Item 16. FORM 10-K SUMMARY

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Item 16. FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			ECHOSTAR CORPORATION

			By:			/s/ David J. Rayner
						David J. Rayner
						Executive Vice President,
						Chief Financial Officer,
						Chief Operating Officer, and
						Treasurer

Date: February 23, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Michael T. Dugan	Chief Executive Officer, President and Director	February 23, 2021
Michael T. Dugan	(Principal Executive Officer)

/s/ David J. Rayner	Executive Vice President, Chief Financial Officer,
David J. Rayner	Chief Operating Officer and Treasurer	February 23, 2021
	(Principal Financial and Accounting Officer)

*	Chairman	February 23, 2021
Charles W. Ergen

*	Director	February 23, 2021
R. Stanton Dodge

*	Director	February 23, 2021
Anthony M. Federico

*	Director	February 23, 2021
Pradman P. Kaul

*	Director	February 23, 2021
Jeffrey R. Tarr

*	Director	February 23, 2021
C. Michael Schroeder

*	Director	February 23, 2021
William David Wade


* By:			/s/ Dean A. Manson
			Dean A. Manson
			Attorney-in-Fact

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements:


			Page
Index to Consolidated Financial Statements			F-1
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets as of December 31, 2020 and 2019			F-4
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018			F-6
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020, 2019 and 2018			F-7
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2020, 2019 and 2018			F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018			F-9
Notes to Consolidated Financial Statements			F-11

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

EchoStar Corporation:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of EchoStar Corporation and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, in 2019, the Company changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting

F-2

includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Identification of related party transactions with DISH Network Corporation

As discussed in Note 22 to the consolidated financial statements, a substantial majority of the voting power of the shares of both the Company and DISH Network Corporation and subsidiaries (DISH) is owned beneficially by the Chairman of the Company. The Company has engaged, and continues to engage, in related party transactions with DISH.

We identified the evaluation of the identification of related party transactions with DISH as a critical audit matter. Subjective auditor judgment was required in assessing the sufficiency of the results of the procedures performed to determine such transactions were identified by the Company.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s related party process, including controls related to the identification of the Company’s related party transactions with DISH. We evaluated the identification of related party transactions with DISH by:

–confirming related party amounts between DISH and the Company with DISH;

–reading public filings from the Company, DISH, and external news for information related to transactions between the Company and DISH;

–reading the Company’s minutes from meetings of the Board of Directors;

–performing a keyword search on the Company’s customer and vendor databases for new relationships with DISH;

–reading new agreements and contracts with DISH;

–inquiring of executive officers, key members of the Company, and the Board of Directors; and

–reading the transcripts to quarterly earnings conference calls for the Company and DISH.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed over the identification of related party transactions with DISH.

/s/ KPMG LLP

We have served as the Company’s auditor since 2007.

Denver, Colorado

February 23, 2021

F-3

ECHOSTAR CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)


	As of December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	896,005	$	1,519,431
Marketable investment securities	1,638,271		940,623
Trade accounts receivable and contract assets, net	183,989		196,629
Other current assets, net	189,821		179,531
Total current assets	2,908,086		2,836,214
Non-current assets:
Property and equipment, net	2,390,313		2,528,738
Operating lease right-of-use assets	128,303		114,042
Goodwill	511,597		506,953
Regulatory authorizations, net	478,762		478,598
Other intangible assets, net	18,433		29,507
Other investments, net	284,937		325,405
Other non-current assets, net	352,921		334,841
Total non-current assets	4,165,266		4,318,084
Total assets	$	7,073,352	$	7,154,298

Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable	$	122,366	$	124,080
Current portion of long-term debt, net	898,237		—
Contract liabilities	104,569		101,060
Accrued expenses and other current liabilities	299,999		270,879
Total current liabilities	1,425,171		496,019
Non-current liabilities:
Long-term debt, net	1,495,256		2,389,168
Deferred tax liabilities, net	359,896		351,692
Operating lease liabilities	114,886		96,941
Other non-current liabilities	70,893		74,925
Total non-current liabilities	2,040,931		2,912,726
Total liabilities	3,466,102		3,408,745

Commitments and contingencies

F-4


Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both December 31, 2020 and 2019	—		—
Common stock, $0.001 par value, 4,000,000,000 shares authorized:
Class A common stock, $0.001 par value, 1,600,000,000 shares authorized, 57,254,201 shares issued and 48,863,374 shares outstanding at December 31, 2020 and 56,592,251 shares issued and 50,107,330 shares outstanding at December 31, 2019	57		57
Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both December 31, 2020 and 2019	48		48
Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both December 31, 2020 and 2019	—		—
Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both December 31, 2020 and 2019	—		—
Additional paid-in capital	3,321,426		3,290,483
Accumulated other comprehensive income (loss)	(187,876)		(122,138)
Accumulated earnings (losses)	583,591		632,809
Treasury stock, at cost	(174,912)		(131,454)
Total EchoStar Corporation stockholders' equity	3,542,334		3,669,805
Non-controlling interests	64,916		75,748
Total stockholders' equity	3,607,250		3,745,553
Total liabilities and stockholders' equity	$	7,073,352	$	7,154,298

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)


	For the years ended December 31,
	2020		2019		2018
Revenue:
Services and other revenue	$	1,682,304	$	1,619,271	$	1,557,228
Equipment revenue	205,603		266,810		205,410
Total revenue	1,887,907		1,886,081		1,762,638
Costs and expenses:
Cost of sales - services and other (exclusive of depreciation and amortization)	577,943		561,353		563,907
Cost of sales - equipment (exclusive of depreciation and amortization)	166,435		226,002		176,600
Selling, general and administrative expenses	474,912		509,145		436,088
Research and development expenses	29,448		25,739		27,570
Depreciation and amortization	525,011		490,765		457,116
Impairment of long-lived assets	1,685		—		65,220
Total costs and expenses	1,775,434		1,813,004		1,726,501
Operating income (loss)	112,473		73,077		36,137
Other income (expense):
Interest income, net	39,982		82,352		80,275
Interest expense, net of amounts capitalized	(147,927)		(251,016)		(219,288)
Gains (losses) on investments, net	(31,306)		28,912		(12,622)
Equity in earnings (losses) of unconsolidated affiliates, net	(7,267)		(14,734)		(5,954)
Foreign currency transaction gains (losses), net	6,015		(11,590)		(15,583)
Other, net	195		(166)		11,249
Total other income (expense), net	(140,308)		(166,242)		(161,923)
Income (loss) from continuing operations before income taxes	(27,835)		(93,165)		(125,786)
Income tax benefit (provision), net	(24,069)		(20,488)		(6,576)
Net income (loss) from continuing operations	(51,904)		(113,653)		(132,362)
Net income (loss) from discontinued operations	—		39,401		93,729
Net income (loss)	(51,904)		(74,252)		(38,633)
Less: Net loss (income) attributable to non-controlling interests	11,754		11,335		(1,842)
Net income (loss) attributable to EchoStar Corporation common stock	$	(40,150)	$	(62,917)	$	(40,475)

Earnings (losses) per share - Class A and B common stock:
Basic and diluted earnings (losses) from continuing operations per share	$	(0.41)	$	(1.06)	$	(1.39)
Total basic and diluted earnings (losses) per share	$	(0.41)	$	(0.65)	$	(0.42)

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6

ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)


	For the years ended December 31,
	2020		2019		2018
Net income (loss)	$	(51,904)	$	(74,252)	$	(38,633)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(83,736)		2,845		(34,399)
Unrealized gains (losses) on available-for-sale securities	(253)		2,571		(962)
Other	2,614		1,466		(1,910)
Amounts reclassified to net income (loss):
Foreign currency translation realized on impairment of long lived assets	—		—		32,136
Realized losses (gains) on available-for-sale debt securities	(2)		(592)		—
Other-than-temporary impairment loss on available-for-sale securities	—		—		(278)
Total other comprehensive income (loss), net of tax	(81,377)		6,290		(5,413)
Comprehensive income (loss)	(133,281)		(67,962)		(44,046)
Less: Comprehensive income (loss) attributable to non-controlling interests	27,392		(8,007)		453
Comprehensive income (loss) attributable to EchoStar Corporation	$	(160,673)	$	(59,955)	$	(44,499)

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-7

ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Amounts in thousands)


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Earnings (Losses)		Treasury Stock, at cost		Non-controlling Interests		Total
Balance, December 31, 2017	$	102	$	3,669,461	$	(130,154)	$	721,316	$	(98,162)	$	14,822	$	4,177,385
Cumulative effect of accounting changes	—		—		10,467		12,656		—		—		23,123
Balance, January 1, 2018	102		3,669,461		(119,687)		733,972		(98,162)		14,822		4,200,508
Issuances of Class A common stock:
Exercise of stock options	—		4,404		—		—		—		—		4,404
Employee benefits	—		7,605		—		—		—		—		7,605
Employee Stock Purchase Plan	—		9,368		—		—		—		—		9,368
Stock-based compensation	—		9,990		—		—		—		—		9,990
Other comprehensive income (loss)	—		—		(3,462)		—		—		(1,389)		(4,851)
Net income (loss)	—		—		—		(40,475)		—		1,842		(38,633)
Treasury share repurchase	—		—		—		—		(33,292)		—		(33,292)
Other, net	—		1,694		(1,951)		632		—		—		375
Balance, December 31, 2018	102		3,702,522		(125,100)		694,129		(131,454)		15,275		4,155,474
Issuances of Class A common stock:
Exercise of stock options	3		67,307		—		—		—		—		67,310
Employee benefits	—		6,654		—		—		—		—		6,654
Employee Stock Purchase Plan	—		9,778		—		—		—		—		9,778
Stock-based compensation	—		9,353		—		—		—		—		9,353
Purchase of non-controlling interest	—		(833)		—		—		—		(6,480)		(7,313)
Net assets distributed pursuant to the BSS Transaction	—		(532,747)		—		—		—		—		(532,747)
Issuance of equity and contribution of assets pursuant to the Yahsat JV formation	—		29,576		—		—		—		73,199		102,775
Other comprehensive income (loss)	—		—		2,962		—		—		3,328		6,290
Net income (loss)	—		—		—		(62,917)		—		(11,335)		(74,252)
Other, net	—		(1,127)		—		1,597		—		1,761		2,231
Balance, December 31, 2019	105		3,290,483		(122,138)		632,809		(131,454)		75,748		3,745,553
Cumulative effect of accounting changes							(9,068)				(240)		(9,308)
Balance, January 1, 2020	105		3,290,483		(122,138)		623,741		(131,454)		75,508		3,736,245
Issuances of Class A common stock:
Exercise of stock options	—		855		—		—		—		—		855
Employee benefits	—		6,921		—		—		—		—		6,921
Employee Stock Purchase Plan	—		10,109		—		—		—		—		10,109
Stock-based compensation	—		8,887		—		—		—		—		8,887
Issuance of equity and contribution of assets pursuant to the Yahsat JV formation	—		4,338				—		—		(1,580)		2,758
Contribution by non-controlling interest holder	—		—		—		—		—		18,241		18,241
Other comprehensive income (loss)	—		—		(65,738)		—		—		(15,631)		(81,369)
Net income (loss)	—		—		—		(40,150)		—		(11,754)		(51,904)
Treasury share repurchase	—		—		—		—		(43,458)		—		(43,458)
Other, net	—		(167)				—		—		132		(35)
Balance, December 31, 2020	$	105	$	3,321,426	$	(187,876)	$	583,591	$	(174,912)	$	64,916	$	3,607,250

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-8

ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)


	For the years ended December 31,
	2020		2019		2018
Cash flows from operating activities:
Net income (loss)	$	(51,904)	$	(74,252)	$	(38,633)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	525,011		588,200		598,178
Impairment of long-lived assets	1,685		—		65,220
Losses (gains) on investments, net	31,306		(28,912)		12,109
Equity in losses (earnings) of unconsolidated affiliates, net	7,267		14,734		6,037
Foreign currency transaction losses (gains), net	(6,015)		11,590		15,583
Deferred tax provision (benefit), net	18,147		32,542		26,327
Stock-based compensation	8,887		9,353		9,990
Amortization of debt issuance costs	4,324		5,912		7,923
Dividends received from unconsolidated affiliates	—		2,716		10,000
Other, net	(12,501)		6,297		(3,489)
Changes in assets and current liabilities, net:
Trade accounts receivable and contract assets, net	2,237		8,289		(17,842)
Other current assets, net	(12,984)		(39,190)		18,577
Trade accounts payable	(12,339)		13,149		9,562
Contract liabilities	3,509		26,376		7,867
Accrued expenses and other current liabilities	42,822		66,352		12,183
Non-current assets and non-current liabilities, net	(15,064)		13,166		(5,070)
Net cash flows from operating activities	534,388		656,322		734,522

Cash flows from investing activities:
Purchases of marketable investment securities	(2,799,838)		(993,369)		(2,973,254)
Sales and maturities of marketable investment securities	2,110,336		2,391,220		1,498,463
Expenditures for property and equipment	(408,798)		(418,584)		(555,141)
Expenditures for externally marketed software	(38,655)		(29,310)		(31,639)
Purchase of other investments	(5,500)		(93,687)		—
Investments in unconsolidated affiliates	—		(2,149)		(115,991)
Purchases of regulatory authorizations	—		(34,447)		—
Refunds and other receipts related to property and equipment	—		—		77,524
Dividend received from unconsolidated affiliate	—		2,284		—
Sale of investment in unconsolidated affiliates	—		—		1,558
Net cash flows from investing activities	(1,142,455)		821,958		(2,098,480)

F-9


Cash flows from financing activities:
Repurchase and maturity of the 2019 Senior Secured Notes	—		(920,923)		(70,173)
Repayment of other long-term debt and finance lease obligations	(811)		(29,347)		(41,019)
Payment of in-orbit incentive obligations	(1,554)		(5,447)		(5,350)
Net proceeds from Class A common stock options exercised	855		67,337		4,424
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan	10,109		9,779		9,368
Treasury share purchase	(43,458)		—		(33,292)
Contribution by non-controlling interest holder	18,241		—		—
Purchase of non-controlling interest	—		(7,313)		—
Other, net	998		603		(521)
Net cash flows from financing activities	(15,620)		(885,311)		(136,563)

Effect of exchange rates on cash and cash equivalents	(1,390)		(575)		(2,233)
Net increase (decrease) in cash and cash equivalents	(625,077)		592,394		(1,502,754)
Cash and cash equivalents, including restricted amounts, beginning of period	1,521,889		929,495		2,432,249
Cash and cash equivalents, including restricted amounts, end of period	$	896,812	$	1,521,889	$	929,495

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-10

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND BUSINESS ACTIVITIES

Principal Business

EchoStar Corporation (which, together with its subsidiaries, is referred to as “EchoStar,” the “Company,” “we,” “us” and “our”) is a holding company that was organized in October 2007 as a corporation under the laws of the State of Nevada and has operated as a separately traded public company from DISH Network Corporation (“DISH”) since 2008. Our Class A common stock is publicly traded on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “SATS.”

We are a global provider of broadband satellite technologies, broadband internet services for consumer customers, which include home and small to medium-sized businesses, and satellite services. We also deliver innovative network technologies, managed services and communications solutions for enterprise customers, which include aeronautical and government enterprises. We operate in the following two business segments:

Hughes — which provides broadband satellite technologies and broadband internet services to domestic and international consumer customers and broadband network technologies, managed services, equipment, hardware, satellite services and communication solutions to service providers and enterprise customers. The Hughes segment also designs, provides and installs gateway and terminal equipment to customers for other satellite systems. In addition, our Hughes segment designs, develops, constructs and provides telecommunication networks comprising satellite ground segment systems and terminals to mobile system operators and our enterprise customers.
ESS — which uses certain of our owned and leased in-orbit satellites and related licenses to provide satellite services on a full-time and/or occasional-use basis to United States (“U.S.”) government service providers, internet service providers, broadcast news organizations, content providers and private enterprise customers.

Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development, Human Resources, IT, Finance, Accounting, Real Estate and Legal) and other activities, such as costs incurred in certain satellite development programs and other business development activities, and gains or losses from certain of our investments, that have not been assigned to our business segments. These activities, costs and income, as well as eliminations of intersegment transactions, are accounted for in Corporate and Other. We also divide our operations by primary geographic market as follows: (i) North America (the U.S. and its territories, Mexico, and Canada); (ii) South and Central America and; (iii) Other (Asia, Africa, Australia, Europe, India, and the Middle East). Refer to Note 20. Segment Reporting for further detail.

In September 2019, pursuant to a master transaction agreement (the “Master Transaction Agreement”) with DISH and a wholly-owned subsidiary of DISH (“Merger Sub”), (i) we transferred certain real property and the various businesses, products, licenses, technology, revenues, billings, operating activities, assets and liabilities primarily related to the former portion of our ESS segment that managed, marketed and provided (1) broadcast satellite services primarily to DISH and its subsidiaries (together with DISH, “DISH Network”) and our joint venture Dish Mexico, S. de R.L. de C.V. (“Dish Mexico”) and its subsidiaries, and (2) telemetry, tracking and control (“TT&C”) services for satellites owned by DISH Network and a portion of our other businesses (collectively, the “BSS Business”) to one of our former subsidiaries, EchoStar BSS Corporation (“BSS Corp.”), (ii) we distributed to each holder of shares of our Class A or Class B common stock entitled to receive consideration in the transaction an amount of shares of common stock of BSS Corp., par value $0.001 per share (“BSS Common Stock”), equal to one share of BSS Common Stock for each share of our Class A or Class B common stock owned by such stockholder (the “Distribution”); and (iii) immediately after the Distribution, (1) Merger Sub merged with and into BSS Corp. (the “Merger”), such that BSS Corp. became a wholly-owned subsidiary of DISH and with DISH then owning and operating the BSS Business, and (2) each issued and outstanding share of BSS Common Stock owned by EchoStar stockholders was converted into the right to receive 0.23523769 shares of DISH Class A common stock, par value $0.001 per share (“DISH Common Stock”) ((i) - (iii) collectively, the “BSS Transaction”).

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In connection with the BSS Transaction, we and DISH Network agreed to indemnify each other against certain losses with respect to breaches of certain representations and covenants and certain retained and assumed liabilities, respectively. Additionally, we and DISH and certain of our and their subsidiaries (i) entered into certain customary agreements covering, among other things, matters relating to taxes, employees, intellectual property and the provision of transitional services; (ii) terminated certain previously existing agreements; and (iii) amended certain existing agreements and entered into certain new agreements pursuant to which we and DISH Network will obtain and provide certain products, services and rights from and to each other.

The BSS Transaction was structured in a manner intended to be tax-free to us and our stockholders for U.S. federal income tax purposes and was accounted for as a spin-off to our shareholders as we did not receive any consideration. Following the consummation of the BSS Transaction, we no longer operate the BSS Business, which was a substantial portion of our ESS segment. As a result of the BSS Transaction, the financial results of the BSS Business, except for certain real estate that transferred in the transaction, are presented as discontinued operations and, as such, excluded from continuing operations and segment results for the years ended December 31, 2019 and 2018, as presented in these Consolidated Financial Statements and the accompanying notes (collectively, the “Consolidated Financial Statements’).

Refer to Note 5. Discontinued Operations for further detail. Additionally, all amounts in the following footnotes reference results from continuing operations unless otherwise noted.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

These Consolidated Financial Statements and the accompanying notes are prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). We consolidate all entities in which we have a controlling financial interest. We are deemed to have a controlling financial interest in variable interest entities in which we are the primary beneficiary and in other entities in which we own more than 50% of the outstanding voting shares and other shareholders do not have substantive rights to participate in management. For entities we control but do not wholly own, we record a non-controlling interest within stockholders’ equity for the portion of the entity’s equity attributed to the non-controlling ownership interests. All significant intercompany balances and transactions have been eliminated in consolidation.

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

Reclassification

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

Use of Estimates

We are required to make certain estimates and assumptions that affect the amounts reported in these Consolidated Financial Statements. The most significant estimates and assumptions are used in determining: (i) inputs used to recognize revenue over time, including amortization periods for deferred contract acquisition costs; (ii) allowances for doubtful accounts; (iii) deferred taxes and related valuation allowances, including uncertain tax positions; (iv) loss contingencies; (v) fair value of financial instruments; (vi) fair value of assets and liabilities acquired in business combinations; and (vii) asset impairment testing.

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

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Fair Value Measurements

We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We utilize the highest level of inputs available according to the following hierarchy in determining fair value:

Level 1 - Defined as observable inputs being quoted prices in active markets for identical assets;
Level 2 - Defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
Level 3 - Defined as unobservable inputs for which little or no market data exists, consistent with characteristics of the asset or liability that would be considered by market participants in a transaction to purchase or sell the asset or liability.

Fair values of our marketable investment securities are measured on a recurring basis based on a variety of observable market inputs. For our investments in publicly traded equity securities and U.S. government securities, fair value ordinarily is determined based on Level 1 measurements that reflect quoted prices for identical securities in active markets. Fair values of our investments in other marketable debt securities are generally based on Level 2 measurements as the markets for such debt securities are less active. We consider trades of identical debt securities on or near the measurement date as a strong indication of fair value and matrix pricing techniques that consider par value, coupon rate, credit quality, maturity and other relevant features may also be used to determine fair value of our investments in marketable debt securities. Fair values for our outstanding debt are based on quoted market prices in less active markets and are categorized as Level 2 measurements. Additionally, we use fair value measurements from time to time in connection with other investments, asset impairment testing and the assignment of purchase consideration to assets and liabilities of acquired companies. Those fair value measurements typically include significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy.

Transfers between levels in the fair value hierarchy are considered to occur at the beginning of the quarterly accounting period. There were no transfers between levels during the years ended December 31, 2020 and 2019.

As of December 31, 2020 and 2019, the carrying amounts of our cash and cash equivalents, trade accounts receivable and contract assets, net, trade accounts payable, and accrued expenses and other current liabilities were equal to or approximated their fair value due to their short-term nature or proximity to current market rates.

Revenue Recognition

Overview

Revenue is recognized upon transfer of control of the promised goods or our performance of the services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We enter into contracts that may include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations.

We also recognize lease revenue which is derived from leases of property and equipment which, for operating leases, is reported in Services and other revenue in the Consolidated Statements of Operations and, for sales-type leases, is reported in Equipment revenue in the Consolidated Statements of Operations. Certain of our customer contracts contain embedded equipment leases, which we separate from non-lease components of the contract based on the relative standalone selling prices of the lease and non-lease components.

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Hughes Segment

Our Hughes segment service contracts typically obligate us to provide substantially the same services on a recurring basis in exchange for fixed recurring fees over the term of the contract. We satisfy such performance obligations over time and recognize revenue ratably as services are rendered over the service period. Certain of our contracts with service obligations provide for fees based on usage, capacity or volume. We satisfy these performance obligations and recognize the related revenue at the point in time, or over the period, when the services are rendered. Our Hughes segment also sells and leases communications equipment to its customers. Revenue from equipment sales generally is recognized based upon shipment terms. Our equipment sales contracts typically include standard product warranties, but generally do not provide for returns or refunds. Revenue for extended warranties is recognized ratably over the extended warranty period. For contracts with multiple performance obligations, we typically allocate the contract’s transaction price to each performance obligation based on their relative standalone selling prices. When the standalone selling price is not observable, our primary method used to estimate standalone selling price is the expected cost plus a margin. Our contracts generally require customer payments to be made at or shortly after the time we transfer control of goods or perform the services.

In addition to equipment and service offerings, our Hughes segment also enters into long-term contracts to design, develop, construct and install complex telecommunication networks for mobile system operators and enterprise customers. Revenue from such contracts is generally recognized over time as a measure of progress that depicts the transfer of control of the goods or services to the customer. Depending on the nature of the arrangement, we measure progress toward contract completion using an appropriate input method or output method. Under the input method, we recognize the transaction price as revenue based on the ratio of costs incurred to estimated total costs at completion. Under the output method, revenue and cost of sales are recognized as products are delivered based on the expected profit for the entire agreement. Profit margins on long-term contracts generally are based on estimates of revenue and costs at completion. We review and revise our estimates periodically and recognize related adjustments in the period in which the revisions are made. Estimated losses on contracts are recorded in the period in which they are identified. We generally receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment.

ESS Segment

Generally, our ESS segment service contracts with customers contain a single performance obligation and, therefore, there is no need to allocate the transaction price. We transfer control and recognize revenue for satellite services at the point in time or over the period when the services are rendered.

Lease Revenue

We lease satellite capacity, communications equipment and real estate to certain of our customers. We identify and determine the classification of such leases as operating leases or sales-type leases. A lease is classified as a sales-type lease if it meets the criteria for a finance lease; otherwise it is classified as an operating lease. Some of our leases are embedded in contracts with customers that include non-lease performance obligations. For such contracts, except where we have elected otherwise, we allocate consideration in the contract between lease and non-lease components based on their relative standalone selling prices. We elected an accounting policy to not separate the lease of equipment from related services in our HughesNet satellite internet service (the “HughesNet service”) contracts with customers and account for all revenue from such contracts as non-lease service revenue. Assets subject to operating leases remain in Property and equipment, net and continue to be depreciated. Assets subject to sales-type leases are derecognized from Property and equipment, net at lease commencement and a net investment in the lease asset is recognized in Trade accounts receivable and contract assets, net and Other non-current assets, net.

Operating lease revenue is generally recognized on a straight-line basis over the lease term. Sales-type lease revenue and a corresponding receivable generally are recognized at lease commencement based on the present value of the future lease payments and related interest income on the receivable is recognized over the lease term. Payments under sales-type leases are discounted using the interest rate implicit in the lease or our incremental borrowing rate if the interest rate implicit in the lease cannot be reasonably determined. We report revenue from

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sales-type leases at the commencement date in Equipment revenue and periodic interest income in Services and other revenue. We report operating lease revenue in Services and other revenue.

Other

Sales and Value Added Taxes, Universal Service Fees and other taxes that we collect concurrent with revenue producing activities are excluded from revenue and included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost after control over a product has transferred to the customer and are included in Cost of sales - equipment in the Consolidated Statements of Operations at the time of shipment.

Cost of Sales - Services and Other

Cost of sales - services and other in the Consolidated Statements of Operations primarily consists of costs of satellite capacity and services, hub infrastructure, customer care, wireline and wireless capacity and direct labor costs associated with the services provided and is generally charged to expense as incurred.

Cost of Sales - Equipment

Cost of sales - equipment in the Consolidated Statements of Operations primarily consists of inventory costs, including freight and royalties, and is generally recognized at the point in time control of the equipment is passed to the customer and related revenue is recognized.

Additionally, customer-related research and development costs are incurred in connection with the specific requirements of a customer’s order; in such instances, the amounts for these customer funded development efforts are also included in Cost of sales - equipment in the Consolidated Statements of Operations.

Stock-based Compensation Expense

Stock-based compensation expense is recognized based on the fair value of stock awards ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense for awards with service conditions only is recognized on a straight-line basis over the requisite service period for the entire award. Compensation expense for awards subject to performance conditions is recognized only when satisfaction of the performance condition is probable.

Advertising Costs

Advertising costs are expensed as incurred and are included in Selling, general and administrative expenses in the Consolidated Statements of Operations.

Research and Development

Research and development costs, not incurred in connection with customer requirements, are generally expensed when incurred.

Debt Issuance Costs

Costs of issuing debt generally are deferred and amortized utilizing the effective interest method, with amortization included in Interest expense, net of amounts capitalized in the Consolidated Statements of Operations. We report unamortized debt issuance costs as a reduction of the related long-term debt in the Consolidated Balance Sheets.

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Foreign Currency

The functional currency for certain of our foreign operations is determined to be the local currency. Accordingly, we translate assets and liabilities of these foreign entities from their local currencies to U.S. dollars using period-end exchange rates and translate income and expense accounts at monthly average rates. The resulting translation adjustments are reported as Foreign currency translation adjustments in the Consolidated Statements of Comprehensive Income (Loss). Except in certain uncommon circumstances, we have not recorded deferred income taxes related to our foreign currency translation adjustments.

Gains and losses resulting from the re-measurement of transactions denominated in foreign currencies are recognized in Foreign currency transaction gains (losses), net in the Consolidated Statements of Operations.

Income Taxes

We recognize a provision or benefit for income taxes currently payable or receivable and for income tax amounts deferred to future periods. Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future income tax effects of temporary differences between U.S. GAAP carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are offset by valuation allowances when we determine it is more likely than not that such deferred tax assets will not be realized in the foreseeable future. We determine deferred tax assets and liabilities separately for each taxing jurisdiction and report the net amount for each jurisdiction as a non-current asset or liability in the Consolidated Balance Sheets.

From time to time, we engage in transactions where the income tax consequences are uncertain. We recognize tax benefits when, in management’s judgment, a tax filing position is more likely than not to be sustained if challenged by the tax authorities. For tax positions that meet the more-likely-than-not threshold, we may not recognize a portion of a tax benefit depending on management’s assessment of how the tax position will ultimately be settled. Unrecognized tax benefits generally are netted against the deferred tax assets associated with our net operating loss and tax credit carryforwards. We adjust our estimates periodically based on ongoing examinations by, and settlements with, various taxing authorities, as well as changes in tax laws, regulations and precedent. Estimates of our uncertain tax positions are made based upon prior experience and are updated in light of changes in facts and circumstances. However, due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of audits may result in liabilities which could be materially different from these estimates. In such an event, we will record additional income tax provision or benefit in the period in which such resolution occurs. We classify interest and penalties, if any, associated with our unrecognized tax benefits as a component of income tax provision or benefit.

Lessee Accounting

We lease real estate, satellite capacity and equipment in the conduct of our business operations. For contracts entered into on or after January 1, 2019, at contract inception, we assess whether the contract is, or contains, a lease. Generally, we determine that a lease exists when (i) the contract involves the use of a distinct identified asset, (ii) we obtain the right to substantially all economic benefits from use of the asset and (iii) we have the right to direct the use of the asset. A lease is classified as a finance lease when one or more of the following criteria are met: (i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful life of the asset, (iv) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset or (v) the asset is of a specialized nature and there is not expected to be an alternative use to the lessor at the end of the lease term. A lease is classified as an operating lease if it does not meet any of these criteria. Our operating leases consist primarily of leases for office space, data centers and satellite-related ground infrastructure. Our finance leases consist primarily of leases for satellite capacity.

At the lease commencement date, we recognize a right-of-use asset and a lease liability for all leases, except short-term leases with an original term of 12 months or less. The right-of-use asset represents the right to use the leased asset for the lease term including any renewal options we are reasonably certain to exercise. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at

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cost, which primarily comprises the initial amount of the lease liability, plus any prepayments to the lessor and initial direct costs such as brokerage commissions, less any lease incentives received. All right-of-use assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the minimum lease payments, discounted using an estimate of our incremental borrowing rate for a collateralized loan with the same term as the underlying lease. The incremental borrowing rates used for the initial measurement of lease liabilities are based on the original lease terms.

We report operating lease right-of-use assets in Operating lease right-of-use assets and operating lease liabilities in Accrued expenses and other current liabilities and Operating lease liabilities. We report finance lease right-of-use assets in Property and equipment, net and finance lease liabilities in Current portion of long-term debt, net and Long-term debt, net.

Minimum lease payments included in the measurement of lease liabilities consist of (i) fixed lease payments for the non-cancelable lease term, (ii) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised and (iii) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. Certain of our real estate lease agreements require payments for non-lease costs such as utilities and common area maintenance. We elected an accounting policy to not account for such payments separately from the related lease payments. Our policy election results in a higher initial measurement of lease liabilities when such non-lease payments are fixed amounts. Certain of our real estate lease agreements require variable lease payments that do not depend on an underlying index or rate, such as sales and value-added taxes and our proportionate share of actual property taxes, insurance and utilities, which are recognized in operating expenses as incurred.

Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Lease expense for finance leases consists of the amortization of the right-of-use asset on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement. For both operating and finance leases, lease payments are allocated between a reduction of the lease liability and interest expense. Amortization of the right-of-use asset for operating leases reflects amortization of the lease liability, any differences between straight-line expense and related lease payments during the accounting period, and any impairments.

Business Combinations

We account for all business combinations that result in our control over another entity by using the acquisition method of accounting, which requires us to allocate the purchase price of the acquired business to the identifiable tangible and intangible assets acquired and liabilities assumed, including contingent consideration, and non-controlling interests, based upon their estimated fair values at the date of acquisition. The difference between the purchase price and the excess of the aggregate estimated fair values of assets acquired and liabilities assumed is recorded as goodwill. In determining the estimated fair values of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling, referenced market values, where available and cost-based approaches. Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate.

Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date, including our estimates for intangible assets, contractual obligations assumed and contingent consideration, where applicable. While we believe the assumptions and estimates we have made are reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired business and are inherently uncertain and subject to refinement.

We believe that the estimated fair values assigned to the assets we have acquired and liabilities we have assumed are based on reasonable and appropriate assumptions. While we believe our estimates and assumptions are reasonable and appropriate, they are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets we have acquired and liabilities we have assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the estimated fair values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded in the Consolidated

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Statements of Operations. In addition, results of operations of the acquired company are included in our results from the date of the acquisition forward and include amortization expense arising from acquired intangible assets. We expense all costs as incurred related to or involved with an acquisition in Other, net, in the Consolidated Statements of Operations.

Earnings Per Share

We present basic and diluted earnings or losses per share (“EPS”) for our Class A and Class B common stock. Basic EPS for our Class A and Class B common stock excludes potential dilution and is computed by dividing Net income (loss) attributable to EchoStar Corporation common stock by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if shares of common stock were issued pursuant to our stock-based compensation awards. The potential dilution from common stock awards is computed using the treasury stock method based on the average market value of our Class A common stock during the period.

Other Comprehensive Income (Loss)

The amounts reclassified to net income (loss) related to unrealized gain (loss) on available-for-sale securities in are included in Gains (losses) on investments, net in the Consolidated Statements of Operations.

Cash and Cash Equivalents

We consider all liquid investments purchased with an original maturity of less than 90 days to be cash equivalents. Cash equivalents as of December 31, 2020 and 2019 primarily consisted of commercial paper, government bonds, corporate notes and money market funds. The amortized cost of these investments approximates their fair value.

Marketable Investment Securities

Debt Securities

Our corporate bond portfolio includes debt instruments issued by individual corporations, primarily in the industrial and financial services industries. Our commercial paper portfolio includes instruments issued by individual corporations, primarily in the industrial, financial services and utilities industries. Our other debt securities portfolio includes investments in various debt instruments, including U.S. government bonds and mutual funds. We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.

We account for our debt securities as available-for-sale or using the fair value option based on our investment strategy for the securities. For available-for-sale debt securities, we recognize periodic changes in the difference between fair value and amortized cost in Unrealized gains (losses) on available-for-sale securities in the Consolidated Statements of Comprehensive Income (Loss). Gains and losses realized upon sales of available-for-sale debt securities are reclassified from other comprehensive income (loss) and recognized on the trade date in Gains (losses) on investments, net in the Consolidated Statements of Operations. We use the first-in, first-out (“FIFO”) method to determine the cost basis on sales of available-for-sale debt securities. Interest income from available-for-sale debt securities is reported in Interest income, net in the Consolidated Statements of Operations.

We periodically evaluate our available-for-sale debt securities portfolio to determine whether any declines in the fair value of these securities are other-than-temporary. Our evaluation considers, among other things, (i) the length of time and extent to which the fair value of such security has been lower than amortized cost, (ii) market and company-specific factors related to the security and (iii) our intent and ability to hold the investment to maturity or when it recovers its value. We generally consider a decline to be other-than-temporary when (i) we intend to sell the security, (ii) it is more likely than not that we will be required to sell the security before maturity or when it recovers its value or (iii) we do not expect to recover the amortized cost of the security at maturity. Declines in the fair value of available-for-sale debt securities that are determined to be other-than-temporary are reclassified from other comprehensive income (loss) and recognized in Net income (loss) in the Consolidated Statements of Operations, thus establishing a new cost basis for the investment.

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From time to time we make strategic investments in marketable corporate debt securities. Generally, we elect to account for these debt securities using the fair value option because it results in consistency in accounting for unrealized gains and losses for all securities in our portfolio of strategic investments. When we elect the fair value option for investments in debt securities, we recognize periodic changes in fair value of these securities in Gains (losses) on investments, net in the Consolidated Statements of Operations. Interest income from these securities is reported in Interest income, net in the Consolidated Statements of Operations.

Equity Securities

We account for our equity securities with readily determinable fair values at fair value and recognize periodic changes in the fair value in Gains (losses) on investments, net in the Consolidated Statements of Operations. We recognize dividend income on equity securities on the ex-dividend date and report such income in Other, net in the Consolidated Statements of Operations.

Restricted Marketable Investment Securities

Restricted marketable investment securities that are pledged as collateral for our letters of credit and surety bonds are included in Other non-current assets, net in the Consolidated Balance Sheets. Restricted marketable securities are accounted for in the same manner as marketable securities that are not restricted, but are presented differently in the Consolidated Balance Sheets due to the restrictions.

Trade Accounts Receivable

Trade accounts receivable includes amounts billed and currently due from customers and represents our unconditional rights to consideration arising from our performance under our customer contracts. Trade accounts receivable also includes amounts due from customers under our leasing arrangements. We make ongoing estimates relating to the collectability of our trade accounts receivable and maintain an allowance for estimated losses resulting from the inability of our customers to make the required payments. In determining the amount of the allowance, we consider historical levels of credit losses and make judgments about the creditworthiness of our customers based on ongoing credit evaluations. Past due trade accounts receivable balances are written off when our internal collection efforts have been unsuccessful. Bad debt expense related to our trade accounts receivable and other contract assets is included in Selling, general and administrative expenses in the Consolidated Statements of Operations.

Contract Assets

Contract assets represent revenue that we have recognized in advance of billing the customer and are included in Trade accounts receivable and contract assets, net or Other non-current assets, net in the Consolidated Balance Sheets based on the expected timing of customer payment. Our contract assets typically relate to our long-term contracts where we recognize revenue using the cost-based input method and the revenue recognized exceeds the amount billed to the customer.

Contract Acquisition Costs

Our contract acquisition costs represent incremental direct costs of obtaining a contract and consist primarily of sales incentives paid to employees and third-party representatives. When we determine that our contract acquisition costs are recoverable, we defer and amortize the costs over the contract term, or over the estimated life of the customer relationship if anticipated renewals are expected and the incentives payable upon renewal are not commensurate with the initial incentive. We amortize contract acquisition costs in proportion to the revenue to which the costs relate. We expense sales incentives as incurred if the expected amortization period is one year or less. Unamortized contract acquisition costs are included in Other non-current assets, net in the Consolidated Balance Sheets and related amortization expense is included in Selling, general and administrative expenses in the Consolidated Statements of Operations.

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Inventory

Inventory is stated at the lower of cost or net realizable value. Cost of inventory is determined using the FIFO method and consists primarily of materials, direct labor and indirect overhead incurred in the procurement and manufacturing of our products. We use standard costing methodologies in determining the cost of certain of our finished goods and work-in-process inventories. We determine net realizable value using our best estimates of future use or recovery, considering the aging and composition of inventory balances, the effects of technological and/or design changes, forecasted future product demand based on firm or near-firm customer orders and alternative means of disposition of excess or obsolete items. We recognize losses within Cost of sales - equipment in the Consolidated Statements of Operations when we determine that the cost of inventory and commitments to purchase inventory exceed net realizable value.

Property and Equipment

Satellites

Satellites are stated at cost, less accumulated depreciation. Depreciation is recorded on a straight-line basis over their estimated useful lives. The cost of our satellites includes construction costs, including the present value of in-orbit incentives payable to the satellite manufacturer, launch costs, capitalized interest and related insurance premiums. We depreciate our owned satellites on a straight-line basis over the estimated useful life of each satellite.

We have satellites acquired under finance leases. The recorded costs of those satellites are the present values of all lease payments. We amortize our finance lease right-of-use satellites over their respective lease terms.

Our satellites may experience anomalies from time to time, some of which may have a significant adverse effect on their remaining useful lives, the commercial operation of the satellites or our operating results or financial position.

We evaluate our satellites for impairment and test for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Certain anomalies may be considered a significant adverse change in the physical condition of a particular satellite. However, based on redundancies designed within each satellite, certain of these anomalies may not be considered to be significant events requiring a test of recoverability.

We generally do not carry in-orbit insurance on our satellites and payloads because we have assessed that the cost of insurance is not economical relative to the risk of failures. Therefore, we generally bear the risk of any in-orbit failures. However, we may be required to carry insurance on specific satellites and payloads per the terms of certain agreements. We will continue to assess circumstances going forward and make insurance-related decisions on a case-by-case basis.

Other Property and Equipment

Other property and equipment are stated at cost, less accumulated depreciation. Depreciation is recorded on a straight-line basis over their estimated useful lives. Other property and equipment includes: land; buildings and improvements; furniture, fixtures, equipment and internal-use software; customer premises equipment; and construction in process. Costs related to the procurement and development of software for internal-use are capitalized and amortized using the straight-line method over the estimated useful life of the software, not in excess of five years. Repair and maintenance costs are charged to expense when incurred.

Goodwill

Goodwill represents the excess of the cost of acquired businesses over the estimated fair values assigned to the identifiable assets acquired and liabilities assumed. We test goodwill for impairment annually in our second fiscal quarter, or more frequently if indicators of impairment may exist. All of our goodwill is assigned to our Hughes segment, as it was generated through the acquisition of Hughes Communications, Inc. (“Hughes Communications”) and its subsidiaries in 2011 (the “Hughes Acquisition”), and the agreement with Al Yah Satellite Communications

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Company PrJSC (“Yahsat”) pursuant to which, in November 2019, Yahsat contributed its satellite communications services business in Brazil to one of our Brazilian subsidiaries in exchange for a 20% equity ownership interest in that subsidiary (the “Yahsat Brazil JV Transaction”).

We consider qualitative factors to assess if it is more likely than not that the fair value for goodwill is below the carrying amount. We may also elect to bypass the qualitative assessment and perform a quantitative assessment. In conducting a qualitative assessment, we analyze a variety of events or factors that may influence the fair value of the reporting unit. There has been no impairment to date.

Regulatory Authorizations

Finite Lived

We have regulatory authorizations that are not related to the Federal Communications Commission (“FCC”) and have determined that they have finite lives due to uncertainties about the ability to extend or renew their terms.

Finite lived regulatory authorizations are amortized over their estimated useful lives on a straight-line basis. Renewal costs are usually capitalized when they are incurred.

Indefinite Lived

We also have indefinite lived regulatory authorizations that primarily consist of FCC authorizations and certain other contractual or regulatory rights to use spectrum at specified orbital locations. We have determined that our FCC authorizations generally have indefinite useful lives based on the following:

FCC authorizations are non-depleting assets;
Renewal satellite applications generally are authorized by the FCC subject to certain conditions, without substantial cost under a stable regulatory, legislative and legal environment;
Expenditures required to maintain the authorization are not significant; and
We intend to use these authorizations indefinitely.

Costs incurred to maintain or renew indefinite-lived regulatory authorizations are expensed as incurred.

Other Intangible Assets

Our other intangible assets consist of customer relationships, patents, trademarks and licenses which are amortized using the straight-line method over their estimated useful lives. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that indicate that the carrying amount of the assets may not be recoverable.

Impairment of Long-lived Assets

We review our long-lived assets for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For assets held and used in operations, the asset is not recoverable if the carrying amount of the asset exceeds its undiscounted estimated future net cash flows. When an asset is not recoverable, we adjust the carrying amount of such asset to its estimated fair value and recognize the impairment loss in Impairment of long-lived assets in the Consolidated Statements of Operations.

F-21

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Other Investments

Equity Method Investments

We use the equity method to account for investments when we have the ability to exercise significant influence on the operating decisions of the affiliate. Such investments are initially recorded at cost and subsequently adjusted for our proportionate share of the net earnings or loss of the investee, which is reported in Equity in earnings (losses) of unconsolidated affiliates, net in the Consolidated Statements of Operations. During the fourth quarter of 2019, we changed our accounting policy to record our share of the net earnings or losses of these affiliates on a three-month lag. This change was immaterial to these Consolidated Financial Statements. Additionally, the carrying amount of such investments includes a component of goodwill when the cost of our investment exceeds the fair value of the underlying identifiable assets and liabilities of the affiliate. Lastly, dividends received from these affiliates reduces the carrying amount of our investment.

Other Equity Investments

We generally measure investments in non-publicly traded equity instruments without a readily determinable fair value at cost adjusted for observable price changes in orderly transactions for the identical or similar securities of the same issuer and changes resulting from impairments, if any. Other equity instruments are measured to determine their value based on observable market information.

Other Debt Investments

We generally record our investments in non-publicly traded debt instruments without a readily determinable fair value at amortized cost. We recognize any discounts over the term of the loan in Interest income in the Consolidated Statements of Operations. In addition, some of our debt instruments have interest income that is paid-in-kind, which is added to the principal balance to determine the then current interest income.

Impairment Considerations

We periodically evaluate all of our other investments to determine whether (i) events or changes in circumstances have occurred that may have a significant adverse effect on the fair value of the investment and (ii) if there has been observable price changes in orderly transactions for identical or similar securities of the same issuer. We consider information if provided to us by our investees such as current financial statements, business plans, investment documentation, capitalization tables, liquidation waterfalls, and board materials; and we may make additional inquiries of investee management.

Indicators of impairment may include, but are not limited to, unprofitable operations, material loss contingencies, changes in business strategy, changes in the investees’ enterprise value and changes in the investees’ investment pricing. When we determine that one of our other investments is impaired we reduce its carrying value to its estimated fair value and recognize the impairment loss in Gains (losses) on investments, net in the Consolidated Statements of Operations. Additionally, when there has been an observable price change to a cost method investment, we adjust the carrying amount of the investment to its then estimated fair value and recognize the investment gain or loss in Gains (losses) on investments, net in the Consolidated Statements of Operations.

Externally Marketed Software

Costs related to the procurement and development of externally marketed software are capitalized and amortized using the straight-line method over the estimated useful life of the software, not in excess of five years. Capitalized costs of externally marketed software are included in Other non-current assets, net in the Consolidated Balance Sheets. Externally marketed software generally is installed in the equipment we sell or lease to customers. We conduct software program reviews for externally marketed capitalized software costs at least annually, or as events and circumstances warrant such a review, to determine if capitalized software development costs are recoverable and to ensure that costs associated with programs that are no longer generating revenue are expensed.

F-22

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Contract Liabilities

Contract liabilities consist of advance payments and billings in excess of revenue recognized under customer contracts and are included in Contract liabilities or Other non-current liabilities in the Consolidated Balance Sheets based on the timing of when we expect to recognize revenue. We recognize contract liabilities as revenue after all revenue recognition criteria have been met.

Recently Adopted Accounting Pronouncements

Credit Losses

On January 1, 2020, we adopted Accounting Standards Update (“ASU”) No. 2016-13 - Financial Instruments - Credit Losses (Topic 326), as amended, and codified in Accounting Standards Codification Topic 326 (“ASC 326”). ASC 326 introduces a new approach to the periodic estimation of credit losses for certain financial assets based on expected losses instead of incurred losses. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets that have experienced credit deterioration since their original purchase. We have elected to apply the requirements of the new standard prospectively and we recognized a cumulative effect of adoption of $9.1 million to Accumulated earnings (losses) as of January 1, 2020. Based on this election, we did not restate our comparative Consolidated Financial Statements and they continue to be reported under the accounting standards in effect for the periods before January 1, 2020.

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

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

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

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

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

F-23

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

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

Financial Impact of Adoption. The following table presents our adoption of this new standard resulting in adjustments to our Consolidated Balance Sheet effective January 1, 2020:


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

The application of ASC 326 requirements did not materially affect our Consolidated Statements of Operations for the year ended December 31, 2020.

Leases

We adopted ASU No. 2016-02 - Leases (Topic 842) Leases (Topic 842), as amended, codified as Accounting Standard Codification (“ASC 842”), as of January 1, 2019. The primary impact of ASC 842 on these Consolidated Financial Statements is the recognition of right-of-use assets and related liabilities in the Consolidated Balance Sheet for leases where we are the lessee. We elected to apply the requirements of the new standard prospectively on January 1, 2019 and did not restate these Consolidated Financial Statements for prior periods. Our adoption of ASC 842 did not have a material impact on our results of operations or cash flows for the year ended December 31, 2019.

Except for the new requirement to recognize assets and liabilities on the balance sheet for operating leases where we are the lessee, under our ASC 842 transition method, we continue to apply prior accounting standards to leases that commenced prior to 2019. We fully apply ASC 842 requirements only to leases that commenced or were modified on or after January 1, 2019. We elected certain practical expedients under our transition method, including elections to not reassess (i) whether a contract is or contains a lease and (ii) the classification of existing leases. We also elected not to apply hindsight in determining whether optional renewal periods should be included in the lease

F-24

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

term, which in some instances may impact the initial measurement of the lease liability and the calculation of straight-line expense over the lease term for operating leases. As a result of our transition elections, there was no change in our recognition of revenue and expense for leases that commenced prior to 2019. In addition, the application of ASC 842 requirements to new and modified leases did not materially affect our recognition of revenue or expenses for the year ended December 31, 2019.

Financial Impact of Adoption. The following table presents our adoption of this standard resulting in adjustments to our Consolidated Balance Sheet effective January 1, 2019:


	Balance December 31, 2018		Adoption of ASC 842 Increase (Decrease)		Balance January 1, 2019
Other current assets, net	$	165,809	$	(28)	$	165,781
Operating lease right-of-use assets	$	—	$	120,358	$	120,358
Other non-current assets, net	$	338,390	$	(7,272)	$	331,118
Total assets	$	8,661,294	$	113,058	$	8,774,352
Accrued expenses and other current liabilities	$	181,698	$	17,453	$	199,151
Operating lease liabilities	$	—	$	100,085	$	100,085
Other non-current liabilities	$	80,304	$	(3,871)	$	76,433
Total liabilities	$	4,505,820	$	113,667	$	4,619,487
Accumulated earnings (losses)	$	694,129	$	(609)	$	693,520
Total stockholders’ equity	$	4,155,474	$	(609)	$	4,154,865
Total liabilities and stockholders’ equity	$	8,661,294	$	113,058	$	8,774,352

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is part of the FASB’s overall simplification initiative and seeks to simplify the accounting for income taxes by updating certain guidance and removing certain exceptions. The updated guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. We have assessed the impact of adopting this new guidance and it will not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848 (“ASC 848”). The purpose of ASC 848 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates to alternative reference rates. ASC 848 applies only to contracts, hedging relationships, and other transactions that reference a reference rate expected to be discontinued because of reference rate reform. The guidance may be applied upon issuance of ASC 848 through December 31, 2022. We expect to utilize the optional expedients provided by the guidance for contracts amended solely to use an alternative reference rate. We have evaluated the impact of adopting this new guidance and do not expect it to have a material impact on our consolidated financial statements.

F-25

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE 3. REVENUE RECOGNITION

Contract Balances

The following table presents the components of our contract balances:


	As of December 31,
	2020		2019
Trade accounts receivable and contract assets, net:
Sales and services	$	149,513	$	152,632
Leasing	4,554		4,016
Total trade accounts receivable	154,067		156,648
Contract assets	45,308		63,758
Allowance for doubtful accounts	(15,386)		(23,777)
Total trade accounts receivable and contract assets, net	$	183,989	$	196,629

Contract liabilities:
Current	$	104,569	$	101,060
Non-current	10,519		10,572
Total contract liabilities	$	115,088	$	111,632

The following table presents the revenue recognized in the Consolidated Statement of Operations that was previously included within contract liabilities:


	For the years ended December 31,
	2020		2019		2018
Revenue	$	72,877	$	65,417	$	52,000

The following table presents the activity in our allowance for doubtful accounts:


	For the years ended December 31,
	2020		2019		2018
Balance at beginning of period	$	23,777	$	16,604	$	12,027
Credit losses (1)	18,582		30,027		24,984
Deductions	(26,031)		(21,832)		(16,888)
Foreign currency translation	(942)		(1,022)		(3,519)
Balance at end of period	$	15,386	$	23,777	$	16,604

(1) The impact of adopting ASC 326 on January 1, 2020 was a net decrease to our allowance for doubtful accounts largely driven by a $13.4 million reclassification to Other current assets, net and Other non-current assets, net, offset by a $2.9 million adjustment to Accumulated earnings (losses).

F-26

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Contract Acquisition Costs

The following table presents the activity in our contract acquisition costs, net:


	For the years ended December 31,
	2020		2019		2018
Balance at beginning of period	$	113,592	$	114,306	$	90,899
Additions	91,143		97,457		113,265
Amortization expense	(101,278)		(97,650)		(88,949)
Foreign currency translation	(3,620)		(521)		(909)
Balance at end of period	$	99,837	$	113,592	$	114,306

Transaction Price Allocated to Remaining Performance Obligations

As of December 31, 2020, the remaining performance obligations for our customer contracts with original expected durations of more than one year was $942.3 million. We expect to recognize 38.2% of our remaining performance obligations of these contracts as revenue in the next twelve months. This amount excludes agreements with consumer customers in our Hughes segment, our leasing arrangements and agreements with certain customers under which collectibility of all amounts due through the term of contracts is uncertain.

Disaggregation of Revenue

Geographic Information

The following table presents our revenue from customer contracts disaggregated by primary geographic market and by segment:


	Hughes		ESS		Corporate and Other		Consolidated Total
For the year ended December 31, 2020
North America	$	1,556,961	$	17,398	$	9,443	$	1,583,802
South and Central America	151,194		—		232		151,426
Other	152,679		—		—		152,679
Total revenue	$	1,860,834	$	17,398	$	9,675	$	1,887,907

For the year ended December 31, 2019
North America	$	1,527,823	$	16,257	$	16,526	$	1,560,606
South and Central America	125,458		—		448		125,906
Other	199,461		—		108		199,569
Total revenue	$	1,852,742	$	16,257	$	17,082	$	1,886,081

For the year ended December 31, 2018
North America	$	1,444,628	$	27,231	$	18,495	$	1,490,354
South and Central America	101,632		—		384		102,016
Other	170,268		—		—		170,268
Total revenue	$	1,716,528	$	27,231	$	18,879	$	1,762,638

F-27

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Nature of Products and Services

The following table presents our revenue disaggregated by the nature of products and services and by segment:


	Hughes		ESS		Corporate and Other		Consolidated Total
For the year ended December 31, 2020
Services and other revenue:
Services	$	1,614,730	$	10,785	$	4,631	$	1,630,146
Lease revenue	40,503		6,613		5,042		52,158
Total services and other revenue	1,655,233		17,398		9,673		1,682,304
Equipment revenue:
Equipment	110,108		—		2		110,110
Design, development and construction services	88,511		—		—		88,511
Lease revenue	6,982		—		—		6,982
Total equipment revenue	205,601		—		2		205,603
Total revenue	$	1,860,834	$	17,398	$	9,675	$	1,887,907

For the year ended December 31, 2019
Services and other revenue:
Services	$	1,535,966	$	10,464	$	6,493	$	1,552,924
Lease revenue	50,073		5,793		10,481		66,347
Total services and other revenue	1,586,039		16,257		16,974		1,619,271
Equipment revenue:
Equipment	115,052		—		107		115,159
Design, development and construction services	145,646		—		—		145,646
Lease revenue	6,005						6,005
Total equipment revenue	266,703		—		107		266,810
Total revenue	$	1,852,742	$	16,257	$	17,082	$	1,886,081

For the year ended December 31, 2018
Services and other revenue:
Services	$	1,313,059	$	21,044	$	5,821	$	1,339,924
Lease revenue	198,059		6,187		13,058		217,304
Total services and other revenue	1,511,118		27,231		18,879		1,557,228
Equipment revenue:
Equipment	119,657		—		—		119,657
Design, development and construction services	85,753		—		—		85,753
Total equipment revenue	205,410		—		—		205,410
Total revenue	$	1,716,528	$	27,231	$	18,879	$	1,762,638

F-28

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Lease Revenue

We elected to apply the requirements of ASC Topic 842, Leases, prospectively on January 1, 2019. As a result, the following disclosures required by the new guidance are not presented for periods prior to that date.

The following table presents our lease revenue by type of lease:


	For the years ended December 31,
	2020		2019
Sales-type lease revenue:
Revenue at lease commencement	$	6,982	$	6,005
Interest income	393		784
Total sales-type lease revenue	7,375		6,789
Operating lease revenue	51,765		65,563
Total lease revenue	$	59,140	$	72,352

Substantially all of our net investment in sales-type leases consisted of lease receivables totaling $13.0 million and $6.5 million as of December 31, 2020 and 2019, respectively.

The following table presents future operating lease payments to be received as of December 31, 2020:


	Amounts
December 31,
2021	$	45,332
2022	34,137
2023	31,907
2024	29,666
2025	28,035
2026 and beyond	99,692
Total lease payments	$	268,769

The following table presents amounts for assets subject to operating leases, which are included in Property and equipment, net:


	As of December 31,
	2020						2019
	Cost		Accumulated Depreciation		Net		Cost		Accumulated Depreciation		Net
Customer premises equipment	$	1,617,053	$	(1,265,129)	$	351,924	$	1,377,914	$	(1,043,431)	$	334,483
Satellites	104,620		(38,335)		66,285		104,620		(31,360)		73,260
Real estate	48,275		(17,094)		31,181		46,930		(16,048)		30,882
Total	$	1,769,948	$	(1,320,558)	$	449,390	$	1,529,464	$	(1,090,839)	$	438,625

F-29

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents depreciation expense for assets subject to operating leases, which is included in Depreciation and amortization:


	For the years ended December 31,
	2020		2019
Customer premises equipment	$	230,079	$	182,523
Satellites	6,975		7,495
Real estate	942		923
Total	$	237,996	$	190,941

NOTE 4. LESSEE ACCOUNTING

The following table presents the amounts for right-of-use assets and lease liabilities:


	As of December 31,
	2020		2019
Right-of-use assets:
Operating	$	128,303	$	114,042
Finance	278,237		325,826
Total right-of-use assets	$	406,540	$	439,868

Lease liabilities:
Current:
Operating	$	14,699	$	14,651
Finance	423		486
Total current	15,122		15,137
Non-current:
Operating	114,886		96,941
Finance	129		565
Total non-current	115,015		97,506
Total lease liabilities	$	130,137	$	112,643

As of December 31, 2020, we have prepaid our obligations regarding most of our finance right-of-use assets. Finance lease assets are reported net of accumulated amortization of $74.0 million and $57.3 million as of December 31, 2020 and 2019, respectively.

F-30

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents the components of lease cost and weighted average lease terms and discount rates for operating and finance leases:


	For the years ended December 31,
	2020		2019
Lease cost:
Operating lease cost	$	24,000	$	24,342
Finance lease cost:
Amortization of right-of-use assets	27,611		26,489
Interest on lease liabilities	106		173
Total finance lease cost	27,717		26,662
Short-term lease cost	376		434
Variable lease cost	3,853		8,837
Total lease cost	$	55,946	$	60,275


	As of December 31,
	2020		2019
Lease term and discount rate:
Weighted average remaining lease term:
Finance leases	1.2 years		2.1 years
Operating leases	10.6 years		10.3 years

Weighted average discount rate:
Finance leases	12.2	%	11.9	%
Operating leases	6.0	%	6.1	%

The following table presents the detailed cash flows from operating and finance leases:


	For the years ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	21,834	$	22,618
Operating cash flows from finance leases	106		173
Financing cash flows from finance leases	499		654

We obtained right-of-use assets in exchange for lease liabilities of $22.6 million and $8.5 million upon commencement of operating leases during the year ended December 31, 2020 and 2019, respectively.

F-31

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents future minimum lease payments of our lease liabilities as of December 31, 2020:


	Operating Leases		Finance Leases		Total
Year ending December 31,
2021	$	21,051	$	472	$	21,523
2022	20,409		136		20,545
2023	19,628		—		19,628
2024	16,364		—		16,364
2025	12,355		—		12,355
2026 and beyond	86,194		—		86,194
Total future minimum lease payments	176,001		608		176,609
Less: Interest	(46,416)		(56)		(46,472)
Total lease liabilities	$	129,585	$	552	$	130,137

NOTE 5. DISCONTINUED OPERATIONS

BSS Business

The following table presents the financial results of our discontinued operations of the BSS Business:


	For the years ended December 31,
	2019		2018
Revenue:
Services and other revenue - DISH Network	$	195,942	$	305,229
Services and other revenue - other	16,260		23,496
Total revenue	212,202		328,725
Costs and expenses:
Cost of sales - services and other (exclusive of depreciation and amortization)	28,057		40,398
Selling, general and administrative expenses	8,946		159
Depreciation and amortization	97,435		141,062
Total costs and expenses	134,438		181,619
Operating income (loss)	77,764		147,106
Other income (expense):
Interest expense	(17,865)		(29,280)
Total other income (expense), net	(17,865)		(29,280)
Income (loss) from discontinued operations before income taxes	59,899		117,826
Income tax benefit (provision), net	(20,498)		(24,097)
Net income (loss) from discontinued operations	$	39,401	$	93,729

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

F-32

ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents the significant supplemental cash flow information and adjustments to reconcile net income to net cash flow from operating activities for discontinued operations of the BSS business:


	For the years ended December 31,
	2019		2018
Operating activities:
Net income (loss) from discontinued operations	$	39,401	$	93,729
Depreciation and amortization	$	97,435	$	141,062

Investing activities:
Expenditures for property and equipment	$	510	$	175

Financing activities:
Payment of finance lease obligations	$	27,203	$	35,886
Payment of in-orbit incentive obligations	$	4,474	$	4,883

Terminated or Transferred Related Party Agreements

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

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

EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV — In March 2014, we began leasing certain satellite capacity to DISH Network on the EchoStar VII satellite, the EchoStar X satellite, the EchoStar XI satellite and the EchoStar XIV satellite.
EchoStar XII — DISH Network leased satellite capacity from us on the EchoStar XII satellite.
EchoStar XVI — In December 2009, we entered into an agreement to lease satellite capacity to DISH Network, pursuant to which DISH Network leased satellite capacity from us on the EchoStar XVI satellite beginning in January 2013.
Nimiq 5 Agreement — In September 2009, we entered into an agreement with Telesat Canada to lease satellite capacity from Telesat Canada on all 32 direct broadcast satellite (“DBS”) transponders on the Nimiq 5 satellite at the 72.7 degree west longitude orbital location (the “Telesat Transponder Agreement”). In September 2009, we entered into an agreement with DISH Network, pursuant to which DISH Network leased satellite capacity from us on all 32 of the DBS transponders covered by the Telesat Transponder Agreement (the “DISH Nimiq 5 Agreement”). Under the terms of the DISH Nimiq 5 Agreement, DISH Network made certain monthly payments to us that commenced in September 2009, when the Nimiq 5 satellite was placed into service. Following the consummation of the BSS Transaction, we retained certain obligations related to DISH Network’s performance under the Telesat Transponder Agreement.
QuetzSat-1 Agreement — In November 2008, we entered into an agreement to lease satellite capacity from SES Latin America, which provided, among other things, for the provision by SES Latin America to us of leased satellite capacity on 32 DBS transponders on the QuetzSat-1 satellite. Concurrently, in 2008, we

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entered into an agreement pursuant to which DISH Network leased from us satellite capacity on 24 of the DBS transponders on the QuetzSat-1 satellite. The QuetzSat-1 satellite was launched in September 2011 and was placed into service in November 2011 at the 67.1 degree west longitude orbital location. In January 2013, the QuetzSat-1 satellite was moved to the 77 degree west longitude orbital location. In February 2013, we and DISH Network entered into an agreement pursuant to which we leased back from DISH Network certain satellite capacity on five DBS transponders on the QuetzSat-1 satellite.

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

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

Santa Fe Lease Agreement — DISH Network leased from us all of 5701 S. Santa Fe Dr., Littleton, Colorado. In connection with the BSS Transaction, we transferred this property to DISH Network.
Cheyenne Lease Agreement — During 2017, we and certain of our subsidiaries entered into a share exchange agreement (the “Share Exchange Agreement”) with DISH and certain of its subsidiaries whereby we and certain of our subsidiaries received all the shares of preferred tracking stock previously issued by us and one of our subsidiaries (the “Tracking Stock”) in exchange for 100% of the equity interests of certain of our subsidiaries that held substantially all of our former EchoStar Technologies businesses and certain other assets (collectively, the “Share Exchange”). Prior to the Share Exchange, we leased to DISH Network certain space at 530 EchoStar Drive, Cheyenne, Wyoming. In connection with the Share Exchange, we transferred ownership of a portion of this property to DISH Network and we and DISH Network amended this agreement to, among other things, provide for a continued lease to DISH Network of the portion of the property we retained (the “Cheyenne Data Center”). In connection with the BSS Transaction, we transferred the Cheyenne Data Center to DISH Network.

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

NOTE 6. BUSINESS COMBINATIONS

In May 2019, we entered into an agreement with Al Yah Satellite Communications Company PrJSC (“Yahsat”) pursuant to which, in November 2019, Yahsat contributed its satellite communications services business in Brazil to one of our Brazilian subsidiaries in exchange for a 20% equity ownership interest in that subsidiary (the “Yahsat Brazil JV Transaction”). The combined business provides broadband internet services and enterprise solutions in Brazil using the Telesat T19V satellite, the Eutelsat 65W satellite and Yahsat’s Al Yah 3 satellite. The results of operations related to the business we acquired from Yahsat have been included in these Consolidated Financial Statements from the date of acquisition. As of December 31, 2020, we incurred $1.6 million of costs associated with the closing of the Yahsat Brazil JV Transaction.

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All assets and liabilities acquired from Yahsat in the Yahsat Brazil JV Transaction have been recorded at fair value. The following table presents our allocation of the purchase price:


	Amounts
Assets:
Cash and cash equivalents	$	8,110
Other current assets, net	5,876
Property and equipment	86,983
Regulatory authorization	4,498
Goodwill	9,186
Other non-current assets, net	1,502
Total assets	$	116,155

Liabilities:
Trade accounts payable	$	3,879
Accrued expenses and other current liabilities	6,676
Total liabilities	$	10,555

Total purchase price (1)	$	105,600

(1) Based on the value determined for the equity ownership interest issued by our Brazilian subsidiary as consideration for the business acquired by us in the Yahsat Brazil JV Transaction.

The following valuation of the acquired assets was derived using primarily unobservable Level 3 inputs, which require significant management judgment and estimation:


	Amounts
Satellite payload	$	49,363
Regulatory authorization	4,498
Total	$	53,861

The satellite payload asset and regulatory authorization were valued using an income approach and will be being amortized over seven and 11 years, respectively.

The goodwill we recognized was allocated entirely to our Hughes segment and attributed to expected synergies, projected long-term business growth in current and new markets and an assembled workforce.

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NOTE 7. EARNINGS PER SHARE

The following table presents the calculation of basic and diluted EPS:


	For the years ended December 31,
	2020		2019		2018
Net income (loss) attributable to EchoStar Corporation common stock:
Net income (loss) from continuing operations	$	(40,150)	$	(102,318)	$	(134,204)
Net income (loss) from discontinued operations	—		39,401		93,729
Net income (loss) attributable to EchoStar Corporation common stock	$	(40,150)	$	(62,917)	$	(40,475)

Weighted-average common shares outstanding:
Class A and B common stock:
Basic and diluted	97,920		96,738		96,250

Earnings (losses) per share:
Class A and B common stock:
Basic and diluted:
Continuing operations	$	(0.41)	$	(1.06)	$	(1.39)
Discontinued operations	—		0.41		0.97
Total basic and diluted earnings (losses) per share	$	(0.41)	$	(0.65)	$	(0.42)

The following table presents the number of anti-dilutive options to purchase shares of our Class A common stock which have been excluded from the calculation of our weighted-average common shares outstanding:


	For the years ended December 31,
	2020	2019	2018
Number of shares	4,374	4,813	5,013

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NOTE 8. OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in the balances of Accumulated other comprehensive income (loss) by component:


	Cumulative Foreign Currency Translation Adjustments		Unrealized Gain (Loss) On Available-For-Sale Securities		Other		Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2018	$	(121,693)	$	(1,574)	$	(1,833)	$	(125,100)
Other comprehensive income (loss) before reclassifications	(483)		2,571		1,466		3,554
Amounts reclassified to net income (loss)	—		(592)		—		(592)
Other comprehensive income (loss)	(483)		1,979		1,466		2,962
Balance, December 31, 2019	(122,176)		405		(367)		(122,138)
Other comprehensive income (loss) before reclassifications	(68,097)		(253)		2,614		(65,736)
Amounts reclassified to net income (loss)	—		(2)		—		(2)
Other comprehensive income (loss)	(68,097)		(255)		2,614		(65,738)
Balance, December 31, 2020	$	(190,273)	$	150	$	2,247	$	(187,876)

NOTE 9. MARKETABLE INVESTMENT SECURITIES

The following table presents our Marketable investment securities:


	As of December 31,
	2020		2019
Marketable investment securities:
Debt securities:
Available-for-sale:
Corporate bonds	$	372,746	$	568,442
Commercial paper	1,101,888		321,706
Other debt securities	148,292		13,874
Total available-for-sale debt securities	1,622,926		904,022
Fair value option - corporate bonds	—		9,128
Total debt securities	1,622,926		913,150
Equity securities	24,435		35,566
Total marketable investment securities, including restricted amounts	1,647,361		948,716
Less: Restricted marketable investment securities	(9,090)		(8,093)
Total marketable investment securities	$	1,638,271	$	940,623

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Debt Securities

Available-for-Sale

The following table presents the components of our available-for-sale debt securities:


	Amortized		Unrealized				Estimated
	Cost		Gains		Losses		Fair Value
As of December 31, 2020
Corporate bonds	$	372,702	$	78	$	(34)	$	372,746
Commercial paper	1,101,888		—		—		1,101,888
Other debt securities	148,292		6		(6)		148,292
Total available-for-sale debt securities	$	1,622,882	$	84	$	(40)	$	1,622,926
As of December 31, 2019
Corporate bonds	$	567,926	$	518	$	(2)	$	568,442
Commercial paper	321,705		1		—		321,706
Other debt securities	13,867		7		—		13,874
Total available-for-sale debt securities	$	903,498	$	526	$	(2)	$	904,022

The following table presents the activity on our available-for-sale debt securities:


	For the years ended December 31,
	2020		2019		2018
Proceeds from sales	$	160,494	$	435,978	$	75,000
Gains (losses) on sales, net	$	2	$	549	$	—

As of December 31, 2020, we have $1.6 billion of available-for-sale debt securities with contractual maturities of one year or less and zero with contractual maturities greater than one year.

Fair Value Option

The following table presents the activity on our fair value option corporate bonds:


	For the years ended December 31,
	2020		2019		2018
Proceeds from sales	$	32,054	$	46,717	$	75,877
Gains (losses) on sales, net	$	14,980	$	6,746	$	4,212

Equity Securities

The following table presents the activity of our equity securities:


	For the years ended December 31,
	2020		2019		2018
Proceeds from sales	$	14,401	$	104,729	$	62,111
Gains (losses) on sales, net	$	(3,241)	$	53,873	$	(16,599)

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Fair Value Measurements

The following table presents our marketable investment securities categorized by the fair value hierarchy, certain of which have historically experienced volatility:


	As of December 31,
	2020						2019
	Level 1		Level 2		Total		Level 1		Level 2		Total
Cash equivalents (including restricted)	$	416	$	809,698	$	810,114	$	31,451	$	1,408,043	$	1,439,494
Debt securities:
Available-for-sale:
Corporate bonds	$	—	$	372,746	$	372,746	$	—	$	568,442	$	568,442
Commercial paper	—		1,101,888		1,101,888		—		321,706		321,706
Other debt securities	139,486		8,806		148,292		8,093		5,781		13,874
Total available-for-sale debt securities	139,486		1,483,440		1,622,926		8,093		895,929		904,022
Fair value option - corporate bonds	—		—		—		—		9,128		9,128
Total debt securities	139,486		1,483,440		1,622,926		8,093		905,057		913,150
Equity securities	14,441		9,994		24,435		27,933		7,633		35,566
Total marketable investment securities, including restricted amounts	153,927		1,493,434		1,647,361		36,026		912,690		948,716
Less: Restricted marketable investment securities	(9,090)		—		(9,090)		(8,093)		—		(8,093)
Total marketable investment securities	$	144,837	$	1,493,434	$	1,638,271	$	27,933	$	912,690	$	940,623

As of December 31, 2020 and 2019, we did not have any investments that were categorized within Level 3 of the fair value hierarchy.

NOTE 10. PROPERTY AND EQUIPMENT

The following table presents the components of Property and equipment, net:


	As of December 31,
	2020		2019
Property and equipment, net:
Satellites, net	$	1,602,076	$	1,749,576
Other property and equipment, net	788,237		779,162
Total property and equipment, net	$	2,390,313	$	2,528,738

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Satellites

As of December 31, 2020, our operating satellite fleet consisted of 10 satellites, seven of which are owned and three of which are leased. They are all in geosynchronous orbit, approximately 22,300 miles above the equator.

The following table presents our operating satellite fleet as of December 31, 2020 which consists of both owned and leased satellites:


Satellite	Segment	Launch Date	Nominal Degree Orbital Location (Longitude)	Depreciable Life (In Years)
Owned:
SPACEWAY 3 (1)	Hughes	August 2007	95 W	10
EchoStar XVII	Hughes	July 2012	107 W	15
EchoStar XIX	Hughes	December 2016	97.1 W	15
Al Yah 3 (2)	Hughes	January 2018	20 W	7
EchoStar IX (3)	ESS	August 2003	121 W	12
EUTELSAT 10A (“W2A”) (4)	Corporate and Other	April 2009	10 E	-
EchoStar XXI	Corporate and Other	June 2017	10.25 E	15

Finance leases:
Eutelsat 65 West A	Hughes	March 2016	65 W	15
Telesat T19V	Hughes	July 2018	63 W	15
EchoStar 105/SES-11	ESS	October 2017	105 W	15

(1) Depreciable life represents the remaining useful life as of June 8, 2011, the date EchoStar completed its acquisition of Hughes Communications, Inc. and its subsidiaries (the “Hughes Acquisition”).

(2) Upon consummation of our joint venture with Yahsat in Brazil in November 2019, we acquired the Brazilian Ka-band payload on this satellite. Depreciable life represents the remaining useful life as of November 2019.

(3) We own the Ka-band and Ku-band payloads on this satellite.

(4) We acquired the S-band payload on this satellite in December 2013. Prior to acquisition, the S-band payload experienced an anomaly at the time of launch and, as a result, is not fully operational.

The following table presents the components of our satellites, net:


	Depreciable Life (In Years)		As of December 31,
		2020			2019
Satellites, net:
Satellites - owned	7 to 15		$	1,805,590		$	1,816,303
Satellites - acquired under finance leases	15		352,245			381,163
Construction in progress	—		409,032			365,133
Total satellites			2,566,867			2,562,599
Accumulated depreciation
Satellites - owned			(890,783)			(756,635)
Satellites - acquired under finance leases			(74,008)			(56,388)
Total accumulated depreciation			(964,791)			(813,023)
Total satellites, net			$	1,602,076		$	1,749,576

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The following table presents the depreciation expense associated with our satellites, net:


	For the years ended December 31,
	2020		2019		2018
Depreciation expense:
Satellites - owned	128,404		130,705		124,987
Satellites - acquired under finance leases	27,611		25,755		20,269
Total depreciation expense	$	156,015	$	156,460	$	145,256

The following table presents capitalized interest associated with our satellites and satellite-related ground infrastructure:


	For the years ended December 31,
	2020		2019		2018
Capitalized interest	$	27,369	$	22,576	$	18,285

Construction in Progress

In August 2017, we entered into a contract for the design and construction of the EchoStar XXIV satellite, a new, next-generation, high throughput geostationary satellite. The EchoStar XXIV satellite is primarily intended to provide additional capacity for our HughesNet satellite internet service (“HughesNet service”) in North, Central and South America as well as enterprise broadband services. Maxar Space, LLC (formerly Space Systems/Loral, LLC), the manufacturer of our EchoStar XXIV satellite has notified us of a delay in completion of the satellite. Capital expenditures associated with the construction and launch of the EchoStar XXIV satellite are included in Corporate and Other in our segment reporting. We launched two nano-satellites in the third quarter of 2020. Following launch, both nano-satellites experienced technical anomalies that precluded them from fulfilling their intended regulatory milestone missions. We recorded an impairment of $1.7 million for the year ended December 31, 2020, related to these nano-satellites.

Satellite-Related Commitments

As of December 31, 2020 and 2019 our satellite-related commitments were $487.7 million and $419.0 million, respectively. These include payments pursuant to agreements for the construction of the EchoStar XXIV satellite, payments pursuant to the EchoStar XXIV launch contract, payments pursuant to regulatory authorizations, non-lease costs associated with our finance lease satellites, in-orbit incentives relating to certain satellites and commitments for satellite service arrangements.

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

Satellite Anomalies and Impairments

We are not aware of any anomalies with respect to our owned or leased satellites or payloads that have had any significant adverse effect on their remaining useful lives, the commercial operation of the satellites or payloads or our operating results or financial position as of and for the year ended December 31, 2020.

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Satellite Insurance

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

Fair Value of In-Orbit Incentives

As of December 31, 2020 and 2019, the fair values of our in-orbit incentive obligations from our continuing operations approximated their carrying amounts of $55.4 million and $57.0 million, respectively.

Other Property and Equipment, Net

The following table presents Other property and equipment, net:


	Depreciable Life (In Years)		As of December 31,
		2020			2019
Other property and equipment, net:
Land	—		$	29,055		$	28,943
Buildings and improvements	1 to 40		115,335			113,938
Furniture, fixtures, equipment and other	1 to 12		887,086			855,274
Customer premises equipment	2 to 4		1,617,053			1,377,914
Construction in progress			99,716			52,986
Total other property and equipment			$	2,748,245		$	2,429,055
Accumulated depreciation			(1,960,008)			(1,649,893)
Other property and equipment, net			$	788,237		$	779,162

The following table presents the depreciation expense associated with our other property and equipment:


	For the years ended December 31,
	2020		2019		2018
Other property and equipment depreciation expense:
Buildings and improvements	$	5,394	$	5,791	$	11,285
Furniture, fixtures, equipment and other	94,389		90,885		82,945
Customer premises equipment	230,079		194,906		174,749
Total depreciation expense	$	329,862	$	291,582	$	268,979

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NOTE 11. REGULATORY AUTHORIZATIONS

The following table presents our Regulatory authorizations, net:


	Finite lived
	Cost		Accumulated Amortization		Total		Indefinite lived		Total
Balance, December 31, 2017	$	92,621	$	(21,342)	$	71,279	$	400,042	$	471,321
Impairment	(37,476)		7,848		(29,628)		—		(29,628)
Amortization expense	—		(5,190)		(5,190)		—		(5,190)
Currency translation adjustments	(8,358)		1,894		(6,464)		—		(6,464)
Balance, December 31, 2018	46,787		(16,790)		29,997		400,042		430,039
Additions	12,833		—		12,833		39,491		52,324
Amortization expense	—		(3,672)		(3,672)		—		(3,672)
Currency translation adjustments	(1,169)		318		(851)		758		(93)
Balance, December 31, 2019	58,451		(20,144)		38,307		440,291		478,598
Amortization expense	—		(4,483)		(4,483)		—		(4,483)
Currency translation adjustments	2,930		(2,012)		918		3,729		4,647
Balance, December 31, 2020	$	61,381	$	(26,639)	$	34,742	$	444,020	$	478,762

Weighted average useful life (in years)			13

Finite Lived Assets

In November 2019, we were granted an S-band spectrum license for terrestrial rights in Mexico for $7.9 million. The acquired asset is subject to amortization over a period of 15 years.

In November 2019, we also acquired Ka-band spectrum rights $4.5 million, upon consummation of the Yahsat Brazil JV Transaction, which are subject to amortization over a period of 11 years.

During the year ended December 31, 2018, impairment of long-lived assets was $65.2 million, which was primarily attributable to the determination that the fair value of the 45 degree west longitude regulatory authorization was de minimis. Our recognition of a loss on the assets and the in-substance liquidation of the business related to this regulatory authorization are as follows: (i) $29.6 million related to the regulatory authorization; (ii) $3.5 million related to other assets; and (iii) $32.1 million of foreign currency translation adjustment.

Future Amortization

The following table presents our estimated future amortization of our regulatory authorizations with finite lives as of December 31, 2020:


	Amount
For the years ending December 31,
2021	$	4,610
2022	4,658
2023	4,658
2024	4,668
2025	4,658
2026 and beyond	11,490
Total	$	34,742

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Indefinite Lived Assets

In October 2019, we acquired Sirion Global Pty Ltd., which we have renamed EchoStar Global Australia Pty Ltd (“EchoStar Global”), which holds global S-band non-geostationary stationary satellite spectrum rights for mobile satellite services. We acquired the global S-band non-geostationary satellite spectrum rights for $39.5 million, of which $26.5 million were made in cash payments and the remainder relate to deferred tax liabilities. The acquired spectrum rights are not subject to amortization.

NOTE 12. OTHER INTANGIBLE ASSETS

The following table presents our other intangible assets:


	Customer Relationships		Patents		Trademarks and Licenses		Total
Cost:
As of December 31, 2017	$	270,300	$	61,300	$	29,700	$	361,300
Write-off	—		(17)		—		(17)
As of December 31, 2018	270,300		61,283		29,700		361,283
As of December 31, 2019	270,300		61,283		29,700		361,283
As of December 31, 2020	$	270,300	$	61,283	$	29,700	$	361,283

Accumulated amortization:
As of December 31, 2017	$	(231,642)	$	(60,927)	$	(9,776)	$	(302,345)
Amortization expense	(13,145)		(94)		(1,485)		(14,724)
Write-off	—		17		—		17
As of December 31, 2018	(244,787)		(61,004)		(11,261)		(317,052)
Amortization expense	(13,146)		(93)		(1,485)		(14,724)
As of December 31, 2019	(257,933)		(61,097)		(12,746)		(331,776)
Amortization expense	(9,496)		(93)		(1,485)		(11,074)
As of December 31, 2020	$	(267,429)	$	(61,190)	$	(14,231)	$	(342,850)

Carrying amount:
As of December 31, 2017	$	38,658	$	373	$	19,924	$	58,955
As of December 31, 2018	$	25,513	$	279	$	18,439	$	44,231
As of December 31, 2019	$	12,367	$	186	$	16,954	$	29,507
As of December 31, 2020	$	2,871	$	93	$	15,469	$	18,433

Weighted average useful life (in years)	8		6		20

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Future Amortization

The following table presents our estimated future amortization of other intangible assets as of December 31, 2020:


	Amount
For the years ending December 31,
2021	$	4,449
2022	1,485
2023	1,485
2024	1,485
2025	1,485
2026 and beyond	8,044
Total	$	18,433

NOTE 13. OTHER INVESTMENTS

The following table presents our Other investments, net:


	As of December 31,
	2020		2019
Other investments, net:
Equity method investments	$	151,070	$	166,209
Other equity investments	31,662		66,627
Other debt investments, net	102,205		92,569
Total other investments, net	$	284,937	$	325,405

Equity Method Investments

Dish Mexico

We own 49% of Dish Mexico, a joint venture that we entered into in 2008 to provide direct-to-home satellite services in Mexico. Historically, we provided certain satellite services to Dish Mexico. However, following the consummation of the BSS Transaction, we no longer provide these services.

Deluxe/EchoStar LLC

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

Broadband Connectivity Solutions (Restricted) Limited

In August 2018, we entered into an agreement with Yahsat to establish a new entity, Broadband Connectivity Solutions (Restricted) Limited (together with its subsidiaries, “BCS”), to provide commercial Ka-band satellite broadband services across Africa, the Middle East and southwest Asia operating over Yahsat's Al Yah 2 and Al Yah 3 Ka-band satellites. The transaction was consummated in December 2018 when we invested $100.0 million in cash in exchange for a 20% interest in BCS. Under the terms of the agreement, we may also acquire, for further cash investments, additional ownership interests in BCS in the future provided certain conditions are met. We supply network operations and management services and equipment to BCS.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Financial Information for Our Equity Method Investments

The following table presents revenue recognized:


	For the years ended December 31,
	2020		2019		2018
Deluxe	$	4,393	$	4,377	$	4,433
BCS	$	9,080	$	8,979	$	695

The following table presents trade accounts receivable:


	As of December 31,
	2020		2019
Deluxe	$	716	$	631
BCS	$	9,347	$	5,171

There were no cash distributions from our investments for the year ended December 31, 2020. We recorded cash distributions from our investments of $2.7 million and $10.0 million, respectively, for the years ended December 31, 2019 and 2018. These cash distributions were determined to be a return on investment and reported in Net cash flows from operating activities in the Consolidated Statements of Cash Flows. Additionally, we recorded an additional dividend from our investments of $2.3 million for the year ended December 31, 2019 that was considered a return of investment and reported in Net cash flows from investing activities in the Consolidated Statements of Cash Flows. There were no returns of investment during the years ended December 31, 2020 and 2018.

Other Equity Investments

The following table presents reductions to the carrying amount of our investments based on circumstances that indicated the fair value of the investments was less than their carry amount:


	For the years ended December 31,
	2020		2019		2018
Loss (gain) on investments, net	$	29,833	$	36,700	$	—

Other Debt Investments, Net

The following table presents our other debt investments, net:


	As of December 31,
	2020		2019
Other debt investments, net:
Cost basis	$	114,903	$	102,878
Discount	(10,185)		(10,309)
Allowance for credit losses	(2,513)		—
Total other debt investments, net	$	102,205	$	92,569

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents the activity in our allowance for credit losses for these investments:


	For the year ended December 31, 2020
Balance at the beginning of the period	$	—
Credit Losses (1)	2,513
Deductions	—
Balance at end of period	$	2,513

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

The following table presents the interest income, net related to our debt investments, net:


	For the years ended December 31,
	2020		2019
Interest income, net
Interest income	$	14,736	$	2,500
Credit losses	(367)		—
Total interest income, net	$	14,369	$	2,500

NOTE 14. LONG-TERM DEBT

The following table presents the carrying amount and fair values of our Current portion of long-term debt, net and Long-term debt, net:


	Effective Interest Rate		As of December 31,
		2020						2019
		Carrying Amount			Fair Value			Carrying Amount			Fair Value
Senior Secured Notes:
5 1/4% Senior Secured Notes due 2026	5.301%		$	750,000		$	834,045		$	750,000		$	825,308
Senior Unsecured Notes:
7 5/8% Senior Unsecured Notes due 2021	8.028%		900,000			924,003			900,000			963,783
6 5/8% Senior Unsecured Notes due 2026	6.667%		750,000			852,810			750,000			833,903
Less: Unamortized debt issuance costs			(6,507)			—			(10,832)			—
Total long-term debt			2,393,493			2,610,858			2,389,168			2,622,994
Less: Current portion, net			(898,237)			(924,003)			—			—
Long-term debt, net			$	1,495,256		$	1,686,855		$	2,389,168		$	2,622,994

2021 Senior Unsecured Notes

On June 1, 2011, HSSC issued $900.0 million aggregate principal amount of 7 5/8% Senior Unsecured Notes due 2021 (the “2021 Senior Unsecured Notes,”) at an issue price of 100.0%, pursuant to an Unsecured Indenture dated June 1, 2011 (the “2011 Indenture”). The 2021 Senior Unsecured Notes mature on June 15, 2021. Interest accrues at an annual rate of 7 5/8% and is payable semi-annually in cash, in arrears on June 15 and December 15 of each year.

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2026 Senior Secured Notes and 2026 Senior Unsecured Notes

On July 27, 2016, HSSC issued $750.0 million aggregate principal amount of 5 1/4% Senior Secured Notes due 2026 (the “2026 Senior Secured Notes”) at an issue price of 100.0%, pursuant to an indenture dated July 27, 2016 (the “2016 Secured Indenture”) and $750.0 million aggregate principal amount of 6 5/8% Senior Unsecured Notes due 2026 (the “2026 Senior Unsecured Notes” and, together with the 2021 Senior Unsecured Notes, the “Unsecured Notes”) at an issue price of 100.0%, pursuant to an indenture dated July 27, 2016 (together with the 2011 Indenture and the 2016 Secured Indenture, the “Indentures”). The 2021 Senior Unsecured Notes, the 2026 Senior Secured Notes and the 2026 Senior Unsecured Notes are referred to collectively as the “Notes” and individually as a series of the Notes. The 2026 Senior Secured Notes and the 2026 Senior Unsecured Notes (collectively, the “2026 Notes”) mature on August 1, 2026. Interest on the 2026 Senior Secured Notes accrue at an annual rate of 5 1/4% and interest on the 2026 Senior Unsecured Notes accrues at an annual rate of 6 5/8%. Interest on the 2026 Notes are payable semi-annually in cash, in arrears, on February 1 and August 1 of each year.

Additional Information Relating to the Notes

Each series of the Notes is redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount thereof plus a “make-whole” premium, as defined in the applicable Indenture, together with accrued and unpaid interest, if any, to the date of redemption.

The 2026 Senior Secured Notes are:

secured obligations of HSSC;
secured by security interests in substantially all existing and future tangible and intangible assets of HSSC and certain of its subsidiaries on a first priority basis, subject to certain exceptions;
effectively junior to HSSC’s obligations that are secured by assets that are not part of the collateral that secures the 2026 Senior Secured Notes, in each case, to the extent of the value of the collateral securing such obligations;
effectively senior to HSSC’s existing and future unsecured obligations to the extent of the value of the collateral securing the 2026 Senior Secured Notes, after giving effect to permitted liens as provided in the 2016 Secured Indenture;
senior in right of payment to all existing and future obligations of HSSC that are expressly subordinated to the 2026 Senior Secured Notes;
structurally junior to any existing and future obligations of any of HSSC’s subsidiaries that do not guarantee the 2026 Senior Secured Notes; and
unconditionally guaranteed, jointly and severally, on a general senior secured basis by certain of our HSSC’s subsidiaries, which guarantees rank equally with all of the guarantors’ existing and future unsubordinated indebtedness and effectively senior to such guarantors’ existing and future obligations to the extent of the value of the assets securing the 2026 Senior Secured Notes.

The Unsecured Notes are:

unsecured senior obligations of HSSC;
ranked equally with all existing and future unsubordinated indebtedness (including as between the 2021 Senior Unsecured Notes and the 2026 Senior Unsecured Notes) and effectively junior to any secured indebtedness up to the value of the assets securing such indebtedness;
effectively junior to HSSC’s obligations that are secured to the extent of the value of the collateral securing such obligations;
senior in right of payment to all existing and future obligations of HSSC that are expressly subordinated to the respective Unsecured Notes;
structurally junior to any existing and future obligations of any of HSSC’s subsidiaries that do not guarantee the respective Unsecured Notes; and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

unconditionally guaranteed, jointly and severally, on a general senior secured basis by certain of HSSC’s subsidiaries, which guarantees rank equally with all of the guarantors’ existing and future unsubordinated indebtedness, and effectively junior to any secured indebtedness of the guarantors up to the value of the assets securing such indebtedness.

Subject to certain exceptions, the Indentures contain restrictive covenants that, among other things, impose limitations on HSSC’s ability and, in certain instances, the ability of certain of HSSC’s subsidiaries to:

incur additional debt;
pay dividends or make distributions on HSSC’s or their capital stock or repurchase HSSC’s or their capital stock;
make certain investments;
create liens or enter into sale and leaseback transactions;
enter into transactions with affiliates;
merge or consolidate with another company;
transfer and sell assets; and
allow to exist certain restrictions on its or their ability to pay dividends, make distributions, make other payments, or transfer assets.

In the event of a Change of Control, as defined in the respective Indentures, HSSC would be required to make an offer to repurchase all or any part of a holder’s Notes at a purchase price equal to 101.0% of the aggregate principal amount thereof, together with accrued and unpaid interest to the date of repurchase.

The Indentures provide for customary events of default for each series of the Notes, including, among other things, non-payment, breach of the covenants in the applicable Indentures, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If any event of default occurs and is continuing with respect to any series of the Notes, the trustee or the holders of at least 25.0% in principal amount of the then outstanding Notes of such series may declare all the Notes of such series to be due and payable immediately, together with any accrued and unpaid interest.

Debt Issuance Costs

For the years ended December 31, 2020, 2019 and 2018, we amortized $4.3 million, $5.9 million and $7.9 million, respectively, of debt issuance costs incurred for all debt issuances, which are included in Interest expense, net of amounts capitalized in the Consolidated Statements of Operations.

NOTE 15. INCOME TAXES

The following table presents the components of Income (loss) from continuing operations before income taxes in the Consolidated Statements of Operations:


	For the years ended December 31,
	2020		2019		2018
Domestic	$	108,078	$	120,295	$	33,176
Foreign	(135,913)		(213,460)		(158,962)
Income (loss) from continuing operations before income taxes	$	(27,835)	$	(93,165)	$	(125,786)

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ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents the components of Income tax benefit (provision), net, in the Consolidated Statements of Operations:


	For the years ended December 31,
	2020		2019		2018
Current benefit (provision), net:
Federal	$	(2,750)	$	(5,089)	$	(1,476)
State	(4,868)		286		4,881
Foreign	(2,116)		(633)		(2,690)
Total current benefit (provision), net	$	(9,734)	$	(5,436)	$	715

Deferred benefit (provision), net:
Federal	$	(9,707)	$	(7,511)	$	6,857
State	3,497		(10,964)		(14,375)
Foreign	(8,125)		3,423		227
Total deferred benefit (provision), net	(14,335)		(15,052)		(7,291)
Total income tax benefit (provision), net	$	(24,069)	$	(20,488)	$	(6,576)

The following table presents our actual tax provisions reconciled to the amounts computed by applying the statutory federal tax rate to Income (loss) from continuing operations before income taxes in the Consolidated Statements of Operations :


	For the years ended December 31,
	2020		2019		2018
Statutory rate	$	5,845	$	19,565	$	26,415
State income taxes, net of federal provision (benefit)	(349)		(8,137)		(10,519)
Permanent differences	(2,209)		(6,531)		(1,367)
Tax credits	1,353		12,453		7,825
Valuation allowance	(44,212)		(54,251)		(50,118)
Rates different than statutory	17,180		18,786		20,254
Withholding tax	(766)		(2,171)		(80)
Other	(911)		(202)		1,014
Total income tax benefit (provision), net	$	(24,069)	$	(20,488)	$	(6,576)

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ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents the components of our deferred tax assets and liabilities:


	As of December 31,
	2020		2019
Deferred tax assets:
Net operating losses, credit and other carryforwards	$	274,894	$	289,353
Unrealized losses on investments, net	43,693		39,018
Accrued expenses	21,787		19,660
Stock-based compensation	6,723		5,772
Other assets	35,689		28,163
Total deferred tax assets	382,786		381,966
Valuation allowance	(225,593)		(181,032)
Deferred tax assets after valuation allowance	$	157,193	$	200,934

Deferred tax liabilities:
Depreciation and amortization	$	(514,091)	$	(544,158)
Other liabilities	(1,217)		(1,217)
Total deferred tax liabilities	(515,308)		(545,375)
Total net deferred tax liabilities	$	(358,115)	$	(344,441)

Net deferred tax asset foreign jurisdiction	$	1,781	$	7,251
Net deferred tax liability domestic	(359,896)		(351,692)
Total net deferred tax liabilities	$	(358,115)	$	(344,441)

Overall, our net deferred tax assets were offset by a valuation allowance of $225.6 million and $181.0 million as of December 31, 2020 and 2019, respectively. The change in the valuation allowance primarily relates to an increase in the net operating loss carryforwards of certain foreign subsidiaries and a decrease associated with unrealized gains that are capital in nature.

Tax benefits of net operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. As of December 31, 2020, we had net operating loss carryforwards of $657.5 million, including $521.2 million of foreign net operating loss carryforwards. A substantial portion of these net operating loss carryforwards will begin to expire in 2037. As of December 31, 2020, we have tax credit carryforwards of $148.0 million and $103.4 million for federal and state income tax purposes, respectively. If not utilized, the federal tax credit carryforwards will begin to expire in 2024 and the state tax credit carryforwards begin to expire in 2020.

As of December 31, 2020, we had undistributed earnings attributable to foreign subsidiaries for which no provision for U.S. income taxes or foreign withholding taxes has been made because it is expected that such earnings will be reinvested outside the U.S. indefinitely. It is not practicable to determine the amount of the unrecognized deferred tax liability at this time. However, due to the one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings, the majority of previously unremitted earnings have now been subjected to U.S. federal income tax. As of December 31, 2020 and 2019, we had net deferred tax assets related to our foreign subsidiaries of $1.8 million and $7.3 million, respectively, which were recorded in Other non-current assets, net in the Consolidated Balance Sheets.

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ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Accounting for Uncertainty in Income Taxes

In addition to filing U.S. federal income tax returns, we file income tax returns in all states that impose an income tax. As of December 31, 2020, we are not currently under a U.S. federal income tax examination. However, the IRS could perform tax examinations on years as early as tax year 2008. We are also subject to frequent state income tax audits and have open state examinations on years as early as 2008. We also file income tax returns in the United Kingdom, Brazil, India and a number of other foreign jurisdictions. We generally are open to income tax examination in these foreign jurisdictions for taxable years beginning in 2003. As of December 31, 2020, we are currently being audited by the Indian tax authorities for fiscal years 2003 through 2018. We have no other on-going significant income tax examinations in process in our foreign jurisdictions.

The following table presents the reconciliation of the beginning and ending amount of unrecognized income tax benefits:


	For the years ended December 31,
	2020		2019		2018
Unrecognized tax benefit balance as of beginning of period:	$	70,401	$	69,540	$	63,296
Additions based on tax positions related to the current year	3,349		861		4,361
Additions based on tax positions related to prior years	76,882		—		2,539
Reductions based on tax positions related to prior years	(572)		—		(656)
Balance as of end of period	$	150,060	$	70,401	$	69,540

As of December 31, 2020 and 2019, we had $150.1 million and $70.4 million, respectively, of unrecognized income tax benefits, all of which, if recognized, would affect our effective tax rate. Additions based on tax positions related to prior years in 2020 include amounts in our deferred tax assets previously considered contingent liabilities related to combined state filings with DISH Network. During 2020, we and DISH Network concluded that combined state filings were no longer required. The amounts have been added to this schedule to reflect the change in filing status.

For the years ended December 31, 2020, 2019 and 2018, our income tax provision included an insignificant amount of interest and penalties.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in March 2020. The CARES Act features significant tax provisions and other measures to assist individuals and businesses impacted by the economic effects of the COVID-19 pandemic, including a five-year carryback of net operating losses, relaxation of Section 163(j) interest deduction limitations, acceleration of Alternative Minimum Tax refunds, relief for payroll tax and tax credits for employers who retain employees. These provisions did not affect our income tax provision for the year ended December 31, 2020.

NOTE 16. STOCKHOLDERS’ EQUITY

Preferred Stock

Our board of directors is authorized to issue preferred stock and may divide such preferred stock into series and, with respect to each series, to determine the preferences and rights and the qualifications, limitations or restrictions of the series, including the dividend rights, conversion rights, voting rights, redemption rights and terms, liquidation preferences, sinking fund provisions, the number of shares constituting the series and the designation of such series. Our board of directors may, without stockholder approval, issue additional preferred stock of existing or new series with voting and other rights that could adversely affect the voting power of the holders of common stock and could have certain anti-takeover effects.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Common Stock

Our Class A, Class B, and Class C common stock are equivalent except for voting rights. Holders of Class A and Class C common stock are entitled to one vote per share and holders of Class B common stock are entitled to 10 votes per share. Upon a change in control of the Company, each holder of outstanding shares of Class C common stock is entitled to 10 votes for each share of Class C common stock held. Each share of Class B and Class C common stock is convertible, at the option of the holder, into one share of Class A common stock. Charles W. Ergen, our Chairman, and certain entities established for the benefit of his family beneficially own all outstanding Class B common stock. There are no shares of Class C common stock outstanding.

Any holder of Class D common stock is not entitled to a vote on any matter or to convert the shares of Class D common stock into any other class of common stock. There are no shares of Class D common stock outstanding.

Each share of common stock is entitled to receive its pro rata share, based upon the number of shares of common stock held, of dividends and distributions upon liquidation.

Common Stock Repurchase Program

Pursuant to stock repurchase programs approved by our board of directors, we were authorized to repurchase up to $500.0 million of our outstanding shares of Class A common stock through and including December 31, 2020. The following table presents information with respect to purchases made by the Company:


Period	Total Number of Shares (or Units) Purchased	Average Price Paid Per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Disclosed Plans or Program	Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased under the Plans or Program
Beginning Balance					$	500,000
Year ended December 31, 2018	952,603	$	34.95	952,603	466,708
Q4 Repurchase Authorization (1)					500,000
Year ended December 31, 2019	—	—		—	500,000
Year ended December 31, 2020	1,905,906	22.79		1,905,906	456,542
Total	2,858,509	$	26.85	2,858,509	$	456,542

(1) On October 29, 2019, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A common stock through and including December 31, 2020. Purchases under our repurchase authorization may be made through privately negotiated transactions, open market repurchases, one or more trading plans in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or otherwise, subject to market conditions and other factors. We may elect to purchase some or all, or not to purchase the maximum amount or any of, the remaining shares allowable under this program and we may also enter into additional share repurchase programs authorized by our Board of Directors. All shares repurchased reflected in the table above have been converted to treasury shares.

NOTE 17. EMPLOYEE BENEFIT PLANS

Employee Stock Purchase Plan

We have an employee stock purchase plan (the “ESPP”), under which we are authorized to issue 5.0 million shares of Class A common stock. As of December 31, 2020, we had approximately 1.7 million shares of Class A common stock which remain available for issuance under the ESPP. Generally, all full-time employees who have been employed by EchoStar for at least one calendar quarter are eligible to participate in the ESPP. Employee stock purchases are made through payroll deductions. Under the terms of the ESPP, each employee’s deductions are limited so that the maximum they may purchase under the ESPP is $25,000 in fair value of Class A common stock per year. Stock purchases are made on the last business day of each calendar quarter at 85.0% of the closing price of the Class A common stock on that date. For the years ended December 31, 2020, 2019 and 2018, employee purchases of Class A common stock through the ESPP totaled approximately 452,000 shares, 285,000 shares and 245,000 shares, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

401(k) Employee Savings Plans

Under the EchoStar 401(k) Plan (“the Plan”), eligible employees are entitled to contribute up to 75.0% of their eligible compensation, on a pre-tax and/or after-tax basis, subject to the maximum contribution limit provided by the Internal Revenue Code of 1986, as amended (the “Code”). All employee contributions to the Plan are immediately vested. We match 50 cents on the dollar for the first 6.0% of each employee’s salary contributions to the Plan for a total of 3.0% match on a pre-tax basis up to a maximum of $7,500 annually. Our match is calculated each pay period there is an employee contribution. In addition, we may make an annual discretionary contribution to the Plan to be made in cash or our stock. Our contributions under the Plan vest at 20.0% per year and are 100.0% vested after an eligible employee has completed five years of employment. Forfeitures of unvested participant balances may be used to fund matching and discretionary contributions.

The following table presents our matching contributions, discretionary contributions and shares:


	For the years ended December 31,
	2020		2019		2018
Matching contributions	$	5,239	$	5,095	$	5,007
Fair value of discretionary contributions of our Class A common stock, net of forfeitures, under 401(k) plan	$	6,921	$	6,654	$	7,605
Approximate number of shares	160,000		181,000		127,000

NOTE 18. STOCK-BASED COMPENSATION

Stock Incentive Plans

We maintain stock incentive plans to attract and retain officers, directors, employees, consultants and advisors. Stock awards under these plans may include both performance-based and non-performance-based stock incentives. As of December 31, 2020, we had outstanding stock options to acquire approximately 4.8 million shares of our Class A common stock under these plans. Stock options granted prior to December 31, 2020 were granted with exercise prices equal to or greater than the market value of our Class A common stock at the date of grant or the last trading day prior to the date of grant (if the grant date is not a trading day) and generally with a maximum term of ten years for our officers and employees and five years for our non-employee directors. While we generally issue stock awards subject to vesting, typically over five years, some stock awards have been granted with immediate or longer vesting periods or that vest only upon the achievement of certain performance objectives. Under these plans, we grant to certain of our employees awards of fully vested shares of Class A common stock under our Employee Innovator Recognition Program, which is available to all of our eligible employees. As of December 31, 2020, we had approximately 6.3 million shares of our Class A common stock available for future grant under our stock incentive plans.

In connection with the BSS Transaction, we adjusted stock options that were unexercised and outstanding as of the date of the Distribution, which resulted in an increase in the number of such options and a reduction in the exercise price of such options.

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ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents our exercise prices for stock options outstanding and exercisable as of December 31, 2020:


	Options Outstanding				Options Exercisable
Exercise Price Range	Number Outstanding as of December 31, 2020	Weighted- Average Remaining Contractual Term (In Years)	Weighted- Average Exercise Price		Number Exercisable as of December 31, 2020	Weighted- Average Remaining Contractual Term (In Years)	Weighted- Average Exercise Price
$0.00 - $20.00	21,864	1	$	18.20	21,864	1	$	18.20
$20.01 - $25.00	5,221	5	23.65		3,221	1	22.96
$25.01 - $30.00	430,635	2	29.60		430,635	2	29.60
$30.01 - $35.00	810,361	5	32.57		488,397	3	33.13
$35.01 - $40.00	1,572,812	8	38.77		506,582	7	38.59
$40.01 - $45.00	1,025,386	4	42.19		1,019,235	4	42.19
$45.01 - $50.00	875,335	6	48.51		531,357	6	48.50
$50.01 - $55.00	63,277	5	52.69		43,709	5	52.71
	4,804,891	6	39.48		3,045,000	4	39.42

Stock Award Activity

The following table presents our stock option activity:


	For the years ended December 31,
	2020			2019			2018
	Options	Weighted- Average Exercise Price		Options	Weighted- Average Exercise Price		Options	Weighted- Average Exercise Price
Total options outstanding, beginning of period	4,812,644	$	43.40	5,013,038	$	41.80	4,951,256	$	41.42
Granted	180,500	30.39		1,959,597	38.12		215,500	51.71
Exercised	(45,170)	18.93		(1,986,937)	33.89		(108,318)	40.67
Forfeited and canceled	(143,083)	41.58		(173,054)	48.99		(45,400)	50.21
Total options outstanding, end of period	4,804,891	39.48		4,812,644	43.40		5,013,038	41.80
Exercisable at end of period	3,045,000	39.42		2,510,947	38.76		3,710,138	38.59

The following table presents our additional share-based compensation disclosures:


	For the years ended December 31,
	2020		2019		2018
Tax benefits from stock options exercised	$	173	$	6,989	$	364
Aggregate intrinsic value of our stock options exercised	$	603	$	17,101	$	1,774

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Stock-Based Compensation

The following table presents our total non-cash, stock-based compensation expense:


	For the years ended December 31,
	2020		2019		2018
Stock-based compensation expense:
Research and development expenses	$	551	$	465	$	634
Selling, general and administrative expenses	8,327		8,860		9,442
Total stock-based compensation expense	$	8,878	$	9,325	$	10,076

The income tax benefits related to stock-based compensation expense was $1.7 million, $1.9 million and $2.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, total unrecognized stock-based compensation cost, net of estimated forfeitures, related to our unvested stock awards was $15.0 million. This amount is based on an estimated future forfeiture rate of 2.0% per year and will be recognized over a weighted-average period of approximately two years.

Valuation of Stock Options

The fair value of each stock option granted for the years ended December 31, 2020, 2019 and 2018 was estimated at the date of the grant using a Black-Scholes option valuation model. The following table presents the estimated grant-date fair values and related assumptions:


	For the years ended December 31,
	2020	2019	2018
Assumptions:
Risk-free interest rate	0.25% - 1.72%	1.83% - 2.54%	2.25% - 2.99%
Volatility	24.32% - 30.07%	23.58% - 30.95%	22.77% - 23.28%
Expected term of options (in years)	4.0 - 5.9	5.7 - 5.8	5.7 - 5.8
Weighted-average grant-date fair value	$6.56 - $11.63	$10.22 - $14.49	$12.38 - $16.23

We do not currently intend to pay dividends on our common stock and accordingly, the dividend yield used in the Black-Scholes option valuation model was assumed to be zero for all periods. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded stock options which have no vesting restrictions and are fully transferable. Consequently, our estimate of fair value may differ from that determined using other valuation models. Further, the Black-Scholes option valuation model requires the input of subjective assumptions. Changes in the subjective input assumptions can materially affect the fair value estimate.

Based on the closing market price of our Class A common stock on December 31, 2020, the aggregate intrinsic value of our stock options was $0.1 million for options outstanding and $0.1 million for options exercisable as of December 31, 2020.

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NOTE 19. COMMITMENTS AND CONTINGENCIES

Commitments

The following table summarizes our contractual obligations from our continuing operations as of December 31, 2020:


	Payments Due in the Years Ending December 31,
	Total		2021		2022		2023		2024		2025		Thereafter
Long-term debt	$	2,400,000	$	900,000	$	—	$	—	$	—	$	—	$	1,500,000
Interest on long-term debt	568,711		123,396		89,063		89,063		89,063		89,063		89,063
Satellite-related commitments	487,665		223,528		73,412		22,778		20,743		21,487		125,717
Operating lease obligations	176,001		21,051		20,409		19,628		16,364		12,355		86,194
Finance lease obligations	608		472		136		—		—		—		—
Total	$	3,632,985	$	1,268,447	$	183,020	$	131,469	$	126,170	$	122,905	$	1,800,974

The table above does not include amounts related to deferred tax liabilities, unrecognized tax positions and certain other amounts recorded in our non-current liabilities as the timing of any payments is uncertain. The table also excludes long-term deferred revenue and other long-term liabilities that do not require future cash payments. Additionally, our satellite-related commitments include payments pursuant to agreements for the construction of the EchoStar XXIV satellite, payments pursuant to the EchoStar XXIV launch contract, payments pursuant to regulatory authorizations, non-lease costs associated with our finance lease satellites, in-orbit incentives relating to certain satellites and commitments for satellite service arrangements.

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

Contingencies

Patents and Intellectual Property

Many entities, including some of our competitors, have, or may have in the future, patents and other intellectual property rights that cover or affect products or services directly or indirectly related to those that we offer. We may not be aware of all patents and other intellectual property rights that our products and services may potentially infringe. Damages in patent infringement cases can be substantial, and in certain circumstances can be tripled. Further, we cannot estimate the extent to which we may be required in the future to obtain licenses with respect to intellectual property rights held by others and the availability and cost of any such licenses. Various parties have asserted patent and other intellectual property rights with respect to our products and services. We cannot be certain that these parties do not own the rights they claim, that these rights are not valid or that our products and services do not infringe on these rights. Further, we cannot be certain that we would be able to obtain licenses from these parties on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be able to redesign our products and services to avoid infringement.

Certain Arrangements with DISH Network

In connection with our spin-off from DISH in 2008 (the “Spin-off”), we entered into a separation agreement with DISH Network that provides, among other things, for the division of certain liabilities, including liabilities resulting from litigation. Under the terms of the separation agreement, we assumed certain liabilities that relate to our business, including certain designated liabilities for acts or omissions that occurred prior to the Spin-off. Certain specific provisions govern intellectual property related claims under which we will generally only be liable for our acts or omissions following the Spin-off and DISH Network will indemnify us for any liabilities or damages resulting from intellectual property claims relating to the period prior to the Spin-off as well as DISH Network’s acts or omissions following the Spin-off. In connection with the Share Exchange and BSS Transaction, we entered into the Share Exchange Agreement and the Master Transaction Agreement, respectively, and other agreements which provide, among other things, for the division of certain liabilities, including liabilities relating to taxes, intellectual property and employees and liabilities resulting from litigation and the assumption of certain liabilities that relate to

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the transferred businesses and assets. These agreements also contain additional indemnification provisions between us and DISH Network for, in the case of the Share Exchange, certain pre-existing liabilities and legal proceedings and, in the case of the BSS Transaction, certain losses with respect to breaches of certain representations and covenants and certain liabilities.

Litigation

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

For certain proceedings, management is unable to predict with any degree of certainty the outcome or provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons: (i) the proceedings are in various stages; (ii) damages have not been sought or specified; (iii) damages are unsupported, indeterminate and/or exaggerated in management’s opinion; (iv) there is uncertainty as to the outcome of pending trials, appeals, motions or other proceedings; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties are involved (as with many patent-related cases). Except as described below, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material effect on our financial condition, operating results or cash flows, though there is no assurance that the resolution and outcomes of these proceedings, individually or in the aggregate, will not be material to our financial condition, operating results or cash flows for any particular period, depending, in part, upon the operating results for such period.

We intend to vigorously defend the proceedings against us. In the event that a court, tribunal, other body or jury ultimately rules against us, we may be subject to adverse consequences, including, without limitation, substantial damages, which may include treble damages, fines, penalties, compensatory damages and/or other equitable or injunctive relief that could require us to materially modify our business operations or certain products or services that we offer to our consumers.

Elbit

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

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Shareholder Litigation

On July 2, 2019, the City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust, purporting to sue on behalf of a class of EchoStar Corporation’s stockholders, filed a complaint in the District Court of Clark County, Nevada against our directors, Charles W. Ergen, R. Stanton Dodge, Anthony M. Federico, Pradman P. Kaul, C. Michael Schroeder, Jeffrey R. Tarr, William D. Wade, and Michael T. Dugan; our officer, David J. Rayner; EchoStar Corporation; our subsidiary Hughes Satellite Systems Corporation (“HSSC”); our former subsidiary BSS Corp.; and DISH and its subsidiary Merger Sub. On September 5, 2019, the defendants filed motions to dismiss. On October 11, 2019, the plaintiffs filed an amended complaint removing Messrs. Dodge, Federico, Kaul, Schroeder, Tarr and Wade as defendants. The amended complaint alleges that Mr. Ergen, as our controlling stockholder, breached fiduciary duties to EchoStar Corporation’s minority stockholders by structuring the BSS Transaction with inadequate consideration and improperly influencing our and HSSC’s boards of directors to approve the BSS Transaction. The amended complaint also alleges that the other defendants aided and abetted such alleged breaches. The plaintiffs seek equitable and monetary relief, including the issuance of additional DISH Common Stock, and other costs and disbursements, including attorneys’ fees on behalf of the purported class. On November 11, 2019, we and the other defendants filed separate motions to dismiss plaintiff’s amended complaint and during a hearing on January 13, 2020 the court denied these motions. On February 10, 2020, we and the other defendants filed answers to the amended complaint. The Court certified plaintiff’s class on January 11, 2021. We intend to vigorously defend this case. We cannot predict its outcome with any degree of certainty*.*

License Fee Dispute with Government of India, Department of Telecommunications

In 1994, the Government of India promulgated a “National Telecommunications Policy” under which the government liberalized the telecommunications sector and required telecommunications service providers to pay fixed license fees. Pursuant to this policy, our subsidiary Hughes Communications India Private Limited (“HCIPL”), formerly known as Hughes Escorts Communications Limited, obtained a license to operate a data network over satellite using VSAT systems. In 1999, HCIPL’s license was amended pursuant to a new government policy that eliminated the fixed license fees and instead required each telecommunications service provider to pay license fees based on its adjusted gross revenue (“AGR”). In March 2005, the Indian Department of Telecommunications (“DOT”) notified HCIPL that, based on its review of HCIPL’s audited accounts and AGR statements, HCIPL must pay additional license fees, interest on such fees and penalties and interest on the penalties. HCIPL responded that the DOT had improperly calculated its AGR by including revenue from licensed and unlicensed activities. The DOT rejected this explanation and in 2006, HCIPL filed a petition with an administrative tribunal (the “Tribunal”), challenging the DOT’s calculation of its AGR. The DOT also issued license fee assessments to other telecommunications service providers and a number of similar petitions were filed by several other such providers with the Tribunal. These petitions were amended, consolidated, remanded and re-appealed several times. On April 23, 2015, the Tribunal issued a judgment affirming the DOT’s calculation of AGR for the telecommunications service providers but reversing the DOT’s imposition of interest, penalties and interest on such penalties as excessive. Over subsequent years, the DOT and HCIPL and other telecommunications service providers, respectively, filed several appeals of the Tribunal’s ruling. On October 24, 2019, the Supreme Court of India (“Supreme Court”) issued an order (the “October 2019 Order”) affirming the license fee assessments imposed by the DOT, including its imposition of interest, penalties and interest on the penalties, but without indicating the amount HCIPL is required to pay the DOT, and ordering payment by January 23, 2020. On November 23, 2019, HCIPL and other telecommunication service providers filed a petition asking the Supreme Court to reconsider the October 2019 Order. The petition was denied on January 20, 2020. On January 22, 2020, HCIPL and other telecommunication service providers filed an application requesting that the Supreme Court modify the October 2019 Order to permit the DOT to calculate the final amount due and extend HCIPL’s and the other telecommunication service providers’ payment deadline. On February 14, 2020, the Supreme Court directed HCIPL and the other telecommunication service providers to explain why the Supreme Court should not initiate contempt proceedings for failure to pay the amounts due. During a hearing on March 18, 2020, the Supreme Court ordered that all amounts that were due before the October 2019 Order must be paid, including interest, penalties and interest on the penalties. The Supreme Court also ordered that the parties appear for a further hearing addressing, potentially among other things, a proposal by the DOT to allow for extended or deferred payments of amounts due. On June 11, 2020, the Supreme Court ordered HCIPL and the other telecommunication service providers to submit affidavits addressing the proposal made by the DOT to extend the time frame for payment of the amounts owed and for HCIPL and the other telecommunication providers to provide security for such payments. On September 1, 2020, the Supreme Court issued a judgment permitting a

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10-year payment schedule. Under the payment schedule, HCIPL is required to make a payment of 10% of the legally payable dues by March 31, 2021, and thereafter make payments in yearly installments through 2031. To date, HCIPL has paid the DOT $2.9 million with respect to this matter. As a result of the Supreme Court’s orders, HCIPL’s payments to date and the impact of foreign exchange rates, we have recorded an accrual of $81.7 million as of December 31, 2020, comprised of $3.9 million for additional license fees, $4.0 million for penalties and $73.8 million for interest and interest on penalties. We had recorded an accrual of $80.2 million as of December 31, 2019. Any eventual payments made with respect to the ultimate outcome of this matter may be different from our accrual and such differences could be significant.

Other

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

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

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

NOTE 20. SEGMENT REPORTING

Business segments are components of an enterprise for which separate financial information is available and regularly evaluated by our chief operating decision maker (“CODM”), who is our Chief Executive Officer. We operate in two business segments, Hughes and ESS, as described in Note 1. Organization and Business Activities.

The primary measure of segment profitability that is reported regularly to our CODM is earnings before interest, taxes, depreciation and amortization, net income (loss) from discontinued operations and net income (loss) attributable to non-controlling interests (“EBITDA”).

Total assets by segment have not been reported herein because the information is not provided to our CODM on a regular basis.

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The following table presents revenue, EBITDA and capital expenditures for each of our business segments. Capital expenditures are net of refunds and other receipts related to our property and equipment.


	Hughes		ESS		Corporate and Other		Consolidated Total
For the year ended December 31, 2020
External revenue	$	1,860,834	$	16,237	$	10,836	$	1,887,907
Intersegment revenue	—		1,161		(1,161)		—
Total revenue	$	1,860,834	$	17,398	$	9,675	$	1,887,907

EBITDA	$	727,608	$	7,873	$	(118,606)	$	616,875
Capital expenditures	$	355,197	$	41	$	53,560	$	408,798

For the year ended December 31, 2019
External revenue	$	1,852,742	$	15,131	$	18,208	$	1,886,081
Intersegment revenue	—		1,126		(1,126)		—
Total revenue	$	1,852,742	$	16,257	$	17,082	$	1,886,081

EBITDA	$	625,660	$	6,994	$	(55,055)	$	577,599
Capital expenditures	$	308,781	$	—	$	109,293	$	418,074

For the year ended December 31, 2018
External revenue	$	1,716,169	$	27,009	$	19,460	$	1,762,638
Intersegment revenue	359		222		(581)		—
Total revenue	$	1,716,528	$	27,231	$	18,879	$	1,762,638

EBITDA	$	601,319	$	17,764	$	(150,582)	$	468,501
Capital expenditures	$	390,108	$	(76,757)	$	164,091	$	477,442

The following table reconciles Income (loss) from continuing operations before income taxes in the Consolidated Statements of Operations to EBITDA:


	For the Years Ended December 31,
	2020		2019		2018
Income (loss) from continuing operations before income taxes	$	(27,835)	$	(93,165)	$	(125,786)
Interest income, net	(39,982)		(82,352)		(80,275)
Interest expense, net of amounts capitalized	147,927		251,016		219,288
Depreciation and amortization	525,011		490,765		457,116
Net loss (income) attributable to non-controlling interests	11,754		11,335		(1,842)
EBITDA	$	616,875	$	577,599	$	468,501

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Geographic Information

The following table summarizes total long-lived assets attributed to the North America, South and Central America and other foreign locations:


	As of December 31,
	2020		2019
Long-lived assets:
North America	$	2,954,421	$	3,092,773
South and Central America	311,063		310,226
Other	133,621		140,797
Total long-lived assets	$	3,399,105	$	3,543,796

NOTE 21. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table presents our quarterly results of operations:


	For the Three Months Ended
	December 31		September 30		June 30		March 31
Year Ended December 31, 2020
Total revenue	$	489,273	$	473,502	$	459,466	$	465,666
Operating income (loss)	30,108		36,990		34,772		10,603
Net income (loss)	(2,597)		23,273		(14,843)		(57,737)
Net income (loss) from continuing operations attributable to EchoStar common stock	117		25,440		(11,412)		(54,295)
Net income (loss) attributable to EchoStar Corporation common stock	117		25,440		(11,412)		(54,295)
Basic and diluted income (loss) from continuing operations per share	0.01		0.26		(0.12)		(0.56)
Total basic and diluted earnings (losses) per share	0.01		0.26		(0.12)		(0.56)

Year Ended December 31, 2019
Total revenue	$	499,006	$	472,262	$	460,431	$	454,382
Operating income (loss)	23,597		26,093		(4,661)		28,048
Net income (loss)	(63,094)		(21,106)		(5,060)		15,008
Net income (loss) from continuing operations attributable to EchoStar common stock	(46,297)		(20,317)		(30,660)		(5,044)
Net income (loss) attributable to EchoStar common stock	(53,118)		(18,309)		(5,692)		14,202
Basic and diluted income (loss) from continuing operations per share	(0.48)		(0.21)		(0.32)		(0.05)
Total basic and diluted earnings (losses) per share	(0.55)		(0.19)		(0.06)		0.15

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NOTE 22. RELATED PARTY TRANSACTIONS - DISH NETWORK

Overview

EchoStar Corporation and DISH have operated as separate publicly-traded companies since 2008. A substantial majority of the voting power of the shares of each of EchoStar Corporation and DISH is owned beneficially by Charles W. Ergen, our Chairman, and by certain entities established for the benefit of his family. In addition, prior to March 2017, DISH Network owned the Trading Stock, which in the aggregate represented an 80% economic interest in the residential retail satellite broadband business of our Hughes segment. The Trading Stock was retired in March 2017.

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

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

Services and Other Revenue — DISH Network

The following table presents our Services and other revenue - DISH Network:


	For the years ended December 31,
	2020		2019		2018
Services and other revenue - DISH Network	$	36,531	$	53,429	$	73,465

The following table presents the related trade accounts receivable:


	As of December 31,
	2020		2019
Trade accounts receivable - DISH Network	$	5,612	$	10,683

Satellite Capacity Leased to DISH Network. We have entered into an agreement and have previously entered into a now terminated agreement to lease satellite capacity pursuant to which we have provided satellite services to DISH Network on certain satellites owned or leased by us. The fees for the services provided under these agreements depend upon, among other things, the orbital location of the applicable satellite, the number of transponders that are providing services on the applicable satellite, the length of the service arrangements and any third-party costs associated with the satellite capacity. The terms of these agreements are set forth below:

EchoStar IX — Effective January 2008, DISH Network began leasing satellite capacity from us on the EchoStar IX satellite. Subject to availability, DISH Network generally has the right to continue leasing satellite capacity from us on the EchoStar IX satellite on a month-to-month basis.
103 Degree Orbital Location/SES-3 — In May 2012, we entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree west longitude orbital location (the “103 Spectrum Rights”). In June 2013, we and DISH Network entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which DISH Network may use and develop the 103 Spectrum Rights. Effective in March 2018, DISH Network exercised its right to terminate the DISH 103 Spectrum Development Agreement and we exercised our right to terminate the 103 Spectrum Development Agreement.

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In connection with the 103 Spectrum Development Agreement, in May 2012, we also entered into a ten-year agreement with Ciel pursuant to which we leased certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree west longitude orbital location (the “Ciel 103 Agreement”). In June 2013, we and DISH Network entered into an agreement pursuant to which DISH Network leased certain satellite capacity from us on the SES-3 satellite (the “DISH 103 Agreement”). Under the terms of the DISH 103 Agreement, DISH Network made certain monthly payments to us through the service term. Effective in March 2018, DISH Network exercised its right to terminate the DISH 103 Agreement and we exercised our right to terminate the Ciel 103 Agreement.

Telesat Obligation Agreement. We transferred the Telesat Transponder Agreement to DISH Network as part of the BSS Transaction; however, we retained certain obligations related to DISH Network’s performance under that agreement. In September 2019, we and DISH Network entered into an agreement whereby DISH Network compensates us for retaining such obligations.

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

100 Inverness Occupancy License Agreement — Effective March 2017, DISH Network is licensed to use certain of our space at 100 Inverness Terrace East, Englewood, Colorado for a period ending in December 2020. Effective December 2020, we amended this agreement to extend the license until December 2021. This agreement may be terminated by either party upon 180 days’ prior notice. This agreement will be converted to a month-to-month lease agreement unless extended by mutual consent or terminated by one of the parties upon 30 days’ notice. In connection with the BSS Transaction, we transferred to DISH Network the Englewood Satellite Operations Center located at 100 Inverness Terrace East, including any and all equipment, hardware licenses, software, processes, software licenses, furniture and technical documentation associated with the satellites transferred in the BSS Transaction.
Meridian Lease Agreement — The lease for all of 9601 S. Meridian Blvd., Englewood, Colorado was originally for a period ending in December 2016. We and DISH Network have amended this lease over time to, among other things, extend the term through December 2021. After December 2021, this agreement may be converted by mutual consent to a month-to-month lease agreement with either party having the right to terminate upon 30 days’ notice.

TerreStar Agreement. In March 2012, DISH Network completed its acquisition of substantially all the assets of TerreStar Networks Inc. (“TerreStar”). Prior to DISH Network’s acquisition of substantially all the assets of TerreStar and our completion of the Hughes Acquisition, TerreStar and HNS entered into various agreements pursuant to which we provide, among other things, warranty, operations and maintenance and hosting services for TerreStar’s ground-based communications equipment (the “TerreStar Agreements”). In December 2017, we and DISH Network amended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DISH Network generally has the right to continue to receive warranty services from us for our products on a month-to-month basis unless terminated by DISH Network upon at least 21 days’ written notice to us. DISH Network generally has the right to continue to receive operations and maintenance services from us on a quarter-to-quarter basis unless operations and maintenance services are terminated by DISH Network upon at least 90 days’ written notice to us. The provision of hosting services will continue until May 2022. In addition, DISH Network generally may terminate any and all services for convenience subject to providing us with prior notice and/or payment of termination charges. In March 2020, we entered into an agreement with DISH Network pursuant to which we perform certain work and provide certain credits to amounts owed to us under the TerreStar Agreements in exchange for DISH Network’s granting us rights to use certain satellite capacity under the Amended and Restated Professional Services Agreement (as defined below). As a result, we and DISH Network amended the TerreStar Agreements to suspend our provision of warranty services to DISH Network from April 2020 through December 2020. Following the expiration of this suspension, we will continue to provide warranty services to DISH Network.

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Hughes Broadband Distribution Agreement. Effective October 2012, we and DISH Network, entered into a distribution agreement (the “Distribution Agreement”) pursuant to which DISH Network has the right, but not the obligation, to market, sell and distribute our Gen 4 HughesNet service. DISH Network pays us a monthly per subscriber wholesale service fee for our Gen 4 HughesNet service based upon a subscriber’s service level and based upon certain volume subscription thresholds. The Distribution Agreement also provides that DISH Network has the right, but not the obligation, to purchase certain broadband equipment from us to support the sale of the Gen 4 HughesNet service. The Distribution Agreement had an initial term of five years with automatic renewal for successive one year terms unless terminated by either party with a written notice at least 180 days’ before the expiration of the then-current term. In February 2014, we and DISH Network entered into an amendment to the Distribution Agreement which, among other things, extended the initial term of the Distribution Agreement until March 2024. Upon expiration or termination of the Distribution Agreement, we and DISH Network will continue to provide our Gen 4 HughesNet service to the then-current DISH Network subscribers pursuant to the terms and conditions of the Distribution Agreement.

DBSD North America Agreement. In March 2012, DISH Network completed its acquisition of all of the equity of reorganized DBSD North America, Inc. (“DBSD North America”). Prior to DISH Network’s acquisition of DBSD North America and our completion of the Hughes Acquisition, DBSD North America and HNS entered into various agreements pursuant to which we provide, among other things, warranty, operations and maintenance and hosting services of DBSD North America’s gateway and ground-based communications equipment. In December 2017, we and DBSD North America amended these agreements, effective as of January 1, 2018, to reduce certain pricing terms through December 31, 2023 and to modify certain termination provisions. DBSD North America has the right to continue to receive operations and maintenance services from us on a quarter-to-quarter basis, unless terminated by DBSD North America upon at least 120 days’ written notice to us. In February 2019, we further amended these agreements to provide DBSD North America with the right to continue to receive warranty services from us on a month-to-month basis until December 2023, unless terminated by DBSD North America upon at least 21 days’ written notice to us. The provision of hosting services will continue until February 2022 and will automatically renew for an additional five-year period until February 2027 unless terminated by DBSD North America upon at least 180 days’ written notice to us. In addition, DBSD North America generally may terminate any and all such services for convenience, subject to providing us with prior notice and/or payment of termination charges.

Hughes Equipment and Services Agreement. In February 2019, we and DISH Network entered into an agreement pursuant to which we will sell to DISH Network our HughesNet Service and HughesNet equipment that has been modified to meet DISH Network’s internet-of-things specifications for the transfer of data to DISH Network’s network operations centers. This agreement has an initial term of five years expiring February 2024 with automatic renewal for successive one-year terms unless terminated by DISH Network with at least 180 days‘ written notice to us or by us with at least 365 days'’ written notice to DISH Network.

Operating Expenses — DISH Network

The following table presents our operating expenses related to DISH Network:


	For the years ended December 31,
	2020		2019		2018
Operating expenses - DISH Network	$	5,793	$	5,198	$	3,889

The following table presents the related trade accounts payable:


	As of December 31,
	2020		2019
Trade accounts payable - DISH Network	$	752	$	1,923

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Amended and Restated Professional Services Agreement. In connection with the Spin-off, we entered into various agreements with DISH Network including a transition services agreement, satellite procurement agreement and services agreement, all of which expired in January 2010 and were replaced by a professional services agreement (the “Professional Services Agreement”). In January 2010, we and DISH Network agreed that we 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 a transition services agreement: information technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration, program acquisition services and other support services. Additionally, we and DISH Network agreed that DISH Network would continue to have the right, but not the obligation, to engage us to manage the process of procuring new satellite capacity for DISH Network (previously provided under a satellite procurement agreement), receive logistics, procurement and quality assurance services from us (previously provided under a services agreement) and provide other support services. In connection with the consummation of the Share Exchange, we and DISH amended and restated the Professional Services Agreement (as amended to date, the “Amended and Restated Professional Services Agreement”) to provide that we and DISH Network shall have the right to receive additional services that either we or DISH Network may require as a result of the Share Exchange, including access to antennas owned by DISH Network for our use in performing TT&C services and maintenance and support services for our antennas (collectively, the “TT&C Antennas”). In September 2019, in connection with the BSS Transaction, we and DISH further amended the Amended and Restated Professional Services Agreement to provide that we and DISH Network shall have the right to receive additional services that either we or DISH Network may require as a result of the BSS Transaction and to remove our access to and the maintenance and support services for the TT&C Antennas. The term of the Amended and Restated Professional Services Agreement is through January 2021 and renews automatically for successive one-year periods thereafter, unless the agreement is terminated earlier by either party upon at least 60 days‘ notice. We or DISH Network may generally terminate the Amended and Restated Professional Services Agreement in part with respect to any particular service it receives for any reason upon at least 30 days’ notice, unless the statement of work for particular services states otherwise. Certain services being provided for under the Amended and Restated Professional Services Agreement may survive the termination of the agreement.

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

Cheyenne Lease Agreement — Effective March 2017, we entered into a lease with DISH Network for certain space at 530 EchoStar Drive in Cheyenne, Wyoming for a period ending in February 2019. In August 2018, we exercised our option to renew this lease for a one year period ending in February 2020. In connection with the BSS Transaction, we transferred the Cheyenne Satellite Operations Center, including any equipment, software licenses, and furniture located within, to DISH Network and amended this lease to reduce the space provided to us for the Cheyenne Satellite Access Center for a period ending in September 2021, with the option for us to renew for a one year period upon 180 days’ written notice prior to the end of the term*.*
American Fork Occupancy License Agreement — Effective March 2017, we entered into an agreement with DISH Network for certain space at 796 East Utah Valley Drive in American Fork, Utah for a period ending in August 2017. We exercised our option to renew this agreement for a five-year period ending in August 2022. We and DISH Network amended this agreement to, among other things, terminate this agreement in March 2019.

Collocation and Antenna Space Agreements. We and DISH Network have entered into an agreement pursuant to which DISH Network provides us with collocation space in El Paso, Texas. This agreement was for an initial period ending in August 2015, and provides us with renewal options for four consecutive years. Effective August 2015, we exercised our first renewal option for a period ending in August 2018 and in April 2018 we exercised our second renewal option for a period ending in August 2021. In connection with the Share Exchange, effective March 2017, we also entered into certain agreements pursuant to which DISH Network provides collocation and antenna space to EchoStar through February 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New

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Braunfels, Texas; Monee, Illinois; Spokane, Washington; and Englewood, Colorado. In October 2019, we provided a termination notice for our New Braunfels, Texas agreement to be effective May 2020. In August 2017, we and DISH Network also entered into certain other agreements pursuant to which DISH Network provides additional collocation and antenna space to us in Monee, Illinois and Spokane, Washington through August 2022. Generally, we may renew our collocation and antenna space agreements for three-year periods by providing DISH Network with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term. We may terminate certain of these agreements with 180 days’ prior written notice. In September 2019, in connection with the BSS Transaction, we entered into an agreement pursuant to which DISH Network provided us with certain additional collocation space in Cheyenne, Wyoming for a period ending in September 2020. The fees for the services provided under these agreements depend on the number of racks located at the location.

Also in connection with the BSS Transaction, in September 2019, we entered into an agreement pursuant to which DISH Network provides us with antenna space and power in Cheyenne, Wyoming for a period of five years commencing in August 2020, with four three-year renewal terms, with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term.

Hughes Broadband Master Services Agreement. In conjunction with the launch of our EchoStar XIX satellite, in March 2017, we and DISH Network entered into a master service agreement (the “Hughes Broadband MSA”) pursuant to which DISH Network, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders and upgrades for our Gen 5 HughesNet service and related equipment and other telecommunication services and (ii) installs Gen 5 HughesNet service equipment with respect to activations generated by DISH Network. Under the Hughes Broadband MSA, we and DISH Network make certain payments to each other relating to sales, upgrades, purchases and installation services. The Hughes Broadband MSA has an initial term of five years through March 2022 with automatic renewal for successive one-year terms. Either party has the ability to terminate the Hughes Broadband MSA, in whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the Hughes Broadband MSA, we will continue to provide our Gen 5 HughesNet service to subscribers and make certain payments to DISH Network pursuant to the terms and conditions of the Hughes Broadband MSA. We incurred sales incentives and other costs under the Hughes Broadband MSA totaling $16.6 million, $17.1 million and $33.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

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

Other Receivables - DISH Network

The following table presents our other receivables owed from DISH Network:


	As of December 31,
	2020		2019
Other receivables - DISH Network	$	92,680	$	92,892

Tax Sharing Agreement. Effective December 2007, we and DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) in connection with the Spin-off. This agreement governs our and DISH Network’s respective rights, responsibilities and obligations after the Spin-off with respect to taxes for the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes, including any taxes that are incurred as a result of restructuring activities undertaken to implement the Spin-off, are borne by DISH Network and DISH Network indemnifies us for such taxes. However, DISH Network is not liable for and does not indemnify us for any taxes that are incurred as a result of the Spin-off or certain related transactions failing to qualify as tax-free distributions pursuant to any provision of Section 355 or Section 361 of the Code, because of: (i) a direct or indirect acquisition of any of our stock, stock options or assets; (ii) any action that we take or fail to take or (iii) any action that we take that

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is inconsistent with the information and representations furnished to the IRS in connection with the request for the private letter ruling, or to counsel in connection with any opinion being delivered by counsel with respect to the Spin-off or certain related transactions. In such case, we will be solely liable for, and will indemnify DISH Network for any resulting taxes, as well as any losses, claims and expenses. The Tax Sharing Agreement will terminate after the later of the full period of all applicable statutes of limitations, including extensions, or once all rights and obligations are fully effectuated or performed.

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

In August 2018, we and DISH Network amended the Tax Sharing Agreement and the 2013 agreements (the “Tax Sharing Amendment”). Under the Tax Sharing Amendment, to the extent permitted by applicable tax law, DISH Network is entitled to apply the benefit of our 2009 net operating losses (the “SATS 2009 NOLs”) to DISH Network’s federal tax return for the year ended December 31, 2008, in exchange for DISH Network paying us over time the value of the net annual federal income taxes paid by us that would have been otherwise offset by the SATS 2009 NOLs. The Tax Sharing Amendment also requires us and DISH Network to pay the other for the benefits of certain past and future federal research and development tax credits that we or DISH Network receive or received as a result of being part of a controlled group under the Code, and requires DISH Network to compensate us for certain past tax losses utilized by DISH Network and for certain past and future excess California research and development tax credits generated by us and used by DISH Network. In addition, the Tax Sharing Amendment extends the term of the State Tax Arrangement to the earlier to occur of termination of the Tax Sharing Agreement, a change in control of either us or DISH Network or, for any particular state, if we and DISH Network no longer file a combined tax return for such state.

We and DISH Network file combined income tax returns in certain states from 2008 through 2019. We have earned and recognized tax benefits for certain state income tax credits that we would be unable to fully utilize currently if we had filed separately from DISH Network. We have charged Additional paid-in capital in prior periods when DISH Network has utilized such tax benefits. We expect to increase Additional paid-in capital upon receipt of any consideration that DISH Network pays to us in exchange for these tax credits. For the years ended December 31, 2020, 2019 and 2018, DISH Network has utilized tax benefits of $2.2 million, tax provisions of $1.6 million and tax benefits of $1.8 million, respectively.

Other Agreements

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

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respect to breaches of certain representations and covenants and certain retained and assumed liabilities, respectively.

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

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

BSS Transaction Employee Matters Agreement. Effective September 2019, in connection with the BSS Transaction, we and DISH Network entered into an employee matters agreement that addressed the transfer of employees from us to DISH Network, including certain benefit and compensation matters and the allocation of responsibility for employee related liabilities relating to current and past employees of the BSS Business. DISH Network assumed employee-related liabilities relating to the BSS Business as part of the BSS Transaction, except that we are responsible for certain pre-BSS Transaction compensation and benefits for employees who transferred to DISH Network in connection with the BSS Transaction.

Share Exchange Agreement. In January 2017, we and certain of our subsidiaries entered into the Share Exchange Agreement with DISH and certain of its subsidiaries pursuant to which, in February 2017, we received all of the shares of the Tracking Stock in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of our EchoStar Technologies businesses and certain other assets. Following consummation of the Share Exchange, we no longer operate the transferred EchoStar Technologies businesses and the Tracking Stock was retired and is no longer outstanding and all agreements, arrangements and policy statements with respect to such Tracking Stock terminated and are of no further effect. Pursuant to the Share Exchange Agreement, we transferred certain assets, investments in joint ventures, spectrum licenses and real estate properties and DISH Network assumed certain liabilities relating to the transferred assets and businesses. The Share Exchange Agreement contained customary representations and warranties by the parties, including representations by us related to the transferred assets, assumed liabilities and the financial condition of the transferred businesses. We and DISH Network also agreed to customary indemnification provisions whereby each party indemnifies the other against certain losses with respect to breaches of representations, warranties or covenants and certain liabilities and if certain actions undertaken by us or DISH causes the transaction to be taxable to the other party after closing.

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Share Exchange Intellectual Property and Technology License Agreement. Effective March 2017, in connection with the Share Exchange, we and DISH Network entered into an intellectual property and technology license agreement (“IPTLA”) pursuant to which we and DISH Network license to each other certain intellectual property and technology. The IPTLA will continue in perpetuity, unless mutually terminated by the parties. Pursuant to the IPTLA, we granted to DISH Network a license to our intellectual property and technology for use by DISH Network, among other things, in connection with its continued operation of the businesses acquired pursuant to the Share Exchange, including a limited license to use the “ECHOSTAR” trademark during a transition period. EchoStar retains full ownership of the “ECHOSTAR” trademark. In addition, DISH Network granted a license back to us, among other things, for the continued use of all intellectual property and technology that is used in our retained businesses but the ownership of which was transferred to DISH Network pursuant to the Share Exchange.

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

Share Exchange Employee Matters Agreement. Effective March 2017, in connection with the Share Exchange, we and DISH Network entered into an employee matters agreement that addressed the transfer of employees from us to DISH Network, including certain benefit and compensation matters and the allocation of responsibility for employee related liabilities relating to current and past employees of the transferred businesses. DISH Network assumed employee-related liabilities relating to the transferred businesses as part of the Share Exchange, except that we are responsible for certain pre-Share Exchange employee related litigation, and compensation and benefits for employees who transferred to DISH Network in connection with the Share Exchange.

NOTE 23. RELATED PARTY TRANSACTIONS - OTHER

Hughes Systique Corporation

We contract with Hughes Systique Corporation (“Hughes Systique”) for software development services. In addition to our approximately 43% ownership in Hughes Systique, Mr. Pradman Kaul, the President of our subsidiary Hughes Communications, Inc.. and a member of our board of directors, and his brother, who is the Chief Executive Officer and President of Hughes Systique, in the aggregate, own approximately 25%, on an undiluted basis, of Hughes Systique’s outstanding shares as of December 31, 2020. Furthermore, Mr. Pradman Kaul serves on the board of directors of Hughes Systique. Hughes Systique is a variable interest entity and we are considered the primary beneficiary of Hughes Systique due to, among other factors, our ability to direct the activities that most significantly impact the economic performance of Hughes Systique. As a result, we consolidate Hughes Systique’s financial statements in these Consolidated Financial Statements.

TerreStar Solutions

DISH Network owns more than 15% of TerreStar Solutions, Inc. (“TSI”). In May 2018, we and TSI entered into an equipment and services agreement pursuant to which we design, manufacture and install upgraded ground communications network equipment for TSI’s network and provide, among other things, warranty and support services. We recognized revenue of $4.4 million, $12.5 million, and $6.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020 and 2019, we had $0.4 million and $2.7 million trade accounts receivable from TSI.

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Global IP

In May 2017, we entered into an agreement with Global-IP Cayman (“Global IP”) providing for the sale of certain equipment and services to Global IP. Mr. William David Wade, a member of our board of directors, served as a member of the board of directors of Global IP and as an executive advisor to the Chief Executive Officer of Global IP from September 2017 until April 2019 and from September 2017 until December 2019, respectively. In August 2018, we and Global IP amended the agreement to: (i) change certain of the equipment and services to be provided to Global IP, (ii) modify certain payment terms, (iii) provide Global IP an option to use one of our test lab facilities and (iv) effectuate the assignment of the agreement from Global IP to one of its wholly-owned subsidiaries. In February 2019, we terminated the agreement as a result of Global IP’s defaults resulting from its failure to make payments to us as required under the terms of the agreement and we reserved our rights and remedies against Global IP under the agreement. We recognized revenue under this agreement of $9.0 million for the year ended December 31, 2018. We have not recognized any revenue since the termination of this agreement. As of December 31, 2020 and 2019, we were owed $7.5 million from Global IP.

Maxar Technologies Inc.

Mr. Jeffrey Tarr, who joined our board of directors in March 2019, served as a consultant and advisor to Maxar Technologies Inc. and its subsidiaries (“Maxar Tech”) through May 2019. We previously entered into agreements with Maxar Tech for the manufacture and certain other services of the EchoStar IX satellite, the EchoStar XVII satellite, the EchoStar XIX satellite, the EchoStar XXI satellite and the EchoStar XXIV satellite and our former EchoStar XI satellite, EchoStar XIV satellite, EchoStar XVI satellite and EchoStar XXIII satellite. Maxar Tech provides us with anomaly support for these satellites once launched pursuant to the terms of the agreements. Maxar Tech also provides a warranty on one of these satellites and may be required to pay us certain amounts should the satellite not operate according to certain performance specifications. Our obligations to pay Maxar Tech under these agreements during the design life of the applicable satellites may be reduced if the applicable satellites do not operate according to certain performance specifications. We incurred aggregate costs payable to Maxar Tech under these agreements of $23.9 million and $90.3 million for the years ended December 31, 2020 and 2019, respectively. At both December 31, 2020 and 2019, we had no trade payable to Maxar Tech.

.NOTE 24. SUPPLEMENTAL FINANCIAL INFORMATION

Research and Development

The following table presents the research and development costs incurred in connection with customers’ orders:


	For the years ended December 31,
	2020		2019		2018
Cost of sales - equipment	$	19,788	$	24,495	$	23,422
Research and development expenses	$	29,448	$	25,739	$	27,570

Advertising Costs

We incurred advertising expense of $65.1 million, $88.2 million and $75.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

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Cash and Cash Equivalents and Restricted Cash

The following table reconciles cash and cash equivalents and restricted cash, as presented in the Consolidated Balance Sheets to the total of the same as presented in the Consolidated Statements of Cash Flows:


	For the years ended December 31,
	2020		2019		2018
Cash and cash equivalents, including restricted amounts, beginning of period:
Cash and cash equivalents	$	1,519,431	$	928,306	$	2,431,456
Restricted cash	2,458		1,189		793
Total cash and cash equivalents, included restricted amounts, beginning of period	$	1,521,889	$	929,495	$	2,432,249

Cash and cash equivalents, including restricted amounts, end of period:
Cash and cash equivalents	$	896,005	$	1,519,431	$	928,306
Restricted cash	807		2,458		1,189
Total cash and cash equivalents, included restricted amounts, end of period	$	896,812	$	1,521,889	$	929,495

Other Current Assets, Net and Other Non-current Assets, Net

The following table presents the components of Other current assets, net and Other non-current assets, net:


	As of December 31,
	2020		2019
Other current assets, net:
Trade accounts receivable - DISH Network	$	5,612	$	10,683
Inventory	97,992		79,621
Prepaids and deposits	55,381		67,014
Other, net	30,836		22,213
Total other current assets	$	189,821	$	179,531

Other non-current assets, net:
Other receivables - DISH Network	$	92,680	$	92,892
Restricted marketable investment securities	9,090		8,093
Restricted cash	807		2,458
Deferred tax assets, net	1,781		7,251
Capitalized software, net	116,661		101,786
Contract acquisition costs, net	99,837		96,723
Contract fulfillment costs, net	2,580		3,010
Other, net	29,485		22,628
Total other non-current assets, net	$	352,921	$	334,841

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


	For the years ended December 31,
	Other current assets, net		Other non-current assets, net
Balance at beginning of period	$	—	$	—
Credit losses (1)	1,595		13,378

Foreign currency translation	152		(509)
Balance at end of period	$	1,747	$	12,869

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

Accrued Expenses and Other Current Liabilities

The following table presents the components of Accrued expenses and other current liabilities:


	As of December 31,
	2020		2019
Accrued expenses and other current liabilities:
Trade accounts payable - DISH Network	$	752	$	1,923
Accrued interest	42,388		42,622
Accrued compensation	62,299		50,787
Accrued taxes	20,297		18,525
Operating lease obligation	14,699		14,651
Other	159,564		142,371
Total accrued expenses and other current liabilities	$	299,999	$	270,879

Inventory

The following table presents the components of inventory:


	As of December 31,
	2020		2019
Raw materials	$	4,564	$	4,240
Work-in-process	8,280		6,979
Finished goods	85,148		68,402
Total inventory	$	97,992	$	79,621

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Capitalized Software Costs

The following tables present the activity related to our capitalized software cost:


	As of December 31,
	2020		2019
Net carrying amount of externally marketed software	$	116,661	$	101,786
Externally marketed software under development and not yet placed into service	$	72,047	$	38,766


	For the years ended December 31,
	2020		2019		2018
Capitalized costs related to development of externally marketed software	$	38,655	$	29,310	$	31,639
Amortization expense relating to externally marketed software	$	23,780	$	24,284	$	22,966
Weighted average useful life (in years)	2

Supplemental and Non-cash Investing and Financing Activities

The following table presents the supplemental and non-cash investing and financing activities:


	For the years ended December 31,
	2020		2019		2018
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized	$	139,280	$	195,331	$	240,596
Cash paid for income taxes	$	15,254	$	3,575	$	5,209

Non-cash investing and financing activities:
Employee benefits paid in Class A common stock	$	6,921	$	6,654	$	7,605
Increase (decrease) in capital expenditures included in accounts payable, net	$	(6,935)	$	(11,111)	$	7,318
Non-cash assets exchanged for BSS Transaction	$	—	$	532,855	$	—
Non-cash net assets received in exchange for a 20% ownership interest in our existing Brazilian subsidiary	$	—	$	94,918	$	—

F-74

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