Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Investments



(In millions)	Balance		Level 1		Level 2		Level 3
September 30, 2015
Assets:
Equity securities	$	4	$	4	$	—	$	—
Government bonds	70		—		70		—
Total assets at fair value	$	74	$	4	$	70	$	—

December 31, 2014
Assets:
Equity securities	$	15	$	15	$	—	$	—
Government bonds	70		—		70		—
Total assets at fair value	$	85	$	15	$	70	$	—

Investments consist of equity and debt securities that are traded in active markets, have readily determined market values and have maturity dates of greater than three months from the date of purchase. The majority of these investments are in deferred charges and other assets in our Consolidated Balance Sheets, while a portion is included in prepayments and other current assets. As of September 30, 2015 and December 31, 2014, gross unrealized gains and losses on marketable securities were not material.

Derivative Instruments

Interest Rate Swap Agreements

As of December 31, 2014, CEOC had eight interest rate swap agreements that were not designated as accounting hedges and had notional amounts totaling $5.8 billion and a total fair value liability of $6 million. These interest rate swaps expired and were settled for $17 million by Caesars during the first quarter of 2015. We did not renew the swap agreements or enter into any replacement instruments.

Effect of Non-designated Derivative Instruments on Net Loss

(In millions)		Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives not designated as hedging instruments	Location of Loss Recognized in Net Loss	2015		2014		2015		2014
Net periodic cash settlements and accrued interest ⁽¹⁾	Interest expense	$	—	$	45	$	—	$	133
Total expense related to derivatives	Interest expense	—		3		7		12

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⁽¹⁾	The derivative settlements under the terms of the interest rate swap agreements were recognized as interest expense and were paid monthly or quarterly prior to their expiration in January 2015.

Items Measured at Fair Value on a Non-recurring Basis

We had contingent earnout liabilities totaling $66 million as of December 31, 2014, primarily related to the CIE acquisition of Pacific Interactive. The liabilities were paid during the first and second quarter of 2015.

We classify the items measured at fair value on a non-recurring basis within level 3 in the fair value hierarchy.