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 June 30, 2014, 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

Fair Value Hedge	2014	Commodity contracts for inventory hedging (long)	514	BBL	$	71.88	$	(0.813	)	$	(418	)
	2014	Commodity contracts for inventory hedging (short)	5,056	BBL	76.93		0.357			1,805
										$	1,387

Non-Designated	2014	Commodity contracts (long)	16,816	BBL	$	85.93	$	1.863		$	31,324
	2014	Commodity contracts (short)	16,800	BBL	95.65		(0.944		)	(15,859		)
	2015	Commodity contracts (long)	4,363	BBL	66.72		2.349			10,250
	2015	Commodity contracts (short)	2,862	BBL	111.96		(2.095		)	(5,997		)
	2016	Commodity contracts (long)	18	BBL	95.84		(0.667		)	(12		)
	2016	Commodity contracts (short)	30	BBL	92.85		2.933			88
	2017	Commodity contracts (long)	4	BBL	4.76		(4.250		)	(17		)
	2017	Commodity contracts (short)	9	BBL	96.37		6.444			58
										19,835

	2014	Foreign currency contracts (long)	21,152	AUD	0.93		0.014			293
	2014	Foreign currency contracts (short)	26,548	AUD	0.93		(0.014		)	(372		)
	2014	Foreign currency contracts (long)	6,040	BRL	2.27		0.012			73
	2014	Foreign currency contracts (long)	12,617	CAD	1.09		0.010			129
	2014	Foreign currency contracts (short)	19,880	CAD	1.09		(0.018		)	(348		)
	2014	Foreign currency contracts (long)	3,652,782	CLP	553.63		0.000			6
	2014	Foreign currency contracts (short)	3,897,485	CLP	558.01		(0.000		)	(58		)
	2014	Foreign currency contracts (long)	36,144,260	COP	1,918.78		0.000			438
	2014	Foreign currency contracts (short)	34,198,944	COP	1,925.39		(0.000		)	(400		)
	2014	Foreign currency contracts (long)	38,573	DKK	5.47		0.000			12
	2014	Foreign currency contracts (short)	25,084	DKK	5.46		(0.000		)	(12		)
	2014	Foreign currency contracts (long)	29,092	EUR	1.37		0.006			189
	2014	Foreign currency contracts (short)	54,354	EUR	1.37		(0.004		)	(226		)
	2014	Foreign currency contracts (long)	118,125	GBP	1.68		0.024			2,866
	2014	Foreign currency contracts (short)	181,578	GBP	1.67		(0.034		)	(6,255		)
	2014	Foreign currency contracts (long)	110,129	INR	60.23		(0.000		)	(1		)
	2014	Foreign currency contracts (short)	220,258	INR	60.91		(0.000		)	(17		)
	2014	Foreign currency contracts (long)	699,990	JPY	101.97		0.000			74
	2014	Foreign currency contracts (short)	865,135	JPY	102.27		(0.000		)	(143		)
	2014	Foreign currency contracts (long)	1,630,733	MXN	13.05		0.000			439
	2014	Foreign currency contracts (short)	1,457,110	MXN	13.07		(0.000		)	(577		)
	2014	Foreign currency contracts (long)	5,652	NOK	6.09		(0.002		)	(14		)
	2014	Foreign currency contracts (short)	8,019	NOK	6.08		0.001			8
	2014	Foreign currency contracts (long)	4,021	PLN	3.06		0.002			7
	2014	Foreign currency contracts (short)	8,209	PLN	3.06		(0.002		)	(13		)
	2014	Foreign currency contracts (long)	22,852	RON	3.23		0.002			56
	2014	Foreign currency contracts (short)	47,758	RON	3.25		(0.004		)	(204		)
	2014	Foreign currency contracts (long)	27,138	SGD	1.25		0.004			114
	2014	Foreign currency contracts (short)	28,331	SGD	1.25		(0.005		)	(140		)
	2015	Foreign currency contracts (long)	100,002	ZAR	10.73		(0.000		)	(43		)
	2015	Foreign currency contracts (short)	196,052	ZAR	10.68		0.000			25
	2015	Foreign currency contracts (long)	600	GBP	1.66		0.047			28
	2015	Foreign currency contracts (short)	13,250	GBP	1.66		(0.049		)	(649		)
	2015	Foreign currency contracts (short)	1,200	GBP	1.67		(0.012		)	(14		)
	2015	Foreign currency contracts (short)	250	GBP	1.67		(0.004		)	(1		)
										(4,730		)
										$	15,105

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
		June 30,		December 31,
	Balance Sheet Location	2014		2013
Derivative assets:
Derivatives designated as hedging instruments
Commodity contracts	Other current assets	$	4,997	$	735
		4,997		735
Derivatives not designated as hedging instruments
Commodity contracts	Other current assets	65,739		47,062
Commodity contracts	Identifiable intangible and other non-current assets	3,242		1,642
Commodity contracts	Accrued expenses and other current liabilities	1,257		1,141
Commodity contracts	Other long-term liabilities	307		874
Foreign currency contracts	Other current assets	1,215		5,003
Foreign currency contracts	Accrued expenses and other current liabilities	3,944		3,483
		75,704		59,205
		$	80,701	$	59,940

Derivative liabilities:
Derivatives designated as hedging instruments
Commodity contracts	Other current assets	$	3,582	$	1,544
Commodity contracts	Accrued expenses and other current liabilities	28		—
		3,610		1,544
Derivatives not designated as hedging instruments
Commodity contracts	Other current assets	37,292		26,876
Commodity contracts	Identifiable intangible and other non-current assets	1,427		894
Commodity contracts	Accrued expenses and other current liabilities	10,807		15,473
Commodity contracts	Other long-term liabilities	1,184		1,228
Foreign currency contracts	Other current assets	700		2,867
Foreign currency contracts	Accrued expenses and other current liabilities	8,982		8,789
Foreign currency contracts	Other long-term liabilities	207		147
		60,599		56,274
		$	64,209	$	57,818

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 Loss
Derivative Instruments	Location	2014			2013		Hedged Items	Location	2014			2013

Three months ended June 30,
Commodity contracts	Cost of revenue	$	(2,093	)	$	14,546	Inventories	Cost of revenue	$	(1,083	)	$	(19,053	)

Six months ended June 30,
Commodity contracts	Cost of revenue	$	(1,701	)	$	19,625	Inventories	Cost of revenue	$	(8,642	)	$	(18,161	)

There were no gains or losses for the three and six months ended June 30, 2014 and 2013 that were excluded from the assessment of the effectiveness of our fair value hedges.

There were no cash flow hedging activities during the three and six months ended June 30, 2014 and the cash flow hedging activities during the three and six months ended June 30, 2013 were 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	2014			2013

Three months ended June 30,

Commodity contracts	Revenue	$	17,225		$	14,112
Commodity contracts	Cost of revenue	(598		)	1,706
Foreign currency contracts	Revenue	(1,053		)	72
Foreign currency contracts	Other income (expense), net	(2,591		)	363
		$	12,983		$	16,253

Six months ended June 30,

Commodity contracts	Revenue	$	24,143		$	19,507
Commodity contracts	Cost of revenue	9,045			1,413
Foreign currency contracts	Revenue	(1,337		)	2,740
Foreign currency contracts	Other income (expense), net	(3,325		)	3,842
		$	28,526		$	27,502

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 June 30, 2014.