Dish Network 2015 Annual Report Download - page 71

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Satellite and transmission expenses. “Satellite and transmission expenses” includes the cost of leasing satellite and
transponder capacity from EchoStar and the cost of digital broadcast operations provided to us by EchoStar, including
satellite uplinking/downlinking, signal processing, conditional access management, telemetry, tracking and control, and
other professional services. “Satellite and transmission expenses” also includes executory costs associated with capital
leases and costs associated with transponder leases and other related services. In addition, “Satellite and transmission
expenses” includes costs associated with our Sling TV services including, among other things, streaming delivery
technology and infrastructure.
Cost of sales - equipment, services and other. “Cost of sales - equipment, services and other” primarily includes the
cost of non-subsidized sales of DBS accessories to independent retailers and other independent distributors of our
equipment. In addition, “Cost of sales - equipment, services and other” includes costs related to equipment sales,
services, and other agreements with EchoStar.
Subscriber acquisition costs. While we primarily lease DBS receiver systems and Broadband modem equipment, we
also subsidize certain costs to attract new subscribers. Our “Subscriber acquisition costs” include the cost of subsidized
sales of DBS receiver systems to independent retailers and other independent distributors of our equipment, the cost of
subsidized sales of DBS receiver systems directly by us to subscribers, including net costs related to our promotional
incentives, costs related to our direct sales efforts and costs related to installation and acquisition advertising. Our
“Subscriber acquisition costs” also includes costs associated with acquiring Sling TV subscribers including, among other
things, costs related to acquisition advertising, our direct sales efforts and commissions.
Pay-TV SAC. Subscriber acquisition cost measures are commonly used by those evaluating companies in the pay-TV
industry. We are not aware of any uniform standards for calculating the “average subscriber acquisition costs per new
Pay-TV subscriber activation,” or Pay-TV SAC, and we believe presentations of Pay-TV SAC may not be calculated
consistently by different companies in the same or similar businesses. Our Pay-TV SAC is calculated as “Subscriber
acquisition costs,” excluding “Subscriber acquisition costs” associated with our broadband services, plus the value of
equipment capitalized under our lease program for new DISH branded pay-TV subscribers, divided by gross new Pay-
TV subscriber activations. We include all the costs of acquiring Pay-TV subscribers (e.g., subsidized and capitalized
equipment) as we believe it is a more comprehensive measure of how much we are spending to acquire subscribers. We
also include all new Pay-TV subscribers in our calculation, including Pay-TV subscribers added with little or no
subscriber acquisition costs. Subscriber acquisition costs for Sling TV subscribers are lower than those for DISH
branded pay-TV subscribers.
General and administrative expenses. “General and administrative expenses” consists primarily of employee-related
costs associated with administrative services such as legal, information systems, accounting and finance, including non-
cash, stock-based compensation expense. It also includes outside professional fees (e.g., legal, information systems and
accounting services) and other items associated with facilities and administration.
Interest expense, net of amounts capitalized. “Interest expense, net of amounts capitalized” primarily includes interest
expense (net of capitalized interest), prepayment premiums and amortization of debt issuance costs associated with our
senior debt, and interest expense associated with our capital lease obligations.
Other, net. The main components of “Other, net” are gains and losses realized on the sale and/or conversion of
marketable and non-marketable investment securities and derivative financial instruments, impairment of marketable and
non-marketable investment securities, unrealized gains and losses from changes in fair value of marketable and non-
marketable strategic investments accounted for under the Fair Value Option and derivative financial instruments, and
equity in earnings and losses of our affiliates.
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Adjusted EBITDA is
defined as “Net income (loss) attributable to DISH Network” less “Income (loss) from discontinued operations, net of
tax” plus “Interest expense, net of amounts capitalized” net of “Interest income,” “Income tax (provision) benefit, net”
and “Depreciation and amortization.” This “non-GAAP measure” is reconciled to “Net income (loss) attributable to
DISH Network” in our discussion of “Results of Operations” below.