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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 JUNE 30, 2025.

☐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

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.)

9601 South Meridian Boulevard
Englewood, Colorado		80112-5308
(Address of principal executive offices)		(Zip Code)

(303) 723-1000		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: None

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 July 31, 2025, 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

HUGHES SATELLITE SYSTEMS CORPORATION

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

	Disclosure Regarding Forward Looking Statements	i
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Changes in Stockholder’s Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to the Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Narrative Analysis of Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	*
Item 4.	Controls and Procedures	46

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	*
Item 3.	Defaults Upon Major Securities	*
Item 4.	Mine Safety Disclosures	None
Item 5.	Other Information	None
Item 6.	Exhibits	49
	Signatures	50

*	This item has been omitted pursuant to the reduced disclosure format as set forth in General Instructions (H)(2)(a) of Form 10-Q.

Table of Contents

PART I — FINANCIAL INFORMATION

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Unless otherwise required by the context, in this report, the words “HSSC,” the “Company,” “we,” “our” and “us” refer to Hughes Satellite Systems Corporation and its subsidiaries, “EchoStar” refers to EchoStar Corporation, our parent company, “DISH Network” refers to DISH Network Corporation, a wholly owned, indirect subsidiary of EchoStar, and its subsidiaries, and “DISH DBS” refers to DISH DBS Corporation, a wholly owned, indirect subsidiary of DISH Network, and its subsidiaries.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, in particular, statements about our plans, objectives and strategies, growth opportunities in our industries and businesses, our expectations regarding future results, financial condition, liquidity and capital requirements, our estimates regarding the impact of regulatory developments and legal proceedings, and other trends and projections. Forward-looking statements are not historical facts and may be identified by words such as “future,” “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate,” “expect,” “predict,” “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 Quarterly Report on Form 10-Q and represent management’s current views and assumptions. Forward-looking statements are not guarantees of future performance, events or results and involve known and unknown risks, uncertainties and other factors, which may be beyond our control. 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, those summarized below:

SUMMARY OF RISK FACTORS

Risks Relating to the Pending FCC Review

●

In response to the uncertainty created by the FCC inquiries, our parent, EchoStar may take one or more significant actions in order to protect their interest in their Wireless Licenses and other assets, which actions may also directly impact us and could negatively impact your investment.

●

The FCC’s review of our parent, EchoStar’s compliance with network build-out requirements could lead to the loss or impairment of certain of their existing spectrum licenses.

Competition and Economic Risks

●

We face intense and increasing competition from providers of broadband services. Changing consumer behavior and new technologies in our industry may reduce our subscriber activations and may cause our subscribers to purchase fewer services from us or to cancel our services altogether, resulting in less revenue to us.

●

If we are unable to take advantage of technological developments on a timely basis, or at all, we may experience a decline in demand for our services or face challenges in implementing or evolving our business strategy.

●

Our business is partially dependent on enterprise revenue and any decline or reduction of that revenue could negatively impact our business, financial condition and results of operations.

Operational and Service Delivery Risks

●

Any deterioration in our operational performance, subscriber activations and churn rate and subscriber satisfaction could adversely affect our business, financial condition and results of operations.

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●

We have limited satellite capacity and any failures or reduced capacity, caused by, among other things, operational and environmental risks, could adversely affect our business, financial condition and results of operations.

●

Our foreign operations and investments expose us to risks and restrictions not present in our domestic operations.

●

Extreme weather may result in risk of damage to our infrastructure and therefore our ability to provide services, and may lead to changes in federal, state and foreign government regulation, all of which could materially and adversely affect our business, results of operations and financial condition.

●

We rely on a single vendor or a limited number of vendors to provide certain key products or services to us, and the inability of these key vendors to meet our needs could have a material adverse effect on our business.

●

Changes in trade policies, including, but not limited to, tariffs and other restrictions, could increase, among other things, our costs, disrupt our supply chain and negatively affect our business, operations and financial condition.

●

We depend on independent third parties to solicit orders for our services that represent a meaningful percentage of our total gross new subscriber activations.

Risks Related to our Human Capital

●

We rely on highly skilled personnel for our business, and any inability to hire and retain key personnel or to hire qualified personnel may negatively affect our business, financial condition and results of operations.

●

Our business growth and customer retention strategies rely in part on the work of technically skilled employees.

Risks Related to our Satellites

●

Our owned and leased satellites in orbit are subject to significant operational and environmental risks that could limit our ability to utilize these satellites.

●

Our satellites under construction are subject to risks related to, among other things, construction, technology, regulations and launch that could limit our ability to utilize these satellites, increase costs and adversely affect our business.

●

Our use of certain satellites is often dependent on satellite coordination agreements, which may be difficult to obtain.

Risks Related to our Products and Technology

●

Our business depends on certain intellectual property rights and on not infringing the intellectual property rights of others.

●

We are, and may become, party to various lawsuits which, if adversely decided, could have a significant adverse impact on our business, particularly lawsuits regarding intellectual property.

●

If our products contain defects, we could be subject to significant costs to correct such defects and our product and network service contracts could be delayed or cancelled, which could adversely affect our revenue.

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Risks Related to Cybersecurity

●

Our parent, EchoStar, has experienced and we may experience in the future consistent cyber-attacks and attempts to gain unauthorized access to our systems and any failure or inadequacy of our information technology infrastructure and communications systems or those of third parties that we use in our operations could disrupt or harm our business.

●

The confidentiality, integrity and availability of our services and products depends on the continuing operation of our information technology and other enabling systems.

Acquisition and Capital Structure Risks

●

We currently do not have the necessary cash on hand, projected future cash flows or committed financing to fund our obligations over the next twelve months, which raises substantial doubt about our ability to continue as a going concern.

●

We have substantial debt outstanding and may incur additional debt and covenants in our Indentures could limit our ability to undertake certain types of activities and adversely affect our liquidity.

●

We may pursue acquisitions, dispositions, capital expenditures, the development, acquisition and launch of new satellites and other strategic initiatives to complement or expand our business, which may not be successful and we may lose a portion or all of our investment in these acquisitions and transactions.

●

We will need additional capital, which may not be available on favorable terms or at all, to fund current obligations, to continue investing in our business and to finance acquisitions and other strategic transactions.

●

Our parent, EchoStar may voluntarily file for protection under the U.S. Bankruptcy Code to protect their Wireless Licenses and other assets.

●

Our parent, EchoStar is controlled by one principal stockholder who is also our Chairman.

Risks Related to the Regulation of Our Business

●

Our services depend on FCC licenses that can expire or be revoked or modified and applications for FCC licenses that may not be granted.

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 Quarterly Report on Form 10-Q and in Part I, Item 1A of our most recent Annual Report on Form 10‑K (the “10‑K”) filed with the Securities and Exchange Commission (“SEC”), those discussed in “Management’s Narrative Analysis of Results of Operations” herein and in the 10‑K and those discussed in other documents we file with the SEC. All cautionary statements made or referred to herein should be read as being applicable to all forward-looking statements wherever they appear. Investors should consider the risks and uncertainties described or referred to herein and should not place undue reliance on any forward-looking statements. The forward-looking statements speak only as of the date made, and we expressly disclaim any obligation to update these forward-looking statements.

iii

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Item 1. FINANCIAL STATEMENTS

HUGHES SATELLITE SYSTEMS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)


	As of
	June 30,		December 31,
	2025		2024
Assets
Current Assets:
Cash and cash equivalents	$	122,901	$	204,198
Marketable investment securities		17,774		—
Trade accounts receivable and contract assets, net of allowance for credit losses of $12,094 and $11,314, respectively		289,331		275,247
Prepaids and other assets		71,860		63,684
Inventory		178,358		151,043
Other current assets		55,312		48,034
Total current assets		735,536		742,206

Noncurrent Assets:
Property and equipment, net		1,021,337		1,097,190
Operating lease assets		887,604		939,896
Regulatory authorizations, net		404,916		404,698
Other intangible assets, net		9,953		11,082
Other investments		22,015		23,516
Other noncurrent assets, net		265,777		252,789
Total noncurrent assets		2,611,602		2,729,171
Total assets	$	3,347,138	$	3,471,377

Liabilities and Stockholder's Equity (Deficit)
Current Liabilities:
Trade accounts payable	$	94,439	$	99,519
Contract liabilities		87,523		81,558
Accrued interest		37,914		38,845
Accrued compensation		32,971		34,904
Accrued expenses		59,028		55,019
Operating lease liabilities		122,053		72,393
Other current liabilities		57,258		48,242
Current portion of long-term debt and other notes payable (Note 8)		11,218		9,548
Total current liabilities		502,404		440,028

Long-Term Obligations, Net of Current Portion:
Long-term debt and other notes payable, net of current portion (Note 8)		1,529,532		1,533,717
Deferred tax liabilities, net		145,309		191,559
Operating lease liabilities, noncurrent		772,505		830,629
Other noncurrent liabilities		78,907		85,385
Total long-term obligations, net of current portion		2,526,253		2,641,290
Total liabilities		3,028,657		3,081,318

Commitments and Contingencies (Note 9)

Stockholder's Equity (Deficit):
Common stock, $0.01 par value, 1,000,000 shares authorized, 1,078 shares issued and outstanding at both June 30, 2025 and December 31, 2024		—		—
Additional paid-in capital		1,496,780		1,487,758
Accumulated other comprehensive income (loss)		(167,506)		(190,810)
Accumulated earnings (deficit)		(1,063,999)		(958,518)
Total HSSC stockholder's equity (deficit)		265,275		338,430
Noncontrolling interests		53,206		51,629
Total stockholder's equity (deficit)		318,481		390,059
Total liabilities and stockholder's equity (deficit)	$	3,347,138	$	3,471,377

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HUGHES SATELLITE SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Revenue:
Service revenue	$	274,254	$	303,905	$	551,955	$	623,409
Equipment sales and other revenue		60,770		85,714		149,133		146,214
Total revenue		335,024		389,619		701,088		769,623

Costs and Expenses (exclusive of depreciation and amortization):
Cost of services		161,017		172,114		320,086		342,564
Cost of sales - equipment and other		63,409		78,283		144,995		134,663
Selling, general and administrative expenses		81,426		93,056		163,221		196,708
Depreciation and amortization		84,014		93,093		167,815		186,875
Total costs and expenses		389,866		436,546		796,117		860,810

Operating income (loss)		(54,842)		(46,927)		(95,029)		(91,187)

Other Income (Expense):
Interest income		2,247		3,555		4,747		20,570
Interest expense, net of amounts capitalized		(24,652)		(22,095)		(50,311)		(49,444)
Other, net (Note 4)		2,949		(3,682)		4,699		(5,106)
Total other income (expense), net		(19,456)		(22,222)		(40,865)		(33,980)

Income (loss) before income taxes		(74,298)		(69,149)		(135,894)		(125,167)
Income tax benefit (provision), net		16,475		11,274		29,031		17,026
Net income (loss)		(57,823)		(57,875)		(106,863)		(108,141)
Less: Net income (loss) attributable to noncontrolling interests		(737)		(1,893)		(1,382)		(6,540)
Net income (loss) attributable to HSSC	$	(57,086)	$	(55,982)	$	(105,481)	$	(101,601)

Comprehensive Income (Loss):
Net income (loss)	$	(57,823)	$	(57,875)	$	(106,863)	$	(108,141)
Other comprehensive income (loss):
Foreign currency translation adjustments		13,824		(17,473)		26,263		(25,711)
Unrealized gains (losses) on available-for-sale debt securities		(7)		(5)		(11)		(267)
Recognition of previously unrealized (gains) losses on available-for-sale debt securities included in net income (loss)		8		—		11		204
Total other comprehensive income (loss), net of tax		13,825		(17,478)		26,263		(25,774)
Comprehensive income (loss):		(43,998)		(75,353)		(80,600)		(133,915)
Less: Comprehensive income (loss) attributable to noncontrolling interests		421		(5,115)		1,577		(10,880)
Comprehensive income (loss) attributable to HSSC	$	(44,419)	$	(70,238)	$	(82,177)	$	(123,035)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HUGHES SATELLITE SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (DEFICIT)

(In thousands)

(Unaudited)


					Accumulated
			Additional		Other		Accumulated
	Common		Paid-in		Comprehensive		Earnings		Noncontrolling
	Stock		Capital		Income (Loss)		(Losses)		Interests		Total
Balance, December 31, 2023	$	—	$	1,484,064	$	(152,491)	$	279,885	$	67,631	$	1,679,089
Non-cash, stock-based compensation		—		993		—		—		—		993
Dividends to EchoStar Corporation		—		—		—		(1,029,000)		—		(1,029,000)
Other comprehensive income (loss)		—		—		(7,178)		—		(1,118)		(8,296)
Net income (loss)		—		—		—		(45,619)		(4,647)		(50,266)
Balance, March 31, 2024	$	—	$	1,485,057	$	(159,669)	$	(794,734)	$	61,866	$	592,520
Non-cash, stock-based compensation		—		1,544		—		—		—		1,544
Other comprehensive income (loss)		—		—		(14,256)		—		(3,222)		(17,478)
Net income (loss)		—		—		—		(55,982)		(1,893)		(57,875)
Balance, June 30, 2024	$	—	$	1,486,601	$	(173,925)	$	(850,716)	$	56,751	$	518,711


					Accumulated
			Additional		Other		Accumulated
	Common		Paid-in		Comprehensive		Earnings		Noncontrolling
	Stock		Capital		Income (Loss)		(Losses)		Interests		Total
Balance, December 31, 2024	$	—	$	1,487,758		(190,810)	$	(958,518)	$	51,629	$	390,059
Non-cash, stock-based compensation		—		2,961		—		—		—		2,961
Other comprehensive income (loss)		—		—		10,637		—		1,801		12,438
Net income (loss)		—		—		—		(48,395)		(645)		(49,040)
Balance, March 31, 2025	$	—	$	1,490,719	$	(180,173)	$	(1,006,913)	$	52,785	$	356,418
Non-cash, stock-based compensation		—		6,061		—		—		—		6,061
Other comprehensive income (loss)		—		—		12,667		—		1,158		13,825
Net income (loss)		—		—		—		(57,086)		(737)		(57,823)
Balance, June 30, 2025	$	—	$	1,496,780	$	(167,506)	$	(1,063,999)	$	53,206	$	318,481

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HUGHES SATELLITE SYSTEMS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Six Months Ended
	June 30,
	2025		2024
Cash Flows From Operating Activities:
Net income (loss)	$	(106,863)	$	(108,141)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization		167,815		186,875
Realized and unrealized losses (gains) on investments, impairments and other		(11)		(200)
Non-cash, stock-based compensation		9,022		2,537
Deferred tax provision (benefit), net		(43,977)		(40,888)
Equity in (earnings) losses of affiliates		(498)		2,523
Changes in allowance for credit losses		780		3,564
Foreign currency transaction losses (gains), net		(4,216)		2,796
Amortization of debt issuance costs		461		435
Noncurrent assets and noncurrent liabilities, net		(22,428)		12,868
Other, net		(304)		(942)
Changes in operating assets and operating liabilities, net:
Trade accounts receivable and contract assets, net		(10,485)		1,548
Other current assets		(21,709)		(33,974)
Trade accounts payable		(4,248)		(5,799)
Contract liabilities		5,965		(35,335)
Accrued expenses and other liabilities		41,872		(344,382)
Net cash flows from operating activities		11,176		(356,515)

Cash Flows From Investing Activities:
Purchases of marketable investment securities		(30,261)		—
Sales and maturities of marketable investment securities		12,800		414,323
Purchases of property and equipment (Note 6)		(61,341)		(123,649)
Expenditures for externally marketed software		(11,499)		(13,245)
Dividend received from unconsolidated affiliate		2,000		3,000
Other, net		(184)		—
Net cash flows from investing activities		(88,485)		280,429

Cash Flows From Financing Activities:
Payment of in-orbit incentive obligations		(3,824)		(1,480)
Dividends to EchoStar Corporation		—		(1,029,000)
Other, net		806		437
Net cash flows from financing activities		(3,018)		(1,030,043)

Effect of exchange rates on cash and cash equivalents		2,954		(3,646)

Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents		(77,373)		(1,109,775)
Cash and cash equivalents, including restricted amounts, beginning of period (Note 4)		205,813		1,277,741
Cash and cash equivalents, including restricted amounts, end of period (Note 4)	$	128,440	$	167,966

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HUGHES SATELLITE SYSTEMS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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” and “parent”). We were formed as a Colorado corporation in March 2011 to facilitate the acquisition by EchoStar (the “Hughes Acquisition”) of Hughes Communications, Inc. and its subsidiaries and related financing transactions. In connection with our formation, EchoStar contributed the assets and liabilities of its satellite services business to us, including the principal operating subsidiary of its satellite services business, EchoStar Satellite Services L.L.C. Substantially all of the voting power of the shares of EchoStar is owned beneficially by Charles W. Ergen, our Chairman, and by certain entities established for the benefit of his family.

We manage our business activities on a consolidated basis and operate as a single operating segment: Hughes. See Note 10 for information regarding our segment reporting.

We offer broadband satellite technologies and broadband internet products and services to consumer customers. We provide broadband network technologies, managed services, equipment, hardware, satellite services and communications solutions to government and enterprise customers. We also design, provide and install gateway and terminal equipment to customers for other satellite systems. In addition, we design, develop, construct and provide telecommunication networks comprising satellite ground segment systems and terminals to mobile system operators and our enterprise customers. We offer a robust suite of integrated, multi-transport solutions to enable airline and airline service providers to deliver reliable in-flight network connectivity serving both commercial and business aviation. We currently lease all of the capacity of EchoStar XXIV from EchoStar, effective December 31, 2023. As of June 30, 2025, we had 819,000 Broadband subscribers.

Recent Developments

Our parent, EchoStar received a letter from the Federal Communications Commission (the “FCC”) on May 9, 2025, indicating that the FCC was beginning a review of their compliance with certain obligations to provide 5G broadband service and raising certain questions regarding the September 2024 buildout extension granted by the FCC and mobile-satellite service (“MSS”) utilization in the 2 GHz band (the “Letter”). EchoStar responded to the FCC’s subsequent public notices with filings on May 27, 2025 and June 6, 2025. On June 11, 2025, EchoStar’s Chairman met with the FCC; during this meeting EchoStar explained that any reconsideration of the September 2024 grant of their construction deadline extensions, any after-the-fact change to the criteria upon which their build-out is judged, or any decision to upend the 2 GHz band’s sharing rules would threaten the viability of their current operations and future plans. While no resolution has been achieved yet, and it is possible that no such resolution will ultimately be achieved, EchoStar continues to explore an acceptable resolution of the FCC’s stated concerns in a manner that minimizes disruption to their businesses and lifts the regulatory uncertainty created by the inquiries. The FCC review has introduced the possibility of reversing prior FCC grants of authority to EchoStar. This uncertainty over EchoStar’s spectrum rights has effectively frozen their ability to make decisions regarding their 5G network buildout, has materially adversely impacted their ability to implement and adjust their overall business plan and has required them to re-evaluate the deployment of their resources. In light of the continued uncertainty related to the FCC inquiries, EchoStar elected not to make interest payments on a certain portion of their long-term senior notes on their respective scheduled due dates. EchoStar subsequently made such payments, including interest on the defaulted interest, within the applicable 30-day

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HUGHES SATELLITE SYSTEMS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

grace periods to make such interest payments. EchoStar remains focused on resolving the FCC’s stated concerns. EchoStar continues to progress wide-ranging efforts to explore alternative or complementary pathways that could, if successfully implemented, resolve the FCC’s stated concerns in a manner acceptable to them.

Future Capital Requirements

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Our cash and cash equivalents and marketable investment securities totaled $141 million as of June 30, 2025 (“Cash on Hand”). As reflected in the condensed consolidated financial statements as of June 30, 2025, we have $1.5 billion of debt maturing in August 2026.

Because we do not currently have the necessary Cash on Hand and/or projected future cash flows or committed financing to fund our obligations for at least twelve months from the issuance of these condensed consolidated financial statements, substantial doubt exists about our ability to continue as a going concern. To address our capital needs, we are in active discussions with funding sources to raise additional capital and/or restructure our outstanding debt. We cannot provide assurances that we will be successful in obtaining such new financing and/or restructuring the existing debt obligations necessary for us to have sufficient liquidity. In addition, our parent, EchoStar, may not be able to provide additional liquidity in the future as substantial doubt exists about their ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we not continue as a going concern.

2.	Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required for complete financial statements prepared under GAAP. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024. Certain prior period amounts have been reclassified to conform to the current period presentation.

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HUGHES SATELLITE SYSTEMS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Principles of Consolidation

We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities, (“VIEs”) where we have been determined to be the primary beneficiary. The portion of equity in a subsidiary not attributable, directly or indirectly, to us are recorded as noncontrolling interests or redeemable noncontrolling interests. Non-consolidated investments are accounted for using the equity method when we have the ability to significantly influence the operating decisions of the investee. When we do not have the ability to significantly influence the operating decisions of an investee, these equity securities are classified as either marketable investment securities or other investments, which will be initially recorded at cost, and based on observable market prices, will be adjusted to their fair value. We record fair value adjustments in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are based on historical experience, observable market inputs, and other reasonable assumptions in accounting for, among other things, allowances for credit losses, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under EchoStar’s stock based compensation plans, fair value of assets and liabilities acquired in business combinations, inputs or outputs used to recognize revenue over time, including amortization periods for deferred contract acquisition costs and relative standalone selling prices of performance obligations, finance leases, asset impairments, estimates of future cash flows used to evaluate and recognize impairments, useful lives of property, equipment and intangible assets, incremental borrowing rate (“IBR”) on lease right of use assets, nonrefundable upfront fees, independent third-party retailer incentives and subscriber lives and likelihood of certain contingent events. Economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur.

Concentration of Credit Risk

Cash and cash equivalents are maintained with several financial institutions domestically and internationally. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with investment-grade credit ratings. We routinely assess the financial strength of significant customers, and this assessment, combined with the large number and geographical diversity of its customers, limits our concentration of risk with respect to receivables from contracts with customers. As of June 30, 2025, our concentration of credit risk is approximately evenly spread across our portfolio of customers.

Fair Value Measurements

We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values,

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HUGHES SATELLITE SYSTEMS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We apply the following hierarchy in determining fair value:

●

Level 1, defined as observable inputs being quoted prices in active markets for identical assets;

●

Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; and quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

●

Level 3, defined as unobservable inputs for which little or no market data exists, consistent with reasonably available assumptions made by other participants therefore requiring assumptions based on the best information available.

As of June 30, 2025 and December 31, 2024, the carrying amount for cash and cash equivalents, trade accounts receivable (net of allowance for credit losses) and current liabilities (excluding the “Current portion of long-term debt and other notes payable”) was equal to or approximated fair value due to their short-term nature or proximity to current market rates.

Fair values of our marketable investment securities are measured on a recurring basis based on a variety of observable market inputs. For our investments in publicly traded equity securities and U.S. government securities, fair value ordinarily is determined based on Level 1 measurements that reflect quoted prices for identical securities in active markets. Fair values of our investments in other marketable debt securities are generally based on Level 2 measurements as the markets for such debt securities are less active. We consider trades of identical debt securities on or near the measurement date as a strong indication of fair value and matrix pricing techniques that consider par value, coupon rate, credit quality, maturity and other relevant features may also be used to determine fair value of our investments in marketable debt securities. Additionally, we use fair value measurements from time to time in connection with other investments, asset impairment testing and the assignment of purchase consideration to assets and liabilities of acquired companies. Those fair value measurements typically include significant unobservable inputs and are categorized within Level 3 of the fair value hierarchy. Transfers between levels in the fair value hierarchy are considered to occur at the beginning of the quarterly accounting period. See Note 4 for the fair value of our marketable investment securities.

Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of non-publicly traded debt are based on, among other things, available trade information, valuations performed by a third party, and/or an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. The non-publicly traded debt is categorized within Level 3 of the fair value hierarchy. See Note 8 for the fair value of our debt.

Assets Recognized Related to the Costs to Obtain a Contract with a Customer

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs , including those with our independent third-party retailers, meet the requirements to be capitalized, and payments made under these programs are capitalized and amortized to expense over the estimated customer life or the contract term. These amounts are capitalized in “Prepaids and other assets” and “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets, and then amortized in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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Advertising Costs

We recognize advertising expense when incurred as a component of “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Advertising expenses totaled $9 million and $11 million for the three months ended June 30, 2025 and 2024, respectively. Advertising expenses totaled $19 million and $24 million for the six months ended June 30, 2025 and 2024, respectively.

Research and Development

Research and development costs, not incurred in connection with customer requirements, are expensed as incurred and are included as a component of “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Additionally, customer-related research and development costs are incurred in connection with the specific requirements of a customer’s order; in such instances, the amounts for these customer funded development efforts are also included in “Cost of sales - equipment and other” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Research and development costs totaled $10 million and $20 million for the three months ended June 30, 2025 and 2024, respectively. Research and development costs totaled $21 million and $36 million for the six months ended June 30, 2025 and 2024, respectively.

New Accounting Pronouncements

Not Yet Adopted

Income Taxes. On December 14, 2023, the FASB issued ASU 2023-9, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which will enhance income tax disclosures. ASU 2023-09 requires among other items disaggregated information in a reporting entity’s rate reconciliation table, clarification on uncertain tax positions and the related financial statement impact as well as information on income taxes paid on a disaggregated basis. This standard is effective for fiscal years beginning after December 15, 2024. We plan to adopt the standard when it becomes effective for us beginning in our fiscal year 2025 annual financial statements, and the adoption of the standard will impact certain of our income tax disclosures.

Disaggregation of Income Statement Expenses. On November 5, 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which will enhance financial statement reporting by providing additional information about specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization. This standard will be effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact the adoption of ASU 2024-03 will have on our condensed consolidated financial statements, related disclosures and control environment.

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3.	Supplemental Data - Statements of Cash Flows

The following table presents certain supplemental cash flow and other non-cash data. See Note 7 for supplemental cash flow and non-cash data related to leases.


	For the Six Months Ended
	June 30,
	2025		2024

	(In thousands)
Cash paid for interest (including capitalized interest)	$	51,023	$	51,790
Cash paid for income taxes to EchoStar Corporation, net of refunds		1,343		200,346
Accrued capital expenditures		3,433		4,896

4.	Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investments

Our marketable investment securities, restricted cash and cash equivalents, and other investments consisted of the following:


	As of
	June 30,		December 31,
	2025		2024

	(In thousands)
Marketable investment securities:
Current marketable investment securities:
Corporate bonds	$	12,501	$	—
Commercial paper		5,000		—
Other debt securities		273		—
Total current marketable investment securities		17,774		—

Restricted cash and cash equivalents (1)		5,539		1,615

Other investments
Equity method investments		10,737		12,238
Cost method investments		11,278		11,278
Total other investments		22,015		23,516

Total marketable investment securities, restricted cash and cash equivalents, and other investments	$	45,328	$	25,131

(1)	Restricted cash and cash equivalents are included in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets.

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Equity Method Investments

Deluxe/EchoStar LLC

We own 50% of Deluxe/EchoStar LLC (“Deluxe”), a joint venture that we entered into in 2010 to build an advanced digital cinema satellite distribution network targeting delivery to digitally equipped theaters in the U.S. and Canada.

Broadband Connectivity Solutions (Restricted) Limited

We own 20% of Broadband Connectivity Solutions (Restricted) Limited (together with its subsidiaries, “BCS”), a joint venture that we entered into in 2018 to provide commercial Ka-band satellite broadband services across Africa, the Middle East and southwest Asia operating over Yahsat’s Al Yah 2 and Al Yah 3 Ka-band satellites. The Al Yah 3 Ka-band satellite is no longer in service.

Fair Value Measurements

The following table presents our marketable investment securities categorized by the fair value hierarchy, certain of which have historically experienced volatility:


	As of
	June 30, 2025								--	December 31, 2024
	Level 1		__	Level 2		__	Total		__	Level 1		__	Level 2		__	Total

	(In thousands)
Cash and cash equivalents (including restricted):
Cash	$	100,484		$	—		$	100,484		$	115,409		$	—		$	115,409
Cash equivalents		6,812			21,144			27,956			1,819			88,585			90,404
Total	$	107,296		$	21,144		$	128,440		$	117,228		$	88,585		$	205,813

Available-for-sale debt securities:
Corporate bonds	$	—		$	12,501		$	12,501		$	—		$	—		$	—
Commercial paper		—			5,000			5,000			—			—			—
Other debt securities		—			273			273			—			—			—
Total	$	—		$	17,774		$	17,774		$	—		$	—		$	—

As of June 30, 2025, marketable investment securities included debt securities of $7 million with contractual maturities within one year and $11 million with contractual maturities extending longer than one year through and including five years.

As of June 30, 2025 and December 31, 2024, we did not have any investments that were categorized within, or transferred into or out of, Level 3 of the fair value hierarchy.

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Gains and Losses on Sales and Changes in Carrying Amounts of Investments and Other

“Other, net” within “Other Income (Expense)” included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
Other, net:	2025		2024		2025		2024

	(In thousands)
Marketable and non-marketable investment securities - realized and unrealized gains (losses)	$	8	$	—	$	11	$	200
Equity in earnings (losses) of unconsolidated affiliates		901		(1,190)		498		(2,523)
Foreign currency transaction gains (losses)		2,081		(2,510)		4,216		(2,796)
Other		(41)		18		(26)		13
Total	$	2,949	$	(3,682)	$	4,699	$	(5,106)

5.	Inventory

Inventory consisted of the following:


	As of
	June 30,		December 31,
	2025		2024

	(In thousands)
Finished goods	$	105,042	$	90,147
Work-in-process		37,084		30,302
Raw materials		36,232		30,594
Total inventory	$	178,358	$	151,043

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6.	Property and Equipment and Intangible Assets

Property and Equipment

Property and equipment consisted of the following:


			Depreciable		As of
			Life		June 30,		December 31,
	(In Years)				2025		2024

					(In thousands)
Equipment leased to customers		2	-	4	$	855,631	$	865,003
Satellites		5	-	15		1,214,974		1,210,437
Satellites acquired under finance lease agreements			15			356,275		344,972
Furniture, fixtures, equipment and other		1	-	12		693,494		682,614
Software and computer equipment		1	-	5		314,962		300,255
Buildings and improvements		1	-	30		131,316		129,779
Land			-			13,618		13,460
Construction in progress			-			6,976		7,980
Total property and equipment						3,587,246		3,554,500
Accumulated depreciation						(2,565,909)		(2,457,310)
Property and equipment, net (1)					$	1,021,337	$	1,097,190

(1)	As of June 30, 2025 and December 31, 2024, there were no refunds and other receipts of purchases of property and equipment.

Depreciation and amortization expense consisted of the following:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

	(In thousands)
Equipment leased to customers	$	27,983	$	43,631	$	55,131	$	71,700
Satellites		23,370		26,646		46,692		53,545
Buildings, furniture, fixtures, equipment and other		15,917		7,192		32,773		30,077
Software and computer equipment		7,171		6,601		14,091		13,203
Intangible assets and other amortization expense		9,573		9,023		19,128		18,350
Total depreciation and amortization	$	84,014	$	93,093	$	167,815	$	186,875

Cost of sales and operating expense categories included in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation and amortization expense related to satellites, equipment leased to customers, and amortization of development costs of externally marketed software.

Satellites

As of June 30, 2025, our satellite fleet consisted of six satellites in geosynchronous orbit, approximately 22,300 miles above the equator, two of which we own and depreciate over their estimated useful life. We also

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lease four satellites, three of which are accounted for as finance leases and are depreciated over their economic life and one of which we lease from EchoStar which is accounted for as an operating lease.

As of June 30, 2025, our satellite fleet consisted of the following:


		Degree	Lease
		Orbital	Termination
Satellites	Launch Date	Location	Date
Owned:
EchoStar XVII	July 2012	107	N/A
EchoStar XIX	December 2016	97.1	N/A

Finance leases:
Eutelsat 65 West A	March 2016	65	July 2031
Telesat T19V	July 2018	63	August 2033
EchoStar 105/SES‑11	October 2017	105	November 2030

Operating leases:
EchoStar XXIV	July 2023	95.2	December 2030

As of June 2025, all commercial traffic on the Al Yah 3 satellite had been transferred to other satellites in our fleet and the Al Yah 3 satellite is no longer operational and is no longer in service.

In addition, all commercial traffic on the EchoStar IX satellite has been transferred to other satellites in our fleet and the EchoStar IX satellite is no longer in service. During the second quarter of 2025, we began the disposal process for the EchoStar IX satellite and the disposal process is expected to be completed in the third quarter of 2025.

Satellite-Related Commitments

As of June 30, 2025 and December 31, 2024 our satellite-related commitments, excluding in-orbit incentives, were $36 million and $43 million, respectively. These include payments pursuant to regulatory authorizations, non-lease costs associated with our finance lease satellites, and commitments for satellite service arrangements.

In certain circumstances, the dates on which we are obligated to pay our contractual obligations could change.

Satellite Anomalies and Impairments

Our satellites may experience anomalies from time to time, some of which may have a significant adverse effect on their remaining useful lives, the commercial operation of the satellites or our operating results or financial position.

There can be no assurance that future anomalies will not impact the remaining useful life and/or commercial operation of any of the owned and leased satellites in our fleet. There can be no assurance that we can recover critical transmission capacity in the event one or more of our owned or leased in-orbit satellites were to fail. We are not aware of any anomalies with respect to our owned or leased satellites that have had any such significant adverse effect during the three and six months ended June 30, 2025.

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We generally do not carry commercial in-orbit insurance on any of the satellites that we own and therefore, we will bear the risk associated with any uninsured in-orbit satellite failures. However, pursuant to the terms of our joint venture agreement with Al Yah Satellite Communications Company PrJSC (“Yahsat”) in Brazil in 2019, we are required to maintain insurance for the Al Yah 3 Brazilian payload during the commercial in-orbit service of such payload, subject to certain limitations on coverage. The insurance policies were procured by Yahsat, under which we and Yahsat are the beneficiaries of any claims in proportion to their shareholdings. An insurance claim was submitted in the second quarter of 2023 for compensation with respect to the reduction in estimated useful life of the Al Yah 3 satellite. During the six months ended June 30, 2025, we received a commitment from the insurance carrier for $5 million, of which we received $4 million in proceeds.

Fair Value of In-Orbit Incentives

As of June 30, 2025 and December 31, 2024, the fair values of our in-orbit incentive obligations approximated their carrying amounts of $38 million and $41 million, respectively.

7.	Leases

Lessee Accounting

We enter into non-cancelable operating and finance leases for, among other things, satellites, satellite-related ground infrastructure, data centers, office space, warehouses and distribution centers. Substantially all of our leases have remaining lease terms from one to 13 years, with a weighted average remaining lease term of 6.0 years, some of which include renewal options, and some of which include options to terminate the leases within one year. For certain arrangements, the lease term includes the non-cancelable period plus the renewal period that we are reasonably certain to exercise.

Our Eutelsat 65 West A, Telesat T19V and EchoStar 105/SES-11 satellites are accounted for as finance leases. Substantially all of our remaining leases are accounted for as operating leases, including our EchoStar XXIV satellite lease. Refer to Note 12 for further details on the EchoStar XXIV operating lease.

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The following table presents the amounts for ROU assets, lease liabilities, weighted-average lease terms and discount rates for operating and finance leases:


	As of
	June 30,			December 31,
	2025			2024

	(In thousands)
Right-of-use assets:
Operating	$	887,604		$	939,896
Finance		176,754			183,391
Total right-of-use assets	$	1,064,358		$	1,123,287

Lease liabilities:
Current:
Operating	$	122,053		$	72,393
Finance		—			—
Total current		122,053			72,393
Noncurrent:
Operating		772,505			830,629
Finance		—			—
Total noncurrent		772,505			830,629
Total lease liabilities	$	894,558		$	903,022

Weighted Average Remaining Lease Term:
Finance leases		0.0 years			0.0 years
Operating leases		6.0 years			6.6 years

Weighted Average Discount Rate:
Finance leases		—	%		—	%
Operating leases		12.0	%		12.0	%

As of June 30, 2025 and December 31, 2024, we have prepaid our obligations regarding all of our finance ROU assets. Finance lease assets are reported net of accumulated amortization of $180 million and $162 million as of June 30, 2025 and December 31, 2024, respectively. Certain of our finance leases are subject to fluctuations in exchange rates.

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The following table presents the components of lease expense:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

	(In thousands)
Lease cost:
Operating lease cost	$	6,653	$	5,548	$	13,225	$	12,195
Operating lease cost - EchoStar XXIV		47,675		47,593		95,350		95,350
Total operating lease cost		54,328		53,141		108,575		107,545
Finance lease cost:
Amortization of right-of-use assets		5,880		790		11,712		5,313
Interest on lease liabilities		—		—		—		—
Total finance lease cost		5,880		790		11,712		5,313
Short-term lease cost		—		—		—		—
Variable lease cost		—		—		—		—
Total lease cost	$	60,208	$	53,931	$	120,287	$	112,858

Supplemental cash flow information related to leases was as follows:


	For the Six Months Ended
	June 30,
	2025		2024

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	58,055	$	260,546
Operating cash flows from finance leases		—		—
Financing cash flows from finance leases		—		—

Right-of-use assets obtained in exchange for lease obligations:
Operating leases		1,006		—
Finance leases		—		—

Refer to Note 12 for further details on EchoStar XXIV operating lease.

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Maturities of lease liabilities as of June 30, 2025 were as follows:


For the Years Ending December 31,	Total
		(In thousands)
2025 (remaining six months)	$	108,972
2026		216,874
2027		215,341
2028		213,089
2029		212,131
Thereafter		272,247
Total lease payments		1,238,654
Less: Imputed interest		(344,096)
Total		894,558
Less: Current portion		122,053
Long-term portion of lease obligations	$	772,505

Lessor Accounting

We lease satellite capacity, communications equipment and real estate to certain of our customers. The following table presents our lease revenue by type of lease:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

Sales-type lease revenue:	(In thousands)
Revenue at lease commencement	$	1,376	$	995	$	3,159	$	1,544
Interest income		411		544		825		1,079
Total sales-type lease revenue		1,787		1,539		3,984		2,623
Operating lease revenue		2,105		4,305		4,592		10,860
Total lease revenue (1)	$	3,892	$	5,844	$	8,576	$	13,483

(1)	The reduction in total lease revenue relates to the loss of a single significant customer.

Substantially all of our net investment in sales-type leases consisted of lease receivables totaling $23 million and $26 million as of June 30, 2025 and December 31, 2024, respectively.

The following table presents future operating lease payments to be received as of June 30, 2025:


For the Years Ending December 31,	Total
	(In thousands)
2025 (remaining six months)	$	5,515
2026		7,271
2027		5,839
2028		3,669
2029		3,128
Thereafter		2,028
Total lease payments to be received	$	27,450

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8.	Long-Term Debt and Other Notes Payable

Fair Value of our Debt

The following table summarizes the carrying amount and fair value of our debt facilities as of June 30, 2025 and December 31, 2024:


	As of
	June 30, 2025				December 31, 2024
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

	(In thousands)
5 1/4% Senior Secured Notes due 2026 (1)	$	750,000	$	669,630	$	750,000	$	686,475
6 5/8% Senior Notes due 2026		750,000		548,625		750,000		595,725
Other notes payable		41,798		41,798		44,774		44,774
Subtotal		1,541,798	$	1,260,053		1,544,774	$	1,326,974
Unamortized deferred financing costs and other debt discounts, net		(1,048)				(1,509)
Total		1,540,750				1,543,265
Less: current portion		(11,218)				(9,548)
Long-term debt and other notes payable, net of current portion	$	1,529,532			$	1,533,717

(1)	During the six months ended June 30, 2025, our parent, EchoStar, purchased approximately $123 million of our 5 1/4% Senior Secured Notes due 2026 in open market trades. The repurchase is held at EchoStar.

We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2).

9.	Commitments and Contingencies

Litigation

We are involved in a number of legal proceedings (including those described below) concerning matters arising in connection with the conduct of our business activities. Many of these proceedings are at preliminary stages, and many of these proceedings seek an indeterminate amount of damages. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made.

For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though

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the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

License Fee Dispute with Government of India, Department of Telecommunications

In 1994, the Government of India promulgated a “National Telecommunications Policy” under which the government liberalized the telecommunications sector and required telecommunications service providers to pay fixed license fees. Pursuant to this policy, our subsidiary Hughes Communications India Private Limited (“HCIPL”), formerly known as Hughes Escorts Communications Limited, obtained a license to operate a data network over satellite using VSAT systems. In 2002, HCIPL’s license was amended pursuant to a 1999 government policy that eliminated fixed license fees and replaced them with license fees based on service providers’ adjusted gross revenue (“AGR”). In March 2005, the Indian Department of Telecommunications (“DOT”) notified HCIPL that, based on its review of HCIPL’s audited accounts and AGR statements, HCIPL must pay additional license fees and penalties and interest on such fees and penalties. HCIPL responded that the DOT had improperly calculated its AGR by including revenue from both licensed and unlicensed activities.

The DOT rejected this explanation and in 2006, HCIPL filed a petition with an administrative tribunal (the “Tribunal”), challenging the DOT’s calculation of its AGR. The DOT also issued license fee assessments to other telecommunications service providers and those other providers filed similar petitions with the Tribunal. These petitions were amended, consolidated, remanded and re-appealed several times. On April 23, 2015, the Tribunal issued a judgment affirming the DOT’s calculation of AGR for the telecommunications service providers but reversing the DOT’s imposition of interest, penalties and interest on such penalties as excessive.

Over subsequent years, the DOT and HCIPL and other telecommunications service providers, respectively, filed several appeals of the Tribunal’s ruling. On October 24, 2019, the Supreme Court of India (“Supreme Court”) issued an order (the “October 2019 Order”) affirming the license fee assessments imposed by the DOT, including its imposition of interest, penalties and interest on the penalties, but without indicating the amount HCIPL was required to pay the DOT, and ordering payment by January 23, 2020. On November 23, 2019, HCIPL and other telecommunication service providers filed a petition asking the Supreme Court to reconsider the October 2019 Order.

The petition was denied on January 20, 2020. On January 22, 2020, HCIPL and other telecommunication service providers filed an application requesting that the Supreme Court modify the October 2019 Order to permit the DOT to calculate the final amount due and extend HCIPL’s and the other telecommunication service providers’ payment deadline. On February 14, 2020, the Supreme Court directed HCIPL and the other telecommunication service providers to explain why the Supreme Court should not initiate contempt proceedings for failure to pay the amounts due.

During a hearing on March 18, 2020, the Supreme Court ordered that all amounts that were due before the October 2019 Order must be paid, including interest, penalties and interest on the penalties. The Supreme Court also ordered that the parties appear for a further hearing addressing, among other things, a proposal by the DOT to allow for extended or deferred payments of amounts due. On June 11, 2020, the Supreme Court ordered HCIPL and the other telecommunication service providers to submit affidavits addressing the proposal made by the DOT to extend the time frame for payment of the amounts owed and for HCIPL and the other telecommunication providers to provide security for such payments.

On September 1, 2020, the Supreme Court issued a judgment permitting a 10-year payment schedule. Under this payment schedule, HCIPL is required to make an annual payment every March 31, through 2031. Following the Supreme Court of India’s October 2019 judgment, HCIPL made payments during the first quarter of 2020, and additional payments on each March 31 thereafter. As of June 30, 2025, the gross

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amount of fees, penalties and interest owed was approximately $93 million with $46 million remaining outstanding as a result of historical payments.

Pursuant to the Contribution and Membership Interest Purchase Agreement (the “Purchase Agreement”) dated December 3, 2004 between The DirecTV Group, Inc. (“DirecTV”) and certain other entities relating to DirecTV’s spinoff of certain of its subsidiaries, including HCIPL, DirecTV undertook to indemnify HCIPL for certain pre-closing tax liabilities. On March 27, 2020, HCIPL filed an indemnification complaint against DirecTV in the United States District Court for the Southern District of New York, seeking to recover certain license fees, penalties and interest owed to the Indian government as a result of the aforementioned proceedings. On November 16, 2021, the New York court granted summary judgment in favor of DirecTV, but on June 22, 2023, the United States Court of Appeals for the Second Circuit reversed, holding that, under the Purchase Agreement, HCIPL is entitled to indemnification from DirecTV. The Second Circuit remanded the case back to the trial court to determine the amount of indemnification owed. The parties reached a conditional agreement to settle the matter, but the conditions were not met, so the stay entered on October 3, 2024 was lifted on November 22, 2024. On July 8, 2025, a magistrate judge issued a report and recommendation that DirecTV should have to indemnify HCIPL only for license fees, penalties and interest that would have been owing to the DOT as of the April 22, 2005 closing date of the spinoff, but not the penalties and interest that compounded on such pre-closing amounts during the course of the litigation in India.

The following table presents the components of the accrual:


	As of
	June 30,		--	December 31,
	2025			2024

	(In thousands)
Additional license fees	$	3,311		$	3,314
Penalties		3,399			3,402
Interest on license fees and penalties		86,484			84,643
Less: Payments		(46,745)			(36,929)
Total accrual		46,449			54,430
Less: Current portion (1)		9,851			9,860
Total long-term accrual (2)(3)	$	36,598		$	44,570

(1)	The current portion of the accrual is included in “Accrued expenses” on our Condensed Consolidated Balance Sheets.

(2)	The long-term portion of the accrual is included in “Other noncurrent liabilities” on our Condensed Consolidated Balance Sheets.

(3)	The amount owed must be paid in Indian Rupees.

Any eventual payments made with respect to the ultimate outcome of this matter may be different from our accrual and such differences could be significant.

Hughes Telecomunicações do Brasil v. State of São Paulo Treasury Department

On December 12, 2019, Hughes Telecomunicações do Brasil (“HTB”) filed a tax annulment claim in the Judicial Court of São Paulo, claiming that a tax assessment from the State Treasury of São Paulo, for the period from January 2013 to December 2014, was based on an erroneous interpretation of an exemption to the ICMS (a state tax on, among other things, communications).

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In June 2022, a judicial expert determined that HTB’s interpretation of the exemption was correct. Nonetheless, in July 2023, the Court entered judgment against HTB, and in October 2023, rejected HTB’s request for clarification. In November 2023, HTB filed an appeal to the Court of Justice, but on February 25, 2025, the Court of Justice ruled against HTB. On March 14, 2025, HTB filed a motion seeking clarification.

We intend to vigorously defend this case. We cannot predict with any degree of certainty the outcome of the suit.

Other

In addition to the above actions, we are subject to various other legal proceedings and claims that arise in the ordinary course of business. In our opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our financial condition, results of operations or liquidity, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

10.	Segment Reporting

Our chief operating decision maker (“CODM”) is our President and Chief Executive Officer. “OIBDA,” defined as “Operating income (loss)” plus “Depreciation and amortization,” is the primary measure used by our CODM to evaluate segment operating performance. The CODM regularly reviews budget-to-actual variances of OIBDA when evaluating segment performance and allocating resources to each segment. The CODM is not regularly provided assets in evaluating the results of our Hughes segment; therefore, such information is not presented.

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We manage our business activities on a consolidated basis and operate as a single operating segment, Hughes.


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
Hughes	2025		2024		2025		2024

	(In thousands)
Revenue
Revenue from external customers:
Service revenue	$	274,254	$	303,905	$	551,955	$	623,409
Equipment sales and other revenue		60,770		85,714		149,133		146,214
Total Revenue		335,024		389,619		701,088		769,623

Operating Expenses
Cost of services:
Connectivity services (1)		97,768		100,251		194,520		198,631
Other (2)		63,249		71,863		125,566		143,933
Total cost of services		161,017		172,114		320,086		342,564

Cost of sales - equipment and other		63,409		78,283		144,995		134,663
Selling, general and administrative expenses:
Subscriber acquisition costs		43,477		45,155		87,996		94,449
Selling, general and administrative expenses		37,949		47,901		75,225		102,259
Total selling, general and administrative expenses		81,426		93,056		163,221		196,708

OIBDA (3)		29,172		46,166		72,786		95,688

Depreciation and amortization		84,014		93,093		167,815		186,875
Total costs and expenses		389,866		436,546		796,117		860,810

Operating income (loss)	$	(54,842)	$	(46,927)	$	(95,029)	$	(91,187)

Interest income		2,247		3,555		4,747		20,570
Interest expense, net of amounts capitalized		(24,652)		(22,095)		(50,311)		(49,444)
Other, net		2,949		(3,682)		4,699		(5,106)
Total other income (expense)		(19,456)		(22,222)		(40,865)		(33,980)

Income (loss) before income taxes		(74,298)		(69,149)		(135,894)		(125,167)
Income tax (provision) benefit, net		16,475		11,274		29,031		17,026
Net income (loss)	$	(57,823)	$	(57,875)	$	(106,863)	$	(108,141)

Purchases of property and equipment	$	(29,693)	$	(55,123)	$	(61,341)	$	(123,649)

(1)

“Connectivity services” is the cost to deliver our services and products to customers, which includes, among other things, satellite and transmission and other related costs.

(2)

“Other” primarily consists of variable costs including call center, manufacturing, dealer incentive, bad debt, billing and other variable costs, as well as costs to retain our subscribers.

(3)

OIBDA is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable

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cost basis as it excludes depreciation and amortization expenses related primarily to capital expenditures and acquisitions, as well as in evaluating operating performance in relation to our competitors.

11.	Revenue Recognition

Contract Balances

The following table presents the activity in our allowance for credit losses:


	For the Six Months Ended
	June 30,
	2025		2024

	(In thousands)
Balance at beginning of period	$	11,314	$	20,399
Current period provision for expected credit losses		8,485		16,784
Write-offs charged against allowance		(7,929)		(12,979)
Foreign currency translation		224		(241)
Balance at end of period	$	12,094	$	23,963

As of June 30, 2025, we have accounts receivable balances of $18 million for certain customers in Mexico and Brazil, a portion of which have been fully reserved in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets.

Contract assets arise when we recognize revenue for providing goods or services in advance of billing our customers. Our contract assets typically relate to our long-term contracts where we recognize revenue using the cost-based input method and the revenue recognized exceeds the amount billed to the customer.

Our contract assets also include receivables related to sales-type leases recognized over the lease term as the customer is billed. Contract assets are amortized as the customer is billed for services. Contract assets are recorded in “Trade accounts receivable and contract assets, net” on our Condensed Consolidated Balance Sheets.

Contract liabilities arise when we bill our customers and receive consideration in advance of providing the goods or service. Contract liabilities are recognized as revenue when the service or equipment has been provided to the customer. Contract liabilities are recorded in “Contract liabilities” or “Other noncurrent liabilities” on our Condensed Consolidated Balance Sheets.

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The following table summarizes our contract asset and liability balances:


	As of
	June 30,		December 31,
	2025		2024

	(In thousands)
Contract assets	$	149,165	$	108,007

Contract liabilities:
Current	$	87,523	$	81,558
Noncurrent		550		1,068
Total contract liabilities	$	88,073	$	82,626

Our beginning of period contract liability recorded as customer contract revenue during 2025 was $51 million.

Performance Obligations

As of June 30, 2025, the remaining performance obligations for our customer contracts was approximately $1.6 billion. Performance obligations expected to be satisfied within one year and greater than one year are 28% and 72%, respectively. This amount and percentages exclude leasing arrangements and agreements with consumer customers.

Contract Acquisition Costs

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


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

	(In thousands)
Balance, beginning of period	$	57,095	$	52,502	$	57,337	$	49,343
Additions		8,941		12,880		18,126		25,920
Amortization expense		(10,063)		(9,101)		(19,896)		(18,843)
Foreign currency translation		367		(762)		773		(901)
Balance, end of period	$	56,340	$	55,519	$	56,340	$	55,519

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Disaggregation of Revenue

Geographic Information

Revenue is attributed to geographic markets based upon the billing location of the customer. The following tables present our revenue from customer contracts disaggregated by primary geographic market:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

	(In thousands)
North America	$	272,359	$	311,705	$	570,413	$	619,553
South and Central America		31,976		35,361		63,553		71,316
Other		30,689		42,553		67,122		78,754
Total revenue	$	335,024	$	389,619	$	701,088	$	769,623

Nature of Products and Services

The following tables present our revenue disaggregated by the nature of products and services:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

	(In thousands)
Service revenue:
Services	$	272,077	$	299,600	$	547,363	$	612,549
Lease revenue		2,177		4,305		4,592		10,860
Total service revenue		274,254		303,905		551,955		623,409
Equipment sales and other revenue:
Equipment sales		29,406		48,457		62,815		83,589
Design, development and construction services		29,505		35,718		82,190		60,002
Lease revenue		1,859		1,539		4,128		2,623
Total equipment and other revenue		60,770		85,714		149,133		146,214
Total revenue	$	335,024	$	389,619	$	701,088	$	769,623

12.	Related Party Transactions

Related Party Transactions with EchoStar, our Parent, and its subsidiaries.

The following is a summary of the terms of our principal agreements with EchoStar, our parent, and its subsidiaries, that may have an impact on our financial condition and results of operations.

“Trade accounts receivable”

As of June 30, 2025 and December 31, 2024, trade accounts receivable from EchoStar was $37 million and $23 million, respectively. These amounts are recorded in “Other current assets” on our Condensed Consolidated Balance Sheets.

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“Noncurrent receivables”

As of June 30, 2025 and December 31, 2024, noncurrent receivables from EchoStar was $92 million and $83 million, respectively. These amounts are recorded in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets.

“Trade accounts payable”

As of June 30, 2025 and December 31, 2024, trade accounts payable to EchoStar was $32 million and $41 million, respectively. These amounts are recorded in “Trade accounts payable” and “Other current liabilities” on our Condensed Consolidated Balance Sheets.

“Noncurrent payables”

As of June 30, 2025 and December 31, 2024, noncurrent payables to EchoStar was $28 million and $26 million, respectively. These amounts are recorded in “Other noncurrent liabilities” on our Condensed Consolidated Balance Sheets.

“Current operating lease liabilities”

As of June 30, 2025 and December 31, 2024, current operating lease liabilities to EchoStar was $105 million and $56 million, respectively. These amounts are recorded in “Operating lease liabilities” on our Condensed Consolidated Balance Sheets.

“Noncurrent operating lease liabilities”

As of June 30, 2025 and December 31, 2024, noncurrent operating lease liabilities to EchoStar was $643 million and $695 million, respectively. These amounts are recorded in “Operating lease liabilities, noncurrent” on our Condensed Consolidated Balance Sheets.

“Service revenue”

During each of the three months ended June 30, 2025 and 2024, we received $3 million for services provided to EchoStar. During the six months ended June 30, 2025 and 2024, we received $6 million and $7 million, respectively, for the services provided to EchoStar. These amounts are recorded in “Service revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The primary agreements pertaining to these revenues are discussed below.

TerreStar Agreement. In March 2012, DISH Network completed its acquisition of substantially all the assets of TerreStar Networks Inc. (“TerreStar”). Prior to DISH Network’s acquisition of substantially all the assets of TerreStar and EchoStar’s completion of the Hughes Acquisition, TerreStar and Hughes Network Systems L.L.C. (“HNS”) entered into various agreements pursuant to which we provide, among other things, warranty, operations and maintenance and hosting services for TerreStar’s ground-based communications equipment (the “TerreStar Agreements”).

In May 2022, we and EchoStar amended the agreement for the provision of hosting services to extend the term until May 2027. We and EchoStar amended the agreements for warranty, operations, and maintenance services for TerreStar ground-based communications equipment, effective as of January 1, 2025, to extend the existing pricing and other terms through December 31, 2025. EchoStar generally has the right to continue to receive warranty services from us for our products on a month-to-month basis unless terminated by EchoStar

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upon at least 21 days’ written notice to us. EchoStar generally has the right to continue to receive operations and maintenance services from us on a quarter-to-quarter basis unless these services are terminated by EchoStar upon at least 90 days’ written notice to us. In addition, EchoStar generally may terminate any and all services for convenience subject to providing us with prior notice and/or payment of termination charges.

TerreStar Solutions. EchoStar has an investment in TerreStar Solutions, Inc. (“TSI”), an entity that provides wireless mobile communication coverage in Canada using a satellite user terminal, that results in EchoStar having significant influence in the entity. In May 2018, we and TSI entered into an equipment and services agreement pursuant to which we design, manufacture and install upgraded ground communications network equipment for TSI’s network and provide, among other things, warranty and support services.

DBSD North America Agreement. In March 2012, DISH Network completed its acquisition of all of the equity of DBSD North America, Inc. (“DBSD North America”). Following the Merger, DISH Network’s ownership of DBSD North America was sold to our parent company, EchoStar, such that EchoStar now owns all of the equity of DBSD North America. Prior to DISH Network’s acquisition of DBSD North America and EchoStar’s completion of the Hughes Acquisition, DBSD North America and HNS entered into various agreements pursuant to which we provide, among other things, warranty, operations and maintenance and hosting services of DBSD North America’s gateway and ground-based communications equipment. DBSD North America has the right to continue to receive operations and maintenance services from us on a quarter-to-quarter basis, unless terminated by DBSD North America upon at least 120 days’ written notice to us. The provision of hosting services will continue until February 2027 unless terminated by DBSD North America upon at least 180 days’ written notice to us. In addition, DBSD North America generally may terminate any and all such services for convenience, subject to providing us with prior notice and/or payment of termination charges. We and DBSD North America amended the agreements for warranty, operations, and maintenance services for DBSD’s gateway and ground-based communications equipment, effective as of January 1, 2025, to extend the existing pricing and other terms through December 31, 2025.

EchoStar Mobile Limited Service Agreements. We provide services and lease equipment to support the business of EchoStar Mobile Limited, a subsidiary of EchoStar that is licensed by the EU to provide mobile satellite services and complementary ground component services covering the entire EU using S-Band spectrum. Additionally, we have converted the receivables for certain of these services into loans, bearing an annual interest rate of 5%. These loans are included within “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets.

Hughes Broadband Distribution Agreement. Effective October 2012, we and EchoStar entered into a Distribution Agreement (the “Distribution Agreement”) pursuant to which EchoStar has the right, but not the obligation, to market, sell and distribute our satellite Internet service (the “Service”) and to purchase certain broadband equipment from us to support the sale of the Service for an extended initial term that ended March 1, 2024. Thereafter, the Distribution Agreement automatically renews for successive one-year terms unless either party gives written notice of its intent not to renew to the other party at least 180 days before the expiration of the then-current term. Upon expiration or termination of the Distribution Agreement, the parties will continue to provide the Service pursuant to the terms and conditions of the Distribution Agreement.

Hughes Equipment and Services Agreement. In February 2019, we and EchoStar entered into an agreement pursuant to which we will provide EchoStar with satellite Internet service and equipment for the transmission of certain data related to EchoStar’s 5G Network Deployment. This agreement had an initial term that ended February 2024 with automatic renewal for successive one-year terms unless terminated by EchoStar with at least 180 days’ written notice to us or by us with at least 365 days’ written notice to EchoStar.

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“Cost of services”

During the three months ended June 30, 2025 and 2024, we incurred $49 million and $48 million, respectively, of costs for services provided to us by EchoStar. During the six months ended June 30, 2025 and 2024, we incurred $98 million and $97 million, respectively, of costs for services provided to us by EchoStar. These amounts are recorded in “Cost of services” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The primary agreements pertaining to these expenses are discussed below.

EchoStar XXIV Satellite Lease. Effective December 2023, we lease all of the capacity of the EchoStar XXIV satellite under an operating lease from EchoStar for a term of seven years for a monthly lease charge of approximately $16 million. We prepaid $185 million in lease obligations under the agreement during the year ended December 31, 2024. The prepayments resulted in the lease liability and associated asset being remeasured. The prepayment ended in March 2025 with regular payments continuing in April 2025.

TT&C Agreement – Master Transaction Agreement. In September 2019, we entered into an agreement pursuant to which EchoStar provides TT&C services to us for an initial term that ended in September 2021, (the “MTA TT&C Agreement”). In September 2021, we amended the MTA TT&C Agreement to extend the term until September 2022 and added the option for us to renew for three one-year renewal terms ending in September 2025. Either party is able to terminate the MTA TT&C Agreement for any reason upon 12 months’ notice.

“Cost of sales – equipment and other”

During the three months ended June 30, 2025 and 2024, we incurred $1 million and $1 million, respectively, for satellite hosting, operations and maintenance services as well as transmission of certain data to EchoStar. During the six months ended June 30, 2025 and 2024, we incurred $2 million and $1 million, respectively, for satellite hosting, operations and maintenance services as well as transmission of certain data to EchoStar. These amounts are recorded in “Cost of sales – equipment and other” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The primary agreements pertaining to these expenses are discussed below.

Professional Services Agreement. Effective January 2010, we and EchoStar entered into the Professional Services Agreement, pursuant to which we have the right, but not the obligation, to receive the following services from EchoStar, among others: information technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration, program acquisition services and other support services, including uplink services. Additionally, we and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to engage us to manage the process of procuring new satellite capacity for EchoStar and receive logistics, procurement and quality assurance services from us and other support services. In February 2017 and in September 2019, we and EchoStar amended the Professional Services Agreement to, among other things, provide certain transition services to each other. The Professional Services Agreement renews automatically for successive one-year periods, unless terminated earlier by either party upon at least 60 days’ notice. However, either party may terminate the Professional Services Agreement in part with respect to any particular service it receives for any reason upon at least 30 days’ notice.

Whidbey Island 5G Network Test Bed Subcontract. Effective June 2022, we entered into certain agreements pursuant to which EchoStar provides us access and use of a lab, technical support and integration, and testing support for the 5G network test bed. In addition, we lease certain wireless spectrum, and receive construction and related services. We may terminate this agreement at any time by providing written notice to EchoStar.

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“Selling, general and administrative expenses”

During each of the three months ended June 30, 2025 and 2024, we incurred $1 million for selling, general and administrative expenses for services provided to us by EchoStar. During each of the six months ended June 30, 2025 and 2024, we incurred $1 million for selling, general and administrative expenses for services provided to us by EchoStar. These amounts are recorded in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The primary agreements pertaining to these expenses are discussed below.

Shared Corporate Services. We and EchoStar, including EchoStar’s other subsidiaries, have agreed that we shall each have the right, but not the obligation, to receive from the other certain shared corporate services, including among other things: treasury, tax, accounting and reporting, risk management, cybersecurity, legal, internal audit, human resources, and information technology. We and EchoStar may each terminate a particular shared corporate service for any reason upon at least 30 days’ notice.

Collocation and Antenna Space Agreements. We entered into certain agreements pursuant to which EchoStar provides certain collocation and antenna space to us. We may terminate certain of these agreements with 180 days’ prior written notice to EchoStar and for certain other agreements with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term. The term of each agreement is set forth below:

●

Effective March 2017 for an initial term that ended in February 2022 and renewal options ending in February 2034 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; Monee, Illinois; Englewood, Colorado; and Spokane, Washington.

●

Effective August 2017 for an initial term that ended in August 2022 and renewal options ending in August 2034 at the following locations: Monee, Illinois and Spokane, Washington. In March 2024, we provided a termination notice for one of the Spokane, Washington agreements, effective April 2024.

●

Effective January 2022 for an initial term ending December 2026 and renewal options ending in December 2038 at the following location: Englewood, Colorado.

●

Effective October 2020 with renewal options ending in October 2037 at the following location: Cheyenne, Wyoming.

Real Estate. We occupy certain office space in buildings owned or leased by EchoStar and its other subsidiaries and pay a portion of the taxes, insurance, utilities and maintenance of the premises in accordance with the percentage of the space we occupy.

Other Agreements – EchoStar

Hughes Satellite Systems Corp 10-Q