Dish Network 2012 Annual Report Download - page 88

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-66
Geographic Information. Revenues are attributed to geographic regions based upon the location where the
products are delivered and services are provided. The following table summarizes revenue attributed to the United
States and foreign locations.
2012 2011 2010
Revenue:
United States............................................................. 13,751,675$ 13,637,945$ 12,640,744$
United Kingdom........................................................ 292,788 241,843 -
Mexico....................................................................... 168,362 117,123 -
Other.......................................................................... 53,667 51,482 -
Total revenue............................................................. 14,266,492$ 14,048,393$ 12,640,744$
For the Year Ended December 31,
(In thousands)
18. Valuation and Qualifying Accounts
Our valuation and qualifying accounts as of December 31, 2012, 2011 and 2010 are as follows:
Allowance for doubtful accounts
Balance at
Beginning
of Year
Char
g
ed to
Costs and
Expenses Deductions
Balance at
End of
Year
For the years ended:
December 31, 2012............................................. 15,773$ 124,610$ (123,438)$ 16,945$
December 31, 2011............................................. 29,650$ 100,321$ (114,198)$ 15,773$
December 31, 2010............................................. 16,372$ 115,478$ (102,200)$ 29,650$
(In thousands)
19. Quarterly Financial Data (Unaudited)
Our quarterly results of operations are summarized as follows:
March 31 June 30 September 30 December 31
Year ended December 31, 2012:
Total revenue.................................................................................................. 3,581,869$ 3,571,766$ 3,523,347$ 3,589,510$
Operating income (loss).................................................................................. 572,411 468,352 (273,029) 454,101
Net income (loss)............................................................................................ 360,126 225,596 (163,329) 203,347
Net income (loss) attributable to DISH Network............................................ 360,310 225,732 (158,461) 209,106
Basic net income (loss) per share attributable to DISH Network................... 0.81$ 0.50$ (0.35)$ 0.46$
Diluted net income (loss) per share attributable to DISH Network................ 0.80$ 0.50$ (0.35)$ 0.46$
Year ended December 31, 2011:
Total revenue.................................................................................................. 3,224,131$ 3,590,161$ 3,602,651$ 3,631,450$
Operating income (loss).................................................................................. 983,353 717,782 624,839 601,980
Net income (loss)............................................................................................ 549,326 334,838 318,978 312,436
Net income (loss) attributable to DISH Network............................................ 549,394 334,760 319,099 312,654
Basic net income (loss) per share attributable to DISH Network................... 1.24$ 0.75$ 0.72$ 0.70$
Diluted net income (loss) per share attributable to DISH Network................ 1.22$ 0.75$ 0.71$ 0.70$
(In thousands, except per share data)
For the Three Months Ended
DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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20. Related Party Transactions
Related Party Transactions with EchoStar
Following the Spin-off, EchoStar has operated as a separate public company, and we have no continued ownership
interest in EchoStar. However, a substantial majority of the voting power of the shares of both companies is owned
beneficially by Charles W. Ergen, our Chairman, or by certain trusts established by Mr. Ergen for the benefit of his
family.
EchoStar is our primary supplier of set-top boxes and digital broadcast operations and a key supplier of transponder
capacity. Generally, the amounts we pay EchoStar for products and services are based on pricing equal to
EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on the nature of the
products and services provided.
In connection with and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to
which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services
and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our
respective businesses. We also may enter into additional agreements with EchoStar in the future. The following is
a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial
position and results of operations.
“Equipment sales - EchoStar”
Remanufactured Receiver Agreement. We entered into a remanufactured receiver agreement with EchoStar
pursuant to which EchoStar has the right, but not the obligation, to purchase remanufactured receivers and
accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased.
In November 2012, we and EchoStar extended this agreement until December 31, 2013. EchoStar may terminate
the remanufactured receiver agreement for any reason upon at least 60 days notice to us. We may also terminate
this agreement if certain entities acquire us.
“Services and other revenue - EchoStar”
Professional Services Agreement. Prior to 2010, in connection with the Spin-off, we entered into various
agreements with EchoStar including the Transition Services Agreement, Satellite Procurement Agreement and
Services Agreement, which all expired on January 1, 2010 and were replaced by a Professional Services Agreement.
During 2009, we and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to
receive the following services from us, among others, certain of which were previously provided under the
Transition Services Agreement: information technology, travel and event coordination, internal audit, legal,
accounting and tax, benefits administration, program acquisition services and other support services. Additionally,
we and EchoStar agreed that we shall continue to have the right, but not the obligation, to engage EchoStar to
manage the process of procuring new satellite capacity for us (previously provided under the Satellite Procurement
Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided
under the Services Agreement) and other support services. The Professional Services Agreement automatically
renewed on January 1, 2013 for an additional one-year period until January 1, 2014 and renews automatically for
successive one-year periods thereafter, 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.
Management Services Agreement. We have a Management Services Agreement with EchoStar pursuant to which
we make certain of our officers available to provide services (which are primarily legal and accounting services) to
EchoStar. Specifically, Paul W. Orban remains employed by us, but also served as EchoStar’s Senior Vice
President and Controller through April 2012. In addition, R. Stanton Dodge remains employed by us, but also
served as EchoStar’s Executive Vice President, General Counsel and Secretary through November 2011. EchoStar
makes payments to us based upon an allocable portion of the personnel costs and expenses incurred by us with
respect to such officers (taking into account wages and fringe benefits). These allocations are based upon the