Fair value measurements

12 Months Ended

Dec. 31, 2017

We measure certain of our assets and liabilities at fair value. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

In general, reporting entities should apply valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are developed using market data and reflect assumptions that market participants would use when pricing the asset or liability. Unobservable inputs are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.

The fair value hierarchy provides transparency regarding the inputs we use to measure fair value. We categorize each fair value measurement in its entirety into the following three levels, based on the lowest level input that is significant to the entire measurement:


•	Level 1 Inputs – quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.


•	Level 2 Inputs – quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.


•	Level 3 Inputs – unobservable inputs for the asset or liability.



Recurring Fair Value Measurements	As of December 31, 2017
	Level 1		Level 2		Level 3		Total
ASSETS:
Cash equivalents	$	142,819	$	—	$	—	$	142,819
Trust assets ⁽¹⁾	1,757		—		—		1,757
Surety bonds	1,618		—		—		1,618
Derivative instruments	—		—		1,724		1,724
TOTAL	$	146,194	$	—	$	1,724	$	147,918
LIABILITIES:
Contingent obligation – net ⁽²⁾	$	—	$	—	$	—	$	—
Derivative instruments	—		—		1,200		1,200
TOTAL	$	—	$	—	$	1,200	$	1,200



Recurring Fair Value Measurements	As of December 31, 2016
	Level 1		Level 2		Level 3		Total
ASSETS:
Cash equivalents	$	79,014	$	—	$	—	$	79,014
Trust assets ⁽¹⁾	3,147		—		—		3,147
Surety bonds	1,874		—		—		1,874
Derivative instruments	—		—		925		925
TOTAL	$	84,035	$	—	$	925	$	84,960
LIABILITIES:
Contingent obligation – net ⁽²⁾	$	—	$	—	$	—	$	—
Derivative instruments	—		—		253		253
TOTAL	$	—	$	—	$	253	$	253


⁽¹⁾	Trust assets are currently invested in money market funds. These trust assets are held to fund the non-qualified supplemental executive pension benefit obligations for certain of our officers.


⁽²⁾	See Note 5 Debt for additional information about the contingent obligation.

The following section describes the valuation techniques and inputs used for fair value measurements categorized within Level 2 or Level 3 of the fair value hierarchy:



Level 2 and Level 3 Fair Value Measurements:
Asset / Liability	Level	Valuation Techniques	Inputs
Fixed for floating swaps	3	Discounted cash flows	Quoted LME forward market, management's estimates of future U.S. Midwest premium
Power price swap	3	Discounted cash flows	Quoted Nordpool forward market, discount rate
Contingent obligation	3	Discounted cash flows	Quoted LME forward market, management’s estimates of the LME forward market prices for periods beyond the quoted periods, management’s estimate of future level of operations and discount rate

There were no transfers between Level 1 and 2 during the periods presented. There were no transfers into or out of Level 3 during the periods presented. It is our policy to recognize transfers into and transfers out of Level 3 as of the date of the event or change in circumstances that caused the transfer.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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