Marketable Investment Securities and Restricted Cash and Cash Equivalents

3 Months Ended

Mar. 31, 2012

Marketable Investment Securities and Restricted Cash and Cash Equivalents

Marketable Investment Securities and Restricted Cash and Cash Equivalents

3.     Marketable Investment Securities and Restricted Cash and Cash Equivalents

Our marketable investment securities and restricted cash and cash equivalents consist of the following:

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
Marketable investment securities:
Current marketable investment securities - VRDNs	$	129,188	$	100,075
Current marketable investment securities - other	487,210		568,188
Total current marketable investment securities	616,398		668,263
Restricted marketable investment securities (1)	65,685		54,507
Total marketable investment securities	682,083		722,770
Restricted cash and cash equivalents (1)	54,985		65,137
Total marketable investment securities and restricted cash and cash equivalents	$	737,068	$	787,907

(1)Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Condensed Consolidated Balance Sheets.

Marketable Investment Securities

Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale.

Current Marketable Investment Securities — VRDNs

Variable rate demand notes (“VRDNs”) are long-term floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised of investments in many municipalities, which are backed by financial institutions or other highly rated companies that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows VRDNs to be liquidated generally on a same day or on a five business day settlement basis.

Current Marketable Investment Securities — Other

Our current marketable investment securities portfolio includes investments in various debt instruments including corporate and government bonds.

Restricted Cash and Marketable Investment Securities

As of March 31, 2012 and December 31, 2011, our restricted marketable investment securities, together with our restricted cash, included amounts required as collateral for our letters of credit or surety bonds and for litigation (See Note 8).

Unrealized Gains (Losses) on Marketable Investment Securities

As of March 31, 2012 and December 31, 2011, we had accumulated net unrealized gains of $3 million and net unrealized losses of $1 million, both net of related tax effect, respectively, as a part of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” A full valuation allowance has been established against any deferred taxes that are capital in nature. The components of our available-for-sale investments are summarized in the table below.

	As of March 31, 2012									As of December 31, 2011
	Marketable									Marketable
	Investment		Unrealized							Investment		Unrealized
	Securities		Gains		Losses			Net		Securities		Gains		Losses			Net
	(In thousands)
Debt securities:
VRDNs	$	129,188	$	—	$	—		$	—	$	100,075	$	—	$	—		$	—
Other (including restricted)	552,895		4,163		(878		)	3,285		622,695		2,625		(4,075		)	(1,450		)
Total	$	682,083	$	4,163	$	(878	)	$	3,285	$	722,770	$	2,625	$	(4,075	)	$	(1,450	)

As of March 31, 2012, restricted and non-restricted marketable investment securities include debt securities of $628 million with contractual maturities of one year or less and $54 million with contractual maturities greater than one year. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity.

Marketable Investment Securities in a Loss Position

The following table reflects the length of time that the individual securities, accounted for as available-for-sale, have been in an unrealized loss position, aggregated by investment category. As of March 31, 2012 and December 31, 2011, the unrealized losses on our investments in debt securities primarily represent investments in corporate bonds and mortgage backed securities. We do not intend to sell our investments in these debt securities before they recover or mature, and it is more likely than not that we will hold these investments until that time. In addition, we are not aware of any specific factors indicating that the underlying issuers of these debt securities would not be able to pay interest as it becomes due or repay the principal at maturity. Therefore, we believe that these changes in the estimated fair values of these marketable investment securities are related to temporary market fluctuations.

	As of
	March 31, 2012					December 31, 2011
	Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss
	(In thousands)
Debt Securities:
Less than 12 months	$	314,649	$	(561	)	$	444,705	$	(2,970	)
12 months or more	10,416		(317		)	33,039		(1,105		)
Total	$	325,065	$	(878	)	$	477,744	$	(4,075	)

Fair Value Measurements

Our investments measured at fair value on a recurring basis were as follows:

	As of
	March 31, 2012								December 31, 2011
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)
Cash Equivalents (including restricted)	$	680,623	$	27,073	$	653,550	$	—	$	162,549	$	18,610	$	143,939	$	—
Debt securities:
VRDNs	$	129,188	$	—	$	129,188	$	—	$	100,075	$	—	$	100,075	$	—
Other (including restricted)	552,895		—		552,895		—		622,695		—		622,695		—
Total	$	682,083	$	—	$	682,083	$	—	$	722,770	$	—	$	722,770	$	—