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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2015
Fair Value Measurements |
Fair Value Measurements | 2.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 $884.4 million and $689.9 million as of September 30, 2015 and December 31, 201 4, respectively, and our notes receivable of $6.4 million and $7.0 million as of September 30, 2015 and December 31, 201 4, 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):
|  |  |  |  |  |  |  |  |  |  |  |  |  | Netting |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | and |  |  |
|  | Level 1 |  | Level 2 |  | Level 3 |  | Sub-Total |  | Collateral |  | Total
As of September 30, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | 194.0 |  | $ | 249.1 |  | $ | 1.3 |  | $ | 444.4 |  | $ | (255.1) |  | $ | 189.3
Foreign currency contracts |  |  | — |  |  | 10.7 |  |  | — |  |  | 10.7 |  |  | (6.0) |  |  | 4.7
Inventories |  |  | — |  |  | 1.8 |  |  | — |  |  | 1.8 |  |  | — |  |  | 1.8
Cash surrender value of life insurance |  |  | — |  |  | 2.3 |  |  | — |  |  | 2.3 |  |  | — |  |  | 2.3
Total |  | $ | 194.0 |  | $ | 263.9 |  | $ | 1.3 |  | $ | 459.2 |  | $ | (261.1) |  | $ | 198.1
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | 311.2 |  | $ | 127.0 |  | $ | 0.1 |  | $ | 438.3 |  | $ | (389.9) |  | $ | 48.4
Foreign currency contracts |  |  |  |  |  | 6.8 |  |  | — |  |  | 6.8 |  |  | (6.0) |  |  | 0.8
Total |  | $ | 311.2 |  | $ | 133.8 |  | $ | 0.1 |  | $ | 445.1 |  | $ | (395.9) |  | $ | 49.2
As of December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | 173.7 |  | $ | 495.6 |  | $ | 4.2 |  | $ | 673.5 |  | $ | (368.0) |  | $ | 305.5
Foreign currency contracts |  |  | — |  |  | 21.8 |  |  | — |  |  | 21.8 |  |  | (12.0) |  |  | 9.8
Cash surrender value of life insurance |  |  | — |  |  | 2.2 |  |  | — |  |  | 2.2 |  |  | — |  |  | 2.2
Total |  | $ | 173.7 |  | $ | 519.6 |  | $ | 4.2 |  | $ | 697.5 |  | $ | (380.0) |  | $ | 317.5
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | 306.4 |  | $ | 329.9 |  | $ | 1.3 |  | $ | 637.6 |  | $ | (595.6) |  | $ | 42.0
Foreign currency contracts |  |  | — |  |  | 12.0 |  |  | — |  |  | 12.0 |  |  | (12.0) |  |  | —
Inventories |  |  | — |  |  | 22.9 |  |  | — |  |  | 22.9 |  |  | — |  |  | 22.9
Total |  | $ | 306.4 |  | $ | 364.8 |  | $ | 1.3 |  | $ | 672.5 |  | $ | (607.6) |  | $ | 64.9
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, we committed to a plan to sell certain assets and liabilities of Pester’s fuel retail business. The fair value of the assets and liabilities held for sale were measured using a discounted cash flow valuation methodology. In accordance with the applicable accounting guidance, the long-lived assets held for sale were recorded at fair value less cost to sell at the acquisition date. The carrying amounts of the current assets and liabilities held for sale approximate fair value based on the short-term maturities of these instruments. Based on the fair value hierarchy, as of September 30, 20 1 5, the fair value of the asset disposal group (excluding inventories) of $34.1 million and the liability disposal group of $5.7 million were categorized as Level 3, as significant unobservable inputs were used in the valuation of such assets and liabilities. The inventories of $4.3 million as of September 30, 2015 were categorized as Level 2 as they were valued based on the price to retailers in a wholesale market. 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, 2015 |  | December 31, 2014
Commodity Contracts |  |  |  |  |  |
Assets: |  |  |  |  |  |
Short-term derivative assets, net |  | $ | 175.3 |  | $ | 294.3
Identifiable intangible and other non-current assets |  |  | 14.0 |  |  | 11.2
Total net assets |  | $ | 189.3 |  | $ | 305.5
Liabilities: |  |  |  |  |  |
Accrued expenses and other current liabilities |  | $ | 43.1 |  | $ | 41.3
Other long-term liabilities |  |  | 5.3 |  |  | 0.7
Total net liabilities |  | $ | 48.4 |  | $ | 42.0
Foreign Currency Contracts |  |  |  |  |  |
Assets: |  |  |  |  |  |
Short-term derivative assets, net |  | $ | 4.2 |  | $ | 9.3
Identifiable intangible and other non-current assets |  |  | 0.5 |  |  | 0.5
Total net assets |  | $ | 4.7 |  | $ | 9.8
Liabilities: |  |  |  |  |  |
Accrued expenses and other current liabilities |  | $ | 0.8 |  | $ | —
Total net liabilities |  | $ | 0.8 |  | $ | —
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, 2015, we had $208.1 million of cash collateral deposits held by financial counterparties, of which $154.8 million have been offset against the total amount of commodity fair value liabilities in the above table and the remaining $53.3 million is included in other current assets in the accompanying consolidated balance sheets. In addition, as of September 30, 2015, we have offset $20.0 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, 2014, we had $301.0 million of cash collateral deposits held by financial counterparties, of which $274.3 million have been offset against the total amount of commodity fair value liabilities in the above table and the remaining $26.7 million is included in other current assets in the accompanying consolidated balance sheets. In addition, as of December 31, 2014, we have offset $46.7 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, 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
Three months ended September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | 5.8 |  | $ | 4.1 |  | $ | 6.6 |  | $ | — | $ | 3.3 |  | $ | 2.0 |  | Revenue
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | — |  | $ | (0.1) |  | $ | — |  | $ | — | $ | 0.1 |  | $ | (0.1) |  | 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
Nine months ended September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | — |  | $ | 9.9 |  | $ | 6.6 |  | $ | — | $ | 3.3 |  | $ | 3.3 |  | Revenue
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | — |  | $ | (0.1) |  | $ | — |  | $ | — | $ | 0.1 |  | $ | (0.1) |  | Revenue
The nature of inputs that are considered Level 3 are modeled inputs. Commodity contracts are categorized in Level 3due 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.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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