4.Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following:


	As of December 31,
	2016		2015
	(In thousands)
Marketable investment securities:
Current marketable investment securities	$	3,833	$	141,335
Restricted marketable investment securities (1)		81,679		82,280
Total marketable investment securities		85,512		223,615

Restricted cash and cash equivalents (1)		681		94

Other investment securities:
Investment in EchoStar preferred tracking stock - cost method		228,795		228,795
Investment in HSSC preferred tracking stock - cost method		87,409		87,409
Other investment securities - cost method		8,167		11,046
Total other investment securities		324,371		327,250

Total marketable investment securities, restricted cash and cash equivalents, and other investment securities	$	410,564	$	550,959

(1)

Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our 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. See Note 2 for further information.

Current Marketable Investment Securities

Our current marketable investment securities portfolio includes investments in equity securities and various debt instruments including, among others, commercial paper, corporate securities and U.S. treasury and/or agency securities.

Commercial paper consists mainly of unsecured short-term, promissory notes issued primarily by corporations with maturities ranging up to 365 days. Corporate securities consist of debt instruments issued by corporations with various maturities normally less than 18 months. U. S. Treasury and agency securities consist of debt instruments issued by the federal government and other government agencies.

Restricted Cash, Cash Equivalents and Marketable Investment Securities

As of December 31, 2016 and 2015, our restricted marketable investment securities, together with our restricted cash and cash equivalents, included amounts required as collateral for our letters of credit.

Other Investment Securities

We have strategic investments in certain debt and equity securities that are included in noncurrent “Other investment securities” on our Consolidated Balance Sheets and accounted for using the cost, equity and/or available-for-sale methods of accounting.

Our ability to realize value from our strategic investments in securities that are not publicly traded depends on the success of the issuers’ businesses and their ability to obtain sufficient capital, on acceptable terms or at all, and to execute their business plans. Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able to obtain fair value for them.

Investment in Tracking Stock

On February 20, 2014, we entered into agreements with EchoStar to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and Hughes Satellite Systems Corporation (“HSSC”), a subsidiary of EchoStar, five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV (collectively the “Transferred Satellites”), including related in-orbit incentive obligations and cash interest payments of approximately $59 million), and approximately $11 million in cash in exchange for an aggregate of 6,290,499 shares of a series of preferred tracking stock issued by EchoStar (the “EchoStar Tracking Stock”) and an aggregate of 81.128 shares of a series of preferred tracking stock issued by HSSC (the “HSSC Tracking Stock” and together with the EchoStar Tracking Stock, collectively, the “Tracking Stock”); and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on the Transferred Satellites (collectively, the “Satellite and Tracking Stock Transaction”). As of November 30, 2015, we no longer lease satellite capacity on the EchoStar I satellite. The Tracking Stock generally tracks the residential retail satellite broadband business of Hughes Network Systems, LLC (“HNS”), a wholly-owned subsidiary of HSSC, including without limitation the operations, assets and liabilities attributed to the Hughes residential retail satellite broadband business (collectively, the “Hughes Retail Group”). The shares of the Tracking Stock issued to us represent an aggregate 80% economic interest in the Hughes Retail Group.

Since the Satellite and Tracking Stock Transaction was among entities under common control, we recorded the Tracking Stock at EchoStar’s and HSSC’s historical cost basis for these instruments of $229 million and $87 million, respectively. The difference between the historical cost basis of the Tracking Stock received and the net carrying value of the Transferred Satellites of $356 million (including debt obligations, net of deferred taxes), plus the $11 million in cash, resulted in a $51 million capital transaction recorded in “Additional paid-in capital” on our Consolidated Balance Sheets. Although our investment in the Tracking Stock represented an aggregate 80% economic interest in the Hughes Retail Group, we had no operational control or significant influence over the Hughes Retail Group business, and there was no public market for the Tracking Stock. As such, the Tracking Stock was accounted for under the cost method of accounting.

On January 31, 2017, we entered into the Share Exchange Agreement with EchoStar pursuant to which, among other things, we transferred the EchoStar Tracking Stock to EchoStar and the HSSC Tracking Stock to HSSC. On February 28, 2017, we and EchoStar completed the Share Exchange. As a result, we no longer hold EchoStar Tracking Stock or HSSC Tracking Stock. See Note 15 for further information.

Unrealized Gains (Losses) on Marketable Investment Securities

As of December 31, 2016 and 2015, we had accumulated net unrealized losses of less than $1 million and net unrealized gains of $20 million, respectively. These amounts, net of related tax effect, were less than $1 million and $12 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below.


	As of December 31,
	2016								2015
	Marketable								Marketable
	Investment		Unrealized						Investment		Unrealized
	Securities		Gains		Losses		Net		Securities		Gains		Losses		Net
	(In thousands)
Debt securities (including restricted):
U. S. Treasury and agency securities	$	81,982	$	13	$	(132)	$	(119)	$	82,124	$	2	$	(135)	$	(133)
Corporate securities		3,530		3		—		3		90,838		3		(174)		(171)
Other		—		—		—		—		17,382		—		(2)		(2)
Equity securities		—		—		—		—		33,271		20,034		—		20,034
Total	$	85,512	$	16	$	(132)	$	(116)	$	223,615	$	20,039	$	(311)	$	19,728

As of December 31, 2016, restricted and non-restricted marketable investment securities included debt securities of $51 million with contractual maturities within one year and $35 million with contractual maturities extending longer than one year through and including five years. 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 December 31, 2016, the unrealized losses related to our investments in debt securities primarily represented investments in U.S. treasury and agency securities. We have the ability to hold and 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 December 31,
	2016				2015
	Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss
	(In thousands)
Debt Securities:
Less than 12 months	$	51,796	$	(131)	$	153,580	$	(306)
12 months or more		1,410		(1)		5,782		(5)
Total	$	53,206	$	(132)	$	159,362	$	(311)

Fair Value Measurements

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


	As of December 31,
	2016								2015
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents (including restricted)	$	702,331	$	4,126	$	698,205	$	—	$	307,406	$	25,814	$	281,592	$	—

Debt securities (including restricted):
U. S. Treasury and agency securities	$	81,982	$	81,982	$	—		—	$	82,124	$	77,328	$	4,796	$	—
Corporate securities		3,530		—		3,530		—		90,838		—		90,838		—
Other		—		—		—		—		17,382		—		17,382		—
Equity securities		—		—		—		—		33,271		33,271		—		—
Total	$	85,512	$	81,982	$	3,530	$	—	$	223,615	$	110,599	$	113,016	$	—

During the years ended December 31, 2016 and 2015, we had no transfers in or out of Level 1 and Level 2 fair value measurements.