DISH Network (DISH) - 2021 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION This section provides the company's consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls Item 1. Financial Statements This section presents DISH Network's consolidated financial statements, detailing financial position and performance for the nine months ended September 30, 2021 Condensed Consolidated Balance Sheets This table presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheet Data (in thousands) | Account | As of Sep 30, 2021 | As of Dec 31, 2020 | | :--- | :--- | :--- | | Total current assets | $7,278,537 | $7,022,158 | | Total noncurrent assets | $33,935,700 | $31,217,789 | | Total assets | $41,214,237 | $38,239,947 | | Total current liabilities | $6,309,344 | $6,084,746 | | Total long-term obligations | $19,566,740 | $18,023,908 | | Total liabilities | $25,876,084 | $24,108,654 | | Total stockholders' equity | $14,955,852 | $13,780,645 | | Total liabilities and stockholders' equity | $41,214,237 | $38,239,947 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This table details the company's revenues, operating income, and net income over specified periods, reflecting operational performance Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $4,449,635 | $4,531,591 | $13,434,448 | $10,936,070 | | Operating income (loss) | $717,705 | $811,248 | $2,489,019 | $1,592,976 | | Net income (loss) | $567,520 | $532,959 | $1,890,534 | $1,112,638 | | Net income (loss) attributable to DISH Network | $557,042 | $504,599 | $1,858,313 | $1,030,041 | | Diluted earnings per share | $0.88 | $0.86 | $2.93 | $1.77 | Condensed Consolidated Statements of Cash Flows This table summarizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash flows from operating activities | $3,259,667 | $2,717,691 | | Net cash flows from investing activities | ($3,836,933) | ($3,180,493) | | Net cash flows from financing activities | ($532,206) | ($156,937) | | Net (decrease) in cash and equivalents | ($1,109,472) | ($619,739) | Notes to Condensed Consolidated Financial Statements This section provides additional information and disclosures essential for understanding the condensed consolidated financial statements Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operational results, focusing on segment performance and 5G network deployment strategy Overview This section provides an overview of the company's primary business segments and their respective strategies - The company operates two primary business segments: Pay-TV (under DISH® and SLING® brands) and Wireless, which is further divided into Retail Wireless and 5G Network Deployment[389] - The Pay-TV strategy focuses on providing the best value, technology, and customer service, with SLING TV targeting consumers who do not subscribe to traditional pay-TV services[390] - The Retail Wireless strategy (Boost Mobile, Ting Mobile, Republic Wireless) aims to grow its subscriber base by offering competitive plans and value-added services while the 5G network is being built[391] - The 5G Network Deployment strategy is to build the nation's first cloud-native, Open Radio Access Network (O-RAN) based 5G network, with agreements with tower companies like Crown Castle and American Tower, and technology vendors like Amazon, Dell, and VMware[392][394] Recent Developments This section outlines recent events impacting the company, including the ongoing effects of the COVID-19 pandemic and key acquisitions - The COVID-19 pandemic continues to impact business operations, particularly through supply chain interruptions for set-top boxes, wireless devices, and network equipment, which could affect the 5G network buildout timeline[395][397] - The company completed the acquisition of Boost Mobile on July 1, 2020, entering the retail wireless market with over 9 million subscribers[400] - The company completed the acquisition of Ting Mobile on August 1, 2020, adding over 200,000 subscribers[403] - The company completed the acquisition of Republic Wireless on May 1, 2021, adding approximately 200,000 subscribers[405] RESULTS OF OPERATIONS – Segments This section analyzes the financial performance of the company's Pay-TV and Wireless segments, including revenue and operating income Consolidated Revenue by Segment (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Pay-TV | $3,220,128 | $3,190,664 | 0.9% | | Wireless | $1,230,072 | $1,341,512 | (8.3%) | | Total | $4,449,635 | $4,531,591 | (1.8%) | Consolidated Operating Income by Segment (in thousands) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Pay-TV | $699,730 | $803,817 | (12.9%) | | Wireless | $17,975 | $7,431 | 141.9% | | Total | $717,705 | $811,248 | (11.5%) | LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's cash position, capital expenditures, and financing activities, particularly for 5G network deployment - As of September 30, 2021, the company held $5.248 billion in cash, cash equivalents, and current marketable investment securities, an increase of $1.515 billion from year-end 2020[564] Free Cash Flow Reconciliation (in thousands) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash flows from operating activities | $3,259,667 | $2,717,691 | | Purchases of property and equipment (incl. capitalized interest) | ($1,389,311) | ($955,814) | | Free cash flow | $1,870,356 | $1,761,877 | - The company expects to incur significant capital expenditures for its 5G Network Deployment, which are anticipated to increase substantially through 2021 and beyond[586][589] - On May 24, 2021, the company issued $1.5 billion of 5 1/8% Senior Notes due 2029, and the $2.0 billion 6 3/4% Senior Notes due 2021 were fully repurchased or redeemed as of June 1, 2021[594] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its market risk during the nine months ended September 30, 2021 - There have been no material changes in the company's market risk during the nine months ended September 30, 2021[598] Controls and Procedures Management evaluated the company's disclosure controls and procedures, concluding they were effective with no material changes during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[599] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[600] PART II — OTHER INFORMATION This section covers additional information including legal proceedings, risk factors, equity sales, and a list of filed exhibits Legal Proceedings This section refers to Note 11 in the financial statements for information regarding the company's legal proceedings - Information regarding legal proceedings is detailed in Note 11 of the financial statements[602] Risk Factors This section refers to the Annual Report on Form 10-K for a detailed discussion of the company's risk factors - A detailed discussion of risk factors is included in the company's Annual Report on Form 10-K for the year ended December 31, 2020[603] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no Class A common stock repurchases during Q3 2021 and authorized a new $1.0 billion repurchase program - No shares of Class A common stock were repurchased during the three months ended September 30, 2021[605][607] - On November 1, 2021, the Board of Directors authorized a new stock repurchase program for up to $1.0 billion of Class A common stock, valid through December 31, 2022[605] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and key agreements - Exhibits filed include CEO/CFO certifications and the Network Services Agreement with AT&T dated July 14, 2021[609]