2010 Annual Report
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EchoStar Annual Report Year Ended December 31, 2010 March 24, 2011 Dear EchoStar Corporation Shareholders: After three full years as an independent, publicly-traded company, we continue to concentrate on developing digital equipment and satellite service solutions for domestic and international satellite, cable TV, IPTV, terrestrial and telecommunications operators. I am pleased to report that EchoStar had a strong year in 2010. Our revenue grew 23% to $2.35 billion. Throughout the year, we continued to focus on efficiency across our operations, which resulted in improved operating margins. Despite difficult economic conditions, we see opportunities for growth in emerging markets. To this end, our Mexican joint venture, Dish Mexico, is one of the fastest growing DTH service providers in the world, approaching two million subscribers with healthy margins. As we identify opportunities, we continue to evaluate partnerships, joint ventures and strategic acquisitions that will leverage our digital equipment, satellite and operational expertise around the globe. Sling Media continues to deliver on the promise of TV Everywhere. Its placeshifting platform expanded further onto iPad, Android, Windows Phone and other Internet-connected devices. For example, we launched our award winning Slingbox 700U, the smallest, thinnest and easiest to install Slingbox in our history. Furthermore, our Sling related revenues are rising due to expanded retail growth and sales to pay-TV operators. Meanwhile, the acquisition of Move Networks and its adaptive video delivery technologies increase our IPTV capability in the U.S. and abroad. Move provides us with the ability to deliver an Over The Top video service as well as a competitive advantage in the video delivery marketplace. While we maintain our focus on areas that historically have been successful for us, our pending acquisition of Hughes Communications will expand EchoStar’s ability for video and data delivery via satellite throughout the world. This transaction brings together two premier providers of satellite communications services, which will enable the combined companies to provide best-in-class service to our customers. We will also remember 2010 with sadness for the passing of Dean Olmstead, President of EchoStar Satellite Services. His legacy at EchoStar is an outstanding team with solid leadership that continues his vision of growing EchoStar into a market-leading provider of satellite services. The pending acquisition of Hughes exemplifies our commitment to Dean’s vision. Let me close by expressing my pride in the worldwide EchoStar team for bringing us to this point. Combining our knowledge and expertise in video systems and delivery with the technology and innovation of Hughes, Sling and Move will position us for outstanding market growth and industry leadership. As the market landscape changes, EchoStar continues to be a predominant leader providing customers with video and data – Anytime, Anywhere. Thank you for your continued support. Sincerely, Charles W. Ergen Chairman of the Board of Directors UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL 7 YEAR ENDED DECEMBER 31, 2010 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: 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) Registrant’s telephone number, including area code: (303) 706-4000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Class A common stock, $0.001 par value The Nasdaq Stock Market L.L.C. Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 7 No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No 7 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 7 No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes 7 No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 7 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer 7 Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes No 7 As of June 30, 2010, the aggregate market value of Class A common stock held by non-affiliates of the registrant was $712 million based upon the closing price of the Class A common stock as reported on the Nasdaq Global Select Market as of the close of business on that date. As of February 14, 2011, the registrant’s outstanding common stock consisted of 37,583,445 shares of Class A common stock and 47,687,039 shares of Class B common stock, each $0.001 par value. DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated into this Form 10-K by reference: Portions of the registrant’s definitive Proxy Statement to be filed in connection with its 2011 Annual Meeting of Shareholders are incorporated by reference in Part III. TABLE OF CONTENTS PART I Disclosure Regarding Forward-Looking Statements............................................................................. i Item 1. Business................................................................................................................................................. 1 Item 1A. Risk Factors........................................................................................................................................... 14 Item 1B. Unresolved Staff Comments.................................................................................................................. 31 Item 2. Properties............................................................................................................................................... 32 Item 3. Legal Proceedings................................................................................................................................. 32 Item 4. (Removed and Reserved)....................................................................................................................... None PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities............................................................................................. 38 Item 6. Selected Financial Data......................................................................................................................... 39 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................................................... 64 Item 8. Financial Statements and Supplementary Data...................................................................................... 65 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................. 65 Item 9A. Controls and Procedures........................................................................................................................ 66 Item 9B. Other Information.................................................................................................................................. 66 PART III Item 10. Directors, Executive Officers and Corporate Governance..................................................................... 67 Item 11. Executive Compensation....................................................................................................................... 67 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters..................................................................................................................................................