v2.4.0.8
Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2014
Derivative Financial Instruments [Abstract]  
Derivative Financial Instruments

7.  DERIVATIVE FINANCIAL INSTRUMENTS

 

At March 31, 2014, the Company’s consolidated balance sheet reflects unrealized losses, net of tax, of $91.6 million in accumulated other comprehensive loss. The Company expects that all of the unrealized losses at March 31, 2014 will be reclassified into operating income over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount ultimately realized in operating income, however, will differ as commodity prices change.

 

Fair Values of Derivative Instruments

 

The following table provides information about the fair values of the Company’s derivative financial instruments and the line items on the consolidated balance sheets in which the fair values are reflected (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Derivatives'

 

Liability Derivatives'

 

 

Fair Value

 

Fair Value

 

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

 

2014

 

2013

 

2014

 

2013

Derivative financial instruments (1)

 

$
(93,204)

(2)

$
(28,466)

(3)

$

 -

 

$

 -

Accrued and other liabilities

 

 

 -

 

 

 -

 

 
37,794 

 

 
4,612 

Total

 

$
(93,204)

 

$
(28,466)

 

$
37,794 

 

$
4,612 

 

(1) Derivative financial instruments as reflected on the consolidated balance sheets are net of related margin deposit assets of $130.4 million and $77.1 million at March 31, 2014 and December 31, 2013, respectively.

(2) Balance at March 31, 2014 includes $150.6 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments.

(3)Balance at December 31, 2013 includes $47.1 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments.

 

 

Refer to Note 3 - Fair Value Disclosures, which also contains fair value information related to derivative financial instruments.

 

 

Effect of Derivative Instruments on Consolidated Statements of Operations and Consolidated Statements of Stockholders’ Equity and Comprehensive Income

 

The following tables provide information about gains or losses recognized in income and other comprehensive income on the Company’s derivative financial instruments and the line items in the financial statements in which such gains and losses are reflected (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) on Derivative Instruments Not

 

Three Months Ended
March 31,

Designated in a Hedging Relationship

 

2014

 

2013

Revenues

 

$
18,250 

 

$
(11,669)

Cost of goods sold

 

 
(1,163)

 

 
11,017 

Net increase (decrease) recognized in earnings before tax

 

$
17,087 

 

$
(652)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) Due to Ineffectiveness

 

Three Months Ended
March 31,

of Cash Flow Hedges

 

2014

 

2013

Revenues

 

$
(346)

 

$
(6)

Cost of goods sold

 

 
860 

 

 
(25)

Net increase (decrease) recognized in earnings before tax

 

$
514 

 

$
(31)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) Reclassified from Accumulated
Other Comprehensive Loss

 

Three Months Ended
March 31,

into Net Income

 

2014

 

2013

Revenues

 

$
(88,146)

 

$
(10,379)

Cost of goods sold

 

 
3,573 

 

 
(833)

Net decrease recognized in earnings before tax

 

$
(84,573)

 

$
(11,212)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Portion of Cash Flow
Hedges Recognized in

 

Three Months Ended
March 31,

Other Comprehensive Loss

 

2014

 

2013

Commodity Contracts

 

$
(223,302)

 

$
(21,139)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) from Fair Value

 

Three Months Ended
March 31,

Hedges of Inventory

 

2014

 

2013

Revenues (effect of change in inventory value)

 

$

 -

 

$
301 

Revenues (effect of fair value hedge)

 

 

 -

 

 
(301)

Cost of goods sold (effect of change in inventory value)

 

 
3,146 

 

 

 -

Cost of goods sold (effect of fair value hedge)

 

 
(2,778)

 

 

 -

Ineffectiveness recognized in earnings before tax

 

$
368 

 

$

 -

 

There were no gains or losses due to the discontinuance of cash flow hedge or fair value hedge treatment during the three months ended March 31, 2014 and 2013.

 

 

The following table summarizes volumes of open commodity derivative positions as of March 31, 2014 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2014

 

 

Exchange Traded

 

Non-Exchange Traded

 

 

 

 

Derivative Instruments

 

Net Long & (Short) (1)

 

Long (2)

 

(Short) (2)

 

Unit of Measure

 

Commodity

Futures

 
(5,345)

 

 

 

 

 

Bushels

 

Corn, Soybeans and Wheat

Futures

 
63,950 

(3)

 

 

 

 

Bushels

 

Corn

Futures

 
(3,315)

(4)

 

 

 

 

Bushels

 

Corn

Futures

 
54,684 

 

 

 

 

 

Gallons

 

Ethanol

Futures

 
(235,620)

(3)

 

 

 

 

Gallons

 

Ethanol

Futures

 
98 

 

 

 

 

 

mmBTU

 

Natural Gas

Options

 
7,242 

 

 

 

 

 

Bushels

 

Corn, Soybeans and Wheat

Options

 
6,659 

 

 

 

 

 

Gallons

 

Ethanol

Options

 
(42)

 

 

 

 

 

mmBTU

 

Natural Gas

Forwards

 

 

 
10,127 

 
(4,709)

 

Bushels

 

Corn and Soybeans

Forwards

 

 

 
5,386 

 
(129,584)

 

Gallons

 

Ethanol

Forwards

 

 

 
91 

 
(399)

 

Tons

 

Distillers Grains

Forwards

 

 

 
(37,491)

 
3,408 

 

Pounds

 

Corn Oil

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis.

(2)

Non-exchange traded forwards are presented on a gross long and (short) position basis including both fixed-price and basis contracts.

(3)

Futures used for cash flow hedges.

(4)

Futures used for fair value hedges.

 

 

Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Revenues and cost of goods sold under such contracts are summarized in the table below for the periods indicated (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

2014

 

2013

Revenues

$
3,620 

 

$
1,982 

Cost of goods sold

 
4,744 

 

 
1,962