Dish Network 2014 Annual Report Download - page 77

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
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Our Pay-TV SAC calculation does not reflect any benefit from payments we received in connection with equipment
not returned to us from disconnecting lease subscribers and returned equipment that is made available for sale or
used in our existing customer lease program rather than being redeployed through our new customer lease program.
During the years ended December 31, 2014 and 2013, these amounts totaled $110 million and $135 million,
respectively.
Our “Subscriber acquisition costs” and “Pay-TV SAC” may materially increase in the future to the extent that we
transition to newer technologies, introduce more aggressive promotions, or provide greater equipment subsidies. See
further discussion under “Liquidity and Capital Resources – Subscriber Acquisition and Retention Costs.”
Depreciation and amortization. “Depreciation and amortization” expense totaled $1.078 billion during the year ended
December 31, 2014, a $24 million or 2.3% increase compared to the same period in 2013. During the year ended
December 31, 2014, we incurred higher depreciation expense from equipment leased primarily to new and existing
subscribers with new Hopper receiver systems, partially offset by a decrease in depreciation expense related to
certain satellites transferred to EchoStar as part of the Satellite and Tracking Stock Transaction. The year ended
December 31, 2013 was negatively impacted by $53 million of additional depreciation expense as a result of the
accelerated depreciable lives of certain assets designed to support the TerreStar MSS business.
Impairment of long-lived assets. “Impairment of long-lived assets” of $438 million during the year ended
December 31, 2013 resulted from an impairment of the T2 and D1 satellites. See Note 8 in the Notes to our
Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
Interest income. “Interest income” totaled $62 million during the year ended December 31, 2014, a decrease of $87
million or 58.5% compared to the same period in 2013. This decrease principally resulted from lower percentage
returns earned on our cash and marketable investment securities during 2014.
Interest expense, net of amounts capitalized. “Interest expense, net of amounts capitalized” totaled $611 million
during the year ended December 31, 2014, a decrease of $134 million or 18.0% compared to the same period in 2013.
This decrease was primarily related to an increase in capitalized interest principally associated with our wireless
spectrum. The decrease was also driven by a reduction in interest expense as a result of redemptions and
repurchases of debt during 2013 and 2014, partially offset by the issuance of debt in November 2014.
Other, net. “Other, net” expense was $69 million during the year ended December 31, 2014, compared to income of
$385 million for the same period in 2013. The year ended December 31, 2014 was negatively impacted by net realized
and/or unrealized losses on our marketable investment securities and derivative financial instruments. The year ended
December 31, 2013 was positively impacted by net realized and/or unrealized gains on our marketable investment
securities and derivative financial instruments.
Adjusted Earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA was $2.849 billion
during the year ended December 31, 2014, an increase of $44 million or 1.6% compared to the same period in 2013.
Adjusted EBITDA for the year ended December 31, 2013 was negatively impacted by the $438 million impairment
charge for the T2 and D1 satellites, partially offset by the positive impact of “Other, net” income of $385 million. The
following table reconciles Adjusted EBITDA to the accompanying financial statements.
2014 2013
Adjusted EBITDA................................................................................................... 2,848,837$ 2,804,807$
Interest, net............................................................................................................ (549,368) (596,120)
Income tax (provision) benefit, net........................................................................ (276,840) (299,826)
Depreciation and amortization............................................................................... (1,077,936) (1,054,026)
Income (loss) from continuing operations attributable to DISH Network............... 944,693$ 854,835$
Plus: Income (loss) from discontinued operations, net of tax............................... - (47,343)
Net income (loss) attributable to DISH Network..................................................... 944,693$ 807,492$
For the Years Ended December 31,
(In thousands)