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Derivatives, Hedging Programs and Other Financial Instruments (Tables) | 6 Months Ended
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Jun. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Summary of material derivative positions | The following table summarizes our derivative positions at June 30, 2018:
Aluminum | Maturity Period (month/year) |  | Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts | 7/18 through 12/21 |  | 163.4 |
Fixed price sales contracts | 7/18 through 11/19 |  | 2.4 |
Midwest premium swap contracts1 | 7/18 through 12/21 |  | 130.7 |
Alloying Metals | Maturity Period (month/year) |  | Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts | 7/18 through 12/19 |  | 6.6 |
Natural Gas2 | Maturity Period (month/year) |  | Notional Amount of Contracts (mmbtu)
Fixed price purchase contracts | 7/18 through 12/20 |  | 3,210,000 |
Electricity3 | Maturity Period (month/year) |  | Notional Amount of Contracts (Mwh)
Fixed price purchase contracts | 1/20 through 12/20 |  | 175,680 |
Euro4 | Maturity Period (month/year) |  | Notional Amount of Contracts (euro)
Fixed price purchase contracts | 7/18 |  | 53,324 |
____________________
1 | Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primary aluminum.
2 | As of June 30, 2018, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 69% of the expected natural gas purchases for the remainder of 2018, 68% of the expected natural gas purchases for 2019, 67% of the expected natural gas purchases for 2020 and 18% of the expected natural gas purchases for 2021.
3 | As of June 30, 2018, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 53% of our expected electricity purchases for the remainder of 2018, and 54% of our expected electricity purchases for both 2019 and 2020.
4 | We are exposed to foreign currency exchange risk related to firm-price agreements for equipment purchases from foreign manufacturers. We use non-designated foreign currency forward contracts designed to line up with the timing and amounts of scheduled payments to the foreign equipment manufacturers to mitigate our exposure to currency exchange rate fluctuations on these purchases.
Summary of realized and unrealized gains and losses | The location and amount of (gain) loss included on the Statements of Consolidated Income within the Fabricated Products segment associated with all derivative contracts consisted of the following for each period presented (in millions of dollars):
| Quarter Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| Cost of products sold, excluding depreciation and amortization and other items1 |  | Cost of products sold, excluding depreciation and amortization and other items1 |  | Unrealized loss on derivative instruments |  | Cost of products sold, excluding depreciation and amortization and other items1 |  | Cost of products sold, excluding depreciation and amortization and other items1 |  | Unrealized (gain) loss on derivative instruments
Total amounts of income and expense line items presented in the statements of consolidated income in which the effects of hedges are recorded | $ | 343.4 |  |  | $ | 277.7 |  |  | $ | 11.9 |  |  | $ | 660.1 |  |  | $ | 555.5 |  |  | $ | (3.2 | )
(Gain) loss recognized in income related to cash flow hedges: |  |  |  |  |  |  |  |  |  |  |
Aluminum | $ | (3.6 | ) |  | $ | — |  |  | $ | — |  |  | $ | (3.3 | ) |  | $ | — |  |  | $ | — |
Alloying Metals | (0.2 | ) |  | 0.2 |  |  | — |  |  | (0.6 | ) |  | 0.1 |  |  | — |
Natural gas | (0.1 | ) |  | — |  |  | — |  |  | (0.1 | ) |  | — |  |  | — |
Total (gain) loss recognized in income | $ | (3.9 | ) |  | $ | 0.2 |  |  | $ | — |  |  | $ | (4.0 | ) |  | $ | 0.1 |  |  | $ | — |
(Gain) loss recognized in income related to non-designated hedges: |  |  |  |  |  |  |  |  |  |  |
Aluminum | $ | — |  |  | $ | (5.2 | ) |  | $ | 11.6 |  |  | $ | — |  |  | $ | (9.8 | ) |  | $ | (4.7 | )
Natural gas | — |  |  | 0.1 |  |  | 0.3 |  |  | — |  |  | 0.1 |  |  | 1.5 |
Total (gain) loss recognized in income | $ | — |  |  | $ | (5.1 | ) |  | $ | 11.9 |  |  | $ | — |  |  | $ | (9.7 | ) |  | $ | (3.2 | )
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1 | Beginning with our adoption of ASU 2017-12 effective January 1, 2018, we no longer have Unrealized loss (gain) on derivative instruments on the Statements of Consolidated Income as all of our commodity hedges are designated as cash flow hedges. As such, all Unrealized loss (gain) on derivative instruments is reported in AOCI. For the quarter and six months ended June 30, 2017, Unrealized loss (gain) on derivative instruments was reclassified to Cost of products sold, excluding depreciation and amortization and other items in the Statements of Consolidated Income to conform to the current period's presentation, for a combined total of $289.6 million and $552.3 million, respectively. The amounts comprising both line items are presented separately here for comparative purposes.
Fair Value of Derivative Assets and Liabilities Measured on Recurring Basis | The following table presents the fair value of our derivative financial instruments as of the period presented (in millions of dollars):
| June 30, 2018 |  | December 31, 2017
| Derivative Assets |  | Derivative Liabilities |  | Net Amount |  | Derivative Assets |  | Derivative Liabilities |  | Net Amount
Cash Flow Hedges: |  |  |  |  |  |  |  |  |  |  |
Aluminum – |  |  |  |  |  |  |  |  |  |  |
Fixed price purchase contracts | $ | 5.8 |  |  | $ | (4.5 | ) |  | $ | 1.3 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Fixed price sales contracts | 0.1 |  |  | (0.1 | ) |  | — |  |  | — |  |  | — |  |  | — |
Midwest premium swap contracts | 8.1 |  |  | (0.1 | ) |  | 8.0 |  |  | — |  |  | — |  |  | — |
Alloying Metals – Fixed price purchase contracts | — |  |  | (1.2 | ) |  | (1.2 | ) |  | 0.9 |  |  | — |  |  | 0.9 |
Natural gas – Fixed price purchase contracts | 0.1 |  |  | (0.5 | ) |  | (0.4 | ) |  | — |  |  | — |  |  | — |
Electricity – Fixed price purchase contracts | — |  |  | (0.3 | ) |  | (0.3 | ) |  | — |  |  | — |  |  | — |
Non-Designated Hedges: |  |  |  |  |  |  |  |  |  |  |
Aluminum – |  |  |  |  |  |  |  |  |  |  |
Fixed price purchase contracts | — |  |  | — |  |  | — |  |  | 22.5 |  |  | — |  |  | 22.5 |
Fixed price sales contracts | — |  |  | — |  |  | — |  |  | — |  |  | (0.1 | ) |  | (0.1 | )
Midwest premium swap contracts | — |  |  | — |  |  | — |  |  | 1.7 |  |  | (0.1 | ) |  | 1.6 |
Natural gas – Fixed price purchase contracts | — |  |  | — |  |  | — |  |  | 0.2 |  |  | (0.5 | ) |  | (0.3 | )
Electricity – Fixed price purchase contracts | — |  |  | — |  |  | — |  |  | — |  |  | (0.1 | ) |  | (0.1 | )
Total1 | $ | 14.1 |  |  | $ | (6.7 | ) |  | $ | 7.4 |  |  | $ | 25.3 |  |  | $ | (0.8 | ) |  | $ | 24.5 |
____________________
1 | All of our derivative contracts with counterparties are subject to enforceable master netting arrangements. We reflect the fair value of our derivative contracts on a gross basis on the Consolidated Balance Sheets.
The following table presents the balance sheet location of derivative assets and liabilities for the periods presented (in millions of dollars):
| June 30, 2018 |  | December 31, 2017
Assets: |  |  |
Prepaid expenses and other current assets | $ | 11.5 |  |  | $ | 18.9 |
Other assets | 2.6 |  |  | 6.4 |
Total assets | $ | 14.1 |  |  | $ | 25.3 |
Liabilities: |  |  |
Other accrued liabilities | $ | (4.2 | ) |  | $ | (0.3 | )
Long-term liabilities | (2.5 | ) |  | (0.5 | )
Total Liabilities | $ | (6.7 | ) |  | $ | (0.8 | )
Fair Value, Non-Derivative Assets Measured on Recurring Basis | The following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of June 30, 2018 (in millions of dollars):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 18.1 |  |  | $ | 145.9 |  |  | $ | — |  |  | $ | 164.0 |
Short-term investments | — |  |  | 71.9 |  |  | — |  |  | 71.9 |
Total | $ | 18.1 |  |  | $ | 217.8 |  |  | $ | — |  |  | $ | 235.9 |
The following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of December 31, 2017 (in millions of dollars):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 23.5 |  |  | $ | 27.6 |  |  | $ | — |  |  | $ | 51.1 |
Short-term investments | — |  |  | 183.7 |  |  | — |  |  | 183.7 |
Total | $ | 23.5 |  |  | $ | 211.3 |  |  | $ | — |  |  | $ | 234.8 |
All Other Financial Assets and Liabilities. We believe that the fair values of our accounts receivable, contract assets, accounts payable and accrued liabilities approximate their respective carrying values due to their short maturities and nominal credit risk.

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- Definition Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by 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 (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19190-110258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 + Details
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- Definition Tabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=84234895&loc=SL5624171-113959 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84234895&loc=SL5618551-113959 + Details
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- Definition Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by 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 (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19190-110258 + Details
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