20230403Report.pdf

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F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors DISH Network Corporation:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of DISH Network Corporation and subsidiaries (the Company) as of
December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), changes in
stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2022, and the related
notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting
as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year
period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error
or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
RECEIVED
2023 April 3, 3:34PM
IDAHO PUBLIC
UTILITIES COMMISSION
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F-3
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Sufficiency of audit evidence over revenue
As discussed in Note 16 to the consolidated financial statements, the Company had $16.7 billion in revenue for the year ended
December 31, 2022, of which $12.5 billion was Pay-TV related and $4.2 billion was Wireless related. Both categories of
revenue have multiple revenue streams and certain aspects of the Company’s processes and information technology (IT) systems
differ among the revenue streams.
We identified the evaluation of sufficiency of audit evidence over certain revenue streams as a critical audit matter. The number
of revenue streams and the revenue-related IT applications required a high-degree of auditor judgment to evaluate the
sufficiency of audit evidence over revenue. Subjective auditor judgment was required to evaluate that revenue data was captured
and aggregated throughout these various IT applications. Additionally, IT professionals with specialized skills and knowledge
were required to evaluate the nature and extent of evidence obtained over certain revenue streams.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to
determine the nature and extent of procedures to be performed over revenue. For each revenue stream where procedures were
performed, we evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s
revenue recognition process, including recording of revenue. We also evaluated the design and tested the operating effectiveness
of certain general IT and application controls. We involved IT professionals with specialized skills and knowledge, who assisted
in testing certain IT applications used by the Company in its revenue recognition processes and the transfer of relevant revenue
data between certain systems used in the revenue recognition processes. For certain revenue streams, we assessed the recorded
revenue by comparing total cash received during the year, adjusted for reconciling items, to the revenue recognized. Such
assessment also evaluated the relevance and reliability of reconciling items to underlying documentation, including the changes
in accounts receivable and deferred revenue.
We evaluated the sufficiency of audit evidence obtained by assessing the results of the procedures performed, including the
appropriateness of the nature and extent of such evidence.
/s/ KPMG LLP
We have served as the Company’s auditor since 2002.
Denver, Colorado
February 22, 2023
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F-4
4DISH NETWORK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
As of December 31,
2022 2021
AssetsCurrent Assets:Cash and cash equivalents $1,785,056 $2,428,188Marketable investment securities 835,983 2,975,518Trade accounts receivable, net of allowance for credit losses of $44,431 and $38,534, respectively 953,812 942,561Inventory502,373 534,937Other current assets 532,886 641,978Total current assets 4,610,110 7,523,182
Noncurrent Assets:Restricted cash, cash equivalents and marketable investment securities 104,614 5,334,768Property and equipment, net 5,640,119 3,257,787FCC authorizations 36,933,073 28,632,665Other investment securities 168,200 150,941Operating lease assets 2,687,522 1,493,410Other noncurrent assets, net 1,897,815 934,293Intangible assets, net 565,109 674,679
Total noncurrent assets 47,996,452 40,478,543
Total assets $52,606,562 $48,001,725
Liabilities and Stockholders’ Equity (Deficit)Current Liabilities:Trade accounts payable $924,438 $848,224Deferred revenue and other 711,474 761,347Accrued programming 1,298,777 1,376,770Accrued interest 258,799 288,308Other accrued expenses 1,283,570 1,179,427Current portion of long-term debt and finance lease obligations (Note 10)1,547,190 2,061,810
Total current liabilities 6,024,248 6,515,886
Long-Term Obligations, Net of Current Portion:Long-term debt and finance lease obligations, net of current portion (Note 10)19,801,948 19,355,206Deferred tax liabilities 4,930,135 4,226,266Operating lease liabilities 2,687,883 1,453,395Long-term deferred revenue and other long-term liabilities 753,708 527,859Total long-term obligations, net of current portion 28,173,674 25,562,726Total liabilities 34,197,922 32,078,612
Commitments and Contingencies (Note 15)
Redeemable noncontrolling interests (Note 2)464,359 395,222
Stockholders’ Equity (Deficit):Class A common stock, $0.01 par value, 1,600,000,000 shares authorized, 292,660,308 and 290,529,607shares issued and outstanding, respectively 2,927 2,905Class B common stock, $0.01 par value, 800,000,000 shares authorized, 238,435,208 shares issued andoutstanding 2,384 2,384Additional paid-in capital 4,851,392 4,735,484Accumulated other comprehensive income (loss)(3,029)281Accumulated earnings (deficit)13,088,850 10,785,617
Total DISH Network stockholders’ equity (deficit)17,942,524 15,526,671
Noncontrolling interests 1,757 1,220
Total stockholders’ equity (deficit)17,944,281 15,527,891
Total liabilities and stockholders’ equity (deficit)$52,606,562 $48,001,725
The accompanying notes are an integral part of these consolidated financial statements.
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F-5
DISH NETWORK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Dollars in thousands, except per share amounts)
For the Years Ended December 31,
2022 2021 2020
Revenue:
Service revenue $16,005,620 $16,890,729 $14,846,024
Equipment sales and other revenue 673,787 990,377 647,411
Total revenue 16,679,407 17,881,106 15,493,435
Costs and Expenses (exclusive of depreciation):
Cost of services 9,558,884 10,185,942 9,094,007
Cost of sales - equipment and other 1,812,191 1,552,341 939,721
Selling, general and administrative expenses 2,545,593 2,214,936 1,806,122
Impairment of long-lived assets (Note 2)——356,418
Depreciation and amortization 717,073 724,852 714,552
Total costs and expenses 14,633,741 14,678,071 12,910,820
Operating income (loss)2,045,666 3,203,035 2,582,615
Other Income (Expense):
Interest income 42,776 11,338 22,734
Interest expense, net of amounts capitalized (22,781)(16,174)(12,974)
Other, net 1,038,982 20,557 (20,164)
Total other income (expense)1,058,977 15,721 (10,404)
Income (loss) before income taxes 3,104,643 3,218,756 2,572,211
Income tax (provision) benefit, net (731,736)(762,810)(698,275)
Net income (loss)2,372,907 2,455,946 1,873,936
Less: Net income (loss) attributable to noncontrolling interests, net of tax 69,674 45,304 111,263
Net income (loss) attributable to DISH Network $2,303,233 $2,410,642 $1,762,673
Weighted-average common shares outstanding - Class A and B common
stock:
Basic 530,114 527,844 524,761
Diluted 637,290 636,063 584,360
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network $4.34 $4.57 $3.36
Diluted net income (loss) per share attributable to DISH Network $3.61 $3.79 $3.02
Comprehensive Income (Loss):
Net income (loss)$2,372,907 $2,455,946 $1,873,936
Other comprehensive income (loss):
Foreign currency translation adjustments (4,160)1,787 (827)
Unrealized holding gains (losses) on available-for-sale debt securities 191 (208)(29)
Recognition of previously unrealized (gains) losses on available-for-sale
securities included in net income (loss)(7)(13)(62)
Deferred income tax (expense) benefit, net 666 (430)81
Total other comprehensive income (loss), net of tax (3,310)1,136 (837)
Comprehensive income (loss)2,369,597 2,457,082 1,873,099
Less: Comprehensive income (loss) attributable to noncontrolling interests,
net of tax 69,674 45,304 111,263
Comprehensive income (loss) attributable to DISH Network $2,299,923 $2,411,778 $1,761,836
The accompanying notes are an integral part of these consolidated financial statements.
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F-6
DISH NETWORK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands)
Accumulated
Class A and B Additional Other Accumulated Redeemable
Common Paid-In Comprehensive Earnings Noncontrolling Noncontrolling
Stock Capital Income (Loss) (Deficit) Interests Total Interests
Balance, December 31, 2019 $5,230 $4,947,007 $(18)$6,612,302 $(449)$11,564,072 $552,075
Issuance of Class A common stock:
Exercise of stock awards 15 9,425 ———9,440 —
Employee benefits 8 28,293 ———28,301 —
Employee Stock Purchase Plan 8 17,966 ———17,974 —
Non-cash, stock-based compensation —64,954 ———64,954 —
Change in unrealized holding gains (losses) on available-for-sale debtsecurities, net ——(91)——(91)—Deferred income tax (expense) benefit attributable to othercomprehensive income (loss)——81 ——81 —
Foreign currency translation ——(827)——(827)—Initial equity component of our 0% convertibles due 2025, net of deferredtaxes of $99,823 —329,409 ———329,409 —
Northstar Spectrum LLC Purchase Agreement ——————(311,735)
Net income (loss) attributable to noncontrolling interests ————955 955 110,308
Net income (loss) attributable to DISH Network ———1,762,673 —1,762,673 —
Other —3,720 ——(16)3,704 —
Balance, December 31, 2020 $5,261 $5,400,774 $(855)$8,374,975 $490 $13,780,645 $350,648
Issuance of Class A common stock:
Exercise of stock awards 13 40,551 ———40,564 —
Employee benefits 9 30,312 ———30,321 —
Employee Stock Purchase Plan 6 17,733 ———17,739 —
Non-cash, stock-based compensation —51,680 ———51,680 —Convertible debt reclassified per ASU 2020-06, net of deferred taxes of$245,778 (Note 2)—(805,566)———(805,566)—Change in unrealized holding gains (losses) on available-for-sale debtsecurities, net ——(221)——(221)—Deferred income tax (expense) benefit attributable to othercomprehensive income (loss)——(430)——(430)—
Foreign currency translation ——1,787 ——1,787 —
Net income (loss) attributable to noncontrolling interests ————730 730 44,574
Net income (loss) attributable to DISH Network ———2,410,642 —2,410,642 —
Balance, December 31, 2021 $5,289 $4,735,484 $281 $10,785,617 $1,220 $15,527,891 $395,222
Issuance of Class A common stock:
Exercise of stock awards 1 199 ———200 —
Employee benefits 8 26,340 ———26,348 —
Employee Stock Purchase Plan 13 17,919 ———17,932 —
Non-cash, stock-based compensation —71,450 ———71,450 —
Change in unrealized holding gains (losses) on available-for-sale debtsecurities, net ——184 ——184 —Deferred income tax (expense) benefit attributable to othercomprehensive income (loss)——666 ——666 —
Foreign currency translation ——(4,160)——(4,160)—
Net income (loss) attributable to noncontrolling interests ————537 537 69,137
Net income (loss) attributable to DISH Network ———2,303,233 —2,303,233 —
Balance, December 31, 2022 $5,311 $4,851,392 $(3,029)$13,088,850 $1,757 $17,944,281 $464,359
The accompanying notes are an integral part of these consolidated financial statements.
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F-7
DISH NETWORK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Years Ended December 31,
2022 2021 2020
Cash Flows From Operating Activities:
Net income (loss)$2,372,907 $2,455,946 $1,873,936
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization 717,073 724,852 714,552
Impairment of long-lived assets (Note 2)——356,418
Realized and unrealized losses (gains) on investments, derivatives and other (1,040,651)19,724 21,822
Non-cash, stock-based compensation 71,450 51,680 64,954
Deferred tax expense (benefit)702,735 602,044 899,173
Changes in allowance for credit losses 5,819 (33,836)28,622
Change in long-term deferred revenue and other long-term liabilities 86,039 (1,400)(244,660)
Other, net 235,856 98,278 4,735
Changes in current assets and current liabilities, net
Trade accounts receivable (24,234)209,456 (25,172)
Prepaid and accrued income taxes (36,115)81,197 (84,633)
Inventory 36,722 (167,985)58,291
Other current assets 27,992 (62,356)(271,227)
Trade accounts payable 79,116 101,034 73,268
Deferred revenue and other (52,105)(98,808)(499)
Accrued programming and other accrued expenses (90,504)51,425 (157,804)
Net cash flows from operating activities 3,092,100 4,031,251 3,311,776
Cash Flows From Investing Activities:
Purchases of marketable investment securities (898,326)(4,687,033)(1,902,599)
Sales and maturities of marketable investment securities 3,023,236 2,069,343 1,944,748
Purchases of property and equipment (2,727,302)(1,185,642)(413,302)
Capitalized interest related to FCC authorizations (Note 2)(984,309)(777,885)(779,204)
Refund of FCC authorization deposit —337,490 —
Purchases of FCC authorizations, including deposits (7,206,865)(122,657)(1,387,542)
Boost Mobile Acquisition ——(1,312,500)
Other, net 6,527 (44,029)(11,173)
Net cash flows from investing activities (8,787,039)(4,410,413)(3,861,572)
Cash Flows From Financing Activities:
Repayment of long-term debt and finance lease obligations (83,117)(89,876)(100,536)
Redemption and repurchases of senior notes (2,056,821)(2,000,000)(1,100,000)
Northstar Spectrum LLC Purchase Agreement ——(311,735)
Proceeds from issuance of senior notes 2,000,000 6,750,000 1,000,000
Proceeds from issuance of convertible notes ——2,000,000
Net proceeds from Class A common stock options exercised and stock issued under the
Employee Stock Purchase Plan 18,132 58,303 27,414
Debt issuance costs and debt discount (51,121)(34,459)(15,675)
Other, net (18,413)(24,540)2
Net cash flows from financing activities (191,340)4,659,428 1,499,470
Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents (5,886,279)4,280,266 949,674
Cash, cash equivalents, restricted cash and cash equivalents, beginning of period (Note 6)7,734,260 3,453,994 2,504,320
Cash, cash equivalents, restricted cash and cash equivalents, end of period (Note 6)$1,847,981 $7,734,260 $3,453,994
The accompanying notes are an integral part of these consolidated financial statements.