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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549 
FORM 10-Q
(Mark One) 
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021.

OR

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                TO                    

Commission File Number: 333-179121
https://cdn.kscope.io/1cd5f4b77aab510fded1b8f0732f30fd-hssc-20210331_g1.jpg
 Hughes Satellite Systems Corporation
(Exact name of registrant as specified in its charter) 
Colorado 45-0897865
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
100 Inverness Terrace East,Englewood,Colorado 80112-5308
(Address of principal executive offices) (Zip Code)
(303) 706-4000Not Applicable
(Registrant’s telephone number, including area code)(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):
Large accelerated filer
Accelerated filer 
Emerging growth company
Non-accelerated filer
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No  
As of April 29, 2021, the registrant’s outstanding common stock consisted of 1,078 shares of common stock, $0.01 par value per share. 
The Registrant meets the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Quarterly Report on Form 10-Q with the reduced disclosure format. 
* The Registrant currently is not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 and is filing this Quarterly Report on Form 10-Q on a voluntary basis. The Registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months as if it were subject to such filing requirements during such period. 


Table of Contents

TABLE OF CONTENTS
 
   
 
Item 3.Quantitative and Qualitative Disclosures about Market Risk*
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds*
Item 3.Defaults Upon Major Securities*
 
*This item has been omitted pursuant to the reduced disclosure format as set forth in General Instructions (H)(2) of Form 10-Q.



Table of Contents

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about our estimates, expectations, future developments, plans, objectives, strategies, financial condition, expected impact of regulatory developments and legal proceedings, opportunities in our industries and businesses and other trends and projections for the next fiscal quarter and beyond. All statements, other than statements of historical facts, may be forward-looking statements. Forward-looking statements may also be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate,” “expect,” “predict,” ”project,” “continue,” “future,” “will,” “would,” “could,” “can,” “may” and similar terms. These forward-looking statements are based on information available to us as of the date of this Form 10-Q and represent management’s current views and assumptions based on past experience and trends, current economic and industry conditions, expected future developments and other relevant factors. Forward-looking statements are not guarantees of future performance, events or results and involve potential known and unknown risks, uncertainties, including the impact of the coronavirus pandemic (COVID-19), and other factors, many of which may be beyond our control and may pose a risk to our operating and financial condition both the near- and long-term. Accordingly, actual performance, events or results could differ materially from those expressed or implied in the forward-looking statements due to a number of factors including, but not limited to:

significant risks related to our ability to operate and control our satellites, operational and environmental risks related to our owned and leased satellites, and risks related to our satellites under construction;
our ability and the ability of third parties with whom we engage to operate our business as a result of the COVID-19 pandemic, including regulatory and competitive considerations;
our ability to implement and/or realize benefits of our investments and other strategic initiatives;
legal proceedings relating to the BSS Transaction or other matters that could result in substantial costs and material adverse effects to our business;
risks related to our foreign operations and other uncertainties associated with doing business internationally;
risks related to our dependency upon third-party providers; and
risks related to our human capital resources.

Other factors that could cause or contribute to such differences include, but are not limited to, those discussed under the caption Risk Factors in Part II, Item 1A of this Form 10-Q and in Part I, Item 1A of our most recent Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission (“SEC”), those discussed in Management’s Narrative Analysis of Results of Operations in Part I, Item 2 of this Form 10-Q and in Part II, Item 7 of our Form 10-K and those discussed in other documents we file with the SEC.
 
All cautionary statements made herein should be read as being applicable to all forward-looking statements wherever they appear. Investors should consider the risks and uncertainties described herein and should not place undue reliance on any forward-looking statements. We do not undertake, and specifically disclaim, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Although we believe that the expectations reflected in any forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievements. We do not assume responsibility for the accuracy and completeness of any forward-looking statements. We assume no responsibility for updating forward-looking information contained or incorporated by reference herein or in any documents we file with the SEC, except as required by law.

Should one or more of the risks or uncertainties described herein or in any documents we file with the SEC occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

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PART I — FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

HUGHES SATELLITE SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
As of
March 31, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$1,403,926 $740,490 
Marketable investment securities515,306 1,203,296 
Trade accounts receivable and contract assets, net187,272 183,988 
Other current assets, net286,689 291,815 
Total current assets2,393,193 2,419,589 
Non-current assets:
Property and equipment, net1,631,221 1,691,523 
Operating lease right-of-use assets131,452 128,266 
Goodwill510,945 511,597 
Regulatory authorizations, net409,960 410,451 
Other intangible assets, net16,246 18,340 
Other investments, net102,163 103,924 
Other non-current assets, net302,416 307,677 
Total non-current assets3,104,403 3,171,778 
Total assets$5,497,596 $5,591,367 
Liabilities and Shareholder's Equity
Current liabilities:
Trade accounts payable$104,683 $118,568 
Current portion of long-term debt, net808,758 898,237 
Contract liabilities112,507 104,569 
Accrued expenses and other current liabilities328,316 325,587 
Total current liabilities1,354,264 1,446,961 
Non-current liabilities:
Long-term debt, net1,495,436 1,495,256 
Deferred tax liabilities, net376,366 369,940 
Operating lease liabilities118,452 114,877 
Other non-current liabilities86,642 87,957 
Total non-current liabilities2,076,896 2,068,030 
Total liabilities3,431,160 3,514,991 
Commitments and contingencies

The accompanying notes are an integral part of these Consolidated Financial Statements.
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HUGHES SATELLITE SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
(Unaudited)

Shareholder's equity:
Preferred stock, $0.001 par value,1,000,000 shares authorized, none issued and outstanding at both March 31, 2021 and December 31, 2020
  
Common stock, $0.01 par value, 1,000,000 shares authorized, 1,078 shares issued and outstanding at both March 31, 2021 and December 31, 2020
  
Additional paid-in capital1,487,590 1,486,730 
Accumulated other comprehensive income (loss)(175,060)(146,840)
Accumulated earnings (losses)690,147 671,570 
Total Hughes Satellite Systems Corporation shareholder's equity2,002,677 2,011,460 
Non-controlling interests63,759 64,916 
Total shareholder's equity2,066,436 2,076,376 
Total liabilities and shareholder's equity$5,497,596 $5,591,367 







































The accompanying notes are an integral part of these Consolidated Financial Statements.
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HUGHES SATELLITE SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands)
(Unaudited)
For the three months ended March 31,
20212020
Revenue:
Services and other revenue $432,991 $410,238 
Equipment revenue52,239 57,309 
Total revenue485,230 467,547 
Costs and expenses:
Cost of sales - services and other (exclusive of depreciation and amortization)131,412 143,885 
Cost of sales - equipment (exclusive of depreciation and amortization)45,140 45,908 
Selling, general and administrative expenses104,370 115,860 
Research and development expenses7,545 6,254 
Depreciation and amortization122,664 125,965 
Impairment of long-lived assets210  
Total costs and expenses411,341 437,872 
Operating income (loss)73,889 29,675 
Other income (expense):
Interest income2,394 8,892 
Interest expense, net of amounts capitalized(41,922)(42,192)
Gains (losses) on investments, net (164)
Equity in earnings (losses) of unconsolidated affiliates, net(1,761)(1,087)
Foreign currency transaction gains (losses), net(3,360)(7,528)
Other, net(973)(278)
Total other income (expense), net(45,622)(42,357)
Income (loss) before income taxes28,267 (12,682)
Income tax benefit (provision), net(10,637)(5,231)
Net income (loss)17,630 (17,913)
Less: Net loss (income) attributable to non-controlling interests947 3,442 
Net income (loss) attributable to HSSC$18,577 $(14,471)








The accompanying notes are an integral part of these Consolidated Financial Statements.
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HUGHES SATELLITE SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands)
(Unaudited)
For the three months ended March 31,
 20212020
Net income (loss)$17,630 $(17,913)
Other comprehensive income (loss), net of tax:  
Foreign currency translation adjustments(33,742)(82,836)
Unrealized gains (losses) on available-for-sale securities (88)(2,479)
Other (405)
Total other comprehensive income (loss), net of tax(33,830)(85,720)
Comprehensive income (loss)(16,200)(103,633)
Less: Comprehensive loss (income) attributable to non-controlling interests6,557 19,765 
Comprehensive income (loss) attributable to HSSC$(9,643)$(83,868)































The accompanying notes are an integral part of these Consolidated Financial Statements.
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HUGHES SATELLITE SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
(Amounts in thousands) 
(Unaudited)
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Earnings (Losses)
Non-controlling
Interests
Total
Balance, December 31, 2019$1,478,636 $(84,636)$664,415 $75,748 $2,134,163 
Cumulative effect of accounting changes— — (2,169)(240)(2,409)
Balance, January 1, 20201,478,636 (84,636)662,246 75,508 2,131,754 
Stock-based compensation1,457 — — — 1,457 
Issuance of equity and contribution of assets pursuant to the Yahsat JV formation4,338 — — (1,514)2,824 
Contribution by non-controlling interest holder— — — 4,000 4,000 
Other comprehensive income (loss)— (69,397)— (16,323)(85,720)
Net income (loss)— — (14,471)(3,442)(17,913)
Other, net(684)— — — (684)
Balance, March 31, 2020$1,483,747 $(154,033)$647,775 $58,229 $2,035,718 
Balance, December 31, 2020$1,486,730 $(146,840)$671,570 $64,916 $2,076,376 
Stock-based compensation860 — — — 860 
Contribution by non-controlling interest holder— — — 5,400 5,400 
Other comprehensive income (loss)— (28,220)— (5,610)(33,830)
Net income (loss)— — 18,577 (947)17,630 
Balance, March 31, 2021$1,487,590 $(175,060)$690,147 $63,759 $2,066,436 
 













The accompanying notes are an integral part of these Consolidated Financial Statements.
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HUGHES SATELLITE SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
For the three months ended March 31,
20212020
Cash flows from operating activities:  
Net income (loss)$17,630 $(17,913)
Adjustments to reconcile net income (loss) to cash flows provided by (used for) operating activities:  
Depreciation and amortization122,664 125,965 
Impairment of long-lived assets210  
Losses (gains) on investments, net 164 
Equity in losses (earnings) of unconsolidated affiliates, net1,761 1,087 
Foreign currency transaction losses (gains), net3,360 7,528 
Deferred tax provision (benefit), net6,584 1,526 
Stock-based compensation860 1,457 
Amortization of debt issuance costs1,118 1,050 
Other, net10,981 (810)
Changes in assets and liabilities, net:
Trade accounts receivable and contract assets, net(6,078)(8,162)
Other current assets, net1,826 (21,268)
Trade accounts payable(15,484)(10,984)
Contract liabilities7,938 (3,213)
Accrued expenses and other current liabilities(33,091)(5,007)
Non-current assets and non-current liabilities, net1,170 (6,196)
Net cash provided by (used for) operating activities121,449 65,224 
Cash flows from investing activities:  
Purchases of marketable investment securities(310,528)(365,877)
Sales and maturities of marketable investment securities1,003,198 490,020 
Expenditures for property and equipment(82,196)(91,517)
Expenditures for externally marketed software(7,846)(8,638)
Net cash provided by (used for) investing activities602,628 23,988 
Cash flows from financing activities:
Repurchase of the 2021 Senior Unsecured Notes(62,588) 
Payment of finance lease obligations(329)(215)
Payment of in-orbit incentive obligations(1,104)(203)
Contribution by non-controlling interest holder5,400 4,000 
Other, net(292)979 
Net cash provided by (used for) financing activities(58,913)4,561 
Effect of exchange rates on cash and cash equivalents(1,700)(4,618)
Net increase (decrease) in cash and cash equivalents663,464 89,155 
Cash and cash equivalents, including restricted amounts, beginning of period741,297 1,140,322 
Cash and cash equivalents, including restricted amounts, end of period$1,404,761 $1,229,477 

The accompanying notes are an integral part of these Consolidated Financial Statements.
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HUGHES SATELLITE SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1.    ORGANIZATION AND BUSINESS ACTIVITIES

Principal Business

Hughes Satellite Systems Corporation (which, together with its subsidiaries, is referred to as “HSSC,” the “Company,” “we,” “us” and “our”) is a holding company and a subsidiary of EchoStar Corporation (“EchoStar”). We are a global provider of broadband satellite technologies, broadband internet services for consumer customers, which include home and small to medium-sized businesses, and satellite services. We also deliver innovative network technologies, managed services and communications solutions for enterprise customers, which include aeronautical and government enterprises. We operate in the following two business segments:
 
Hughes — which provides broadband satellite technologies and broadband internet services to domestic and international consumer customers and broadband network technologies, managed services, equipment, hardware, satellite services and communication solutions to service providers and enterprise customers. The Hughes segment also designs, provides and installs gateway and terminal equipment to customers for other satellite systems. In addition, our Hughes segment designs, develops, constructs and provides telecommunication networks comprising satellite ground segment systems and terminals to mobile system operators and our enterprise customers.
ESS — which uses certain of our owned and leased in-orbit satellites and related licenses to provide satellite services on a full-time and/or occasional-use basis to United States (“U.S.”) government service providers, internet service providers, broadcast news organizations, content providers and private enterprise customers.

Our operations also include various corporate departments (primarily Executive, Treasury, Strategic Development, Human Resources, Information Technology, Finance, Accounting, Real Estate and Legal) and other activities, such as costs incurred in certain satellite development programs and other business development activities, and gains or losses from certain of our investments, that have not been assigned to our business segments. These activities, costs and income, as well as eliminations of intersegment transactions, are accounted for in Corporate and Other in our segment reporting. We also divide our operations by primary geographic market as follows: (i) North America (the U.S. and its territories, Mexico, and Canada); (ii) South and Central America and (iii) Other (Asia, Africa, Australia, Europe, India, and the Middle East). Refer to Note 14. Segment Reporting for further detail.

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
 
These unaudited Consolidated Financial Statements and the accompanying notes (collectively, the “Consolidated Financial Statements”) are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, they do not include all of the information and notes required for complete financial statements prepared in conformity with U.S. GAAP. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. However, our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

All amounts presented in these Consolidated Financial Statements are expressed in thousands of U.S. dollars, except share and per share amounts and unless otherwise noted.

Refer to Note 2. Summary of Significant Accounting Policies to the consolidated financial statements in our Form 10-K for a summary and discussion of our significant accounting policies, except as updated below.

Use of Estimates
 
We are required to make certain estimates and assumptions that affect the amounts reported in these Consolidated Financial Statements. The most significant estimates and assumptions are used in determining: (i) inputs used to recognize revenue over time, including amortization periods for deferred contract acquisition costs; (ii) allowances
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)



for doubtful accounts; (iii) deferred taxes and related valuation allowances, including uncertain tax positions; (iv) loss contingencies; (v) fair value of financial instruments; (vi) fair value of assets and liabilities acquired in business combinations; and (vii) asset impairment testing.

We base our estimates and assumptions on historical experience, observable market inputs and on various other factors that we believe to be relevant under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results may differ from previously estimated amounts and such differences may be material to our financial statements. Additionally, changing economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. We review our estimates and assumptions periodically and the effects of revisions thereto are reflected in the period they occur or prospectively if the revised estimate affects future periods.

Principles of Consolidation

We consolidate all entities in which we have a controlling financial interest. We are deemed to have a controlling financial interest in variable interest entities in which we are the primary beneficiary and in other entities in which we own more than 50% of the outstanding voting shares and other shareholders do not have substantive rights to participate in management. For entities we control but do not wholly own, we record a non-controlling interest within shareholder’s equity for the portion of the entity’s equity attributed to the non-controlling ownership interests. All significant intercompany balances and transactions have been eliminated in consolidation.

Recently Adopted Accounting Pronouncements

On January 1, 2021, we adopted Accounting Standard Update (“ASU”) No. 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is part of the Financial Accounting Standards Board (“FASB”) overall simplification initiative and seeks to simplify the accounting for income taxes by updating certain guidance and removing certain exceptions. Our adoption of this ASU did not have a material impact on our Consolidated Financial Statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04 - Reference Rate Reform (Topic 848), codified as ASC 848 (“ASC 848”). The purpose of ASC 848 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates to alternative reference rates. ASC 848 applies only to contracts, hedging relationships, and other transactions that reference a reference rate expected to be discontinued because of reference rate reform. The guidance may be applied upon issuance of ASC 848 through December 31, 2022. We expect to utilize the optional expedients provided by the guidance for contracts amended solely to use an alternative reference rate. We have evaluated the impact of adopting this new guidance and do not expect it to have a material impact on our Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)



NOTE 3.     REVENUE RECOGNITION

Contract Balances

The following table presents the components of our contract balances:
 As of
March 31, 2021December 31, 2020
Trade accounts receivable and contract assets, net:
Sales and services$150,021 $149,513 
Leasing4,648 4,553 
Total trade accounts receivable154,669 154,066 
Contract assets46,267 45,308 
Allowance for doubtful accounts(13,664)(15,386)
Total trade accounts receivable and contract assets, net$187,272 $183,988 
Contract liabilities:
Current$112,507 $104,569 
Non-current10,357 10,519 
Total contract liabilities$122,864 $115,088 

The following table presents the revenue recognized in the Consolidated Statement of Operations that was previously included within contract liabilities:

For the three months ended March 31,
20212020
Revenue$63,081 $52,172 

Contract Acquisition Costs

The following table presents the activity in our contract acquisition costs, net:

For the three months ended March 31,
20212020
Balance at beginning of period$99,837 $113,592 
Additions18,400 26,474 
Amortization expense(22,769)(25,675)
Foreign currency translation(875)(3,994)
Balance at end of period$94,593 $110,397 

Performance Obligations

As of March 31, 2021, the remaining performance obligations for our customer contracts with original expected durations of more than one year was $939.7 million. Performance obligations expected to be satisfied within one year and greater than one year are 37% and 63%, respectively. This amount and percentages exclude agreements with consumer customers in our Hughes segment, our leasing arrangements and agreements with certain customers under which collectability of all amounts due through the term of contracts is uncertain.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)




Disaggregation of Revenue

Geographic Information

The following table presents our revenue from customer contracts disaggregated by primary geographic market and by segment:
HughesESSCorporate and OtherConsolidated
Total
For the three months ended March 31, 2021
North America$398,759 $4,089 $(88)$402,760 
South and Central America43,030   43,030 
Other34,070  5,370 39,440 
Total revenue$475,859 $4,089 $5,282 $485,230 
For the three months ended March 31, 2020
North America$382,715 $4,652 $(285)$387,082 
South and Central America33,956   33,956 
Other41,811  4,698 46,509 
Total revenue$458,482 $4,652 $4,413 $467,547 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)



Nature of Products and Services

The following table presents our revenue disaggregated by the nature of products and services and by segment:
HughesESSCorporate and OtherConsolidated
Total
For the three months ended March 31, 2021
Services and other revenue:
Services$413,519 $2,690 $ $416,209 
Lease revenue10,101 1,399 5,282 16,782 
Total services and other revenue423,620 4,089 5,282 432,991 
Equipment revenue:
Equipment28,521   28,521 
Design, development and construction services21,636   21,636 
Lease revenue2,082   2,082 
Total equipment revenue52,239   52,239 
Total revenue$475,859 $4,089 $5,282 $485,230 
 
For the three months ended March 31, 2020
Services and other revenue:
Services$390,000 $2,765 $ $392,765 
Lease revenue11,173 1,887 4,413 17,473 
Total services and other revenue401,173 4,652 4,413 410,238 
Equipment revenue:
Equipment24,839   24,839 
Design, development and construction services31,557   31,557 
Lease revenue913   913 
Total equipment revenue57,309   57,309 
Total revenue$458,482 $4,652 $4,413 $467,547 

Lease Revenue

The following table presents our lease revenue by type of lease:

For the three months ended March 31,
20212020
Sales-type lease revenue:
Revenue at lease commencement$2,082 $913 
Interest income73 69 
Total sales-type lease revenue2,155 982 
Operating lease revenue16,709 17,404 
Total lease revenue$18,864 $18,386 

Substantially all of our net investment in sales-type leases consisted of lease receivables totaling $13.4 million and $13.0 million as of March 31, 2021 and December 31, 2020, respectively.
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(Unaudited)




The following table presents future operating lease payments to be received as of March 31, 2021:
Amounts
Year ending December 31,
2021 (remainder)$30,433 
202234,082 
202332,000 
202429,740 
202528,482 
2026 and beyond47,562 
Total lease payments$202,299 

The following table presents amounts for assets subject to operating leases, which are included in Property and equipment, net:
As of
March 31, 2021December 31, 2020
CostAccumulated DepreciationNetCostAccumulated DepreciationNet
Customer premises equipment$1,737,049 $(1,370,538)$366,511 $1,706,328 $(1,317,210)$389,118 
Satellites104,620 (40,078)64,542 104,620 (38,335)66,285 
Total$1,841,669 $(1,410,616)$431,053 $1,810,948 $(1,355,545)$455,403 

The following table presents depreciation expense for assets subject to operating leases, which is included in Depreciation and amortization:

For the three months ended March 31,
20212020
Customer premises equipment$60,967 $49,504 
Satellites1,744 1,744 
Total$62,711 $51,248 

NOTE 4.    MARKETABLE INVESTMENT SECURITIES

The following table presents our Marketable investment securities:
As of
March 31, 2021December 31, 2020
Marketable investment securities:
Available-for-sale debt securities:
Corporate bonds$109,598 $276,361 
Commercial paper327,648 823,173 
Other debt securities78,054 103,756 
Total available-for-sale debt securities515,300 1,203,290 
Equity securities6 6 
Total marketable investment securities$515,306 $1,203,296 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)





Debt Securities

Available-for-Sale

The following table presents the components of our available-for-sale debt securities:
AmortizedUnrealizedEstimated
CostGainsLossesFair Value
As of March 31, 2021
Corporate bonds$109,600 $10 $(12)$109,598 
Commercial paper327,648   327,648 
Other debt securities78,108 2 (56)78,054 
Total available-for-sale debt securities$515,356 $12 $(68)$515,300 
As of December 31, 2020
Corporate bonds$276,327 $59 $(25)$276,361 
Commercial paper823,173   823,173 
Other debt securities103,758 3 (5)103,756 
Total available-for-sale debt securities$1,203,258 $62 $(30)$1,203,290 

The following table presents the activity on our available-for-sale debt securities:

For the three months ended March 31,
20212020
Proceeds from sales$95,765 $10,000 

As of March 31, 2021, we have $491.2 million of available-for-sale debt securities with contractual maturities of one year or less and $24.1 million with contractual maturities greater than one year. 

Equity Securities

The following table presents the activity of our equity securities:

For the three months ended March 31,
20212020
Gains (losses) on investments, net$ $(164)
 
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(Unaudited)



Fair Value Measurements
 
The following table presents our marketable investment securities categorized by the fair value hierarchy, certain of which have historically experienced volatility:
Level 1Level 2Total
As of March 31, 2021
Cash equivalents (including restricted)$508 $1,317,529 $1,318,037 
Available-for-sale debt securities:
Corporate bonds$ $109,598 $109,598 
Commercial paper 327,648 327,648 
Other debt securities32,498 45,556 78,054 
Total available-for-sale debt securities32,498 482,802 515,300 
Equity securities6  6 
Total marketable investment securities$32,504 $482,802 $515,306 
As of December 31, 2020
Cash equivalents (including restricted)$128 $654,853 $654,981 
Available-for-sale debt securities:
Corporate bonds$ $276,361 $276,361 
Commercial paper 823,173 823,173 
Other debt securities95,497 8,259 103,756 
Total available-for-sale debt securities95,497 1,107,793 1,203,290 
Equity securities6  6 
Total marketable investment securities$95,503 $1,107,793 $1,203,296 

As of March 31, 2021 and December 31, 2020, we did not have any investments that were categorized within Level 3 of the fair value hierarchy.

NOTE 5.    PROPERTY AND EQUIPMENT
 
The following table presents the components of Property and equipment, net:
As of
March 31, 2021December 31, 2020
Property and equipment, net:
Satellites, net$919,813 $954,559 
Other property and equipment, net711,408 736,964 
Total property and equipment, net$1,631,221 $1,691,523 

Satellites
 
As of March 31, 2021, our operating satellite fleet consisted of eight satellites, five of which are owned and three of which are leased. They are all in geosynchronous orbit, approximately 22,300 miles above the equator.

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HUGHES SATELLITE SYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)




The following table presents our operating satellite fleet as of March 31, 2021 which consists of both owned and leased satellites: