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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2014
Derivative Financial Instruments [Abstract]  
Derivative Financial Instruments

9.  DERIVATIVE FINANCIAL INSTRUMENTS

 

At December 31, 2014, the consolidated balance sheets reflect unrealized losses, net of tax, of $5.3 million in accumulated other comprehensive loss. The Company expects all of the unrealized losses at December 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 at December 31,

 

Fair Value at December 31,

 

2014

 

2013

 

2014

 

2013

Derivative financial instruments (1)

$
11,859 
(2)

$
(28,466)
(3)

$

 -

 

$

 -

Other assets

 
3 

 

 

 -

 

 

 -

 

 

 -

Accrued and other liabilities

 

 -

 

 

 -

 

 
28,082 

 

 
4,612 

Total

$
11,862 

 

$
(28,466)

 

$
28,082 

 

$
4,612 

 

(1) Derivative financial instruments as reflected on the balance sheet include a margin deposit assets of $24.5 million and $77.1 million at December 31, 2014 and 2013, respectively.

(2) Balance at December 31, 2014, includes $0.6 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 4 - 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 consolidated financial statements in which such gains and losses are reflected (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) on Derivative Instruments Not

 

Year Ended December 31,

Designated in a Hedging Relationship

 

2014

 

2013

 

2012

Revenues

 

$
13,369 

 

$
(10,855)

 

$
(6,206)

Cost of goods sold

 

 
165 

 

 
12,701 

 

 
(12,050)

Net increase (decrease) recognized in earnings before tax

 

$
13,534 

 

$
1,846 

 

$
(18,256)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) Due to Ineffectiveness

 

Year Ended December 31,

of Cash Flow Hedges

 

2014

 

2013

 

2012

Revenues

 

$
(326)

 

$
(84)

 

$
(10)

Cost of goods sold

 

 
481 

 

 
(490)

 

 

 -

Net increase (decrease) recognized in earnings before tax

 

$
155 

 

$
(574)

 

$
(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) Reclassified from Accumulated
Other Comprehensive Income (Loss)

 

Year Ended December 31,

into Net Income

 

2014

 

2013

 

2012

Revenues

 

$
(257,730)

 

$
(96,736)

 

$
(17,318)

Cost of goods sold

 

 
(43,853)

 

 
(25,852)

 

 
56,848 

Net increase (decrease) recognized in earnings before tax

 

$
(301,583)

 

$
(122,588)

 

$
39,530 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Portion of Cash Flow
Hedges Recognized in

 

Year Ended December 31,

Other Comprehensive Income (Loss)

 

2014

 

2013

 

2012

Commodity Contracts

 

$
(299,684)

 

$
(138,589)

 

$
49,999 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) from Fair Value

 

Year Ended December 31,

Hedges of Inventory

 

2014

 

2013

 

2012

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

 

$
304 

 

$
102 

 

$

 -

Cost of goods sold  (effect of fair value hedge)

 

 
2,612 

 

 
674 

 

 

 -

Ineffectiveness recognized in earnings before tax

 

$
2,916 

 

$
776 

 

$

 -

 

There were no gains or losses due to the discontinuance of cash flow hedge or fair value hedge treatment during the years ended December 31, 2014, 2013 and 2012.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

Exchange Traded

 

Non-Exchange Traded

 

 

 

 

Derivative Instruments

 

Net Long & (Short) (1)

 

Long (2)

 

(Short) (2)

 

Unit of Measure

 

Commodity

Futures

 
(4,410)

 

 

 

 

 

Bushels

 

Corn, Soybeans and Wheat

Futures

 
3,675 

(3)

 

 

 

 

Bushels

 

Corn

Futures

 
(9,010)

(4)

 

 

 

 

Bushels

 

Corn

Futures

 
46,410 

 

 

 

 

 

Gallons

 

Ethanol

Futures

 
(82,950)

(3)

 

 

 

 

Gallons

 

Ethanol

Futures

 
958 

 

 

 

 

 

mmBTU

 

Natural Gas

Futures

 
(4,318)

(4)

 

 

 

 

mmBTU

 

Natural Gas

Futures

 
1,320 

 

 

 

 

 

Pounds

 

Cattle

Futures

 
(37,040)

(3)

 

 

 

 

Pounds

 

Cattle

Futures

 
(2,700)

 

 

 

 

 

Pounds

 

Soybean Oil

Options

 
(2,461)

 

 

 

 

 

Bushels

 

Corn, Soybeans and Wheat

Options

 
(15,095)

 

 

 

 

 

Gallons

 

Ethanol

Options

 
(30)

 

 

 

 

 

mmBTU

 

Natural Gas

Forwards

 

 

 
19,041 

 
(16,251)

 

Bushels

 

Corn and Soybeans

Forwards

 

 

 
8,046 

 
(160,901)

 

Gallons

 

Ethanol

Forwards

 

 

 
104 

 
(461)

 

Tons

 

Distillers Grains

Forwards

 

 

 
3,744 

 
(60,490)

 

Pounds

 

Corn Oil

Forwards

 

 

 
9,310 

 
(876)

 

mmBTU

 

Natural Gas

 

 

 

 

 

 

 

 

 

 

 

(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. Included in revenues are net gains of $8.0 million, net losses of $1.2 million, and net gains of $0.5 million for the years ended December 31, 2014, 2013 and 2012, respectively, on energy trading contracts.