Fair Value Measurements

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

From time to time we enter into various instruments that require fair value measurement, including foreign currency contracts, interest rate swaps and copper derivative contracts. Assets measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, include:

(Dollars in thousands)	Carrying amount as of December 31, 2014			Level 1		Level 2			Level 3
Pension assets	$	170,600		$	51,097	$	107,739		$	11,764
Foreign currency contracts	(18		)	—		(18		)	—
Copper derivative contracts	355			—		355			—
Interest rate swap	(144		)	—		(144		)	—

(Dollars in thousands)	Carrying amount as of December 31, 2013			Level 1		Level 2			Level 3
Pension assets	$	171,218		$	119,277	$	38,584		$	13,357
Foreign currency contracts	(77		)	—		(77		)	—
Copper derivative contracts	984			—		984			—
Interest rate swap	(296		)	—		(296		)	—

The following table presents information about our assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2014, aggregated by the level in the fair value hierarchy within which those measurements fall. This Level 3 asset represents the investment in Solicore, Inc. The valuation is based on our evaluation of Solicore's financial performance through December 31, 2014 and the most recent round of capital financing that was initiated in the fourth quarter of 2014. See Note 8 - Investment for further details.

(Dollars in thousands)	Carrying amount as of December 31, 2014		Level 1		Level 2		Level 3
Solicore investment	$	341	$	—	$	—	$	341

The table below sets forth a summary of changes in the fair value of the Solicore investment Level 3 assetfor the year ended December 31, 2014.

(Dollars in thousands)	Solicore investment
Balance at beginning of year	$	507
Cash investment	—
Impairment reported in earnings	(166		)
Balance at end of year	$	341

Auction Rate Securities

During the first quarter of 2012, we liquidated our auction rate security portfolio, receiving net proceeds of $25.4 million on a stated par value of $29.5 million. As a result of this liquidation, we recognized a loss on the discount of the securities of $3.2 million (the remaining difference between the liquidation and par value of $0.9 million had previously been recognized as an impairment loss) in our earnings.

Derivatives Contracts

We are exposed to certain risks relating to our ongoing business operations. The primary risks being managed through the use of derivative instruments are interest rate risk, foreign currency exchange rate risk and commodity pricing risk (particularly related to copper).   

Foreign Currency - The fair value of any foreign currency option derivatives is based upon valuation models applied to current market information such as strike price, spot rate, maturity date and volatility, and by reference to market values resulting from an over-the-counter market or obtaining market data for similar instruments with similar characteristics.  

Commodity (Copper) - The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models. The intrinsic valuation model reflects the difference between the strike price of the underlying copper derivative instrument and the current prevailing copper prices in an over-the-counter market at period end. The time value valuation model incorporates the constant changes in the price of the underlying copper derivative instrument, the time value of money, the underlying copper derivative instrument's strike price and the remaining time to the underlying copper derivative instrument's expiration date from the period end date. Overall, fair value is a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate, and volatility.  

Interest Rates - The fair value of our interest rate swap instruments is derived by comparing the present value of the interest rate forward curve against the present value of the swap rate, relative to the notional amount of the swap. The net value represents the estimated amount we would receive or pay to terminate the agreements. Settlement amounts for an "in the money" swap would be adjusted down to compensate the counterparty for cost of funds, and the adjustment is directly related to the counterparty's credit ratings.

We do not use derivative financial instruments for trading or speculation purposes.

For further discussion on our derivative contracts, see Note 3 - Hedging Transactions and Derivative Financial Instruments.

Pension Assets

Our pension assets are stated at fair value on an annual basis and there are categories of assets in Level 1, 2 and 3 of the fair value hierarchy. See further discussion in Note 9 - Pension Benefits and Retirement Health and Life Insurance Benefits.