Hughes Communications (HUGH)

Sales and Marketing

Sales and marketing expense consists primarily of the salaries, commissions and related benefit costs of our direct sales force and marketing staff, advertising, travel, allocation of facilities and other directly related overhead costs for our domestic and international businesses, as well as other subscriber acquisition costs related to our Consumer/SMB business. Sales and marketing expense for the nine months ended September 30, 2006 was $58.2 million. We had no sales and marketing expense prior to the January 1, 2006 acquisition of HNS. See “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” included in the Form 10-Q filed by HNS with the SEC related to the period ended September 30, 2006, which Form 10-Q is included as Exhibit 99.1 herein, for a comparison of HNS’ results for the nine months ended September 30, 2006 with the nine months ended September 30, 2005.

41

Table of Contents

Sales and Marketing

For the nine months ended September 30, 2006, sales and marketing expense increased by $0.2 million, or 0.3%, to $58.2 million from $58.0 million for the nine months ended September 30, 2005. Sales and marketing expense as a percentage of revenues decreased, to 9% for the nine months ended September 30, 2006 from 10% for the nine months ended September 30, 2005. The increase in sales and marketing expense is due primarily to a $1.2 million charge in the North America Consumer/SMB business for collection exposure related to resellers and $1.8 million of increased commission expense in North America associated with increased sales and orders. Partially offsetting these increases was a $1.1 million decrease in advertising costs, primarily related to the placement of advertisements and infomercials as a result of changes to lower cost service providers, a $0.3 million decrease in expenses related to Telecom Systems, a $0.8 million decrease in international subsidiary activities, and a $0.6 million decrease in SPACEWAY marketing efforts due to headcount and other cost reductions attributable to DIRECTV's decision that HNS would no longer continue to pursue the business plan of the SPACEWAY program as originally contemplated, which resulted in a reduction in its efforts to introduce existing and prospective customers to the SPACEWAY technology.

Sales and Marketing

Sales and marketing expense consists primarily of the salaries, commissions and related benefit costs of our direct sales force and marketing staff, advertising, travel, allocation of facilities and other directly related overhead costs for our domestic and international businesses, as well as other subscriber acquisition costs related to our Consumer/SMB business. Sales and marketing expense for the six months ended June 30, 2006 was $39.8 million. We had no sales and marketing expense prior to the January 1, 2006 acquisition of HNS. See the Management’s Discussion and Analysis of Financial Conditions and Results of Operations for HNS included in Exhibit 99.1, which is incorporated by reference herein, for a comparison of HNS’ results for the six months ended June 30, 2006 with the six months ended June 30, 2005.

Sales and Marketing

For the six months ended June 30, 2006, sales and marketing expense increased by $0.3 million, or 0.8%, to $39.8 million from $39.5 million for the six months ended June 30, 2005. Sales and marketing expense as a percentage of revenues decreased, to 9.8% for the six months ended June 30, 2006 from 10.5% for the six months ended June 30, 2005. The increase in sales and marketing expense is due primarily to a $1.0 million charge in the North America Consumer/SMB business for collection exposure related to resellers and $1.2 million in increased commission expense in North America due to an increase in sales and orders. Partially offsetting these increases was a $1.1 million decrease in advertising costs, primarily related to the placement of advertisements and infomercials, and a $0.6 million decrease in SPACEWAY marketing efforts due to headcount and other cost reductions attributable to DIRECTV’s decision that HNS would no longer continue to pursue the business plan of the SPACEWAY program as it was originally contemplated which resulted in a reduction in its efforts to introduce existing and prospective customers to the SPACEWAY technology.

Sales and Marketing

For the three months ended March 31, 2006, sales and marketing expense decreased by $1.1 million, or 5.3%, to $19.7 million from $20.8 million for the three months ended March 31, 2005. Sales and marketing expense as a percentage of revenues also decreased, to 10% for the three months ended March 31, 2006 from 12% for the three months ended March 31, 2005. The decrease in sales and marketing expense is due primarily to a $0.4 million decrease in advertising costs primarily related to the placement of advertisements and infomercials and a $0.6 million decrease in SPACEWAY marketing efforts due to headcount and other cost reductions attributable to DIRECTV’s decision that HNS would no longer continue to pursue the business plan of the SPACEWAY program as it was originally contemplated which resulted in a reduction in its efforts to introduce existing and prospective customers to the SPACEWAY technology.

Sales and Marketing

For the three months ended March 31, 2006, sales and marketing expense decreased by $1.1 million, or 5.3%, to $19.7 million from $20.8 million for the three months ended March 31, 2005. Sales and marketing expense as a percentage of revenues also decreased, to 10% for the three months ended March 31, 2006 from 12% for the three months ended March 31, 2005. The decrease in sales and marketing expense is due primarily to a $0.4 million decrease in advertising costs primarily related to the placement of advertisements and infomercials and a $0.6 million decrease in SPACEWAY marketing efforts due to headcount and other cost reductions attributable to DIRECTV’s decision that HNS would no longer continue to pursue the business plan of the SPACEWAY program as it was originally contemplated which resulted in a reduction in its efforts to introduce existing and prospective customers to the SPACEWAY technology.

Sales and Marketing

For the year ended December 31, 2004, sales and marketing expense decreased by $2.8 million, or 3.7%, to $72.6 million from $75.4 million for the year ended December 31, 2003. Sales and marketing expense as a percentage of revenues also decreased, to 9% for the year ended December 31, 2004 from 10% for the year ended December 31, 2003. The decrease in sales and marketing expense is due primarily to $5.2 million in lower commissions as HNS shifted the focus of its consumer sales effort from a dealer network to online sales, with the resulting savings partially offset by a $3.2 million increase in the cost of placing additional advertisements and infomercials on DIRECTV’s digital television service.

Sales and Marketing

For the year ended December 31, 2004, sales and marketing expense decreased by $2.8 million, or 3.7%, to $72.6 million from $75.4 million for the year ended December 31, 2003. Sales and marketing expense as a percentage of revenues also decreased, to 9% for the year ended December 31, 2004 from 10% for the year ended December 31, 2003. The decrease in sales and marketing expense is due primarily to $5.2 million in lower commissions as we shifted the focus of our consumer sales effort from a dealer network to online sales, with the resulting savings partially offset by a $3.2 million increase in the cost of placing additional advertisements and infomercials on DIRECTV’s digital television service.