FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2013

The tables below present information about the Company's financial assets and liabilities measured and recorded at fair value on a recurring basis and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of December 31, 2013 and 2012.



	December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	5,857	$	—	$	—	$	5,857
Non-qualified pension plan assets	4,905		—		—		4,905
Commodity contracts	4,252		6,681		—		10,933
Derivatives included with inventory intermediation agreement obligations	—		6,016		—		6,016
Liabilities:
Commodity contracts	—		6,989		23,365		30,354
Derivatives included with inventory supply arrangement obligations	—		177		—		177
Catalyst lease obligations	—		53,089		—		53,089



	December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	175,786	$	—	$	—	$	175,786
Commodity contracts	3,303		—		—		3,303
Derivatives included with inventory supply arrangement obligations	—		5,595		—		5,595
Liabilities:
Catalyst lease obligations	—		43,442		—		43,442
Commodity contracts	—		1,872		—		1,872
Contingent consideration for refinery acquisition	—		—		21,358		21,358

The valuation methods used to measure financial instruments at fair value are as follows:


•	Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices and included within cash and cash equivalents.


•	Non-qualified pension plan assets categorized in Level 1 of the hierarchy are measured at fair value using a market approach based on published net asset values of mutual funds and included within deferred charges and other assets, net.


•	The commodity contracts categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted prices in an active market. The commodity contracts categorized in Level 2 of the fair value hierarchy are measured at fair value using a market approach based upon future commodity prices for similar instruments quoted in active markets.

•

The commodity contracts categorized in Level 3 of the fair value hierarchy consist of commodity price swap contracts that relate to forecasted purchases of crude oil for which quoted forward market prices are not readily available due to market illiquidity. The forward price used to value these swaps was derived using broker quotes, prices from other third party sources and other available market based data.


•	The derivatives included with inventory supply arrangement obligations, derivatives included with inventory intermediation agreement obligations and the catalyst lease obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based upon commodity prices for similar instruments quoted in active markets.

•

The contingent consideration for refinery acquisition obligation at December 31, 2012 is categorized in Level 3 of the fair value hierarchy and is estimated using a discounted cash flow model based on management's estimate of the future cash flows of the Toledo refinery; a risk free rate of return of 0.16%; credit rate spread of 4.38%; and a discount rate of 4.54%. During the year ended December 31, 2013, there was no change in fair value, as the obligation was known and was paid in full on April 30, 2013.

The table below summarizes the changes in fair value measurements of contingent consideration for refinery acquisition categorized in Level 3 of the fair value hierarchy:



	Year Ended December 31,
	2013			2012
Balance at beginning of period	$	21,358		$	122,232
Purchases	—			—
Settlements	(21,358		)	(103,642		)
Unrealized loss included in earnings	—			2,768
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Balance at end of period	$	—		$	21,358

The table below summarizes the changes in fair value measurements of commodity contracts categorized in Level 3 of the fair value hierarchy:



	Year Ended December 31,
	2013			2012
Balance at beginning of period	$	—		$	—
Purchases	—			—
Settlements	24,678			—
Unrealized loss included in earnings	(48,043		)	—
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Balance at end of period	$	(23,365	)	$	—

There were no transfers between levels during the years ended December 31, 2013 and 2012, respectively.

Fair value of debt

The table below summarizes the fair value and carrying value as of December 31, 2013 and 2012.



	December 31, 2013				December 31, 2012
	Carrying value		Fair value		Carrying value		Fair value
Senior Secured Notes (a)	$	667,487	$	697,568	$	666,538	$	700,963
Revolver (b)	15,000		15,000		—		—
Catalyst leases (c)	53,089		53,089		43,442		43,442
	735,576		765,657		709,980		744,405
Less - Current maturities	12,029		12,029		—		—
Long-term debt	$	723,547	$	753,628	$	709,980	$	744,405

(a) The estimated fair value, categorized as a Level 2 measurement, was calculated based on the present value of future expected payments utilizing implied current market interest rates based on quoted prices of the Senior Secured Notes.

(b) The estimated fair value approximates carrying value, categorized as a Level 2 measurement, as these borrowings bear interest based upon short-term floating market interest rates.

(c) Catalyst leases are valued using a market approach based upon commodity prices for similar instruments quoted in active markets and are categorized as a Level 2 measurement. The Company has elected the fair value option for accounting for its catalyst lease repurchase obligations as the Company's liability is directly impacted by the change in fair value of the underlying catalyst.

- 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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