Fair Value Measurements

12 Months Ended

Dec. 31, 2016

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. The carrying values of our debt and notes receivables 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 $1.2 billion and $772.2 million as of December 31, 2016 and December 31, 2015, respectively, and our notes receivable of $16.9 million and $12.7 million as of December 31, 2016 and December 31, 2015, respectively are categorized in Level 3.

Recurring Fair Value Measurements.

The following table presents information about our gross assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2016 and 2015 (in millions):



	Fair Value Measurements as of December 31, 2016
		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Assets:
Commodities contracts	$	273.6	$	55.3	$	2.3	$	331.2
Foreign currency contracts		—		16.0		—		16.0
Cash surrender value of life insurance		—		4.0		—		4.0
Total assets at fair value	$	273.6	$	75.3	$	2.3	$	351.2

Liabilities:
Commodities contracts	$	236.6	$	88.8	$	0.7	$	326.1
Foreign currency contracts		—		6.4		—		6.4
Total liabilities at fair value	$	236.6	$	95.2	$	0.7	$	332.5



	Fair Value Measurements as of December 31, 2015
		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Assets:
Commodities contracts	$	262.0	$	252.0	$	3.3	$	517.3
Foreign currency contracts		—		12.4		—		12.4
Cash surrender value of life insurance		—		2.4		—		2.4
Total assets at fair value	$	262.0	$	266.8	$	3.3	$	532.1

Liabilities:
Commodities contracts	$	339.8	$	123.4	$	0.2	$	463.4
Foreign currency contracts		—		5.0		—		5.0
Total liabilities at fair value	$	339.8	$	128.4	$	0.2	$	468.5

Our Level 1 items consist of exchange traded futures. Our Level 2 items consist of commodity swaps, commodity collars, physical forward purchases and sales commitments, and foreign currency forward contracts. Our level 3 items consist of physical forward purchase or sales commitments. The cash surrender value of life insurance is in connection with the NQDC plan and was included in identifiable intangible and other non-current assets in the accompanying consolidated balance sheets.

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. The following tables summarize those commodity derivative balances subject to the right of setoff as presented on our consolidated balance sheet. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right offset exists.



	Fair Value as of December 31, 2016
		Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Cash Collateral		Gross Amounts Without Right of Offset		Net Amounts


Assets:
Commodities contracts	$	331.2	$	249.7	$	81.5	$	27.1	$	—	$	54.5
Foreign currency contracts		16.0		5.1		10.9		—		—		10.9
Total assets at fair value	$	347.2	$	254.8	$	92.4	$	27.1	$	—	$	65.3

Liabilities:
Commodities contracts	$	326.1	$	249.7	$	76.5	$	2.0	$	—	$	74.5
Foreign currency contracts		6.4		5.1		1.2		—		—		1.2
Total liabilities at fair value	$	332.5	$	254.8	$	77.7	$	2.0	$	—	$	75.7



	Fair Value as of December 31, 2015
		Gross Amounts Recognized		Gross Amounts Offset		Net Amounts Presented		Cash Collateral		Gross Amounts Without Right of Offset		Net Amounts


Assets:
Commodities contracts	$	517.3	$	257.2	$	260.1	$	28.4	$	—	$	231.7
Foreign currency contracts		12.4		4.1		8.2		—		—		8.2
Total assets at fair value	$	529.6	$	261.3	$	268.4	$	28.4	$	—	$	240.0

Liabilities:
Commodities contracts	$	463.4	$	257.2	$	206.3	$	140.8	$	—	$	65.5
Foreign currency contracts		5.0		4.1		0.9		—		—		0.9
Total liabilities at fair value	$	468.5	$	261.3	$	207.2	$	140.8	$	—	$	66.4

At December 31, 2016 and December 31, 2015, we did not present any amounts gross on our consolidated balance sheet where we had the right of setoff.

Level 3 Information.

The following table presents a reconciliation of beginning and ending balances of assets and liabilities that are measured at fair value on a recurring basis that utilized significant Level 3 inputs for the periods presented (in millions):




	2016			2015
Fair value at beginning of the period	$	3.0		$	2.8
Included in earnings	(1.3		)	4.2
Settlements	—			4.8
Transfers in	—			0.9
Transfers out	0.1			—
Fair value at end of period	$	1.6		$	3.0

Gains for the period included in earnings attributable to the change in unrealized gains relating to derivatives still held at the reporting date	$	1.6		$	2.6

The nature of inputs that are considered Level 3 are modeled inputs. Contracts are categorized in Level 3 due 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.

- 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.

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