FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS

The following tables summarize the gross fair values of our financial instruments and commodity contracts as of March 31, 2015 and 2014 (in millions):



	March 31, 2015
	Assets				Liabilities						Net Fair Value
	Current		Noncurrent(A)		Current			Noncurrent(A)			Assets/(Liabilities)
Derivatives designated as hedging instruments:
Cash flow hedges
Aluminum contracts	$	15	$	—	$	(5	)	$	—		$	10
Currency exchange contracts	4		—		(42		)	(15		)	(53		)
Energy contracts	—		—		(6		)	(2		)	(8		)
Interest rate swaps	—		—		(1		)	—			(1		)
Net Investment hedges
Currency exchange contracts	5		—		—			—			5
Total derivatives designated as hedging instruments	24		—		(54		)	(17		)	(47		)
Derivatives not designated as hedging instruments
Aluminum contracts	24		—		(26		)	—			(2		)
Currency exchange contracts	26		—		(54		)	—			(28		)
Energy contracts	3		—		(15		)	(7		)	(19		)
Total derivatives not designated as hedging instruments	53		—		(95		)	(7		)	(49		)
Total derivative fair value	$	77	$	—	$	(149	)	$	(24	)	$	(96	)



	March 31, 2014
	Assets				Liabilities						Net Fair Value
	Current		Noncurrent(A)		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	)


(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 use over-the-counter derivatives indexed to the London Metals Exchange (LME) and from time to time we also use over-the-counter derivatives indexed to the Midwest transaction premium (collectively referred to as our "aluminum derivative 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 simultaneously 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 2 kt and 9 kt of outstanding aluminum forward purchase contracts designated as fair value hedges as of March 31, 2015 and 2014, respectively. One kilotonne (kt) is 1,000 metric tonnes.

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



	Amount of Gain (Loss) Recognized on Changes in Fair Value
	Year Ended March 31,
	2015		2014
Fair Value Hedges of Metal Price Risk
Derivative Contracts	$	—	$	(3	)
Designated Hedged Items	—		3
Net Ineffectiveness (A)	$	—	$	—


(A)	Effective portion is recorded in "Net sales" and net ineffectiveness in "Other expense (income), net". There was no amount excluded from the assessment of hedge effectiveness related to Fair Value Hedges.

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 two years in length. We had 1 kt and 16 kt of outstanding aluminum forward purchase contracts designated as cash flow hedges as of March 31, 2015 and 2014, 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. 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 285 kt and 222 kt of outstanding aluminum forward sales contracts designated as cash flow hedges as of March 31, 2015 and 2014, respectively.

The remaining balance of our aluminum derivative contracts are not designated as accounting hedges. As of March 31, 2015 and 2014, we had 36 kt and 105 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,
	2015		2014
Hedge Type
Purchase (Sale)
Cash flow purchases	1		16
Cash flow sales	(285	)	(222	)
Fair value	2		9
Not designated	(36	)	(105	)
Total, net	(318	)	(302	)

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 $590 million and $724 million in outstanding foreign currency forwards designated as cash flow hedges as of March 31, 2015 and 2014, respectively.

We use foreign currency contracts to hedge our foreign currency exposure to our net investment in foreign subsidiaries. We had $28 million outstanding foreign currency forwards designated as net investment hedges as of March 31, 2015. As of March 31, 2014, we had $61 million outstanding foreign currency forwards designated as net investment hedges.

As of March 31, 2015 and 2014, we had outstanding currency exchange contracts with a total notional amount of $868 million and $649 million, respectively, which were not designated as hedges. Contracts representing the majority of this notional amount will mature during the first and second quarter of fiscal 2016.

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. Less than 1 million of notional megawatt hours remained outstanding as of March 31, 2015, and the fair value of this swap was a liability of $16 million as of March 31, 2015. As of March 31, 2014, the fair value of this electricity swap was a liability of $19 million.

We use natural gas forward purchase contracts to manage our exposure to fluctuating energy prices in North America. We had 7 million MMBTUs designated as cash flow hedges as of March 31, 2015, and the fair value was a liability of $8 million. There were 9.5 million MMBTUs of natural gas forward purchase contracts designated as cash flow hedges as of March 31, 2014 and the fair value was an asset of $3 million. As of March 31, 2015 and 2014, we had 2 million MMBTUs and 1.5 million MMBTUs, respectively, of natural gas forward purchase contracts that were not designated as hedges. The fair value as of March 31, 2015 and 2014 was a liability of $3 million and an asset of less than $1 million, respectively, for the forward purchase contracts not designated as hedges. The average duration of undesignated contracts is approximately one year in length. One MMBTU is the equivalent of one decatherm, or one million British Thermal Units.

Interest Rate

As of March 31, 2015, we swapped $78 million (KRW 86 billion) floating rate loans to a weighted average fixed rate of 3.69%. All swaps expire concurrent with the maturity of the related loans. As of March 31, 2015 and 2014, $78 million (KRW 86 billion) and $127 million (KRW 136 billion) were designated as cash flow hedges, respectively.

Gain (Loss) Recognition

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 expense (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,
	2015			2014			2013
Derivative Instruments Not Designated as Hedges
Aluminum contracts	$	(31	)	$	(4	)	$	(10	)
Currency exchange contracts	(5		)	(15		)	3
Energy contracts (A)	2			14			15
(Loss) gain recognized in "Other expense (income), net"	(34		)	(5		)	8
Derivative Instruments Designated as Hedges
Gain recognized in "Other expense (income), net" (B)	19			38			28
Total (loss) gain recognized in "Other expense (income), net"	$	(15	)	$	33		$	36
Balance sheet remeasurement currency exchange contract losses	$	(13	)	$	(19	)	$	(6	)
Realized (losses) gains, net	(2		)	62			28
Unrealized (losses) gains on other derivative instruments, net	—			(10		)	14
Total (loss) gain recognized in "Other expense (income), net"	$	(15	)	$	33		$	36


(A)	Includes amounts related to de-designated electricity swap and natural gas swaps not designated as hedges.


(B)	Amount includes: forward market premium/discount excluded from hedging relationship and ineffectiveness on designated aluminum and foreign currency capex contracts; releases to income from AOCI on balance sheet remeasurement contracts; and ineffectiveness of 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 $36 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 Expense (Income), net” (Ineffective and Excluded Portion)
	Year Ended March 31,									Year Ended March 31,
	2015			2014			2013			2015			2014		2013
Cash flow hedging derivatives
Aluminum contracts	$	(26	)	$	35		$	34		$	24		$	39	$	29
Currency exchange contracts	(44		)	(16		)	(21		)	(2		)	1		2
Energy contracts	(12		)	1			1			—			—		—
Interest Rate Swaps	(1		)	—			(1		)	—			—		—
Total cash flow hedging derivatives	(83		)	20			13			22			40		31
Net Investment derivatives
Currency exchange contracts	11			(3		)	1			—			—		—
Total	$	(72	)	$	17		$	14		$	22		$	40	$	31

Gain (Loss) Reclassification



	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	2015			2014			2013
Energy contracts (A)	$	(5	)	$	(5	)	$	(5	)	Other expense (income), net
Aluminum contracts	(40		)	53			19			Cost of goods sold (B)
Aluminum contracts	—			7			12			Net sales
Currency exchange contracts	(14		)	(14		)	(15		)	Cost of goods sold (B)
Currency exchange contracts	(1		)	(1		)	(2		)	SG&A
Currency exchange contracts	18			3			—			Net sales
Currency exchange contracts	(3		)	(2		)	(1		)	Other expense (income), net
Currency exchange contracts	7			—			—			Gain on assets held for sale, net
Currency exchange contracts	(1		)	—			—			Depreciation and amortization
Total	(39		)	41			8			(Loss) income before taxes
	8			(16		)	(2		)	Income tax benefit (provision)
	$	(31	)	$	25		$	6		Net (loss) income

(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.