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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 SEPTEMBER 30, 2021.

☐ 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: 001-33807

EchoStar Corporation

(Exact name of registrant as specified in its charter)

Nevada

26-1232727

(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) 706-4000

Not Applicable

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Class A common stock

$0.001 par value

The NASDAQ Stock Market LLC

(Title of each class)

(Name of each exchange on which registered)

SATS

(Ticker symbol)

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 November 2, 2021, the registrant’s outstanding common stock consisted of 38,941,239 shares of Class A common stock and 47,687,039 shares of Class B common stock, each $0.001 par value.

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TABLE OF CONTENTS


Disclosure Regarding Forward Looking Statements		i

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020 (audited)	1
	Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020 (unaudited)	4
	Consolidated Statements of Stockholders’ Equity for the three months ended September 30, 2021 and 2020 (unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the nine months ended Septem ber 30, 2021 and 2020 (unaudited)	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)	7
	Notes to the Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4.	Controls and Procedures	57

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	59
Item 6.	Exhibits	60
	Signatures	61

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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 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 Discussion and Analysis of Financial Condition and 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

ECHOSTAR CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(Unaudited)


	As of
	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	429,656	$	896,005
Marketable investment securities	1,127,048		1,638,271
Trade accounts receivable and contract assets, net	201,751		183,989
Other current assets, net	195,993		189,821
Total current assets	1,954,448		2,908,086
Non-current assets:
Property and equipment, net	2,374,080		2,390,313
Operating lease right-of-use assets	140,739		128,303
Goodwill	511,266		511,597
Regulatory authorizations, net	471,010		478,762
Other intangible assets, net	14,378		18,433
Other investments, net	351,884		284,937
Other non-current assets, net	364,553		352,921
Total non-current assets	4,227,910		4,165,266
Total assets	$	6,182,358	$	7,073,352

Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable	$	111,047	$	122,366
Current portion of long-term debt, net	—		898,237
Contract liabilities	134,635		104,569
Accrued expenses and other current liabilities	241,615		299,999
Total current liabilities	487,297		1,425,171
Non-current liabilities:
Long-term debt, net	1,495,805		1,495,256
Deferred tax liabilities, net	407,650		359,896
Operating lease liabilities	127,424		114,886
Other non-current liabilities	135,737		70,893
Total non-current liabilities	2,166,616		2,040,931
Total liabilities	2,653,913		3,466,102

Commitments and contingencies

The accompanying notes are an integral part of these Consolidated Financial Statements.

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ECHOSTAR CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(Unaudited)


Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both September 30, 2021 and December 31, 2020	—		—
Common stock, $0.001 par value, 4,000,000,000 shares authorized:
Class A common stock, $0.001 par value, 1,600,000,000 shares authorized, 57,939,820 shares issued and 39,810,942 shares outstanding at September 30, 2021 and 57,254,201 shares issued and 48,863,374 shares outstanding at December 31, 2020	58		57
Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both September 30, 2021 and December 31, 2020	48		48
Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2021 and December 31, 2020	—		—
Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2021 and December 31, 2020	—		—
Additional paid-in capital	3,341,751		3,321,426
Accumulated other comprehensive income (loss)	(205,470)		(187,876)
Accumulated earnings (losses)	732,814		583,591
Treasury shares, at cost	(406,295)		(174,912)
Total EchoStar Corporation stockholders' equity	3,462,906		3,542,334
Non-controlling interests	65,539		64,916
Total stockholders' equity	3,528,445		3,607,250
Total liabilities and stockholders' equity	$	6,182,358	$	7,073,352

The accompanying notes are an integral part of these Consolidated Financial Statements.

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ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)


	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Revenue:
Services and other revenue	$	432,739	$	426,532	$	1,294,355	$	1,251,932
Equipment revenue	71,921		46,970		192,721		146,702
Total revenue	504,660		473,502		1,487,076		1,398,634
Costs and expenses:
Cost of sales - services and other (exclusive of depreciation and amortization)	138,179		146,577		410,515		432,848
Cost of sales - equipment (exclusive of depreciation and amortization)	62,328		37,079		161,982		115,529
Selling, general and administrative expenses	112,986		115,358		341,143		354,437
Research and development expenses	7,974		7,676		22,960		21,378
Depreciation and amortization	120,596		129,822		368,864		392,077
Impairment of long-lived assets	—		—		245		—
Total costs and expenses	442,063		436,512		1,305,709		1,316,269
Operating income (loss)	62,597		36,990		181,367		82,365
Other income (expense):
Interest income, net	5,725		7,364		16,914		33,707
Interest expense, net of amounts capitalized	(16,313)		(37,967)		(79,848)		(112,458)
Gains (losses) on investments, net	3,748		14,998		112,981		(37,764)
Equity in earnings (losses) of unconsolidated affiliates, net	74		(2,134)		(2,596)		(5,866)
Foreign currency transaction gains (losses), net	(6,641)		6,681		(10,045)		(2,603)
Other, net	775		291		(12,922)		(379)
Total other income (expense), net	(12,632)		(10,767)		24,484		(125,363)
Income (loss) before income taxes	49,965		26,223		205,851		(42,998)
Income tax benefit (provision), net	(19,748)		(2,950)		(63,047)		(6,309)
Net income (loss)	30,217		23,273		142,804		(49,307)
Less: Net loss (income) attributable to non-controlling interests	3,192		2,167		6,419		9,040
Net income (loss) attributable to EchoStar Corporation common stock	$	33,409	$	25,440	$	149,223	$	(40,267)

Earnings (losses) per share - Class A and B common stock:
Basic and diluted earnings (losses) per share	$	0.38	$	0.26	$	1.64	$	(0.41)

The accompanying notes are an integral part of these Consolidated Financial Statements.

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ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

(Unaudited)


	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	30,217	$	23,273	$	142,804	$	(49,307)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(28,692)		(11,585)		(15,414)		(112,100)
Unrealized gains (losses) on available-for-sale securities	(234)		27		(214)		(248)
Other	119		6,900		(4,792)		4,322
Amounts reclassified to net income (loss):
Realized losses (gains) on available-for-sale debt securities	(5)		(1)		(12)		(1)
Total other comprehensive income (loss), net of tax	(28,812)		(4,659)		(20,432)		(108,027)
Comprehensive income (loss)	1,405		18,614		122,372		(157,334)
Less: Comprehensive loss (income) attributable to non-controlling interests	8,760		4,098		9,257		29,667
Comprehensive income (loss) attributable to EchoStar Corporation	$	10,165	$	22,712	$	131,629	$	(127,667)

The accompanying notes are an integral part of these Consolidated Financial Statements.

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ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Amounts in thousands)

(Unaudited)


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Earnings (Losses)		Treasury Shares, at cost		Non-controlling Interests		Total
Balance, June 30, 2020	$	105	$	3,311,861	$	(206,810)	$	558,034	$	(137,347)	$	58,425	$	3,584,268
Issuances of Class A common stock:
Exercise of stock options	—		477		—		—		—		—		477
Employee Stock Purchase Plan	—		2,766		—		—		—		—		2,766
Stock-based compensation	—		2,378		—		—		—		—		2,378
Contribution by non-controlling interest holder	—		—		—		—		—		4,268		4,268
Other comprehensive income (loss)	—		—		(6,670)		—		—		(1,931)		(8,601)
Net income (loss)	—		—		—		25,440		—		(2,167)		23,273
Other, net	—		386		3,942		—		—		(21)		4,307
Balance, September 30, 2020	$	105	$	3,317,868	$	(209,538)	$	583,474	$	(137,347)	$	58,574	$	3,613,136

Balance, June 30, 2021	$	106	$	3,337,190	$	(182,226)	$	699,405	$	(343,869)	$	74,299	$	3,584,905
Issuances of Class A common stock:
Employee Stock Purchase Plan	—		2,473		—		—		—		—		2,473
Stock-based compensation	—		2,088		—		—		—		—		2,088

Other comprehensive income (loss)	—		—		(23,244)		—		—		(5,568)		(28,812)
Net income (loss)	—		—		—		33,409		—		(3,192)		30,217
Treasury share repurchase	—		—		—		—		(62,426)		—		(62,426)
Balance, September 30, 2021	$	106	$	3,341,751	$	(205,470)	$	732,814	$	(406,295)	$	65,539	$	3,528,445

The accompanying notes are an integral part of these Consolidated Financial Statements.

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ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Amounts in thousands)

(Unaudited)


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Earnings (Losses)		Treasury Shares, at cost		Non-controlling Interests		Total
Balance, December 31, 2019	$	105	$	3,290,483	$	(122,138)	$	632,809	$	(131,454)	$	75,748	$	3,745,553
Cumulative effect of accounting changes	—		—		—		(9,068)		—		(240)		(9,308)
Balance, January 1, 2020	105		3,290,483		(122,138)		623,741		(131,454)		75,508		3,736,245
Issuances of Class A common stock:
Exercise of stock options	—		983		—		—		—		—		983
Employee benefits	—		6,920		—		—		—		—		6,920
Employee Stock Purchase Plan	—		8,066		—		—		—		—		8,066
Stock-based compensation	—		6,887		—		—		—		—		6,887
Issuance of equity and contribution of assets pursuant to the Yahsat JV formation	—		4,338		—		—		—		(1,514)		2,824
Contribution by non-controlling interest holder	—		—		—		—		—		14,268		14,268
Other comprehensive income (loss)	—		—		(91,342)		—		—		(20,627)		(111,969)
Net income (loss)	—		—		—		(40,267)		—		(9,040)		(49,307)
Treasury share repurchase	—		—		—		—		(5,893)		—		(5,893)
Other, net	—		191		3,942		—		—		(21)		4,112
Balance, September 30, 2020	$	105	$	3,317,868	$	(209,538)	$	583,474	$	(137,347)	$	58,574	$	3,613,136

Balance, December 31, 2020	$	105	$	3,321,426	$	(187,876)	$	583,591	$	(174,912)	$	64,916	$	3,607,250
Issuances of Class A common stock:
Employee benefits	1		7,124		—		—		—		—		7,125
Employee Stock Purchase Plan	—		7,288		—		—		—		—		7,288
Stock-based compensation	—		5,913		—		—		—		—		5,913
Contribution by non-controlling interest holder	—		—		—		—		—		9,880		9,880
Other comprehensive income (loss)	—		—		(17,594)		—		—		(2,838)		(20,432)
Net income (loss)	—		—		—		149,223		—		(6,419)		142,804
Treasury share repurchase	—		—		—		—		(231,383)		—		(231,383)
Balance, September 30, 2021	$	106	$	3,341,751	$	(205,470)	$	732,814	$	(406,295)	$	65,539	$	3,528,445

The accompanying notes are an integral part of these Consolidated Financial Statements.

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ECHOSTAR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	For the nine months ended September 30,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	142,804	$	(49,307)
Adjustments to reconcile net income (loss) to cash flows provided by (used for) operating activities:
Depreciation and amortization	368,864		392,077
Impairment of long-lived assets	245		—
Losses (gains) on investments, net	(112,981)		37,764
Equity in losses (earnings) of unconsolidated affiliates, net	2,596		5,866
Foreign currency transaction losses (gains), net	10,045		2,603
Deferred tax provision (benefit), net	45,950		4,474
Stock-based compensation	5,913		6,887
Amortization of debt issuance costs	2,192		3,212
Other, net	16,691		(9,145)
Changes in assets and liabilities, net:
Trade accounts receivable and contract assets, net	(20,894)		(9,157)
Other current assets, net	(7,841)		(21,090)
Trade accounts payable	(15,386)		(17,824)
Contract liabilities	30,066		(11,438)
Accrued expenses and other current liabilities	(103,457)		29,155
Non-current assets and non-current liabilities, net	63,055		1,325
Net cash provided by (used for) operating activities	427,862		365,402

Cash flows from investing activities:
Purchases of marketable investment securities	(1,452,982)		(2,234,671)
Sales and maturities of marketable investment securities	2,099,815		1,231,790
Expenditures for property and equipment	(352,003)		(295,041)
Expenditures for externally marketed software	(25,634)		(27,824)
Purchase of other investments	(50,000)		(5,500)
Sales of other investments	10,951		—
Net cash provided by (used for) investing activities	230,147		(1,331,246)

Cash flows from financing activities:
Repurchase and maturity of the 2021 Senior Unsecured Notes	(901,818)		—
Treasury share repurchase	(229,383)		(5,893)
Contribution by non-controlling interest holder	9,880		14,268
Proceeds from Class A common stock options exercised	—		983
Proceeds from Class A common stock issued under the Employee Stock Purchase Plan	7,288		8,066
Payment of in-orbit incentive obligations	(1,800)		(1,268)
Payment of finance lease obligations	(578)		(606)
Other, net	(966)		998
Net cash provided by (used for) financing activities	(1,117,377)		16,548

Effect of exchange rates on cash and cash equivalents	(3,114)		(8,348)
Net increase (decrease) in cash and cash equivalents	(462,482)		(957,644)
Cash and cash equivalents, including restricted amounts, beginning of period	896,812		1,521,889
Cash and cash equivalents, including restricted amounts, end of period	$	434,330	$	564,245

The accompanying notes are an integral part of these Consolidated Financial Statements.

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ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION AND BUSINESS ACTIVITIES

Principal Business

EchoStar Corporation (which, together with its subsidiaries, is referred to as “EchoStar,” the “Company,” “we,” “us” and “our”) is a holding company that was organized in October 2007 as a corporation under the laws of the State of Nevada and has operated as a separately traded public company from DISH Network Corporation (“DISH”) since 2008. Our Class A common stock is publicly traded on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “SATS.”

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.

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ECHOSTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

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 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 stockholders’ 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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ECHOSTAR CORPORATION

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
	September 30, 2021		December 31, 2020
Trade accounts receivable and contract assets, net:
Sales and services	$	167,048	$	149,513
Leasing	5,662		4,554
Total trade accounts receivable	172,710		154,067
Contract assets	42,839		45,308
Allowance for doubtful accounts	(13,798)		(15,386)
Total trade accounts receivable and contract assets, net	$	201,751	$	183,989

Contract liabilities:
Current	$	134,635	$	104,569
Non-current	9,746		10,519
Total contract liabilities	$	144,381	$	115,088

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


	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Revenue	$	16,521	$	3,794	$	81,543	$	63,581

Contract Acquisition Costs

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


	For the nine months ended September 30,
	2021		2020
Balance at beginning of period	$	99,837	$	113,592
Additions	54,701		68,589
Amortization expense	(66,815)		(75,429)
Foreign currency translation	(828)		(2,984)
Balance at end of period	$	86,895	$</