Fair Value Measurements and Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2016

The estimated fair value of our financial instruments that are not measured at fair value, categorized based upon the fair value hierarchy, are as follows (in thousands):



	Fair Value Measurements at March 31, 2016 Using										Fair Value Measurements at December 31, 2015 Using
Description	Total Carrying Amount		Total Fair Value		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾		Total Carrying Amount		Total Fair Value		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾
Assets:
Cash and cash equivalents⁽⁴⁾	$	117,360	$	117,360	$	117,360	$	—	$	—	$	121,565	$	121,565	$	121,565	$	—	$	—
Total Assets	$	117,360	$	117,360	$	117,360	$	—	$	—	$	121,565	$	121,565	$	121,565	$	—	$	—
Liabilities:
Long-term debt (including current portion of long-term debt)⁽⁵⁾	$	8,655,603	$	9,039,755	$	1,546,938	$	7,492,817	$	—	$	8,478,473	$	8,895,009	$	1,536,629	$	7,358,380	$	—
Total Liabilities	$	8,655,603	$	9,039,755	$	1,546,938	$	7,492,817	$	—	$	8,478,473	$	8,895,009	$	1,536,629	$	7,358,380	$	—

(1) Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2) Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.

(3) Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2016 and December 31, 2015.

(4) Consists of cash and marketable securities with original maturities of less than 90 days.

(5) Consists of unsecured revolving credit facilities, senior notes, senior debentures and term loans. Does not include our capital lease obligations.

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):



	Fair Value Measurements at March 31, 2016 Using								Fair Value Measurements at December 31, 2015 Using
Description	Total		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾		Total		Level 1⁽¹⁾		Level 2⁽²⁾		Level 3⁽³⁾
Assets:
Derivative financial instruments⁽⁴⁾	$	137,463	$	—	$	137,463	$	—	$	134,574	$	—	$	134,574	$	—
Investments⁽⁵⁾	$	3,804	3,804		—		—		$	3,965	3,965		—		—
Total Assets	$	141,267	$	3,804	$	137,463	$	—	$	138,539	$	3,965	$	134,574	$	—
Liabilities:
Derivative financial instruments⁽⁶⁾	$	1,017,967	$	—	$	1,017,967	$	—	$	1,044,292	$	—	$	1,044,292	$	—
Total Liabilities	$	1,017,967	$	—	$	1,017,967	$	—	$	1,044,292	$	—	$	1,044,292	$	—

(2) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps, cross currency swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity, as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Fair value for foreign currency collar options is determined by using standard option pricing models with inputs based on the options’ contract terms, such as exercise price and maturity, and readily available public market data, such as foreign exchange curves, foreign exchange volatility levels and discount rates. All derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.

(3) Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2016 and December 31, 2015.

(4) Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Please refer to the “Fair Value of Derivative Instruments” table for breakdown by instrument type.

(5) Consists of exchange-traded equity securities and mutual funds reported within Other assets in our consolidated balance sheets.

(6) Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Please refer to the “Fair Value of Derivative Instruments” table for breakdown by instrument type.

Offsetting Assets

The following table presents information about the Company’s offsetting of financial assets under master netting agreements with derivative counterparties:



	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2016									As of December 31, 2015
	Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities			Cash Collateral Received		Net Amount of Derivative Assets		Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Assets			Cash Collateral Received		Net Amount of Derivative Assets
(In thousands)
Derivatives subject to master netting agreements	$	137,463	$	(137,463	)	$	—	$	—	$	134,574	$	(129,815	)	$	—	$	4,759
Total	$	137,463	$	(137,463	)	$	—	$	—	$	134,574	$	(129,815	)	$	—	$	4,759

Offsetting Liabilities

The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative counterparties:



	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2016										As of December 31, 2015
	Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet			Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Pledged		Net Amount of Derivative Liabilities			Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet			Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Pledged		Net Amount of Derivative Liabilities
(In thousands)
Derivatives subject to master netting agreements	$	(1,017,967	)	$	137,463	$	—	$	(880,504	)	$	(1,044,292	)	$	129,815	$	—	$	(914,477	)
Total	$	(1,017,967	)	$	137,463	$	—	$	(880,504	)	$	(1,044,292	)	$	129,815	$	—	$	(914,477	)

Schedule of Price Risk Derivatives

As of March 31, 2016 and December 31, 2015, we had the following outstanding fuel swap agreements:



	Fuel Swap Agreements
	As of March 31, 2016	As of December 31, 2015
	(metric tons)
2016	692,000	930,000
2017	854,000	854,000
2018	583,000	583,000
2019	308,000	231,000
2020	79,000	—



	Fuel Swap Agreements
	As of March 31, 2016		As of December 31, 2015
	(% hedged)
Projected fuel purchases:
2016	65	%	65	%
2017	60	%	59	%
2018	40	%	40	%
2019	20	%	15	%
2020	5	%	—

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as follows:



	Fair Value of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	As of March 31, 2016		As of December 31, 2015		Balance Sheet Location	As of March 31, 2016		As of December 31, 2015
	Balance Sheet Location	Fair Value		Fair Value		Balance Sheet Location	Fair Value		Fair Value
(In thousands)
Derivatives designated as hedging instruments under ASC 815-20⁽¹⁾
Interest rate swaps	Other assets	$	13,046	$	—	Other long-term liabilities	$	139,805	$	67,371
Foreign currency forward contracts	Derivative financial instruments	78,179		93,996		Derivative financial instruments	139,456		320,873
Fuel swaps	Derivative financial instruments	—		—		Derivative financial instruments	284,336		307,475
Fuel swaps	Other assets	3,893		—		Other long-term liabilities	300,669		325,055
Total derivatives designated as hedging instruments under 815-20		95,118		93,996			864,266		1,020,774
Derivatives not designated as hedging instruments under ASC 815-20
Foreign currency forward contracts	Derivative financial instruments	$	33,779	$	32,339	Derivative financial instruments	$	129,817	$	—
Fuel swaps	Derivative financial instruments	8,566		8,239		Derivative financial instruments	23,884		23,518
Total derivatives not designated as hedging instruments under 815-20		42,345		40,578			153,701		23,518
Total derivatives		$	137,463	$	134,574		$	1,017,967	$	1,044,292

(1) Accounting Standard Codification 815-20 “Derivatives and Hedging.”

Non Derivative Instruments Qualifying and Designated as Hedging Instruments in Net Investment Hedges

The effect of non-derivative instruments qualifying and designated as net investment hedging instruments on the consolidated financial statements was as follows:



	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)
Non-derivative instruments under ASC 815-20 Net Investment Hedging Relationships	Quarter Ended March 31, 2016		Quarter Ended March 31, 2015
(In thousands)
Foreign Currency Debt	$	—	$	12,137
	$	—	$	12,137

Not Designated as Hedging Instrument

Derivative Instruments

Derivative Instruments, Gain (Loss)

The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows:



		Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments under ASC 815-20	Location of Gain (Loss) Recognized in Income on Derivatives	Quarter Ended March 31, 2016		Quarter Ended March 31, 2015
(In thousands)
Foreign currency forward contracts	Other (expense) income	$	14,455	$	(28,083	)
Fuel swaps	Other (expense) income	22		(129		)
		$	14,477	$	(28,212	)

Fair Value Hedging

Derivative Instruments

Derivative Instruments, Gain (Loss)

The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statements of comprehensive income (loss) was as follows:



Derivatives and Related Hedged Items under ASC 815-20 Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item	Amount of Gain (Loss) Recognized in Income on Derivative				Amount of Gain (Loss) Recognized in Income on Hedged Item
		Quarter Ended March 31, 2016		Quarter Ended March 31, 2015		Quarter Ended March 31, 2016			Quarter Ended March 31, 2015
(In thousands)
Interest rate swaps	Interest expense, net of interest capitalized	$	2,362	$	2,976	$	3,925		$	3,882
Interest rate swaps	Other (expense) income	26,268		15,152		(23,700		)	(12,341		)
		$	28,630	$	18,128	$	(19,775	)	$	(8,459	)

Cash flow hedge

Derivative Instruments

Derivative Instruments, Gain (Loss)



Derivatives under ASC 815-20 Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
		Quarter Ended March 31, 2016			Quarter Ended March 31, 2015
(In thousands)
Interest rate swaps	Other (expense) income	(900		)	—
Interest rate swaps	Other (expense) income	—			38
Fuel swaps	Other (expense) income	(16		)	182
		$	(916	)	$	220

The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows:



Derivatives under ASC 815-20 Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative (Effective Portion)						Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Effective Portion)
	Quarter Ended March 31, 2016			Quarter Ended March 31, 2015				Quarter Ended March 31, 2016			Quarter Ended March 31, 2015
(In thousands)
Interest rate swaps	$	(97,371	)	$	(35,815	)	Interest expense, net of interest capitalized	$	(9,128	)	$	(6,786	)
Interest rate swaps	—			—			Other (expense) income	—			—
Foreign currency forward contracts	46,049			(172,822		)	Depreciation and amortization expenses	(718		)	(718		)
Foreign currency forward contracts	—			—			Other (expense) income	6,087			(238		)
Foreign currency collar options	—			(64,833		)	Depreciation and amortization expenses	(602		)	—
Fuel swaps	—			—			Other (expense) income	(7,335		)	—
Fuel swaps	(48,337		)	(48,913		)	Fuel	(90,700		)	(53,692		)
	$	(99,659	)	$	(322,383	)		$	(102,396	)	$	(61,434	)