Basic and Diluted Net Income (Loss) Per Share

6 Months Ended

Jun. 30, 2024

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 EchoStar” 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 reporting 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 Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
	(In thousands, except per share amounts)
Net income (loss)	$	(207,458)	$	232,692	$	(315,833)	$	505,537
Less: Net income (loss) attributable to noncontrolling interests, net of tax		(1,867)		20,030		(2,866)		39,341
Net income (loss) attributable to EchoStar - Basic		(205,591)		212,662		(312,967)		466,196
Interest on dilutive Convertible Notes, net of tax (1) (3)		—		—		—		—
Net income (loss) attributable to EchoStar - Diluted	$	(205,591)	$	212,662	$	(312,967)	$	466,196
Weighted-average common shares outstanding - Class A and B common stock:
Basic		271,592		270,818		271,555		270,328
Dilutive impact of Convertible Notes (2)(3)		—		37,550		—		37,550
Dilutive impact of stock awards outstanding (3)		—		7		—		70
Diluted		271,592		308,375		271,555		307,948
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to EchoStar	$	(0.76)	$	0.79	$	(1.15)	$	1.72
Diluted net income (loss) per share attributable to EchoStar	$	(0.76)	$	0.69	$	(1.15)	$	1.51

(1) For both the three and six months ended June 30, 2023, substantially all of our interest expense was capitalized. See Note 2 for further information.

(2) We repurchased or redeemed the principal balance of our 2 3/8% Convertible Notes due 2024 as of March 15, 2024, the instrument’s maturity date.

(3) For the three and six months ended June 30, 2024, the dilutive impact of 33 million and 35 million weighted-average shares of Class A common stock, respectively, were excluded from the computation of “Diluted net income (loss) per share attributable to EchoStar” because the effect would have been anti-dilutive as a result of the net loss attributable to EchoStar in the period.

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 at price ranges of approximately $185.75 to $245.33 per share, subject to certain adjustments. As a consequence, the following are not included in the diluted EPS calculation.

	As of June 30,
	2024	2023
	(In thousands)
Anti-dilutive stock awards	9,762	11,241
Performance/market based options	4,421	4,861
Restricted Performance Units/Awards	—	—
Common stock warrants	16,151	16,151
Total	30,334	32,253

Exchange Offer

On March 4, 2024, we commenced a tender offer to eligible employees (which excludes our co-founders and the non-executive/non-employee 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 March 4, 2024 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 April 1, 2024 and we accepted for exchange approximately 7 million stock options. As a result of the Exchange Offer, during the second quarter of 2024, the exercise price of approximately 6 million new stock options, affecting approximately 1,000 eligible employees, was adjusted to $14.04. The total incremental non-cash stock-based compensation expense resulting from the Exchange Offer is $15 million, which will be recognized over the remaining vesting period of the applicable options.