Supplemental Guarantor and Non-Guarantor Financial Information (Tables)

9 Months Ended

Sep. 30, 2018

Supplemental Guarantor and Non-Guarantor Financial Information

Schedule of consolidating balance sheet

Condensed Consolidating Balance Sheet as of September 30, 2018

(In thousands)

	HSS		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
Assets
Cash and cash equivalents	$	1,291,333	$	40,695	$	29,527	$	—		$	1,361,555
Marketable investment securities, at fair value	1,201,132		1,358		—		—			1,202,490
Trade accounts receivable and contract assets	—		151,535		65,946		—			217,481
Trade accounts receivable - DISH Network, net	—		10,096		492		—			10,588
Inventory	—		58,097		11,964		—			70,061
Advances to affiliates, net	7,829		498,705		22,693		(428,497		)	100,730
Other current assets	116		23,345		35,572		—			59,033
Total current assets	2,500,410		783,831		166,194		(428,497		)	3,021,938
Property and equipment, net	—		2,352,820		290,651		—			2,643,471
Regulatory authorizations	—		465,658		—		—			465,658
Goodwill	—		504,173		—		—			504,173
Other intangible assets, net	—		47,609		—		—			47,609
Investments in unconsolidated entities	—		30,301		—		—			30,301
Investment in subsidiaries	3,308,536		181,408		—		(3,489,944		)	—
Advances to affiliates	700		86,614		—		(87,314		)	—
Deferred tax asset	140,216		—		10,168		(140,216		)	10,168
Other noncurrent assets, net	—		230,502		11,415		—			241,917
Total assets	$	5,949,862	$	4,682,916	$	478,428	$	(4,145,971	)	$	6,965,235
Liabilities and Shareholders’ Equity
Trade accounts payable	$	—	$	101,470	$	15,271	$	—		$	116,741
Trade accounts payable - DISH Network	—		456		—		—			456
Current portion of long-term debt and capital lease obligations	986,843		38,928		4,317		—			1,030,088
Advances from affiliates, net	159,157		185,431		84,838		(428,497		)	929
Accrued expenses and other	56,233		129,319		52,445		—			237,997
Total current liabilities	1,202,233		455,604		156,871		(428,497		)	1,386,211
Long-term debt and capital lease obligations, net	2,384,210		197,410		1,199		—			2,582,819
Deferred tax liabilities, net	—		618,915		972		(140,216		)	479,671
Advances from affiliates	—		—		120,836		(87,314		)	33,522
Other noncurrent liabilities	—		102,773		2,095		—			104,868
Total HSS shareholders’ equity	2,363,419		3,308,214		181,730		(3,489,944		)	2,363,419
Noncontrolling interests	—		—		14,725		—			14,725
Total liabilities and shareholders’ equity	$	5,949,862	$	4,682,916	$	478,428	$	(4,145,971	)	$	6,965,235

Condensed Consolidating Balance Sheet as of December 31, 2017

(In thousands)

	HSS		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
Assets
Cash and cash equivalents	$	1,746,878	$	42,373	$	33,310	$	—		$	1,822,561
Marketable investment securities, at fair value	454,500		1,102		—		—			455,602
Trade accounts receivable and contract assets, net	—		133,735		63,105		—			196,840
Trade accounts receivable - DISH Network	—		38,286		355		—			38,641
Inventory	—		59,711		23,884		—			83,595
Advances to affiliates, net	119,605		229,488		7,313		(241,548		)	114,858
Other current assets	64		98,890		31,788		(401		)	130,341
Total current assets	2,321,047		603,585		159,755		(241,949		)	2,842,438
Property and equipment, net	—		2,459,703		293,395		—			2,753,098
Regulatory authorizations	—		465,658		—		—			465,658
Goodwill	—		504,173		—		—			504,173
Other intangible assets, net	—		58,582		—		—			58,582
Investments in unconsolidated entities	—		30,587		—		—			30,587
Investment in subsidiaries	3,260,790		204,208		—		(3,464,998		)	—
Advances to affiliates	700		80,744		—		(81,444		)	—
Deferred tax asset	110,546		—		3,700		(110,546		)	3,700
Other noncurrent assets, net	—		185,839		13,275		—			199,114
Total assets	$	5,693,083	$	4,593,079	$	470,125	$	(3,898,937	)	$	6,857,350
Liabilities and Shareholders’ Equity
Trade accounts payable	$	—	$	82,300	$	20,516	$	—		$	102,816
Trade accounts payable - DISH Network	—		3,769		—		—			3,769
Current portion of long-term debt and capital lease obligations	—		35,886		4,745		—			40,631
Advances from affiliates, net	—		185,161		56,864		(241,548		)	477
Accrued expenses and other	43,518		145,362		46,748		(401		)	235,227
Total current liabilities	43,518		452,478		128,873		(241,949		)	382,920
Long-term debt and capital lease obligations, net	3,365,143		226,997		2,073		—			3,594,213
Deferred tax liabilities, net	—		549,217		960		(110,546		)	439,631
Advances from affiliates	—		—		115,159		(81,444		)	33,715
Other noncurrent liabilities	—		104,249		3,378		—			107,627
Total HSS shareholders’ equity	2,284,422		3,260,138		204,860		(3,464,998		)	2,284,422
Noncontrolling interests	—		—		14,822		—			14,822
Total liabilities and shareholders’ equity	$	5,693,083	$	4,593,079	$	470,125	$	(3,898,937	)	$	6,857,350

Schedule of consolidating statement of operations and comprehensive income (loss)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the Three Months Ended September 30, 2018

(In thousands)

 

	HSS			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Revenue:
Services and other revenue - DISH Network	$	—		$	84,298		$	491		$	—		$	84,789
Services and other revenue - other	—			345,466			57,312			(9,558		)	393,220
Equipment revenue	—			57,138			7,625			(7,917		)	56,846
Total revenue	—			486,902			65,428			(17,475		)	534,855
Costs and Expenses:
Costs of sales - services and other (exclusive of depreciation and amortization)	—			123,696			36,206			(8,855		)	151,047
Cost of sales - equipment (exclusive of depreciation and amortization)	—			47,736			6,499			(7,917		)	46,318
Selling, general and administrative expenses	—			85,222			13,156			(703		)	97,675
Research and development expenses	—			6,544			—			—			6,544
Depreciation and amortization	—			125,748			13,203			—			138,951
Total costs and expenses	—			388,946			69,064			(17,475		)	440,535
Operating income	—			97,956			(3,636		)	—			94,320
Other Income (Expense):
Interest income	15,019			930			670			(922		)	15,697
Interest expense, net of amounts capitalized	(57,514		)	(7,277		)	(1,221		)	922			(65,090		)
Gains and losses on investments, net	—			145			—			—			145
Equity in earnings of unconsolidated affiliate	—			992			—			—			992
Equity in earnings (losses) of subsidiaries, net	61,476			(6,701		)	—			(54,775		)	—
Other, net	1			(15		)	(3,604		)	—			(3,618		)
Total other income (expense), net	18,982			(11,926		)	(4,155		)	(54,775		)	(51,874		)
Income (loss) before income taxes	18,982			86,030			(7,791		)	(54,775		)	42,446
Income tax benefit (provision)	9,488			(24,463		)	1,449			—			(13,526		)
Net income (loss)	28,470			61,567			(6,342		)	(54,775		)	28,920
Less: Net income attributable to noncontrolling interests	—			—			450			—			450
Net income (loss) attributable to HSS	$	28,470		$	61,567		$	(6,792	)	$	(54,775	)	$	28,470
Comprehensive Income (Loss):
Net income (loss)	$	28,470		$	61,567		$	(6,342	)	$	(54,775	)	$	28,920
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	—			—			(9,460		)	—			(9,460		)
Unrealized gains (losses) on available-for-sale securities and other	27			—			(144		)	—			(117		)
Realized gains on available-for-sale securities	(1		)	—			—			—			(1		)
Equity in other comprehensive income (loss) of subsidiaries, net	(9,014		)	(9,014		)	—			18,028			—
Total other comprehensive income (loss), net of tax	(8,988		)	(9,014		)	(9,604		)	18,028			(9,578		)
Comprehensive income (loss)	19,482			52,553			(15,946		)	(36,747		)	19,342
Less: Comprehensive loss attributable to noncontrolling interests	—			—			(140		)	—			(140		)
Comprehensive income (loss) attributable to HSS	$	19,482		$	52,553		$	(15,806	)	$	(36,747	)	$	19,482

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the Three Months Ended September 30, 2017

(In thousands)

 

	HSS			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Revenue:
Services and other revenue - DISH Network	$	—		$	107,765		$	499		$	—		$	108,264
Services and other revenue - other	—			273,821			47,333			(10,181		)	310,973
Equipment revenue	—			59,645			6,242			(6,762		)	59,125
Total revenue	—			441,231			54,074			(16,943		)	478,362
Costs and Expenses:
Costs of sales - services and other (exclusive of depreciation and amortization)	—			116,069			35,625			(9,624		)	142,070
Cost of sales - equipment (exclusive of depreciation and amortization)	—			49,730			4,623			(6,709		)	47,644
Selling, general and administrative expenses	—			72,492			11,630			(610		)	83,512
Research and development expenses	—			8,302			—			—			8,302
Depreciation and amortization	—			117,702			10,213			—			127,915
Total costs and expenses	—			364,295			62,091			(16,943		)	409,443
Operating income	—			76,936			(8,017		)	—			68,919
Other Income (Expense):
Interest income	7,667			200			653			(199		)	8,321
Interest expense, net of amounts capitalized	(57,372		)	(4,282		)	672			199			(60,783		)
Equity in earnings of unconsolidated affiliate	—			1,948			—			—			1,948
Equity in earnings (losses) of subsidiaries, net	42,830			(2,705		)	—			(40,125		)	—
Other, net	—			(85		)	1,889			—			1,804
Total other income (expense), net	(6,875		)	(4,924		)	3,214			(40,125		)	(48,710		)
Income (loss) before income taxes	(6,875		)	72,012			(4,803		)	(40,125		)	20,209
Income tax benefit (provision)	17,826			(29,092		)	2,540			—			(8,726		)
Net income (loss)	10,951			42,920			(2,263		)	(40,125		)	11,483
Less: Net income attributable to noncontrolling interests	—			—			532			—			532
Net income (loss) attributable to HSS	$	10,951		$	42,920		$	(2,795	)	$	(40,125	)	$	10,951
Comprehensive Income (Loss):
Net income (loss)	$	10,951		$	42,920		$	(2,263	)	$	(40,125	)	$	11,483
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	—			—			8,571			—			8,571
Unrealized gains (losses) on available-for-sale securities and other	(20		)	24			(70		)	—			(66		)
Equity in other comprehensive income (loss) of subsidiaries, net	8,525			8,501			—			(17,026		)	—
Total other comprehensive income (loss), net of tax	8,505			8,525			8,501			(17,026		)	8,505
Comprehensive income (loss)	19,456			51,445			6,238			(57,151		)	19,988
Less: Comprehensive income attributable to noncontrolling interests	—			—			532			—			532
Comprehensive income (loss) attributable to HSS	$	19,456		$	51,445		$	5,706		$	(57,151	)	$	19,456

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the Nine Months Ended September 30, 2018

(In thousands)

	HSS			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Revenue:
Services and other revenue - DISH Network	$	—		$	281,038		$	1,505		$	—		$	282,543
Services and other revenue - other	—			989,449			171,767			(28,547		)	1,132,669
Equipment revenue	—			157,190			16,789			(23,845		)	150,134
Total revenue	—			1,427,677			190,061			(52,392		)	1,565,346
Costs and expenses:
Costs of sales - services and other (exclusive of depreciation and amortization)	—			365,281			110,441			(26,797		)	448,925
Cost of sales - equipment (exclusive of depreciation and amortization)	—			137,596			13,503			(23,845		)	127,254
Selling, general and administrative expenses	—			251,091			36,359			(1,750		)	285,700
Research and development expenses	—			20,328			—			—			20,328
Depreciation and amortization	—			371,336			38,041			—			409,377
Total costs and expenses	—			1,145,632			198,344			(52,392		)	1,291,584
Operating income	—			282,045			(8,283		)	—			273,762
Other income (expense):
Interest income	39,548			2,855			1,679			(2,720		)	41,362
Interest expense, net of amounts capitalized	(172,438		)	(20,807		)	(3,100		)	2,720			(193,625		)
Gains and losses on investments, net	—			262			—			—			262
Equity in earnings of unconsolidated affiliate	—			3,722			—			—			3,722
Equity in earnings (losses) of subsidiaries, net	191,915			(18,559		)	—			(173,356		)	—
Other, net	7			9,377			(13,148		)	—			(3,764		)
Total other income (expense), net	59,032			(23,150		)	(14,569		)	(173,356		)	(152,043		)
Income (loss) before income taxes	59,032			258,895			(22,852		)	(173,356		)	121,719
Income tax benefit (provision)	29,670			(66,650		)	5,255			—			(31,725		)
Net income (loss)	88,702			192,245			(17,597		)	(173,356		)	89,994
Less: Net income attributable to noncontrolling interests	—			—			1,292			—			1,292
Net income (loss) attributable to HSS	$	88,702		$	192,245		$	(18,889	)	$	(173,356	)	$	88,702
Comprehensive income (loss):
Net income (loss)	$	88,702		$	192,245		$	(17,597	)	$	(173,356	)	$	89,994
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	—			—			(39,874		)	—			(39,874		)
Unrealized gains (losses) on available-for-sale securities and other	186			—			(385		)	—			(199		)
Recognition of realized losses on available-for-sale securities in net income	(4		)	—			—			—			(4		)
Equity in other comprehensive income (loss) of subsidiaries, net	(38,870		)	(38,870		)	—			77,740			—
Total other comprehensive income (loss), net of tax	(38,688		)	(38,870		)	(40,259		)	77,740			(40,077		)
Comprehensive income (loss)	50,014			153,375			(57,856		)	(95,616		)	49,917
Less: Comprehensive income attributable to noncontrolling interests	—			—			(97		)	—			(97		)
Comprehensive income (loss) attributable to HSS	$	50,014		$	153,375		$	(57,759	)	$	(95,616	)	$	50,014

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

For the Nine Months Ended September 30, 2017

(In thousands)

	HSS			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Revenue:
Services and other revenue - DISH Network	$	—		$	329,457		$	1,218		$	—		$	330,675
Services and other revenue - other	—			763,554			125,307			(22,610		)	866,251
Equipment revenue	—			192,711			15,952			(34,844		)	173,819
Total revenue	—			1,285,722			142,477			(57,454		)	1,370,745
Costs and expenses:
Costs of sales - services and other (exclusive of depreciation and amortization)	—			339,007			95,276			(20,635		)	413,648
Cost of sales - equipment (exclusive of depreciation and amortization)	—			164,434			12,429			(34,736		)	142,127
Selling, general and administrative expenses	—			213,212			32,876			(2,083		)	244,005
Research and development expenses	—			23,444			—			—			23,444
Depreciation and amortization	—			339,342			25,536			—			364,878
Total costs and expenses	—			1,079,439			166,117			(57,454		)	1,188,102
Operating income	—			206,283			(23,640		)	—			182,643
Other income (expense):
Interest income	19,890			633			1,322			(597		)	21,248
Interest expense, net of amounts capitalized	(172,007		)	(12,301		)	1,715			597			(181,996		)
Gains and losses on investments, net	—			(1,575		)	—			—			(1,575		)
Equity in earnings of unconsolidated affiliate	—			5,298			—			—			5,298
Equity in earnings (losses) of subsidiaries, net	117,767			(13,344		)	—			(104,423		)	—
Other, net	—			(925		)	1,154			—			229
Total other income (expense), net	(34,350		)	(22,214		)	4,191			(104,423		)	(156,796		)
Income (loss) before income taxes	(34,350		)	184,069			(19,449		)	(104,423		)	25,847
Income tax benefit (provision)	54,556			(65,974		)	6,783			—			(4,635		)
Net income (loss)	20,206			118,095			(12,666		)	(104,423		)	21,212
Less: Net income attributable to noncontrolling interests	—			—			1,006			—			1,006
Net income (loss) attributable to HSS	$	20,206		$	118,095		$	(13,672	)	$	(104,423	)	$	20,206
Comprehensive income (loss):
Net income (loss)	$	20,206		$	118,095		$	(12,666	)	$	(104,423	)	$	21,212
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	—			—			13,956			—			13,956
Unrealized losses on available-for-sale securities and other	(68		)	(1,464		)	(45		)	—			(1,577		)
Recognition of other-than-temporary loss on available-for-sale securities in net income (loss)	—			3,298			—			—			3,298
Equity in other comprehensive income (loss) of subsidiaries, net	15,745			13,911			—			(29,656		)	—
Total other comprehensive income (loss), net of tax	15,677			15,745			13,911			(29,656		)	15,677
Comprehensive income (loss)	35,883			133,840			1,245			(134,079		)	36,889
Less: Comprehensive income attributable to noncontrolling interests	—			—			1,006			—			1,006
Comprehensive income (loss) attributable to HSS	$	35,883		$	133,840		$	239		$	(134,079	)	$	35,883

Schedule of consolidating statement of cash flows

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2018

(In thousands)

	HSS			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Cash flows from operating activities:
Net income (loss)	$	88,702		$	192,245		$	(17,597	)	$	(173,356	)	$	89,994
Adjustments to reconcile net income (loss) to net cash flows from operating activities	(201,774		)	438,805			55,249			173,356			465,636
Net cash flows from operating activities	(113,072		)	631,050			37,652			—			555,630
Cash flows from investing activities:
Purchases of marketable investment securities	(1,546,479		)	—			—			—			(1,546,479		)
Sales and maturities of marketable investment securities	799,250			—			—			—			799,250
Expenditures for property and equipment	—			(223,484		)	(62,739		)	—			(286,223		)
Refunds and other receipts related to property and equipment	—			77,524			—			—			77,524
Expenditures for externally marketed software	—			(24,568		)	—			—			(24,568		)
Payment for satellite launch services	—			—			(7,125		)	—			(7,125		)
Distributions (contributions) and advances from (to) subsidiaries, net	397,631			(32,985		)	—			(364,646		)	—
Other	—			(991		)	—			—			(991		)
Net cash flows from investing activities	(349,598		)	(204,504		)	(69,864		)	(364,646		)	(988,612		)
Cash flows from financing activities:
Contributions (distributions) and advances (to) from parent, net	—			(397,631		)	32,985			364,646			—
Repayment of debt and capital lease obligations	—			(26,545		)	(1,219		)	—			(27,764		)
Capital contribution from EchoStar	7,125			—			—			—			7,125
Repayment of in-orbit incentive obligations	—			(4,048		)	—			—			(4,048		)
Net cash flows from financing activities	7,125			(428,224		)	31,766			364,646			(24,687		)
Effect of exchange rates on cash and cash equivalents	—			—			(3,350		)	—			(3,350		)
Net increase (decrease) in cash and cash equivalents, including restricted amounts	(455,545		)	(1,678		)	(3,796		)	—			(461,019		)
Cash and cash equivalents, including restricted amounts, beginning of period	1,746,878			42,373			34,103			—			1,823,354
Cash and cash equivalents, including restricted amounts, end of period	$	1,291,333		$	40,695		$	30,307		$	—		$	1,362,335

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2017

(In thousands)

	HSS			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Cash flows from operating activities:
Net income (loss)	$	20,206		$	118,095		$	(12,666	)	$	(104,423	)	$	21,212
Adjustments to reconcile net income (loss) to net cash flows from operating activities	66,702			160,917			16,592			104,423			348,634
Net cash flows from operating activities	86,908			279,012			3,926			—			369,846
Cash flows from investing activities:
Purchases of marketable investment securities	(170,158		)	—			—			—			(170,158		)
Sales and maturities of marketable investment securities	151,141			—			—			—			151,141
Expenditures for property and equipment	—			(243,409		)	(48,566		)	—			(291,975		)
Expenditures for externally marketed software	—			(25,447		)	—			—			(25,447		)
Distributions (contributions) and advances from (to) subsidiaries, net	(44,000		)	(47,500		)	—			91,500			—
Net cash flows from investing activities	(63,017		)	(316,356		)	(48,566		)	91,500			(336,439		)
Cash flows from financing activities:
Contributions (distributions) and advances (to) from parent, net	—			44,000			47,500			(91,500		)	—
Repayment of debt and capital lease obligations	—			(23,800		)	(1,987		)	—			(25,787		)
Advances from affiliates	—			—			(36		)	—			(36		)
Payment of in-orbit incentive obligations	—			(4,583		)	—			—			(4,583		)
Other, net	186			—			886			—			1,072
Net cash flows from financing activities	186			15,617			46,363			(91,500		)	(29,334		)
Effect of exchange rates on cash and cash equivalents	—			—			923			—			923
Net increase (decrease) in cash and cash equivalents, including restricted amounts	24,077			(21,727		)	2,646			—			4,996
Cash and cash equivalents, including restricted amounts, beginning of period	1,991,949			53,905			25,833			—			2,071,687
Cash and cash equivalents, including restricted amounts, end of period	$	2,016,026		$	32,178		$	28,479		$	—		$	2,076,683