2. Derivatives

We enter into financial derivative contracts in order to mitigate the risk of market price fluctuations in aviation, marine and land fuel, to offer our customers fuel pricing alternatives to meet their needs and to mitigate the risk of fluctuations in foreign currency exchange rates. We also enter into proprietary derivative transactions, primarily intended to capitalize on arbitrage opportunities related to basis or time spreads related to fuel products we sell. We have applied the normal purchase and normal sales exception (“NPNS”), as provided by accounting guidance for derivative instruments and hedging activities, to certain of our physical forward sales and purchase contracts. While these contracts are considered derivative instruments under the guidance for derivative instruments and hedging activities, they are not recorded at fair value, but rather are recorded in our consolidated financial statements when physical settlement of the contracts occurs. If it is determined that a transaction designated as NPNS no longer meets the scope of the exception, the fair value of the related contract is recorded as an asset or liability on the consolidated balance sheet and the difference between the fair value and the contract amount is immediately recognized through earnings.

The following describes our derivative classifications:

Cash Flow Hedges. Includes certain of our foreign currency forward contracts we enter into in order to mitigate the risk of currency exchange rate fluctuations.

Fair Value Hedges. Includes derivatives we enter into in order to hedge price risk associated with our inventory and certain firm commitments relating to fixed price purchase and sale contracts.

Non-designated Derivatives. Includes derivatives we primarily enter into in order to mitigate the risk of market price fluctuations in aviation, marine and land fuel in the form of swaps or futures as well as certain fixed price purchase and sale contracts and proprietary trading. In addition, non-designated derivatives are also entered into to hedge the risk of currency rate fluctuations.

As of September 30, 2013, our derivative instruments, at their respective fair value positions were as follows (in thousands, except weighted average fixed price and weighted average mark-to-market amount):

Hedge Strategy	Settlement Period	Derivative Instrument	Notional	Unit	Weighted Average Fixed Price		Weighted Average Mark-to-Market Amount			Fair Value Amount

Cash Flow Hedge	2013	Foreign currency contracts (long)	333	EUR	$	1.24	$	0.11		$	38

Fair Value Hedge	2013	Commodity contracts for inventory hedging (long)	322	BBL	$	112.71	$	(0.78	)	$	(252	)
	2013	Commodity contracts for inventory hedging (short)	2,293	BBL	118.61		2.56			5,879
	2014	Commodity contracts for inventory hedging (short)	12	BBL	115.93		6.50			78
										$	5,705

Non-Designated	2013	Commodity contracts (long)	20,078	BBL	$	72.44	$	0.15		$	2,967
	2013	Commodity contracts (short)	16,540	BBL	89.59		0.23			3,848
	2014	Commodity contracts (long)	11,275	BBL	82.69		0.02			218
	2014	Commodity contracts (short)	8,445	BBL	100.43		0.63			5,338
	2015	Commodity contracts (long)	532	BBL	118.22		3.71			1,972
	2015	Commodity contracts (short)	590	BBL	90.20		(2.97		)	(1,755		)
	2013	Foreign currency contracts (long)	1,905	AUD	0.91		0.03			48
	2013	Foreign currency contracts (short)	5,461	AUD	0.90		(0.03		)	(169		)
	2013	Foreign currency contracts (long)	2,730	BRL	2.32		(0.00		)	(6		)
	2013	Foreign currency contracts (short)	134	BRL	2.41		(0.03		)	(4		)
	2013	Foreign currency contracts (long)	15,941	CAD	1.04		0.01			169
	2013	Foreign currency contracts (short)	26,615	CAD	1.04		(0.01		)	(318		)
	2013	Foreign currency contracts (long)	813,772	CLP	506.18		(0.00		)	(4		)
	2013	Foreign currency contracts (short)	1,542,720	CLP	509.97		(0.00		)	(30		)
	2013	Foreign currency contracts (long)	34,247,444	COP	1,916.12		(0.00		)	(10		)
	2013	Foreign currency contracts (short)	28,827,902	COP	1,919.49		(0.00		)	(32		)
	2013	Foreign currency contracts (long)	17,197	DKK	5.62		0.00			76
	2013	Foreign currency contracts (long)	7,330	EUR	1.32		0.03			202
	2013	Foreign currency contracts (short)	32,293	EUR	1.32		(0.04		)	(1,334		)
	2013	Foreign currency contracts (long)	73,437	GBP	1.54		0.08			5,615
	2013	Foreign currency contracts (short)	141,332	GBP	1.55		(0.08		)	(10,989		)
	2013	Foreign currency contracts (short)	111,367	INR	60.45		0.00			70
	2013	Foreign currency contracts (long)	205,458	JPY	98.93		0.00			12
	2013	Foreign currency contracts (short)	467,248	JPY	98.88		(0.00		)	(40		)
	2013	Foreign currency contracts (long)	1,290,707	MXN	12.99		(0.00		)	(1,501		)
	2013	Foreign currency contracts (short)	1,147,876	MXN	12.96		0.00			1,335
	2013	Foreign currency contracts (long)	16,897	NOK	6.08		0.00			16
	2013	Foreign currency contracts (short)	39,031	NOK	6.02		(0.00		)	(62		)
	2013	Foreign currency contracts (long)	2,055	PLN	3.20		0.01			16
	2013	Foreign currency contracts (short)	3,127	PLN	3.28		(0.02		)	(54		)
	2013	Foreign currency contracts (short)	12,791	RON	3.38		(0.01		)	(133		)
	2013	Foreign currency contracts (long)	23,530	SGD	1.27		0.01			211
	2013	Foreign currency contracts (short)	35,063	SGD	1.27		(0.01		)	(284		)
	2013	Foreign currency contracts (long)	33,118	ZAR	10.05		0.00			37
	2013	Foreign currency contracts (short)	93,162	ZAR	10.05		(0.00		)	(59		)
	2014	Foreign currency contracts (short)	1,391	CAD	1.03		0.00			1
	2014	Foreign currency contracts (long)	4,146	DKK	5.51		(0.00		)	(1		)
	2014	Foreign currency contracts (short)	94	EUR	1.35		(0.01		)	(1		)
	2014	Foreign currency contracts (long)	1,750	GBP	1.58		0.06			104
	2014	Foreign currency contracts (short)	14,240	GBP	1.56		(0.06		)	(856		)
	2014	Foreign currency contracts (long)	88,534	JPY	98.16		0.00			1
	2014	Foreign currency contracts (short)	1,384	NOK	6.05		(0.00		)	(1		)
	2014	Foreign currency contracts (long)	5,434	SGD	1.25		(0.00		)	(3		)
	2014	Foreign currency contracts (short)	13,570	ZAR	10.22		(0.00		)	(7		)
	2015	Foreign currency contracts (short)	2,500	GBP	1.59		(0.02		)	(52		)
										$	4,551

The following table presents information about our derivative instruments measured at fair value and their locations on the consolidated balance sheets (in thousands):

		As of
		September 30,		December 31,
	Balance Sheet Location	2013		2012
Derivative assets:
Derivatives designated as hedging instruments
Commodity contracts	Other current assets	$	6,345	$	991
Foreign currency contracts	Accrued expenses and other current liabilities	38		148
		6,383		1,139
Derivatives not designated as hedging instruments
Commodity contracts	Other current assets	59,536		67,533
Commodity contracts	Identifiable intangible and other non-current assets	4,022		1,423
Commodity contracts	Accrued expenses and other current liabilities	4,385		5,776
Commodity contracts	Other long-term liabilities	1,106		46
Foreign currency contracts	Other current assets	4,564		741
Foreign currency contracts	Accrued expenses and other current liabilities	3,954		1,545
		77,567		77,064
		$	83,950	$	78,203

Derivative liabilities:
Derivatives designated as hedging instruments
Commodity contracts	Other current assets	$	572	$	2,284
Commodity contracts	Accrued expenses and other current liabilities	68		—
		640		2,284
Derivatives not designated as hedging instruments
Commodity contracts	Other current assets	34,828		41,410
Commodity contracts	Identifiable intangible and other non-current assets	2,222		47
Commodity contracts	Accrued expenses and other current liabilities	17,843		20,927
Commodity contracts	Other long-term liabilities	1,568		1,034
Foreign currency contracts	Other current assets	3,990		595
Foreign currency contracts	Accrued expenses and other current liabilities	12,477		3,151
Foreign currency contracts	Other long-term liabilities	88		99
		73,016		67,263
		$	73,656	$	69,547

The following table presents the effect and financial statement location of our derivative instruments and related hedged items in fair value hedging relationships on our consolidated statements of income and comprehensive income (in thousands):

		Realized and Unrealized Gain (Loss)								Realized and Unrealized Gain (Loss)
Derivative Instruments	Location	2013			2012			Hedged Items	Location	2013			2012

Three months ended September 30,
Commodity contracts	Cost of revenue	$	(12,032	)	$	(38,337	)	Inventories	Cost of revenue	$	10,937		$	44,615

Nine months ended September 30,
Commodity contracts	Revenue	$	—		$	265		Firm commitments	Revenue	$	—		$	(201	)
Commodity contracts	Cost of revenue	—			(1,417		)	Firm commitments	Cost of revenue	—			739
Commodity contracts	Cost of revenue	7,593			(28,144		)	Inventories	Cost of revenue	(7,224		)	41,196
		$	7,593		$	(29,296	)			$	(7,224	)	$	41,734

There were no gains or losses for the three and nine months ended September 30, 2013 and 2012 that were excluded from the assessment of the effectiveness of our fair value hedges.

The following table presents the effect and financial statement location of our derivative instruments in cash flow hedging relationships on our accumulated other comprehensive income and consolidated statements of income and comprehensive income (in thousands):

	Amount of Gain					Amount of Gain
	Recognized in Accumulated					Reclassified from Accumulated
	Other Comprehensive Income				Location of	Other Comprehensive Income
	(Effective Portion)				Realized Gain	(Effective Portion)
Derivative Instruments	2013		2012		(Effective Portion)	2013		2012

Three months ended September 30,
Foreign currency contracts	$	33	$	127	Other (expense) income, net	$	47	$	13

Nine months ended September 30,
Foreign currency contracts	$	9	$	127	Other (expense) income, net	$	119	$	13

In the event forecasted cash outflows are less than the hedged amounts, a portion or all of the gains or losses recorded in accumulated other comprehensive income are reclassified to the consolidated statements of income and comprehensive income. As of September 30, 2013, the maximum amount that could be reclassified to the consolidated statements of income and comprehensive income for the next twelve months is not significant.

The following table presents the effect and financial statement location of our derivative instruments not designated as hedging instruments on our consolidated statements of income and comprehensive income (in thousands):

		Realized and Unrealized
		Gain (Loss)
Derivatives	Location	2013			2012

Three months ended September 30,

Commodity contracts	Revenue	$	6,589		$	30,928
Commodity contracts	Cost of revenue	(521		)	(29,272		)
Foreign currency contracts	Revenue	(1,992		)	(1,392		)
Foreign currency contracts	Other (expense) income, net	(6,105		)	(785		)
		$	(2,029	)	$	(521	)

Nine months ended September 30,

Commodity contracts	Revenue	$	26,096		$	14,156
Commodity contracts	Cost of revenue	893			298
Foreign currency contracts	Revenue	748			(2,120		)
Foreign currency contracts	Other (expense) income, net	(2,263		)	(1,469		)
		$	25,474		$	10,865

We enter into derivative instrument contracts which may require us to periodically post collateral. Certain of these derivative contracts contain clauses that are similar to credit-risk-related contingent features, including material adverse change, general adequate assurance and internal credit review clauses that may require additional collateral to be posted and/or settlement of the instruments in the event an aforementioned clause is triggered. The triggering events are not a quantifiable measure; rather they are based on good faith and reasonable determination by the counterparty that the triggers have occurred. The net liability position for such contracts, the collateral posted and the amount of assets required to be posted and/or to settle the positions should a contingent feature be triggered is not significant as of September 30, 2013.