Derivatives

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives  

We enter into financial derivative contracts in order to mitigate the risk of market price fluctuations in aviation, land and marine 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 in 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 contract occurs. If it is determined that a transaction designated as NPNS no longer qualifies for this classification, the fair value of the related contract is recorded as an asset or liability on the consolidated balance sheets 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 derivative contracts we execute to mitigate the risk of price volatility in forecasted transactions.

Fair Value Hedges. Includes derivative contracts we hold to hedge the risk of changes in the price of our inventory.

Non-designated Derivatives. Includes derivatives we primarily transact to mitigate the risk of market price fluctuations in the form of swaps or futures as well as certain forward fixed price purchase and sale contracts and proprietary trading.

The following table presents the gross fair value of our derivative instruments and their locations on the consolidated balance sheets (in millions):

		Gross Derivative Assets						Gross Derivative Liabilities
		As of						As of
		September 30, 2017			December 31, 2016			September 30, 2017			December 31, 2016
Derivative Instruments	Balance Sheet Location
Derivatives designated as hedging instruments
Commodity contracts	Short-term derivative assets, net		$	0.6		$	2.2		$	1.0		$	5.4
	Accrued expenses and other current liabilities		41.6			86.0			52.8			93.5
	Other long-term liabilities		—			5.1			—			10.1
Total derivatives designated as hedging instruments			$	42.3		$	93.3		$	53.8		$	108.9
Derivatives not designated as hedging instruments
Commodity contracts	Short-term derivative assets, net		$	133.8		$	160.3		$	83.4		$	86.7
	Identifiable intangible and other non-current assets		27.4			17.1			16.0			6.2
	Accrued expenses and other current liabilities		46.4			52.5			77.1			112.2
	Other long-term liabilities		6.9			8.1			12.1			12.1
			$	214.5		$	238.0		$	188.7		$	217.2
Foreign currency contracts	Short-term derivative assets, net		$	0.4		$	13.5		$	0.2		$	3.4
	Identifiable intangible and other non-current assets		—			0.9			—			0.1
	Accrued expenses and other current liabilities		4.6			1.6			9.1			2.8
	Other long-term liabilities		—			—			0.2			—
			$	5.0		$	16.0		$	9.5		$	6.4
Total derivatives not designated as hedging instruments			$	219.5		$	253.9		$	198.2		$	223.6
Total derivatives			$	261.8		$	347.2		$	251.9		$	332.5

For information regarding our derivative instruments measured at fair value after netting and collateral see Note 4.

The following table summarizes the gross notional values of our commodity and foreign currency exchange derivative contracts used for risk management purposes that were outstanding as of September 30, 2017 (in millions):

	As of September 30,
Derivative Instruments	Units	2017
Commodity contracts
Buy / Long	BBL	77.2
Sell / Short	BBL	(88.7	)
Foreign currency exchange contracts
Sell U.S. dollar, buy other currencies	USD	(241.2	)
Buy U.S. dollar, sell other currencies	USD	431.8

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 millions): 

Realized and Unrealized Gain (Loss)		For the Three Months Ended							Realized and Unrealized Gain (Loss)		For the Three Months Ended
		September 30,									September 30,
Derivative Instruments	Location		2017			2016			Hedged Items	Location		2017			2016
Commodity contracts									Inventories
	Cost of revenue		$	(23.1	)	$	11.3			Cost of revenue		$	0.8		$	(0.9	)
Total (Loss) Gain			$	(23.1	)	$	11.3		Total Gain (Loss)			$	0.8		$	(0.9	)
Realized and Unrealized Gain (Loss)		For the Nine Months Ended							Realized and Unrealized Gain (Loss)		For the Nine Months Ended
		September 30,									September 30,
Derivative Instruments	Location		2017			2016			Hedged Items	Location		2017			2016
Commodity contracts									Inventories
	Cost of revenue		$	(16.4	)	$	(19.5	)		Cost of revenue		$	(1.3	)	$	9.8
Total (Loss)			$	(16.4	)	$	(19.5	)	Total (Loss) Gain			$	(1.3	)	$	9.8

The net gains or losses recognized in income for the three months ended September 30, 2017 and 2016, representing hedge ineffectiveness were a $22.3 million loss, and a $10.4 million gain, respectively. For the nine months ended September 30, 2017 and 2016, the amounts of losses representing hedge ineffectiveness were $17.7 million, and $9.7 million, respectively. There were no amounts for the three and nine months ended September 30, 2017 and 2016, 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, consolidated statements of income and comprehensive income (in millions):

Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)	For the Three Months Ended							Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	For the Three Months Ended
	September 30,								September 30,
Derivative Instruments		2017			2016			Location		2017			2016
Commodity contracts		$	(83.0	)	$	11.2		Revenue		$	(8.4	)	$	(16.6	)
Commodity contracts		68.7			17.4			Cost of Revenue		2.8			53.0
Total (Loss) Gain		$	(14.3	)	$	28.7		Total (Loss) Gain		$	(5.6	)	$	36.4
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)	For the Nine Months Ended							Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	For the Nine Months Ended
	September 30,								September 30,
Derivative Instruments		2017			2016			Location		2017			2016
Commodity contracts		$	23.3		$	(105.3	)	Revenue		$	(2.6	)	$	30.7
Commodity contracts		(25.2		)	130.4			Cost of Revenue		(1.0		)	(2.9		)
Total (Loss) Gain		$	(1.8	)	$	25.1		Total (Loss) Gain		$	(3.6	)	$	27.9

Amount of Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)	For the Three Months Ended
	September 30,
Location		2017			2016
Revenue		$	(8.2	)	$	2.9
Cost of Revenue		4.2			(3.6		)
Total (Loss)		$	(4.1	)	$	(0.7	)
Amount of Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)	For the Nine Months Ended
	September 30,
Location		2017			2016
Revenue		$	2.1		$	(12.2	)
Cost of Revenue		(13.9		)	9.2
Total (Loss)		$	(11.8	)	$	(3.0	)

The effective portion of the gains or losses on derivative instruments designated as cash flow hedges of forecasted transactions are initially reported as a component of accumulated other comprehensive income and subsequently reclassified into earnings once the future transactions affects earnings.

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 millions):

Amount of Realized and Unrealized Gain (Loss)		For the Three Months Ended
			September 30,
Derivative Instruments - Non-designated	Location		2017			2016
Commodity contracts
	Revenue		$	(31.2	)	$	18.3
	Cost of revenue		47.9			(14.6		)
			$	16.7		$	3.7
Foreign currency contracts
	Revenue		$	(1.0	)	$	1.3
	Other (expense), net		(2.5		)	(0.5		)
			$	(3.5	)	$	0.8
Total Gain			$	13.2		$	4.5
Amount of Realized and Unrealized Gain (Loss)		For the Nine Months Ended
			September 30,
Derivative Instruments - Non-designated	Location		2017			2016
Commodity contracts
	Revenue		$	37.1		$	51.7
	Cost of revenue		11.7			(53.3		)
			$	48.8		$	(1.6	)
Foreign currency contracts
	Revenue		$	(3.1	)	$	7.7
	Other (expense), net		(8.9		)	(6.1		)
			$	(12.0	)	$	1.6
Total Gain			$	36.8		$	—

Credit-Risk-Related Contingent Features

We enter into derivative instrument contracts which may require us to periodically provide collateral. Certain derivative contracts contain credit-risk-related contingent clauses which are triggered by credit events. These credit events may include the requirement to provide additional collateral or the immediate settlement of the derivative instruments upon the occurrence of a credit downgrade or if certain defined financial ratios fall below an established threshold. The following table presents the potential collateral requirements for derivative liabilities with credit-risk-contingent features (in millions):

	Potential Collateral Requirements for Derivative Liabilities with Credit-Risk-Contingent Features
		As of September 30, 2017		As of December 31, 2016
Net derivatives liability positions with credit contingent features		$	5.0	$	15.2
Maximum potential collateral requirements		$	5.0	$	15.2

At September 30, 2017 and December 31, 2016, there was no collateral held by our counterparties on these derivative contracts with credit-risk-contingent features.