Note 11.Debt and Capital Lease Obligations

As of December 31, 2015 and 2014, our debt primarily consisted of our Senior Secured Notes and Senior Unsecured Notes, as defined below, and our capital lease obligations. The Notes are registered with the Securities and Exchange Commission.

The following table summarizes the carrying amounts and fair values of our debt:

		As of December 31,
		2015					2014
	Interest	Carrying			Fair		Carrying			Fair
	Rates	Amount			Value		Amount			Value
		(In thousands)
6 1/2% Senior Secured Notes due 2019	6.500%	$	990,000		$	1,071,675	$	1,100,000		$	1,177,000
7 5/8% Senior Unsecured Notes due 2021	7.625%	900,000			954,000		900,000			994,500
Other	5.5 - 13.25%	803			803		1,240			1,240

Subtotal		1,890,803			$	2,026,478	2,001,240			$	2,172,740

Capital lease obligations		332,838					366,447

Total debt and capital lease obligations		2,223,641					2,367,687
Less: Current portion		(35,698		)			(41,912		)

Long-term portion of debt and capital lease obligations		$	2,187,943				$	2,325,775

We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2).

6 1/2% Senior Secured Notes due 2019 and 7 5/8% Senior Unsecured Notes due 2021

On June 1, 2011, our subsidiary, Hughes Satellite Systems Corporation (“HSS”), issued $1.10 billion aggregate principal amount of 6 1/2% Senior Secured Notes (the “Senior Secured Notes”) at an issue price of 100.0%, pursuant to a Secured Indenture dated June 1, 2011, (as amended the “Secured Indenture”). The Senior Secured Notes mature on June 15, 2019. Interest accrues at an annual rate of 6 1/2% and is payable semi-annually in cash, in arrears on June 15 and December 15 of each year. As of December 31, 2015, the outstanding principal balance on the Senior Secured Notes was $990.0 million.

On June 1, 2011, HSS also issued $900.0 million aggregate principal amount of 7 5/8% Senior Unsecured Notes (the “Senior Unsecured Notes,” and together with the “Senior Secured Notes,” the “Notes”) at an issue price of 100.0%, pursuant to an Unsecured Indenture dated June 1, 2011, (as amended the “Unsecured Indenture”, and together with the “Secured Indenture”, the “Indentures”). The Senior Unsecured Notes mature on June 15, 2021. Interest accrues at an annual rate of 7 5/8% and is payable semi-annually in cash, in arrears on June 15 and December 15 of each year. As of December 31, 2015, the outstanding principal balance on the Senior Unsecured Notes was $900.0 million.

The Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount thereof plus a “make-whole” premium, as defined in the Indentures, together with accrued and unpaid interest, if any, to the date of redemption. On June 12, 2015, we redeemed $110.0 million of the Senior Secured Notes at a redemption price equal to 103.0% of the principal amount plus related and unpaid accrued interest. As a result, we recorded a $5.0 million loss consisting of the $3.3 million redemption premium and a $1.7 million write-off of related deferred financing costs.

The Senior Secured Notes are:

general secured obligations of HSS;

secured by a first priority security interest in substantially all of the assets of HSS and certain of its subsidiaries, subject to certain exceptions and permitted liens as provided in the Secured Indenture;

effectively junior to HSS’ obligations that are secured by assets that are not part of the collateral that secures the Senior Secured Notes, in each case to the extent of the value of the collateral securing such obligations;

effectively senior to HSS’ existing and future unsecured obligations to the extent of the value of the collateral securing the Senior Secured Notes, after giving effect to permitted liens as provided in the Secured Indenture;

senior in right of payment to all existing and future obligations of HSS that are expressly subordinated to the Senior Secured Notes;

structurally junior to any existing and future obligations of any of HSS’ subsidiaries that do not guarantee the Senior Secured Notes; and

unconditionally guaranteed, jointly and severally, on a general senior secured basis by certain of HSS’ subsidiaries that guarantee the Senior Secured Notes.

The Senior Unsecured Notes are:

general unsecured obligations of HSS;

effectively junior to HSS’ obligations that are secured to the extent of the value of the collateral securing such obligations;

senior in right of payment to all existing and future obligations of HSS that are expressly subordinated to the Senior Unsecured Notes;

structurally junior to any existing and future obligations of any of HSS’ subsidiaries that do not guarantee the Senior Unsecured Notes; and

unconditionally guaranteed, jointly and severally, on a general senior basis by certain of HSS’ subsidiaries that guarantee the Senior Unsecured Notes.

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

pay dividends or make distributions on capital stock or repurchase capital stock;

incur additional debt;

make certain investments;

create liens or enter into sale and leaseback transactions;

merge or consolidate with another company;

transfer or sell assets;

enter into transactions with affiliates; and

allow to exist certain restrictions on the ability of certain subsidiaries of HSS to pay dividends, make distributions, make other payments, or transfer assets to us.

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

As discussed above, HSS and certain of its subsidiaries have granted a first priority security interest in substantially all of their assets, subject to certain exceptions and permitted liens, to secure HSS’ obligations under the Senior Secured Notes and related guarantees.

Debt Issuance Costs

As of December 31, 2015 we had not early adopted ASU 2015-03 (see Note 2) and unamortized debt issuance costs associated with our Notes were reported in “Other noncurrent assets” in our consolidated balance sheets. For the years ended December 31, 2015, 2014 and 2013, we amortized $6.0 million, $5.8 million and $5.4 million of debt issuance costs, respectively, which are included in “Interest expense, net of amounts capitalized” in our consolidated statements of operations and comprehensive income (loss).

Capital Lease Obligations

Our capital lease obligations reflect the present value of future minimum lease payments under noncancelable lease agreements, primarily for certain of our satellites (see Note 9). These agreements require monthly recurring payments, which generally include principal, interest, an amount for use of the orbital location and estimated executory costs, such as insurance and maintenance. The monthly recurring payments generally are subject to reduction in the event of failures that reduce the satellite transponder capacity. Certain of these agreements provide for extension of the initial lease term at our option. The effective interest rates for our satellite capital lease obligations range from 9.1% to 11.2%, with a weighted average of 10.5% as of December 31, 2015.

Our capital lease obligations consist primarily of our payment obligations under agreements for the Nimiq 5 and QuetzSat-1 satellites, which have remaining noncancelable terms ending in September 2024 and November 2021, respectively. As discussed in Note 19, we have subleased transponders on these satellites to DISH Network. As discussed in Note 9, in August 2014, our then existing capital lease agreements for the AMC-15 and AMC-16 satellites were extended. The AMC-15 agreement is being accounted for as an operating lease. The amended agreement for the AMC-16 satellite services extended the term for the satellite’s entire communications capacity, subject to available power, for one year following expiration of the initial term in February 2015 and the agreement terminated according to its terms in February 2016.

Future minimum lease payments under our capital lease obligations, together with the present value of the net minimum lease payments as of December 31, 2015, are as follows:

	Amount
	(In thousands)
For the Years Ending December 31,
2016	$	94,008
2017	90,144
2018	88,182
2019	87,930
2020	87,818
Thereafter	257,999

Total minimum lease payments	706,081
Less: Amount representing lease of the orbital location and estimated executory costs (primarily insurance and maintenance) including profit thereon, included in total minimum lease payments	(214,242		)

Net minimum lease payments	491,839
Less: Amount representing interest	(159,001		)

Present value of net minimum lease payments	332,838
Less: Current portion	(34,895		)

Long-term portion of capital lease obligations	$	297,943

For the years ended December 31, 2015, 2014 and 2013, we received rental income of approximately $132.4 million, $132.4 million and $126.7 million, respectively, from the sublease of our capital lease satellites. As of December 31, 2015, our future minimum sublease rental income was $613.3 million, relating to such satellites.