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

Unless the context indicates otherwise, the terms “we,” “us,” “EchoStar,” the “Company” and “our” refer to EchoStar Corporation and its subsidiaries. The following Management’s Discussion and Analysis of our Financial Condition and Results of Operations (“Management’s Discussion and Analysis”) should be read in conjunction with our accompanying Consolidated Financial Statements and notes thereto (“Consolidated Financial Statements”) in Item 1 of this Quarterly Report on Form 10-Q (“Form 10-Q”). This Management’s Discussion and Analysis is intended to help provide an understanding of our financial condition, changes in our financial condition and our results of operations. Many of the statements in this Management’s Discussion and Analysis are forward-looking statements that involve assumptions and are subject to risks and uncertainties that are often difficult to predict and beyond our control. Actual results could differ materially from those expressed or implied by such forward-looking statements. Refer to the Disclosure Regarding Forward-Looking Statements in this Form 10-Q for further discussion. For a discussion of additional risks, uncertainties and other factors that could impact our results of operations or financial condition, refer to the Risk Factors in Part II, Item 1A of this Form 10-Q and in Part I, Item 1A of our most recent Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission (“SEC”). Further, such forward-looking statements speak only as of the date of this Form 10-Q and we undertake no obligation to update them.

EXECUTIVE SUMMARY

Overview

We currently operate in two business segments: our Hughes segment and our EchoStar Satellite Services segment (“ESS segment”). Our operations include various corporate functions 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.

All amounts presented in this Management’s Discussion and Analysis are expressed in thousands of U.S. dollars, except share and per share amounts and unless otherwise noted.

On August 8, 2023, the Company entered into an Agreement and Plan of Merger (the “Original Merger Agreement”) with DISH Network Corporation, a Nevada corporation (“DISH”), and Eagle Sub Corp, a Nevada corporation and a wholly owned subsidiary of DISH. The Original Merger Agreement provided, among other things, that subject to the satisfaction or waiver of the conditions set forth in the agreement, Eagle Sub Corp would merge with and into EchoStar, with EchoStar surviving as a wholly owned subsidiary of DISH.

On October 2, 2023, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Amended Merger Agreement”) with DISH and EAV Corp., a Nevada corporation and a wholly owned subsidiary of EchoStar (“Merger Sub”). The Amended Merger Agreement revises the structure of the merger of DISH and EchoStar contemplated by the Original Merger Agreement. The Amended Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth in the Amended Merger Agreement, Merger Sub will merge with and into DISH (the “Merger”), with DISH surviving the Merger as a wholly owned subsidiary of EchoStar. The expected proportional ownership of existing EchoStar stockholders and DISH stockholders in the combined company upon the consummation of the Merger remains the same as the expected proportional ownership contemplated by the Original Merger Agreement. Pursuant to the Amended Merger Agreement, at the effective time of the Merger, (the “Effective Time”), each share of DISH Class A Common Stock, par value $0.01 per share (“DISH Class A Common Stock”) and DISH Class C Common Stock, par value $0.01 per share (“DISH Class C Common Stock”), outstanding immediately prior to the Effective Time, will be converted into the right to receive a number of validly issued, fully paid and non-assessable shares of EchoStar Class A Common Stock, par value $0.001 per share (“EchoStar Class A Common Stock”), equal to 0.350877 (the “Exchange Ratio”). On the terms and subject to the conditions set forth in the Amended Merger Agreement, at the Effective Time, each share of DISH Class B Common Stock, par value $0.01 per share (“DISH Class B Common Stock”), outstanding immediately prior to the Effective Time will be converted into the right to receive a number of validly issued, fully paid and non-assessable shares of EchoStar Class B Common Stock, par value $0.001 per share (the “EchoStar Class B Common Stock” and, together with the EchoStar Class A Common Stock, the “EchoStar Common Stock”), equal to the Exchange Ratio. Any shares of DISH Class A Common Stock, DISH Class B Common Stock and DISH Class C Common Stock (collectively, “DISH Common Stock”) that are held in DISH’s treasury or held directly by EchoStar or Merger Sub immediately prior to the Effective Time will be cancelled and cease to exist and no consideration shall be paid or payable in respect thereof.

Concurrently with the entry into the Amended Merger Agreement, Charles W. Ergen and Ergen family stockholders entered into an amended support agreement with the Company and DISH, pursuant to which they have agreed to not vote, or cause or direct to be voted, the shares of EchoStar Class A Common Stock owned by them, other than with respect of any matter presented to the holders of EchoStar Class A Common Stock on which holders of EchoStar Class B Common Stock are not entitled to vote, for three years following the closing of the Merger. Under the terms of the amended support agreement, EchoStar and the Ergen Stockholders will enter into a registration rights agreement reasonably acceptable to the parties prior to the closing of the Merger providing for the registration of such stockholders’ shares of EchoStar Class A Common Stock or EchoStar Class B Common Stock received as part of the Merger consideration and/or shares of EchoStar Class B Common Stock held by such stockholders immediately prior to the closing of the Merger, at EchoStar’s sole cost and expense.

Upon the consummation of the Merger, the Company Board will consist of eleven directors, comprised of (i) seven individuals who were members of the DISH board as of immediately prior to the Merger, (ii) three individuals who were independent directors on the Company Board as of immediately prior to the Merger and (iii) the President and Chief Executive Officer of EchoStar. The Company and DISH will consult with each other in connection with selecting the directors of the existing Company Board who will continue to serve on the Company Board from and after the Merger.

The board of directors of the Company (the “Board”), acting upon the unanimous recommendation of a special transaction committee of independent directors of the Board, has unanimously approved, adopted and declared advisable the Amended Merger Agreement and the transactions contemplated by the Amended Merger Agreement. The closing of the Merger is expected to occur in the fourth calendar quarter of 2023, subject to the satisfaction of certain regulatory approvals and other customary closing conditions. The Amended Merger Agreement provides certain termination rights for each of the Company and DISH, including, among others, if the consummation of the Merger does not occur on or before April 2, 2024.

Hughes Segment

Our Hughes segment is an industry leader in both networking technologies and services, innovating to deliver the global solutions that power a connected future for people, enterprises and things everywhere. We offer broadband satellite technologies and broadband internet products and services to consumer customers. We offer broadband network technologies, managed services, equipment, hardware, satellite services and communications solutions to government and enterprise customers.

Anticipating the commencement of commercial operations of the EchoStar XXIV satellite, as discussed below, our consumer business, marketed under the HughesNet® brand, has been focused on optimizing financial returns of our existing satellites, while planning for new satellite capacity. Our consumer revenue growth depends on our success in adding new and retaining existing subscribers, as well as increasing our Average Revenue Per User/Subscriber (“ARPU”). Service and acquisition costs related to ongoing support for our direct and indirect customers and partners are typically impacted most significantly by our growth. We expect that our enterprise business will also benefit from the new capacity added with EchoStar XXIV. The growth of our enterprise and consumer businesses relies heavily on global economic conditions and the competitive landscape for pricing relative to competitors and alternative technologies. Prior to the launch of EchoStar XXIV, we were nearing or had reached capacity in most areas of the U.S., which constrained growth within our consumer subscriber base. Growth within our Latin America consumer subscriber base in certain areas had also become capacity constrained. These constraints are expected to be addressed by the EchoStar XXIV satellite.

The EchoStar XXIV satellite launched in July 2023 and is expected to begin service in December 2023. Once in service, the satellite is expected to bring further consumer broadband capacity across North and South America and generate additional sales in other markets, including in-flight Wi-Fi, enterprise networking and cellular backhaul for mobile network operators across the two continents.

Our broadband subscribers include customers that subscribe to our HughesNet services in the U.S. and Latin America through retail, wholesale and small/medium enterprise service channels.

The following table presents our approximate number of broadband subscribers:

						As of
						September 30, 2023						June 30, 2023
United States						801,000						846,000
Latin America						262,000						276,000
Total broadband subscribers						1,063,000						1,122,000

The following table presents the approximate number of net subscriber decreases:

						For the three months ended
						September 30, 2023						June 30, 2023
United States						(45,000)						(44,000)
Latin America						(14,000)						(11,000)
Total net subscriber decreases						(59,000)						(55,000)

Our ability to gain new customers and retain existing customers in the U.S. is being impacted by our capacity limitations, competitive pressure from satellite-based competitors and other technologies, and increased bandwidth usage on average by our existing customers. For the three months ended September 30, 2023, these factors resulted in lower total subscribers as compared to the three months ended June 30, 2023.

Our ability to gain new customers and retain existing customers in Latin America were tempered by our focus on more profitable consumer segments and our allocation of capacity to enterprise opportunities. Capacity constraints in certain other areas also limit our ability to add new subscribers. For the three months ended September 30, 2023, the decline in net subscribers was primarily due to more selective customer screening as compared to the three months ended June 30, 2023.

We continued to execute our strategy of maximizing financial returns by utilizing capacity for higher economic value enterprise and government applications in Latin America. Continued success of this strategy will further reduce the available capacity for consumers.

As of September 30, 2023, our Hughes segment had $1.5 billion of contracted revenue backlog, which was primarily flat compared to December 31, 2022. We define Hughes segment contracted revenue backlog as our expected future revenue under enterprise customer contracts that are non-cancelable, including lease revenue.

To date, we have not experienced a material adverse impact from the Russia-Ukraine conflict and the associated sanctions.

ESS Segment

Our ESS segment provides satellite services on a full-time and/or occasional-use basis to U.S. government service providers, internet service providers, broadcast news organizations, content providers and private enterprise customers. We operate our ESS business using primarily the EchoStar IX satellite and the EchoStar 105/SES-11 satellite and related infrastructure. Revenue in our ESS segment depends largely on our ability to make continuous use of our available satellite capacity on behalf of existing customers and our ability to enter into commercial relationships with new customers. During the first quarter of 2023, we transitioned the EchoStar IX satellite into inclined operations to extend its usable life for our customers. With this inclined mode of operation, we are expecting to extend the life of the spacecraft into 2024 without diminishing its capacity.

As of September 30, 2023, our ESS segment had $13.2 million of contracted revenue backlog, a decrease of 40.8%, as compared to December 31, 2022, primarily due to the recognition of revenue of existing contracts. We define contracted revenue backlog for our ESS segment as contracted future satellite lease revenue.

Satellite Anomalies and Impairments

During the first quarter of 2023, we lost contact with our third nano-satellite (“EG-3”), which was launched in the second quarter of 2021 and brought into use through our Sirion-1 ITU filing in the third quarter of 2021. Consequently, we canceled our contract with the vendor who manufactured and operated our nano-satellites and recorded an impairment charge of $3.1 million related to EG-3 and other related assets in the first quarter of 2023 in Corporate and Other. As a result, the ITU has suspended the filing, and we have three years from the date of suspension to place a new S-band spacecraft at the altitude prescribed in our Australian ITU filing. We expect the first group of S-band satellites ordered from our supplier, Astro Digital, to be launched well in advance of the three-year replacement deadline.

In the second quarter of 2023, we reduced the estimated useful life of the Al Yah 3 satellite, which serves our Brazilian customers, as a result of certain technical anomalies. In order to safeguard the future operability of the satellite, the Company has, in conjunction with recommendations from the satellite manufacturer, implemented immediate and long-term remedial actions. A revised estimate of the satellite’s remaining lifetime has been calculated using operational data of two previous quarters. Although the anomalies are expected to shorten the remaining useful life of the satellite, they have not affected its current operation.

We are not aware of any other anomalies with respect to our owned or leased satellites as of September 30, 2023. There can be no assurance, however, that undetected existing or future anomalies will not have a significant adverse effect on our operations or revenue in the future. In addition, there can be no assurance that we can recover critical transmission capacity in the event one or more of our satellites were to fail.

Cybersecurity

We are not aware of cyber-incidents with respect to our owned or leased satellites or other networks, equipment or systems that have had a material adverse effect on our business, costs, operations, prospects, results of operation or financial position during the nine months ended September 30, 2023 and through November 6, 2023. There can be no assurance, however, that any such incident can be detected or thwarted or will not have such a material adverse effect in the future.

EXPLANATION OF KEY METRICS AND OTHER ITEMS

Services and other revenue. Services and other revenue primarily includes the sales of consumer and enterprise broadband services, maintenance and other contracted services, revenue associated with satellite and transponder leases and services, satellite uplinking/downlinking, subscriber wholesale service fees for the HughesNet service, professional services, and facilities rental revenue.

Equipment revenue. Equipment revenue primarily includes broadband equipment and networks sold to customers in our consumer and enterprise markets.

Cost of sales - services and other. Cost of sales - services and other primarily includes the cost of broadband services provided to our consumer and enterprise customers, maintenance and other contracted services, costs associated with satellite and transponder leases and services, professional services, and facilities rental expenses.

Cost of sales - equipment. Cost of sales - equipment consists primarily of the cost of broadband equipment and networks provided to customers in our consumer and enterprise markets. It also includes certain other costs associated with the deployment of equipment to our customers.

Selling, general and administrative expenses. Selling, general and administrative expenses primarily include selling and marketing costs and employee-related costs associated with administrative services (e.g., information systems, human resources and other services), including bad debt expense and stock-based compensation expense. It also includes professional fees (e.g., legal, information systems and accounting services) and other expenses associated with facilities and administrative services.

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

Impairment of long-lived assets. Impairment of long-lived assets includes our impairment losses related to our property and equipment, regulatory authorizations and other intangible assets.

Interest income, net. Interest income, net primarily includes interest earned on our cash, cash equivalents and marketable investment securities, and other investments including premium amortization, discount accretion on debt securities, and changes in allowance for estimated credit losses on investments.

Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized primarily includes interest expense associated with our debt and finance lease obligations (net of capitalized interest), amortization of debt issuance costs, and interest expense related to certain legal proceedings.

Gains (losses) on investments, net. Gains (losses) on investments, net primarily includes changes in fair value of our marketable equity securities and other investments for which we have elected the fair value option. It may also include realized gains and losses on the sale or exchange of our available-for-sale debt securities, other-than-temporary impairment losses on our available-for-sale securities, realized gains and losses on the sale or exchange of equity securities and debt securities without readily determinable fair value, and adjustments to the carrying amount of investments in unconsolidated affiliates and marketable equity securities resulting from impairments and observable price changes.

Equity in earnings (losses) of unconsolidated affiliates, net. Equity in earnings (losses) of unconsolidated affiliates, net includes earnings or losses from our investments accounted for using the equity method.

Other-than-temporary impairment losses on equity method investments**.** Other-than-temporary impairment losses on equity method investments primarily includes impairment charges for losses on our equity method investments which were deemed permanent in nature.

Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net include gains and losses resulting from the re-measurement of transactions denominated in foreign currencies.

Other, net. Other, net primarily includes dividends received from our marketable investment securities, gains from repayment of other debt investments, transaction costs related to the proposed merger with DISH Network Corporation, and other non-operating income and expense items that are not appropriately classified elsewhere in the Consolidated Statements of Operations in our Consolidated Financial Statements.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is defined as Net income (loss) excluding Interest income and expense, net, Income tax benefit (provision), net, Depreciation and amortization, and Net income (loss) attributable to non-controlling interests. EBITDA is not a measure determined in accordance with U.S. GAAP. This non-GAAP measure is reconciled to Net income (loss) in our discussion of Results of Operations section below. EBITDA should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with GAAP. EBITDA is used by our management as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes EBITDA provides meaningful supplemental information regarding the underlying operating performance of our business and is appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate the performance of companies in our industry.

Subscribers. Subscribers include customers that subscribe to our HughesNet service, through retail, wholesale and small/medium enterprise service channels.

Highlights from our Financial Results

Consolidated Results of Operations for the Three Months Ended September 30, 2023:

• Revenue of $413.1 million

• Operating income of $22.1 million

• Net income of $0.5 million

• Net income attributable to EchoStar common stock of $3.2 million and basic and diluted earnings per share of common stock of $0.04

• EBITDA of $101.3 million (see reconciliation of this non-GAAP measure in Results of Operations)

Consolidated Financial Condition as of September 30, 2023:

• Total assets of $6.2 billion

• Total liabilities of $2.5 billion

• Total stockholders’ equity of $3.7 billion

• Cash and cash equivalents and marketable investment securities of $2.0 billion

RESULTS OF OPERATIONS

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following table presents our consolidated results of operations for the three months ended September 30, 2023 compared to the three months ended September 30, 2022:

						For the three months ended September 30,												Variance
Statements of Operations Data (1)						2023						2022						Amount						%
Revenue:
Services and other revenue						$	359,349					$	401,382					$	(42,033)					(10.5)
Equipment revenue						53,725						96,005						(42,280)						(44.0)
Total revenue						413,074						497,387						(84,313)						(17.0)
Costs and expenses:
Cost of sales - services and other						133,335						145,189						(11,854)						(8.2)
% of total services and other revenue						37.1		%				36.2		%
Cost of sales - equipment						43,180						74,329						(31,149)						(41.9)
% of total equipment revenue						80.4		%				77.4		%
Selling, general and administrative expenses						104,988						111,421						(6,433)						(5.8)
% of total revenue						25.4		%				22.4		%
Research and development expenses						6,463						9,181						(2,718)						(29.6)
% of total revenue						1.6		%				1.8		%
Depreciation and amortization						103,028						110,233						(7,205)						(6.5)
Total costs and expenses						390,994						450,353						(59,359)						(13.2)
Operating income (loss)						22,080						47,034						(24,954)						(53.1)
Other income (expense):
Interest income, net						26,209						14,183						12,026						84.8
Interest expense, net of amounts capitalized						(12,650)						(13,845)						1,195						(8.6)
Gains (losses) on investments, net						(10,743)						(10,077)						(666)						6.6
Equity in earnings (losses) of unconsolidated affiliates, net						(1,978)						(1,426)						(552)						38.7
Foreign currency transaction gains (losses), net						(2,089)						(2,805)						716						(25.5)
Other, net						(11,750)						(319)						(11,431)						*
Total other income (expense), net						(13,001)						(14,289)						1,288						(9.0)
Income (loss) before income taxes						9,079						32,745						(23,666)						(72.3)
Income tax benefit (provision), net						(8,547)						(13,195)						4,648						(35.2)
Net income (loss)						532						19,550						(19,018)						(97.3)
Less: Net loss (income) attributable to non-controlling interests						2,712						2,853						(141)						(4.9)
Net income (loss) attributable to EchoStar Corporation common stock						$	3,244					$	22,403					$	(19,159)					(85.5)
Other data:
EBITDA (2)						$	101,260					$	145,493					$	(44,233)					(30.4)
Subscribers, end of period						1,063,000						1,285,000						(222,000)						(17.3)

• Percentage is not meaningful.

(1) An explanation of our key metrics is included in Explanation of Key Metrics and Other Items.

(2) A reconciliation of EBITDA to Net income (loss), the most directly comparable GAAP measure in our Consolidated Financial Statements, is included in Results of Operations. For further information on our use of EBITDA, see Explanation of Key Metrics and Other Items.

The following discussion relates to our results of operations for the three months ended September 30, 2023 compared to the three months ended September 30, 2022:

Services and other revenue. Services and other revenue totaled $359.3 million for the three months ended September 30, 2023, a decrease of $42.0 million, or 10.5%, as compared to 2022. The decrease was primarily attributable to our Hughes segment related to lower sales of broadband services to our consumer customers of $40.4 million.

Equipment revenue. Equipment revenue totaled $53.7 million for the three months ended September 30, 2023, a decrease of $42.3 million, or 44.0%, as compared to 2022. The decrease was primarily attributable to decreases in hardware sales to our North American enterprise customers of $27.0 million and a decrease in hardware sales to our international enterprise customers of $16.0 million.

Cost of sales - services and other. Cost of sales - services and other totaled $133.3 million for the three months ended September 30, 2023, a decrease of $11.9 million, or 8.2%, as compared to 2022. The decrease was primarily attributable to the corresponding decrease in services and other revenue.

Cost of sales - equipment. Cost of sales - equipment totaled $43.2 million for the three months ended September 30, 2023, a decrease of $31.1 million, or 41.9%, as compared to 2022. The decrease was primarily attributable to the corresponding decrease in equipment revenue.

Selling, general and administrative expenses. Selling, general and administrative expenses totaled $105.0 million for the three months ended September 30, 2023, a decrease of $6.4 million, or 5.8%, as compared to 2022. The decrease was primarily attributable to decreases in sales and marketing expenses of $5.4 million and bad debt expense of $1.1 million.

Depreciation and amortization. Depreciation and amortization expenses totaled $103.0 million for the three months ended September 30, 2023, a decrease of $7.2 million, or 6.5%, as compared to 2022. The decrease was primarily attributable to a decrease in non-satellite depreciation expense of $9.6 million, partially offset by an increase in satellite depreciation expense of $2.0 million.

Interest income, net. Interest income, net totaled $26.2 million for the three months ended September 30, 2023, an increase of $12.0 million, as compared to 2022, primarily attributable to increases in the yield on our marketable investment securities and an increase in our marketable investment securities average balance.

Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized totaled $12.7 million for the three months ended September 30, 2023, a decrease of $1.2 million, or 8.6%, as compared to 2022. The decrease was primarily attributable to an increase of $1.0 million in capitalized interest relating to the EchoStar XXIV satellite program.

Gains (losses) on investments, net. Gains (losses) on investments, net totaled $10.7 million in losses for the three months ended September 30, 2023 as compared to $10.1 million in losses for the three months ended September 30, 2022, an increase in losses of $0.7 million. The change was primarily due to a loss of $28.3 million related to the exit of our investment in Dish Mexico for the three months ended September 30, 2022 compared to a loss of $24.4 million due to a decline in value of an equity investment previously held on a cost-basis method during the three months ended September 30, 2023, partially offset by a decrease in net gains on marketable equity securities of $4.6 million.

Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net totaled $2.1 million in losses for the three months ended September 30, 2023, as compared to $2.8 million in losses for the three months ended September 30, 2022. The positive change of $0.7 million was primarily due to the net impact of foreign exchange rate fluctuations of certain foreign currencies in Latin America.

Other, net. Other, net totaled $11.8 million expense for the three months ended September 30, 2023, as compared to $0.3 million expense for the three months ended September 30, 2022. The increase was primarily attributable to transaction costs related to the proposed merger with DISH Network Corporation.

Income tax benefit (provision), net. Income tax benefit (provision), net was $8.5 million provision for the three months ended September 30, 2023, as compared to $13.2 million provision for the three months ended September 30, 2022. Our effective income tax rate was 94.1% and 40.3% for the three months ended September 30, 2023 and 2022, respectively. The variations in our effective tax rate from the U.S federal statutory rate for the three months ended September 30, 2023 were primarily due to excluded investment impairment losses and the impact of research and development credits. The variations in our effective tax rate from the U.S. federal statutory rate for the three months ended September 30, 2022 were primarily due to excluded foreign losses where the Company carries a full valuation allowance and the impact of state and local taxes.

Net income (loss) attributable to EchoStar Corporation common stock. The following table reconciles the change in Net income (loss) attributable to EchoStar Corporation common stock:

						Amounts
Net income (loss) attributable to EchoStar Corporation for the three months ended September 30, 2022						$	22,403
Increase (decrease) in interest income, net						12,026
Decrease (increase) in income tax benefit (provision), net						4,648
Decrease (increase) in interest expense, net of amounts capitalized						1,195
Increase (decrease) in foreign currency transaction gains (losses), net						716
Increase (decrease) in net income (loss) attributable to non-controlling interest						(141)
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						(552)
Decrease (increase) in gains (losses) on investments, net						(666)
Increase (decrease) in other, net						(11,431)
Increase (decrease) in operating income (loss), including depreciation and amortization						(24,954)
Net income (loss) attributable to EchoStar Corporation for the three months ended September 30, 2023						$	3,244

EBITDA. EBITDA is a non-GAAP financial measure and is described under Explanation of Key Metrics and Other Items section. The following table reconciles EBITDA to Net income (loss), the most directly comparable GAAP measure in our Consolidated Financial Statements:

						For the three months ended September 30,												Variance
						2023						2022						Amount						%
Net income (loss)						$	532					$	19,550					$	(19,018)					(97.3)
Interest income, net						(26,209)						(14,183)						(12,026)						84.8
Interest expense, net of amounts capitalized						12,650						13,845						(1,195)						(8.6)
Income tax provision (benefit), net						8,547						13,195						(4,648)						(35.2)
Depreciation and amortization						103,028						110,233						(7,205)						(6.5)
Net loss (income) attributable to non-controlling interests						2,712						2,853						(141)						(4.9)
EBITDA						$	101,260					$	145,493					$	(44,233)					(30.4)

The following table reconciles the change in EBITDA:

						Amounts
EBITDA for the three months ended September 30, 2022						$	145,493
Increase (decrease) in foreign currency transaction gains (losses), net						716
Decrease (increase) in net loss (income) attributable to non-controlling interests						(141)
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						(552)
Increase (decrease) in gains (losses) on investments, net						(666)
Increase (decrease) in other, net						(11,431)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(32,159)
EBITDA for the three months ended September 30, 2023						$	101,260

Segment Operating Results and Capital Expenditures

The following tables present our total revenue, capital expenditures and EBITDA by segment for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022:

						Hughes						ESS						Corporate and Other						Consolidated Total
For the three months ended September 30, 2023
Total revenue						$	404,209					$	6,446					$	2,419					$	413,074
Capital expenditures						51,214						130						27,820						79,164
EBITDA						142,204						4,868						(45,812)						101,260
For the three months ended September 30, 2022
Total revenue						$	489,565					$	4,981					$	2,841					$	497,387
Capital expenditures						50,783						—						10,674						61,457
EBITDA						175,010						3,446						(32,963)						145,493

Capital expenditures are net of refunds and other receipts related to property and equipment.

Hughes Segment

						For the three months ended September 30,												Variance
						2023						2022						Amount						%
Total revenue						$	404,209					$	489,565					$	(85,356)					(17.4)
Capital expenditures						51,214						50,783						431						0.8
EBITDA						142,204						175,010						(32,806)						(18.7)

Total revenue was $404.2 million for the three months ended September 30, 2023, a decrease of $85.4 million, or 17.4%, as compared to 2022. Services and other revenue decreased primarily due to lower sales of broadband services to our consumer customers of $40.4 million. Equipment revenue decreased primarily due to a decrease in hardware sales to our enterprise customers of $43.0 million.

Capital expenditures were $51.2 million for the three months ended September 30, 2023, an increase of $0.4 million, or 0.8%, as compared to 2022.

The following table reconciles the change in the Hughes Segment EBITDA:

						Amounts
EBITDA for the three months ended September 30, 2022						$	175,010
Increase (decrease) in foreign currency transaction gains (losses), net						596
Increase (decrease) in other, net						243
Decrease (increase) in net loss (income) attributable to non-controlling interests						(142)
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						(915)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(32,588)
EBITDA for the three months ended September 30, 2023						$	142,204

ESS Segment

						For the three months ended September 30,												Variance
						2023						2022						Amount						%
Total revenue						$	6,446					$	4,981					$	1,465					29.4
Capital expenditures						130						—						130						*
EBITDA						4,868						3,446						1,422						41.3

• Percentage is not meaningful.

Total revenue was $6.4 million for the three months ended September 30, 2023, an increase of $1.5 million, or 29.4%, compared to 2022, primarily due to an increase in transponder services provided to third parties.

EBITDA was $4.9 million for the three months ended September 30, 2023, an increase of $1.4 million, or 41.3%, primarily due to the increase in overall ESS segment revenue.

Corporate and Other

						For the three months ended September 30,												Variance
						2023						2022						Amounts						%
Total revenue						$	2,419					$	2,841					$	(422)					(14.9)
Capital expenditures						27,820						10,674						17,146						*
EBITDA						(45,812)						(32,963)						(12,849)						39.0

• Percentage is not meaningful.

Total revenue was $2.4 million for the three months ended September 30, 2023, which is primarily flat compared to 2022.

Capital expenditures, net of refunds were $27.8 million for the three months ended September 30, 2023, an increase of $17.1 million, as compared to 2022, primarily due to an increase in expenditures for EchoStar XXIV satellite program.

The following table reconciles the change in the Corporate and Other EBITDA:

						Amounts
EBITDA for the three months ended September 30, 2022						$	(32,963)
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						361
Increase (decrease) in foreign currency transaction gains (losses), net						121
Increase (decrease) in gains (losses) on investments, net						(666)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(990)
Increase (decrease) in other, net						(11,675)
EBITDA for the three months ended September 30, 2023						$	(45,812)

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following table presents our consolidated results of operations for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022:

						For the nine months ended September 30,												Variance
Statements of Operations Data (1)						2023						2022						Amount						%
Revenue:
Services and other revenue						$	1,108,386					$	1,234,890					$	(126,504)					(10.2)
Equipment revenue						197,394						263,347						(65,953)						(25.0)
Total revenue						1,305,780						1,498,237						(192,457)						(12.8)
Costs and expenses:
Cost of sales - services and other						401,431						430,553						(29,122)						(6.8)
% of total services and other revenue						36.2		%				34.9		%
Cost of sales - equipment						151,004						213,497						(62,493)						(29.3)
% of total equipment revenue						76.5		%				81.1		%
Selling, general and administrative expenses						322,469						342,682						(20,213)						(5.9)
% of total revenue						24.7		%				22.9		%
Research and development expenses						21,560						25,562						(4,002)						(15.7)
% of total revenue						1.7		%				1.7		%
Depreciation and amortization						311,474						347,224						(35,750)						(10.3)
Impairment of long-lived assets						3,142						711						2,431						*
Total costs and expenses						1,211,080						1,360,229						(149,149)						(11.0)
Operating income (loss)						94,700						138,008						(43,308)						(31.4)
Other income (expense):
Interest income, net						78,331						29,677						48,654						*
Interest expense, net of amounts capitalized						(39,176)						(43,125)						3,949						(9.2)
Gains (losses) on investments, net						(23,337)						48,071						(71,408)						*
Equity in earnings (losses) of unconsolidated affiliates, net						(3,075)						(4,441)						1,366						(30.8)
Other-than-temporary impairment losses on equity method investments						(33,400)						—						(33,400)						*
Foreign currency transaction gains (losses), net						4,482						(53)						4,535						*
Other, net						(2,308)						2,198						(4,506)						*
Total other income (expense), net						(18,483)						32,327						(50,810)						*
Income (loss) before income taxes						76,217						170,335						(94,118)						(55.3)
Income tax benefit (provision), net						(38,780)						(51,367)						12,587						(24.5)
Net income (loss)						37,437						118,968						(81,531)						(68.5)
Less: Net loss (income) attributable to non-controlling interests						6,005						8,736						(2,731)						(31.3)
Net income (loss) attributable to EchoStar Corporation common stock						$	43,442					$	127,704					$	(84,262)					(66.0)
Other data:
EBITDA (2)						$	354,541					$	539,743					$	(185,202)					(34.3)
Subscribers, end of period						1,063,000						1,285,000						(222,000)						(17.3)

• Percentage is not meaningful.

(1) An explanation of our key metrics is included in Explanation of Key Metrics and Other Items.

(2) A reconciliation of EBITDA to Net income (loss), the most directly comparable GAAP measure in our Consolidated Financial Statements, is included in Results of Operations. For further information on our use of EBITDA, see Explanation of Key Metrics and Other Items.

The following discussion relates to our results of operations for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022:

Services and other revenue. Services and other revenue totaled $1.1 billion for the nine months ended September 30, 2023, a decrease of $126.5 million, or 10.2%, as compared to 2022. The decrease was primarily attributable to our Hughes segment related to lower sales of broadband services to our consumer customers of $123.7 million.

Equipment revenue. Equipment revenue totaled $197.4 million for the nine months ended September 30, 2023, a decrease of $66.0 million, or 25.0%, as compared to 2022. The decrease was primarily attributable to a decrease of $37.6 million in hardware sales to our international enterprise customers and a net decrease of $33.8 million related to our North American enterprise customers due to lower hardware sales and positive adjustments on certain long-term contracts, partially offset by an increase of $7.1 million in sales to our mobile satellite system customers.

Cost of sales - services and other. Cost of sales - services and other totaled $401.4 million for the nine months ended September 30, 2023, a decrease of $29.1 million, or 6.8%, as compared to 2022. The decrease was primarily attributable to the corresponding decrease in services and other revenue.

Cost of sales - equipment. Cost of sales - equipment totaled $151.0 million for the nine months ended September 30, 2023, a decrease of $62.5 million, or 29.3%, as compared to 2022. The decrease was primarily attributable to the corresponding decrease in equipment revenue.

Selling, general and administrative expenses. Selling, general and administrative expenses totaled $322.5 million for the nine months ended September 30, 2023, a decrease of $20.2 million, or 5.9%, as compared to 2022. The decrease was primarily attributable to decreases in sales and marketing expenses of $22.4 million.

Depreciation and amortization. Depreciation and amortization expenses totaled $311.5 million for the nine months ended September 30, 2023, a decrease of $35.8 million, or 10.3%, as compared to 2022. The decrease was primarily attributable to decreases in other non-satellite depreciation expense of $37.2 million.

Impairment of long-lived assets. Impairment of long-lived assets totaled $3.1 million for the nine months ended September 30, 2023. This impairment charge was related to our EG-3 nano-satellite and other related assets abandoned during the first quarter of 2023 due to lost contact with EG-3.

Interest income, net. Interest income, net totaled $78.3 million for the nine months ended September 30, 2023, an increase of $48.7 million as compared to 2022, primarily attributable to increases in the yield on our marketable investment securities and an increase in our marketable investment securities average balance.

Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized, totaled $39.2 million for the nine months ended September 30, 2023, a decrease of $3.9 million, or 9.2%, as compared to 2022. The decrease was primarily attributable to an increase of $3.1 million in capitalized interest relating to the EchoStar XXIV satellite program.

Gains (losses) on investments, net. Gains (losses) on investments, net totaled $23.3 million in losses for the nine months ended September 30, 2023, as compared to $48.1 million in gains for the nine months ended September 30, 2022, a negative change of $71.4 million. The change was primarily related to a gain of $49.8 million on a cost-method investment from an adjustment for observable price changes and a $29.5 million gain on marketable equity securities, offset by a net loss of $28.3 million related to the exit of our investment in Dish Mexico during the nine months ended September 30, 2022, compared to a loss of $24.4 million from a decline in value of an investment previously held on a cost-basis method whose fair value subsequently became determinable as a result of a merger between that entity and a publicly traded entity, and a $1.1 million gain on marketable equity securities during the nine months ended September 30, 2023.

Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net totaled $4.5 million in gains for the nine months ended September 30, 2023, as compared to $0.1 million in losses for the nine months ended September 30, 2022, a positive change of $4.5 million. The change was due to the net impact of foreign exchange rate fluctuations of certain foreign currencies in Latin and Central America.

Other, net. Other, net totaled $2.3 million expense for the nine months ended September 30, 2023, as compared to $2.2 million income for the nine months ended September 30, 2022. The decrease was primarily attributable to transaction costs incurred related to the proposed merger with DISH Network Corporation, partially offset by a recognized gain on the repayment of an other debt investment in April 2023.

Other-than-temporary impairment losses on equity method investments. Other-than-temporary impairment losses on equity method investments was $33.4 million for the nine months ended September 30, 2023, related to the impairment of our investment in Broadband Connectivity Solutions (Restricted) Limited (BCS) as a result of increased competition and the economic environment for this business.

Income tax benefit (provision), net. Income tax benefit (provision), net was $38.8 million provision for the nine months ended September 30, 2023, as compared to $51.4 million provision for the nine months ended September 30, 2022. Our effective income tax rate was 50.9% and 30.2% for the nine months ended September 30, 2023 and 2022, respectively. The variations in our effective tax rate from the U.S. federal statutory rate for the nine months ended September 30, 2023 were primarily due to excluded investment impairment losses and excluded foreign losses where the Company carries a full valuation allowance. The variations in our effective tax rate from the U.S. federal statutory rate for the nine months ended September 30, 2022, were primarily due to excluded foreign losses where the Company carries a full valuation allowance, and the impact of state and local taxes.

Net income (loss) attributable to EchoStar Corporation common stock. The following table reconciles the change in Net income (loss) attributable to EchoStar Corporation common stock:

						Amounts
Net income (loss) attributable to EchoStar Corporation for the nine months ended September 30, 2022						$	127,704
Increase (decrease) in interest income, net						48,654
Decrease (increase) in income tax benefit (provision), net						12,587
Increase (decrease) in foreign currency transaction gains (losses), net						4,535
Decrease (increase) in interest expense, net of amounts capitalized						3,949
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						1,366
Increase (decrease) in net income (loss) attributable to non-controlling interest						(2,731)
Increase (decrease) in other, net						(4,506)
Decrease (increase) in other-than-temporary impairment losses on equity method investments						(33,400)
Increase (decrease) in operating income (loss), including depreciation and amortization						(43,308)
Increase (decrease) in gains (losses) on investments, net						(71,408)
Net income (loss) attributable to EchoStar Corporation for the nine months ended September 30, 2023						$	43,442

EBITDA. EBITDA is a non-GAAP financial measure and is described under Explanation of Key Metrics and Other Items section. The following table reconciles EBITDA to Net income (loss), the most directly comparable GAAP measure in our Consolidated Financial Statements:

						For the nine months ended September 30,												Variance
						2023						2022						Amount						%
Net income (loss)						$	37,437					$	118,968					$	(81,531)					(68.5)
Interest income, net						(78,331)						(29,677)						(48,654)						*
Interest expense, net of amounts capitalized						39,176						43,125						(3,949)						(9.2)
Income tax provision (benefit), net						38,780						51,367						(12,587)						(24.5)
Depreciation and amortization						311,474						347,224						(35,750)						(10.3)
Net loss (income) attributable to non-controlling interests						6,005						8,736						(2,731)						(31.3)
EBITDA						$	354,541					$	539,743					$	(185,202)					(34.3)

• Percentage is not meaningful.

The following table reconciles the change in EBITDA:

						Amounts
EBITDA for the nine months ended September 30, 2022						$	539,743
Increase (decrease) in foreign currency transaction gains (losses), net						4,535
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						1,366
Decrease (increase) in net loss (income) attributable to non-controlling interests						(2,731)
Increase (decrease) in other, net						(4,506)
Decrease (increase) in other-than-temporary impairment losses on equity method investments						(33,400)
Increase (decrease) in gains (losses) on investments, net						(71,408)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(79,058)
EBITDA for the nine months ended September 30, 2023						$	354,541

Segment Operating Results and Capital Expenditures

The following tables present our total revenue, capital expenditures and EBITDA by segment for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022:

						Hughes						ESS						Corporate and Other						Consolidated Total
For the nine months ended September 30, 2023
Total revenue						$	1,279,739					$	18,563					$	7,478					$	1,305,780
Capital expenditures						142,189						130						29,932						172,251
EBITDA						440,435						14,085						(99,979)						354,541
For the nine months ended September 30, 2022
Total revenue						$	1,475,512					$	14,305					$	8,420					$	1,498,237
Capital expenditures						176,665						—						72,709						249,374
EBITDA						546,108						9,658						(16,023)						539,743

Capital expenditures are net of refunds and other receipts related to property and equipment.

Hughes Segment

						For the nine months ended September 30,												Variance
						2023						2022						Amount						%
Total revenue						$	1,279,739					$	1,475,512					$	(195,773)					(13.3)
Capital expenditures						142,189						176,665						(34,476)						(19.5)
EBITDA						440,435						546,108						(105,673)						(19.4)

Total revenue was $1.3 billion for the nine months ended September 30, 2023, a decrease of $195.8 million, or 13.3%, as compared to 2022. Services and other revenue decreased primarily due to lower sales of broadband services to our consumer customers of $123.7 million. Equipment revenue decrease was primarily attributable to a decrease of $37.6 million in hardware sales to our international enterprise customers and a net decrease of $33.8 million related to our North American customers due to lower hardware sales and positive adjustments on certain long-term contracts, partially offset by an increase of $7.1 million in sales to our mobile satellite system customers.

Capital expenditures were $142.2 million for the nine months ended September 30, 2023, a decrease of $34.5 million, or 19.5%, as compared to 2022, primarily due to decreases in expenditures associated with our consumer business and decreases in expenditures related to the construction of our satellite-related ground infrastructure.

The following table reconciles the change in the Hughes Segment EBITDA:

						Amounts
EBITDA for the nine months ended September 30, 2022						$	546,108
Increase (decrease) in foreign currency transaction gains (losses), net						3,220
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						386
Increase (decrease) in gains (losses) on investments, net						(217)
Increase (decrease) in other, net						(547)
Decrease (increase) in net loss (income) attributable to non-controlling interests						(2,731)
Decrease (increase) in other-than-temporary impairment losses on equity method investments						(33,400)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(72,384)
EBITDA for the nine months ended September 30, 2023						$	440,435

ESS Segment

						For the nine months ended September 30,												Variance
						2023						2022						Amount						%
Total revenue						$	18,563					$	14,305					$	4,258					29.8
Capital expenditures						130						—						130						*
EBITDA						14,085						9,658						4,427						45.8

• Percentage is not meaningful.

Total revenue was $18.6 million for the nine months ended September 30, 2023, an increase of $4.3 million, or 29.8%, compared to 2022, primarily due to an increase in transponder services provided to third parties.

EBITDA was $14.1 million for the nine months ended September 30, 2023, an increase of $4.4 million, or 45.8%, as compared to 2022, primarily due to the increase in overall ESS segment revenue and lower expenses.

Corporate and Other

						For the nine months ended September 30,												Variance
						2023						2022						Amount						%
Total revenue						$	7,478					$	8,420					$	(942)					(11.2)
Capital expenditures						29,932						72,709						(42,777)						(58.8)
EBITDA						(99,979)						(16,023)						(83,956)						*

• Percentage is not meaningful.

Total revenue was $7.5 million for the nine months ended September 30, 2023, which is primarily flat compared to 2022.

Capital expenditures, net of refunds and other receipts related to property and equipment were $29.9 million for the nine months ended September 30, 2023, a decrease of $42.8 million, as compared to 2022, primarily due to decreases in expenditures, as well as refunds and other receipts, related to the EchoStar XXIV satellite program.

The following table reconciles the change in the Corporate and Other EBITDA:

						Amounts
EBITDA for the nine months ended September 30, 2022						$	(16,023)
Increase (decrease) in foreign currency transaction gains (losses), net						1,315
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						981
Increase (decrease) in other, net						(3,959)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(11,102)
Increase (decrease) in gains (losses) on investments, net						(71,191)
EBITDA for the nine months ended September 30, 2023						$	(99,979)

LIQUIDITY AND CAPITAL RESOURCES

Cash, Cash Equivalents and Marketable Investment Securities

We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.

As of September 30, 2023 our cash, cash equivalents and marketable investment securities totaled $2.0 billion, $0.9 billion of which we held as marketable investment securities, consisting of various debt and equity instruments including corporate bonds, corporate equity securities, government bonds and mutual funds.

Cash Flow Activities

The following table summarizes our cash flows provided by (used for) operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows:

						For the nine months ended September 30,												Variance
						2023						2022
Operating activities						$	301,023					$	343,317					$	(42,294)
Investing activities						88,857						115,008						(26,151)
Financing activities						(1,518)						(84,666)						83,148
Effect of exchange rates on cash and cash equivalents						1,622						(3,123)						4,745
Net increase (decrease) in cash and cash equivalents						$	389,984					$	370,536					$	19,448

Cash flows provided by (used for) operating activities decreased by $42.3 million primarily attributable to decreases in net income of $81.5 million, other, net, of $42.1 million, depreciation and amortization of $35.8 million, accretion of discounts on debt investments of $21.5 million, deferred tax provision, net of $20.8 million, and gain on repayment of other debt securities of $7.6 million, partially offset by other-than-temporary impairment losses on equity method investments of $33.4 million, changes in assets and liabilities, net of $65.8 million, and losses (gains) on investments, net of $71.4 million.

Cash flows provided by (used for) investing activities decreased by $26.2 million primarily attributable to decreases in our marketable investment securities net activities of $241.6 million and externally marketed software expenditures of $5.4 million, partially offset by proceeds from repayment of other debt investments of $148.4 million, a decrease in expenditures for property and equipment of $77.1 million, and the absence of expenditures for the India JV formation in 2022 of $7.9 million.

Cash flows provided by (used for) financing activities increased by $83.1 million primarily attributable to decreases in treasury share repurchases of $89.3 million.

Obligations and Future Capital Requirements

Off-Balance Sheet Arrangements

We generally do not engage in off-balance sheet financing activities or use material derivative financial instruments for hedge accounting or speculative purposes.

Letters of Credit and Surety Bonds

The following table presents the components of our letters of credit and surety bonds as of September 30, 2023**:**

						Amounts
Letters of credit secured by restricted cash						$	7,797
Surety bonds						16,246
Credit arrangement available to our foreign subsidiaries						26,846
Total letters of credit and surety bonds						$	50,889

Certain letters of credit are secured by assets of our foreign subsidiaries.

Satellites

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

Satellite Insurance

We generally do not carry in-orbit insurance on our satellites or payloads because we have assessed that the cost of insurance is not economical relative to the risk of failures. Therefore, we generally bear the risk of any in-orbit failures.

Pursuant to the terms of our joint venture agreement with Yahsat, we are required to maintain insurance for the Al Yah 3 Brazilian payload during the commercial in-orbit service of such payload, subject to certain limitations on coverage. The insurance policies were procured by Yahsat, under which the Company and Yahsat are the beneficiaries of any claims in proportion to their shareholdings. An insurance claim was submitted in the second quarter of 2023 for compensation with respect to the reduction in estimated useful life of the Al Yah 3 satellite.

We also have obtained certain insurance for our EchoStar XXIV satellite covering launch plus the first year of operations. We will continue to assess circumstances going forward and make insurance-related decisions on a case-by-case basis.

Future Capital Requirements

We primarily rely on our existing cash and marketable investment securities balances, as well as cash flow generated through our operations, to fund our business. Revenue in our ESS segment depends largely on our ability to make continuous use of our available satellite capacity on behalf of existing customers and our ability to enter into commercial relationships with new customers. Consumer revenue in our Hughes segment depends on our success in adding new and retaining existing subscribers and driving higher ARPU. Revenue in our enterprise and equipment businesses relies heavily on global economic conditions and the competitive landscape for pricing relative to competitors and alternative technologies. There can be no assurance that we will have positive cash flows from operations in the future. Furthermore, if we experience negative cash flows, our existing cash and marketable investment securities balances may be reduced.

We have a significant amount of outstanding indebtedness. As of September 30, 2023, our total indebtedness was $1.5 billion. Our liquidity requirements will continue to be significant, primarily due to our remaining debt service requirements. We may from time to time seek to repurchase amounts of our outstanding debt in open market purchases, privately negotiated transactions or otherwise, depending on market conditions, our liquidity needs and other factors. The amounts we may repurchase may be material. In the future, we may require material capital expenditures to make significant acquisitions or investments in infrastructure, technologies or joint ventures to support and expand our business, or if we decide to purchase or build additional satellites or invest in other technologies or assets. Other aspects of our business operations may also require additional capital. We also expect to owe U.S. federal income tax for 2023.

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

Stock Repurchases

On November 2, 2021, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A common stock commencing January 1, 2022 through and including December 31, 2022. In addition, on October 20, 2022, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A common stock commencing January 1, 2023 through and including December 31, 2023. Purchases under our repurchase authorizations 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 not to purchase the maximum amount or any of the shares allowable under these authorizations and we may also enter into additional share repurchase programs authorized by our Board of Directors. During the nine months ended September 30, 2023, we repurchased zero shares of our Class A common stock under this program. Notwithstanding this authorization, Section 4.1(a)(vii) of the Amended Merger Agreement contains an interim operating covenant that prohibits us from repurchasing our stock during the period between October 2, 2023, and the Effective Time of the Merger. As a result, we do not plan to undertake any stock repurchases until after the occurrence of either (a) the Merger Effective Time, or (b) the termination of the Amended Merger Agreement.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are described in Note 2. Summary of Significant Accounting Policies to our Consolidated Financial Statements in our Form 10-K. There have been no significant changes in our critical accounting policies from those presented in our Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

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

NEW ACCOUNTING PRONOUNCEMENTS

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

SEASONALITY

For our Hughes segment, service revenue is generally not impacted by seasonal fluctuations other than those related to sales and promotional activities.

Our ESS segment is not generally affected by seasonal impacts.

We cannot predict with any certainty whether these trends will continue in the near future.

INFLATION AND SUPPLY CHAIN

Inflation has impacted our operations as we have continued to experience increased costs in certain functional areas including field services and customer care. We are unable to predict the extent or nature of any future inflationary pressure at this time. Our ability to increase the prices charged for our products and services in future periods depends primarily on competitive pressures, contractual terms, and inflationary pressures.

Worldwide interruptions and delays in the supply of components, materials and parts, although not materially impacting our operations during the nine months ended September 30, 2023, may impact our ability to timely provide equipment deliveries in the future. Any such future interruptions and delays could increase the cost of our equipment, and we may not be able to pass these higher costs on to our customers.