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1

FOR IMMEDIATE RELEASE

Hughes Communications, Inc. Announces Second Quarter 2007 Results

Revenues Increase 12% over Second Quarter 2006 to $234 Million;

EBITDA More than Doubles to $31 Million;

Net Income Increases to $10 Million and Earnings per Share to $0.50

Germantown, Md., August 10, 2007—Hughes Communications, Inc. (NASDAQ: HUGH) (“Hughes”), the

global leader in broadband satellite network solutions and services, today announced financial results for the

second quarter ended June 30, 2007. Hughes' consolidated operations are classified into three reportable

segments: VSAT; Telecom Systems; and Parent and Other. The VSAT and Telecom Systems segments

represent all the operations of Hughes Network Systems, LLC (“HNS”), Hughes’ principal operating

subsidiary. The Parent and Other segment includes the financial results of Hughes Corporate, Electronic

System Products, Inc., and investments in the other companies that were contributed from SkyTerra

Communications, Inc. (“SkyTerra”), Hughes' predecessor, prior to the Skyterra/Hughes spin-off in February

2006.

Hughes Network Systems, LLC (HNS)

“HNS once again delivered strong all-round financial performance in the second quarter of 2007, setting new

records for second quarter revenue, operating income, EBITDA, and net income,” said Pradman Kaul,

president and chief executive officer. “Revenues increased by 12% over the second quarter of 2006 to $234

million and operating income increased by 449% to a strong $20 million from $4 million. EBITDA more

than doubled to $32 million, and net income increased to $11 million compared to a loss of $4 million in the

second quarter of 2006. Adjusted EBITDA also increased by 12% to $32 million in the second quarter of

2007.

“The consumer/SMB and mobile satellite businesses continued to be the key contributors to our revenue

growth,” said Kaul. “Over 30,000 new subscribers were activated in the second quarter of 2007, resulting in

the consumer/SMB subscriber base growing to 353,000 at June 30, 2007 for a growth of 18% over the

subscriber base at June 30, 2006. Revenue from our mobile satellite business showed strong growth of 88%

to $35 million in the second quarter of 2007 over the second quarter of 2006. Our North American and

International enterprise businesses continued their steady revenue contribution with combined growth of 3%

over the second quarter of 2006.”

Kaul continued, “We booked new orders of $219 million in the second quarter of 2007 including significant

orders from Barrett Xplore, Foot Locker, Yum Brands, Kmart, Shell Oil, Weis Markets, Jiffy Lube and

T.J.Maxx in our North America enterprise business. In our International enterprise business, we were

awarded significant orders by World Bank, Micro Tech, Telmex and BP. The Mobile Satellite business was

awarded major orders by TerreStar, ICO, and Thuraya.”

“For the six months ended June 30, 2007, HNS revenue grew by 13% to $457 million, EBITDA by 88% to

$57 million, Adjusted EBITDA by 27% to $59 million, and net income to $15 million compared to a loss of

$4 million in the same period in 2006. New orders for all segments were robust. Total new orders for the first

six months of 2007 were $496 million, a growth of 28% over the same period in 2006.”

2

Set forth below is a table highlighting certain of HNS' results for the three- and six-month periods ended June

30, 2007 and 2006:

(Dollars in thousands) 2007 2006 2007 2006

Revenue

VSAT 196,696$ 183,856$ 391,757$ 365,164$

Telecom Systems 37,413 24,647 65,083 40,131

Total 234,109$ 208,503$ 456,840$ 405,295$

Operating income (loss)

VSAT 15,399$ (1,778)$ 24,858$ 5,454$

Telecom Systems 4,844 5,466 8,385 7,217

Total 20,243$ 3,688$ 33,243$ 12,671$

Net income (loss) 11,178$ (4,428)$ 15,486$ (4,234)$

EBITDA* 31,921$ 14,256$ 57,335$ 30,519$

Adjusted EBITDA* 31,981$ 28,526$ 58,572$ 46,244$

Hughes Network Systems, LLC

Three Months

Ended June 30, Six Months

Ended June 30,

* For the definitions of EBITDA and Adjusted EBITDA, see “Reconciliation of

Non-GAAP Financial Measures to GAAP Financial Measures” below.

Selected Highlights

• The SPACEWAY

™

3 satellite arrived at the Arianespace launch facility in Kourou, French Guiana,

where the Ariane 5 heavy launcher will launch the satellite into geosynchronous transfer orbit. The

scheduled launch date is August 14, 2007. The SPACEWAY 3 satellite will operate in the globally

assigned Ka-band spectrum and will be used to provide a new range of satellite broadband services

to enterprise, consumer, and government customers throughout North America.

• HNS announced a breakthrough in broadband network management—a fully integrated, enterprise-

wide performance and fault management tool for both satellite and landline (DSL, T1) broadband

technologies—the HughesNet

®

Customer Gateway. Available exclusively to HughesNet Managed

Services customers, the HughesNet Customer Gateway offers a single interface for monitoring and

managing any broadband technology deployed within an organization.

• Frost and Sullivan awarded HNS the North American Vertical Market Penetration Leadership Award

for managed network services for the retail sector. This award recognizes HNS for its ability to

provide solutions and support that meet customers' specific infrastructure management needs.

• HNS is a member of Sprint's winning team for the recently awarded U.S. General Services

Administration (GSA) Networx Enterprise contract. HNS will provide managed network access and

Internet services via broadband satellite as a subcontractor in support of federal mission-critical

telecommunications requirements.

• HNS announced the general availability in Europe of HughesNet Managed Network Services. This

suite of fully-managed virtual private network (VPN) solutions for multi-site enterprise networks

offers customers the choice of broadband access technologies at each site, whether DSL, satellite,

private line, or in a combination.

3

• For the seventh consecutive year, HNS has been awarded the Workplace Excellence Seal of

Approval from the Alliance for Workplace Excellence. In addition to the Workplace Excellence

award, the company was also given the Wellness Trailblazer award. Both awards are given to

members of the Maryland business community dedicated to establishing a workplace culture that

allows employees to achieve success at work, at home, and in the community.

• On August 8, 2007, Hughes Communications, Inc. filed a shelf registration statement on Form S-3 to

register equity and debt securities of Hughes Communications, Inc. and debt securities of Hughes

Network Systems, LLC, and HNS Finance, its wholly owned subsidiary, as co-issuers, with the SEC.

Any proceeds received from the sale of these securities will be used for capital expenditures,

acquisitions, working capital and other general corporate purposes.

Hughes Communications, Inc. (Hughes)

Certain financial information for Hughes for the three- and six- months ended June 30, 2007 and 2006 is

shown below.

(Dollars in thousands) 2007 2006 2007 2006

Revenue

VSAT 196,696$ 183,856$ 391,757$ 365,164$

Telecom Systems 37,413 24,647 65,083 40,131

Parent and Other 249 158 400 240

Total 234,358$ 208,661$ 457,240$ 405,535$

Operating income (loss)

VSAT 15,399$ (1,778)$ 24,858$ 5,454$

Telecom Systems 4,844 5,466 8,385 7,217

Parent and Other (1,210) (310) (2,654) (2,534)

Total 19,033$ 3,378$ 30,589$ 10,137$

Net income (loss) 9,632$ (4,396)$ 12,572$ (59,940)$

EBITDA* 30,766$ 14,447$ 55,146$ 28,313$

Hughes Communications, Inc.

Three Months

Ended June 30, Six Months

Ended June 30,

* For the definition of EBITDA, see “Reconciliation of Non-GAAP Financial

Measures to GAAP Financial Measures” below.

The net loss for the six months ended June 30, 2006 includes a tax charge of approximately $51.3 million recorded in

the first quarter of 2006, primarily related to the SkyTerra/Hughes spin-off. As Hughes is the accounting successor to

SkyTerra, the taxes associated with the separation are included in Hughes' results for the quarter ended March 31, 2006

and a portion of the deferred tax assets were utilized to satisfy the tax expense resulting from the taxable gain.

Accordingly, Hughes does not expect this expense to have an impact on its cash from operations.

4

To summarize, Kaul said, “We are very pleased that we have once again delivered strong financial results in

the second quarter of 2007 after an equally strong first quarter. This performance, combined with a strong

order backlog, has positioned us well for revenue growth. I am also delighted to inform you that our

SPACEWAY 3 satellite is at the launch site in French Guiana awaiting its launch on August 14, 2007. We

are looking forward to a successful launch and to commencing HughesNet

commercial service using

SPACEWAY 3 approximately six months thereafter. We expect that SPACEWAY 3 will substantially

reduce our costs and open up new revenue opportunities going forward in the enterprise and consumer/SMB

markets.”

Commenting on the financial performance, Grant Barber, executive vice president and chief financial officer

said, “Our revenue and profitability showed strong growth in all operating segments in the second quarter of

2007 over the same period in 2006, and is reflected in the earnings per share for Hughes of $0.50 on a fully

diluted basis compared to a loss of $0.23 in the same period in 2006. For the six-month period ended June

30, 2007, Hughes delivered earnings per share of $0.65 compared to a loss of $4.24 per share in the same

period in 2006. We generated cash from operations of $33 million during the six months ended June 30,

2007 compared to $15 million in the six months ended June 30, 2006, and we closed the second quarter of

2007 with a healthy consolidated cash and marketable securities position of $221 million.”

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

The following table reconciles the differences between HNS' net income as determined under United States

of America generally accepted accounting principles (GAAP), EBITDA and Adjusted EBITDA.

(Dollars in thousands) 2007 2006 2007 2006

Net income (loss) 11,178$ (4,428)$ 15,486$ (4,234)$

Add:

Interest expense 11,870 10,346 23,308 19,740

Income tax (benefit) expense (131) 500 389 987

Depreciation and amortization 10,981 10,086 22,524 17,216

Equity incentive plan compensation 767 93 1,294 152

Less:

Interest income (2,744) (2,341) (5,666) (3,342)

EBITDA 31,921$ 14,256$ 57,335$ 30,519$

Add:

Inventory provision related to shift to Broadband focus - 11,879 - 11,879

HughesNet branding costs - 902 - 1,454

Restructuring charge 60 - 1,237 -

Benefits/insurance programs sponsored by DIRECTV - 653 - 1,306

Legal settlement and related fees - pre-April 2005 Acquisition - 586 - 586

Management fee to Hughes Communications, Inc. - 250 - 500

Adjusted EBITDA 31,981$ 28,526$ 58,572$ 46,244$

Hughes Network Systems, LLC

Three Months

Ended June 30, Six Months

Ended June 30,

5

The following table reconciles the differences between Hughes’ net income as determined under GAAP and

EBITDA:

(Dollars in thousands) 2007 2006 2007 2006

Net income (loss) 9,632$ (4,396)$ 12,572$ (59,940)$

Add:

Interest expense 11,872 10,388 23,310 21,489

Income tax expense 164 500 684 51,821

Depreciation and amortization 10,981 10,086 22,524 17,216

Equity incentive plan compensation 1,005 467 2,022 1,510

Less:

Interest income (2,888) (2,598) (5,966) (3,783)

EBITDA 30,766$ 14,447$ 55,146$ 28,313$

Hughes Communications, Inc.

Three Months

Ended June 30, Six Months

Ended June 30,

The financial statements of Hughes and HNS for the three- and six-month periods ended June 30, 2007 and

2006 are attached to this press release.

Note:

EBITDA is defined as earnings (loss) before interest, income taxes, depreciation, amortization and equity

incentive plan compensation. Adjusted EBITDA is used in calculating covenant compliance under HNS'

credit agreements and the indenture governing HNS’ 9½% Senior Notes due 2014. Adjusted EBITDA is

defined as EBITDA further adjusted to exclude certain adjustments. EBITDA and Adjusted EBITDA are not

recognized terms under GAAP. EBITDA and Adjusted EBITDA do not represent net income or cash flows

from operations, as these terms are defined under GAAP, and should not be considered as alternatives to net

income as an indicator of operating performance or to cash flows as a measure of liquidity. Additionally,

EBITDA and Adjusted EBITDA are not intended to be measures of cash flow available to management for

discretionary use, as such measures do not consider certain cash requirements such as capital expenditures

(including expenditures on VSAT operating lease hardware and capitalized software development costs), tax

payments, and debt service requirements (including VSAT operating lease hardware). EBITDA and Adjusted

EBITDA as presented herein are not necessarily comparable to similarly titled measures reported by other

companies. EBITDA and Adjusted EBITDA are presented herein because HNS and Hughes use such

information in their review of the performance of management and in the performance of their business. In

addition, information concerning Adjusted EBITDA is being presented because it reflects important

components included in the financial covenants under the senior note indenture and HNS' credit agreements.

About Hughes Communications, Inc.

Hughes Communications, Inc. (NASDAQ: HUGH) is the 100 percent owner of Hughes Network Systems,

LLC. Hughes is the global leader in providing broadband satellite networks and services for enterprises,

governments, small businesses, and consumers. HughesNet encompasses all broadband solutions and

managed services from Hughes, bridging the best of satellite and terrestrial technologies. Its broadband

satellite products are based on the IPoS (IP over Satellite) global standard, approved by the TIA, ETSI, and

ITU standards organizations. To date, Hughes has shipped more than 1.2 million systems to customers in

over 100 countries.

Headquartered outside Washington, D.C., in Germantown, Maryland, USA, Hughes maintains sales and

support offices worldwide. For more information, please visit www.hughes.com.

6

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995

This press release may contain statements that are forward looking, as that term is defined by the Private Securities

Litigation Reform Act of 1995. These statements include, but are not limited to, discussions regarding industry outlook

and Hughes’ expectations regarding the performance of its business, its future liquidity and capital resource needs, its

strategic plans and objectives and the ability to launch and deploy SPACEWAY 3. These forward-looking statements

are based on management's beliefs, as well as assumptions made by, and information currently available to,

management. When used in this release, the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “project,”

“plans” and similar expressions and the use of future dates are intended to identify forward-looking statements.

Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can

give no assurance that these expectations will prove to have been correct. You are cautioned not to place undue reliance

on any forward-looking statements, which speak only as of the date made. These statements are subject to certain risks,

uncertainties and assumptions, including, but not limited to, the following: risks related to Hughes’ substantial leverage

and restrictions contained in its debt agreements, technological developments, its reliance on providers of satellite

transponder capacity, changes in demand for Hughes’ services and products, competition, industry trends, regulatory

changes, foreign currency exchange rate fluctuations and other risks identified and discussed under the caption “Risk

Factors” in Hughes’ Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and

Exchange Commission on March 26, 2007 and in the other documents Hughes files with the Securities and Exchange

Commission from time to time.

###

©Hughes Communications, Inc. All rights reserved. Hughes, HughesNet, IPoS, and SPACEWAY are trademarks of Hughes

Network Systems, LLC. DIRECTV and DIRECWAY are registered trademarks of The DIRECTV Group, Inc.

Contact Information

Investor Relations Contact: Deepak V. Dutt,

Vice President, Treasurer and Investor Relations Officer

Email: ddutt@hns.com

Phone: 301-428-7010

Media Contact: Judy Blake,

Director, Marketing Communications

Email: jblake@hns.com

Phone: 301-601-7330

Attachments

Hughes Communications, Inc.

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Cash Flows

Hughes Network Systems, LLC

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Cash Flows

7

HUGHES COMMUNICATIONS, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

June 30,

2007

December 31,

2006

ASSETS

Current assets:

Cash and cash equivalents 175,972$ 106,933$

Marketable securities 44,891 107,320

Receivables, net 181,946 180,955

Inventories 61,104 61,280

Prepaid expenses and other 45,234 39,947

Total current assets 509,147 496,435

Property, net 378,760 312,497

Capitalized software costs, net 44,780 41,159

Intangible assets, net 27,592 30,663

Other assets 107,999 50,890

Total assets 1,068,278$ 931,644$

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:

Accounts payable 67,861$ 59,391$

Short-term borrowings and current portion of long-term debt 21,545 27,210

Accrued liabilities 143,326 124,586

Due to affiliates 9,437 13,119

Total current liabilities 242,169 224,306

Long-term debt 578,174 469,190

Other long-term liabilities 9,660 18,079

Total liabilities 830,003 711,575

Commitments and contingencies

Minority interests 4,521 4,680

Stockholders' Equity:

Preferred stock, $0.001 par value; 1,000,000 shares authorized and no

shares issued and outstanding at June 30, 2007 and December 31, 2006 - -

Common stock, $0.001 par value; 64,000,000 shares authorized;

19,135,572 shares and 19,000,622 shares issued and outstanding

as of June 30, 2007 and December 31, 2006, respectivel

y

19 19

Additional paid in capital 629,062 626,927

Accumulated deficit (397,836) (410,408)

Accumulated other comprehensive income (loss) 2,509 (1,149)

Total stockholders' equity 233,754 215,389

Total liabilities and stockholders' equity 1,068,278$ 931,644$

8

HUGHES COMMUNICATIONS, INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

2007 2006 2007 2006

Revenues:

Services 129,373$ 107,726$ 249,147$ 213,042$

Hardware sales 104,985 100,935 208,093 192,493

Total revenues 234,358 208,661 457,240 405,535

Operating costs and expenses:

Cost of services 86,940 75,071 167,174 147,353

Cost of hardware products sold 85,352 89,159 172,518 163,018

Selling, general and administrative 37,280 33,546 75,546 68,516

Research and development 4,218 6,309 8,342 14,246

Amortization of intangibles 1,535 1,198 3,071 2,265

Total operating costs and expenses 215,325 205,283 426,651 395,398

Operating income 19,033 3,378 30,589 10,137

Other (expense) income :

Interest expense (11,872) (10,388) (23,310) (21,489)

Interest income 2,888 2,598 5,966 3,783

Other income, net 39 756 140 756

Income (loss) before income taxes expense; minority

interests in net (earnings) losses of subsidiaries; equity in losses

of unconsolidated affiliates; and discontinued operations 10,088 (3,656) 13,385 (6,813)

Income tax expense (164) (500) (684) (51,821)

Minority interests in net (earnings) losses of subsidiaries (125) (122) 158 249

Equity in losses of unconsolidated affiliates (167) (118) (287) (1,753)

Income (loss) from continuing operations 9,632 (4,396) 12,572 (60,138)

Discontinued operations:

Loss from discontinued operations - - - (42)

Gain on sale of discontinued operations - - - 240

Net income (loss) 9,632 (4,396) 12,572 (59,940)

Cumulative dividends and accretion of convertible preferred stock

to liquidation value - - - (1,454)

Net income (loss) attributable to common stockholders 9,632$ (4,396)$ 12,572$ (61,394)$

Basic net earnings (loss) per common share:

Continuing operations 0.51$ (0.23)$ 0.67$ (4.25)$

Discontinued operations - - - 0.01

Basic net earnings (loss) per common share 0.51$ (0.23)$ 0.67$ (4.24)$

Diluted net earnings (loss) per common share:

Continuing operations 0.50$ (0.23)$ 0.65$ (4.25)$

Discontinued operations - - - 0.01

Diluted net earnings (loss) per common share 0.50$ (0.23)$ 0.65$ (4.24)$

Basic weighted average common shares outstanding 18,862,337 18,795,289 18,852,783 14,483,198

Diluted weighted average common shares outstanding 19,209,312 18,795,289 19,212,199 14,483,198

June 30, June 30,

Three Months Ended Six Months Ended

9

HUGHES COMMUNICATIONS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

2007 2006

Cash flows from operating activities:

Net income (loss) 12,572$ (59,940)$

Adjustments to reconcile net income (loss) to cash flows from

operating activities:

Loss on discontinued operations - 42

Depreciation and amortization 22,767 17,564

Equity plan compensation expense 2,022 1,510

Minority interests (158) (193)

Equity in losses from unconsolidated affiliates 287 1,806

Gain on disposal of assets (285) (222)

Deferred income taxes (705) 48,347

Change in other operating assets and liabilities, net of acquisitions:

Receivables, net 1,988 26,412

Inventories 817 17,241

Prepaid expenses and other (5,401) 1,081

Accounts payable 9,148 (16,878)

Accrued liabilities and other (10,478) (21,711)

Net cash provided by continuing operations 32,574 15,059

Net cash used in discontinued operations - (9)

Net cash provided by operating activities 32,574 15,050

Cash flows from investing activities:

Change in restricted cash 406 (506)

Sale (purchases) of marketable investments, net 62,514 (44,091)

Expenditures for property (119,383) (37,950)

Expenditures for capitalized software (6,949) (8,768)

Proceeds from sale of property 716 155

Acquisitions/divestitures, net of cash received - 12,870

Other, net - (54)

Net cash used in investing activities (62,696) (78,344)

Cash flows from financing activities:

Net increase (decrease) in notes and loans payable 358 (1,261)

Debt borrowings from Apollo - 100,000

Debt repayments to Apollo - (100,000)

Proceeds from rights offering - 100,000

Distribution to SkyTerra - (8,911)

Payment of dividends on preferred stock - (1,394)

Proceeds from exercise of stock options and warrants 113 1,966

Long-term debt borrowings 115,662 453,944

Repayment of long-term debt (13,226) (341,603)

Debt issuance costs (2,044) (11,136)

Net cash provided by financing activities 100,863 191,605

Effect of exchange rate changes on cash and cash equivalents (1,702) 107

Net increase in cash and cash equivalents 69,039 128,418

Cash and cash equivalents at beginning of the period 106,933 21,964

Cash and cash equivalents at end of the period 175,972$ 150,382$

Supplemental cash flow information:

Cash paid for interest 26,005$ 16,215$

Cash paid for income taxes 2,173$ 3,213$

Supplemental disclosure of non-cash financing activities:

Net liability distributed to SkyTerra, net of cash -$ 48,113$

Six Months Ended

June 30,

10

HUGHES NETWORK SYSTEMS

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

June 30,

2007

December 31,

2006

ASSETS

Current assets:

Cash and cash equivalents 171,521$ 99,098$

Marketable securities 38,196 103,466

Receivables, net 181,668 180,694

Inventories 61,104 61,280

Prepaid expenses and other 44,049 39,175

Total current assets 496,538 483,713

Property, net 378,760 312,497

Capitalized software costs, net 44,780 41,159

Intangible assets, net 27,592 30,663

Other assets 93,714 44,358

Total assets 1,041,384$ 912,390$

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable 66,682$ 57,781$

Short-term borrowings and current portion of long-term debt 21,545 27,210

Accrued liabilities 142,013 123,576

Due to affiliates 9,933 13,592

Total current liabilities 240,173 222,159

Long-term debt 578,174 469,190

Other long-term liabilities 953 18,079

Total liabilities 819,300 709,428

Commitments and contingencies

Minority interests 4,476 4,659

Equity:

Class A membership interests 180,506 180,346

Class B membership interests - -

Retained earnings 34,588 19,102

Accumulated other comprehensive income (loss) 2,514 (1,145)

Total equity 217,608 198,303

Total liabilities and equity 1,041,384$ 912,390$

11

HUGHES NETWORK SYSTEMS

Condensed Consolidated Statements of Operations

(In thousands)

(Unaudited)

2007 2006 2007 2006

Revenues:

Services 129,124$ 107,568$ 248,747$ 212,802$

Hardware sales 104,985 100,935 208,093 192,493

Total revenues 234,109 208,503 456,840 405,295

Operating costs and expenses:

Cost of services 86,926 75,060 167,132 147,324

Cost of hardware products sold 85,352 89,159 172,518 163,018

Selling, general and administrative 35,835 33,089 72,534 65,771

Research and development 4,218 6,309 8,342 14,246

Amortization of intangibles 1,535 1,198 3,071 2,265

Total operating costs and expenses 213,866 204,815 423,597 392,624

Operating income 20,243 3,688 33,243 12,671

Other income (expense):

Interest expense (11,870) (10,346) (23,308) (19,740)

Interest income 2,744 2,341 5,666 3,342

Other income, net 39 475 91 480

Income before income tax benefit (expense), minority interests in net

(earnings) losses of subsidiaries and equity in earnings of

unconsolidated affiliates 11,156 (3,842) 15,692 (3,247)

Income tax benefit (expense) 131 (500) (389) (987)

Minority interests in net (earnings) losses of subsidiaries (109) (122) 183 (54)

Equity in earnings of unconsolidated affiliates -

36 - 54

Net income (loss) 11,178$ (4,428)$ 15,486$ (4,234)$

Three Months Ended

June 30,

Six Months Ended

June 30,

12

HUGHES NETWORK SYSTEMS

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

2007 2006

Cash flows from operating activities:

Net income (loss) 15,486$ (4,234)$

Adjustments to reconcile net income to cash flows

from operating activities:

Depreciation and amortization 22,767 17,564

Equity plan compensation expense 160 152

Minority interests (183) -

Gain on disposal of assets (285) -

Change in other operating assets and liabilities, excluding the

effect of the HCI Transaction:

Receivables, net 2,004 26,640

Inventories 817 17,241

Prepaid expenses and other (6,654) 1,590

Accounts payable 9,579 (16,115)

Accrued liabilities and other (10,755) (21,374)

Net cash provided by operating activities 32,936 21,464

Cash flows from investing activities:

Change in restricted cash 406 (506)

Sale (purchase) of marketable investments, net 65,649 (46,594)

Expenditures for property (119,383) (37,950)

Expenditures for capitalized software (6,949) (8,768)

Proceeds from sale of property 716 155

Other, net - 54

Net cash used in investing activities (59,561) (93,609)

Cash flows from financing activities:

Net increase (decrease) in notes and loans payable 358 (1,261)

Long-term debt borrowings 115,662 453,944

Repayment of long-term debt (13,226) (341,602)

Debt issuance costs (2,044) (11,136)

Net cash provided by financing activities 100,750 99,945

Effect of exchange rate changes on cash and cash equivalents (1,702) 104

Net increase in cash and cash equivalents 72,423 27,904

Cash and cash equivalents at beginning of the period 99,098 113,267

Cash and cash equivalents at end of the period 171,521$ 141,171$

Supplemental cash flow information:

Cash paid for interest 26,003$ 14,465$

Cash paid for income taxes 2,172$ 1,412$

Supplemental non-cash disclosure due to acquisition by

Hughes Communications, Inc.:

Increase in assets 51,471$

Increase in liabilities 40,118

Increase in net assets 11,353$

Six Months Ended

June 30,