|
12. Segment Reporting
Operating segments are components of an enterprise for which separate financial information is available and regularly evaluated by the chief operating decision maker(s) of an enterprise. Total assets by segment have not been specified because the information is not available to the chief operating decision-maker. Under this definition, we operate three business units.
· EchoStar Technologies — which designs, develops and distributes digital set-top boxes and related products and technology, including our Slingbox “placeshifting” technology, primarily for satellite TV service providers, telecommunication and cable companies and, with respect to Slingboxes, directly to consumers via retail outlets. EchoStar Technologies also provides digital broadcast operations including satellite uplinking/downlinking, transmission services, signal processing, conditional access management and other services primarily to DISH Network.
· EchoStar Satellite Services — which uses 10 of our 11 owned and leased in-orbit satellites and related FCC licenses to lease capacity on a full-time and occasional-use basis primarily to DISH Network, and secondarily to Dish Mexico, U.S. government service providers, state agencies, Internet service providers, broadcast news organizations, programmers and private enterprise customers.
· Hughes — which provides broadband network services and systems to the domestic and international enterprise markets and satellite broadband Internet access to North American consumers. Hughes also provides managed services to large enterprises and networking systems solutions to customers for mobile satellite and wireless backhaul systems. Effective June 9, 2011, Hughes became a new business unit as a result of our acquisition of Hughes Communications and the results of operations of Hughes Communications are included in this report only as of such date. See Note 10 for further discussion of the transaction. See Note 10 for further discussion of the transaction.
The “All Other” category consists of revenue and net income (loss) attributable to EchoStar common shareholders from other operations including our corporate investment portfolio for which segment disclosure requirements do not apply. In addition, this category includes interest expense related to our 6 1/2% Senior Secured Notes due 2019 and our 7 5/8% Senior Notes due 2021, net of capitalized interest.
The following table reports our operating segment data and reconciles earnings before interest, taxes, depreciation and amortization (“EBITDA”) to reported “Net income (loss) attributable to EchoStar common shareholders” in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss):
|
|
|
|
|
EchoStar |
|
|
|
|
|
|
|
|
|
|
EchoStar |
|
Satellite |
|
|
|
All |
|
|
|
|
|
|
Technologies |
|
Services |
|
Hughes |
|
Other & |
|
Consolidated |
|
|
|
|
Business |
|
Business |
|
Business |
|
Eliminations |
|
Total |
|
|
|
|
(In thousands) |
|
|
For the Three Months Ended September 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
497,625 |
|
$ |
68,491 |
|
$ |
287,861 |
|
$ |
9,186 |
|
$ |
863,163 |
|
|
EBITDA (1) |
|
37,311 |
|
44,370 |
|
67,294 |
|
4,559 |
|
153,534 |
|
|
Interest expense, net |
|
(9 |
) |
(9,782 |
) |
104 |
|
(20,980 |
) |
(30,667 |
) |
|
Income tax benefit (provision), net |
|
(8,182 |
) |
7,694 |
|
1,440 |
|
(14,816 |
) |
(13,864 |
) |
|
Depreciation and amortization |
|
(20,172 |
) |
(23,685 |
) |
(77,362 |
) |
(6,901 |
) |
(128,120 |
) |
|
Net income (loss) attributable to EchoStar common shareholders |
|
$ |
8,948 |
|
$ |
18,597 |
|
$ |
(8,524 |
) |
$ |
(38,138 |
) |
$ |
(19,117 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
1,329,993 |
|
$ |
206,856 |
|
$ |
369,784 |
|
$ |
20,589 |
|
$ |
1,927,222 |
|
|
EBITDA (1) |
|
106,330 |
|
148,842 |
|
87,527 |
|
(572 |
) |
342,127 |
|
|
Interest expense, net |
|
(13 |
) |
(28,060 |
) |
102 |
|
(10,204 |
) |
(38,175 |
) |
|
Income tax benefit (provision), net |
|
(14,346 |
) |
(7,106 |
) |
(171 |
) |
(9,607 |
) |
(31,230 |
) |
|
Depreciation and amortization |
|
(71,608 |
) |
(70,737 |
) |
(93,395 |
) |
(20,453 |
) |
(256,193 |
) |
|
Net income (loss) attributable to EchoStar common shareholders |
|
$ |
20,363 |
|
$ |
42,939 |
|
$ |
(5,937 |
) |
$ |
(40,836 |
) |
$ |
16,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
535,927 |
|
$ |
66,869 |
|
$ |
— |
|
$ |
4,244 |
|
$ |
607,040 |
|
|
EBITDA (1) |
|
44,913 |
|
45,694 |
|
— |
|
(13,555 |
) |
77,052 |
|
|
Interest expense, net |
|
(10 |
) |
(9,522 |
) |
— |
|
24,131 |
|
14,599 |
|
|
Income tax benefit (provision), net |
|
(1,327 |
) |
(11,952 |
) |
— |
|
(15,030 |
) |
(28,309 |
) |
|
Depreciation and amortization |
|
(29,948 |
) |
(23,115 |
) |
— |
|
(5,128 |
) |
(58,191 |
) |
|
Net income (loss) attributable to EchoStar common shareholders |
|
$ |
13,628 |
|
$ |
1,105 |
|
$ |
— |
|
$ |
(9,582 |
) |
$ |
5,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
1,627,452 |
|
$ |
196,503 |
|
$ |
— |
|
$ |
13,214 |
|
$ |
1,837,169 |
|
|
EBITDA (1) |
|
125,013 |
|
137,929 |
|
— |
|
14,436 |
|
277,378 |
|
|
Interest expense, net |
|
(10 |
) |
(30,992 |
) |
— |
|
29,489 |
|
(1,513 |
) |
|
Income tax benefit (provision), net |
|
(9,916 |
) |
(20,680 |
) |
— |
|
(36,983 |
) |
(67,579 |
) |
|
Depreciation and amortization |
|
(86,303 |
) |
(71,705 |
) |
— |
|
(14,858 |
) |
(172,866 |
) |
|
Net income (loss) attributable to EchoStar common shareholders |
|
$ |
28,784 |
|
$ |
14,552 |
|
$ |
— |
|
$ |
(7,916 |
) |
$ |
35,420 |
|
(1) EBITDA is not a measure determined in accordance with GAAP and should not be considered a substitute for operating income, net income or any other measure determined in accordance with GAAP. Conceptually, EBITDA measures the amount of income generated each period that could be used to service debt, pay taxes and fund capital expenditures. EBITDA should not be considered in isolation or as a substitute for measures of performance prepared 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 liquidity and 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 companies in our industries.
Geographic Information and Transactions with Major Customers
Geographic Information. Revenues are attributed to geographic regions based upon the location where the goods and services are provided. North American revenue includes transactions with North American customers. All other revenue includes transactions with customers in Asia, Africa, Australia, Europe, South America and the Middle East. The following table summarizes total long-lived assets and revenue attributed to the North American and other foreign locations.
|
|
|
As of |
|
|
|
|
September 30, |
|
December 31, |
|
|
Long-lived assets, including FCC authorizations: |
|
2011 |
|
2010 |
|
|
|
|
(In thousands) |
|
|
North America |
|
$ |
3,795,954 |
|
$ |
1,457,208 |
|
|
All other |
|
37,509 |
|
41,356 |
|
|
Total |
|
$ |
3,833,463 |
|
$ |
1,498,564 |
|
|
|
|
For the Three Months |
|
For the Nine Months |
|
|
|
|
Ended September 30, |
|
Ended September 30, |
|
|
Revenue: |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
|
|
(In thousands) |
|
|
North America |
|
$ |
789,974 |
|
$ |
597,656 |
|
$ |
1,807,066 |
|
$ |
1,806,380 |
|
|
All other |
|
73,189 |
|
9,384 |
|
120,156 |
|
30,789 |
|
|
Total |
|
$ |
863,163 |
|
$ |
607,040 |
|
$ |
1,927,222 |
|
$ |
1,837,169 |
|
Transactions with Major Customers. During the three and nine months ended September 30, 2011 and 2010, our revenue included sales to three major customers. The following table summarizes sales to each customer and its percentage of total revenue.
|
|
|
For the Three Months |
|
For the Nine Months |
|
|
|
|
Ended September 30, |
|
Ended September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
|
|
(In thousands) |
|
|
Total revenue: |
|
|
|
|
|
|
|
|
|
|
DISH Network |
|
$ |
464,213 |
|
$ |
512,852 |
|
$ |
1,256,393 |
|
$ |
1,515,405 |
|
|
Bell TV |
|
62,809 |
|
41,248 |
|
152,792 |
|
164,556 |
|
|
Dish Mexico |
|
14,629 |
|
21,628 |
|
45,434 |
|
73,420 |
|
|
Other |
|
321,512 |
|
31,312 |
|
472,603 |
|
83,788 |
|
|
Total revenue |
|
$ |
863,163 |
|
$ |
607,040 |
|
$ |
1,927,222 |
|
$ |
1,837,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of total revenue: |
|
|
|
|
|
|
|
|
|
|
DISH Network |
|
53.8 |
% |
84.5 |
% |
65.2 |
% |
82.5 |
% |
|
Bell TV |
|
7.3 |
% |
6.8 |
% |
7.9 |
% |
9.0 |
% |
|
Dish Mexico |
|
1.7 |
% |
3.6 |
% |
2.4 |
% |
4.0 |
% |
|
All Other |
|
37.2 |
% |
5.1 |
% |
24.5 |
% |
4.5 |
% | |