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Investment Securities | 12 Months Ended
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Dec. 31, 2015
Investment Securities |
Investment Securities | Note 6.Investment Securities Our marketable investment securities, restricted cash and cash equivalents, and investments in unconsolidated entities consisted of the following:
|  | As of December 31, |
|  | 2015 |  | 2014 |
|  | (In thousands) |
Marketable investment securities—current: |  |  |  |  |
Corporate bonds |  | $ | 562,236 |  | $ | 1,049,139 |
Strategic equity securities |  | 38,864 |  | 41,705 |
Other |  | 11,238 |  | 48,259 |
Total marketable investment securities—current |  | 612,338 |  | 1,139,103 |
Restricted marketable investment securities (1) |  | 13,227 |  | 11,712 |
Total |  | 625,565 |  | 1,150,815 |
Restricted cash and cash equivalents (1) |  | 7,775 |  | 7,233 |
Investments in unconsolidated entities—noncurrent: |  |  |  |  |
Cost method |  | 81,174 |  | 31,174 |
Equity method |  | 128,090 |  | 128,788 |
Total investments in unconsolidated entities—noncurrent |  | 209,264 |  | 159,962 |
Total marketable investment securities, restricted cash and cash equivalents, and investments in unconsolidated entities |  | $ | 842,604 |  | $ | 1,318,010 |
| (1) |  | Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” in our consolidated balance sheets.
Marketable Investment Securities Our marketable investment securities portfolio consists of various debt and equity instruments, which generally are classified as available-for-sale. As of December 31, 2015, certain of our equity securities were classified as trading securities in order to reflect our investment strategy for those securities. The value of our investment portfolio depends on the value of such securities and other instruments comprising the portfolio. Corporate Bonds Our corporate bond portfolio includes debt instruments issued by individual corporations, primarily in the industrial and financial services industries. Strategic Equity Securities Our strategic investment portfolio consists of investments in shares of common stock of public companies, which are highly speculative and have experienced and continue to experience volatility. We did not receive any dividend income for the years ended December 31, 2015, 2014 and 2013. As of December 31, 2015 and 2014, our strategic equity securities included shares of common stock of one of our customers that we received in satisfaction of certain milestone payments that were required to be paid to us under an existing long-term contract. For the year ended December 31, 2015, “Other-than-temporary impairment loss on marketable investment securities” included a $6.1 million other-than-temporary impairment of such common stock in our marketable investment portfolio. For the year ended December 31, 2015, “Gains (losses) on marketable investment securities, net” includes $6.5 million in losses on such common stock in our trading securities portfolio, which had a fair value of $10.3 million as of December 31, 2015. Other-than-temporary impairment losses for the year ended December 31, 2015 also includes a $5.1 million impairment of our shares of common stock in another company that experienced a severe decline in market value during the third and fourth quarters of 2015. We did not record any other-than-temporary impairment losses during the years ended December 31, 2014 or 2013. Other Our other current marketable investment securities portfolio includes investments in various debt instruments, including U.S. government bonds. Restricted Cash and Marketable Investment Securities As of December 31, 2015 and 2014, our restricted marketable investment securities, together with our restricted cash, included amounts required as collateral for our letters of credit or surety bonds. Unrealized Gains (Losses) on Marketable Investment Securities The components of our available-for-sale investments are summarized in the table below.
|  | Amortized |  | Unrealized |  | Estimated |
|  | Cost |  | Gains |  | Losses |  | Fair Value |
|  | (In thousands) |
As of December 31, 2015 |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 562,849 |  | $ | 10 |  | $ | (623 | ) | $ | 562,236 |
Other (including restricted) |  | 24,495 |  | — |  | (30 | ) | 24,465 |
Equity securities - strategic |  | 20,855 |  | 7,748 |  | (82 | ) | 28,521 |
Total marketable investment securities |  | $ | 608,199 |  | $ | 7,758 |  | $ | (735 | ) | $ | 615,222 |
As of December 31, 2014 |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 1,050,803 |  | $ | 33 |  | $ | (1,697 | ) | $ | 1,049,139 |
Other (including restricted) |  | 59,977 |  | 1 |  | (7 | ) | 59,971 |
Equity securities - strategic |  | 32,081 |  | 12,849 |  | (3,225 | ) | 41,705 |
Total marketable investment securities |  | $ | 1,142,861 |  | $ | 12,883 |  | $ | (4,929 | ) | $ | 1,150,815 |
As of December 31, 2015, restricted and non-restricted marketable investment securities included debt securities of $519.3 million with contractual maturities of one year or less and $67.4 million with contractual maturities greater than one year. We may realize proceeds from certain investments prior to their contractual maturity as a result of our ability to sell these securities prior to their contractual maturity. Marketable Investment Securities in a Loss Position The following table reflects the length of time that our available-for-sale securities have been in an unrealized loss position. We do not intend to sell these securities before they recover or mature, and it is more likely than not that we will hold these securities until they recover or mature. We believe that changes in the estimated fair values of these securities are primarily related to temporary market conditions as of December 31, 2015.
|  | As of December 31, |
|  | 2015 |  | 2014 |
|  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |
|  | (In thousands) |
Less than 12 months |  | $ | 364,160 |  | $ | (609 | ) | $ | 968,941 |  | $ | (4,929 | )
12 months or more |  | 149,889 |  | (126 | ) | — |  | — |
Total |  | $ | 514,049 |  | $ | (735 | ) | $ | 968,941 |  | $ | (4,929 | )
Sales of Marketable Investment Securities We recognized de minimis gains from the sales of our available-for-sale securities for the year ended December 31, 2015 and $0.1 million and $36.3 million for the years ended December 31, 2014 and 2013, respectively. We recognized de minimis losses from the sales of our available-for-sale securities for each of the years ended December 31, 2015, 2014 and 2013, respectively. Proceeds from sales of our available-for-sale securities totaled $111.5 million, $190.5 million and $177.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Fair Value Measurements Our current marketable investment securities are measured at fair value on a recurring basis as summarized in the table below. As of December 31, 2015 and 2014, we did not have investments that were categorized within Level 3 of the fair value hierarchy.
|  | As of December 31, |
|  | 2015 |  | 2014 |
|  | Total |  | Level 1 |  | Level 2 |  | Total |  | Level 1 |  | Level 2 |
|  | (In thousands) |
Cash equivalents (including restricted) |  | $ | 840,950 |  | $ | 38,771 |  | $ | 802,179 |  | $ | 437,886 |  | $ | 58,108 |  | $ | 379,778 |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 562,236 |  | $ | — |  | $ | 562,236 |  | $ | 1,049,139 |  | $ | — |  | $ | 1,049,139 |
Other (including restricted) |  | 24,465 |  | 12,078 |  | 12,387 |  | 59,971 |  | 5,630 |  | 54,341 |
Equity securities - strategic |  | 38,864 |  | 38,864 |  | — |  | 41,705 |  | 41,705 |  | — |
Total marketable investment securities |  | $ | 625,565 |  | $ | 50,942 |  | $ | 574,623 |  | $ | 1,150,815 |  | $ | 47,335 |  | $ | 1,103,480 |
Investments in Unconsolidated Entities — Noncurrent We have several strategic investments in certain non-publicly traded equity securities that are accounted for using either the equity or the cost method of accounting. Our ability to realize value from our strategic investments in companies that are not publicly traded depends on the success of those companies’ businesses and their ability to obtain sufficient capital 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. In June 2015, we purchased an equity investment in WorldVu Satellites Limited (“OneWeb”), a low-earth orbit satellite company. OneWeb plans to develop and operate a global network of low-earth orbit Ku-band satellites to provide internet access to fixed and mobile terminals. We do not exercise significant influence over the management of OneWeb; accordingly, we account for the investment using the cost method. In May 2015, we acquired a 22.5% interest in the equity and subordinated debt of SmarDTV SA (“SmarDTV”), a Swiss subsidiary of Kudelski SA that offers set-top boxes and conditional access modules, in exchange for cash of $13.9 million and the contribution of several of our European subsidiaries to SmarDTV. We recorded our initial investment in SmarDTV at $20.0 million, representing our estimate of the investment’s fair value using discounted cash flow techniques. Our estimate included significant unobservable inputs related to SmarDTV’s future operations and is categorized within Level 3 of the fair value hierarchy. As of the acquisition date, we deconsolidated the contributed entities and recognized a $2.6 million loss within “Other income (expense)” in our consolidated statement of operations and comprehensive income (loss), consisting of: (i) a $0.7 million loss resulting from our initial investment (at fair value) being less than the sum of our $13.9 million cash payment and the carrying amount of the net assets of the deconsolidated entities and (ii) the reclassification from accumulated other comprehensive loss of $1.9 million in foreign currency translation adjustments related to the deconsolidated entities. The net assets of the deconsolidated entities included property and equipment of $6.7 million and cash of $0.8 million. We have the ability to exercise significant influence over SmarDTV and therefore account for our investment using the equity method. We and SmarDTV also entered into a services agreement pursuant to which our EchoStar Technologies segment purchases certain engineering services from SmarDTV. See Note 19 for information about our related party transactions with SmarDTV subsequent to the date of our initial investment. On August 8, 2014, an option providing for an unrelated party to acquire a 51.0% equity interest in Dish Mexico was terminated. Although we have owned 49.0% of the equity of Dish Mexico since its inception in 2008, we accounted for our investment as a 24.0% equity interest using the equity method based on assumed dilution that would occur upon the exercise of the option. Upon termination of the option, we recorded a $10.3 million adjustment to increase “Equity in earnings (losses) of unconsolidated affiliates” to reflect an increase from 24.0% to 49.0% in our interest in Dish Mexico’s inception-to-date net income. For periods subsequent to the date of the termination of the option, we account for our investment in Dish Mexico as a 49.0% equity interest using the equity method. As of December 31, 2013, our equity method investments included $18.0 million for our investment in DISH Digital Holding, L.L.C. (now known as Sling TV Holding L.L.C., “Sling TV Holding”), a joint venture between us and DISH Network. The carrying amount of our investment reflected the $44.7 million aggregate carrying amount of cash and certain noncash assets that we contributed to Sling TV Holding upon its formation on July 1, 2012 in exchange for a one-third equity interest in Sling TV Holding, less our equity in the net loss of Sling TV Holding of $16.5 million and $10.2 million for the years ended December 31, 2013 and 2012, respectively. Effective August 1, 2014, we and Sling TV Holding entered into an exchange agreement (the “Exchange Agreement”) pursuant to which, we exchanged our one-third voting interest in Sling TV Holding, which we accounted for using the equity method, for a 10.0% non-voting interest in Sling TV Holding, which we account for using the cost method. As part of this transaction, we received a distribution of certain noncurrent assets associated with Move Networks, including property and equipment, technology-related intangible assets and goodwill. Because we and Sling TV Holding are entities under common control, we recorded the distributed assets at their carrying amounts in Sling TV Holding’s accounts, which totaled $34.1 million at the date of distribution, and we recorded our non-voting interest at $1.1 million, which represents 10.0% of the carrying amount of the remaining equity in Sling TV Holding. These amounts exceeded the carrying amount of our existing equity method investment by $8.8 million, which was credited to additional paid-in capital because gain recognition generally is precluded by GAAP in exchanges between entities under common control. In connection with our obligations associated with our interest prior to the Exchange Agreement, we contributed $18.6 million in cash to Sling TV Holding during the third quarter of 2014. We have no obligation to contribute additional capital to Sling TV Holding. See Note 19 for more information regarding the Exchange Agreement with Sling TV Holding. Investment in TerreStar In 2008, we invested in certain debt securities (“Exchangeable Notes”) of TerreStar Networks Inc. (“TerreStar”), which subsequently filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in 2010. We accounted for our investment in the Exchangeable Notes using the fair value method and, as of December 31, 2011, our investment was stated at its estimated fair value of zero. Effective March 29, 2012, the Exchangeable Notes were cancelled pursuant to TerreStar’s Chapter 11 plan of reorganization. In December 2014 and January 2016, we received $5.8 million and $0.8 million, respectively, in cash distributions from the indenture trustee in satisfaction of our claims related to the Exchangeable Notes. We accrued a receivable as of December 31, 2015 for the 2016 receipt and recognized the distributions as gains in “Other, net” within “Other Income (Expense)” in our consolidated statement of operations and comprehensive income (loss) and we reported the 2014 cash receipt in “Other, net” within “Cash Flows from Investing Activities” in our consolidated statement of cash flows for the year ended December 31, 2014.

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