UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 9, 2017
ECHOSTAR CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA | 001-33807 | 26-1232727 | ||
(State or other jurisdiction of | (Commission File Number) | (IRS Employer | ||
incorporation) | Identification No.) | |||
100 INVERNESS TERRACE E. | ||
ENGLEWOOD, COLORADO | 80112 | |
(Address of principal executive offices) | (Zip Code) | |
(303) 706-4000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01. Other Events.
On February 28, 2017, EchoStar Corporation (“EchoStar”) and certain of its subsidiaries consummated a share exchange (the “Share Exchange”) with DISH Network Corporation and certain of its subsidiaries, pursuant to which EchoStar and its subsidiary, Hughes Satellite Systems Corporation (“HSS”), received all of the shares of the Hughes Retail Preferred Tracking Stock issued by EchoStar and HSS in exchange for 100% of the equity interests of certain EchoStar subsidiaries that held substantially all of its EchoStar Technologies businesses and certain other assets. Following the consummation of the Share Exchange, as of March 2017, EchoStar discontinued operations of its EchoStar Technologies business segment. Effective in March 2017, EchoStar also changed its overhead allocation methodology to reflect how the chief operating decision maker evaluates its business segments. Historically, the costs of all corporate functions were included on an allocated basis in each of the business segments’ earnings before interest, taxes, depreciation and amortization. Under the revised allocation methodology, these costs are now reported and analyzed as part of “Corporate and Other” (previously “All Other and Eliminations”). EchoStar is filing this Current Report on Form 8-K to provide certain preliminary unaudited segment financial information for the three months ended June 30, 2016, September 30, 2016 and December 31, 2016 and for the year ended December 31, 2016. The actual results reported in EchoStar's future filings may differ from these preliminary results due to the completion of EchoStar's quarterly financial review procedures.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Description | |
Exhibit 99.1 | Preliminary Segment Financial Information for the Three Months Ended June 30, 2016, September 30, 2016 and December 31, 2016 and for the Year Ended December 31, 2016 (unaudited). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ECHOSTAR CORPORATION | ||
Date: June 9, 2017 | By: | /s/ Dean A. Manson |
Executive Vice President, General Counsel and | ||
Secretary | ||
Exhibit Index
Exhibit No. | Description | |
Exhibit 99.1 | Preliminary Segment Financial Information for the Three Months Ended June 30, 2016, September 30, 2016 and December 31, 2016 and for the Year Ended December 31, 2016 (unaudited). | |
Exhibit 99.1
Prior to March 2017, EchoStar Corporation (“EchoStar” “we” and/or “our”) operated in three primary business segments, Hughes, EchoStar Technologies and EchoStar Satellite Services (“ESS”). Following consummation of the Share Exchange described in Note 3 of our condensed consolidated financial statements for the three months ended March 31, 2017 included in our Quarterly Report on Form 10-Q for such period (the “Form 10-Q”), we no longer operate the EchoStar Technologies business segment. The primary measure of segment profitability that is reported regularly to our chief operating decision maker (“CODM”) is earnings before interest, taxes, depreciation and amortization, or EBITDA. Effective in March 2017, we also changed our overhead allocation methodology to reflect how the CODM evaluates our segments. Historically, the costs of all corporate functions were included on an allocated basis in each of the business segments’ EBITDA. Under the revised allocation methodology, these costs are now reported and analyzed as part of “Corporate and Other” (previously “All Other and Eliminations”). Set forth below is certain preliminary unaudited financial information for our Hughes and ESS business segments reflecting these changes. The actual results reported in our future filings may differ from these preliminary results due to the completion of our quarterly financial review procedures.
As of March 2017, our two primary business segments are Hughes and ESS, as described in Note 1 of our condensed consolidated financial statements included in Form 10-Q. Our operations also include various corporate departments (primarily Executive, Strategic Development, Human Resources, IT, Finance, Real Estate and Legal) as well as other activities that have not been assigned to our operating segments, including costs incurred in certain satellite development programs and other business development activities, our centralized treasury operations, and gains (losses) from certain of our investments. Costs and income associated with these departments and activities are accounted for in the “Corporate and Other” column in the table below or in the reconciliation of EBITDA below.
Total assets by segment have not been reported herein because the information is not provided to our CODM on a regular basis.
The following preliminary unaudited financial information should be read in conjunction with the audited consolidated financial statements included in our Form 10-K for the year ended December 31, 2016, the unaudited condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q for the periods ended June 30, 2016 and September 30, 2016 and our results of operations and financial condition for the quarter ended December 31, 2016 included in our Form 8-K filed on February 24, 2017.
The following table presents preliminary revenue, EBITDA, and capital expenditures for each of our operating segments for each of the three months ended June 30, 2016, September 30, 2016 and December 31, 2016 and for the year ended December 31, 2016.
Hughes | EchoStar Satellite Services | Corporate and Other | Consolidated Total | |||||||||||||
(In thousands) | ||||||||||||||||
For the Three Months Ended June 30, 2016 | ||||||||||||||||
External revenue | $ | 338,574 | $ | 101,278 | $ | 2,806 | $ | 442,658 | ||||||||
Intersegment revenue | $ | 763 | $ | 172 | $ | (935 | ) | $ | — | |||||||
Total revenue | $ | 339,337 | $ | 101,450 | $ | 1,871 | $ | 442,658 | ||||||||
EBITDA | $ | 117,627 | $ | 84,284 | $ | (11,585 | ) | $ | 190,326 | |||||||
Capital expenditures | $ | 81,322 | $ | 10,312 | $ | 40,815 | $ | 132,449 | ||||||||
For the Three Months Ended September 30, 2016 | ||||||||||||||||
External revenue | $ | 355,090 | $ | 101,308 | $ | 3,648 | $ | 460,046 | ||||||||
Intersegment revenue | $ | 786 | $ | 172 | $ | (958 | ) | $ | — | |||||||
Total revenue | $ | 355,876 | $ | 101,480 | $ | 2,690 | $ | 460,046 | ||||||||
EBITDA | $ | 125,522 | $ | 84,257 | $ | (20,477 | ) | $ | 189,302 | |||||||
Capital expenditures | $ | 75,682 | $ | 15,730 | $ | 48,162 | $ | 139,574 | ||||||||
For the Three Months Ended December 31, 2016 | ||||||||||||||||
External revenue | $ | 369,949 | $ | 101,569 | $ | 4,271 | $ | 475,789 | ||||||||
Intersegment revenue | $ | 961 | $ | 172 | $ | (1,133 | ) | $ | — | |||||||
Total revenue | $ | 370,910 | $ | 101,741 | $ | 3,138 | $ | 475,789 | ||||||||
EBITDA | $ | 123,660 | $ | 84,335 | $ | (22,170 | ) | $ | 185,825 | |||||||
Capital expenditures | $ | 61,121 | $ | 8,163 | $ | 81,408 | $ | 150,692 | ||||||||
For the Year Ended December 31, 2016 | ||||||||||||||||
External revenue | $ | 1,389,152 | $ | 406,970 | $ | 14,345 | $ | 1,810,467 | ||||||||
Intersegment revenue | $ | 3,209 | $ | 690 | $ | (3,899 | ) | $ | — | |||||||
Total revenue | $ | 1,392,361 | $ | 407,660 | $ | 10,446 | $ | 1,810,467 | ||||||||
EBITDA | $ | 477,165 | $ | 341,516 | $ | (67,676 | ) | $ | 751,005 | |||||||
Capital expenditures | $ | 322,362 | $ | 58,925 | $ | 247,223 | $ | 628,510 | ||||||||
The following table reconciles the preliminary total consolidated EBITDA to Net income, the most directly comparable GAAP measure for each of the three months ended June 30, 2016, September 30, 2016 and December 31, 2016 and for the year ended December 31, 2016.
For the Three Months Ended | For the Year Ended | |||||||||||||||
June 30, 2016 | September 30, 2016 | December 31, 2016 | December 31, 2016 | |||||||||||||
(in thousands) | ||||||||||||||||
Net income | $ | 55,909 | $ | 37,410 | $ | 38,930 | $ | 180,692 | ||||||||
Interest income and expense, net | 16,387 | 31,057 | 35,587 | 102,237 | ||||||||||||
Income tax (benefit) provision | 23,692 | 17,394 | 18,996 | 80,254 | ||||||||||||
Depreciation and amortization | 106,117 | 108,549 | 108,161 | 432,904 | ||||||||||||
Net income from discontinued operations | (11,656 | ) | (4,499 | ) | (15,107 | ) | (44,320 | ) | ||||||||
Net income attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests | (123 | ) | (609 | ) | (742 | ) | (762 | ) | ||||||||
EBITDA | $ | 190,326 | $ | 189,302 | $ | 185,825 | $ | 751,005 | ||||||||
Note on Use of Non-GAAP Financial Measures
Earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is a non-GAAP financial measure that we report for our continuing operations. EBITDA is defined as “Net income” excluding “Net income from discontinued operations,” “Net income attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests,” “Interest expense, net of amounts capitalized,” “Interest income,” “Income tax benefit (provision),” and “Depreciation and amortization.” EBITDA is not a measure determined in accordance with GAAP. This non-GAAP measure is reconciled to “Net income” 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.