | 25,000 | |
U.S. Treasury and agency securities | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | (49) | (119) |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 22 | |
Unrealized Losses | (49) | (141) |
Unrealized Gains Losses, Net | (49) | (119) |
Commercial paper | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | (2) | |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Losses | (2) | |
Unrealized Gains Losses, Net | (2) | |
Corporate securities | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | 7 | (29) |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 28 | |
Unrealized Losses | (21) | (29) |
Unrealized Gains Losses, Net | $ 7 | $ (29) |
Marketable Investment Securit_5
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair value of marketable securities | ||
Debt securities | $ 124,082 | $ 164,160 |
Equity Securities | 11,236 | 93,367 |
Total marketable investment securities | 135,318 | 257,527 |
Transfer of investments from Level 1 to Level 2 | 0 | |
Transfer of investments from Level 2 to Level 1 | 0 | |
U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 66,569 | 74,788 |
Commercial paper | ||
Fair value of marketable securities | ||
Debt securities | 4,606 | 24,407 |
Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 52,648 | 63,809 |
Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | 259 | 1,156 |
Fair value measurements on recurring basis | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 103,042 | 315,030 |
Equity Securities | 11,236 | 93,367 |
Total marketable investment securities | 135,318 | 257,527 |
Fair value measurements on recurring basis | U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 66,569 | 74,788 |
Fair value measurements on recurring basis | Commercial paper | ||
Fair value of marketable securities | ||
Debt securities | 4,606 | 24,407 |
Fair value measurements on recurring basis | Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 52,648 | 63,809 |
Fair value measurements on recurring basis | Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | 259 | 1,156 |
Fair value measurements on recurring basis | Level 1 | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 74 | 140 |
Equity Securities | 11,236 | 93,367 |
Total marketable investment securities | 77,805 | 168,155 |
Fair value measurements on recurring basis | Level 1 | U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 66,569 | 74,788 |
Fair value measurements on recurring basis | Level 2 | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 102,968 | 314,890 |
Total marketable investment securities | 57,513 | 89,372 |
Fair value measurements on recurring basis | Level 2 | Commercial paper | ||
Fair value of marketable securities | ||
Debt securities | 4,606 | 24,407 |
Fair value measurements on recurring basis | Level 2 | Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 52,648 | 63,809 |
Fair value measurements on recurring basis | Level 2 | Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | $ 259 | $ 1,156 |
Marketable Investment Securit_6
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Gains And Losses On Sales And Changes In Carrying Amounts Of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | ||||
Marketable investment securities - gains (losses) on sales/exchanges | $ 23,573 | $ 39,706 | $ 8,846 | $ 41,509 |
Costs related to early redemption of debt | (2,716) | |||
Gain (loss) on sale of subsidiary | 7,004 | 7,004 | ||
Equity in earnings | (5,369) | 501 | (3,164) | 895 |
Other | 262 | 52 | 2,118 | 1,280 |
Total | 25,470 | $ 40,259 | 12,088 | $ 43,684 |
Unrealized gains related to equity securities | $ 5,000 | $ 3,000 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory | ||
Finished goods | $ 231,339 | $ 248,233 |
Work-in-process and service repairs | 55,910 | 54,445 |
Raw materials | 17,654 | 18,221 |
Total Inventory | $ 304,903 | $ 320,899 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Property and Equipment | ||
Total property and equipment | $ 4,989,337 | $ 5,121,816 |
Accumulated depreciation | (3,543,172) | (3,489,655) |
Property and equipment, net | 1,446,165 | 1,632,161 |
Equipment leased to customers | ||
Property and Equipment | ||
Total property and equipment | $ 2,065,102 | 2,264,653 |
Equipment leased to customers | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 2 years | |
Equipment leased to customers | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 5 years | |
EchoStar XV | ||
Property and Equipment | ||
Total property and equipment | $ 277,658 | 277,658 |
Depreciable life of assets | 15 years | |
Satellites acquired under capital lease agreements | ||
Property and Equipment | ||
Total property and equipment | $ 499,819 | 499,819 |
Satellites acquired under capital lease agreements | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 10 years | |
Satellites acquired under capital lease agreements | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 15 years | |
Furniture, fixtures, equipment and other | ||
Property and Equipment | ||
Total property and equipment | $ 1,738,873 | 1,680,492 |
Furniture, fixtures, equipment and other | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 3 years | |
Furniture, fixtures, equipment and other | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 10 years | |
Buildings and improvements | ||
Property and Equipment | ||
Total property and equipment | $ 293,152 | 292,191 |
Buildings and improvements | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 4 years | |
Buildings and improvements | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 40 years | |
Land | ||
Property and Equipment | ||
Total property and equipment | $ 14,057 | 14,057 |
Construction in progress | ||
Property and Equipment | ||
Total property and equipment | $ 100,676 | $ 92,946 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | |
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | $ 163,022 | $ 189,726 | $ 501,774 | $ 563,068 |
Equipment leased to customers | ||||
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | 113,193 | 139,702 | 330,851 | 411,247 |
Satellites | ||||
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | 15,261 | 15,261 | 45,784 | 45,784 |
Buildings, furniture, fixtures, equipment and other | ||||
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | $ 34,568 | $ 34,763 | $ 125,139 | $ 106,037 |
Pay-TV Satellites | ||||
Depreciation and amortization expense | ||||
Number of satellites utilized in geostationary orbit approximately 22,300 miles above the equator | 11 | |||
Owned Satellites | 1 | 1 | ||
Number of satellites utilized under operating lease | 7 | |||
Number of satellites utilized under capital lease | 2 | |||
Dish Network | Pay-TV Satellites | ||||
Depreciation and amortization expense | ||||
Number of satellites utilized under operating lease | 1 |
Property and Equipment - Pay TV
Property and Equipment - Pay TV Satellites (Details) | 9 Months Ended |
Sep. 30, 2018 | |
EchoStar XV | |
Property and Equipment | |
Depreciable life of assets | 15 years |
EchoStar XVI | |
Property and Equipment | |
Option to renew the lease for an additional period | 5 years |
Long-Term Debt and Capital Le_3
Long-Term Debt and Capital Lease Obligations - Long term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | |
Long-term debt | ||||
Carrying Value | $ 11,947,815 | $ 13,037,370 | ||
Fair Value | 11,577,985 | 13,309,474 | ||
Unamortized deferred financing costs and debt discount, net | (25,105) | (31,041) | ||
Capital lease obligations (3) | 76,348 | 104,318 | ||
Total long-term debt and capital lease obligations (including current portion) | 11,999,058 | 13,110,647 | ||
Principal balance of debt redeemed | 1,088,392 | $ 900,000 | ||
4 1/4% Senior Notes due 2018 | ||||
Long-term debt | ||||
Carrying Value | 1,025,861 | |||
Fair Value | $ 1,031,596 | |||
Interest rate (as a percent) | 4.25% | 4.25% | ||
7 7/8% Senior Notes due 2019 | ||||
Long-term debt | ||||
Carrying Value | 1,337,469 | $ 1,400,000 | ||
Fair Value | 1,386,514 | 1,501,206 | ||
Debt repurchased | 62,000 | |||
5 1/8% Senior Notes due 2020 | ||||
Long-term debt | ||||
Carrying Value | 1,100,000 | 1,100,000 | ||
Fair Value | 1,112,320 | $ 1,127,588 | ||
Interest rate (as a percent) | 5.125% | 5.125% | ||
6 3/4% Senior Notes due 2021 | ||||
Long-term debt | ||||
Carrying Value | 2,000,000 | $ 2,000,000 | ||
Fair Value | 2,049,640 | $ 2,120,480 | ||
Interest rate (as a percent) | 6.75% | 6.75% | ||
5 7/8% Senior Notes due 2022 | ||||
Long-term debt | ||||
Carrying Value | 2,000,000 | $ 2,000,000 | ||
Fair Value | 1,958,480 | $ 2,014,140 | ||
Interest rate (as a percent) | 5.875% | 5.875% | ||
5% Senior Notes due 2023 | ||||
Long-term debt | ||||
Carrying Value | 1,500,000 | $ 1,500,000 | ||
Fair Value | 1,366,665 | 1,432,335 | ||
5 7/8% Senior Notes due 2024 | ||||
Long-term debt | ||||
Carrying Value | 2,000,000 | 2,000,000 | ||
Fair Value | 1,802,400 | $ 1,952,220 | ||
Interest rate (as a percent) | 5.875% | 5.875% | ||
7 3/4% Senior Notes due 2026 | ||||
Long-term debt | ||||
Carrying Value | 2,000,000 | $ 2,000,000 | ||
Fair Value | 1,891,620 | $ 2,118,400 | ||
Interest rate (as a percent) | 7.75% | 7.75% | ||
Other notes payable | ||||
Long-term debt | ||||
Carrying Value | 10,346 | $ 11,509 | ||
Fair Value | $ 10,346 | $ 11,509 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | Jul. 06, 2018patent | Jun. 05, 2017USD ($) | Oct. 03, 2016 | Sep. 23, 2016USD ($) | Dec. 23, 2013USD ($) | Feb. 11, 2016USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Commitments and Contingencies | ||||||||
Term barred from conducting any outbound telemarketing | 2 years | |||||||
Term barred from accepting orders from independent third-party retailer | 2 years | |||||||
Phase two expected expenditures | $ 10,000,000,000 | |||||||
Litigation expense (Note 8) | $ 295,695,000 | |||||||
Maximum | ||||||||
Commitments and Contingencies | ||||||||
Phase one expected expenditures | 1,000,000,000 | |||||||
Minimum | ||||||||
Commitments and Contingencies | ||||||||
Phase one expected expenditures | $ 500,000,000 | |||||||
LBAC | ||||||||
Commitments and Contingencies | ||||||||
Business days allowed to terminate existing agreements | 3 days | |||||||
Blue Spike LLC | Maximum | ||||||||
Commitments and Contingencies | ||||||||
Number of patent infringement cases filed | patent | 170 | |||||||
Northstar Wireless or Northstar Spectrum | ||||||||
Commitments and Contingencies | ||||||||
Non-controlling investments | $ 10,000,000,000 | |||||||
Northstar Wireless or Northstar Spectrum | AWS 3 Auction | Vermont National Telephone Company | ||||||||
Commitments and Contingencies | ||||||||
Bidding credit credits | 25.00% | |||||||
Northstar Wireless or Northstar Spectrum | AWS 3 Auction | Vermont National Telephone Company | Maximum | ||||||||
Commitments and Contingencies | ||||||||
Claim amount | $ 11,000 | |||||||
Northstar Wireless or Northstar Spectrum | AWS 3 Auction | Vermont National Telephone Company | Minimum | ||||||||
Commitments and Contingencies | ||||||||
Claim amount | $ 5,500 | |||||||
Satellite transponder guarantees | ||||||||
Commitments and Contingencies | ||||||||
Guarantor Obligations, Maximum Exposure, Undiscounted | 69,000,000 | |||||||
Krakauer Action | Other accrued expenses | ||||||||
Commitments and Contingencies | ||||||||
Loss Contingency Accrual | 61,000,000 | |||||||
Telemarketing Litigation [Member] | ||||||||
Commitments and Contingencies | ||||||||
Demonstration requirements period | 5 years | |||||||
Loss Contingency Accrual | $ 280,000,000 | |||||||
Period of injunctive relief sought from placing any outbound telemarketing calls to market or promote its goods or services | 5 years | |||||||
Telemarketing Litigation [Member] | DISH Network L.L.C. | ||||||||
Commitments and Contingencies | ||||||||
Federal Loss Contingency Damages Sought Value | 900,000,000 | |||||||
State Loss Contingency Damages Sought Value | 23,500,000,000 | |||||||
Claim amount | $ 270,000,000 | |||||||
Telemarketing Litigation [Member] | Other accrued expenses | ||||||||
Commitments and Contingencies | ||||||||
Loss Contingency Accrual | 280,000,000 | |||||||
Telemarketing Litigation [Member] | Maximum | ||||||||
Commitments and Contingencies | ||||||||
Claim amount from state plaintiff | $ 1,000,000,000 | |||||||
Claim amount from federal plaintiff | $ 900,000,000 | |||||||
Do Not Call Litigation | ||||||||
Commitments and Contingencies | ||||||||
Period of injunctive relief sought from placing any outbound telemarketing calls to market or promote its goods or services | 5 years | |||||||
CALIFORNIA | Telemarketing Litigation [Member] | DISH Network L.L.C. | ||||||||
Commitments and Contingencies | ||||||||
Claim amount | $ 100,000,000 | |||||||
OHIO | Telemarketing Litigation [Member] | DISH Network L.L.C. | ||||||||
Commitments and Contingencies | ||||||||
Claim amount | $ 10,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Narrative Part 2 (Details) | Apr. 05, 2018USD ($) | May 22, 2017USD ($) | Oct. 03, 2016 | Sep. 23, 2016USD ($) | Feb. 12, 2015USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 05, 2017USD ($) |
Loss contingencies | |||||||||||||
Payment to acquire interest in non-controlling investments in certain entities | $ 11,000,000,000 | ||||||||||||
Total investment | $ 90,381,000 | $ 21,000,000,000 | |||||||||||
Dividend paid to DOC | $ 8,250,000,000 | ||||||||||||
General and administrative expenses | $ 161,577,000 | $ 182,679,000 | $ 506,855,000 | $ 487,287,000 | |||||||||
Other accrued expenses | |||||||||||||
Loss contingencies | |||||||||||||
Litigation expense | $ 41,000,000 | ||||||||||||
Satellite transponder guarantees | |||||||||||||
Loss contingencies | |||||||||||||
Guarantees for payments | 69,000,000 | 69,000,000 | |||||||||||
Telemarketing Litigation [Member] | |||||||||||||
Loss contingencies | |||||||||||||
Period of injunctive relief sought from placing any outbound telemarketing calls to market or promote its goods or services | 5 years | ||||||||||||
Litigation expense | $ 255,000,000 | $ 25,000,000 | |||||||||||
Litigation accrual | $ 280,000,000 | ||||||||||||
Number of telemarketing calls | item | 51,119 | ||||||||||||
Litigation per call damages | $ 400 | ||||||||||||
Judgment in favor of the court | $ 61,000,000 | ||||||||||||
Telemarketing Litigation [Member] | Other accrued expenses | |||||||||||||
Loss contingencies | |||||||||||||
Litigation accrual | 280,000,000 | 280,000,000 | |||||||||||
Litigation per call damages | $ 1,200 | ||||||||||||
Krakauer Action | |||||||||||||
Loss contingencies | |||||||||||||
Litigation expense | $ 20,000,000 | ||||||||||||
Krakauer Action | Other accrued expenses | |||||||||||||
Loss contingencies | |||||||||||||
Litigation accrual | $ 61,000,000 | $ 61,000,000 | |||||||||||
AWS 3 Auction | Northstar Wireless or Northstar Spectrum | Vermont National Telephone Company | |||||||||||||
Loss contingencies | |||||||||||||
Bidding Credit | $ 3,300,000,000 | ||||||||||||
Loss Contingency Recovery Amount | 10,000,000,000 | ||||||||||||
Bidding credit value | 3,300,000,000 | ||||||||||||
AWS 3 Auction | Maximum | Northstar Wireless or Northstar Spectrum | Vermont National Telephone Company | |||||||||||||
Loss contingencies | |||||||||||||
Claim amount | 11,000 | ||||||||||||
AWS 3 Auction | Minimum | Northstar Wireless or Northstar Spectrum | Vermont National Telephone Company | |||||||||||||
Loss contingencies | |||||||||||||
Claim amount | $ 5,500 |
Disaggregation of Revenue (Deta
Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue | ||||
Revenue | $ 3,334,444 | $ 3,491,559 | $ 10,110,973 | $ 10,606,330 |
United States | ||||
Disaggregation of Revenue | ||||
Revenue | 3,319,715 | 3,479,791 | 10,076,737 | 10,573,536 |
Canada and Mexico | ||||
Disaggregation of Revenue | ||||
Revenue | 14,729 | 11,768 | 34,236 | 32,794 |
Pay-TV video and related revenue | ||||
Disaggregation of Revenue | ||||
Revenue | 3,288,754 | 3,459,439 | 9,988,705 | 10,508,801 |
Equipment sales and other | ||||
Disaggregation of Revenue | ||||
Revenue | $ 45,690 | $ 32,120 | $ 122,268 | $ 97,529 |
Contract Balances (Details)
Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Balance at Beginning of Period | $ 15,056 | |
Charged to Cost and Expenses | 73,698 | |
Deductions | (75,857) | |
Balance at End of Period | 12,897 | |
Balance as of December 31, 2017 | 684,119 | |
Recognition of unearned revenue | (5,426,705) | |
Deferral of revenue | 5,402,154 | |
Balance as of September 30, 2018 | $ 684,119 | $ 659,568 |
Remaining performance obligations | true |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Trade accounts receivable | $ 651,914 | $ 651,914 | $ 628,278 | ||
Trade accounts payable | 240,255 | 240,255 | 361,759 | ||
Broadband, Wireless and Other Segments | |||||
Related Party Transaction [Line Items] | |||||
Expenses associated with services | 10,000 | $ 11,000 | 30,000 | $ 40,000 | |
EchoStar | |||||
Related Party Transaction [Line Items] | |||||
Trade accounts receivable | 4,000 | 4,000 | 2,000 | ||
Trade accounts payable | 12,000 | 12,000 | $ 29,000 | ||
Equipment sales and other revenue | $ 2,000 | $ 1,000 | $ 7,000 | $ 2,000 |
Related Party Transactions - Na
Related Party Transactions - Narrative Part 1 (Details) $ in Thousands | Mar. 01, 2017item | Aug. 31, 2017item | Jan. 31, 2012item | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2009 |
Related Party Transaction [Line Items] | ||||||||
Subscriber acquisition costs | $ | $ 2,088,244 | $ 2,182,555 | $ 6,347,849 | $ 6,543,542 | ||||
Meridian Lease Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Additional term of renewal option | 1 year | |||||||
Santa Fe Lease Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Additional term of renewal option | 1 year | |||||||
100 Inverness Lease Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Required notice period for termination by the reporting entity | 180 days | |||||||
EchoStar | El Paso Lease Agreement | Dish Network | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of consecutive three year renewal options | 4 | |||||||
Agreement Renewal Option Term | 3 years | |||||||
EchoStar | Professional Services Agreement | Dish Network | ||||||||
Related Party Transaction [Line Items] | ||||||||
Agreement term | 1 year | |||||||
Automatic renewal period | 1 year | |||||||
Minimum notice period for termination of agreement | 60 days | |||||||
EchoStar | 90 Inverness Lease Agreement | Dish Network | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of consecutive three year renewal options | 4 | |||||||
Agreement Renewal Option Term | 3 years | |||||||
EchoStar | Cheyenne Lease Agreement | Dish Network | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of successive one year renewal options | 12 | |||||||
Agreement Renewal Option Term | 1 year | |||||||
EchoStar | Gilbert Lease Agreement | Dish Network | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of successive one year renewal options | 12 | |||||||
Agreement Renewal Option Term | 1 year | |||||||
EchoStar | Collocation And Antenna Space Agreements [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Required notice period for termination by the reporting entity | 180 days | |||||||
HNS | Collocation And Antenna Space Agreements [Member] | Dish Network | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of consecutive three year renewal options | 4 | |||||||
Agreement Renewal Option Term | 3 years |
Related Party Transactions - _2
Related Party Transactions - Narrative Part 2 (Details) $ in Thousands | Dec. 21, 2012 | Jan. 02, 2012item | May 31, 2012 | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Mar. 31, 2013item | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2009item | Dec. 31, 2008item |
Related Party Transaction [Line Items] | ||||||||||
Satellite and transmission expenses | $ | $ 152,017 | $ 174,787 | $ 482,009 | $ 544,508 | ||||||
EchoStar XVIII Satellite | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Satellite and transmission expenses | $ | 16,000 | 50,000 | 16,000 | 50,000 | ||||||
EchoStar XVI | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Agreement Renewal Option Term | 5 years | |||||||||
TT&C Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Purchase of renewal of agreement | 1 year | |||||||||
Number of automatic renewal period | 4 | |||||||||
EchoStar | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Satellite and transmission expenses | $ | $ 71,000 | $ 86,000 | $ 238,000 | $ 261,000 | ||||||
EchoStar | EchoStar XVI | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Agreement term from commencement of service date | 4 years | |||||||||
Additional term of renewal option | 5 years | |||||||||
EchoStar | Telesat Transponder Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Agreement term with third party | 15 years | |||||||||
Number of DBS transponders available to receive services | 32 | |||||||||
EchoStar | DISH Nimiq 5 Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Agreement term | 10 years | |||||||||
Number of DBS transponders currently used | 32 | |||||||||
EchoStar | QuetzSat-1 Lease Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Agreement term with third party | 10 years | |||||||||
Number of DBS transponders available to receive services | 32 | |||||||||
Number of DBS transponders currently used | 24 | |||||||||
Number of transponders subleased | 5 | |||||||||
EchoStar | 103 degree orbital location member | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Agreement term | 10 years | |||||||||
EchoStar | TT&C Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Required notice period for termination by the reporting entity | 12 months |
Related Party Transactions - _3
Related Party Transactions - Narrative Part 3 (Details) - USD ($) $ in Thousands | Mar. 01, 2017 | Jun. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2009 |
Related Party Transaction [Line Items] | |||||||
General and administrative expenses | $ 161,577 | $ 182,679 | $ 506,855 | $ 487,287 | |||
Santa Fe Lease Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Additional term of renewal option | 1 year | ||||||
EchoStar | |||||||
Related Party Transaction [Line Items] | |||||||
General and administrative expenses | $ 5,000 | $ 8,000 | $ 16,000 | $ 23,000 | |||
Dish Network | EchoStar | 90 Inverness Lease Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Agreement Renewal Option Term | 3 years | ||||||
Dish Network | EchoStar | Gilbert Lease Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Agreement Renewal Option Term | 1 year | ||||||
Dish Network | EchoStar | American Fork Occupancy License Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Agreement Renewal Option Term | 5 years | ||||||
Dish Network | EchoStar | Professional Services Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Minimum notice period for termination of agreement | 60 days | ||||||
Minimum notice period for termination of a specific service | 30 days | ||||||
Agreement term | 1 year |
Related Party Transactions - _4
Related Party Transactions - Narrative Part 4 (Details) $ in Thousands | Dec. 21, 2012 | Apr. 29, 2011USD ($)installment | Dec. 31, 2011USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2011USD ($) |
Related Party Transaction [Line Items] | ||||||||
Cost of sales - equipment and other | $ 40,267 | $ 21,563 | $ 106,273 | $ 71,672 | ||||
Dish Network | TiVo v. Dish Network and EchoStar Corporation | ||||||||
Related Party Transaction [Line Items] | ||||||||
Settlement amount | $ 500,000 | |||||||
Initial settlement amount paid | 300,000 | |||||||
Aggregate of six annual installment amounts between 2012 and 2017 | $ 200,000 | |||||||
Estimated percentage of annual future payments payable by the company | 95.00% | |||||||
Litigation settlement number of annual installments | installment | 6 | |||||||
Contribution from related party | $ 10,000 | |||||||
EchoStar | Patent Cross-License Agreements | Dish Network | Maximum | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payments to third party by related party | $ 10,000 | |||||||
Payments to third party by related party under extension option | $ 3,000 | |||||||
EchoStar XVI | ||||||||
Related Party Transaction [Line Items] | ||||||||
Agreement Renewal Option Term | 1 year |
Related Party Transactions - Pa
Related Party Transactions - Part 5 (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 19, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Rovi License Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Agreement term | 10 years | |||||
Payments to Related Parties | $ 0 | |||||
Hughes Broadband Sales Agency Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Required notice period for termination by the reporting entity | 90 days | |||||
Agreement term | 5 years | |||||
Automatic renewal period | 1 year | |||||
Broadband equipment purchased from related party | $ 1,000 | $ 7,000 | $ 18,000 | $ 17,000 | ||
NagraStar | ||||||
Related Party Transaction [Line Items] | ||||||
Interest on equity method investment | 50.00% | 50.00% | ||||
Purchases from NagraStar | $ 15,007 | 17,897 | $ 57,632 | 54,328 | ||
Amounts payable to NagraStar | 16,229 | 16,229 | $ 16,685 | |||
Commitments to NagraStar | $ 879 | $ 879 | 4,927 | |||
Dish Mexico | ||||||
Related Party Transaction [Line Items] | ||||||
Interest on equity method investment | 49.00% | 49.00% | ||||
Amounts receivable | $ 1,219 | $ 1,219 | $ 3,027 | |||
Dish Mexico | Digital receivers and related components | ||||||
Related Party Transaction [Line Items] | ||||||
Sales | 465 | 413 | 921 | 1,596 | ||
Dish Mexico | Uplink services | ||||||
Related Party Transaction [Line Items] | ||||||
Sales | $ 1,187 | $ 995 | $ 3,385 | $ 2,993 |