PBF Energy 2012 Annual Report Download - page 140

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PBF ENERGY INC. AND SUBSIDIARIES
(COMBINED AND CONSOLIDATED WITH PBF ENERGY COMPANY LLC AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, UNIT AND BARREL DATA)
18 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
The Company’s policy is to net the fair value of the derivatives included with inventory supply arrangement
obligations against the liability related to inventory supply arrangements with the same counterparty as the legal
right of offset exists.
The following tables provide information about the gain or loss recognized in income on these derivative
instruments and the line items in the consolidated statement of operations in which such gains and losses are
reflected.
Description
Location of Gain or (Loss)
Recognized in
Income on
Derivatives
Gain or (Loss)
Recognized in
Income on Derivatives
Derivatives designated as hedging instruments:
For the year ended December 31, 2012:
Derivatives included with inventory supply
arrangement obligations .................. Cost of sales $ 7,060
For the year ended December 31, 2011:
Derivatives included with inventory supply
arrangement obligations .................. Cost of sales $ (6,076)
For the year ended December 31, 2010:
Derivatives included with inventory supply
arrangement obligations .................. Cost of sales $ —
Derivatives not designated as hedging instruments:
For the year ended December 31, 2012:
Derivatives included with inventory supply
arrangement obligations .................. Cost of sales $ (8)
Commodity contracts ...................... Cost of sales $ 34,778
For the year ended December 31, 2011:
Derivatives included with inventory supply
arrangement obligations .................. Cost of sales $ 2,829
Commodity contracts ...................... Cost of sales $ 5,604
For the year ended December 31, 2010:
Derivatives included with inventory supply
arrangement obligations .................. Cost of sales $ (2,043)
Commodity contracts ...................... Cost of sales $ —
Hedged items designated in fair value hedges:
For the year ended December 31, 2012:
Crude oil and feedstock inventory ............ Cost of sales $ (4,704)
For the year ended December 31, 2011:
Crude oil and feedstock inventory ............ Cost of sales $ 6,558
For the year ended December 31, 2010:
Crude oil and feedstock inventory ............ Cost of sales $ —
Ineffectiveness related to the Company’s fair value hedges resulted in a gain of $2,356 and $482 for the years
ended December 31, 2012 and 2011, respectively. The gains and losses due to ineffectiveness were excluded
from the assessment of hedge effectiveness. The Company did not apply hedge accounting to any of its
derivative instruments prior to July 1, 2011.
F-48