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Derivatives
 12 Months Ended
Dec. 31, 2011
Derivatives  
Derivatives

3. Derivatives

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. There were no outstanding cash flow hedges as of December 31, 2011 and 2010.

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. As of December 31, 2011 and 2010, we recorded an unrealized net gain of $2.4 million and an unrealized net loss of $0.8 million, respectively, related to the ineffectiveness between our derivative hedging instruments and hedged items on the respective dates.

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 December 31, 2011 and 2010, we recorded an unrealized net gain of $11.1 million and an unrealized net loss of $0.1 million, respectively, related to our non-designated derivative positions.

For additional information on our derivatives accounting policy, see Note 1.

As of December 31, 2011, our derivative instruments, at their respective fair value positions were as follows (in thousands, except mark-to-market prices):

Hedge Strategy
   Settlement
Period
   Derivative Instrument
   Notional
   Unit
   Mark-to-
Market Prices
   Mark-to-
Market
 

Fair Value Hedge

   2012   Commodity contracts for firm commitment hedging (long)   778   GAL   0.01   $11

 

   2012   Commodity contracts for firm commitment hedging (short)   1,848   GAL   (0.12)   (219)

 

   2012   Commodity contracts for inventory hedging (short)   54,264   GAL   (0.01)   (552)

 

   2012   Commodity contracts for firm commitment hedging (long)   1   MT   11.00   11

 

   2012   Commodity contracts for inventory hedging (short)   75   MT   (3.19)   (239)
                         

 

                       $(988)
                         

Non-Designated

  

2012

  

Commodity contracts (long)

  
95,925		  
GAL		  
0.02		  
$2,238

 

   2012   Commodity contracts (short)   156,443   GAL   0.00   555

 

   2012   Commodity contracts (long)   4,915   MT   4.11   20,196

 

   2012   Commodity contracts (short)   3,598   MT   (4.10)   (14,750)

 

   2013   Commodity contracts (long)   3,385   GAL   0.11   380

 

   2013   Commodity contracts (short)   7,157   GAL   0.10   720

 

   2013   Commodity contracts (long)   68   MT   (13.93)   (947)

 

   2013   Commodity contracts (short)   19   MT   32.16   611

 

   2014   Commodity contracts (long)   3   MT   (45.33)   (136)

 

   2014   Commodity contracts (short)   6   MT   48.33   290

 

   2012   Foreign currency contracts (long)   3,096   CAD   0.00   13

 

   2012   Foreign currency contracts (short)   15,300   CAD   (0.00)   (57)

 

   2012   Foreign currency contracts (long)   3,551,328   CLP   (0.00)   (16)

 

   2012   Foreign currency contracts (long)   389   EUR   (0.03)   (12)

 

   2012   Foreign currency contracts (short)   11,500   EUR   0.00   27

 

   2012   Foreign currency contracts (long)   11,927   GBP   (0.02)   (193)

 

   2012   Foreign currency contracts (short)   55,834   GBP   0.03   1,676

 

   2012   Foreign currency contracts (long)   163,922   MXN   (0.00)   (56)

 

   2012   Foreign currency contracts (short)   81,028   MXN   0.00   5

 

   2012   Foreign currency contracts (long)   2,800   SGD   0.00   8

 

   2012   Foreign currency contracts (long)   724   AUD   0.01   5

 

   2012   Foreign currency contracts (short)   499   AUD   (0.06)   (29)

 

   2012   Foreign currency contracts (long)   9,500   UYU   0.00   4

 

   2013   Foreign currency contracts (long)   9,230   GBP   (0.05)   (461)

 

   2013   Foreign currency contracts (short)   16,665   GBP   0.06   1,062
                         

 

                       $11,133
                         

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

 
    
   As of December 31,
 
   Balance Sheet Location
   2011
   2010
 

Derivative assets:

            
             

Derivatives designated as hedging instruments

            

Commodity contracts

   Other current assets   $257   $439

Commodity contracts

   Other current assets   271   —

Commodity contracts

   Accrued expenses and other current liabilities   22   448
         

 

       550   887
         

Derivatives not designated as hedging instruments

            

Commodity contracts

   Other current assets   58,985   11,296

Commodity contracts

   Accrued expenses and other current liabilities   3,231   2,195

Commodity contracts

   Other current assets   200   —

Commodity contracts

   Non-current other assets   2,065   637

Commodity contracts

   Other long-term liabilities   40   —

Foreign currency contracts

   Other current assets   1,912   369

Foreign currency contracts

   Non-current other assets   1,082   —

Foreign currency contracts

   Accrued expenses and other current liabilities   —   92
         

 

       67,515   14,589
         

       $68,065   $15,476
         

Derivative liabilities:

            
             

Derivatives designated as hedging instruments

            

Commodity contracts

   Other current assets   $766   $229

Commodity contracts

   Accrued expenses and other current liabilities   21   2,853

Commodity contracts

   Other current assets   753   —
         

       1,540   3,082
         

Derivatives not designated as hedging instruments

            

Commodity contracts

   Other current assets   37,709   4,001

Commodity contracts

   Accrued expenses and other current liabilities   16,434   9,519

Commodity contracts

   Other current assets   4   —

Commodity contracts

   Other long-term liabilities   1,213   502

Commodity contracts

   Non-current other assets   2   81

Foreign currency contracts

   Other current assets   413   185

Foreign currency contracts

   Non-current other assets   481   —

Foreign currency contracts

   Accrued expenses and other current liabilities   124   389
         

       56,380   14,677
         

 

       $57,920   $17,759
         

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

Derivatives
   Location
   Realized and Unrealized Gain (Loss)
 
        For the year ended December 31,
        2011   2010   2009
         
Commodity contracts   Revenue   $11,608   $10,040   $14,117
Commodity contracts   Cost of revenue   (6,926)   (739)   (13,162)
Commodity contracts   Cost of revenue   (26,039)   (12,563)   (19,269)
         
        $(21,357)   $(3,262)   $(18,314)
         

 

Hedged Items
   Location
   Realized and Unrealized Gain (Loss)
 
        For the year ended December 31,
        2011   2010   2009
         
Firm commitments   Revenue   $(12,973)   $(7,494)   $(14,227)
Firm commitments   Cost of revenue   7,771   (797)   12,193
Inventories   Cost of revenue   38,377   21,419   23,105
         
        $33,175   $13,128   $21,071
         

There were no gains or losses for the year ended December 31, 2011, 2010 and 2009 that were excluded from the assessment of the effectiveness of our fair value hedges.

There were no cash flow hedge transactions during 2011. 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 for 2010 and 2009 (in thousands):

Derivatives
   Unrealized
Gain (Loss)
Recorded in
Accumulated Other
Comprehensive
Income
(Effective Portion)
   Location of Realized
Gain (Loss)
(Effective Portion)
   Realized Gain (Loss)
(Effective Portion)
     
For the year ended December 31,   For the year ended December 31,
    2010   2009       2010   2009
             
Foreign currency contracts   $1,799   $(39)   Revenue   $1,107   $(38)
Foreign currency contracts   —   631   Cost of revenue   —   131
Foreign currency contracts   (81)   1,022   Other (expense) income, net   (81)   47
             
    $1,718   $1,614       $1,026   $140
             

In the event forecasted foreign currency cash outflows are less than the hedged amounts, a portion or all of the gains or losses recorded in accumulated other comprehensive income would be reclassified to the consolidated statement of income. During the year ended December 31, 2010, we de-designated a cash flow hedge due to the hedged forecasted foreign currency cash outflows no longer being probable which resulted in a realized net gain of $0.7 million being reclassified from accumulated other comprehensive income to other income (expense), net in the consolidated statements of income.

During the year ended 2010 and 2009, there were no amounts recognized in the consolidated statements of income related to the ineffective portion of our cash flow hedges or amounts excluded from the assessment of our cash flow hedge effectiveness.

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 (in thousands):

Derivatives
   Location
   Realized and Unrealized Gain (Loss)
 
        For the year ended December 31,
        2011   2010   2009
         
Commodity contracts   Revenue   $14,283   $4,385   $3,590
Commodity contracts   Cost of revenue   3,137   (1,001)   2,087
Foreign currency contracts   Revenue   1,653   —   —
Foreign currency contracts   Other (expense) income, net   (386)   2,536   1,583
         
        $18,687   $5,920   $7,260
         

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 December 31, 2011.