Press Release: EchoStar Announces Financial Results for Three and Six Months Ending June 30, 2016

Press Release: EchoStar Announces Financial Results for Three and Six Months Ending June 30, 2016

EchoStar Announces Financial Results for Three and Six Months Ending June 30, 2016

PR Newswire

ENGLEWOOD, Colo., Aug. 9, 2016

ENGLEWOOD, Colo., Aug. 9, 2016 /PRNewswire/ — EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ending June 30, 2016.

Three Months Ending June 30, 2016 Financial Highlights:

   -- Consolidated revenues of $758 million. 
 
   -- Consolidated net income of $56 million. 
 
   -- Consolidated net income attributable to EchoStar common stock of $56 
      million and diluted earnings per share of $0.60. 
 
   -- Consolidated EBITDA of $221 million (see reconciliation of this non-GAAP 
      measure below). 
 
   -- Approximately 1,030,000 Hughes consumer broadband subscribers as of June 
      30, 2016. 
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Six Months Ended June 30, 2016 Financial Highlights:

   -- Consolidated revenue of $1.57 billion. 
 
   -- Consolidated net income of $104 million. 
 
   -- Consolidated net income attributable to EchoStar common stock of $107 
      million and diluted earnings per share of $1.14. 
 
   -- Consolidated EBITDA of $443 million (see reconciliation of this non-GAAP 
      measure below). 
 
   -- Strong liquidity with cash, cash equivalents and current marketable 
      investment securities of $1.51 billion as of June 30, 2016. 
 

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and six months ended June 30, 2016 and 2015:

 
                For the Three 
                Months Ended June   For the Six Months 
                30,                  Ended June 30, 
                2016      2015      2016        2015 
                (Dollars in thousands) 
Revenue 
Hughes          $339,337  $335,185  $665,575    $660,465 
EchoStar 
 Technologies 
 Corp.          314,937   331,952   700,063     678,172 
EchoStar 
 Satellite 
 Services       101,450   124,589   204,439     249,987 
All Other & 
 Eliminations   1,905     1,869     3,911       3,624 
Total           $757,629  $793,595  $1,573,988  $1,592,248 
 
EBITDA 
Hughes          $106,379  $103,414  $205,847    $194,687 
EchoStar 
 Technologies 
 Corp.          19,912    29,257    48,080      54,818 
EchoStar 
 Satellite 
 Services       83,826    103,558   172,012     209,977 
All Other & 
 Eliminations   10,487    (23,911)  17,461      (33,483) 
Total           $220,604  $212,318  $443,400    $425,999 
 
Net income 
 (loss) 
 attributable 
 to EchoStar 
 common stock   $56,133   $33,900   $106,807    $67,302 
Diluted 
 earnings per 
 share (in 
 dollars)       $0.60     $0.36     $1.14       $0.72 
Net income      $55,909   $31,013   $104,352    $58,611 
 
Capital 
 expenditures   $141,633  $179,108  $352,769    $356,910 
 
 

The following table reconciles total consolidated EBITDA to net income.

 
                  For the Three Months      For the Six Months 
                   Ended June 30,            Ended June 30, 
                  2016         2015         2016         2015 
                  (In thousands) 
Net income        $   55,909   $   31,013   $   104,352  $   58,611 
 
Less: Interest 
 income and 
 expense, net     (16,424)     (29,235)     (35,668)     (61,932) 
Less: Income tax 
 provision        (27,889)     (18,863)     (55,552)     (37,264) 
Less: 
 Depreciation 
 and 
 amortization     (120,505)    (132,470)    (247,239)    (265,655) 
Less: Net income 
 (loss) 
 attributable to 
 noncontrolling 
 interest in HSS 
 Tracking Stock 
 and other 
 noncontrolling 
 interests        123          (737)        (589)        (2,537) 
EBITDA            $   220,604  $   212,318  $   443,400  $   425,999 
 
 

Note on Use of Non-GAAP Financial Measures

EBITDA is defined as “Net income” excluding “Interest expense, net of amounts capitalized,” “Interest income”, “Income tax provision” and “Depreciation and amortization.” EBITDA is not a measure determined in accordance with US GAAP. This non-GAAP measure is reconciled to net income in the table above. 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. 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.

The consolidated financial statements of EchoStar for the periods ended June 30, 2016 and 2015 are attached to this press release. Detailed financial data and other information are available in EchoStar’s Quarterly Report on Form 10-Q for the three months ended June 30, 2016 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Tuesday, August 9, 2016 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 56393075.

About EchoStar Corporation

EchoStar Corporation (NASDAQ: SATS) is a premier global provider of satellite and video delivery solutions. Headquartered in Englewood, Colo., and conducting business around the globe, EchoStar is a pioneer in secure communications technologies through its EchoStar Satellite Services, EchoStar Technologies and Hughes Network Systems business segments. For more information, visit echostar.com. Follow [a]EchoStar on Twitter.

Safe Harbor Statement under the US Private Securities Litigation Reform Act of 1995

This press release may contain statements that are forward looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words “believe,” “anticipate, ” “estimate,” “expect,” “intend,” “project,” “plans,” and similar expressions and the use of future dates are intended to identify forward–looking statements. Although management believes that the expectations reflected in these forward–looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no responsibility for the accuracy of forward-looking statements or information or for updating forward-looking information or statements. These statements are subject to certain risks, uncertainties, and assumptions. See “Risk Factors” in EchoStar’s Quarterly Report on Form 10-Q for the three months ended June 30, 2016, filed today with the Securities and Exchange Commission and in the other documents EchoStar files with the Securities and Exchange Commission from time to time.

 
ECHOSTAR CORPORATION 
 Consolidated Balance Sheets 
 (Dollars in thousands, except per-share amounts) 
 
                                          As of 
                                          June 30,    December 31, 
                                          2016        2015 
Assets 
Current Assets: 
Cash and cash equivalents                 $761,840    $   924,240 
Marketable investment securities, at 
 fair value                               745,844     612,338 
Trade accounts receivable, net of 
 allowance for doubtful accounts of 
 $13,030 and $12,485, respectively        156,064     179,240 
Trade accounts receivable - DISH 
 Network, net of allowance for doubtful 
 accounts of zero                         340,955     277,159 
Inventory                                 72,392      67,010 
Prepaids and deposits                     58,334      56,949 
Other current assets                      10,429      16,723 
Total current assets                      2,145,858   2,133,659 
Noncurrent Assets: 
Restricted cash and marketable 
 investment securities                    22,691      21,002 
Property and equipment, net of 
 accumulated depreciation of $3,202,386 
 and $2,998,074, respectively             3,569,168   3,412,990 
Regulatory authorizations, net            548,272     543,812 
Goodwill                                  510,630     510,630 
Other intangible assets, net              108,521     132,653 
Investments in unconsolidated entities    202,023     209,264 
Other receivable - DISH Network           91,376      90,966 
Other noncurrent assets, net              162,854     154,510 
Total noncurrent assets                   5,215,535   5,075,827 
Total assets                              $7,361,393  $   7,209,486 
Liabilities and Stockholders' Equity 
Current Liabilities: 
Trade accounts payable                    $206,132    $   213,671 
Trade accounts payable - DISH Network     18,829      24,682 
Current portion of long-term debt and 
 capital lease obligations                38,494      35,698 
Deferred revenue and prepayments          67,516      61,881 
Accrued compensation                      39,945      29,767 
Accrued royalties                         23,634      22,531 
Accrued expenses and other                104,880     138,601 
Total current liabilities                 499,430     526,831 
Noncurrent Liabilities: 
Long-term debt and capital lease 
 obligations, net of unamortized debt 
 issuance costs                           2,144,479   2,156,667 
Deferred tax liabilities, net             705,376     650,392 
Other noncurrent liabilities              92,757      93,954 
Total noncurrent liabilities              2,942,612   2,901,013 
Total liabilities                         3,442,042   3,427,844 
Commitments and Contingencies (Note 14) 
Stockholders' Equity: 
Preferred Stock, $.001 par value, 
20,000,000 shares authorized: 
Hughes Retail Preferred Tracking Stock, 
 $.001 par value, 13,000,000 shares 
 authorized, 6,290,499 issued and 
 outstanding at each of June 30, 2016 
 

Press Release: EchoStar Announces Financial -2-

 and December 31, 2015                    6           6 
Common stock, $.001 par value, 
4,000,000,000 shares authorized: 
Class A common stock, $.001 par value, 
 1,600,000,000 shares authorized, 
 51,716,369 shares issued and 46,184,051 
 shares outstanding at June 30, 2016 and 
 51,087,839 shares issued and 45,555,521 
 shares outstanding at December 31, 
 2015                                     52          51 
Class B common stock, $.001 par value, 
 800,000,000 shares authorized, 
 47,687,039 shares issued and 
 outstanding at each of June 30, 2016 
 and December 31, 2015                    48          48 
Class C common stock, $.001 par value, 
800,000,000 shares authorized, none 
issued and outstanding at each of June 
30, 2016 and December 31, 2015            --          -- 
Class D common stock, $.001 par value, 
800,000,000 shares authorized, none 
issued and outstanding at each of June 
30, 2016 and December 31, 2015            --          -- 
Additional paid-in capital                3,804,580   3,776,451 
Accumulated other comprehensive loss      (111,820)   (117,233) 
Accumulated earnings                      239,258     134,317 
Treasury stock, at cost                   (98,162)    (98,162) 
Total EchoStar stockholders' equity       3,833,962   3,695,478 
Noncontrolling interest in HSS Tracking 
 Stock                                    73,843      74,854 
Other noncontrolling interests            11,546      11,310 
Total stockholders' equity                3,919,351   3,781,642 
Total liabilities and stockholders' 
 equity                                   $7,361,393  $   7,209,486 
 
 
ECHOSTAR CORPORATION 
 Consolidated Statements of Operations 
 (Dollars in thousands, except per-share amounts) 
 
                        For the Three 
                        Months Ended June   For the Six Months 
                        30,                  Ended June 30, 
                        2016      2015      2016         2015 
Revenue: 
Equipment revenue - 
 DISH Network           $185,148  $196,134  $   434,761  $   420,093 
Equipment revenue - 
 other                  76,403    87,772    156,880      166,908 
Services and other 
 revenue - DISH 
 Network                220,199   235,953   433,926      458,757 
Services and other 
 revenue - other        275,879   273,736   548,421      546,490 
Total revenue           757,629   793,595   1,573,988    1,592,248 
Costs and Expenses: 
Cost of sales - 
 equipment (exclusive 
 of depreciation and 
 amortization)          222,875   238,623   509,738      498,846 
Cost of sales - 
 services and other 
 (exclusive of 
 depreciation and 
 amortization)          207,488   217,765   404,650      426,005 
Selling, general and 
 administrative 
 expenses               96,143    90,704    194,836      188,632 
Research and 
 development expenses   20,732    19,685    41,174       37,557 
Depreciation and 
 amortization           120,505   132,470   247,239      265,655 
Total costs and 
 expenses               667,743   699,247   1,397,637    1,416,695 
Operating income        89,886    94,348    176,351      175,553 
 
Other Income 
(Expense): 
Interest income         3,503     2,723     7,469        5,334 
Interest expense, net 
 of amounts 
 capitalized            (19,927)  (31,958)  (43,137)     (67,266) 
Loss from partial 
 redemption of debt     --        (5,044)   --           (5,044) 
Gains (losses) on 
 marketable investment 
 securities, net        5,487     (1,613)   7,949        (1,604) 
Other-than-temporary 
 impairment loss on 
 available-for-sale 
 securities             --        (4,649)   --           (4,649) 
Equity in earnings 
 (losses) of 
 unconsolidated 
 affiliates, net        6,980     (203)     6,017        (256) 
Other, net              (2,131)   (3,728)   5,255        (6,193) 
Total other expense, 
 net                    (6,088)   (44,472)  (16,447)     (79,678) 
Income before income 
 taxes                  83,798    49,876    159,904      95,875 
Income tax provision    (27,889)  (18,863)  (55,552)     (37,264) 
Net income              55,909    31,013    104,352      58,611 
Less: Net loss 
 attributable to 
 noncontrolling 
 interest in HSS 
 Tracking Stock         (188)     (1,165)   (1,011)      (3,334) 
Less: Net income 
 attributable to other 
 noncontrolling 
 interests              311       428       422          797 
Net income 
 attributable to 
 EchoStar               55,786    31,750    104,941      61,148 
Less: Net loss 
 attributable to 
 Hughes Retail 
 Preferred Tracking 
 Stock (Note 4)         (347)     (2,150)   (1,866)      (6,154) 
Net income 
 attributable to 
 EchoStar common 
 stock                  $56,133   $33,900   $   106,807  $   67,302 
 
Weighted-average 
common shares 
outstanding - Class A 
and B common stock: 
Basic                   93,751    92,283    93,541       92,127 
Diluted                 94,330    93,514    94,090       93,437 
 
Earnings per share - 
Class A and B common 
stock: 
Basic                   $0.60     $0.37     $   1.14     $   0.73 
Diluted                 $0.60     $0.36     $   1.14     $   0.72 
 
Comprehensive Income: 
Net income              $55,909   $31,013   $   104,352  $   58,611 
Other comprehensive 
income (loss), net of 
tax: 
Foreign currency 
 translation 
 adjustments            (338)     2,994     11,286       (23,406) 
Recognition of foreign 
 currency translation 
 loss in net income     --        1,889     --           1,889 
Unrealized gains 
 (losses) on 
 available-for-sale 
 securities and other   (1,988)   (2,053)   (485)        (835) 
Recognition of 
 other-than-temporary 
 loss on 
 available-for-sale 
 securities in net 
 income                 --        4,649     --           4,649 
Recognition of 
 realized gains on 
 available-for-sale 
 securities in net 
 income                 (3,327)   (11)      (5,574)      (20) 
Total other 
 comprehensive income 
 (loss), net of tax     (5,653)   7,468     5,227        (17,723) 
Comprehensive income    50,256    38,481    109,579      40,888 
Less: Comprehensive 
 loss attributable to 
 noncontrolling 
 interest in HSS 
 Tracking Stock         (188)     (1,165)   (1,011)      (3,334) 
Less: Comprehensive 
 income attributable 
 to other 
 noncontrolling 
 interests              125       428       236          797 
Comprehensive income 
 attributable to 
 EchoStar               $50,319   $39,218   $   110,354  $   43,425 
 
 
ECHOSTAR CORPORATION 
 Consolidated Statements of Cash Flows 
 (In thousands) 
 
                               For the Six Months Ended June 30, 
                               2016                  2015 
Cash Flows from Operating 
Activities: 
Net income                     $     104,352         $   58,611 
Adjustments to reconcile net 
income to net cash flows 
from operating activities: 
Depreciation and amortization  247,239               265,655 
Equity in losses (earnings) 
 of unconsolidated 
 affiliates, net               (6,017)               256 
Loss from partial redemption 
 of debt                       --                    5,044 
Loss (gain) and impairment on 
 marketable investment 
 securities, net               (7,949)               6,253 
Stock-based compensation       8,328                 10,288 
Deferred tax provision         53,091                36,255 
Dividends received from 
unconsolidated entity          10,000                -- 
Proceeds from sale of 
trading securities             7,140                 -- 
Changes in current assets and 
 current liabilities, net      (73,916)              (14,429) 
Changes in noncurrent assets 
 and noncurrent liabilities, 
 net                           2,859                 3,294 
Other, net                     10,507                11,517 
Net cash flows from operating 
 activities                    355,634               382,744 
Cash Flows from Investing 
Activities: 
Purchases of marketable 
 investment securities         (641,358)             (285,130) 
Sales and maturities of 
 marketable investment 
 securities                    500,775               419,038 
Purchases of property and 
 equipment                     (376,856)             (356,910) 
Refunds and other receipts 
related to capital 
expenditures                   24,087                -- 
Changes in restricted cash 
 and marketable investment 
 securities                    (1,689)               (1,507) 
Investments in unconsolidated 
 entities                      (1,636)               (64,655) 
Acquisition of regulatory 
 authorization                 --                    (3,428) 
Expenditures for externally 
 marketed software             (12,299)              (11,660) 
Other, net                     1,462                 8 
Net cash flows from investing 
 activities                    (507,514)             (304,244) 
Cash Flows from Financing 
Activities: 
Repayment of 6 1/2% Senior 
 Notes Due 2019 and related 
 premium                       --                    (113,300) 
Repayment of other debt and 
 capital lease obligations     (20,433)              (26,235) 
Net proceeds from Class A 
 common stock options 
 exercised and stock issued 
 under the Employee Stock 
 Purchase Plan                 10,505                14,104 
Other, net                     (1,320)               3,186 
Net cash flows from financing 
 activities                    (11,248)              (122,245) 
Effect of exchange rates on 
 cash and cash equivalents     728                   (3,298) 
Net increase (decrease) in 
 cash and cash equivalents     (162,400)             (47,043) 
Cash and cash equivalents, 
 beginning of period           924,240               549,053 
Cash and cash equivalents, 
 end of period                 $     761,840         $   502,010 
 
Supplemental Disclosure of 
Cash Flow Information: 
Cash paid for interest 
 (including capitalized 
 interest)                     $     87,213          $   91,817 
Capitalized interest           $     47,093          $   27,569 
Cash paid for income taxes     $     6,199           $   3,010 
Employee benefits paid in 
 Class A common stock          $     11,126          $   10,711 
 

Press Release: EchoStar Announces Financial -3-

Property and equipment 
 financed under capital lease 
 obligations                   $     6,857           $   3,367 
Increase (decrease) in 
 capital expenditures 
 included in accounts 
 payable, net                  $     8,238           $   (8,931) 
Reduction of capital lease 
 obligation for AMC-15 and 
 AMC-16 satellites             $     --              $   4,500 
 
 

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SOURCE EchoStar Corporation

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