CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2013 AND JUNE 30, 2014
(Expressed in thousands of U.S. dollars – except for share and per share data)
The accompanying notes are an integral part of these condensed consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
|
1.
|
Basis of Presentation and General Information:
|
The accompanying unaudited condensed consolidated financial statements include the accounts of Aegean Marine Petroleum Network Inc. ("Aegean" or "AMPNI") and its subsidiaries (Aegean and its subsidiaries are hereinafter collectively referred to as the "Company") and have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") for interim financial information. Accordingly, they do not include all the information and notes required by US GAAP for complete financial statements.
These unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. Operating results for the six months ended June 30, 2014 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2014.
These unaudited condensed consolidated financial statements presented in this report should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 20-F for the year ended December 31, 2013.
|
2.
|
Significant accounting policies:
|
A discussion of the Company's significant accounting policies can be found in the Company's consolidated financial statements included in the Annual Report on Form 20-F for the year ended December 31, 2013. There have been no material changes to these policies in the six-month period ended June 30, 2014, except for an additional accounting policy, which is as follows:
Assets Held for Sale
: It is the Company's policy to dispose of vessels when suitable opportunities occur and not necessarily to keep them until the end of their useful life. The Company classifies vessels as being held for sale when the following criteria are met: (i) management possessing the necessary authority has committed to a plan to sell the vessels, (ii) the vessels are available for immediate sale in their present condition, (iii) an active program to find a buyer and other actions required to complete the plan to sell the vessels have been initiated, (iv) the sale of the vessels is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within one year and (v) the vessels are being actively marketed for sale at a price that is reasonable in relation to their current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These vessels are not depreciated once they meet the criteria to be classified as held for sale. Furthermore, in the period a vessel meets the held for sale criteria in accordance with ASC 360-10, a loss is recognized for any reduction of the vessel's carrying amount to its fair value less cost to sell.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
New accounting pronouncements
Revenue from Contracts with Customers:
On May 28, 2014, the Financial Accounting Standards Board issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under generally accepted accounting principles in the United States. The core principal of the new standard is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard is effective e for annual and interim periods beginning after December 15, 2016 and early adoption is prohibited. The Company has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows
3.
Trade Accounts Receivables Factoring Agreement
In connection with the factoring agreement, renewed on November 12, 2013 and valid until November 14, 2014, the Company sold $281,627 and $275,783 of trade accounts receivable during the periods ended June 30, 2013 and 2014, respectively, net of servicing fees of $790 and $708, included in the consolidated statements of income.
The amounts shown in the accompanying condensed consolidated balance sheets are analyzed as follows:
|
|
|
December 31, 2013
|
|
|
June 30,
2014
|
|
|
Held for sale:
|
|
|
|
|
|
|
|
Marine Fuel Oil
|
|
$
|
270,066
|
|
|
$
|
224,558
|
|
|
Marine Gas Oil
|
|
|
27,812
|
|
|
|
37,016
|
|
|
|
|
|
297,878
|
|
|
|
261,574
|
|
|
Held for consumption:
|
|
|
|
|
|
|
|
|
|
Marine fuel
|
|
|
4,477
|
|
|
|
3,191
|
|
|
Lubricants
|
|
|
809
|
|
|
|
774
|
|
|
Stores
|
|
|
20
|
|
|
|
15
|
|
|
Victuals
|
|
|
113
|
|
|
|
178
|
|
|
|
|
|
5,419
|
|
|
|
4,158
|
|
|
Total
|
|
$
|
303,297
|
|
|
$
|
265,732
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
|
5.
|
Advances for Vessels under Construction and Acquisitions:
|
During the six months ended June 30, 2014, the movement of the account, advances for vessels under construction and acquisitions, was as follows:
|
Balance, December 31, 2013
|
|
$
|
1,585
|
|
|
Advances for vessels under construction and related costs
|
|
|
96
|
|
|
Balance, June 30, 2014
|
|
$
|
1,681
|
|
The amounts shown in the accompanying condensed consolidated balance sheets include advance and milestone payments relating to the remaining shipbuilding contracts with shipyards, advance and milestone payments relating to the contracts with the engineering firm, advance payments for the acquisition of assets, and any material related expenses incurred during the construction period which were capitalized.
|
6.
|
Advances for Other Fixed Assets under Construction:
|
Fujairah in-land storage facility
: In July 2010, the Company assumed a 25-year terminal lease agreement, as a result of the transfer of all the shares of Aegean Oil Terminal Corporation from a related party. The agreement, signed by the Company's subsidiary, Aegean Oil Terminal Corporation, and the Municipality of Fujairah will be automatically renewed for an additional 25 years and was assumed to build an in-land storage facility in the United Arab Emirates. The Company is expected to complete the construction of the new facility in the second half of 2014 and the payments of the contractual amounts are made with the progress of the construction. As of June 30, 2014, the Company has paid advances for construction of the in-land storage facility amounting to $177,693 and we capitalized interest of amount $10,587. The contractual obligations arising from signed contracts relating to this project after June 30, 2014 are approximately $8,000 for 2014.
During the six months ended June 30, 2014, the movement of the account vessels was as follows:
|
|
|
Vessel Cost
|
|
|
Accumulated Depreciation
|
|
|
Net Book Value
|
|
|
Balance, December 31, 2013
|
|
$
|
517,225
|
|
|
|
(95,696
|
)
|
|
$
|
421,529
|
|
|
- Vessel acquired and delivered
|
|
|
7,587
|
|
|
|
-
|
|
|
|
7,587
|
|
|
- Depreciation
|
|
|
-
|
|
|
|
(9,350
|
)
|
|
|
(9,350
|
)
|
|
- Vessels sold
|
|
|
(9,147
|
)
|
|
|
6,687
|
|
|
|
(2,460
|
)
|
|
- Reclassified to held for sale
|
|
|
(8,214
|
)
|
|
|
7,486
|
|
|
|
(728
|
)
|
|
- Impairment charge
|
|
|
(3,910
|
)
|
|
|
-
|
|
|
|
(3,910
|
)
|
|
Balance, June 30, 2014
|
|
$
|
503,541
|
|
|
|
(90,873
|
)
|
|
$
|
412,668
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
On March 10, 2014, the Company entered into a Memorandum of Agreement to sell Aegean Flower, a 6,523 dwt double hull bunkering tanker, to a third-party purchaser, for a contracted sales price of $2,000. The vessel was delivered to its new owners on April 1, 2014. As of March 31, 2014, the vessel Aegean Flower was classified as asset held for sale and was recorded at the lower of its carrying amount and fair value less cost to sell. The resulting impairment loss of $4,062 is included under "Vessel impairment charge" in the accompanying condensed consolidated statements of income.
On March 25, 2014, the Company's subsidiary, Aegean Barges NV, took delivery of a Belgian-flagged 4,100 dwt (built in 2006) in-land waterway double hull bunkering tanker, the Elveba (renamed "New Jersey"), to deploy in the A.R.A. region. The vessel was purchased from a third-party purchaser for $7,587 (€5,500,000).
On March 28, 2014, the Company completed the sale of the vessel Aegean X to an unaffiliated third-party purchaser for an aggregate price of $1,700. The gain on sale of $493 was calculated as the net sales price less the carrying value of the vessel of $460 and the carrying value of unamortized dry-docking costs of $747. This gain is included under the gain on sale of vessels in the accompanying condensed consolidated statements of income.
On May 27, 2014, the Company entered into a Memorandum of Agreement to sell Aegean XI, an 11,050 dwt double hull bunkering tanker, to a third-party purchaser, for a contracted sales price of $2,500. The vessel was delivered to its new owners on July 3, 2014. As of June 30, 2014, the vessel Aegean XI was classified as asset held for sale and was recorded at its carrying value of $1,742 which was calculated as the carrying value of the vessel of $728 and the carrying value of unamortized dry-docking costs of $1,024.
The amounts in the accompanying condensed consolidated balance sheets are analyzed as follows:
|
|
|
Land
|
|
|
Buildings
|
|
|
Other
|
|
|
Total
|
|
|
Cost, December 31, 2013
|
|
$
|
9,036
|
|
|
$
|
3,459
|
|
|
$
|
13,196
|
|
|
$
|
25,691
|
|
|
- Additions
|
|
|
-
|
|
|
|
-
|
|
|
|
7,204
|
|
|
|
7,204
|
|
|
- Disposals
|
|
|
-
|
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
(33
|
)
|
|
Cost, June 30, 2014
|
|
|
9,036
|
|
|
|
3,459
|
|
|
|
20,367
|
|
|
|
32,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation, December 31, 2013
|
|
|
-
|
|
|
|
(519
|
)
|
|
|
(2,263
|
)
|
|
|
(2,782
|
)
|
|
- Depreciation expense
|
|
|
-
|
|
|
|
(41
|
)
|
|
|
(1,158
|
)
|
|
|
(1,199
|
)
|
|
- Disposals
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
|
|
|
33
|
|
|
Accumulated depreciation, June 30, 2014
|
|
|
-
|
|
|
|
(560
|
)
|
|
|
(3,388
|
)
|
|
|
(3,948
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value, December 31, 2013
|
|
|
9,036
|
|
|
|
2,940
|
|
|
|
10,933
|
|
|
|
22,909
|
|
|
Net book value, June 30, 2014
|
|
$
|
9,036
|
|
|
$
|
2,899
|
|
|
$
|
16,979
|
|
|
$
|
28,914
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
During the six months ended June 30, 2014, the movement of the account deferred charges was as follows:
|
|
|
Dry-docking
|
|
|
Financing Costs
|
|
|
Total
|
|
|
Balance, December 31, 2013
|
|
$
|
16,993
|
|
|
$
|
10,485
|
|
|
$
|
27,478
|
|
|
- Additions
|
|
|
3,713
|
|
|
|
80
|
|
|
|
3,793
|
|
|
- Disposals
|
|
|
(747
|
)
|
|
|
-
|
|
|
|
(747
|
)
|
|
- Reclassified to held for sale
|
|
|
(1,014
|
)
|
|
|
-
|
|
|
|
(1,014
|
)
|
|
- Impairment charge
|
|
|
(152
|
)
|
|
|
-
|
|
|
|
(152
|
)
|
|
- Amortization for the period
|
|
|
(3,018
|
)
|
|
|
(1,645
|
)
|
|
|
(4,663
|
)
|
|
Balance, June 30, 2014
|
|
$
|
15,775
|
|
|
$
|
8,920
|
|
|
$
|
24,695
|
|
The amortization for dry-docking costs is included in cost of revenue and in selling and distribution cost in the accompanying condensed consolidated statements of income, according to their function. The amortization of financing costs is included in interest and finance costs in the accompanying condensed consolidated statements of income.
|
10.
|
Goodwill and intangible assets:
|
Goodwill:
Goodwill identified represents the purchase price in excess of the fair value of the identifiable net assets of the acquired business at the date of acquisition. The Company calculated the fair value of the reporting unit using the discounted cash flow method, and determined that the fair value of the reporting unit exceeded its book value including the goodwill. The discounted cash flows calculation is subject to management judgment related to revenue growth, capacity utilization, the weighted average cost of capital (WACC), of approximately 7%, and the future price of marine fuel products. No impairment loss was recorded at June 30, 2014.
Intangible assets:
The Company has identified finite-lived intangible assets associated with concession agreements acquired with the purchase of the Portland subsidiary, the Las Palmas and Panama sites, a non-compete covenant acquired with the Aegean NWE business and a below market time charter on a barging vessel, acquired with the U.S. East Coast business. The values recorded have been recognized at the date of the acquisition and are amortized on a straight line basis over their useful life.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
The amounts in the accompanying condensed consolidated balance sheets are analyzed as follows:
|
|
|
|
|
|
|
Below Market Acquired Time Charter
|
|
|
Concession agreements
|
|
|
Non-compete covenant
|
|
|
Total
|
|
|
Cost as per
|
|
|
December 31, 2013
|
|
|
$
|
1,915
|
|
|
$
|
19,797
|
|
|
$
|
3,365
|
|
|
$
|
25,077
|
|
|
|
|
|
|
June 30, 2014
|
|
|
|
1,915
|
|
|
|
19,797
|
|
|
|
3,365
|
|
|
|
25,077
|
|
|
Accumulated Amortization as per
|
|
|
December 31, 2013
|
|
|
|
(94
|
)
|
|
|
(4,214
|
)
|
|
|
(1,939
|
)
|
|
|
(6,247
|
)
|
|
|
|
|
|
June 30, 2014
|
|
|
|
(1,402
|
)
|
|
|
(4,701
|
)
|
|
|
(2,199
|
)
|
|
|
(8,302
|
)
|
|
NBV as per
|
|
|
December 31, 2013
|
|
|
|
1,821
|
|
|
|
15,583
|
|
|
|
1,426
|
|
|
|
18,830
|
|
|
|
|
|
|
June 30, 2014
|
|
|
|
513
|
|
|
|
15,096
|
|
|
|
1,166
|
|
|
|
16,775
|
|
|
Amortization Schedule
|
|
|
July 1, to December 31, 2014
|
|
|
|
513
|
|
|
|
499
|
|
|
|
257
|
|
|
|
1,269
|
|
|
|
|
|
|
|
2015
|
|
|
|
-
|
|
|
|
988
|
|
|
|
517
|
|
|
|
1,505
|
|
|
|
|
|
|
|
2016
|
|
|
|
-
|
|
|
|
988
|
|
|
|
392
|
|
|
|
1,380
|
|
|
|
|
|
|
|
2017
|
|
|
|
-
|
|
|
|
988
|
|
|
|
-
|
|
|
|
988
|
|
|
|
|
|
|
|
2018
|
|
|
|
-
|
|
|
|
988
|
|
|
|
-
|
|
|
|
988
|
|
|
|
|
|
|
Thereafter
|
|
|
|
-
|
|
|
|
10,645
|
|
|
|
-
|
|
|
|
10,645
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
The amounts comprising total debt are presented in the accompanying condensed consolidated balance sheet as follows:
|
Loan Facility
|
|
December 31,
2013
|
|
|
June 30,
2014
|
|
|
Short-term borrowings:
|
|
|
|
|
|
|
|
Revolving overdraft facility dated 7/26/2013
|
|
$
|
7,993
|
|
|
$
|
6,993
|
|
|
Trade credit facility dated 8/9/2013
|
|
|
20,853
|
|
|
|
-
|
|
|
Revolving credit facility dated 11/16/2013
|
|
|
65,120
|
|
|
|
-
|
|
Revolving credit facility dated 9/1/2013
|
|
|
28,467
|
|
|
|
-
|
|
|
Revolving credit facility dated 5/10/2013
|
|
|
109,871
|
|
|
|
-
|
|
|
Security agreement dated dated 12/17/2013
|
|
|
99,286
|
|
|
|
146,199
|
|
|
Borrowing base facility agreement dated 9/19/2013
|
|
|
-
|
|
|
|
349,703
|
|
|
Total short-term borrowings
|
|
$
|
331,590
|
|
|
$
|
502,895
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
Secured syndicated term loan dated 8/30/2005
|
|
$
|
22,539
|
|
|
$
|
21,340
|
|
|
Secured term loan facility under
senior secured credit facility dated 12/19/2006
|
|
|
17,020
|
|
|
|
15,620
|
|
|
Secured term loan dated 10/25/2006
|
|
|
19,019
|
|
|
|
18,275
|
|
|
Secured term loan dated 10/27/2006
|
|
|
12,376
|
|
|
|
11,764
|
|
|
Secured syndicated term loan dated 10/30/2006
|
|
|
49,374
|
|
|
|
47,660
|
|
|
Secured term loan dated 9/12/2008
|
|
|
29,675
|
|
|
|
27,538
|
|
|
Secured syndicated term loan dated 4/24/2008
|
|
|
27,555
|
|
|
|
26,573
|
|
|
Secured syndicated term loan dated 7/8/2008
|
|
|
3,971
|
|
|
|
3,088
|
|
|
Secured term loan dated 4/1/2010
|
|
|
1,922
|
|
|
|
1,735
|
|
|
Secured term loan dated 4/1/2010
|
|
|
275
|
|
|
|
-
|
|
|
Roll over agreement dated 4/1/2010
|
|
|
6,386
|
|
|
|
6,072
|
|
|
Corporate credit facility dated 3/11/2013
|
|
|
73,500
|
|
|
|
67,700
|
|
|
Senior convertible notes
|
|
|
73,115
|
|
|
|
74,229
|
|
|
Trade credit facility dated 8/9/2013
|
|
|
115,000
|
|
|
|
-
|
|
|
Borrowing base facility agreement dated 9/19/2013
|
|
|
-
|
|
|
|
115,000
|
|
|
Roll over agreement dated 3/21/2014
|
|
|
-
|
|
|
|
4,455
|
|
|
Total
|
|
|
451,727
|
|
|
|
441,049
|
|
|
Less: Current portion of long-term debt
|
|
|
(34,983
|
)
|
|
|
(38,746
|
)
|
|
Long-term debt, net of current portion
|
|
$
|
416,744
|
|
|
$
|
402,303
|
|
The above dates show the later of the date of the facility, the date of the most recent renewal or the date the loan was assumed by the Company.
On March 21, 2014, the Company signed a roll over loan agreement with a bank for the purpose of financing its new secondhand vessel New Jersey for an amount of $4,545 and bears interest at LIBOR plus 2.80%. The credit facility is repayable in forty quarterly installments.
Details of the Company's credit facilities are discussed in notes 14 and 15 of the Company's Consolidated Financial Statements for the year ended December 31, 2013 included in the Company's Annual Report on Form 20-F.
As at June 30, 2014, the Company was in compliance with all of its covenants contained in its credit facilities.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
The annual principal payments of long-term debt required to be made after June 30, 2014 is as follows:
|
|
|
Amount
|
|
July 1 to December 31, 2014
|
|
$
|
19,523
|
|
|
2015
|
|
|
38,706
|
|
|
2016
|
|
|
153,782
|
|
|
2017
|
|
|
44,281
|
|
|
2018
|
|
|
112,245
|
|
|
2019 and thereafter
|
|
|
84,533
|
|
|
Total principal payments
|
|
|
453,070
|
|
|
Less: Unamortized portion of notes' discount
|
|
|
(12,021
|
)
|
|
Total long-term debt
|
|
$
|
441,049
|
|
|
|
|
|
|
|
|
12.
|
Derivatives and fair value measurements:
|
The Company uses derivatives in accordance with its overall risk management strategy. The changes in the fair value of these derivatives are recognized immediately through earnings.
The following describes the Company's derivative classifications: The Company enters into interest rate swap contracts to economically hedge its exposure to variability in its floating rate long-term debt. Under the terms of the interest rate swaps, the Company and the bank agreed to exchange at specified intervals the difference between paying fixed rate and floating rate interest amount calculated by reference to the agreed principal amount and maturity. Interest rate swaps allow the Company to convert long-term borrowings issued at floating rates to equivalent fixed rates.
As of December 31, 2013 and June 30, 2014, the Company has entered into the following 15 year interest rate swap arrangement with a call option for the bank to terminate it after 5 years duration, on March 31, 2016:
As of December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Index
|
|
Principal Amount
|
|
|
Fair Value/Carrying Amount of Liability
|
|
|
Weighted-average remaining term
|
|
|
Fixed Interest Rate
|
|
|
U.S. Dollar-denominated Interest Rate Swap
|
Euribor
|
|
$
|
6,386
|
|
|
$
|
470
|
|
|
|
12.25
|
|
|
|
2.35
|
%
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
As of June 30, 2014:
|
Interest Rate Index
|
|
Principal Amount
|
|
|
Fair Value/Carrying Amount of Liability
|
|
|
Weighted-average remaining term
|
|
|
Fixed Interest Rate
|
|
|
U.S. Dollar-denominated Interest Rate Swap
|
Euribor
|
|
$
|
6,072
|
|
|
$
|
569
|
|
|
|
11.76
|
|
|
|
2.35
|
%
|
The Company is exposed to credit loss in the event of non-performance by the counterparty to the interest rate swap agreement. In order to minimize counterparty risk, the Company enters into derivative transactions with counterparties that are rated AAA or at least A at the time of the transactions.
The Company uses fuel pricing contracts to hedge exposure to changes in the net cost of marine fuel purchases. The Company has the right of offset with the counterparty of the fuel pricing contracts, and settles outstanding balances on a monthly basis. Therefore, these amounts are presented on a net basis in the condensed consolidated balance sheets (on a gross basis: an asset of $61 and a liability of $900, as of December 31, 2013 and an asset of $911 and a liability of $2,270 as of June 30, 2014).
The following table presents information about our derivative instruments measured at fair value and their locations on the condensed consolidated balance sheets:
|
|
|
|
As of
|
|
|
Balance Sheet Location
|
|
December 31, 2013
|
|
|
June 30,
2014
|
|
|
Fuel pricing contracts
|
Derivative liabilities, current
|
|
$
|
(839
|
)
|
|
$
|
(1,359
|
)
|
|
Interest rates contracts
|
Derivative liabilities, non-current
|
|
$
|
(470
|
)
|
|
$
|
(569
|
)
|
The following table presents the effect and financial statement location of our derivative instruments on our condensed consolidated statements of income for the six months ended June 30, 2013 and 2014:
|
|
|
|
Six months ended June 30,
|
|
|
Income/ (Loss)
|
Statements of Income Location
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Fuel pricing contracts
|
Cost of revenue - third parties
|
|
$
|
(284
|
)
|
|
$
|
(4,671
|
)
|
|
Interest rate contracts
|
Interest and finance costs
|
|
|
102
|
|
|
|
(130
|
)
|
|
Total
|
|
|
$
|
(182
|
)
|
|
$
|
(4,801
|
)
|
The following table sets forth by level our assets / liabilities that are measured at fair value on a recurring basis. As required by the fair value guidance, assets / liabilities are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
|
|
|
|
|
|
Fair value measurements at December 31, 2013
|
|
|
Liabilities
|
|
Total
|
|
|
Quoted prices in active markets
(Level 1)
|
|
|
Significant other observable inputs
(Level 2)
|
|
|
Significant unobservable inputs
(Level 3)
|
|
|
Interest Rate Swap
|
|
$
|
470
|
|
|
$
|
-
|
|
|
$
|
470
|
|
|
$
|
-
|
|
|
Fuel pricing contracts
|
|
$
|
839
|
|
|
|
-
|
|
|
$
|
839
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,309
|
|
|
$
|
-
|
|
|
$
|
1,309
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Fair value measurements at June 30, 2014
|
|
|
Liabilities
|
|
Total
|
|
|
Quoted prices in active markets
(Level 1)
|
|
|
Significant other observable inputs
(Level 2)
|
|
|
Significant unobservable inputs
(Level 3)
|
|
|
Interest Rate Swap
|
|
$
|
569
|
|
|
$
|
-
|
|
|
$
|
569
|
|
|
$
|
-
|
|
|
Fuel pricing contracts
|
|
$
|
1,359
|
|
|
|
-
|
|
|
$
|
1,359
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,928
|
|
|
$
|
-
|
|
|
$
|
1,928
|
|
|
$
|
-
|
|
The fair value of the interest rate swaps is determined using the discounted cash flow method based on market-based Euribor rates swap yield curves, taking into account current interest rates. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs.
The Company uses observable inputs to calculate the mark-to-market valuation of the fuel pricing derivatives. Fuel pricing contracts are valued using quoted market prices of the underlying commodity. During the periods ended June 30, 2013 and 2014, the Company entered into fuel pricing contracts for 639,700 metric tons and 1,666,600 metric tons, respectively.
The Company's derivatives trade in over the counter markets, and as such, model inputs are generally observable and do not require significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
The carrying amounts of cash and cash equivalents, trade accounts receivable, and trade accounts payable reported in the consolidated balance sheets approximate their respective fair values because of the short term nature of these accounts. The fair value of revolving credit facilities is estimated based on current rates offered to the Company for similar debt of the same remaining maturities. The carrying value approximates the fair market value for the floating rate loans due to their variable interest rate, being EURIBOR or LIBOR. LIBOR and EURIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence floating rate loans are considered Level 2 items in accordance with the fair value hierarchy.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
|
13.
|
Revenues and Cost of Revenues:
|
The amounts in the accompanying condensed consolidated statements of income are analyzed as follows:
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Sales of marine petroleum products
|
|
$
|
3,239,312
|
|
|
$
|
3,378,926
|
|
|
Voyage revenues
|
|
|
10,213
|
|
|
|
15,277
|
|
|
Other revenues
|
|
|
12,790
|
|
|
|
20,375
|
|
|
Total Revenues
|
|
|
3,262,315
|
|
|
|
3,414,578
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of marine petroleum products
|
|
|
3,112,866
|
|
|
|
3,227,592
|
|
|
Cost of voyage revenues
|
|
|
6,728
|
|
|
|
7,685
|
|
|
Cost of other revenues
|
|
|
2,516
|
|
|
|
11,925
|
|
|
Total Cost of Revenues
|
|
$
|
3,122,110
|
|
|
$
|
3,247,202
|
|
Included in the cost of revenues is depreciation of $956 and $1,224 for the six months ended June 30, 2013 and 2014, respectively.
|
14.
|
Selling and Distribution:
|
The amounts in the accompanying condensed consolidated statements of income are analyzed as follows:
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
$
|
30,449
|
|
|
$
|
29,745
|
|
|
Depreciation
|
|
|
8,880
|
|
|
|
8,382
|
|
|
Vessel hire charges
|
|
|
6,525
|
|
|
|
16,034
|
|
|
Amortization of dry-docking costs
|
|
|
3,257
|
|
|
|
2,807
|
|
|
Vessel operating expenses
|
|
|
18,430
|
|
|
|
17,352
|
|
|
Bunkers consumption
|
|
|
17,471
|
|
|
|
16,204
|
|
|
Storage costs
|
|
|
7,206
|
|
|
|
12,464
|
|
|
Broker commissions
|
|
|
1,945
|
|
|
|
2,169
|
|
|
(Release of)/ Provision for doubtful accounts
|
|
|
(350
|
)
|
|
|
472
|
|
|
Other
|
|
|
5,765
|
|
|
|
5,137
|
|
|
Selling and Distribution expenses
|
|
$
|
99,578
|
|
|
$
|
110,766
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
|
15.
|
General and Administrative:
|
The amounts in the accompanying condensed consolidated statements of income are analyzed as follows:
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
$
|
6,204
|
|
|
$
|
6,600
|
|
|
Depreciation
|
|
|
291
|
|
|
|
943
|
|
|
Office expenses
|
|
|
7,745
|
|
|
|
8,920
|
|
|
General and Administrative expenses
|
|
$
|
14,240
|
|
|
$
|
16,463
|
|
|
16.
|
Commitments and Contingencies:
|
Lease Commitments:
The Company leases certain property under operating leases, which require the Company to pay maintenance, insurance and other expenses in addition to annual rentals. The minimum annual payments under all noncancelable operating leases at June 30, 2014 are as follows:
|
July 1 to December 31, 2014
|
|
$
|
14,529
|
|
|
2015
|
|
|
29,060
|
|
|
2016
|
|
|
28,746
|
|
|
2017
|
|
|
28,671
|
|
|
2018
|
|
|
27,362
|
|
|
Thereafter
|
|
|
171,239
|
|
|
Total minimum annual payments under all noncancelable operating leases
|
|
$
|
299,607
|
|
Rent expense under operating leases was $7,933 and $15,926 for the six months period ended June 30, 2013 and 2014, respectively.
Legal Matters
: In November 2005, an unrelated party filed a declaratory action against one of the Company's subsidiaries before the First Instance Court of Piraeus, Greece. The plaintiff asserted that he was instrumental in the negotiation of the Company's eight-year Fuel Purchase Agreement with a government refinery in Jamaica and sought a judicial affirmation of his alleged contractual right to receive a commission of $0.01 per metric ton of marine fuel over the term of the contract. In December 2008, the First Instance Court of Piraeus dismissed the plaintiff's action as vague and inadmissible, however the Company appealed that decision on the grounds that there was no contract between the Company and the plaintiff and that the court lacked jurisdiction. While the action was pending in Greece, the plaintiff commenced a new action involving the same cause of action before the Commercial Court of Paris, France, which dismissed that action in June 2009. The plaintiff's appeal of the dismissal was denied by the Paris Court of Appeal in February 2010. In January 2012, the plaintiff commenced a new action relating to the same allegations before the Commercial Court of Paris, which was dismissed on June 27, 2012 in favor of the competence and jurisdiction of the Greek courts. In July 2012, the plaintiff filed a "contredit," an appeal procedure under French law. On November 2013, the Court held that the matter is not pending in Greece that would allow the French courts to decline jurisdiction to the benefit of the Greek proceedings. As a consequence the case is to return to the Commercial Court of Paris which should have to examine the admissibility of Mr Varouxis' claim in France with the relevant pleadings procedurally scheduled to be filled by the parties on September 2, 2014. The Company believes that this matter fails for lack of jurisdiction and is unwarranted and lacking in merit. The Company believes that the outcome of this lawsuit will not have a material effect on its operations and financial position.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
In May, 2013, on the order of STX Corporation ("STX Corp.")., the Company supplied bunkers to the vessel UNICO SIENNA in the Port of Singapore. The invoice for those bunkers totaled approximately $323. STX Corp. has filed for reorganization in Korea, and has filed for protection under Chapter 15 of the U.S. Bankruptcy Code. The Company believes that has maritime liens against this vessel, and has arrested the UNICO SIENNA in Panama to enforce its maritime lien against it. The Company intends to exercise its remedies for recovery of the unpaid amounts and believes that it will recover the full amount due.
Various claims, suits, and complains, including those involving government regulations and product liability, arise in the ordinary course of business. In addition, losses may arise from disputes with charterers and agents and insurance and other claims with suppliers relating to the operations of the Company's vessels. Currently, management is not aware of any such claims or contingent liabilities for which a provision should be established in the accompanying consolidated financial statements.
Environmental and Other Liabilities:
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the Company's exposure. Currently, management is not aware of any such claims or contingent liabilities for which a provision should be established in these condensed consolidated financial statements. The Company's Protection and Indemnity ("P&I") insurance policies cover third-party liability and other expenses related to injury or death of crew, passengers and other third parties, loss or damage of cargo, claims arising from collisions with other vessels, damage to other third-party property, and pollution arising from oil or other substances. The Company's coverage under the P&I insurance policies, except for pollution, are unlimited. Coverage for pollution is $1,000,000 per vessel per incident.
|
17.
|
Equity Incentive Plan:
|
The Company measures stock-based compensation cost at grant date, based on the estimated fair value of the award which is determined by the closing price of the Company's common stock traded on the NYSE on the grant date, and recognizes the cost as expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. The expense is recorded in the general and administrative expenses in the accompanying condensed consolidated statements of income. Aegean is incorporated in a non-taxable jurisdiction and accordingly, no deferred tax assets are recognized for these stock-based incentive awards.
All grants of nonvested stock issued under the 2006 Plan are subject to accelerated vesting upon certain circumstances set forth in the 2006 Plan.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
The following table summarizes the status of the Company's non-vested shares outstanding for the six months ended June 30, 2014:
|
|
|
Non-vested Stock
|
|
|
Weighted Average Grant Date Market Price
|
|
|
January 1, 2014
|
|
|
1,569,102
|
|
|
$
|
8.52
|
|
|
Awarded
|
|
|
977,500
|
|
|
|
9.83
|
|
|
Vested
|
|
|
(615,769
|
)
|
|
|
8.52
|
|
|
Forfeited
|
|
|
(1,750
|
)
|
|
|
7.25
|
|
|
June 30, 2014
|
|
|
1,929,083
|
|
|
$
|
9.18
|
|
Total compensation cost of $2,307 was recognized and included in the general and administrative expenses under accompanying condensed consolidated statements of income for the six months ended June 30, 2014.
As of June 30, 2014, there was $11,715 of total unrecognized compensation cost related to nonvested share-based compensation awards. This unrecognized compensation at June 30, 2014, is expected to be recognized as compensation expense over a weighted average period of 1.3 years as follows:
|
|
|
Amount
|
|
|
July 1 to December 31, 2014
|
|
$
|
6,344
|
|
|
2015
|
|
|
4,231
|
|
|
2016
|
|
|
1,057
|
|
|
2017
|
|
|
83
|
|
|
|
|
$
|
11,715
|
|
18. Earnings per Common Share:
The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period using the two class method. The computation of diluted earnings per share assumes the granting of non-vested share-based compensation awards (refer to Note 17), for which the assumed proceeds upon grant are deemed to be the amount of compensation cost attributable to future services and not yet recognized using the treasury stock method, to the extent dilutive.
As of June 30, 2013 and 2014, the Company excluded 1,560,502 and
1,929,083
non vested shares, respectively, as anti-dilutive. Non-vested share-based payment awards that contain rights to receive non forfeitable dividends or dividend equivalents (whether paid or unpaid) and participate equally in undistributed earnings are participating securities, and thus, are included in the two-class method of computing earnings per share.
The treasury stock method is used in calculating diluted earnings per share for the Notes as the Company expects to settle the principal in cash.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
The components of the calculation of basic earnings per common share and diluted earnings per common share are as follows:
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2013
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Net and diluted income
|
|
$
|
12,726
|
|
|
$
|
14,419
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Dividends declared and undistributed earnings allocated to unvested shares
|
|
|
(346
|
)
|
|
|
(526
|
)
|
|
Basic and diluted income
available to common stockholders
|
|
|
12,380
|
|
|
|
13,893
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number
of common shares outstanding
|
|
|
45,670,903
|
|
|
|
46,215,011
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number
of common shares outstanding
|
|
|
45,670,903
|
|
|
|
46,215,011
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
0.27
|
|
|
$
|
0.30
|
|
|
Diluted earnings per common share
|
|
$
|
0.27
|
|
|
$
|
0.30
|
|
19. Income Taxes:
The Company operates through its subsidiaries, which are subject to several tax jurisdictions.
The income tax (expense) / benefit for the periods presented and the respective effective tax rates for such periods are as follows:
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2013
|
|
|
2014
|
|
|
Current tax expense
|
|
$
|
246
|
|
|
$
|
4,011
|
|
|
Net deferred tax expense/ (benefit)
|
|
|
150
|
|
|
|
(846
|
)
|
|
Income tax expense
|
|
$
|
396
|
|
|
$
|
3,165
|
|
|
Effective tax rate
|
|
|
45.62
|
%
|
|
|
42.54
|
%
|
|
|
|
|
|
|
|
|
|
|
Our provision for income taxes for each of the six-month periods ended June 30, 2013 and 2014 was calculated for our Belgian, Canadian and U.S. companies that are subject to federal and state income taxes.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
The reconciliation between the statutory tax expense on income from continuing operations to the income tax expense recorded in the financial statements is as follows:
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2013
|
|
|
2014
|
|
|
Income tax expense on profit before tax at statutory rates
|
|
$
|
258
|
|
|
$
|
3,352
|
|
|
Effect of permanent differences
|
|
|
138
|
|
|
|
(187
|
)
|
|
Total tax expense
|
|
$
|
396
|
|
|
$
|
3,165
|
|
Deferred income taxes that derive from our Belgian subsidiaries, are the result of provisions of the tax laws that either require or permit certain items of income or expense to be reported for tax purposes in different periods than they are reported for financial reporting.
|
20.
|
Business Segments and Geographical Information:
|
The Company is primarily a physical supplier in the downstream marine petroleum products industry. Marine petroleum products mainly consist of different classifications of marine fuel oil, marine gas oil and lubricants.
The Company cannot and does not identify expenses, profitability or other financial performance measures by type of marine petroleum product supplied, geographical area
served, nature of services performed or on anything other than on a consolidated basis (although the Company is able to segregate revenues on these various bases). As a result, management, including the chief operating decision maker, reviews operating results on a consolidated basis only. Therefore, the Company has determined that it has only one operating segment.
The Company is domiciled in the Marshall Islands but provides no services in that location. It is impracticable to disclose revenues from external customers attributable to individual foreign countries because where the customer is invoiced is not necessarily the country of domicile. In addition, due to the nature of the shipping industry, where services are provided on a worldwide basis, the country of domicile of the customer does not provide useful information regarding the risk that this disclosure is intended to address.
The Company's long-lived assets mainly consist of bunkering tankers which are positioned across the Company's existing territories and which management, including the chief operating decision maker, reviews on a periodic basis and reposition among the Company's existing or new territories to optimize the vessel per geographical territory ratio.
The Company's vessels operate within or outside the territorial waters of each geographical location and, under international law, shipping vessels usually fall under the jurisdiction of the country of the flag they sail. The Company's vessels are not permanently located within particular territorial waters and the Company is free to mobilize all its vessels worldwide at its own discretion.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
except share and per share data, unless otherwise stated)
On February 25, 2013, the Company entered into an agreement with a third-party to sell its ownership interest (55.5%) in Aegean Oil Terminals (Panama). The remaining interest had been previously presented as a non-controlling interest on the consolidated financial statements. Under the terms of the agreement, an amount of $6,318 was paid to the Company. Also, an amount of $3,384 was distributed from Aegean Oil Terminals as dividends to Aegean and an amount of $2,713 to the non-controlling interest in accordance with the ownership interests. The Company's gain from the sale of its ownership interest in Aegean Oil Terminals is included in Gain on sale of subsidiary on the accompanying condensed consolidated statement of income. The net effect of the cash received from the sale and the transfer of cash balances to the owners is reflected in Proceeds from Sale of subsidiary, net of cash surrendered in the investing activities of the consolidated statement of cash flows.
Under a separate agreement with the purchaser, the Company simultaneously agreed to lease from the purchaser fuel storage facilities at the ports of Panama.
Sale of vessels
: On July 3 and August 5, 2014, the Company completed the sale and delivered the double hull bunkering tankers
Aegean XI
and
Aegean XII
, of deadweight 11,050 and 3,680, respectively, to third-party purchasers. The vessels were sold for a total amount of $3,400, resulting in a net loss of approximately $4,300.
Agreement for sale of vessel
: On July 30, 2014, the Company entered into an agreement to sell its single hull bunkering barge
PT36,
of deadweight 3,730, to third-party purchaser for an amount of $450. The expected gain from the sale is approximately $300.