Items Measured at Fair Value on a Recurring Basis



(In millions)	Balance			Level 1		Level 2			Level 3
June 30, 2014
Assets:
Investments	$	91.4		$	91.4	$	—		$	—
Accrued expenses and other current liabilities:
Derivative instruments	(87.0		)	—		(87.0		)	—

December 31, 2013
Assets:
Investments	$	91.7		$	91.7	$	—		$	—
Deferred credits and other:
Derivative instruments	(165.9		)	—		(165.9		)	—

Investments

Investments consist of equity and debt securities with maturity dates of greater than three months from the date of purchase. The majority of these securities are traded in active markets, have readily determined market values, and use Level 1 inputs. Securities for which there are not active markets or the market values are not readily determinable are valued using Level 2 inputs. All of these investments are included in either prepayments and other current assets or deferred charges and other in our Consolidated Condensed Balance Sheets. The following table shows our investments by type:



(In millions)	June 30, 2014		December 31, 2013
Equity securities	$	16.8	$	19.6
Government bonds	74.6		72.1
Total investments	$	91.4	$	91.7

Gross unrealized gains and losses on marketable securities at June 30, 2014 and December 31, 2013 were not material.

Derivative Instruments

The estimated fair values of our derivative instruments are derived from market prices obtained from dealer quotes for similar, but not identical, assets or liabilities. Such quotes represent the estimated amounts we would receive or pay to terminate the contracts. As of June 30, 2014, derivative instruments are included in accrued expenses in our Consolidated Condensed Balance Sheets. Our derivatives are recorded at their fair values, adjusted for the credit rating of the counterparty if the derivative is an asset, or adjusted for the credit rating of the Company if the derivative is a liability.

Interest Rate Swap Agreements

We use interest rate swaps to manage the mix of our debt between fixed and variable rate instruments. As of June 30, 2014, we had eight interest rate swap agreements outstanding with notional amounts totaling $5,750.0 million that were not designated as accounting hedges. These interest rate swaps reset monthly or quarterly and expire on January 25, 2015. The difference to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and recognized as an adjustment to interest expense for the related debt. Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements will have a corresponding effect on future cash flows. Changes in the fair value of the swap agreements are recognized in interest expense.

Interest Rate Cap Agreements

We have an interest rate cap agreement to partially hedge the risk of future increases in the variable rate of the CERP Financing. In February 2013, we entered into an interest rate cap agreement with $4,664.1 million notional amount at a LIBOR cap rate of 4.5% and which terminates February 13, 2015. This is not designated as a hedge for accounting purposes and as a result, changes in fair value of the interest rate cap are recognized in interest expense.

We have an interest rate cap agreement which expires in December 2014 to partially hedge the risk of future increases in the variable rate of the CGPH Term Facility. The interest rate cap agreement is for a notional amount of $501.4 million at a LIBOR cap rate of 7.0%. Changes in fair value of the interest rate cap are recognized in interest expense and the value of the interest rate cap was immaterial as of June 30, 2014 and December 31, 2013.

Impact on Consolidated Condensed Financial Statements

None of our derivative instruments are offset, and the fair values of assets and liabilities are recognized in the Consolidated Condensed Balance Sheets. As of June 30, 2014 and December 31, 2013, none of our derivative instruments were designated as accounting hedges.

Effect of Derivative Instruments on Net Loss and Comprehensive Loss

(In millions)		Three Months Ended June 30,				Six Months Ended June 30,
Derivatives designated as hedging instruments	Location of Loss Recognized in Net Loss	2014		2013		2014		2013
Amount of loss reclassified from AOCL into net loss (effective portion)	Interest expense	$	—	$	—	$	—	$	3.9

Effect of Non-designated Derivative Instruments on Net Loss

(In millions)		Three Months Ended June 30,					Six Months Ended June 30,
Derivatives not designated as hedging instruments	Location of Loss Recognized in Net Loss	2014		2013			2014		2013
Net periodic cash settlements and accrued interest ⁽¹⁾	Interest expense	$	44.3	$	42.8		$	87.7	$	85.0
Total expense related to derivatives	Interest expense	0.1		(2.8		)	8.5		18.5

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⁽¹⁾	The derivative settlements under the terms of the interest rate swap agreements are recognized as interest expense and are paid monthly or quarterly.

Items Measured at Fair Value on a Non-recurring Basis

The following table shows the fair value of our assets and liabilities that are required to be measured at fair value as of June 30, 2014 and the total adjustments recorded on these items during the six months ended June 30, 2014:



(In millions)	Balance		Level 1		Level 2		Level 3		Total Adjustments Loss/(Gain)
Intangible and tangible assets	$	295.4	$	—	$	—	$	295.4	$	32.9
Contingent earnout liabilities	70.2		—		—		70.2		32.6

Market and income approaches were used to value the intangible and tangible assets. Inputs included an expected range of market values, probability estimated by management that each value could be achieved, expected cash flows, recent comparable transactions, discounted cash flows, discounted cash flows, discount rate, royalty rate, growth rate, and tax rate.

The contingent earnout liabilities primarily relate to the CIE acquisitions of Buffalo Studios and Pacific Interactive.