SEC Filing | Dish

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022.


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO______.

Commission File Number: 333-31929

DISH DBS Corporation

(Exact name of registrant as specified in its charter)


Colorado	84-1328967
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9601 South Meridian Boulevard
Englewood, Colorado	80112
(Address of principal executive offices)	(Zip code)

(303) 723-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻		Accelerated filer ◻

Non-accelerated filer ⌧		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of May 5, 2022, the registrant’s outstanding common stock consisted of 1,015 shares of common stock, $0.01 par value.

The registrant meets the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

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PART I — FINANCIAL INFORMATION

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Unless otherwise required by the context, in this report, the words “DISH DBS,” the “Company,” “we,” “our” and “us” refer to DISH DBS Corporation and its subsidiaries, “DISH Network” refers to DISH Network Corporation, our parent company, and its subsidiaries, including us, and “EchoStar” refers to EchoStar Corporation and its subsidiaries.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, in particular, statements about our plans, objectives and strategies, growth opportunities in our industries and businesses, our expectations regarding future results, financial condition, liquidity and capital requirements, our estimates regarding the impact of regulatory developments and legal proceedings, and other trends and projections. Forward-looking statements are not historical facts and may be identified by words such as “future,” “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate,” “expect,” “predict,” “will,” “would,” “could,” “can,” “may,” and similar terms. These forward-looking statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q and represent management’s current views and assumptions. Forward-looking statements are not guarantees of future performance, events or results and involve known and unknown risks, uncertainties and other factors, which may be beyond our control. Accordingly, actual performance, events or results could differ materially from those expressed or implied in the forward-looking statements due to a number of factors, including, but not limited to, those summarized below:

SUMMARY OF RISK FACTORS

COVID-19 Pandemic

●

The COVID-19 pandemic and its impact on the economic environment generally, and on us specifically, have adversely impacted our business. Furthermore, any continuation or worsening of the pandemic and economic environment could have a material adverse effect on our business, financial condition and results of operations.

Competition and Economic Risks

●

We face intense and increasing competition from providers of video, broadband and/or wireless services, which may require us to further increase subscriber acquisition and retention spending or accept lower subscriber activations and higher subscriber churn.

●

Changing consumer behavior and new technologies in our Pay-TV business may reduce our subscriber activations and may cause our subscribers to purchase fewer services from us or to cancel our services altogether, resulting in less revenue to us.

●

Our pay-TV competitors may be able to leverage their relationships with programmers to reduce their programming costs and/or offer exclusive content that will place them at a competitive advantage to us.

●

Changes in how network operators handle and charge for access to data that travels across their networks could adversely impact our Pay-TV business.

●

Economic weakness and uncertainty may adversely affect our ability to grow or maintain our business.

Operational and Service Delivery Risks

●

Any deterioration in our operational performance and subscriber satisfaction could adversely affect our business, financial condition and results of operations.

●

If our subscriber activations decrease, or if our subscriber churn rate, subscriber acquisition costs or retention costs increase, our financial performance will be adversely affected.

●

With respect to our Pay-TV business, programming expenses are increasing, which may adversely affect our future financial condition and results of operations.

●

We depend on others to provide the programming that we offer to our Pay-TV subscribers and, if we fail to obtain or lose access to certain programming, our Pay-TV subscriber activations and our subscriber churn rate may be negatively impacted.

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Item 1. FINANCIAL STATEMENTS

DISH DBS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share amounts)

(Unaudited)


	As of
	March 31,		December 31,
	2022		2021
Assets
Current Assets:
Cash and cash equivalents	$	1,700,879	$	1,373,591
Marketable investment securities		336,968		1,670,739
Trade accounts receivable, net of allowance for credit losses of $28,918 and $32,861, respectively		584,214		601,553
Inventory		302,362		292,099
Other current assets		191,144		270,417
Total current assets		3,115,567		4,208,399

Noncurrent Assets:
Restricted cash, cash equivalents and marketable investment securities		54,896		55,027
Property and equipment, net		1,161,861		1,233,180
FCC authorizations		611,794		611,794
Other investment securities		90,286		99,606
Operating lease assets		188,927		220,089
Note receivable - DISH Network (Note 13)		6,750,000		5,250,000
Interest receivable - DISH Network (Note 13)		125,715		31,840
Other noncurrent assets, net		139,202		152,747
Total noncurrent assets		9,122,681		7,654,283
Total assets	$	12,238,248	$	11,862,682

Liabilities and Stockholder's Equity (Deficit)
Current Liabilities:
Trade accounts payable	$	586,505	$	522,523
Deferred revenue and other		570,948		602,521
Accrued programming		1,277,217		1,376,770
Accrued interest		255,105		239,571
Other accrued expenses		614,706		588,201
Current portion of long-term debt and finance lease obligations (Note 8)		3,540,533		2,042,641
Total current liabilities		6,845,014		5,372,227

Long-Term Obligations, Net of Current Portion:
Long-term debt and finance lease obligations, net of current portion (Note 8)		11,787,565		13,294,988
Deferred tax liabilities		439,475		469,418
Operating lease liabilities		67,450		83,725
Long-term deferred revenue and other long-term liabilities		201,002		197,147
Total long-term obligations, net of current portion		12,495,492		14,045,278
Total liabilities		19,340,506		19,417,505

Commitments and Contingencies (Note 9)

Stockholder’s Equity (Deficit):
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding		—		—
Additional paid-in capital		1,500,570		1,492,174
Accumulated other comprehensive income (loss)		(1,504)		(1,262)
Accumulated earnings (deficit)		(8,601,324)		(9,045,735)
Total stockholder’s equity (deficit)		(7,102,258)		(7,554,823)
Total liabilities and stockholder’s equity (deficit)	$	12,238,248	$	11,862,682

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DISH DBS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	For the Three Months Ended
	March 31,
	2022		2021
Revenue:
Service revenue	$	3,108,313	$	3,137,387
Equipment sales and other revenue		25,098		25,532
Total revenue		3,133,411		3,162,919

Costs and Expenses (exclusive of depreciation):
Cost of services		1,890,096		1,958,699
Cost of sales - equipment and other		20,872		16,275
Selling, general and administrative expenses		401,751		333,074
Depreciation and amortization		95,916		115,242
Total costs and expenses		2,408,635		2,423,290

Operating income (loss)		724,776		739,629

Other Income (Expense):
Interest income		97,120		806
Interest expense, net of amounts capitalized		(232,369)		(173,976)
Other, net		790		(1,508)
Total other income (expense)		(134,459)		(174,678)

Income (loss) before income taxes		590,317		564,951
Income tax (provision) benefit, net		(145,906)		(140,424)
Net income (loss)	$	444,411	$	424,527

Comprehensive Income (Loss):
Net income (loss)	$	444,411	$	424,527
Other comprehensive income (loss):
Foreign currency translation adjustments		(187)		(195)
Unrealized holding gains (losses) on available-for-sale debt securities		(76)		(2)
Deferred income tax (expense) benefit, net		21		—
Total other comprehensive income (loss), net of tax		(242)		(197)
Comprehensive income (loss)	$	444,169	$	424,330

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DISH DBS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (DEFICIT)

(In thousands)

(Unaudited)


					Accumulated
			Additional		Other		Accumulated
	Common		Paid-In		Comprehensive		Earnings
	Stock		Capital		Income (Loss)		(Deficit)		Total
Balance, December 31, 2020	$	—	$	1,463,407	$	(805)	$	(10,782,607)	$	(9,320,005)
Non-cash, stock-based compensation		—		7,676		—		—		7,676
Change in unrealized holding gains (losses) on available-for-sale securities, net		—		—		(2)		—		(2)
Foreign currency translation		—		—		(195)		—		(195)
Net income (loss)		—		—		—		424,527		424,527
Balance, March 31, 2021	$	—	$	1,471,083	$	(1,002)	$	(10,358,080)	$	(8,887,999)

Balance, December 31, 2021	$	—	$	1,492,174	$	(1,262)	$	(9,045,735)	$	(7,554,823)
Non-cash, stock-based compensation		—		8,383		—		—		8,383
Change in unrealized holding gains (losses) on available-for-sale securities, net		—		—		(76)		—		(76)
Deferred income tax (expense) benefit attributable to other comprehensive income (loss)		—		—		21		—		21
Foreign currency translation		—		—		(187)		—		(187)
Net income (loss)		—		—		—		444,411		444,411
Other		—		13		—		—		13
Balance, March 31, 2022	$	—	$	1,500,570	$	(1,504)	$	(8,601,324)	$	(7,102,258)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DISH DBS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Three Months Ended
	March 31,
	2022			2021
Cash Flows From Operating Activities:
Net income (loss)	$	444,411	$	424,527
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization		95,916		115,242
Realized and unrealized losses (gains) on investments and other		6		2,600
Non-cash, stock-based compensation		8,383		7,676
Deferred tax expense (benefit)		(29,922)		(14,548)
Changes in allowance for credit losses		(3,943)		(8,940)
Other, net		30,643		3,719
Changes in current assets and current liabilities, net		83,524		32,499
Net cash flows from operating activities		629,018		562,775

Cash Flows From Investing Activities:
(Purchases) Sales and maturities of marketable investment securities, net		1,333,695		83,596
Purchases of property and equipment		(30,889)		(49,802)
Notes receivable - DISH Network		(1,500,000)		—
Other, net		(93,316)		2,200
Net cash flows from investing activities		(290,510)		35,994

Cash Flows From Financing Activities:
Repayment of long-term debt and finance lease obligations		(10,170)		(13,251)
Redemptions and repurchases of senior notes		(1,175)		(205,354)
Other, net		(6)		(2,517)
Net cash flows from financing activities		(11,351)		(221,122)

Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents		327,157		377,647
Cash, cash equivalents, restricted cash and cash equivalents, beginning of period (Note 4)		1,428,618		1,296,732
Cash, cash equivalents, restricted cash and cash equivalents, end of period (Note 4)	$	1,755,775	$	1,674,379

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Organization and Business Activities

Principal Business

DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our,” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. Our subsidiaries operate one business segment, Pay-TV.

Pay-TV

We offer pay-TV services under the DISH^® brand and the SLING^® brand (collectively “Pay-TV” services). The DISH branded pay-TV service consists of, among other things, Federal Communications Commission (“FCC”) licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, broadcast operations, a leased fiber optic network, in-home service and call center operations, and certain other assets utilized in our operations (“DISH TV”). We also design, develop and distribute receiver systems and provide digital broadcast operations, including satellite uplinking/downlinking, transmission and other services to third-party pay-TV providers. The SLING branded pay-TV services consist of, among other things, multichannel, live-linear and on-demand streaming over-the-top (“OTT”) Internet-based domestic, international and Latino video programming services (“SLING TV”). As of March 31, 2022, we had 10.245 million Pay-TV subscribers in the United States, including 7.993 million DISH TV subscribers and 2.252 million SLING TV subscribers.

2.	Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required for complete financial statements prepared under GAAP. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. Certain prior period amounts have been reclassified to conform to the current period presentation.

Principles of Consolidation

We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary. Minority interests are recorded as noncontrolling interests or redeemable noncontrolling interests. Non-consolidated investments are accounted for using the equity method when we have the ability to significantly influence the operating decisions of the investee. When we do not have the ability to significantly influence the operating decisions of an investee, these equity securities are classified as either marketable investment securities or other investments and recorded at fair value with changes recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation.

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for credit losses, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under DISH Network’s stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, relative standalone selling prices of performance obligations, finance leases, asset impairments, estimates of future cash flows used to evaluate and recognize impairments, useful lives of property, equipment and intangible assets, incremental borrowing rate (“IBR”) on lease right of use assets, nonrefundable upfront fees, independent third-party retailer incentives, programming expenses and subscriber lives. Economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur.

Fair Value Measurements

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

●

Level 1, defined as observable inputs being quoted prices in active markets for identical assets;

●

Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; and quoted prices for identical or similar instruments in markets that are not active; and

●

Level 3, defined as unobservable inputs for which little or no market data exists, consistent with reasonably available assumptions made by other participants therefore requiring assumptions based on the best information available.

As of March 31, 2022 and December 31, 2021, the carrying amount for cash and cash equivalents, trade accounts receivable (net of allowance for credit losses) and current liabilities (excluding the “Current portion of long-term debt and finance lease obligations”) was equal to or approximated fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities.

Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are based on, among other things, available trade information, and/or an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 8 for the fair value of our long-term debt.

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Assets Recognized Related to the Costs to Obtain a Contract with a Subscriber

We recognize an asset for the incremental costs of obtaining a contract with a subscriber if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs, including those with our independent third-party retailers, meet the requirements to be capitalized, and payments made under these programs are capitalized and amortized to expense over the estimated subscriber life exceeding one year. During the three months ended March 31, 2022 and 2021, we capitalized $21 million and $28 million, respectively, under these programs. The amortization expense related to these programs was $41 million and $37 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022 and December 31, 2021, we had a total of $278 million and $298 million, respectively, capitalized on our Condensed Consolidated Balance Sheets. These amounts are capitalized in “Other current assets” and “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets, and then amortized in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Advertising Costs

We recognize advertising expense when incurred as a component of “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Advertising expenses totaled $119 million and $83 million for the three months ended March 31, 2022 and 2021, respectively.

Research and Development

Research and development costs are expensed as incurred and are included as a component of “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Research and development costs totaled $10 million and $7 million for the three months ended March 31, 2022 and 2021, respectively.

New Accounting Pronouncements

We do not expect that any recently issued accounting pronouncements will have a material effect on our condensed consolidated financial statements.

3.	Supplemental Data - Statements of Cash Flows

The following table presents certain supplemental cash flow and other non-cash data. See Note 7 for supplemental cash flow and non-cash data related to leases.


	For the Three Months Ended
	March 31,
	2022		2021

	(In thousands)
Cash paid for interest	$	210,818	$	211,139
Cash received for interest		2,180		806
Cash paid for income taxes		203		404
Cash paid for income taxes to DISH Network		165,614		146,386

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Our parent, DISH Network, provides a centralized system for the management of our cash and marketable investment securities as it does for all of its subsidiaries to, among other reasons, maximize yield of the portfolio. As a result, the cash and marketable investment securities included on our Condensed Consolidated Balance Sheets are a component or portion of the overall cash and marketable investment securities portfolio included on DISH Network’s Condensed Consolidated Balance Sheets and are managed by DISH Network. We are reflecting the purchases and sales of marketable investment securities on a net basis for each period presented on our Condensed Consolidated Statements of Cash Flows as we believe the net presentation is more meaningful to our cash flows from investing activities.

4.	Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following:



	As of
	March 31,		December 31,
	2022		2021

	(In thousands)
Marketable investment securities:
Current marketable investment securities	$	336,968	$	1,670,739
Restricted marketable investment securities (1)		—		—
Total marketable investment securities		336,968		1,670,739

Restricted cash and cash equivalents (1)		54,896		55,027

Other investment securities:
Other investment securities		90,286		99,606
Total other investment securities		90,286		99,606

Total marketable investment securities, restricted cash and cash equivalents, and other investment securities	$	482,150	$	1,825,372

(1)	Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Condensed Consolidated Balance Sheets.

Marketable Investment Securities

Our marketable investment securities portfolio may consist of debt and equity instruments. All equity securities are carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All debt securities are classified as available-for-sale and are recorded at fair value. We report the temporary unrealized gains and losses related to changes in market conditions of marketable debt securities as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. The corresponding changes in the fair value of marketable debt securities, which are determined to be company specific credit losses are recorded in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 2 for further information.

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Fair Value Measurements

Our investments measured at fair value on a recurring basis were as follows:


	As of
	March 31, 2022								December 31, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3

	(In thousands)
Cash equivalents (including restricted)	$	1,732,870	$	167,670	$	1,565,200	$	—	$	1,404,505	$	60,085	$	1,344,420	$	—

Debt securities (including restricted):
Commercial paper	$	223,627	$	—	$	223,627	$	—	$	1,413,134	$	—	$	1,413,134	$	—
Corporate securities		113,067		—		113,067		—		254,631		—		254,631		—
Other		274		—		274		—		2,974		—		2,974		—
Total	$	336,968	$	—	$	336,968	$	—	$	1,670,739	$	—	$	1,670,739	$	—

As of March 31, 2022, restricted and non-restricted marketable investment securities included debt securities of $337 million with contractual maturities within one year. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity.

Gains and Losses on Sales and Changes in Carrying Amounts of Investments and Other

“Other, net” within “Other Income (Expense)” included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows:


	For the Three Months Ended
	March 31,
Other, net:	2022		2021

	(In thousands)
Costs related to early redemption of debt	$	(6)	$	(2,600)
Equity in earnings (losses) of affiliates		679		903
Other		117		189
Total	$	790	$	(1,508)

5.	Inventory

Inventory consisted of the following:


	As of
	March 31,		December 31,
	2022		2021

	(In thousands)
Finished goods	$	240,696	$	246,723
Work-in-process and service repairs		16,699		19,074
Raw materials		44,967		26,302
Total inventory	$	302,362	$	292,099

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

6.	Property and Equipment

Property and equipment consisted of the following:


	Depreciable		As of
	Life	March 31,		December 31,
	(In Years)	2022		2021

		(In thousands)
Equipment leased to customers	2-5	$	1,459,380	$	1,518,880
EchoStar XV	15		277,658		277,658
EchoStar XVIII	15		411,255		411,255
Satellites acquired under finance lease agreements	15		398,107		398,107
Furniture, fixtures, equipment and other	2-10		1,888,512		1,882,610
Buildings and improvements	5-40		293,780		292,840
Land	-		12,505		12,505
Construction in progress	-		30,687		37,339
Total property and equipment			4,771,884		4,831,194
Accumulated depreciation			(3,610,023)		(3,598,014)
Property and equipment, net		$	1,161,861	$	1,233,180

Depreciation and amortization expense consisted of the following:


	For the Three Months Ended
	March 31,
	2022		2021

	(In thousands)
Equipment leased to customers	$	51,270	$	64,262
Satellites		23,797		23,797
Buildings, furniture, fixtures, equipment and other		20,849		27,183
Total depreciation and amortization	$	95,916	$	115,242

Cost of sales and operating expense categories included in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to customers.

Pay-TV Satellites. We currently utilize ten satellites in geostationary orbit approximately 22,300 miles above the equator, two of which we own and depreciate over their estimated useful life. We currently utilize certain capacity on five satellites that we lease from DISH Network, one satellite that we lease from EchoStar, and two satellites that we lease from third parties. All leased satellites are accounted for as operating leases except Nimiq 5 and Anik F3, which are accounted for as financing leases and are each depreciated over their economic life. As of March 31, 2022, the Anik F3 satellite was accounted for as a finance lease and was fully depreciated. However, during April 2022, we extended this lease and as a result, Anik F3 will subsequently be accounted for as an operating lease.

Table of Contents

DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

As of March 31, 2022, our pay-TV satellite fleet consisted of the following:


		Degree
	Launch	Orbital	Lease
Satellites	Date	Location	Termination Date
Owned:
EchoStar XV	July 2010	61.5	N/A
EchoStar XVIII	June 2016	61.5	N/A

Leased from EchoStar:
EchoStar IX	August 2003	121	Month to month

Leased from DISH Network (1):
EchoStar X	February 2006	110	February 2023
EchoStar XI	July 2008	110	September 2022
EchoStar XIV	March 2010	119	February 2023
EchoStar XVI	November 2012	61.5	January 2023
Nimiq 5	September 2009	72.7	September 2022

Leased from Other Third Party:
Anik F3 (2)	April 2007	118.7	April 2025
Ciel II	December 2008	129	July 2023

(1)	See Note 13 for further information on our Related Party Transactions with DISH Network.

(2)	During April 2022, we extended the Anik F3 satellite lease for an additional two years with an option to renew for one additional year to April 2025.

7.	Leases

We enter into operating and finance leases for, among other things, satellites, office space, warehouses and distribution centers, vehicles, and other equipment. Our leases have remaining lease terms from one to 11 years, some of which include renewal options, and some of which include options to terminate the leases within one year.

During the fourth quarter of 2021, our QuetzSat 1 operating lease expired. As of March 31, 2022, our Anik F3 and Nimiq 5 satellites were accounted for as financing leases. However, during April 2022, we extended the Anik F3 lease and as a result, Anik F3 will subsequently be accounted for as an operating lease. Substantially all of our remaining leases are accounted for as operating leases, including the remainder of our satellite fleet.


PART I — FINANCIAL INFORMATION

	Disclosure Regarding Forward-Looking Statements	i

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2

	Condensed Consolidated Statements of Changes in Stockholder’s Equity (Deficit)	3

	Condensed Consolidated Statements of Cash Flows	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Narrative Analysis of Results of Operations	38

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	*

Item 4.	Controls and Procedures	49

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	49

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	*

Item 3.	Defaults Upon Senior Securities	*

Item 4.	Mine Safety Disclosures	None

Item 5.	Other Information	None

Item 6.	Exhibits	50

	Signatures	51


	For the Three Months Ended
	March 31,
	2022		2021

	(In thousands)
Operating lease cost (1)	$	40,376	$	60,023

Short-term lease cost (1)(2)		16,330		4,236

Finance lease cost: