Fair Value Measurements.

U.S. GAAP requires enhanced disclosures about investments and non-recurring non-financial assets and non-financial liabilities that are measured and reported at fair value and has established a hierarchal disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments or non-financial assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments and non-financial assets and/or liabilities measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 - Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments included in Level 1 include listed equities and listed derivatives. We do not adjust the quoted price for these investments, even in situations where we hold a large position.

Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments that are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives. The inputs and assumptions of our Level 2 investments are derived from market observable sources including reported trades, broker/dealer quotes and other pertinent data.

Level 3 - Pricing inputs are unobservable for the investment and non-financial asset and/or liability and include situations where there is little, if any, market activity for the investment or non-financial asset and/or liability. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. Significant transfers, if any, between the levels within the fair value hierarchy are recognized at the beginning of the reporting period when changes in circumstances require such transfers.

The following table summarizes the valuation of our investments, derivative contracts, securities sold not yet purchased and other liabilities by the above fair value hierarchy levels measured on a recurring and non-recurring basis as of December 31, 2016 and 2015:



	December 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	(in millions)
Investments (Note 5)	$	9,033	$	306	$	240	$	9,579	$	14,447	$	289	$	292	$	15,028
Derivative contracts, at fair value⁽¹⁾	—		23		—		23		—		259		—		259
	$	9,033	$	329	$	240	$	9,602	$	14,447	$	548	$	292	$	15,287
Liabilities
Securities sold, not yet purchased (Note 5)	$	1,087	$	52	$	—	$	1,139	$	794	$	—	$	—	$	794
Other liabilities	$	—	$	187	$	—	$	187	$	—	$	3	$	—	$	3
Derivative contracts, at fair value⁽²⁾	—		1,139		—		1,139		—		36		—		36
	$	1,087	$	1,378	$	—	$	2,465	$	794	$	39	$	—	$	833


⁽¹⁾	Amounts are classified within other assets in our consolidated balance sheets.


⁽²⁾	Amounts are classified within accrued expenses and other liabilities in our consolidated balance sheets.

Assets Measured at Fair Value on a Non-Recurring Basis for Which We Use Level 3 Inputs to Determine Fair Value

We have certain investments in debt securities classified as held-to-maturity within our Gaming segment since we have the ability and intent to hold the bonds to maturity. The debt securities are classified as Level 3 investments measured at fair value on a non-recurring basis and therefore are excluded from the roll forward of Level 3 investments measured on a recurring basis below. As of December 31, 2016 and 2015, the fair value of these debt securities was $28 million and $9 million, respectively, with the increase resulting primarily from our acquisition of TER during the first quarter of 2016.

Certain assets measured at fair value using level 3 inputs on a nonrecurring basis for which impairment was recorded are described below.

During 2016, 2015 and 2014, we recorded aggregate goodwill impairment charges of $577 million, $571 million and $103 million, respectively. Additionally, during 2016 and 2015, we recorded intangible asset impairment charges of $16 million and $2 million, respectively. Refer to Note 8, "Goodwill and Intangible Assets, Net," for further discussion.

During 2016, we recorded an aggregate $99 million of impairment relating to property, plant and equipment at our Gaming, Automotive, Real Estate and Metals segments and our Holding Company. During 2015, we recorded aggregate impairment charges of $201 million relating to property, plant and equipment at our Automotive, Metals, Mining and Real Estate segments. During 2014 we recorded aggregate impairment charges of $27 million relating to property, plant and equipment at our Automotive, Metals and Real Estate segments. We determined the fair value of property, plant and equipment by applying probability weighted, expected present value techniques to the estimated future cash flows using assumptions a market participant would utilize.

During 2016 and 2015, we recorded aggregate impairment charges of $17 million and $14 million, respectively, relating to assets held for sale at our Automotive and Metals segments. During 2014, we recorded an impairment charge of $5 million relating to equity method investments at our Automotive segment.

Refer to Note 13, "Segment and Geographic Reporting," for total impairment recorded by each of our segments.

Assets Measured at Fair Value on a Recurring Basis for Which We Use Level 3 Inputs to Determine Fair Value

The changes in investments measured at fair value on a recurring basis for which we use Level 3 inputs to determine fair value are as follows:



	Year Ended December 31,
	2016			2015
	(in millions)
Balance at January 1	$	283		$	229
Net transfers out	(131		)	(47		)
Realized and unrealized gains, net	10			1
Purchases	50			100
Balance at December 31	$	212		$	283


⁽¹⁾	Includes unrealized (losses) gains of $(6) million of $1 million for the years ended December 31, 2016 and 2015, respectively, relating to investments still held at December 31 of each respective period and which are included in net (loss) gain from investment activities in the consolidated statements of operations.

During 2016, we transferred out a Level 3 corporate debt investment in the amount of $126 million. See Note 3, "Operating Units - Gaming," for further discussion regarding this transaction. During 2015, the Holding Company obtained control of, and consolidated, Ferrous Resources, which was previously considered a Level 3 investment due to unobservable market data. The fair value of our investment in Ferrous Resources immediately prior to obtaining control was $36 million, which was transferred out of Level 3 investments during the second quarter of 2015. In addition, during 2015, our Gaming segment received $10 million as reimbursement for certain approved capital expenditures.

During 2015, the Holding Company made a certain investment classified as trading securities in the amount of $100 million, which is considered a Level 3 investment due to unobservable market data and is measured at fair value on a recurring basis. We purchased an additional $50 million of this investment during 2016. We determined the fair value of this investment using the Black-Scholes option pricing model as well as other valuation techniques. As of December 31, 2016 and 2015, the fair value of this investment was $207 million and $157 million, respectively.

The following table presents our Automotive segment's defined benefit plan assets measured at fair value on a recurring basis as of December 31, 2016 and 2015:



	December 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
U.S. Plans:
Cash	$	30	$	—	$	—	$	30	$	26	$	—	$	—	$	26
Investments with registered investment companies:
Equity securities	346		—		—		346		310		—		—		310
Fixed income securities	154		—		—		154		149		—		—		149
Real estate and other	41		—		—		41		27		—		—		27
Equity securities	204		—		—		204		220		—		—		220

Corporate and other	—		21		—		21		—		22		—		22
Government	11		17		—		28		17		13		—		30
Hedge funds	—		—		32		32		—		—		86		86
	$	786	$	38	$	32	$	856	$	749	$	35	$	86	$	870
Non-U.S. Plans:
Insurance contracts	$	—	$	—	$	42	$	42	$	—	$	—	$	40	$	40
Investments with registered investment companies:
Fixed income securities	19		—		—		19		13		—		—		13
Equity securities	2		—		—		2		2		—		—		2
Corporate bonds	—		—		—		—		—		2		—		2
	$	21	$	—	$	42	$	63	$	15	$	2	$	40	$	57

The changes in U.S. and Non-U.S. plan assets measured at fair value for which our Automotive segment has used Level 3 input to determine fair value are as follows:



	Year Ended December 31,
	2016			2015
	(in millions)
U.S. Plans:
Hedge funds:
Balance at January 1	$	86		$	91
Realized/unrealized (losses) gains, net	—			(5		)
Purchases and settlements, net	48			—
Sales, net	(102		)	—
Balance at December 31	$	32		$	86



	Year Ended December 31,
	2016			2015
	(in millions)
Non-U.S. Plans:
Insurance contracts:
Balance at January 1	$	40		$	41
Realized and unrealized gains, net	2			1
Purchases and settlements, net	3			6
Proceeds	(2		)	(4		)
Foreign currency exchange rate movements	(1		)	(4		)
Balance at December 31	$	42		$	40

The following table presents our Food Packaging and Railcar segment's defined benefit plan assets measured at fair value on a recurring basis as of December 31, 2016 and 2015:



	December 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
U.S. and Non-U.S. Plans:
Asset category:
Cash equivalents	$	4	$	1	$	—	$	5	$	5	$	1	$	—	$	6
Equity securities	54		27		—		81		51		27		—		78
Fixed income securities	18		2		—		20		7		12		—		19
Other	5		3		9		17		5		—		21		26
	$	81	$	33	$	9	$	123	$	68	$	40	$	21	$	129

The changes in U.S. and Non-U.S. plan assets measured at fair value for which our Food Packaging and Railcar segments have used Level 3 input to determine fair value are as follows:



	Year Ended December 31,
	2016			2015
	(in millions)
U.S. and Non-U.S. Plans:
Balance at January 1	$	21		$	21
Realized and unrealized gains, net	—			—
Purchases and settlements, net	(12		)	—
Balance at December 31	$	9		$	21