Basic and Diluted Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2019

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. 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,
	2019		2018		2019		2018
	(In thousands, except per share amounts)
Net income (loss)	$	377,157	$	452,598	$	1,079,022	$	1,298,205
Less: Net income (loss) attributable to noncontrolling interests, net of tax		23,853		20,864		68,914		60,194
Net income (loss) attributable to DISH Network - Basic		353,304		431,734		1,010,108		1,238,011
Interest on dilutive Convertible Notes, net of tax (1)		—		—		—		—
Net income (loss) attributable to DISH Network - Diluted	$	353,304	$	431,734	$	1,010,108	$	1,238,011
Weighted-average common shares outstanding - Class A and B common stock:
Basic		477,495		467,570		471,736		467,216
Dilutive impact of Convertible Notes		58,192		58,192		58,192		58,192
Dilutive impact of stock awards outstanding		59		233		113		344
Diluted		535,746		525,995		530,041		525,752
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network	$	0.74	$	0.92	$	2.14	$	2.65
Diluted net income (loss) per share attributable to DISH Network	$	0.66	$	0.82	$	1.91	$	2.35

(1) For both the three and nine months ended September 30, 2019 and 2018, materially all of our interest expense was capitalized. See Note 2 for further information.

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 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 adjustments. As a consequence, the following are not included in the diluted EPS calculation.

	As of September 30,
	2019	2018
	(In thousands)
Anti-dilutive stock awards	5,181	3,836
Performance based options (1)	8,418	4,722
Restricted Performance Units/Awards	1,516	1,790
Common stock warrants	46,029	46,029
Total	61,144	56,377

(1) The increase in performance based options as of September 30, 2019 primarily resulted from the issuance of stock option awards as of October 1, 2018 under a long-term, performance-based stock incentive plan adopted on August 17, 2018 (the “2019 LTIP”).

2017 LTIP. On December 2, 2016, we adopted a long-term, performance-based stock incentive plan (the “2017 LTIP”). The 2017 LTIP provides stock options that vest based on company-specific subscriber and financial performance conditions. Awards were initially granted under the 2017 LTIP as of January 1, 2017. As of December 31, 2018, we had determined that 75% of the 2017 LTIP performance conditions were probable of achievement. During the three months ended September 30, 2019, management determined the 2017 LTIP performance conditions were not probable of achievement and as a result, we reversed $13 million of non-cash, stock-based compensation expense, which we had previously accrued.