Fair Value Measurements and Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2011

Estimated Fair Value of Financial Instruments that are not Measured at Fair Value on a Recurring Basis

The estimated fair value of our financial instruments that are not measured at fair value on a recurring basis are as follows (in thousands):


	At June 30, 2011		At December 31, 2010

Long-term debt (including current portion of long-term debt)	$	8,858,400	$	8,775,875

Company's Financial Instruments Recorded at Fair Value on a Recurring Basis

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 June 30, 2011 Using								Fair Value Measurements at December 31, 2010 Using
Description	Total		Level 1¹		Level 2²		Level 3³		Total		Level 1¹		Level 2²		Level 3³

Assets:

Derivative financial instruments⁴	$	447,469		—		447,469		—	$	195,944		—		195,944		—

Investments⁵	$	7,833		7,833		—		—	$	7,974		7,974		—		—


Total Assets	$	455,302	$	7,833	$	447,469	$	—	$	203,918	$	7,974	$	195,944	$	—


Liabilities:
Derivative financial instruments⁶	$	2,038		—	$	2,038		—	$	88,491		—		88,491		—


Total Liabilities	$	2,038	$	—	$	2,038	$	—	$	88,491	$	—	$	88,491	$	—

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.

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, cross currency 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 exchange rates, fuel types, fuel curves, interest rate yield curves, creditworthiness of the counterparty and the Company. For fuel call options, fair value is determined by using the prevailing market price for the instruments consisting of published price quotes for similar assets based on recent transactions in an active market.

3.	Inputs that are unobservable for the asset or liability. The Company did not use any Level 3 inputs as of June 30, 2011 and December 31, 2010.

4.	Consists of foreign currency forward contracts, interest rate, cross currency, fuel swaps and fuel call options. 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.

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

Reconciliation of Company's Fuel Call Options

The following table presents a reconciliation of the Company’s fuel call options’ beginning and ending balances as of June 30, 2010 (in thousands):


Quarter Ended June 30, 2010	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)			Six Months Ended June 30, 2010	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fuel Call Options				Fuel Call Options

Balance at April 1, 2010	$	20,543		Balance at January 1, 2010	$	9,998
Total gains or losses (realized /unrealized)				Total gains or losses (realized /unrealized)
Included in other income (expense)		(4,249	)	Included in other income (expense)		(7,347	)
Purchases		10,896		Purchases		24,539
Transfers in and/or out of Level 3		—		Transfers in and/or out of Level 3		—

Balance at June 30, 2010	$	27,190		Balance at June 30, 2010	$	27,190

The amount of total gains or losses for the period included in other (expense) income attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	(4,249	)	The amount of total gains or losses for the period included in other (expense) income attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	(7,347	)

Fuel Swap Agreements

As of June 30, 2011 and December 31, 2010, we have entered into the following fuel swap agreements:


	Fuel Swap Agreements
	As of June 30, 2011			As of December 31, 2010
	(metric tons)
2011		436,000			766,000
2012		738,000			738,000
2013		644,000			300,000
2014		418,000			—
2015		284,000			—

	Fuel Swap Agreements
Projected fuel purchases for year:	As of June 30, 2011			As of December 31, 2010
	(% hedged)
2011		55	%		58	%
2012		55	%		55	%
2013		47	%		22	%
2014		30	%		—
2015		20	%

Fair Value and Line Item Caption of Derivative Instruments

The fair value and line item caption of derivative instruments recorded were as follows:


	Fair Value of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	As of June 30, 2011		As of December 31, 2010		Balance Sheet Location	As of June 30, 2011		As of December 31, 2010
	Balance Sheet Location	Fair Value		Fair Value		Balance Sheet Location	Fair Value		Fair Value
In thousands
Derivatives designated as hedging instruments under ASC 815-20¹

Interest rate swaps	Other Assets	$	57,871	$	56,497	Other long- term liabilities	$	—	$	—
Cross currency swaps	Other Assets		51,595		13,017	Other long- term liabilities		—		—
Foreign currency forward contracts	Derivative Financial Instruments		13,645		—	Accrued expenses and other liabilities		644		68,374
Foreign currency forward contracts	Other Assets		69,941		8,058	Other long- term liabilities		607		19,630
Fuel swaps	Derivative Financial Instruments		117,190		49,297	Accrued expenses and other liabilities		—		—
Fuel swaps	Other Assets		104,783		37,362	Other long- term liabilities		787		487


Total derivatives designated as hedging instruments under ASC 815-20		$	415,025	$	164,231		$	2,038	$	88,491


Derivatives not designated as hedging instruments under ASC 815-20

Foreign currency forward contracts	Other Assets		4,519		—	Other long- term liabilities		—		—
Fuel call options	Derivative Financial Instruments		—		7,194	Accrued expenses and other liabilities		—		—
Fuel call options	Other Assets		27,925		24,519	Other long- term liabilities		—		—


Total derivatives not designated as hedging instruments under ASC 815-20		$	32,444	$	31,713		$	—	$	—

Total derivatives		$	447,469	$	195,944		$	2,038	$	88,491

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

The Fair Value and Line Item Caption of Non-derivative Instruments

The fair value and line item caption of non-derivative instruments recorded was as follows:


Non-derivative instrument designated as hedging instrument under ASC 815-20	Balance Sheet Location	Carrying Value
		As of June 30, 2011		As of December 31, 2010
In thousands
Foreign currency debt	Long-term debt	$	656,509	$	628,172

		$	656,509	$	628,172

Effect of Non-derivative Instruments Qualifying and Designated as Hedging Instruments in Net Investment Hedges on the Consolidated Financial Statements

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


Non-derivatives instruments under ASC 815-20 Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in OCI (Effective Portion)								Location of Gain (Loss) in Income (Ineffective	Amount of Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Quarter Ended June 30, 2011		Quarter Ended June 30, 2010		Six Months Ended June 30, 2011		Six Months Ended June 30, 2010		Portion and Amount Excluded from Effectiveness Testing)	Quarter Ended June 30, 2011		Quarter Ended June 30, 2010		Six Months Ended June 30, 2011		Six Months Ended June 30, 2010
In thousands
Foreign Currency Debt	$	(17,294)	$	60,887	$	(54,502)	$	102,274	Other income (expense)	$	—	$	—	$	—	$	—

	$	(17,294)	$	60,887	$	(54,502)	$	102,274		$	—	$	—	$	—	$	—

Fair Value Hedge

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statement of operations 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 June 30, 2011			Quarter Ended June 30, 2010			Six Months Ended June 30, 2011		Six Months Ended June 30, 2010			Quarter Ended June 30, 2011			Quarter Ended June 30, 2010			Six Months Ended June 30, 2011			Six Months Ended June 30, 2010
In thousands

Interest rate swaps	Interest expense, net of interest capitalized	$	4,444		$	12,919		$	8,881	$	28,812		$	7,971		$	—		$	15,594		$	—

Cross currency swaps	Interest expense, net of interest capitalized		—			208			—		987			—			—			—			—

Interest rate swaps	Other income (expense)		7,333			6,280			1,374		27,018			(6,933	)		(4,763	)		(1,043	)		(26,160	)

Cross currency swaps	Other income (expense)		—			(22,238	)		—		(42,284	)		—			23,640			—			47,715

Foreign currency forward contracts	Other income (expense)		(10	)		(49,908	)		22,901		(109,853	)		(28	)		52,424			(23,720	)		113,133

		$	11,767		$	(52,739	)	$	33,156	$	(95,320	)	$	1,010		$	71,301		$	(9,169	)	$	134,688

Cash Flow Hedging

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

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


Derivatives under ASC 815-20 Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)											Location of Gain (Loss) Reclassified from	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
	Quarter Ended June 30, 2011		Quarter Ended June 30, 2010			Six Months Ended June 30, 2011			Six Months Ended June 30, 2010			Accumulated OCI into Income (Effective Portion)	Quarter Ended June 30, 2011			Quarter Ended June 30, 2010			Six Months Ended June 30, 2011			Six Months Ended June 30, 2010
In thousands
Cross currency swaps		13,691		(30,911	)		38,578			(30,911	)	Other income (expense)		13,760			(19,200	)		44,720			(19,200	)
Foreign currency forward contracts		44,307		(157,090	)		112,156			(259,399	)	Depreciation and amortization expenses		(175	)		54			(349	)		108
Foreign currency forward contracts		—		—			(12,375	)		—		Other income (expense)		(71	)		262			191			525
Fuel swaps		14,464		(68,867	)		193,479			(72,233	)	Fuel		42,427			3,586			78,501			9,510



	$	72,462	$	(256,868	)	$	331,838		$	(362,543	)		$	55,941		$	(15,298	)	$	123,063		$	(9,057	)


Derivatives under ASC 815-20 Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness testing)
	Excluded from Effectiveness Testing)	Quarter Ended June 30, 2011		Quarter Ended June 30, 2010		Six Months Ended June 30, 2011		Six Months Ended June 30, 2010
In thousands
Cross currency swaps	Other income (expense)		—		—		—		—

Foreign currency forward contracts	Other income (expense)		1,661		414		2,689		240

Foreign currency forward contracts	Other income (expense)		—		—		—		—

Fuel swaps	Other income (expense)		1,685		(185)		6,769		270


		$	3,346	$	229	$	9,458	$	510

Not Designated as Hedging Instrument

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

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


Derivatives Not Designated as Hedging Instruments under ASC 815-20	Location of Gain (Loss) Recognized in	Amount of Gain (Loss) Recognized in Income on Derivative
	Income on Derivative	Quarter Ended June 30, 2011		Quarter Ended June 30, 2010		Six Months Ended June 30, 2011		Six Months Ended June 30, 2010
In thousands
Foreign exchange contracts	Other income (expense)	$	4,697	$	3	$	4,697	$	(54)

Fuel call options	Other income (expense)		642		(4,250)		24,795		(7,348)

		$	5,339	$	(4,247)	$	29,492	$	(7,402)

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

+ References+ Details

- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

+ References+ Details