XML 39 R42.htm IDEA: XBRL DOCUMENT v2.4.0.8
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2013
Fair Value Disclosures [Abstract]  
Assumptions used in determining fair value of the Call Option
The inputs to the model at December 31, 2013 were as follows:
Stock price at December 31, 2013
$
70.24

Quarterly dividend yield (per share)1
$
0.24

Risk-free interest rate2
0.19
%
Credit spread (basis points)3
171

Expected volatility rate4
17
%
____________
1 
Quarterly dividends during 2013 were $0.30 per share, but the model assumes a discrete $0.24 per share quarterly dividend as was paid at the inception of the Call Options. Quarterly dividends in excess of $0.24 per share do not affect the Call Options' value due to anti-dilution adjustments.
2 
The risk-free rate was based on the 1.25-year Constant Maturity Treasury rate on December 31, 2013.
3 
The credit spread is based on the Company's long-term credit rating of BB- issued by Standard & Poor’s and a senior
unsecured credit rating of Ba3 issued by Moody’s.
4 
The volatility rate was based on both observed volatility, which is based on the Company’s historical stock price, and
implied volatility from the Company’s traded options. Such volatility was further adjusted to take into consideration
market participant risk tolerance.
Summary of assets and liabilities measured and recognized at fair value on a recurring basis
The following tables present the Company's financial instruments, classified under the appropriate level of the fair value hierarchy, as of December 31, 2013 and December 31, 2012:
 
2013
 
Level 1
 
Level 2
 
Level 3
 
Total
FINANCIAL ASSETS:
 
 
 
 
 
 
 
Derivative Instruments
 
 
 
 
 
 
 
Aluminum -
 
 
 
 
 
 
 
Fixed priced purchase contracts
$
—

 
$
0.1

 
$
—

 
$
0.1

Midwest premium swap contracts
—

 
—

 
1.1

 
1.1

Natural Gas -
 
 
 
 
 
 
 
Fixed priced purchase contracts
—

 
0.5

 
—

 
0.5

Electricity -
 
 
 
 
 
 
 
     Fixed priced purchase contracts
—

 
0.5

 
—

 
0.5

Foreign Currency -
 
 
 
 
 
 
 
     Euro
—

 
0.1

 
—

 
0.1

Hedges Relating to the Convertible Notes -
 
 
 
 
 
 
 
Call Options
—

 
79.5

 
—

 
79.5

 
 
 
 
 
 
 
 
VEBAs and Canadian Pension Plan
 
 
 
 
 
 
 
Fixed income investment funds in registered investment companies1
57.0

 
318.0

 
—

 
375.0

Mortgage backed securities
—

 
25.9

 
—

 
25.9

Corporate debt securities2
—

 
78.2

 
—

 
78.2

Equity investment funds in registered investment companies3
—

 
175.3

 
—

 
175.3

United States Treasuries
—

 
43.3

 
—

 
43.3

Municipal debt securities
—

 
1.6

 
—

 
1.6

Cash and money market investments4
36.8

 
—

 
—

 
36.8

Asset backed securities
—

 
8.5

 
—

 
8.5

Diversified investment funds in registered investment companies5
20.1

 
6.2

 
—

 
26.3

 
 
 
 
 
 
 
 
All Other Financial Assets
 
 
 
 
 
 
 
Cash and cash equivalents6
57.7

 
111.8

 
—

 
169.5

Short-term investments
—

 
129.5

 
—

 
129.5

Deferred compensation plan asset
—

 
6.5

 
—

 
6.5

Total
$
171.6

 
$
985.5

 
$
1.1

 
$
1,158.2

 
 
 
 
 
 
 
 
FINANCIAL LIABILITIES:
 
 
 
 
 
 
 
Derivative Instruments
 
 
 
 
 
 
 
Aluminum -
 
 
 
 
 
 
 
Fixed priced purchase contracts
$
—

 
$
(1.8
)
 
$
—

 
$
(1.8
)
Natural Gas -
 
 
 
 
 
 
 
Fixed priced purchase contracts
—

 
(0.8
)
 
—

 
(0.8
)
Electricity -
 
 
 
 
 
 
 
Fixed priced purchase contracts
—

 
(0.4
)
 
—

 
(0.4
)
Hedges Relating to the Convertible Notes -
 
 
 
 
 
 
 
Bifurcated Conversion Feature
—

 
(83.1
)
 
—

 
(83.1
)
 
 
 
 
 
 
 
 
All Other Financial Liabilities
 
 
 
 
 
 
 
Senior Notes
(255.4
)
 
—

 
—

 
(255.4
)
Convertible Notes
(260.0
)
 
—

 
—

 
(260.0
)
Total
$
(515.4
)
 
$
(86.1
)
 
$
—

 
$
(601.5
)




 
2012
 
Level 1
 
Level 2
 
Level 3
 
Total
FINANCIAL ASSETS:
 
 
 
 
 
 
 
Derivative Instruments
 
 
 
 
 
 
 
Aluminum -
 
 
 
 
 
 
 
Fixed priced purchase contracts
$
—

 
$
2.6

 
$
—

 
$
2.6

Midwest premium swap contracts
—

 
—

 
0.4

 
0.4

Natural Gas -
 
 
 
 
 
 
 
     Fixed priced purchase contracts
—

 
0.2

 
—

 
0.2

Hedges Relating to the Convertible Notes -
 
 
 

 
 

 
 
Call Options
—

 
55.3

 
—

 
55.3

 
 
 
 
 
 
 
 
VEBAs and Canadian Pension Plan
 
 
 
 
 
 
 
Fixed income investment funds in registered investment companies1
192.3

 
235.4

 
—

 
427.7

Mortgage backed securities
—

 
31.5

 
—

 
31.5

Corporate debt securities2
—

 
40.4

 
—

 
40.4

Equity investment funds in registered investment companies3
114.1

 
58.8

 
—

 
172.9

United States Treasuries
—

 
13.6

 
—

 
13.6

Municipal debt securities
—

 
3.9

 
—

 
3.9

Cash and money market investments4
16.4

 
—

 
—

 
16.4

Asset backed securities
—

 
3.2

 
—

 
3.2

Diversified investment funds in registered investment companies5
6.4

 
5.7

 
—

 
12.1

Equity securities
8.7

 
—

 
—

 
8.7

 
 
 
 
 
 
 
 
All Other Financial Assets
 
 
 
 
 
 
 
Cash and cash equivalents6
107.9

 
165.5

 
—

 
273.4

Short-term investments
—

 
85.0

 
—

 
85.0

Deferred compensation plan asset
—

 
5.6

 
—

 
5.6

Total
$
445.8

 
$
706.7

 
$
0.4

 
$
1,152.9

 
 
 
 
 
 
 
 
FINANCIAL LIABILITIES:
 
 
 
 
 
 
 
Derivative Instruments
 
 
 
 
 
 
 
Aluminum -
 
 
 
 
 
 
 
Fixed priced purchase contracts
$
—

 
$
(0.5
)
 
$
—

 
$
(0.5
)
Natural Gas -
 

 
 

 
 

 
 
Put option sales contracts
—

 
(0.5
)
 
—

 
(0.5
)
Fixed priced purchase contracts
—

 
(2.6
)
 
—

 
(2.6
)
Electricity -
 
 
 
 
 
 
 
Fixed priced purchase contracts
—

 
(1.0
)
 
—

 
(1.0
)
Hedges Relating to the Convertible Notes -
 

 
 

 
 

 
 
Bifurcated Conversion Feature
—

 
(62.1
)
 
—

 
(62.1
)
 
 
 
 
 
 
 
 
All Other Financial Liabilities
 
 
 
 
 
 
 
Senior Notes
(250.0
)
 
—

 
—

 
(250.0
)
Convertible Notes
(240.1
)
 
—

 
—

 
(240.1
)
Total
$
(490.1
)
 
$
(66.7
)
 
$
—

 
$
(556.8
)
_________________________
1. 
This category represents investments in various fixed income funds with multiple registered investment companies. Such funds invest in diversified portfolios, including (i) marketable fixed income securities such as (a) U.S. Treasury and other government and agency securities, (b) municipal bonds, (c) mortgage-backed securities, (d) asset-backed securities, (e) corporate bonds, notes and debentures in various sectors, (f) preferred and common stock, (g) investments in affiliated and other investment companies, (h) short-term investments and other net assets and (i) repurchase agreements and reverse repurchase agreements, (ii) other commingled investments, (iii) investment grade debt, (iv) fixed income instruments which may be represented by options, future contracts or swap agreements, and (v) cash and cash equivalents. The fair value of assets in this category is estimated using the net asset value per share of the investments.
2. 
This category represents investments in fixed income corporate securities in various sectors. Investments in the industrial, financial and utilities sectors in 2013 represented approximately 56%, 35% and 9% of the total portfolio in this category, respectively. Investments in the industrial, financial and utilities sectors in 2012 represented approximately 61%, 33% and 6% of the total portfolio in this category, respectively. The fair value of assets in this category is estimated using the net asset value per share of the investments.
3. 
This category represents investments in equity funds that invest in portfolios comprised of (i) equity and equity-related securities of U.S. and non-U.S. issuers across all market capitalization, (ii) common stock in investment trust funds, and (iii) other short-term investments. The fair value of assets in this category is determined by using quoted prices in active markets for investments considered Level 1 inputs and estimated using the net asset value per share of the investments for investments considered Level 2 inputs.
4. 
This category represents cash and investments in various money market funds.
5. 
The plan assets are invested in investment funds that hold a diversified portfolio of (i) U.S and international debt and equity securities, (ii) fixed income securities such as corporate bonds and government bonds, (iii) mortgage-related securities, and (iv) cash and cash equivalents. The fair value of assets in this category is estimated using the net asset value per share of the investments.
6. 
See Note 2 for components of cash and cash equivalents.
Reconciliation of activity for financial instruments classified as Level 3
The following table presents a reconciliation of activity for such derivative contracts on a net basis:
 
Level 3
Balance at December 31, 2012
$
0.4

Total realized/unrealized gains included in:
 
Cost of goods sold excluding depreciation and amortization and Unrealized (gains) losses on derivative instruments
(0.1
)
Transactions involving Level 3 derivative contracts:
 
Purchases
1.0

Sales
—

Issuances
—

Settlements
(0.2
)
Transactions involving Level 3 derivatives - net
0.8

Transfers in and (or) out of Level 3 valuation hierarchy
—

Balance at December 31, 2013
$
1.1

 
 
Total gains included in Unrealized (gains) losses on derivative instruments, attributable to the change in unrealized gains/losses relating to derivative contracts held at December 31, 2013:
$
1.1
Summary of activities relating to the Company's CARO liabilities
The following table summarizes the activity relating to the Company's CARO liabilities:
 
 
Year Ended December 31,
 
 
2013
 
2012
 
2011
Beginning balance
 
$
4.1

 
$
4.0

 
$
3.8

Liabilities settled during the period
 
(0.2
)
 
(0.5
)
 
(0.1
)
Accretion expense
 
0.4

 
0.3

 
0.3

Adjustment to accretion expense due to revisions to estimated cash flow and timing of expenditure1
 
0.1

 
0.3

 
—

Ending balance
 
$
4.4

 
$
4.1

 
$
4.0

__________________________________________ 
1 
The adjustment in 2013 did not have a material impact on the basic and diluted earnings per share for 2013. The adjustment in 2012 decreased both basic and diluted earnings per share for 2012 by approximately $0.02 per share.