INVESTMENTS

A) Short-Term Investments

Marketable Securities

The Company's short-term investments primarily consist of its marketable securities portfolio held by its subsidiary, Steel Excel. These marketable securities as of June 30, 2016, and December 31, 2015, are classified as "available-for-sale" securities, with changes in fair value recognized in Partners' Capital as Other comprehensive income (loss), except for other-than-temporary impairments, which are reflected as a reduction of cost and charged to the Consolidated Statement of Operations. The classification of marketable securities as a current asset is based on the intended holding period and realizability of the investment.

The Company's portfolio of marketable securities was as follows:



	June 30, 2016											December 31, 2015
	Cost			Gross Unrealized Gains		Gross Unrealized Losses			Fair value			Cost			Gross Unrealized Gains		Gross Unrealized Losses			Fair value
Available-for-sale securities
Short-term deposits	$	67,190		$	—	$	—		$	67,190		$	30,118		$	—	$	—		$	30,118
Mutual funds	11,835			2,402		—			14,237			11,835			2,182		—			14,017
Corporate securities	28,985			2,745		(1,183		)	30,547			41,861			250		(549		)	41,562
Corporate obligations	20,692			1,920		(208		)	22,404			25,747			98		(582		)	25,263
Total marketable securities	128,702			7,067		(1,391		)	134,378			109,561			2,530		(1,131		)	110,960
Amounts classified as cash equivalents	(67,190		)	—		—			(67,190		)	(30,118		)	—		—			(30,118		)
Amounts classified as marketable securities	$	61,512		$	7,067	$	(1,391	)	$	67,188		$	79,443		$	2,530	$	(1,131	)	$	80,842

Proceeds from sales of marketable securities were $12,700 and $26,804 in the three months ended June 30, 2016 and 2015, respectively, and were $44,200 and $49,902 in the six months ended June 30, 2016 and 2015, respectively. The Company determines gains and losses from sales of marketable securities based on specific identification of the securities sold. Gross realized gains and losses from sales of marketable securities, all of which are reported as a component of Other income, net in the Consolidated Statements of Operations, were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Gross realized gains	$	1,938		$	3,410		$	2,003		$	4,600
Gross realized losses	(248		)	(418		)	(1,641		)	(793		)
Realized gains, net	$	1,690		$	2,992		$	362		$	3,807

The fair value of marketable securities with unrealized losses at June 30, 2016 and December 31, 2015, all of which had unrealized losses for a period of less than twelve months, were as follows:



	June 30, 2016					December 31, 2015
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate securities	$	13,573	$	(1,183	)	$	2,283	$	(549	)
Corporate obligations	4,498		(208		)	13,199		(582		)
Total	$	18,071	$	(1,391	)	$	15,482	$	(1,131	)

Gross unrealized losses primarily related to losses on corporate securities and corporate obligations, which primarily consist of investments in equity and debt securities of publicly-traded entities. Based on Steel Excel's evaluation of such securities, it determined that certain unrealized losses represented other-than-temporary impairments. This determination was based on several factors, including adverse changes in the market conditions and economic environments in which the entities operate. Steel Excel recognized asset impairment charges of approximately $1,500 for the six months ended June 30, 2016 and approximately $22,700 for the three and six months ended June 30, 2015, equal to the cost basis of such securities in excess of their fair values. Steel Excel has determined that there was no indication of other-than-temporary impairments on its other investments with unrealized losses as of June 30, 2016. This determination was based on several factors, including the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the entity, and the intent and ability to hold the corporate securities for a period of time sufficient to allow for any anticipated recovery in market value.

The amortized cost and estimated fair value of available-for-sale debt securities and marketable securities as of June 30, 2016, by contractual maturity, were as follows:



	Cost		Estimated Fair Value
Debt securities maturing after one year through three years	$	20,692	$	22,404
Securities with no contractual maturities	$	108,010	$	111,974
	$	128,702	$	134,378

B) Long-Term Investments

The following table summarizes the Company's long-term investments as of June 30, 2016 and December 31, 2015. For those investments at fair value, the carrying amount of the investment equals its respective fair value.



					Investment Balance				Income (Loss) Recorded in the Statement of Operations
									Three Months Ended June 30,						Six Months Ended June 30,
(1) AVAILABLE-FOR-SALE					June 30, 2016		December 31, 2015		2016			2015			2016			2015
Fair Value Changes Recorded in Accumulated Other Comprehensive Loss:
Equity securities - U.S.⁽¹⁾
Aerospace/Defense					$	76,429	$	65,474
Other					580		568
Total					77,009		66,042
Fair Value Changes Recorded in the Consolidated Statement of Operations:
Equity securities					—		—		$	—		$	—		$	—		$	4,450
Corporate obligations⁽²⁾					3,538		—		59						59			—
Total					80,547		66,042		$	59		$	—		$	59		$	4,450
(2) EQUITY METHOD
Investments in Associated Companies:	June 30, 2016		December 31, 2015
At Cost:	Ownership
WFH LLC (formerly CoSine)⁽³⁾	91.2	%	90.8	%	—		—		$	—		$	—		$	—		$	(602	)
Other ⁽⁴⁾					3,302		4,166		(67		)	(149		)	(38		)	(286		)
At Fair Value:
ModusLink Global Solutions, Inc. ("MLNK")⁽¹⁾	31.3	%	31.5	%	19,929		40,862		(4,164		)	(5,779		)	(16,912		)	(4,053		)
SLI⁽³⁾	100.0	%	25.1	%	—		31,716		5,969			(4,119		)	8,078			(388		)
JPS⁽³⁾	100.0	%	100.0	%	—		—		—			3,660			—			5,429
API Technologies Corp. ("API Tech")	—	%	20.6	%	—		15,779		343			5,031			7,089			4,345
Aviat Networks, Inc. ("Aviat")⁽¹⁾	12.7	%	12.9	%	5,214		6,175		(496		)	563			(961		)	(724		)
Other⁽⁵⁾	43.8	%	43.8	%	1,414		1,931		125			(27		)	(517		)	108
					29,859		100,629		$	1,710		$	(820	)	$	(3,261	)	$	3,829
Other Investments at Fair Value - Related Party:
SPII Liquidating Trust - Series G					—		—		$	—		$	(36	)	$	—		$	447
SPII Liquidating Trust - Series H					—		—		—			(2		)	—			(86		)
					—		—		$	—		$	(38	)	$	—		$	361
OTHER INVESTMENTS
ModusLink Warrants⁽⁵⁾					27		543		$	(49	)	$	(527	)	$	(516	)	$	(564	)

Total Long-Term Investments					$	110,433	$	167,214

(1) Level 1 investments.

(2) Level 2 investment.

(3) WFH LLC became a consolidated subsidiary as of the first quarter of 2015, SLI and JPS became consolidated subsidiaries in the second quarter of 2016 and the third quarter of 2015, respectively. For additional information on these acquisitions see Note 2 - "Acquisitions."

(4) Represents Steel Excel's investments in iGo, Inc. ("iGo") of 45.7% and a 50% investment in API Optix s.r.o ("API Optix"), a joint venture investment held by API.

(5) Level 3 investment. For additional information related to the Company's Level 3 investments, see Note 14 - "Fair Value Measurements."

(1) AVAILABLE-FOR-SALE SECURITIES

The following table presents activity for the available-for-sale securities presented in the table above for the three and six months ended June 30, 2016 and 2015:



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
(A) AVAILABLE-FOR-SALE SECURITIES
Fair Value Changes Recorded in Accumulated Other Comprehensive Loss:
Change in net unrealized holding gains (losses) gains included in Accumulated other comprehensive loss	$	7,948	$	(10,830	)	$	10,967	$	9,651
Reclassified Out of Accumulated Other Comprehensive Loss:
Unrealized gains	$	—	$	7,185		$	—	$	29,663
Unrealized losses	—		—			—		—
Total	$	—	$	7,185		$	—	$	29,663

Fair Value Changes Recorded in Accumulated Other Comprehensive Loss

For purposes of determining gross realized gains and losses, the cost of securities sold is based on specific identification. Gross unrealized gains and gross unrealized losses are reported in Accumulated other comprehensive loss ("AOCI") in the Company's Consolidated Balance Sheets. In January 2015, the Company contributed Nathan's, one of its available-for-sale securities, to CoSine in exchange for additional CoSine equity (see Note 2 - "Acquisitions" for additional information). Also, in the six months of 2015, Cosine sold all 445,456 shares of Nathan's for proceeds of approximately $33,202 and received a special dividend of approximately $5,500 which is included in Other income, net in the Consolidated Statement of Operations for the six months ended June 30, 2015. As a result, management determined there to be an other-than-temporary impairment in the stock price and recorded an impairment charge of approximately $5,500.

The cost basis and gross unrealized gains and losses related to our available-for-sale securities, which are classified as long-term investments, are as follows:



	June 30, 2016								December 31, 2015
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Aerospace/Defense	$	11,675	$	64,754	$	—	$	76,429	$	11,675	$	53,799	$	—		$	65,474
Other	575		5		—		580		575		—		(7		)	568
	$	12,250	$	64,759	$	—	$	77,009	$	12,250	$	53,799	$	(7	)	$	66,042

Fair Value Changes Recorded in Consolidated Statement of Operations

In the second quarter of 2016, the Company purchased approximately $3,500 of available-for-sale convertible debt securities. These securities are publicly traded and are convertible into common equity of the investee. The Company elected the fair value option to account for these convertible debt securities and, accordingly, changes in fair value are reported in the Company's Consolidated Statements of Operations in Income (loss) from investments held at fair value. Also, prior to its acquisition in the second quarter of 2015, the Company's investment in API was accounted for as an available-for-sale security under the fair value option (see Note 2 - "Acquisitions" for additional information on the acquisition of API).

(2) EQUITY METHOD INVESTMENTS

Investments in Associated Companies

The Company's investments in associated companies are accounted for under the equity method of accounting. The Company elected to record certain investments under the equity method at fair value beginning on the dates these investments became subject to the equity method. Associated companies are included in the Diversified Industrial, Energy or, Corporate and Other segments. Certain associated companies have a fiscal year end that differs from December 31. Additional information for each of SPLP's investments in associated companies as of June 30, 2016 are as follows:

Traditional Equity Method:


•	Steel Excel has an investment in iGo, a provider of accessories for mobile devices. This investment is being accounted for under the traditional equity method as an associated company. Based on the closing market price of iGo's publicly-traded shares, the fair value of the investment in iGo was approximately $3,900 at June 30, 2016 and December 31, 2015.


•	WFH LLC's API subsidiary has a 50% joint venture in API Optix with IQ Structures s.r.o. API Optix provides development and origination services in the field of micro and nano-scale surface relief technology. The investment, based in Prague, Czech Republic, is being accounted for under the traditional equity method as an associated company.

Equity Method, At Fair Value:


•	MLNK provides supply chain and logistics services to companies in consumer electronics, communications, computing, medical devices, software, luxury goods and retail. MLNK also issued the Company warrants to purchase an additional 2,000,000 shares at $5.00 per share, which expire in March 2018.


•	API Tech is a designer and manufacturer of high performance systems, subsystems, modules and components. In April 2016, API Tech consummated a merger pursuant to which holders of its common stock received $2.00 for each share held. Upon consummation of the merger, Steel Excel received $22,900 for its investment in API Tech, and Steel Excel no longer holds an investment in API Tech.


•	Aviat is a global provider of microwave networking solutions. Prior to being classified as an equity method investment in January 2015, the investment in Aviat was accounted for as an available-for-sale security, and upon the change in classification Steel Excel recognized a loss of approximately $2,800 that had previously been included as a component of AOCI.


•	The Other investment represents the Company's investment in a Japanese real estate partnership.

Associated Company Information

The below summary balance sheet amounts are for the nearest practicable period. The below summary operating results include results for associated companies for the periods in which they were accounted for as an associated company, or the nearest practicable corresponding period. This summary data may be derived from unaudited financial statements and may contain a reporting lag.



	June 30, 2016			December 31, 2015
Summary of balance sheet amounts:
Current assets	$	438,862		$	540,446
Noncurrent assets	88,333			91,840
Total assets	$	527,195		$	632,286

Current liabilities	$	244,992		$	329,201
Noncurrent liabilities	100,072			98,730
Total liabilities	345,064			427,931
Equity	182,131			204,355
Total liabilities and equity	$	527,195		$	632,286

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Summary operating results:
Revenue	$	145,955		$	197,805		$	318,705		$	418,872
Gross profit	4,946			32,339			27,779			63,527
Loss from continuing operations	(10,742		)	(8,146		)	(20,547		)	(6,256		)
Net loss after noncontrolling interests	(11,253		)	(8,308		)	(21,753		)	(1,313		)

OTHER INVESTMENTS

Steel Excel's other investments at June 30, 2016, include an investment in a venture capital fund totaling $500 and preferred stock of an investee of $100, both of which are classified in Other non-current assets in the Company's Consolidated Balance Sheets. In addition, Steel Excel has a promissory note with an amortized cost of $3,000, which is a reasonable approximation of fair value at June 30, 2016, classified in Prepaids and other current assets in the Company's Consolidated Balance Sheet as of June 30, 2016.

WebBank has $7,328 and $6,558 of held-to-maturity securities at June 30, 2016 and December 31, 2015, respectively. WebBank records these securities at amortized cost, and they included in Other non-current assets in the Company's Consolidated Balance Sheets. The dollar value of these securities with expected maturities from three years through ten years is $6,241, and after ten years is $0. Actual maturities may differ from expected or contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The securities are collateralized by unsecured consumer loans. These securities had an estimated fair value of $7,401 and $6,551 at June 30, 2016 and December 31, 2015.