Fair Value Measurements Summary of Derivative Contracts (Policies)

12 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS

The gross fair values of our financial instruments and commodity contracts as of March 31, 2014 and 2013 are as follows (in millions):

	March 31, 2014
	Assets				Liabilities						Net Fair Value
	Current		Noncurrent		Current			Noncurrent(A)			Assets/(Liabilities)
Derivatives designated as hedging instruments:
Cash flow hedges
Aluminum contracts	$	4	$	—	$	(7	)	$	—		$	(3	)
Currency exchange contracts	15		$	4	(13		)	(6		)	—
Energy contracts	3		—		—			—			3
Net Investment hedges
Currency exchange contracts	—		—		(1		)	—			(1		)
Fair value hedges											—
Aluminum contracts	—		—		(1		)	—			(1		)
Total derivatives designated as hedging instruments	$	22	$	4	$	(22	)	$	(6	)	$	(2	)
Derivatives not designated as hedging instruments
Aluminum contracts	19		—		(28		)	—			(9		)
Currency exchange contracts	9		—		(3		)	—			6
Energy contracts	1		—		(7		)	(13		)	(19		)
Total derivatives not designated as hedging instruments	29		—		(38		)	(13		)	(22		)
Total derivative fair value	$	51	$	4	$	(60	)	$	(19	)	$	(24	)

	March 31, 2013
	Assets				Liabilities						Net Fair Value
	Current		Noncurrent		Current			Noncurrent(A)			Assets/(Liabilities)
Derivatives designated as hedging instruments:
Cash flow hedges
Aluminum contracts	$	24	$	—	$	—		$	—		$	24
Currency exchange contracts	12		—		(7		)	(8		)	(3		)
Energy contracts	1		—		—			—			1
Interest rate swaps	—		—		(1		)	—			(1		)
Fair value hedges
Aluminum contracts	—		—		(1		)	(1		)	(2		)
Total derivatives designated as hedging instruments	$	37	$	—	$	(9	)	(9		)	$	19
Derivatives not designated as hedging instruments
Aluminum contracts	49		—		(46		)	(1		)	2
Currency exchange contracts	21		1		(11		)	—			11
Energy contracts	2		—		(8		)	(19		)	(25		)
Total derivatives not designated as hedging instruments	72		1		(65		)	(20		)	(12		)
Total derivative fair value	$	109	$	1	$	(74	)	$	(29	)	$	7

(A) The noncurrent portions of derivative assets and liabilities are included in “Other long-term assets-third parties” and in “Other long-term liabilities” respectively, in the accompanying consolidated balance sheets.

Aluminum

We use derivative instruments to preserve our conversion margins and manage the timing differences associated with metal price lag. We sell short-term LME and Midwest transaction premium aluminum forward contracts to reduce our exposure to fluctuating metal prices associated with the period of time between the pricing of our purchases of inventory and the pricing of the sale of that inventory to our customers. We also purchase forward LME aluminum contracts simultaneous with our sales contracts with customers that contain fixed metal prices. These LME aluminum forward contracts directly hedge the economic risk of future metal price fluctuations to better match the selling price of the metal with the purchase price of the metal.

Price risk exposure arises from commitments to sell aluminum in future periods at fixed prices. We identify and designate certain LME aluminum forward contracts as fair value hedges of the metal price risk associated with fixed price sales commitments that qualify as firm commitments. Such exposures do not extend beyond two years in length. We had 9 kt and 22 kt of outstanding aluminum forward purchase contracts designated as fair value hedges as of March 31, 2014 and March 31, 2013, respectively.

The following table summarizes the amount of gain (loss) recognized on fair value hedges of metal price risk:

	Amount of Gain (Loss) Recognized on Changes in Fair Value
	Year Ended March 31,
	2014			2013
Fair Value Hedges of Metal Price Risk
Derivative Contracts	$	(3	)	$	(10	)
Designated Hedged Items	3			8
Net Ineffectiveness (A)	$	—		$	(2	)

(A) Effective portion is recorded in "Net sales" and net ineffectiveness in "Other income, net"

Price risk arises due to fluctuating aluminum prices between the time the sales order is committed and the time the order is shipped. We identify and designate certain LME aluminum forward purchase contracts as cash flow hedges of the metal price risk associated with our future metal purchases that vary based on changes in the price of aluminum. Such exposures do not extend beyond three years in length. We had 16 kt and 5 kt of outstanding aluminum forward purchase contracts designated as cash flow hedges as of March 31, 2014 and March 31, 2013, respectively.

Price risk exposure arises due to the timing lag between the LME based pricing of raw material metal purchases and the LME based pricing of finished product sales. Price risk exposure also arises due to fixed costs associated with our smelter operations in South America. We identify and designate certain LME aluminum forward sales contracts as cash flow hedges of the metal price risk associated with our future metal sales that vary based on changes in the price of aluminum. Such exposures do not extend beyond two years in length. We had 222 kt and 210 kt of outstanding aluminum forward sales contracts designated as cash flow hedges as of March 31, 2014 and March 31, 2013, respectively.

The remaining balance of our LME and Midwest transaction premium aluminum derivative contracts are not designated as accounting hedges. As of March 31, 2014 and March 31, 2013, we had 105 kt and 36 kt, respectively, of outstanding aluminum sales contracts not designated as hedges. The average duration of undesignated contracts is less than six months. The following table summarizes our notional amount (in kt).

	March 31,
	2014			2013
Hedge Type
Purchase (Sale)
Cash flow purchases	$	16		$	5
Cash flow sales	(222		)	(210		)
Fair value	9			22
Not designated	(105		)	(36		)
Total, net	$	(302	)	$	(219	)

Foreign Currency

We use foreign exchange forward contracts, cross-currency swaps and options to manage our exposure to changes in exchange rates. These exposures arise from recorded assets and liabilities, firm commitments and forecasted cash flows denominated in currencies other than the functional currency of certain operations.

We use foreign currency contracts to hedge expected future foreign currency transactions, which include capital expenditures. These contracts cover the same periods as known or expected exposures. We had total notional amounts of $724 million and $918 million in outstanding foreign currency forwards designated as cash flow hedges as of March 31, 2014 and March 31, 2013, respectively.

We use foreign currency contracts to hedge our foreign currency exposure to net investment in foreign subsidiaries. We had $61 million outstanding foreign currency forwards designated as net investment hedges as of March 31, 2014. As of March 31, 2013, we had no outstanding foreign currency forwards designated as net investment hedges.

As of March 31, 2014 and March 31, 2013, we had outstanding currency exchange contracts with a total notional amount of $649 million and $620 million, respectively, which were not designated as hedges. Contracts that represent the majority of notional amounts will mature during the first and second quarters of fiscal 2015.

Energy

We own an interest in an electricity swap which we formerly designated as a cash flow hedge of our exposure to fluctuating electricity prices. As of March 31, 2011, due to significant credit deterioration of our counterparty, we discontinued hedge accounting for this electricity swap. Approximately 1 million of notional megawatt hours remained outstanding as of March 31, 2014, and the fair value of this swap was a liability of $19 million as of March 31, 2014. As of March 31, 2013, the fair value of this electricity swap was a liability of $27 million.

We use natural gas swaps to manage our exposure to fluctuating energy prices in North America. We had 9.5 million MMBTUs designated as cash flow hedges as of March 31, 2014, and the fair value of these swaps was an asset of $3 million. There were 2.4 million MMBTUs of natural gas swaps designated as cash flow hedges as of March 31, 2013 and the fair value of these swaps was an asset of $1 million. As of March 31, 2014 and March 31, 2013, we had 1.5 million MMBTUs and 3.3 million MMBTUs, respectively, of natural gas swaps that were not designated as hedges. The fair value as of March 31, 2014 and March 31, 2013 was an asset of less than $1 million and an asset of $2 million, respectively, for the swaps not designated as hedges. The average duration of undesignated contracts is less than one year in length. One MMBTU is the equivalent of one decatherm, or one million British Thermal Units.

Interest Rate

As of March 31, 2014, we swapped $127 million (KRW 136 billion) floating rate loans to a weighted average fixed rate of 4.03%. All swaps expire concurrent with the maturity of the related loans. As of March 31, 2014 and March 31, 2013, $127 million (KRW 136 billion) and $95 million (KRW 106 billion) were designated as cash flow hedges, respectively.

The following table summarizes the gains (losses) associated with the change in fair value of derivative instruments not designated as hedges and the ineffectiveness of designated derivatives recognized in “Other income, net” (in millions). Gains (losses) recognized in other line items in the consolidated statement of operations are separately disclosed within this footnote.

	Year Ended March 31,
	2014			2013			2012
Derivative Instruments Not Designated as Hedges
Aluminum contracts	$	(4	)	$	(10	)	$	65
Currency exchange contracts	(15		)	3			27
Energy contracts (A)	14			15			(30		)
Interest rate swaps	—			—			—
(Loss) gain recognized in "Other income, net"	(5		)	8			62
Derivative Instruments Designated as Hedges
Gain recognized in "Other income, net" (B)	38			28			12
Total gain recognized in "Other income, net"	$	33		$	36		$	74
Balance sheet remeasurement currency exchange contracts	$	(19	)	$	(6	)	$	6
Realized gains (losses), net	62			28			130
Unrealized (losses) gains on other derivative instruments, net	(10		)	14			(62		)
Total gain recognized in "Other income, net"	$	33		$	36		$	74

(A) Includes amounts related to de-designated electricity swap.

(B) Amount includes: forward market premium/discount excluded and hedging relationship ineffectiveness on designated aluminum contracts; releases to income from AOCI on balance sheet remeasurement contracts; and ineffectiveness on fair value hedges involving aluminum derivatives.

The following table summarizes the impact on AOCI and earnings of derivative instruments designated as cash flow and net investment hedges (in millions). Within the next twelve months, we expect to reclassify $4 million of losses from “AOCI” to earnings, before taxes.

	Amount of Gain (Loss) Recognized in OCI (Effective Portion)									Amount of Gain (Loss) Recognized in “Other (Income) Expense,  net” (Ineffective and Excluded Portion)
	Year Ended March 31,									Year Ended March 31,
	2014			2013			2012			2014		2013		2012
Cash flow hedging derivatives
Aluminum contracts	$	35		$	34		$	(30	)	$	39	$	29	$	2
Currency exchange contracts	(16		)	(21		)	(26		)	1		2		11
Energy contracts (A)	1			1			—			—		—		—
Interest rate swaps	—			(1		)	—			—		—		—
Total Cash flow hedging derivatives	20			13			(56		)	40		31		13
Net investment derivatives
Currency exchange contracts	(3		)	1			6			—		—		—
Total	$	17		$	14		$	(50	)	$	40	$	31	$	13

	Amount of Gain (Loss) Reclassified from AOCI into Income/(Expense) (Effective Portion) Year Ended March 31,									Location of Gain (Loss) Reclassified from AOCI into Earnings
Cash flow hedging derivatives	2014			2013			2012
Energy contracts (A)	$	(5	)	$	(5	)	$	(5	)	Other income, net
Aluminum contracts	53			19			(16		)	Cost of goods sold (B)
Aluminum contracts	7			12			5			Net sales
Currency exchange contracts	(14		)	(15		)	6			Cost of goods sold (B)
Currency exchange contracts	(1		)	(2		)	1			SG&A
Currency exchange contracts	3			—			(3		)	Net sales
Currency exchange contracts	(2		)	(1		)	(1		)	Other income, net
Total	$	41		$	8		$	(13	)	Income (loss) before taxes
	(16		)	(2		)	7			Income tax (provision) benefit
	$	25		$	6		$	(6	)	Net income (loss)

(A) Includes amounts related to de-designated electricity swap. AOCI related to this swap is amortized to income over the remaining term of the hedged item. Amounts reclassified from AOCI into income/(expense) related to natural gas swaps for the periods presented were less than $1 million. AOCI releases related to natural gas swaps are recorded in "Cost of goods sold (exclusive of depreciation and amortization)."

(B) "Cost of goods sold" is exclusive of depreciation and amortization.

Derivative Contracts

For certain derivative contracts that have fair values based upon trades in liquid markets, such as aluminum, foreign exchange and natural gas forward contracts and options, valuation model inputs can generally be verified and valuation techniques do not involve significant judgment. The fair values of such financial instruments are generally classified within Level 2 of the fair value hierarchy.

The majority of our derivative contracts are valued using industry-standard models that use observable market inputs as their basis, such as time value, forward interest rates, volatility factors, and current (spot) and forward market prices. We generally classify these instruments within Level 2 of the valuation hierarchy. Such derivatives include interest rate swaps, cross-currency swaps, foreign currency contracts, LME and Midwest transaction premium aluminum forwards and swaps and natural gas forward contracts.

We classify derivative contracts that are valued based on models with significant unobservable market inputs as Level 3 of the valuation hierarchy. Our electricity swap, which is our only Level 3 derivative contract, represents an agreement to buy electricity at a fixed price at our Oswego, New York facility. Forward prices are not observable for this market, so we must make certain assumptions based on available information that we believe to be relevant to market participants. We use observable forward prices for a geographically nearby market and adjust for 1) historical spreads between the cash prices of the two markets, and 2) historical spreads between retail and wholesale prices.

The average forward price at March 31, 2014, estimated using the method described above, was $59 per megawatt hour, which represented a $7 premium over forward prices in the nearby observable market. The actual rate from the most recent swap settlement was approximately $99 per megawatt hour. Each $1 per megawatt hour decline in price decreases the valuation of the electricity swap by approximately $1 million.

For Level 2 and 3 of the fair value hierarchy, where appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit considerations (nonperformance risk). We regularly monitor these factors along with significant market inputs and assumptions used in our fair value measurements and evaluate the level of the valuation input according to the fair value hierarchy.  This may result in a transfer between levels in the hierarchy from period to period. As of March 31, 2014 and March 31, 2013, we did not have any Level 1 derivative contracts. No amounts were transferred between levels in the fair value hierarchy.

All of the Company's derivative instruments are carried at fair value in the statements of financial position prior to considering master netting agreements. The table below also discloses the net fair value of the derivative instruments after considering the impact of master netting agreements.