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Fair Value Measurements (Tables) | 12 Months Ended
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Dec. 31, 2011
Fair Value Disclosures [Abstract] |
Assumptions used in determining fair value of the Call Option | The significant assumptions used in the determining the fair value of the Call Options at December 31, 2011 were as follows:
Stock price at December 31, 2011 1 | $ | 45.88 |
Quarterly dividend yield (per share)2 | $ | 0.24 |
Risk-free interest rate 3 | 0.42 | %
Credit spread (basis points)4 | 569 |
Expected volatility rate 5 | 42 | %
____________
1 | The Company's stock price has the most material impact to the fair values of the Call Options and the Notes, which drives the fair value of the Bifurcated Conversion Feature.
2 | The Company used a discrete quarterly dividend payment of $0.24 per share based on historical and expected future quarterly dividend payments as of December 31, 2011.
3 | The risk-free rate was based on the five-year and three-year Constant Maturity Treasury rate on December 31, 2011, compounded semi-annually.
4 | The Company's credit rating was estimated to be between BB and B+ based on comparisons of its financial ratios and size to those of other rated companies. Using the Merrill Lynch High Yield index, the Company identified credit spreads for other debt issuances with similar credit ratings and used the median of such credit spreads.
5 | 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 table presents the Company's financial instruments, classified under the appropriate level of the fair value hierarchy, as of December 31, 2011:
| Level 1 |  | Level 2 |  | Level 3 |  | Total
FINANCIAL ASSETS: |  |  |  |  |  |  |
Derivative Instruments |  |  |  |  |  |  |
Aluminum - |  |  |  |  |  |  |
Fixed priced purchase contracts | $ | — |  |  | $ | 0.3 |  |  | $ | — |  |  | $ | 0.3 |
Midwest premium swap contracts | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
Hedges Relating to the Notes - |  |  |  |  |  |  |
Call Options | — |  |  | 46.3 |  |  | — |  |  | 46.3 |
VEBAs and Canadian Pension Plan |  |  |  |  |  |  |
Fixed income investment funds in registered investment companies 1 | — |  |  | 413.3 |  |  | — |  |  | 413.3 |
Mortgage backed securities | — |  |  | 33.9 |  |  | — |  |  | 33.9 |
Corporate debt securities 2 | — |  |  | 39.1 |  |  | — |  |  | 39.1 |
Equity investment funds in registered investment companies 3 | — |  |  | 52.3 |  |  | — |  |  | 52.3 |
United States Treasuries | — |  |  | 1.6 |  |  | — |  |  | 1.6 |
Municipal debt securities | — |  |  | 6.3 |  |  | — |  |  | 6.3 |
Cash and money market investments 4 | 12.1 |  |  | — |  |  | — |  |  | 12.1 |
Asset backed securities | — |  |  | 5.0 |  |  | — |  |  | 5.0 |
Diversified investment funds in registered investment companies 5 | — |  |  | 12.3 |  |  | — |  |  | 12.3 |
All Other Financial Assets |  |  |  |  |  |  |
Cash and cash equivalents | 49.8 |  |  | — |  |  | — |  |  | 49.8 |
Available for sale securities | — |  |  | 4.9 |  |  | — |  |  | 4.9 |
Total | $ | 61.9 |  |  | $ | 615.3 |  |  | $ | 0.1 |  |  | $ | 677.3 |
FINANCIAL LIABILITIES: |  |  |  |  |  |  |
Derivative Instruments |  |  |  |  |  |  |
Aluminum - |  |  |  |  |  |  |
Fixed priced purchase contracts | $ | — |  |  | $ | (7.8 | ) |  | $ | — |  |  | $ | (7.8 | )
Midwest premium swap contracts | — |  |  | — |  |  | (0.1 | ) |  | (0.1 | )
Natural Gas - |  |  |  |  |  |  |
Put option sales contracts | — |  |  | (5.6 | ) |  | — |  |  | (5.6 | )
Fixed priced purchase contracts | — |  |  | (1.3 | ) |  | — |  |  | (1.3 | )
Electricity - |  |  |  |  |  |  |
Fixed priced purchase contracts | — |  |  | (1.8 | ) |  | — |  |  | (1.8 | )
Hedges Relating to the Notes - |  |  |  |  |  |  |
Bifurcated Conversion Feature | — |  |  | (53.9 | ) |  | — |  |  | (53.9 | )
All Other Financial Liabilities |  |  |  |  |  |  |
Nichols Promissory Note | — |  |  | (4.7 | ) |  | — |  |  | (4.7 | )
Notes | (203.0 | ) |  | — |  |  | — |  |  | (203.0 | )
Total | $ | (203.0 | ) |  | $ | (75.1 | ) |  | $ | (0.1 | ) |  | $ | (278.2 | )
The following table presents the Company's financial instruments classified under the appropriate level of the fair value hierarchy as of December 31, 2010:
| Level 1 |  | Level 2 |  | Level 3 |  | Total
FINANCIAL ASSETS: |  |  |  |  |  |  |
Derivative Instruments |  |  |  |  |  |  |
Aluminum - |  |  |  |  |  |  |
Call option purchase contracts | $ | — |  |  | $ | 9.3 |  |  | $ | — |  |  | $ | 9.3 |
Put option purchase contracts | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Fixed priced purchase contracts | — |  |  | 18.2 |  |  | — |  |  | 18.2 |
Midwest premium swap contracts | — |  |  | — |  |  | 0.2 |  |  | 0.2 |
Natural Gas - |  |  |  |  |  |  |  |  |  |
Call option purchase contracts | — |  |  | 0.3 |  |  | — |  |  | 0.3 |
Put option purchase contracts | — |  |  | 2.5 |  |  | — |  |  | 2.5 |
Fixed priced purchase contracts | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Hedges Relating to the Notes - |  |  |  |  |  |  |  |  |
Call Options | — |  |  | 48.4 |  |  | — |  |  | 48.4 |
VEBAs and Canadian Pension Plan |  |  |  |  |  |  |
Fixed income investment funds in registered investment companies 1 | — |  |  | 299.1 |  |  | — |  |  | 299.1 |
Mortgage backed securities | — |  |  | 81.7 |  |  | — |  |  | 81.7 |
Corporate debt securities 2 | — |  |  | 47.6 |  |  | — |  |  | 47.6 |
Equity investment funds in registered investment companies 3 | — |  |  | 32.8 |  |  | — |  |  | 32.8 |
United States Treasuries | — |  |  | 15.0 |  |  | — |  |  | 15.0 |
Municipal debt securities | — |  |  | 7.1 |  |  | — |  |  | 7.1 |
Cash and money market investments 4 | 11.2 |  |  | — |  |  | — |  |  | 11.2 |
Asset backed securities | — |  |  | 10.1 |  |  | — |  |  | 10.1 |
Diversified investment funds in registered investment companies 5 | — |  |  | 4.9 |  |  | — |  |  | 4.9 |
All Other Financial Assets |  |  |  |  |  |  |
Cash and cash equivalents | 135.6 |  |  | — |  |  | — |  |  | 135.6 |
Available for sale securities | — |  |  | 4.6 |  |  | — |  |  | 4.6 |
Total | $ | 146.8 |  |  | $ | 581.8 |  |  | $ | 0.2 |  |  | $ | 728.8 |
FINANCIAL LIABILITIES: |  |  |  |  |  |  |
Derivative Instruments |  |  |  |  |  |  |
Aluminum - |  |  |  |  |  |  |
Call option sales contracts | $ | — |  |  | $ | (9.3 | ) |  | $ | — |  |  | $ | (9.3 | )
Put option sales contracts | — |  |  | (0.1 | ) |  | — |  |  | (0.1 | )
Fixed priced purchase contracts | — |  |  | (0.4 | ) |  | — |  |  | (0.4 | )
Fixed priced sales contracts | — |  |  | (3.4 | ) |  | — |  |  | (3.4 | )
Midwest premium swap contracts | — |  |  | — |  |  | (0.1 | ) |  | (0.1 | )
Natural Gas - |  |  |  |  |  |  |  |  |  |
Put option sales contracts | — |  |  | (4.6 | ) |  | — |  |  | (4.6 | )
Fixed priced purchase contracts | — |  |  | (0.5 | ) |  | — |  |  | (0.5 | )
Hedges Relating to the Notes - |  |  |  |  |  |  |  |  |  |
Bifurcated Conversion Feature | — |  |  | (60.0 | ) |  | — |  |  | (60.0 | )
All Other Financial Liabilities |  |  |  |  |  |  |
Los Angeles Promissory Note | — |  |  | (7.0 | ) |  | — |  |  | (7.0 | )
Nichols Promissory Note | — |  |  | (6.0 | ) |  | — |  |  | (6.0 | )
Notes | (214.7 | ) |  | — |  |  | — |  |  | (214.7 | )
Total | $ | (214.7 | ) |  | $ | (91.3 | ) |  | $ | (0.1 | ) |  | $ | (306.1 | )
_________________________
1. | This category represents investments in various fixed income funds with multiple registered investment companies. Such funds invest in diversified portfolios, including (a) marketable fixed income securities such as (i) U.S. Treasury and other government issued debt securities, (ii) mortgage backed securities, (iii) asset backed securities, (iv) corporate bonds, notes and debentures in various sectors, (v) preferred stock, (vi) various deposit accounts and (vii) repurchase agreements and reverse repurchase agreements, (b) higher yielding, non-investment-grade fixed income securities in the high yield market, (c) debt securities of issuers located in countries with new or emerging markets, denominated in U.S. dollars or other foreign currencies and (d) fixed income instruments which may be represented by options, future contracts or swap agreements. 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 2011 represented approximately 53%, 38% and 9% of the total portfolio in this category, respectively. Investments in the industrial, financial and utilities sectors in 2010 represented approximately 53%, 36% and 11% 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 securities of U.S. companies with a certain market capitalization threshold, (ii) American Depositary Receipts, or ADRs, for securities of non-U.S. issuers, and (iii) securities whose principal market is outside of U.S. The fair value of assets in this category is estimated using the net asset value per share of the investments. The fair value of assets in this category is estimated using the net asset value per share of the investments.
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 U.S and international equity securities and fixed income securities such as corporate bonds, government bonds, mortgage and asset backed securities. The fair value of assets in this category is estimated using the net asset value per share of the investments.
Reconciliation of activity for financial instruments classified as Level 3 | Financial instruments classified as Level 3 in the fair value hierarchy represent derivative contracts in which management has used at least one significant unobservable input in the valuation model. The following table presents a reconciliation of activity for such derivative contracts on a net basis:
| Level 3
Balance at December 31, 2010 | $ | 0.1 |
Total realized/unrealized losses included in: |
Cost of goods sold excluding depreciation expense | 1.4 |
Transactions involving Level 3 derivative contracts: |
Purchases | — |
Sales | — |
Issuances | — |
Settlements | (1.5 | )
Transactions involving Level 3 derivatives - net | (1.5 | )
Transfers in and (or) out of Level 3 valuation hierarchy | — |
Balance at December 31, 2011 | $ | — |
Total gains included in earnings attributable to the change in unrealized losses relating to derivative contracts held at December 31, 2011: | $ | — |
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,
|  | 2011 |  | 2010 |  | 2009
Beginning balance |  | $ | 3.8 |  |  | $ | 3.5 |  |  | $ | 3.3 |
Liabilities incurred during the period |  | — |  |  | — |  |  | — |
Liabilities settled during the period |  | (0.1 | ) |  | — |  |  | — |
Accretion expense |  | 0.3 |  |  | 0.3 |  |  | 0.2 |
Adjustment to accretion expense due to revisions to estimated cash flow 1 |  | — |  |  | (1.1 | ) |  | — |
Revisions to estimated cash flow |  | — |  |  | 1.1 |  |  | — |
Ending balance |  | $ | 4.0 |  |  | $ | 3.8 |  |  | $ | 3.5 |
__________________________________________ 1 The adjustment increased both basic and diluted earnings per share for 2010 by approximately $0.05 per share.

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- Definition Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32 -Subparagraph c -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19279-110258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258 + Details
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- Definition Tabular disclosure of the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods. Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19279-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 33 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 10 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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