Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts receivable, net, accounts payable and accrued expenses and other current liabilities approximate fair value based on the short-term maturities of these instruments.  Fair value for our debt and notes receivable is derived using a discounted cash flow valuation methodology. The carrying values of these instruments approximate fair value since these instruments bear interest either at variable rates or fixed rates which are not significantly different than market rates.  Based on the fair value hierarchy, our debt of $1,138.9 million and $772.2 million as of September 30, 2016 and December 31, 2015, respectively, and our notes receivable of $17.4 million and $7.4 million as of September 30, 2016 and December 31, 2015, respectively, are categorized in Level 3.

The following table presents information about our financial assets and liabilities that are measured at estimated fair value on a recurring basis (in millions):

	Level 1		Level 2		Level 3		Sub-Total		Netting and Collateral			Total
As of September 30, 2016
Assets:
Commodity contracts	$	168.7	$	87.9	$	0.6	$	257.2	$	(213.8	)	$	43.3
Foreign currency contracts	—		11.6		—		11.6		(4.6		)	7.0
Inventories	—		3.1		—		3.1		—			3.1
Cash surrender value of life insurance	—		3.9		—		3.9		—			3.9
Total	$	168.7	$	106.5	$	0.6	$	275.8	$	(218.4	)	$	57.3
Liabilities:
Commodity contracts	$	179.4	$	90.2	$	0.3	$	269.9	$	(232.8	)	$	37.0
Foreign currency contracts	—		6.5		—		6.5		(4.6		)	1.9
Firm Commitments	—		3.5		—		3.5		—			3.5
Total	$	179.4	$	100.2	$	0.3	$	279.9	$	(237.4	)	$	42.4
As of December 31, 2015
Assets:
Commodity contracts	$	255.4	$	251.9	$	3.2	$	510.5	$	(279.0	)	$	231.5
Foreign currency contracts	—		12.4		—		12.4		(4.1		)	8.3
Cash surrender value of life insurance	—		2.4		—		2.4		—			2.4
Total	$	255.4	$	266.7	$	3.2	$	525.3	$	(283.1	)	$	242.2
Liabilities:
Commodity contracts	$	340.1	$	123.4	$	0.2	$	463.7	$	(389.6	)	$	74.1
Foreign currency contracts	—		5.0		—		5.0		(4.1		)	0.9
Inventories	—		14.3		—		14.3		—			14.3
Total	$	340.1	$	142.7	$	0.2	$	483.0	$	(393.7	)	$	89.3

The cash surrender value of life insurance is in connection with the non-qualified deferred compensation plan and was included in identifiable intangible and other non-current assets in the accompanying consolidated balance sheets.

Nonrecurring Fair Value Measurements. In connection with the acquisition of all of the outstanding stock of Pester on September 1, 2015, we committed to a plan to sell certain assets and liabilities of Pester’s fuel retail business. On May 1, 2016, we completed the sale of Pester’s retail business for $29.3 million in cash and an additional $3.0 million to be received at a future date.

The following table presents information regarding the balance sheet location of our commodity and foreign currency contracts net assets and liabilities (in millions):

	As of
	September 30, 2016		December 31, 2015
Commodity Contracts
Assets:
Short-term derivative assets, net	$	28.1	$	212.6
Identifiable intangible and other non-current assets	15.2		18.9
Total net assets	$	43.3	$	231.5
Liabilities:
Accrued expenses and other current liabilities	$	31.9	$	68.7
Other long-term liabilities	5.2		5.4
Total net liabilities	$	37.0	$	74.1
Foreign Currency Contracts
Assets:
Short-term derivative assets, net	$	5.7	$	7.6
Identifiable intangible and other non-current assets	1.3		0.7
Total net assets	$	7.0	$	8.3
Liabilities:
Accrued expenses and other current liabilities	$	1.9	$	0.9
Total net liabilities	$	1.9	$	0.9

For our derivative contracts, we may enter into master netting, collateral and offset agreements with counterparties. These agreements provide us the ability to offset a counterparty’s rights and obligations, request additional collateral when necessary or liquidate the collateral in the event of counterparty default. We net fair value of cash collateral paid or received against fair value amounts recognized for net derivative positions executed with the same counterparty under the same master netting or offset agreement.

As of September 30, 2016, we had $47.5 million of cash collateral deposits held by financial counterparties, of which $20.0 million have been offset against the total amount of commodity fair value liabilities in the above table and the remaining $27.6 million is included in other current assets in the accompanying consolidated balance sheets.  In addition, as of September 30, 2016, we have offset $1.0 million of cash collateral deposits received from customers against the total amount of commodity fair value assets in the above table.  As of December 31, 2015, we had $174.6 million of cash collateral deposits held by financial counterparties, of which $132.2 million have been offset against the total amount of commodity fair value liabilities in the above table and the remaining $42.4 million is included in other current assets in the accompanying consolidated balance sheets. In addition, as of December 31, 2015, we have offset $21.6 million of cash collateral deposits received from customers against the total amount of commodity fair value assets in the above table. 

The following table presents information about our assets and liabilities that are measured at fair value on a recurring basis that utilized Level 3 inputs for the periods presented (in millions):

	Beginning of Period		Realized and Unrealized Gains (Losses) Included in Earnings			Settlements		Transfers into Level 3			End of Period		Change in Unrealized Gains (Losses) Relating to Assets and Liabilities that are Held at end of Period			Location of  Realized and Unrealized Gains (Losses)Included in Earnings
Three months ended September 30, 2016
Assets:
Commodity contracts	$	0.5	$	0.1		$	—	$	—		$	0.6	$	0.2		Revenue
Liabilities:
Commodity contracts	$	0.3	$	(0.1	)	$	—	$	0.1		$	0.3	$	0.2		Cost of revenue
Three months ended September 30, 2015
Assets:
Commodity contracts	$	0.5	$	(0.1	)	$	0.1	$	1.0		$	1.3	$	1.0		Revenue
Liabilities:
Commodity contracts	$	0.4	$	0.4		$	—	$	(0.1	)	$	0.1	$	0.5		Cost of Revenue
Nine months ended September 30, 2016
Assets:
Commodity contracts	$	3.3	$	(2.3	)	$	1.8	$	1.3		$	0.6	$	(2.2	)	Revenue
Liabilities:
Commodity contracts	$	0.2	$	(0.2	)	$	—	$	0.1		$	0.3	$	—		Cost of revenue
Nine months ended September 30, 2015
Assets:
Commodity contracts	$	4.2	$	0.7		$	4.6	$	1.0		$	1.3	$	1.4		Revenue
Liabilities:
Commodity contracts	$	1.3	$	0.8		$	0.5	$	(0.1	)	$	0.1	$	0.9		Cost of Revenue

The nature of inputs that are considered Level 3 are modeled inputs. Commodity contracts are categorized in Level 3 due to the significance of the unobservable model inputs to their respective fair values. The unobservable model inputs, such as basis differentials, are based on the difference between the historical prices of our prior transactions and the underlying observable data as well as certain risk related to non-performance.  The effect on our income before income taxes of a 10% change in the model input for non-performance risk would not be significant. There were no transfers between Level 1 and Level 2 during the periods presented. Transfers between Level 2 and Level 3 were due to the increased significance of basis adjustments which are Level 3 measurements.