Financial Instruments and Risk Management

12 Months Ended

Sep. 26, 2015

Fair Value Disclosures [Abstract]

Financial Instruments and Risk Management

10. Financial Instruments and Risk Management

Cash and Cash Equivalents.  The fair value of cash and cash equivalents is not materially different from their carrying amount because of the short-term maturity of these instruments.

Derivative Instruments and Hedging Activities.  The Partnership measures the fair value of its exchange-traded commodity-related options and futures contracts using Level 1 inputs, the fair value of its commodity-related swap contracts and interest rate swaps using Level 2 inputs and the fair value of its over-the-counter commodity-related options contracts using Level 3 inputs.  The Partnership’s over-the-counter options contracts are valued based on an internal option model.  The inputs utilized in the model are based on publicly available information, as well as broker quotes.

The following summarizes the fair value of the Partnership’s derivative instruments and their location in the consolidated balance sheets as of September 26, 2015 and September 27, 2014, respectively:

	As of September 26, 2015			As of September 27, 2014
Asset Derivatives	Location	Fair Value		Location	Fair Value
Derivatives not designated as hedging    instruments:
Commodity-related derivatives	Other current assets	$	7,013	Other current assets	$	3,924
	Other assets		485	Other assets		62
		$	7,498		$	3,986
Liability Derivatives	Location	Fair Value		Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate swap	Other current liabilities	$	1,112	Other current liabilities	$	1,257
	Other liabilities		200	Other liabilities		283
		$	1,312		$	1,540
Derivatives not designated as hedging    instruments:
Commodity-related derivatives	Other current liabilities	$	—	Other current liabilities	$	1,527
	Other liabilities		2,567	Other liabilities		53
		$	2,567		$	1,580

The following summarizes the reconciliation of the beginning and ending balances of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

	Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
	Fiscal 2015					Fiscal 2014
	Assets			Liabilities		Assets			Liabilities
Beginning balance of over-the-counter options	$	1,512		$	—	$	1,847		$	—
Beginning balance realized during the period		(1,450	)		—		(1,166	)		—
Contracts purchased during the period		2,067			347		1,145			—
Change in the fair value of outstanding contracts		652			—		(314	)		—
Ending balance of over-the-counter options	$	2,781		$	347	$	1,512		$	—

As of September 26, 2015 and September 27, 2014, the Partnership’s outstanding commodity-related derivatives had a weighted average maturity of approximately seven and four months, respectively.

The effect of the Partnership’s derivative instruments on the consolidated statements of operations for fiscal 2015, 2014 and 2013 are as follows:

	Amount of Gains			Gains (Losses) Reclassified from
	(Losses)			Accumulated OCI into Income
	Recognized  in OCI			(Effective Portion)
Derivatives in Cash Flow Hedging Relationships	(Effective Portion)			Location	Amount
Interest rate swaps:
Fiscal 2015	$	(1,159	)	Interest expense	$	(1,388	)
Fiscal 2014	$	(518	)	Interest expense	$	(1,406	)
Fiscal 2013	$	584		Interest expense	$	(2,465	)

Derivatives Not Designated as Hedging Instruments	Location of Gains (Losses) Recognized in Income	Amount
Commodity-related derivatives:
Fiscal 2015	Cost of products sold	$	1,855
Fiscal 2014	Cost of products sold	$	306
Fiscal 2013	Cost of products sold	$	(4,318	)

The following table presents the fair value of the Partnership’s recognized derivative assets and liabilities on a gross basis and amounts offset on the consolidated balance sheets subject to enforceable master netting arrangements or similar agreements:

	As of September 26, 2015
						Net amounts
						presented in the
	Gross amounts		Effects of netting			balance sheet
Asset Derivatives
Commodity-related derivatives	$	13,063	$	(5,565	)	$	7,498
Interest rate swap		740		(740	)		—
	$	13,803	$	(6,305	)	$	7,498
Liability Derivatives
Commodity-related derivatives	$	8,132	$	(5,565	)	$	2,567
Interest rate swap		2,052		(740	)		1,312
	$	10,184	$	(6,305	)	$	3,879

	As of September 27, 2014
						Net amounts
						presented in the
	Gross amounts		Effects of netting			balance sheet
Asset Derivatives
Commodity-related derivatives	$	9,533	$	(5,547	)	$	3,986
Interest rate swap		2,139		(2,139	)		—
	$	11,672	$	(7,686	)	$	3,986
Liability Derivatives
Commodity-related derivatives	$	7,127	$	(5,547	)	$	1,580
Interest rate swap		3,679		(2,139	)		1,540
	$	10,806	$	(7,686	)	$	3,120

The Partnership had $553 and $-0- posted cash collateral as of September 26, 2015 and September 27, 2014, respectively, with its brokers for outstanding commodity-related derivatives.

Concentrations.  The Partnership’s principal customers are residential and commercial end users of propane and fuel oil and refined fuels served by 700 locations in 41 states.  No single customer accounted for more than 10% of revenues during fiscal 2015, 2014 or 2013 and no concentration of receivables exists as of September 26, 2015 or September 27, 2014.

During fiscal 2015, Crestwood Midstream Partners L.P., Enterprise Products Partners L.P. and Targa Liquids Marketing and Trade LLC provided approximately 20%, 13% and 12% of the Partnership’s total propane purchases, respectively.  No other single supplier accounted for more than 10% of the Partnership’s propane purchases in fiscal 2015.  The Partnership believes that, if supplies from any of these suppliers were interrupted, it would be able to secure adequate propane supplies from other sources without a material disruption of its operations.

Credit Risk.  Exchange-traded futures and options contracts are traded on and guaranteed by the NYMEX and as a result, have minimal credit risk.  Futures contracts traded with brokers of the NYMEX require daily cash settlements in margin accounts.  The Partnership is subject to credit risk with over-the-counter swaps and options contracts entered into with various third parties to the extent the counterparties do not perform.  The Partnership evaluates the financial condition of each counterparty with which it conducts business and establishes credit limits to reduce exposure to credit risk based on non-performance.  The Partnership does not require collateral to support the contracts.

Bank Debt and Senior Notes.  The fair value of the Revolving Credit Facility approximates the carrying value since the interest rates are adjusted quarterly to reflect market conditions.  Based upon quoted market prices, the fair value of the Partnership’s 2021 Senior Notes, 2024 Senior Notes and 2025 Senior Notes was $363,922, $498,750 and $241,250, respectively, as of September 26, 2015.