Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

RESULTS OF OPERATIONS

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

The following table presents our consolidated results of operations for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:

						For the three months ended March 31,												Variance
Statements of Operations Data (1)						2022						2021						Amount						%
Revenue:
Services and other revenue						$	418,811					$	430,337					$	(11,526)					(2.7)
Equipment revenue						82,723						52,245						30,478						58.3
Total revenue						501,534						482,582						18,952						3.9
Costs and expenses:
Cost of sales - services and other						141,129						132,789						8,340						6.3
% of total services and other revenue						33.7		%				30.9		%
Cost of sales - equipment						69,114						45,151						23,963						53.1
% of total equipment revenue						83.5		%				86.4		%
Selling, general and administrative expenses						118,170						114,119						4,051						3.5
% of total revenue						23.6		%				23.6		%
Research and development expenses						7,617						7,545						72						1.0
% of total revenue						1.5		%				1.6		%
Depreciation and amortization						120,436						129,286						(8,850)						(6.8)
Impairment of long-lived assets						—						230						(230)						(100.0)
Total costs and expenses						456,466						429,120						27,346						6.4
Operating income (loss)						45,068						53,462						(8,394)						(15.7)
Other income (expense):
Interest income, net						6,422						5,949						473						8.0
Interest expense, net of amounts capitalized						(14,973)						(34,667)						19,694						(56.8)
Gains (losses) on investments, net						80,686						78,600						2,086						2.7
Equity in earnings (losses) of unconsolidated affiliates, net						(1,714)						1,374						(3,088)						*
Foreign currency transaction gains (losses), net						6,394						(4,069)						10,463						*
Other, net						(156)						(930)						774						(83.2)
Total other income (expense), net						76,659						46,257						30,402						65.7
Income (loss) before income taxes						121,727						99,719						22,008						22.1
Income tax benefit (provision), net						(32,782)						(22,147)						(10,635)						48.0
Net income (loss)						88,945						77,572						11,373						14.7
Less: Net loss (income) attributable to non-controlling interests						2,488						947						1,541						*
Net income (loss) attributable to EchoStar Corporation common stock						$	91,433					$	78,519					$	12,914					16.4
Other data:
EBITDA (2)						$	253,202					$	258,670					$	(5,468)					(2.1)
Subscribers, end of period						1,406,000						1,553,000						(147,000)						(9.5)

• Percentage is not meaningful.

(1) An explanation of our key metrics is included in Explanation of Key Metrics and Other Items.

(2) A reconciliation of EBITDA to Net income (loss), the most directly comparable U.S. generally accepted accounting principles (“U.S. GAAP”) measure in our Consolidated Financial Statements, is included in Results of Operations. For further information on our use of EBITDA, see Explanation of Key Metrics and Other Items.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

The following discussion relates to our results of operations for the three months ended March 31, 2022 and 2021.

Services and other revenue. Services and other revenue totaled $418.8 million for the three months ended March 31, 2022, a decrease of $11.5 million, or 2.7%, as compared to 2021. The decrease was primarily attributable to our Hughes segment related to lower sales of broadband services to our consumer customers of $17.0 million due to lower broadband consumer customers, partially offset by higher sales of broadband services to our enterprise customers of $3.3 million and to our mobile satellite system and other customers of $1.5 million. These variances reflect the negative impact of exchange rate fluctuations of $0.9 million, primarily attributable to our enterprise customers.

Equipment revenue. Equipment revenue totaled $82.7 million for the three months ended March 31, 2022, an increase of $30.5 million, or 58.3%, as compared to 2021. The increase was primarily attributable to increases in hardware sales to our enterprise customers of $28.2 million mainly associated with a certain customer in North America and to international customers.

Cost of sales - services and other. Cost of sales - services and other totaled $141.1 million for the three months ended March 31, 2022, an increase of $8.3 million, or 6.3%, as compared to 2021. The increase was attributable to a non-recurring decrease in a certain international regulatory fee of $4.5 million in 2021 and increases in costs provided to our consumer and enterprise customers, mainly related to service delivery expenses.

Cost of sales - equipment. Cost of sales - equipment totaled $69.1 million for the three months ended March 31, 2022, an increase of $24.0 million, or 53.1%, as compared to 2021. The increase was primarily attributable to the corresponding increase in equipment revenue and change in product mix.

Selling, general and administrative expenses. Selling, general and administrative expenses totaled $118.2 million for the three months ended March 31, 2022, an increase of $4.1 million, or 3.5%, as compared to 2021. The increase was primarily attributable to increases in bad debt expense of $3.9 million primarily due to the recovery of bad debt reserves in 2021.

Depreciation and amortization. Depreciation and amortization expenses totaled $120.4 million for the three months ended March 31, 2022, a decrease of $8.9 million, or 6.8%, as compared to 2021. The decrease was primarily attributable to (i) decreases in our satellite depreciation of $9.4 million, mainly related to our SPACEWAY 3 satellite which was fully depreciated at the end of the first quarter of 2021, (ii) decreases in amortization of intangibles of $1.5 million, and (iii) decreases in other property and equipment depreciation expense of $1.6 million. These decreases were partially offset by increases in amortization of our capitalized software of $3.1 million.

Interest income, net. Interest income, net totaled $6.4 million for the three months ended March 31, 2022, an increase of $0.5 million, or 8.0%, as compared to 2021, primarily attributable to increases in the yield on our marketable investment securities.

Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized, totaled $15.0 million for the three months ended March 31, 2022, a decrease of $19.7 million, or 56.8%, as compared to 2021. The decrease was primarily attributable to a decrease of $17.8 million in interest expense and the amortization of deferred financing cost as a result of the repurchases and maturity of our 7 5/8% Senior Unsecured Notes due 2021 and an increase of $1.8 million in capitalized interest relating to the EchoStar XXIV satellite program.

Gains (losses) on investments, net. Gains (losses) on investments, net totaled $80.7 million in gains for the three months ended March 31, 2022, an increase of $2.1 million, as compared to 2021. The change was primarily attributable to increased gains on marketable investment securities and other equity securities of $3.3 million.

Equity in earnings (losses) of unconsolidated affiliates, net. Equity in earnings (losses) of unconsolidated affiliates, net totaled $1.7 million in losses for the three months ended March 31, 2022, as compared to $1.4 million in earnings for the three months ended March 31, 2021, a negative change of $3.1 million. The change was related to net decreased earnings from our investments in our equity method investees.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net totaled $6.4 million in gains for the three months ended March 31, 2022, as compared to $4.1 million in losses for the three months ended March 31, 2021, a positive change of $10.5 million. The change was due to the net impact of foreign exchange rate fluctuations of certain foreign currencies during the quarter.

Income tax benefit (provision), net. Income tax benefit (provision), net was $(32.8) million for the three months ended March 31, 2022, as compared to $(22.1) million for the three months ended March 31, 2021. Our effective income tax rate was 26.9% and 22.2% for the three months ended March 31, 2022 and 2021, respectively. The variations in our effective tax rate from the U.S. federal statutory rate for the three months ended March 31, 2022 were primarily due to excluded foreign losses where the Company carries a full valuation allowance, and the impact of state and local taxes. The variations in our effective tax rate from the U.S. federal statutory rate for the three months ended March 31, 2021 were primarily due to excluded foreign losses where the Company carries a full valuation allowance and by the change in net unrealized gains that are capital in nature.

Net income (loss) attributable to EchoStar Corporation common stock. The following table reconciles the change in Net income (loss) attributable to EchoStar Corporation common stock:

						Amounts
Net income (loss) attributable to EchoStar Corporation for the three months ended March 31, 2021						$	78,519
Decrease (increase) in interest expense, net of amounts capitalized						19,694
Increase (decrease) in foreign currency transaction gains (losses), net						10,463
Increase (decrease) in gains (losses) on investments, net						2,086
Increase (decrease) in net income (loss) attributable to non-controlling interest						1,541
Increase (decrease) in other, net						774
Increase (decrease) in interest income, net						473
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						(3,088)
Increase (decrease) in operating income (loss), including depreciation and amortization						(8,394)
Decrease (increase) in income tax benefit (provision), net						(10,635)
Net income (loss) attributable to EchoStar Corporation for the three months ended March 31, 2022						$	91,433

EBITDA. EBITDA is a non-GAAP financial measure and is described under Explanation of Key Metrics and Other Items below. The following table reconciles EBITDA to Net income (loss), the most directly comparable U.S. GAAP measure in our Consolidated Financial Statements:

						For the three months ended March 31,												Variance
						2022						2021						Amount						%
Net income (loss)						$	88,945					$	77,572					$	11,373					14.7
Interest income, net						(6,422)						(5,949)						(473)						8.0
Interest expense, net of amounts capitalized						14,973						34,667						(19,694)						(56.8)
Income tax provision (benefit), net						32,782						22,147						10,635						48.0
Depreciation and amortization						120,436						129,286						(8,850)						(6.8)
Net loss (income) attributable to non-controlling interests						2,488						947						1,541						*
EBITDA						$	253,202					$	258,670					$	(5,468)					(2.1)

• Percentage is not meaningful

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

The following table reconciles the change in EBITDA:

						Amounts
EBITDA for the three months ended March 31, 2021						$	258,670
Increase (decrease) in foreign currency transaction gains (losses), net						10,463
Increase (decrease) in gains (losses) on investments, net						2,086
Decrease (increase) in net loss (income) attributable to non-controlling interests						1,541
Increase (decrease) in other, net						774
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						(3,088)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(17,244)
EBITDA for the three months ended March 31, 2022						$	253,202

Segment Operating Results and Capital Expenditures

The following tables present our total revenue, capital expenditures and EBITDA by segment for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021:

						Hughes						ESS						Corporate and Other						Consolidated Total
For the three months ended March 31, 2022
Total revenue						$	494,106					$	4,474					$	2,954					$	501,534
Capital expenditures						61,021						—						51,117						112,138
EBITDA						191,170						2,691						59,341						253,202
For the three months ended March 31, 2021
Total revenue						$	475,859					$	4,089					$	2,634					$	482,582
Capital expenditures						82,196						—						97,039						179,235
EBITDA						198,578						1,919						58,173						258,670

Hughes Segment

						For the three months ended March 31,												Variance
						2022						2021						Amount						%
Total revenue						$	494,106					$	475,859					$	18,247					3.8
Capital expenditures						61,021						82,196						(21,175)						(25.8)
EBITDA						191,170						198,578						(7,408)						(3.7)

Total revenue was $494.1 million for the three months ended March 31, 2022, an increase of $18.2 million, or 3.8%, as compared to 2021. Services and other revenue decreased primarily due to lower sales of broadband services to our consumer customers of $17.0 million due to lower broadband consumer customers, partially offset by higher sales of broadband services to our enterprise customers of $3.3 million and to our mobile satellite system and other customers of $1.5 million. Equipment revenue increased primarily due to increases in hardware sales to our enterprise customers of $28.2 million mainly associated with a certain customer in North America and to international customers. These variances reflect the negative impact of exchange rate fluctuations of $0.9 million.

Capital expenditures were $61.0 million for the three months ended March 31, 2022, a decrease of $21.2 million, or 25.8%, as compared to 2021, primarily due to decreases in expenditures associated with our consumer business, partially offset by increased expenditures related to the construction of our satellite-related ground infrastructure in preparation of the launch of EchoStar XXIV.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

The following table reconciles the change in the Hughes Segment EBITDA:

						Amounts
EBITDA for the three months ended March 31, 2021						$	198,578
Increase (decrease) in foreign currency transaction gains (losses), net						9,958
Decrease (increase) in net loss (income) attributable to non-controlling interests						1,541
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						164
Increase (decrease) in other, net						(746)
Increase (decrease) in operating income (loss), excluding depreciation and amortization						(18,325)
EBITDA for the three months ended March 31, 2022						$	191,170

ESS Segment

						For the three months ended March 31,												Variance
						2022						2021						Amount						%
Total revenue						$	4,474					$	4,089					$	385					9.4
EBITDA						2,691						1,919						772						40.2

Total revenue was $4.5 million for the three months ended March 31, 2022, an increase of $0.4 million, or 9.4%, compared to 2021, primarily due to an increase in transponder services provided to third parties.

EBITDA was $2.7 million for the three months ended March 31, 2022, an increase of $0.8 million, or 40.2%, as compared to 2021, primarily due to the increase in overall ESS segment revenue and lower expenses.

Corporate and Other Segment

						For the three months ended March 31,												Variance
						2022						2021						Amount						%
Total revenue						$	2,954					$	2,634					$	320					12.1
Capital expenditures						51,117						97,039						(45,922)						(47.3)
EBITDA						59,341						58,173						1,168						2.0

Total revenue was $3.0 million for the three months ended March 31, 2022, an increase of $0.3 million, or 12.1%, as compared to 2021, primarily due to increased services and other revenue from DISH Network.

Capital expenditures were $51.1 million for the three months ended March 31, 2022, a decrease of $45.9 million, as compared to 2021, primarily due to decreases in expenditures related to the EchoStar XXIV satellite program.

The following table reconciles the change in the Corporate and Other Segment EBITDA:

						Amounts
EBITDA for the three months ended March 31, 2021						$	58,173
Increase (decrease) in gains (losses) on investments, net						2,086
Increase (decrease) in other, net						1,571
Increase (decrease) in foreign currency transaction gains (losses), net						454
Increase (decrease) in operating income (loss), excluding depreciation and amortization						308
Decrease (increase) in equity in earnings (losses) of unconsolidated affiliates, net						(3,251)
EBITDA for the three months ended March 31, 2022						$	59,341

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

LIQUIDITY AND CAPITAL RESOURCES

Cash, Cash Equivalents and Marketable Investment Securities

We consider all liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.

As of March 31, 2022 our cash, cash equivalents and marketable investment securities totaled $1.5 billion, $0.6 billion of which we held as marketable investment securities, consisting of various debt and equity instruments including corporate bonds, corporate equity securities, government bonds and mutual funds.

Cash Flow Activities

The following table summarizes our cash flows provided by (used for) operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows:

						For the three months ended March 31,												Variance
						2022						2021
Operating activities						$	104,353					$	116,887					$	(12,534)
Investing activities						279,111						736,980						(457,869)
Financing activities						(32,469)						(164,289)						131,820
Effect of exchange rates on cash and cash equivalents						3,480						(1,808)						5,288
Net increase (decrease) in cash and cash equivalents						$	354,475					$	687,770					$	(333,295)

Cash flows provided by (used for) operating activities decreased by $12.5 million primarily attributable to changes in net income (loss) of $11.4 million, depreciation and amortization of $(8.9) million, gains (losses) on investments, net of $(2.1) million, foreign currency translation losses (gains), net of $(10.5) million, deferred tax provision (benefit), net of $7.2 million, and other, net of $(14.1) million and changes in assets and liabilities, net of $2.6 million.

Cash flows provided by (used for) investing activities decreased by $457.9 million primarily attributable to our marketable investment securities net activity, other investments net activity, a decrease in expenditures for property and equipment, and the India JV formation.

Cash flows provided by (used for) financing activities improved by $131.8 million primarily attributable to decreases in treasury share repurchases of $74.6 million and the repurchase and maturity of our 7 5/8% Senior Unsecured Notes due 2021 of $62.6 million.

Obligations and Future Capital Requirements

Contractual Obligations

As of March 31, 2022, our satellite-related commitments were $299.8 million. These primarily include payments pursuant to: i) agreements for the construction of the EchoStar XXIV satellite, ii) the EchoStar XXIV launch contract, iii) regulatory authorizations, and non-lease costs associated with our finance lease satellites, in-orbit incentives relating to certain satellites and commitments for satellite service arrangements.

In certain circumstances, the dates on which we are obligated to pay our contractual obligations could change.

Off-Balance Sheet Arrangements

We generally do not engage in off-balance sheet financing activities or use derivative financial instruments for hedge accounting or speculative purposes.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

Letters of Credit

The following table presents the components of our letters of credit as of March 31, 2022**:**

						Amounts
Restricted cash						$	13,227
Insurance bonds						6,864
Credit arrangement available to our foreign subsidiaries						32,534
Total letters of credit						$	52,625

Certain letters of credit are secured by assets of our foreign subsidiaries.

Satellites

As our satellite fleet ages, we will be required to evaluate replacement alternatives such as acquiring, leasing or constructing additional satellites, with or without customer commitments for capacity. We may also construct, acquire or lease additional satellites or satellite capacity in the future to provide satellite services at additional orbital locations or to improve the quality of our satellite services.

Satellite Insurance

We generally do not carry in-orbit insurance on our satellites or payloads because we have assessed that the cost of insurance is not economical relative to the risk of failures. Therefore, we generally bear the risk of any in-orbit failures. Pursuant to the terms of our joint venture agreement with Al Yah Satellite Communications Company PrJSC (“Yahsat”), we are required to maintain insurance for the Al Yah 3 Brazilian payload during the commercial in-orbit service of such payload, subject to certain limitations on coverage. Our satellites and other payloads, either in orbit or under construction, are not covered by launch or in-orbit insurance. We will continue to assess circumstances going forward and make insurance-related decisions on a case-by-case basis.

Future Capital Requirements

We primarily rely on our existing cash and marketable investment securities balances, as well as cash flow generated through our operations, to fund our business. Revenue in our ESS segment depends largely on our ability to continuously make use of our available satellite capacity with existing customers and our ability to enter into commercial relationships with new customers. Consumer revenue in our Hughes segment depends on our success in adding new and retaining existing subscribers and driving higher ARPU. Revenue in our enterprise and equipment businesses relies heavily on global economic conditions and the competitive landscape for pricing relative to competitors and alternative technologies. Service costs related to ongoing support of our direct and indirect customers and partners are typically impacted most significantly by our growth. There can be no assurance that we will have positive cash flows from operations. Furthermore, if we experience negative cash flows, our existing cash and marketable investment securities balances may be reduced.

We have a significant amount of outstanding indebtedness. As of March 31, 2022, our total indebtedness was $1.5 billion. Refer to our Form 10-K for a discussion of the terms of our long-term debt. Our liquidity requirements will continue to be significant, primarily due to our remaining debt service requirements and the design and construction and launch of our new EchoStar XXIV satellite. We may from time to time seek to purchase amounts of our outstanding debt in open market purchases, privately negotiated transactions or otherwise, depending on market conditions, our liquidity needs and other factors. The amounts we may repurchase may be material. In addition, our future capital expenditures are likely to increase if we make acquisitions or additional investments in infrastructure, technologies or joint ventures to support and expand our business, or if we decide to purchase or build additional satellites or other technologies or assets. Other aspects of our business operations may also require additional capital. We also expect to owe U.S. Federal income tax for 2022.

We anticipate that our existing cash and marketable investment securities are sufficient to fund the currently anticipated operations of our business through the next twelve months.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

Stock Repurchases

On November 2, 2021, our Board of Directors authorized us to repurchase up to $500.0 million of our Class A common stock commencing January 1, 2022 through and including December 31, 2022. Purchases under our repurchase authorizations may be made through privately negotiated transactions, open market repurchases, one or more trading plans in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or otherwise, subject to market conditions and other factors. We may elect not to purchase the maximum amount or any of the shares allowable under these authorizations and we may also enter into additional share repurchase programs authorized by our Board of Directors. During the three months ended March 31, 2022, we repurchased 1,462,094 shares of our Class A common stock for $35.0 million under this program. The remaining authorization under this program was $465.0 million as of March 31, 2022.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are described in Note 2. Summary of Significant Accounting Policies in our Consolidated Financial Statements in our Form 10-K. There have been no significant changes in our critical accounting policies from those presented in our Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Our critical accounting estimates are described in our Form 10-K under the heading Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. There have been no significant changes in our critical accounting estimates from those presented in our Form 10-K.

NEW ACCOUNTING PRONOUNCEMENTS

For a discussion of new accounting pronouncements, refer to Note 2. Summary of Significant Accounting Policies in our Consolidated Financial Statements.

SEASONALITY

For our Hughes segment, service revenue is generally not impacted by seasonal fluctuations other than those associated with fluctuations related to sales and promotional activities.

Our ESS segment is not generally affected by seasonal impacts.

We cannot predict with any certainty whether these trends will continue in the near future as the economy and our customers react to the COVID-19 pandemic and experience associated disruptions and dislocations.

INFLATION AND SUPPLY CHAIN

Inflation started to impact our operations in 2021 and we have continued to experience increased costs in certain functional areas including field services and customer care. We are unable to predict the extent or nature of any future inflationary pressure at this time. Our ability to increase the prices charged for our products and services in future periods will depend primarily on competitive pressures or contractual terms.

The worldwide interruptions and delays in the supply of components, materials and parts, although not materially impacting our operations during the first quarter of 2022, may impact our ability to timely provide equipment deliveries in the future. These interruptions and delays could also increase the cost of our equipment which we may not be able to pass onto our customers.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

EXPLANATION OF KEY METRICS AND OTHER ITEMS

Services and other revenue. Services and other revenue primarily includes the sales of consumer and enterprise broadband services, maintenance and other contracted services, revenue associated with satellite and transponder leases and services, satellite uplinking/downlinking, subscriber wholesale service fees for the HughesNet service professional services and facilities rental revenue.

Equipment revenue. Equipment revenue primarily includes broadband equipment and networks sold to customers in our consumer and enterprise markets.

Cost of sales - services and other. Cost of sales - services and other primarily includes the cost of broadband services provided to our consumer and enterprise customers, maintenance and other contracted services, costs associated with satellite and transponder leases and services, professional services and facilities rental.

Cost of sales - equipment. Cost of sales - equipment consists primarily of the cost of broadband equipment and networks provided to customers in our consumer and enterprise markets. It also includes certain other costs associated with the deployment of equipment to our customers.

Selling, general and administrative expenses. Selling, general and administrative expenses primarily include selling and marketing costs and employee-related costs associated with administrative services (e.g., information systems, human resources and other services), including stock-based compensation expense. It also includes professional fees (e.g. legal, information systems and accounting services) and other expenses associated with facilities and administrative services.

Research and development expenses. Research and development expenses primarily include costs associated with the design and development of products to support future growth and provide new technology and innovation to our customers.

Impairment of long-lived assets. Impairment of long-lived assets includes our impairment losses related to our property and equipment, goodwill, regulatory authorizations and other intangible assets.

Interest income, net. Interest income, net primarily includes interest earned on our cash, cash equivalents and marketable investment securities, and other investments including premium amortization and discount accretion on debt securities.

Interest expense, net of amounts capitalized. Interest expense, net of amounts capitalized primarily includes interest expense associated with our debt and finance lease obligations (net of capitalized interest), amortization of debt issuance costs and interest expense related to certain legal proceedings.

Gains (losses) on investments, net. Gains (losses) on investments, net primarily includes changes in fair value of our marketable equity securities and other investments for which we have elected the fair value option. It may also include realized gains and losses on the sale or exchange of our available-for-sale debt securities, other-than-temporary impairment losses on our available-for-sale securities, realized gains and losses on the sale or exchange of equity securities and debt securities without readily determinable fair value and adjustments to the carrying amount of investments in unconsolidated affiliates and marketable equity securities resulting from impairments and observable price changes.

Equity in earnings (losses) of unconsolidated affiliates, net. Equity in earnings (losses) of unconsolidated affiliates, net includes earnings or losses from our investments accounted for using the equity method.

Foreign currency transaction gains (losses), net. Foreign currency transaction gains (losses), net include gains and losses resulting from the re-measurement of transactions denominated in foreign currencies.

Other, net. Other, net primarily includes dividends received from our marketable investment securities and other non-operating income and expense items that are not appropriately classified elsewhere in the Consolidated Statements of Operations in our Consolidated Financial Statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED

Earnings before interest, taxes, depreciation and amortization, and Net income (loss) attributable to non-controlling interests (“EBITDA”). EBITDA is defined as Net income (loss) excluding Interest income and expense, net, Income tax benefit (provision), net, Depreciation and amortization, and Net income (loss) attributable to non-controlling interests. EBITDA is not a measure determined in accordance with U.S. GAAP. This non-GAAP measure is reconciled to Net income (loss) in our discussion of Results of Operations above. EBITDA should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with U.S. GAAP. EBITDA is used by our management as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes EBITDA provides meaningful supplemental information regarding the underlying operating performance of our business and is appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate the performance of companies in our industry.

Subscribers. Subscribers include customers that subscribe to our HughesNet service, through retail, wholesale and small/medium enterprise service channels.