3.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 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 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 commodity contracts we enter into to mitigate the risk of price volatility in forecasted purchases and sales.

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 entered into to hedge the risk of currency rate fluctuations.

As of September 30, 2015, our derivative instruments, at their respective fair value positions were as follows (in millions, except weighted average fixed price and weighted average mark-to-market amount):


							Weighted
							Average
					Weighted		Mark-to-
	Settlement				Average		Market		Fair Value
Hedge Strategy	Period	Derivative Instrument	Notional	Unit	Fixed Price		Amount		Amount

Fair Value Hedge	2015	Commodity contracts for inventory hedging	5.8	BBL	$	42.959	$	(0.224)	$	(1.3)
	2016	Commodity contracts for inventory hedging	0.1	BBL		66.989		18.000		1.8
									$	0.5

Cash Flow Hedge	2015	Commodity contracts for inventory hedging	—	BBL		64.730		—		0.5
	2016	Commodity contracts for inventory hedging	1.5	BBL		66.772		(1.400)		(2.1)
										(1.6)

Non-Designated	2015	Commodity contracts (long)	21.3	BBL	$	51.090	$	(13.649)	$	(291.3)
	2015	Commodity contracts (short)	21.1	BBL		58.480		14.600		308.3
	2016	Commodity contracts (long)	23.2	BBL		62.660		(22.101)		(513.6)
	2016	Commodity contracts (short)	21.6	BBL		69.870		23.284		502.8
	2017	Commodity contracts (long)	0.9	BBL		26.260		(2.065)		(1.9)
	2017	Commodity contracts (short)	1.0	BBL		20.160		2.129		2.1
	2018	Commodity contracts (long)	0.1	BBL		17.500		(1.572)		(0.1)
	2018	Commodity contracts (short)	0.1	BBL		26.810		4.505		0.5
	2020	Commodity contracts (short)	0.1	BBL		18.840		3.895		0.4
	2015	Foreign currency contracts	8.9	AUD		0.732		0.034		0.3
	2015	Foreign currency contracts	81.3	CAD		1.307		0.009		0.7
	2015	Foreign currency contracts	2,841.4	CLP		677.060		0.000		0.2
	2015	Foreign currency contracts	52.5	EUR		1.118		(0.006)		(0.3)
	2015	Foreign currency contracts	116.3	GBP		1.552		0.008		0.9
	2015	Foreign currency contracts	2,126.1	MXN		16.478		(0.000)		(0.3)
	2015	Foreign currency contracts	43.8	NOK		8.219		0.002		0.1
	2015	Foreign currency contracts	41.0	RON		3.999		(0.002)		(0.1)
	2015	Foreign currency contracts	37.4	SGD		1.392		0.011		0.4
	2015	Foreign currency contracts	59.1	ZAR		13.019		0.007		0.4
	2016	Foreign currency contracts	40.0	GBP		1.553		0.035		1.4
	2017	Foreign currency contracts	4.8	GBP		1.569		0.042		0.2
									$	11.1

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


		As of
	Balance Sheet Location	September 30, 2015		December 31, 2014
Derivative assets:
Derivatives designated as hedging instruments
Commodity contracts	Short-term derivative assets, net	$	20.1	$	18.8
Commodity contracts	Accrued expenses and other current liabilities		1.0		4.7
			21.1		23.5
Derivatives not designated as hedging instruments
Commodity contracts	Short-term derivative assets, net		237.9		399.0
Commodity contracts	Identifiable intangible and other non-current assets		16.3		12.1
Commodity contracts	Accrued expenses and other current liabilities		157.8		234.1
Commodity contracts	Other long-term liabilities		11.3		4.8
Foreign currency contracts	Short-term derivative assets, net		9.6		21.3
Foreign currency contracts	Identifiable intangible and other non-current assets		0.5		0.5
Foreign currency contracts	Accrued expenses and other current liabilities		0.6		—
			434.0		671.8
		$	455.1	$	695.3

Derivative liabilities:
Derivatives designated as hedging instruments
Commodity contracts	Other current assets	$	21.4	$	1.0
Commodity contracts	Accrued expenses and other current liabilities		0.8		0.7
			22.2		1.7
Derivatives not designated as hedging instruments
Commodity contracts	Short-term derivative assets, net		41.4		76.0
Commodity contracts	Identifiable intangible and other non-current assets		2.3		0.6
Commodity contracts	Accrued expenses and other current liabilities		346.9		530.0
Commodity contracts	Other long-term liabilities		25.5		29.3
Foreign currency contracts	Short-term derivative assets, net		5.4		12.0
Foreign currency contracts	Accrued expenses and other current liabilities		1.4		—
			422.9		647.9
		$	445.1	$	649.6

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						Realized and Unrealized
Derivative Instruments	Location	Gain				Hedged Items	Location	(Loss)
		2015		2014				2015		2014

Three months ended September 30,
Commodity contracts	Cost of revenue	$	52.8	$	36.3	Inventories	Cost of revenue	$	(48.5)	$	(36.2)
Nine months ended September 30,
Commodity contracts	Cost of revenue	$	36.7	$	34.6	Inventories	Cost of revenue	$	(29.2)	$	(44.9)

There were no gains or losses for the three and nine months ended September 30, 2015 and 2014 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 and consolidated statements of income and comprehensive income (in millions):



		Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)			Location of Realized Gain (Loss)		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Effective Portion)				Amount of Gain (Loss) Recognized in Income (Ineffective Portion)
Derivative Instruments		2015	2014		(Effective Portion)		2015		2014		2015		2014
Three months ended September 30,
Commodity Contracts	$	0.3	$	—	Revenue	$	—		—	$	(1.2)	$	—
Commodity Contracts		(1.4)		—	Cost of revenue		—		—		0.9		—
Total	$	(1.1)	$	—		$	—	$	—	$	(0.3)	$	—

Nine months ended September 30,
Commodity Contracts		0.3		—	Revenue		—		—	$	(1.2)	$	—
Commodity Contracts		(1.4)		—	Cost of revenue		—		—		0.9		—
Total	$	(1.1)	$	—		$	—	$	—	$	(0.3)	$	—

In the event forecasted cash outflows are less than the hedged amounts, a portion or all of the gain or losses recorded in accumulated other comprehensive income are reclassified to the consolidated statements of income and comprehensive income. As of September 30, 2015, the maximum amount that could be reclassified to the consolidated statements of income and comprehensive income for the next twelve months is 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 millions):


		Realized and Unrealized
Derivatives	Location	Gain (Loss)
		2015		2014

Three months ended September 30,
Commodity contracts	Revenue	$	43.2	$	19.8
Commodity contracts	Cost of revenue		(39.9)		0.7
Foreign currency contracts	Revenue		3.4		2.9
Foreign currency contracts	Other income, net		1.9		8.9
		$	8.6	$	32.3

Nine months ended September 30,
Commodity contracts	Revenue	$	89.2	$	43.9
Commodity contracts	Cost of revenue		(68.0)		9.8
Foreign currency contracts	Revenue		2.1		1.6
Foreign currency contracts	Other income, net		6.9		5.5
		$	30.2	$	60.8

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. As of September 30, 2015, the net liability position for such contracts is $62.2 million, the collateral posted is $43.9 million and the amount of assets required to be posted and/or to settle the positions should a credit-risk contingent feature be triggered is $30.2 million. As of December 31, 2014, the net liability position for such contracts is $111.7 million, the collateral posted is $89.4 million and the amount of assets required to be posted and/or to settle the positions should a credit-risk contingent feature be triggered is $22.3 million.