Basic and Diluted Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2022

Basic and Diluted Net Income (Loss) Per Share

Basic and Diluted Net Income (Loss) Per Share

3.Basic and Diluted Net Income (Loss) Per Share

We present both basic earnings per share (“EPS”) and diluted EPS. Basic EPS excludes potential dilution and is computed by dividing “Net income (loss) attributable to DISH Network” by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock awards were exercised and if our Convertible Notes were converted. The potential dilution from stock awards is accounted for using the treasury stock method based on the average market value of our Class A common stock for the period. The potential dilution from conversion of the Convertible Notes is accounted for using the if-converted method, which requires that all of the shares of our Class A common stock issuable upon conversion of the Convertible Notes will be included in the calculation of diluted EPS assuming conversion of the Convertible Notes at the beginning of the reporting period (or at time of issuance, if later).

The following table presents EPS amounts for all periods and the basic and diluted weighted-average shares outstanding used in the calculation.

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands, except per share amounts)
Net income (loss)	$	429,585	$	567,520	$	1,418,438	$	1,890,534
Less: Net income (loss) attributable to noncontrolling interests, net of tax		17,355		10,478		50,725		32,221
Net income (loss) attributable to DISH Network - Basic		412,230		557,042		1,367,713		1,858,313
Interest on dilutive Convertible Notes, net of tax (1)		—		—		—		—
Net income (loss) attributable to DISH Network - Diluted	$	412,230	$	557,042	$	1,367,713	$	1,858,313
Weighted-average common shares outstanding - Class A and B common stock:
Basic		530,436		528,229		529,870		527,503
Dilutive impact of Convertible Notes		107,016		107,016		107,016		107,016
Dilutive impact of stock awards outstanding		3		1,195		409		699
Diluted		637,455		636,440		637,295		635,218
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network	$	0.78	$	1.05	$	2.58	$	3.52
Diluted net income (loss) per share attributable to DISH Network	$	0.65	$	0.88	$	2.15	$	2.93

(1) For both the three and nine months ended September 30, 2022 and 2021, substantially all of our interest expense was capitalized. See Note 2 for further information.

On June 24, 2022, we commenced a tender offer to eligible employees (which excludes our co-founders and the independent members of our Board of Directors) to exchange eligible stock options (which excludes the Ergen 2020 Performance Award) for new options as detailed in our Schedule TO filed June 23, 2022 with the Securities and Exchange Commission (the “Exchange Offer”), to, among other things, further align employee incentives with the current market. The Exchange Offer expired on July 22, 2022. As a result of the Exchange Offer, the exercise price of approximately 13 million stock options, affecting approximately 700 eligible employees, was adjusted during the third quarter of 2022 to $20.00. The total incremental non-cash stock-based compensation expense resulting from the Exchange Offer is $28 million, which will be recognized over the remaining vesting period of the applicable options. During the three and nine months ended September 30, 2022, we recognized $8 million of incremental non-cash, stock-based compensation expense on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as a result of the Exchange Offer.

Certain stock awards to acquire our Class A common stock are not included in the weighted-average common shares outstanding above, as their effect is anti-dilutive. In addition, vesting of performance/market based options and rights to acquire shares of our Class A common stock granted pursuant to our performance-based stock incentive plans (“Restricted Performance Units”) are both contingent upon meeting certain goals, some of which are not yet probable of being achieved.

Furthermore, the warrants that we issued to certain option counterparties in connection with the Convertible Notes due 2026 are only exercisable at their expiration if the market price per share of our Class A common stock is greater than the strike price of the warrants, which is approximately $86.08 per share, subject to certain adjustments. As a consequence, the following are not included in the diluted EPS calculation.

	As of September 30,
	2022	2021
	(In thousands)
Anti-dilutive stock awards	8,435	6,898
Performance/market based options	15,508	15,425
Restricted Performance Units/Awards	1,146	1,402
Common stock warrants	46,029	46,029
Total	71,118	69,754