GLOBAL PARTNERS LP - 10-K filing on 2017-03-10

Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of notional values of derivative instruments


	Units (1)		Unit of Measure
Exchange-Traded Derivatives
Long		89,329	Thousands of barrels
Short		(95,633)	Thousands of barrels

OTC Derivatives (Petroleum/Ethanol)
Long		5,648	Thousands of barrels
Short		(5,967)	Thousands of barrels

OTC Derivatives (Natural Gas)
Long		10,834	Thousands of decatherms
Short		(10,435)	Thousands of decatherms

Interest Rate Swaps	$	100.0	Millions of U.S. dollars

(1)

Number of open positions and gross notional values do not measure the Partnership’s risk of loss, quantify risk or represent assets or liabilities of the Partnership, but rather indicate the relative size of the derivative instruments and are used in the calculation of the amounts to be exchanged between counterparties upon settlements.

Schedule of the amount of gains and losses from derivatives not involved in a fair value hedging relationship or in a hedging relationship recognized in the consolidated statements of income (in thousands)

							Location of Gain (Loss)
	Amount of Gain (Loss)						Reclassified from	Amount of Gain (Loss)
	Recognized in						Accumulated Other	Reclassified from Other
	Other Comprehensive						Comprehensive Income into	Comprehensive Income into
Derivatives Designated in	Income on Derivatives (Effective Portion)						Income (Effective Portion)	Income (Effective Portion)
Cash Flow Hedging Relationship	2016		2015		2014			2016		2015		2014
Interest rate swaps	$	2,173	$	3,353	$	2,766	Interest expense	$	—	$	—	$	—
Interest rate cap (1)		—		(17)		(8)	Interest expense		—		—		—
Total	$	2,173	$	3,336	$	2,758		$	—	$	—	$	—

(1)

The interest rate cap was de-designated as a cash flow hedge in June 2014. Prepaid interest rate caplet amounts recognized in accumulated other comprehensive income up until the date of de-designation have been frozen in partner’s equity as of the de-designation date and were being amortized to income through the tenor of the interest rate cap instrument. The change in the fair value of the interest rate cap following de-designation is reflected in earnings and was immaterial for the years ended December 31, 2016, 2015 and 2014. As of December 31, 2016, the interest rate caplets were fully amortized as the interest rate cap expired in April 2016.

Summary of derivatives not designated as either fair value hedges or cash flow hedges and their respective fair values and location


	Statement of Gain (Loss)
Derivatives not designated as	Recognized in
hedging instruments	Income on Derivatives	2016		2015		2014
Commodity contracts	Cost of sales	$	3,118	$	5,930	$	18,894
Forward foreign currency contracts	Cost of sales		71		191		25
Total		$	3,189	$	6,121	$	18,919

Schedule of fair values of derivative instruments and location in consolidated balance sheets (in thousands)


		December 31, 2016
		Derivatives		Derivatives Not
		Designated as		Designated as
		Hedging		Hedging
	Balance Sheet Location	Instruments		Instruments		Total
Asset Derivatives:
Exchange-traded derivative contracts	Broker margin deposits	$	—	$	60,018	$	60,018
Forward derivative contracts (1)	Derivative assets		—		21,382		21,382
Total asset derivatives		$	—	$	81,400	$	81,400

Liability Derivatives:
Exchange-traded derivative contracts	Broker margin deposits	$	(33,877)	$	(96,831)	$	(130,708)
Forward derivative contracts (1)	Derivative liabilities		—		(27,413)		(27,413)
Interest rate swap contracts	Other long-term liabilities		—		(1,170)		(1,170)
Total liability derivatives		$	(33,877)	$	(125,414)	$	(159,291)


		December 31, 2015
		Derivatives		Derivatives Not
		Designated as		Designated as
		Hedging		Hedging
	Balance Sheet Location	Instruments		Instruments		Total
Asset Derivatives:
Exchange-traded derivative contracts	Broker margin deposits	$	83,645	$	11,722	$	95,367
Forward derivative contracts (1)	Derivative assets		—		66,099		66,099
Forward foreign currency contracts	Other assets		—		10		10
Total asset derivatives		$	83,645	$	77,831	$	161,476

Liability Derivatives:
Forward derivative contracts (1)	Derivative liabilities	$	—	$	(31,911)	$	(31,911)
Interest rate swap contracts	Other long-term liabilities		—		(3,343)		(3,343)
Total liability derivatives		$	—	$	(35,254)	$	(35,254)

(1)

Forward derivative contracts include the Partnership’s petroleum and ethanol physical and financial forwards and OTC swaps.

Fair Value Hedge

Derivative Financial Instruments

Schedule of net gains and losses from derivatives recognized in consolidated statements of operations (in thousands)

The following table presents the gains and losses from the Partnership’s derivative instruments involved in fair value hedging relationships recognized in the consolidated statements of operations for the years ended December 31 (in thousands):


	Statement of Gain (Loss)
	Recognized in Income on
	Derivatives	2016		2015		2014
Derivatives in fair value hedging relationship
Exchange-traded futures contracts and OTC derivative contracts for petroleum commodity products	Cost of sales	$	(34,461)	$	151,344	$	139,473

Hedged items in fair value hedge relationship
Physical inventory	Cost of sales	$	41,860	$	(158,987)	$	(141,699)