Dish Network 2014 Annual Report Download - page 132

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-26
Construction in progress consisted of the following:
2014 2013
Wireless ground equipment and build-out, including capitalized interest...................... $ 484,668 $ 289,732
EchoStar XVIII, including capitalized interest............................................................... 271,497 143,839
T2 satellite (1)................................................................................................................ - 40,000
Other............................................................................................................................... 18,402 41,876
Construction in progress................................................................................................. 774,567$ 515,447$
As of December 31,
(In thousands)
(1) During the fourth quarter 2014, EchoStar purchased our rights to the T2 satellite. See Note 20 for further
discussion of our Related Party Transactions with EchoStar.
As we prepare for commercialization of our AWS-4 and H Block wireless spectrum licenses, which are recorded in
FCC Authorizations on our Consolidated Balance Sheets, interest expense related to their carrying value is being
capitalized within “Property and equipment, net” on our Consolidated Balance Sheets based on our weighted-
average borrowing rate for our debt. We began capitalizing interest on the H Block licenses in April 2014
concurrent with the FCC order granting our application to acquire these licenses. See Note 16 for further
discussion.
Depreciation and amortization expense consisted of the following:
2014 2013 2012
Equipment leased to customers............................................ $ 854,759 $ 763,796 $ 652,327
Satellites (1)......................................................................... 95,766 135,464 145,749
Buildings, furniture, fixtures, equipment and other (2)........ 127,411 154,766 98,632
148 degree orbital location (3)............................................. - - 67,776
Total depreciation and amortization................................ 1,077,936$ 1,054,026$ 964,484$
For the Years Ended December 31,
(In thousands)
(1) Depreciation and amortization expense decreased $40 million in 2014 as a result of the Satellite and Tracking
Stock Transaction. See Note 6 and Note 20 for further discussion.
(2) During 2013, we ceased operations of our TerreStar Mobile Satellite Service (“MSS”) business, which had
less than 2,000 customers and had less than $1 million in revenue. As a result, we accelerated the
depreciable lives of certain assets designed to support this business and the remaining net book value of $53
million was fully depreciated in 2013.
(3) On May 31, 2012, the International Bureau of the FCC announced the termination of our license for use of
the 148 degree orbital location associated with our DISH segment. We had not had a satellite positioned at
the 148 degree orbital location since the retirement of EchoStar V in August 2009. Our license for use of
the 148 degree orbital location had a $68 million carrying value. This amount was recorded as
“Depreciation and amortization” expense on our Consolidated Statements of Operations and Comprehensive
Income (Loss) in 2012 due to the termination of this license by the FCC.
Cost of sales and operating expense categories included in our accompanying Consolidated Statements of Operations
and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to
customers.