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Echosphere LLC, et al. – ‘S-4/A’ on 9/16/11 – R12

On:  Friday, 9/16/11, at 5:21pm ET   ·   Accession #:  1104659-11-52137   ·   File #s:  333-175277, -01, -02, -03, -04

Previous ‘S-4’:  ‘S-4’ on 7/1/11   ·   Next:  ‘S-4’ on 6/26/12   ·   Latest:  ‘S-4’ on 8/26/16

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 9/16/11  Echosphere LLC                    S-4/A                 50:17M                                    Merrill Corp-MD/FA
          DISH Network LLC
          Dish DBS Corp
          Dish Network Service LLC
          Dish Operating L.L.C.

Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Pre-Effective Amendment to Registration of          HTML   2.95M 
                          Securities Issued in a                                 
                          Business-Combination Transaction                       
 2: EX-12.1     Statement re: Computation of Ratios                 HTML     57K 
 3: EX-23.1     Consent of Experts or Counsel                       HTML     18K 
49: EXCEL       XBRL IDEA Workbook -- Financial Report (.xls)        XLS   3.89M 
13: R1          Consolidated Balance Sheets                         HTML    148K 
46: R2          Consolidated Balance Sheets (Parenthetical)         HTML     40K 
10: R3          Consolidated Statements of Operations and           HTML    101K 
                          Comprehensive Income (Loss)                            
11: R4          Consolidated Statements of Changes in               HTML     65K 
                          Stockholder's Equity (Deficit)                         
39: R5          Consolidated Statements of Changes in               HTML     18K 
                          Stockholder's Equity (Deficit)                         
                          (Parenthetical)                                        
27: R6          Consolidated Statements of Cash Flows               HTML    158K 
42: R7          Organization and Business Activities                HTML     33K 
20: R8          Summary of Significant Accounting Policies          HTML     70K 
28: R9          Statements of Cash Flow Data                        HTML     45K 
30: R10         Marketable Investment Securities, Restricted Cash   HTML    397K 
                          and Other Investment Securities                        
36: R11         Inventory                                           HTML     51K 
15: R12         Property and Equipment                              HTML    210K 
26: R13         Long-Term Debt                                      HTML    213K 
22: R14         Income Taxes and Accounting for Uncertainty in      HTML    141K 
                          Income Taxes                                           
24: R15         Employee Benefit Plans                              HTML     42K 
43: R16         Stock-Based Compensation                            HTML    482K 
19: R17         Commitments and Contingencies                       HTML    164K 
35: R18         Financial Information for Subsidiary Guarantors     HTML     21K 
23: R19         Valuation and Qualifying Accounts                   HTML     39K 
45: R20         Quarterly Financial Data (Unaudited)                HTML     54K 
37: R21         Related Party Transactions                          HTML    175K 
40: R22         Subsequent Events                                   HTML     27K 
12: R23         Condensed Consolidated Balance Sheets               HTML    148K 
41: R24         Condensed Consolidated Balance Sheets               HTML     40K 
                          (Parenthetical)                                        
18: R25         Condensed Consolidated Statements of Operations     HTML    102K 
                          and Comprehensive Income (Loss)                        
14: R26         Condensed Consolidated Statements of Cash Flows     HTML    131K 
16: R27         Organization and Business Activities                HTML     33K 
31: R28         Summary of Significant Accounting Policies          HTML     70K 
38: R29         Marketable Investment Securities and Restricted     HTML    397K 
                          Cash                                                   
34: R30         Inventory                                           HTML     51K 
29: R31         Property and Equipment                              HTML    210K 
25: R32         Long-Term Debt                                      HTML    213K 
33: R33         Stock-Based Compensation                            HTML    482K 
44: R34         Commitments and Contingencies                       HTML    164K 
21: R35         Financial Information for Subsidiary Guarantors     HTML     21K 
47: R36         Related Party Transactions                          HTML    175K 
50: R37         Subsequent Events                                   HTML     27K 
17: R38         Document and Entity Information                     HTML     34K 
48: XML         XBRL XML File -- Filing Summary                      XML     77K 
 4: EX-101.INS  XBRL Instance -- ddbs-20110630                       XML   2.40M 
 6: EX-101.CAL  XBRL Calculations -- ddbs-20110630_cal               XML    198K 
 9: EX-101.DEF  XBRL Definitions -- ddbs-20110630_def                XML    404K 
 7: EX-101.LAB  XBRL Labels -- ddbs-20110630_lab                     XML    763K 
 8: EX-101.PRE  XBRL Presentations -- ddbs-20110630_pre              XML    569K 
 5: EX-101.SCH  XBRL Schema -- ddbs-20110630                         XSD     88K 
32: ZIP         XBRL Zipped Folder -- 0001104659-11-052137-xbrl      Zip    188K 


R12   —   Property and Equipment


This is an XBRL IDEA Report rendered in HTML by the SEC.  [ Alternative Formats ]



 
v2.3.0.11
Property and Equipment
6 Months Ended 12 Months Ended
Property and Equipment    
Property and Equipment

 

5.     Property and Equipment

 

Depreciation and Amortization Expense

 

Depreciation and amortization expense consists of the following:

 

 

 

For the Three Months

 

For the Six Months

 

 

 

Ended June 30,

 

Ended June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

(In thousands)

 

Equipment leased to customers

 

$

189,030

 

$

225,348

 

$

372,017

 

$

430,746

 

Satellites

 

32,087

 

25,699

 

64,178

 

47,882

 

Buildings, furniture, fixtures, equipment and other

 

13,021

 

13,321

 

26,069

 

25,232

 

Total depreciation and amortization

 

$

234,138

 

$

264,368

 

$

462,264

 

$

503,860

 

 

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.

 

Satellites

 

We currently utilize 13 satellites in geostationary orbit approximately 22,300 miles above the equator, six of which we own. We currently utilize capacity on five satellites from EchoStar, which are accounted for as operating leases. See Note 10 for further discussion of our satellite leases with EchoStar. We also lease two satellites from third parties, which are accounted for as capital leases and are depreciated over the shorter of the economic life or the term of the satellite agreement.

 

Operation of our subscription television service requires that we have adequate satellite transmission capacity for the programming we offer.  Moreover, current competitive conditions require that we continue to expand our offering of new programming, particularly by expanding local high definition (“HD”) coverage and offering more HD national channels.  While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity to recover the transmission of certain critical programming, our backup capacity is limited.

 

In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as necessary to remain competitive and thus may have a material adverse effect on our business, financial condition and results of operations.

 

Prior to 2011, certain satellites in our fleet experienced anomalies, some of which have had a significant adverse impact on their remaining useful life and/or commercial operation. There can be no assurance that future anomalies will not further impact the remaining useful life and/or commercial operation of any of these satellites. See “Long-Lived Satellite Assets” below for further discussion of evaluation of impairment. There can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail. We do not anticipate carrying insurance for any of the in-orbit satellites that we use, and we will bear the risk associated with any in-orbit satellite failures. Recent developments with respect to certain of our satellites are discussed below.

 

Leased Satellites

 

EchoStar VIII.  EchoStar VIII was designed to operate 32 DBS transponders in the continental United States at approximately 120 watts per channel, switchable to 16 DBS transponders operating at approximately 240 watts per channel.  EchoStar VIII was also designed with spot-beam technology.  This satellite has experienced several anomalies prior to 2011 and during January 2011, the satellite experienced an anomaly, which temporarily disrupted electrical power to some components causing an interruption of broadcast service.  In addition, one of the two on board computers used to control the satellite failed in connection with this anomaly.  None of these anomalies has impacted the commercial operation or estimated useful life of the satellite.  However, there can be no assurance that this anomaly or any future anomalies will not reduce its useful life or impact its commercial operation.

 

Long-Lived Satellite Assets

 

We evaluate our satellite fleet for impairment as one asset group and test for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.  While certain of the anomalies discussed above, and previously disclosed, may be considered to represent a significant adverse change in the physical condition of an individual satellite, based on the redundancy designed within each satellite and considering the asset grouping, these anomalies are not considered to be significant events that would require evaluation for impairment recognition.  Unless and until a specific satellite is abandoned or otherwise determined to have no service potential, the net carrying amount related to the satellite would not be written off.

 

 

6.     Property and Equipment

 

Property and equipment consists of the following:

 

 

 

Depreciable

 

 

 

 

 

 

 

Life

 

As of December 31,

 

 

 

(In Years)

 

2010

 

2009

 

 

 

 

 

(In thousands)

 

Equipment leased to customers

 

2-5

 

$

3,495,360

 

$

3,295,298

 

EchoStar I

 

12

 

201,607

 

201,607

 

EchoStar VII

 

12

 

177,000

 

177,000

 

EchoStar X

 

12

 

177,192

 

177,192

 

EchoStar XI

 

12

 

200,198

 

200,198

 

EchoStar XIV

 

15

 

316,518

 

 

EchoStar XV

 

15

 

277,533

 

 

Satellites acquired under capital lease agreements

 

10-15

 

499,819

 

499,819

 

Furniture, fixtures, equipment and other

 

1-10

 

480,217

 

454,048

 

Buildings and improvements

 

1-40

 

69,165

 

65,306

 

Land

 

 

3,760

 

3,760

 

Construction in progress

 

 

16,844

 

13,686

 

Total property and equipment

 

 

 

5,915,213

 

5,087,914

 

Accumulated depreciation

 

 

 

(2,684,364

)

(2,486,734

)

Property and equipment, net

 

 

 

$

3,230,849

 

$

2,601,180

 

 

Construction in progress consists of the following:

 

 

 

As of December 31,

 

 

 

2010

 

2009

 

 

 

(In thousands)

 

Software related projects

 

$

3,469

 

$

7,440

 

Other

 

13,375

 

6,246

 

Construction in progress

 

$

16,844

 

$

13,686

 

 

Depreciation and amortization expense consists of the following:

 

 

 

For the Years Ended December 31,

 

 

 

2010

 

2009

 

2008

 

 

 

(In thousands)

 

Equipment leased to customers

 

$

822,442

 

$

799,169

 

$

827,599

 

Satellites

 

110,510

 

86,430

 

89,435

 

Buildings, furniture, fixtures, equipment and other

 

50,408

 

54,115

 

83,196

 

Total depreciation and amortization

 

$

983,360

 

$

939,714

 

$

1,000,230

 

 

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

 

The cost of our satellites includes capitalized interest of $6 million during the year ended December 31, 2008. We did not record any capitalized interest during the years ended December 31, 2010 or 2009.

 

Satellites

 

We currently utilize 13 satellites in geostationary orbit approximately 22,300 miles above the equator, six of which we own. We currently utilize capacity on five satellites from EchoStar, which are accounted for as operating leases. We also lease two satellites from third parties, which are accounted for as capital leases and are depreciated over the shorter of the economic life or the term of the satellite agreement.

 

 

 

 

 

 

 

Original

 

 

 

 

 

 

 

Degree

 

Useful

 

 

 

 

 

Launch

 

Orbital

 

Life

 

Lease Term

 

Satellites

 

Date

 

Location

 

(Years)

 

(Years)

 

Owned:

 

 

 

 

 

 

 

 

 

EchoStar I (1)

 

December 1995

 

77

 

12

 

 

 

EchoStar VII

 

February 2002

 

119

 

12

 

 

 

EchoStar X

 

February 2006

 

110

 

12

 

 

 

EchoStar XI

 

July 2008

 

110

 

12

 

 

 

EchoStar XIV

 

March 2010

 

119

 

15

 

 

 

EchoStar XV

 

July 2010

 

61.5

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased from EchoStar:

 

 

 

 

 

 

 

 

 

EchoStar VI (1)

 

July 2000

 

77

 

12

 

 

 

EchoStar VIII (1)(2)

 

August 2002

 

77

 

12

 

 

 

EchoStar IX (1)(2)(3)

 

August 2003

 

121

 

12

 

 

 

EchoStar XII (1)

 

July 2003

 

61.5

 

10

 

 

 

Nimiq 5 (1)(2)

 

September 2009

 

72.7

 

10

 

10

 

 

 

 

 

 

 

 

 

 

 

Leased from Other Third Party:

 

 

 

 

 

 

 

 

 

Anik F3

 

April 2007

 

118.7

 

15

 

15

 

Ciel II

 

December 2008

 

129

 

10

 

10

 

 

 

 

 

 

 

 

 

 

 

Under Construction:

 

 

 

 

 

 

 

 

 

Leased from EchoStar

 

 

 

 

 

 

 

 

 

QuetzSat-1

 

Late 2011

 

77

 

10

 

10

 

EchoStar XVI

 

2012

 

61.5

 

10

 

10

 

 

 

(1)         See Note 15 for further discussion of our Related Party Agreements.

(2)         We lease a portion of the capacity on these satellites.

(3)         Leased on a month to month basis.

 

EchoStar XIV.  Our EchoStar XIV satellite was launched on March 20, 2010 and commenced commercial operations at the 119 degree orbital location during May 2010.  EchoStar XIV has both spot beam capabilities and the ability to provide service to the entire continental United States (“CONUS”) that has allowed us, among other things, to expand our HD offerings.

 

EchoStar XV.  Our EchoStar XV satellite was launched on July 10, 2010 and commenced commercial operations at the 61.5 degree orbital location during August 2010.  EchoStar XV is a CONUS satellite that has allowed us, among other things, to expand our HD offerings.  EchoStar XV is expected to be used as an in-orbit spare when EchoStar XVI commences commercial operations during the second half of 2012.

 

Satellite Anomalies

 

Operation of our programming service requires that we have adequate satellite transmission capacity for the programming we offer. Moreover, current competitive conditions require that we continue to expand our offering of new programming, particularly by expanding local HD coverage and offering more HD national channels. While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity to recover the transmission of certain critical programming, our backup capacity is limited.

 

In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as necessary to remain competitive and thus may have a material adverse effect on our business, financial condition and results of operations.

 

Prior to 2010, certain satellites in our fleet experienced anomalies, some of which have had a significant adverse impact on their remaining useful life and/or commercial operation. There can be no assurance that future anomalies will not further impact the remaining useful life and/or commercial operation of any of these satellites. See “Long-Lived Satellite Assets” below for further discussion of evaluation of impairment. There can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail. We do not anticipate carrying insurance for any of the in-orbit satellites that we use, and we will bear the risk associated with any in-orbit satellite failures. Recent developments with respect to certain of our satellites are discussed below.

 

Owned Satellites

 

EchoStar VII.  EchoStar VII, which is being used as an in-orbit spare, was designed with four gyros, of which three are required to properly control the positioning of the satellite.  During October 2010, EchoStar VII experienced an anomaly which caused one of its gyros to temporarily stop functioning.  Testing during December 2010 confirmed that this gyro is functioning again.  In addition, during July 2010, EchoStar VII experienced a thruster anomaly.  Thrusters control spacecraft location and maintain spacecraft pointing.  While these anomalies did not reduce the estimated useful life of the satellite to less than 12 years or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

 

EchoStar X.  EchoStar X was designed with 49 spot beams which use up to 42 active 140 watt traveling wave tube amplifiers (“TWTAs”) and 24 solar array circuits, of which approximately 22 are required to assure full power for the original minimum 12-year useful life of the satellite.  During May and September of 2010, EchoStar X experienced anomalies which affected seven solar array circuits reducing the number of functional solar array circuits to 17.  While these anomalies did not reduce the estimated useful life of the satellite to less than 12 years or impact commercial operation of the satellite based on the satellite’s current configuration, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

 

Leased Satellites

 

EchoStar VI.  EchoStar VI was designed with 108 solar array strings, of which approximately 102 are required to assure full power availability for the original minimum 12-year useful life of the satellite.  During March and August of 2010, EchoStar VI experienced anomalies resulting in the loss of 24 solar array strings, reducing the number of functional solar array strings to 84. While these anomalies did not reduce the estimated useful life of the satellite to less than 12 years, commercial operation has been impacted and there can be no assurance that future anomalies will not reduce its useful life or further impact its commercial operation.  The satellite was designed to operate 32 DBS transponders in CONUS at approximately 125 watts per channel, switchable to 16 DBS transponders operating at approximately 250 watts per channel.  The power reduction resulting from the solar array failures currently limits us to operating 24 DBS transponders in CONUS at approximately 125 watts per channel, switchable to 12 DBS transponders operating at approximately 250 watts per channel.  The number of transponders to which power can be provided is expected to decline in the future at the rate of approximately one transponder every three years.

 

EchoStar VIIIEchoStar VIII was designed to operate 32 DBS transponders in CONUS at approximately 120 watts per channel, switchable to 16 DBS transponders operating at approximately 240 watts per channel.  EchoStar VIII was also designed with spot-beam technology.  This satellite has experienced several anomalies prior to 2011, but none have reduced its useful life or impacted its commercial operation.  During January 2011, the satellite experienced an anomaly, which temporarily disrupted electrical power to some components causing an interruption of broadcast service.  Testing is being performed to determine if this anomaly will reduce the satellite’s useful life or impact its commercial operations.  There can be no assurance that this anomaly or any future anomalies will not reduce its useful life or impact its commercial operation.

 

Long-Lived Satellite Assets.  We evaluate our satellite fleet for impairment as one asset group and test for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.  While certain of the anomalies discussed above, and previously disclosed, may be considered to represent a significant adverse change in the physical condition of an individual satellite, based on the redundancy designed within each satellite and considering the asset grouping, these anomalies are not considered to be significant events that would require evaluation for impairment recognition.  Unless and until a specific satellite is abandoned or otherwise determined to have no service potential, the net carrying amount related to the satellite would not be written off.

 

FCC Authorizations.  We currently do not have any satellites positioned at the 148 degree orbital location as a result of the retirement of EchoStar V.  While we have requested the necessary approval from the FCC for the continued use of this orbital location, there can be no assurance that the FCC will determine that our proposed future use of this orbital location complies fully with all licensing requirements.  If the FCC decides to revoke this license, we may be required to write-off its $68 million carrying value.

 


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘S-4/A’ Filing    Date    Other Filings
Filed on:9/16/11
6/30/1110-Q,  S-4
12/31/1010-K
7/10/10
3/20/10
9/15/09
12/31/0810-K,  10-K/A
 List all Filings 
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