4.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 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 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 June 30, 2016, 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	2016	Commodity contracts for inventory hedging	2.0	BBL	$	60.961	$	(0.060)	$	(0.1)
	2017	Commodity contracts for inventory hedging	0.1	BBL		61.834		(2.907)		(0.3)
									$	(0.4)

Cash Flow Hedge	2016	Commodity contracts for inventory hedging	15.1	BBL		52.314		0.017		0.3
	2017	Commodity contracts for inventory hedging	1.5	BBL		52.606		(7.379)		(11.2)
									$	(10.9)

Non-Designated	2016	Commodity contracts (long)	42.7	BBL	$	34.112	$	(4.586)	$	(195.9)
	2016	Commodity contracts (short)	41.8	BBL		35.676		4.693		196.1
	2017	Commodity contracts (long)	14.5	BBL		26.233		2.733		39.6
	2017	Commodity contracts (short)	11.2	BBL		32.754		(2.899)		(32.4)
	2018	Commodity contracts (long)	3.2	BBL		16.756		2.339		7.4
	2018	Commodity contracts (short)	2.2	BBL		17.819		(1.807)		(3.9)
	2019	Commodity contracts (long)	0.1	BBL		20.777		0.757		0.1
	2019	Commodity contracts (short)	—	BBL		48.806		3.926		0.1
	2020	Commodity contracts (long)	0.1	BBL		21.457		(1.461)		(0.1)
	2020	Commodity contracts (short)	0.1	BBL		37.674		5.348		0.5
	2021	Commodity contracts (long)	—	BBL		20.730		0.138		—
	2016	Foreign currency contracts	19.3	AUD		0.748		0.003		0.1
	2016	Foreign currency contracts	7.3	BRL		3.442		0.010		0.1
	2016	Foreign currency contracts	174.9	CAD		1.294		(0.004)		(0.7)
	2016	Foreign currency contracts	0.9	CHF		0.970		0.007		—
	2016	Foreign currency contracts	7,621.0	CLP		678.600		(0.000)		(0.1)
	2016	Foreign currency contracts	75,725.7	COP		3,028.989		(0.000)		(0.3)
	2016	Foreign currency contracts	190.1	DKK		6.623		0.001		0.2
	2016	Foreign currency contracts	102.7	EUR		1.132		0.008		0.9
	2016	Foreign currency contracts	178.2	GBP		1.447		0.023		4.1
	2016	Foreign currency contracts	278.3	INR		67.998		—		—
	2016	Foreign currency contracts	600.8	JPY		106.540		(0.000)		(0.1)
	2016	Foreign currency contracts	2,234.5	MXN		18.290		(0.000)		(0.1)
	2016	Foreign currency contracts	125.8	NOK		8.365		(0.000)		—
	2016	Foreign currency contracts	13.8	PLN		3.911		0.002		—
	2016	Foreign currency contracts	20.2	RON		4.022		0.003		0.1
	2016	Foreign currency contracts	103.4	SEK		8.329		(0.002)		(0.2)
	2016	Foreign currency contracts	57.1	SGD		1.359		(0.001)		(0.1)
	2016	Foreign currency contracts	43.2	ZAR		15.358		(0.000)		—
	2017	Foreign currency contracts	25.2	SEK		8.301		(0.000)		—
	2017	Foreign currency contracts	7.3	EUR		1.145		(0.005)		—
	2017	Foreign currency contracts	17.5	GBP		1.492		0.156		2.7
	2018	Foreign currency contracts	16.9	SEK		8.149		0.003		—
	2018	Foreign currency contracts	1.7	EUR		1.105		(0.025)		—
	2018	Foreign currency contracts	0.5	GBP		1.428		0.095		—
	2019	Foreign currency contracts	0.3	GBP		1.457		0.115		—
									$	18.1

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	June 30, 2016		December 31, 2015
Derivative assets:
Derivatives designated as hedging instruments
Commodity contracts	Short-term derivative assets, net	$	—	$	114.0
Commodity contracts	Identifiable intangible and other non-current assets		—		7.4
Commodity contracts	Accrued expenses and other current liabilities		122.0		6.3
			122.0		127.7
Derivatives not designated as hedging instruments
Commodity contracts	Short-term derivative assets, net		48.5		241.4
Commodity contracts	Identifiable intangible and other non-current assets		31.2		17.0
Commodity contracts	Accrued expenses and other current liabilities		133.9		120.4
Commodity contracts	Other long-term liabilities		2.1		4.0
Foreign currency contracts	Short-term derivative assets, net		14.5		10.9
Foreign currency contracts	Identifiable intangible and other non-current assets		1.7		0.7
Foreign currency contracts	Accrued expenses and other current liabilities		1.2		0.8
			233.1		395.2
		$	355.1	$	522.9

Derivative liabilities:
Derivatives designated as hedging instruments
Commodity contracts	Short-term derivative assets, net	$	—	$	95.3
Commodity contracts	Accrued expenses and other current liabilities		133.4		2.9
			133.4		98.2
Derivatives not designated as hedging instruments
Commodity contracts	Short-term derivative assets, net		7.2		26.6
Commodity contracts	Identifiable intangible and other non-current assets		18.1		4.8
Commodity contracts	Accrued expenses and other current liabilities		169.2		319.9
Commodity contracts	Other long-term liabilities		9.6		14.2
Foreign currency contracts	Short-term derivative assets, net		7.7		3.3
Foreign currency contracts	Identifiable intangible and other non-current assets		0.1		—
Foreign currency contracts	Accrued expenses and other current liabilities		3.0		1.7
			214.9		370.5
		$	348.3	$	468.7

The following table presents the effect and financial statement location of our derivative instruments in a fair value hedging relationship and related hedged items on our consolidated statements of income and comprehensive income (in millions):


		Realized and Unrealized						Realized and Unrealized
Derivative Instruments	Location	Loss				Hedged Items	Location	Gain (Loss)
		2016		2015				2016		2015
Three months ended June 30,
Commodity contracts	Cost of revenue	$	(34.2)	$	(20.1)	Inventories	Cost of revenue	$	13.9	$	19.8
Six months ended June 30,
Commodity contracts	Cost of revenue	$	(30.8)	$	(16.1)	Inventories	Cost of revenue	$	10.7	$	19.3

There were no gains or losses for the three and six months ended June 30, 2016 and 2015 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) (Effective Portion)		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Effective Portion)			Amount of Gain (Loss) Recognized in Income (Ineffective Portion)
Derivative Instruments		2016		2015			2016	2015		2016	2015
Three Months ended June 30,
Commodity contracts	$	(70.0)	$	—	Revenue	$	5.4	—	$	(15.0)	—
Commodity contracts		68.7		—	Cost of Revenue		1.1	—		9.9	—
Total	$	(1.3)	$	—		$	6.5	—	$	(5.1)	—
Six Months ended June 30,
Commodity contracts	$	(116.5)	$	—	Revenue	$	(48.4)	—	$	(15.1)	—
Commodity contracts		112.9		—	Cost of Revenue		55.5	—		12.8	—
	$	(3.6)	$	—		$	7.1	—	$	(2.3)	—

During the three months and six months ended June 30, 2016, we recorded a loss of $15.0 million in revenue and income of $9.9 million in cost of revenue, related to hedge ineffectiveness.

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)
		2016		2015
Three months ended June 30,
Commodity contracts	Revenue	$	(5.5)	$	25.4
Commodity contracts	Cost of revenue		8.8		(16.4)
Foreign currency contracts	Revenue		4.5		(5.2)
Foreign currency contracts	Other (expense) income, net		(0.4)		(4.2)
		$	7.4	$	(0.4)

Six months ended June 30,
Commodity contracts	Revenue	$	33.4	$	46.0
Commodity contracts	Cost of revenue		(38.7)		(28.1)
Foreign currency contracts	Revenue		6.5		(1.3)
Foreign currency contracts	Other (expense) income, net		(5.6)		5.0
		$	(4.4)	$	21.6

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 following table presents the net liability position for such contracts, the collateral posted and amount of assets required to be posted and/or to settle the positions should a credit-risk contingent feature be triggered (in millions):


	Net Liability Position				Collateral		Contingent
	Subject to Collateral Requirements				Posted		Additional Collateral
As of June 30, 2016
Commodity contracts		$	16.0	$	(4.4)	$	11.6

As of December 31, 2015
Commodity contract		$	63.2	$	(28.1)	$	35.0