GEL 3.31.2014 10-Q
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
 
 
 
Form 10-Q 
 
 
 
 
 

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2014
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12295
 
 
 
 
 
GENESIS ENERGY, L.P.
(Exact name of registrant as specified in its charter)
 
 
 
 
 

Delaware
76-0513049
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
919 Milam, Suite 2100,
Houston, TX
77002
(Address of principal executive offices)
(Zip code)
Registrant’s telephone number, including area code: (713) 860-2500
 
 
 
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2) of the Exchange Act).    Yes  ¨    No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 88,650,988 Class A Common Units and 39,997 Class B Common Units outstanding as of April 30, 2014.



Table of Contents

GENESIS ENERGY, L.P.
TABLE OF CONTENTS
 
 
 
Page
 
 
Item 1.
 
 
 
 
 
 
 
 2. Acquisition and Divestiture
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

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Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except units)
 
 
March 31, 2014
 
December 31, 2013
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
11,676

 
$
8,866

Accounts receivable - trade, net
307,978

 
368,033

Inventories
97,029

 
85,330

Other
37,653

 
72,994

Total current assets
454,336

 
535,223

FIXED ASSETS, at cost
1,415,443

 
1,327,974

Less: Accumulated depreciation
(211,689
)
 
(199,230
)
Net fixed assets
1,203,754

 
1,128,744

NET INVESTMENT IN DIRECT FINANCING LEASES, net of unearned income
150,250

 
151,903

EQUITY INVESTEES
626,195

 
620,247

INTANGIBLE ASSETS, net of amortization
59,914

 
62,928

GOODWILL
325,046

 
325,046

OTHER ASSETS, net of amortization
38,058

 
38,111

TOTAL ASSETS
$
2,857,553

 
$
2,862,202

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable - trade
$
302,695

 
$
316,204

Accrued liabilities
98,738

 
130,349

Total current liabilities
401,433

 
446,553

SENIOR SECURED CREDIT FACILITY
640,500

 
582,800

SENIOR UNSECURED NOTES
700,740

 
700,772

DEFERRED TAX LIABILITIES
16,285

 
15,944

OTHER LONG-TERM LIABILITIES
18,536

 
18,396

COMMITMENTS AND CONTINGENCIES (Note 14)

 

PARTNERS’ CAPITAL:
 
 
 
Common unitholders, 88,690,985 units issued and outstanding at
March 31, 2014 and December 31, 2013, respectively
1,080,059

 
1,097,737

TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$
2,857,553

 
$
2,862,202

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


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GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
 
 
Three Months Ended
March 31,
 
2014
 
2013
REVENUES:
 
 
 
Supply and logistics
$
944,606

 
$
944,545

Refinery services
54,193

 
49,484

Pipeline transportation services
20,920

 
20,779

Total revenues
1,019,719

 
1,014,808

COSTS AND EXPENSES:
 
 
 
Supply and logistics product costs
849,262

 
869,844

Supply and logistics operating costs
63,092

 
48,772

Refinery services operating costs
33,195

 
32,443

Pipeline transportation operating costs
7,478

 
7,084

General and administrative
12,010

 
11,611

Depreciation and amortization
19,280

 
15,049

Total costs and expenses
984,317

 
984,803

OPERATING INCOME
35,402

 
30,005

Equity in earnings of equity investees
7,818

 
3,936

Interest expense
(12,804
)
 
(11,441
)
Income from continuing operations before income taxes
30,416

 
22,500

Income tax (expense) benefit
(641
)
 
203

Income from continuing operations
29,775

 
22,703

Income from discontinued operations

 
143

NET INCOME
$
29,775

 
$
22,846

BASIC AND DILUTED NET INCOME PER COMMON UNIT:
 
 
 
Continuing operations
$
0.34

 
$
0.28

Discontinued operations
$

 
$

Net income per common unit
0.34

 
$
0.28

WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:
 
 
 
Basic and Diluted
88,691

 
81,203

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


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GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(In thousands)
 
 
Number of
Common Units
 
Partners’ Capital
 
2014
 
2013
 
2014
 
2013
Partners’ capital, January 1
88,691

 
81,203

 
$
1,097,737

 
$
916,495

Net income

 

 
29,775

 
22,846

Cash distributions

 

 
(47,453
)
 
(39,390
)
Partners' capital, March 31
88,691

 
81,203

 
$
1,080,059

 
$
899,951

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


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GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
Three Months Ended
March 31,
 
2014
 
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
29,775

 
$
22,846

Adjustments to reconcile net income to net cash provided by operating activities -
 
 
 
Depreciation and amortization
19,280

 
15,053

Amortization of debt issuance costs and premium
1,104

 
1,022

Amortization of unearned income and initial direct costs on direct financing leases
(3,977
)
 
(4,083
)
Payments received under direct financing leases
5,315

 
5,315

Equity in earnings of investments in equity investees
(7,818
)
 
(3,936
)
Cash distributions of earnings of equity investees
9,944

 
6,047

Non-cash effect of equity-based compensation plans
2,886

 
7,021

Deferred and other tax liabilities (benefits)
341

 
(323
)
Unrealized gains on derivative transactions
(3,911
)
 
(52
)
Other, net
231

 
71

Net changes in components of operating assets and liabilities (Note 11)
52,918

 
(10,165
)
Net cash provided by operating activities
106,088

 
38,816

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Payments to acquire fixed and intangible assets
(104,254
)
 
(47,151
)
Cash distributions received from equity investees - return of investment
2,636

 
3,583

Investments in equity investees
(10,709
)
 
(64,534
)
Proceeds from asset sales
72

 
332

Other, net
(1,270
)
 
755

Net cash used in investing activities
(113,525
)
 
(107,015
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Borrowings on senior secured credit facility
249,900

 
386,400

Repayments on senior secured credit facility
(192,200
)
 
(615,400
)
Proceeds from issuance of senior unsecured notes, including premium

 
350,000

Debt issuance costs

 
(8,157
)
Distributions to common unitholders
(47,453
)
 
(39,390
)
Other, net

 
(553
)
Net cash provided by financing activities
10,247

 
72,900

Net increase in cash and cash equivalents
2,810

 
4,701

Cash and cash equivalents at beginning of period
8,866

 
11,282

Cash and cash equivalents at end of period
$
11,676

 
$
15,983

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1. Organization and Basis of Presentation and Consolidation
Organization
We are a limited partnership focused on the midstream segment of the oil and gas industry in the Gulf Coast region of the United States, primarily Texas, Louisiana, Arkansas, Mississippi, Alabama, Florida, Wyoming and in the Gulf of Mexico. We have a diverse portfolio of assets, including pipelines, refinery-related plants, storage tanks and terminals, railcars, rail loading and unloading facilities, barges and trucks. We were formed in 1996 and are owned 100% by our limited partners. Genesis Energy, LLC, our general partner, is a wholly-owned subsidiary. Our general partner has sole responsibility for conducting our business and managing our operations. We conduct our operations and own our operating assets through our subsidiaries and joint ventures. We manage our businesses through the following three divisions that constitute our reportable segments:
Pipeline transportation of interstate, intrastate and offshore crude oil, and, to a lesser extent, carbon dioxide (or "CO2");
Refinery services involving processing of high sulfur (or “sour”) gas streams for refineries to remove the sulfur, and selling the related by-product, sodium hydrosulfide (or “NaHS”, commonly pronounced "nash"); and
Supply and logistics services, which include terminaling, blending, storing, marketing, and transporting crude oil and petroleum products and, on a smaller scale, CO2.
Basis of Presentation and Consolidation
The accompanying Unaudited Condensed Consolidated Financial Statements include Genesis Energy, L.P. and its subsidiaries, including Genesis Energy, LLC, our general partner.
Our results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. The Condensed Consolidated Financial Statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they reflect all adjustments (which consist solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial results for interim periods. Certain information and notes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with the information contained in the periodic reports we file with the SEC pursuant to the Securities Exchange Act of 1934, including the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.
Except per unit amounts, or as noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars.

2. Acquisition and Divestiture

Acquisition

Offshore Marine Transportation Business

In August 2013, we completed the acquisition of substantially all of the assets of the downstream transportation business of Hornbeck Offshore Services, Inc. for $230.9 million, which we refer to as our offshore marine transportation business and assets. The total acquisition cost has been allocated to fixed assets based on estimated preliminary fair values. Such preliminary fair values were developed by management. We do not expect any material adjustments to these preliminary purchase price allocations as a result of the final valuation. The acquired business was primarily comprised of nine barges and nine tug boats which transport crude oil and refined petroleum products, principally serving refineries and storage terminals along the Gulf Coast, Eastern Seaboard, Great Lakes and Caribbean. That acquisition complements and further integrates our existing operations, including our Genesis Marine inland barge business (comprised of 54 barges and 23 push/tow boats), our crude oil and heavy refined products storage and blending terminals as well as our crude oil pipeline systems. That acquisition was funded with proceeds from our $1 billion revolving credit facility. We have reflected the financial results of the acquired business in our supply and logistics segment from the date of the acquisition.


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The following table presents selected unaudited financial information of our offshore marine transportation business included in our Unaudited Consolidated Statement of Operations for the periods presented:

 
Three Months Ended March 31, 2014
Revenues
$
24,884

Net income
$
6,531


The table below presents selected unaudited pro forma financial information incorporating the historical results of our offshore marine transportation business. The pro forma financial information below has been prepared as if the acquisition had been completed on January 1, 2013 and is based upon assumptions deemed appropriate by us and may not be indicative of actual results. Depreciation expense for the fixed assets acquired is calculated on a straight-line basis over an estimated useful life of approximately 25 years.

 
Three Months Ended March 31, 2013
Pro forma earnings data:
 
Revenues
$
1,029,798

Net income
$
30,839


Divestiture

On December 31, 2013, we completed the sale of our vehicle fuel procurement and delivery logistics management services business. That business, previously reported in our supply and logistics revenues and costs and expenses, was reclassified as discontinued operations in our Unaudited Condensed Consolidated Statements of Operations for the quarter ended March 31, 2013. The summarized operating results of our discontinued operations are as follows:
 
Three Months Ended March 31, 2013
Revenues
$
132,406

Cost and expenses
132,264

Operating income
142

Interest income
1

Income from discontinued operations
$
143



3. Inventories
The major components of inventories were as follows:
 
March 31,
2014
 
December 31,
2013
Petroleum products
$
74,313

 
$
71,373

Crude oil
14,621

 
5,380

Caustic soda
4,226

 
2,679

NaHS
3,852

 
5,845

Other
17

 
53

Total
$
97,029

 
$
85,330

Inventories are valued at the lower of cost or market. The market value of inventories was below recorded costs by approximately $0.2 million at March 31, 2014, therefore we reduced the value of inventory in our Unaudited Condensed Consolidated Financial Statements for this difference. At December 31, 2013, market values of our inventories exceeded recorded costs.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


4. Fixed Assets
Fixed Assets
Fixed assets consisted of the following:
 
 
March 31,
2014
 
December 31,
2013
Pipelines and related assets
$
419,282

 
$
338,920

Machinery and equipment
176,256

 
173,092

Transportation equipment
18,666

 
19,140

Marine vessels
557,848

 
554,679

Land, buildings and improvements
31,260

 
30,170

Office equipment, furniture and fixtures
5,372

 
5,633

Construction in progress
178,764

 
183,037

Other
27,995

 
23,303

Fixed assets, at cost
1,415,443

 
1,327,974

Less: Accumulated depreciation
(211,689
)
 
(199,230
)
Net fixed assets
$
1,203,754

 
$
1,128,744

Our depreciation expense for the periods presented was as follows:
 
Three Months Ended
March 31,
 
2014
 
2013
Depreciation expense
$
15,277

 
$
10,491


5. Equity Investees
We account for our ownership in our joint ventures under the equity method of accounting. The price we pay to acquire an ownership interest in a company may exceed the underlying book value of the capital accounts we acquire. Such excess cost amounts are included within the carrying values of our equity investees. At March 31, 2014 and December 31, 2013, the unamortized excess cost amounts totaled $223.2 million and $225.7 million, respectively. We amortize the excess cost as a reduction in equity earnings in a manner similar to depreciation.

The following table presents information included in our Unaudited Condensed Consolidated Financial Statements related to our equity investees.
 
Three Months Ended
March 31,
 
2014
 
2013
Genesis’ share of operating earnings
$
10,401

 
$
6,650

Amortization of excess purchase price
(2,583
)
 
(2,714
)
Net equity in earnings
$
7,818

 
$
3,936

Distributions received
$
12,580

 
$
9,630


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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following tables present the combined unaudited balance sheet and income statement information (on a 100% basis) of our equity investees:
 
March 31,
2014
 
December 31,
2013
BALANCE SHEET DATA:
 
 
 
Assets
 
 
 
Current assets
$
80,967

 
$
70,921

Fixed assets, net
1,031,940

 
1,028,808

Other assets
7,635

 
6,823

Total assets
$
1,120,542

 
$
1,106,552

Liabilities and equity
 
 
 
Current liabilities
$
62,843

 
$
55,918

Other liabilities
196,587

 
190,578

Equity
861,112

 
860,056

Total liabilities and equity
$
1,120,542

 
$
1,106,552

 
 
Three Months Ended
March 31,
 
2014
 
2013
INCOME STATEMENT DATA:
 
 
 
Revenues
$
49,824

 
$
40,740

Operating income
$
30,475

 
$
21,100

Net income
$
29,706

 
$
20,455


6. Intangible Assets
The following table summarizes the components of our intangible assets at the dates indicated:
 
 
March 31, 2014
 
December 31, 2013
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
Refinery Services:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
94,654

 
$
77,682

 
$
16,972

 
$
94,654

 
$
76,283

 
$
18,371

Licensing agreements
38,678

 
26,787

 
11,891

 
38,678

 
26,055

 
12,623

Segment total
133,332

 
104,469

 
28,863

 
133,332

 
102,338

 
30,994

Supply & Logistics:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
35,430

 
28,983

 
6,447

 
35,430

 
28,568

 
6,862

Intangibles associated with lease
13,260

 
3,157

 
10,103

 
13,260

 
3,039

 
10,221

Segment total
48,690

 
32,140

 
16,550

 
48,690

 
31,607

 
17,083

Other
21,488

 
6,987

 
14,501

 
21,356

 
6,505

 
14,851

Total
$
203,510

 
$
143,596

 
$
59,914

 
$
203,378

 
$
140,450

 
$
62,928

Our amortization expense for the periods presented was as follows:
 
Three Months Ended
March 31,
 
2014
 
2013
Amortization expense
$
3,145

 
$
3,627


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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


We estimate that our amortization expense for the next five years will be as follows:
Remainder of
2014
$
9,459

 
2015
$
10,791

 
2016
$
9,330

 
2017
$
8,166

 
2018
$
7,245


7. Debt
Our obligations under debt arrangements consisted of the following:
 
March 31,
2014
 
December 31,
2013
Senior secured credit facility
$
640,500

 
$
582,800

7.875% senior unsecured notes (including unamortized premium of $740 and $772 in 2014 and 2013, respectively)
350,740

 
350,772

5.750% senior unsecured notes
350,000

 
350,000

Total long-term debt
$
1,341,240

 
$
1,283,572

As of March 31, 2014, we were in compliance with the financial covenants contained in our credit agreement and senior unsecured notes indentures.
Senior Secured Credit Facility
At March 31, 2014, we had $640.5 million borrowed under our $1 billion credit facility, with $71.6 million of the borrowed amount designated as a loan under the inventory sublimit. The credit agreement allows up to $100 million of the capacity to be used for letters of credit, of which $12.4 million was outstanding at March 31, 2014. Due to the revolving nature of loans under our credit facility, additional borrowings and periodic repayments and re-borrowings may be made until the maturity date. The total amount available for borrowings under our credit facility at March 31, 2014 was $347.1 million.
Senior Unsecured Notes
In November 2010, we issued $250 million in aggregate principal amount of 7.875% senior unsecured notes due December 15, 2018 (the "2018 Notes"). The 2018 Notes were sold at face value. Interest payments are due on June 15 and December 15 of each year. In February 2012, we issued an additional $100 million of aggregate principal amount of the 2018 Notes. The additional 2018 Notes were issued at 101% of face value at an effective interest rate of 7.682%. The additional 2018 Notes have the same terms and conditions as the notes previously issued under their indenture. The issuance increased the total aggregate principal amount of the 2018 Notes under their indenture to $350 million.
On February 8, 2013, we issued $350 million of aggregate principal amount of 5.75% senior unsecured notes (the "2021 Notes"). The 2021 Notes were sold at face value. Interest payments are due on February 15 and August 15 of each year. The 2021 Notes mature on February 15, 2021. The net proceeds were used to repay borrowings under our credit facility and for general partnership purposes.
The 2018 and the 2021 Notes were co-issued by Genesis Energy Finance Corporation (which has no independent assets or operations) and are each fully and unconditionally guaranteed, jointly and severally, by certain of our wholly-owned subsidiaries. We have the right to redeem the 2018 Notes at any time after December 15, 2014 at a premium to the face amount of the notes that varies based on the time remaining to maturity of the 2018 Notes. We have the right to redeem the 2021 Notes at any time after February 15, 2017, at a premium to the face amount of the 2021 Notes that varies based on the time remaining to maturity on the 2021 Notes. Prior to February 15, 2016, we may also redeem up to 35% of the principal amount of the 2021 Notes for 105.75% of the face amount with the proceeds from an equity offering of our common units.

8. Partners’ Capital and Distributions
At March 31, 2014, our outstanding common units consisted of 88,650,988 Class A units and 39,997 Class B units.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Waiver Units
Our waiver units are non-voting securities entitled to a minimal preferential quarterly distribution. At issuance, our waiver units were comprised of four classes (designated Class 1, Class 2, Class 3 and Class 4) of 1,738,000 units each. The waiver units in each class were/are convertible into Class A common units at a 1:1 conversion rate in the calendar quarter during which each of our common units receives a specified minimum quarterly distribution and our distribution coverage ratio (after giving effect to the then convertible waiver units) would be at least 1.1 times. The minimum distribution per common unit required for conversion is $0.52 for our Class 4 waiver units.
Our Class 1 and Class 2 waiver units converted into common units in 2012 and our Class 3 waiver units were converted into common units in 2013.
At March 31, 2014, we had 1,738,233 waiver units outstanding comprised of the Class 4 waiver units. The Class 4 waiver units will convert into common units when we satisfy the distribution conversion ratio requirement and pay a minimum distribution of $0.52 per common unit.
Distributions
We paid or will pay the following distributions in 2013 and 2014:
Distribution For
 
Date Paid
 
Per Unit
Amount
 
Total
Amount
2013
 
 
 
 
 
 
1st Quarter
 
May 15, 2013
 
$
0.4975

 
$
40,405

2nd Quarter
 
August 14, 2013
 
$
0.5100

 
$
42,302

3rd Quarter
 
November 14, 2013
 
$
0.5225

 
$
46,344

4th Quarter
 
February 14, 2014
 
$
0.5350

 
$
47,453

2014
 
 
 
 
 
 
1st Quarter
 
May 15, 2014
(1) 
$
0.5500

 
$
48,783

 
(1) This distribution will be paid to unitholders of record as of May 1, 2014.
9. Business Segment Information
Our operations consist of three operating segments:
Pipeline Transportation – interstate, intrastate and offshore crude oil, and to a lesser extent, CO2;
Refinery Services – processing high sulfur (or “sour”) gas streams as part of refining operations to remove the sulfur and selling the related by-product, NaHS and;
Supply and Logistics – terminaling, blending, storing, marketing, and transporting crude oil and petroleum products (primarily fuel oil, asphalt, and other heavy refined products) and, on a smaller scale, CO2.
Substantially all of our revenues are derived from, and substantially all of our assets are located in, the United States.
We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash charges, such as depreciation and amortization), and segment general and administrative expenses, plus our equity in distributable cash generated by our equity investees. In addition, our Segment Margin definition excludes the non-cash effects of our legacy stock appreciation rights plan and includes the non-income portion of payments received under direct financing leases.
Our chief operating decision maker (our Chief Executive Officer) evaluates segment performance based on a variety of measures including Segment Margin, segment volumes, where relevant, and capital investment.
 

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Segment information for the periods presented below was as follows:
 
Pipeline
Transportation
 
Refinery
Services
 
Supply &
Logistics
 
Total
Three Months Ended March 31, 2014
 
 
 
 
 
 
 
Segment Margin (a)
$
28,092

 
$
20,872

 
$
28,387

 
$
77,351

Capital expenditures (b)
$
34,280

 
$
302

 
$
68,196

 
$
102,778

Revenues:
 
 
 
 
 
 
 
External customers
$
16,450

 
$
57,107

 
$
946,162

 
$
1,019,719

Intersegment (c)
4,470

 
(2,914
)
 
(1,556
)
 

Total revenues of reportable segments
$
20,920

 
$
54,193

 
$
944,606

 
$
1,019,719

Three Months Ended March 31, 2013
 
 
 
 
 
 
 
Segment Margin (a)
$
25,196

 
$
17,965

 
$
28,904

 
$
72,065

Capital expenditures (b)
$
83,852

 
$
352

 
$
17,611

 
$
101,815

Revenues:
 
 
 
 
 
 
 
External customers
$
17,305

 
$
52,179

 
$
945,324

 
$
1,014,808

Intersegment (c)
3,474

 
(2,695
)
 
(779
)
 

Total revenues of reportable segments
$
20,779

 
$
49,484

 
$
944,545

 
$
1,014,808

Total assets by reportable segment were as follows:
 
March 31,
2014
 
December 31,
2013
Pipeline transportation
$
1,098,205

 
$
1,075,235

Refinery services
409,931

 
417,121

Supply and logistics
1,290,226

 
1,312,461

Other assets
59,191

 
57,385

Total consolidated assets
$
2,857,553

 
$
2,862,202

 
(a)
A reconciliation of Segment Margin to income from continuing operations before income taxes for the periods presented is as follows:
 
Three Months Ended
March 31,
 
2014
 
2013
Segment Margin
$
77,351

 
$
72,065

Corporate general and administrative expenses
(11,061
)
 
(10,837
)
Depreciation and amortization
(19,280
)
 
(15,049
)
Interest expense
(12,804
)
 
(11,441
)
Distributable cash from equity investees in excess of equity in earnings
(5,777
)
 
(6,564
)
Non-cash items not included in segment margin
3,325

 
(4,295
)
Cash payments from direct financing leases in excess of earnings
(1,338
)
 
(1,232
)
Discontinued operations

 
(147
)
Income from continuing operations before income taxes
$
30,416

 
$
22,500

 
(b)
Capital expenditures include maintenance and growth capital expenditures, such as fixed asset additions (including enhancements to existing facilities and construction of internal growth projects) as well as acquisitions of businesses and interests in equity investees. In addition to construction of internal growth projects, capital spending in our pipeline transportation segment included $10.4 million and $64.5 million during the three months ended March 31, 2014 and March 31, 2013, respectively, representing capital contributions to our SEKCO equity investee to fund our share of the construction costs for its pipeline.
(c)
Intersegment sales were conducted under terms that we believe were no more or less favorable than then-existing market conditions.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



10. Transactions with Related Parties
Sales, purchases and other transactions with affiliated companies, in the opinion of management, are conducted under terms no more or less favorable than then-existing market conditions. The transactions with related parties were as follows:
 
Three Months Ended
March 31,
 
2014
 
2013
Revenues:
 
 
 
Sales of CO2 to Sandhill Group, LLC (1)
$
655

 
$
673

Petroleum products sales to Davison family businesses(2)

 
355

Costs and expenses:
 
 
 
Amounts paid to our CEO in connection with the use of his aircraft
$
150

 
$
150

 
(1)
We own a 50% interest in Sandhill Group, LLC.
(2)
Amounts included in discontinued operations for all periods presented.
Amount due from Related Party
At March 31, 2014 and December 31, 2013 Sandhill Group, LLC owed us $0.2 million, respectively, for purchases of CO2.
11. Supplemental Cash Flow Information
The following table provides information regarding the net changes in components of operating assets and liabilities.
 
 
Three Months Ended
March 31,
 
2014
 
2013
(Increase) decrease in:
 
 
 
Accounts receivable
$
60,046

 
$
(85,915
)
Inventories
(11,700
)
 
7,947

Other current assets
41,623

 
4,736

Increase (decrease) in:
 
 
 
Accounts payable
(1,867
)
 
57,048

Accrued liabilities
(35,184
)
 
6,019

Net changes in components of operating assets and liabilities
$
52,918

 
$
(10,165
)
Payments of interest and commitment fees were $14 million and $2.8 million for the three months ended March 31, 2014 and March 31, 2013, respectively.
At March 31, 2014 and March 31, 2013, we had incurred liabilities for fixed and intangible asset additions totaling $41.6 million and $5 million, respectively, that had not been paid at the end of the first quarter, and, therefore, were not included in the caption “Payments to acquire fixed and intangible assets” under Cash Flows from Investing Activities in the Unaudited Condensed Consolidated Statements of Cash Flows.
At March 31, 2013, we had incurred liabilities for other asset additions totaling $0.3 million that had not been paid at the end of the first quarter and, therefore, were not included in the caption "Other, net" under Cash Flows from Investing Activities in the Unaudited Condensed Consolidated Statements of Cash Flows.
12. Derivatives
Commodity Derivatives
We have exposure to commodity price changes related to our inventory and purchase commitments. We utilize derivative instruments (primarily futures and options contracts traded on the NYMEX) to hedge our exposure to commodity prices, primarily of crude oil, fuel oil and petroleum products. Our decision as to whether to designate derivative instruments as

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


fair value hedges for accounting purposes relates to our expectations of the length of time we expect to have the commodity price exposure and our expectations as to whether the derivative contract will qualify as highly effective under accounting guidance in limiting our exposure to commodity price risk. Most of the petroleum products, including fuel oil that we supply, cannot be hedged with a high degree of effectiveness with derivative contracts available on the NYMEX; therefore, we do not designate derivative contracts utilized to limit our price risk related to these products as hedges for accounting purposes. Typically we utilize crude oil and other petroleum products futures and option contracts to limit our exposure to the effect of fluctuations in petroleum products prices on the future sale of our inventory or commitments to purchase petroleum products, and we recognize any changes in fair value of the derivative contracts as increases or decreases in our cost of sales. The recognition of changes in fair value of the derivative contracts not designated as hedges for accounting purposes can occur in reporting periods that do not coincide with the recognition of gain or loss on the actual transaction being hedged. Therefore we will, on occasion, report gains or losses in one period that will be partially offset by gains or losses in a future period when the hedged transaction is completed.
At March 31, 2014, we had the following outstanding derivative commodity contracts that were entered into to economically hedge inventory or fixed price purchase commitments. We had no outstanding derivative contracts that were designated as hedges under accounting rules.
 
 
Sell (Short)
Contracts
 
Buy (Long)
Contracts
Not qualifying or not designated as hedges under accounting rules:
 
 
 
 
Crude oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
159

 
100

Weighted average contract price per bbl
 
$
99.43

 
$
102.13

Crude oil swaps:
 
 
 
 
Contract volumes (1,000 bbls)
 
105

 

Weighted average contract price per bbl
 
$
4.05

 
$

Diesel futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
48

 
10

Weighted average contract price per gal
 
$
2.91

 
$
2.93

#6 Fuel oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
690

 

Weighted average contract price per bbl
 
$
89.71

 
$

Crude oil options:
 
 
 
 
Contract volumes (1,000 bbls)
 
125

 

Weighted average premium received
 
$
1.13

 
$

Diesel options:
 
 
 
 
Contract volumes (1,000 bbls)
 
20

 

Weighted average premium received
 
$
2.03

 
$

Financial Statement Impacts
Unrealized gains are subtracted from net income and unrealized losses are added to net income in determining cash flows from operating activities. To the extent that we have fair value hedges outstanding, the offsetting change recorded in the fair value of inventory is also eliminated from net income in determining cash flows from operating activities. Changes in margin deposits necessary to fund unrealized losses also affect cash flows from operating activities.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following tables reflect the estimated fair value gain (loss) position of our derivatives at March 31, 2014 and December 31, 2013:
Fair Value of Derivative Assets and Liabilities
 
 
Unaudited Condensed Consolidated Balance Sheets Location
 
Fair Value
 
March 31,
2014
 
December 31,
2013
Asset Derivatives:
 
 
 
 
 
Commodity derivatives - futures and call options (undesignated hedges):
 
 
 
 
 
Gross amount of recognized assets
Current Assets - Other
 
$
699

 
$
615

Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other
 
(699
)
 
(615
)
Net amount of assets presented in the Unaudited Condensed Consolidated Balance Sheets
 
 
$

 
$

Liability Derivatives:
 
 
 
 
 
Commodity derivatives - futures and call options (undesignated hedges):
 
 
 
 
 
Gross amount of recognized liabilities
Current Assets - Other (1)
 
$
(700
)
 
$
(4,527
)
Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other (1)
 
700

 
4,527

Net amount of liabilities presented in the Unaudited Condensed Consolidated Balance Sheets
 
 
$

 
$

 
(1) These derivative liabilities have been funded with margin deposits recorded in our Unaudited Condensed Consolidated Balance Sheets under Current Assets - Other.
 
Our accounting policy is to offset derivative assets and liabilities executed with the same counterparty when a master netting arrangement exists.  Accordingly, we also offset derivative assets and liabilities with amounts associated with cash margin.  Our exchange-traded derivatives are transacted through brokerage accounts and are subject to margin requirements as established by the respective exchange.  On a daily basis, our account equity (consisting of the sum of our cash balance and the fair value of our open derivatives) is compared to our initial margin requirement resulting in the payment or return of variation margin.  As of March 31, 2014, we had a net broker receivable of approximately $3.2 million (consisting of initial margin of $2.4 million increased by $0.8 million of variation margin).  As of December 31, 2013, we had a net broker receivable of approximately $5.3 million (consisting of initial margin of $4.1 million increased by $1.2 million of variation margin).  At March 31, 2014 and December 31, 2013, none of our outstanding derivatives contained credit-risk related contingent features that would result in a material adverse impact to us upon any change in our credit ratings. 

Effect on Operating Results 
 
 
Amount of Gain (Loss) Recognized in Income
 
Unaudited Condensed Consolidated Statements of Operations Location
 
Three Months Ended
March 31,
 
 
2014
 
2013
Commodity derivatives - futures and call options:
 
 
 
 
 
Contracts not considered hedges under accounting guidance
Supply and logistics product costs
 
$
2,769

 
$
(3,503
)
Total commodity derivatives
 
 
$
2,769

 
$
(3,503
)

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


13. Fair-Value Measurements
We classify financial assets and liabilities into the following three levels based on the inputs used to measure fair value:
(1)
Level 1 fair values are based on observable inputs such as quoted prices in active markets for identical assets and liabilities;
(2)
Level 2 fair values are based on pricing inputs other than quoted prices in active markets and are either directly or indirectly observable as of the measurement date; and
(3)
Level 3 fair values are based on unobservable inputs in which little or no market data exists.
As required by fair value accounting guidance, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Our assessment of the significance of a particular input to the fair value requires judgment and may affect the placement of assets and liabilities within the fair value hierarchy levels.
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2014 and December 31, 2013. 
 
 
Fair Value at
 
Fair Value at
 
 
March 31, 2014
 
December 31, 2013
Recurring Fair Value Measures
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Commodity derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
$
699

 
$

 
$

 
$
615

 
$

 
$

Liabilities
 
$
(700
)
 
$

 
$

 
$
(4,527
)
 
$

 
$

Our commodity derivatives include exchange-traded futures and exchange-traded options contracts. The fair value of these exchange-traded derivative contracts is based on unadjusted quoted prices in active markets and is, therefore, included in Level 1 of the fair value hierarchy.
See Note 12 for additional information on our derivative instruments.
Other Fair Value Measurements
We believe the debt outstanding under our credit facility approximates fair value as the stated rate of interest approximates current market rates for similar instruments with comparable maturities. At March 31, 2014, our senior unsecured notes had a carrying value of $700.7 million and a fair value of $737.2 million, compared to $700.8 million and $732.4 million, respectively, at December 31, 2013. The fair value of the senior unsecured notes is determined based on trade information in the financial markets of our public debt and is considered a Level 2 fair value measurement.
14. Contingencies
We are subject to various environmental laws and regulations. Policies and procedures are in place to monitor compliance and to detect and address any releases of crude oil from our pipelines or other facilities; however, no assurance can be made that such environmental releases may not substantially affect our business.

We are subject to lawsuits in the normal course of business and examination by tax and other regulatory authorities. We do not expect such matters presently pending to have a material effect on our financial position, results of operations, or cash flows.
15. Condensed Consolidating Financial Information
Our $700 million aggregate principal amount of senior unsecured notes co-issued by Genesis Energy, L.P. and Genesis Energy Finance Corporation are fully and unconditionally guaranteed jointly and severally by all of Genesis Energy, L.P.’s current and future 100% owned domestic subsidiaries, except Genesis Free State Pipeline, LLC, Genesis NEJD Pipeline, LLC and certain other minor subsidiaries. Genesis NEJD Pipeline, LLC is 100% owned by Genesis Energy, L.P., the parent company. The remaining non-guarantor subsidiaries are owned by Genesis Crude Oil, L.P., a guarantor subsidiary. Genesis Energy Finance Corporation has no independent assets or operations. See Note 7 for additional information regarding our consolidated debt obligations.

17

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following is condensed consolidating financial information for Genesis Energy, L.P., the guarantor subsidiaries and the non-guarantor subsidiaries.



18

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Unaudited Condensed Consolidating Balance Sheet
March 31, 2014

 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
19

 
$

 
$
10,874

 
$
783

 
$

 
$
11,676

Other current assets
1,181,454

 

 
415,347

 
54,713

 
(1,208,854
)
 
442,660

Total current assets
1,181,473

 

 
426,221

 
55,496

 
(1,208,854
)
 
454,336

Fixed assets, at cost

 

 
1,298,704

 
116,739

 

 
1,415,443

Less: Accumulated depreciation

 

 
(193,084
)
 
(18,605
)
 

 
(211,689
)
Net fixed assets

 

 
1,105,620

 
98,134

 

 
1,203,754

Goodwill

 

 
325,046

 

 

 
325,046

Other assets, net
20,295

 

 
234,875

 
151,035

 
(157,983
)
 
248,222

Equity investees

 

 
626,195

 

 

 
626,195

Investments in subsidiaries
1,231,287

 

 
126,331

 

 
(1,357,618
)
 

Total assets
$
2,433,055

 
$

 
$
2,844,288

 
$
304,665

 
$
(2,724,455
)
 
$
2,857,553

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
11,756

 
$

 
$
1,580,761

 
$
17,926

 
$
(1,209,010
)
 
$
401,433

Senior secured credit facility
640,500

 

 

 

 

 
640,500

Senior unsecured notes
700,740

 

 

 

 

 
700,740

Deferred tax liabilities

 

 
16,285

 

 

 
16,285

Other liabilities

 

 
14,833

 
161,510

 
(157,807
)
 
18,536

Total liabilities
1,352,996

 

 
1,611,879

 
179,436

 
(1,366,817
)
 
1,777,494

Partners’ capital
1,080,059

 

 
1,232,409

 
125,229

 
(1,357,638
)
 
1,080,059

Total liabilities and partners’ capital
$
2,433,055

 
$

 
$
2,844,288

 
$
304,665

 
$
(2,724,455
)
 
$
2,857,553



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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Balance Sheet
December 31, 2013
 
 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
20

 
$

 
$
8,061

 
$
785

 
$

 
$
8,866

Other current assets
1,133,695

 

 
498,230

 
54,199

 
(1,159,767
)
 
526,357

Total current assets
1,133,715

 

 
506,291

 
54,984

 
(1,159,767
)
 
535,223

Fixed assets, at cost

 

 
1,211,356

 
116,618

 

 
1,327,974

Less: Accumulated depreciation

 

 
(181,905
)
 
(17,325
)
 

 
(199,230
)
Net fixed assets

 

 
1,029,451

 
99,293

 

 
1,128,744

Goodwill

 

 
325,046

 

 

 
325,046

Other assets, net
21,432

 

 
238,282

 
152,413

 
(159,185
)
 
252,942

Equity investees

 

 
620,247

 

 

 
620,247

Investments in subsidiaries
1,236,164

 

 
124,718

 

 
(1,360,882
)
 

Total assets
$
2,391,311

 
$

 
$
2,844,035

 
$
306,690

 
$
(2,679,834
)
 
$
2,862,202

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
10,002

 
$

 
$
1,576,186

 
$
19,660

 
$
(1,159,295
)
 
$
446,553

Senior secured credit facility
582,800

 

 

 

 

 
582,800

Senior unsecured notes
700,772

 

 

 

 

 
700,772

Deferred tax liabilities

 

 
15,944

 

 

 
15,944

Other liabilities

 

 
14,664

 
162,739

 
(159,007
)
 
18,396

Total liabilities
1,293,574

 

 
1,606,794

 
182,399

 
(1,318,302
)
 
1,764,465

Partners’ capital
1,097,737

 

 
1,237,241

 
124,291

 
(1,361,532
)
 
1,097,737

Total liabilities and partners’ capital
$
2,391,311

 
$

 
$
2,844,035

 
$
306,690

 
$
(2,679,834
)
 
$
2,862,202




























20

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2014
 
 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics
$

 
$

 
$
942,037

 
$
32,211

 
$
(29,642
)
 
$
944,606

Refinery services

 

 
51,730

 
6,074

 
(3,611
)
 
54,193

Pipeline transportation services

 

 
14,607

 
6,313

 

 
20,920

Total revenues

 

 
1,008,374

 
44,598

 
(33,253
)
 
1,019,719

COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics costs

 

 
911,120

 
30,874

 
(29,640
)
 
912,354

Refinery services operating costs

 

 
31,591

 
5,846

 
(4,242
)
 
33,195

Pipeline transportation operating costs

 

 
7,055

 
423

 

 
7,478

General and administrative

 

 
11,980

 
30

 

 
12,010

Depreciation and amortization

 

 
17,995

 
1,285

 

 
19,280

Total costs and expenses

 

 
979,741

 
38,458

 
(33,882
)
 
984,317

OPERATING INCOME

 

 
28,633

 
6,140

 
629

 
35,402

Equity in earnings of subsidiaries
42,579

 

 
2,164

 

 
(44,743
)
 

Equity in earnings of equity investees

 

 
7,818

 

 

 
7,818

Interest (expense) income, net
(12,804
)
 

 
3,966

 
(3,966
)
 

 
(12,804
)
Income before income taxes
29,775

 

 
42,581

 
2,174

 
(44,114
)
 
30,416

Income tax expense

 

 
(587
)
 
(54
)
 

 
(641
)
Income from continuing operations
29,775

 

 
41,994

 
2,120

 
(44,114
)
 
29,775

Income from discontinued operations

 

 

 

 

 

NET INCOME
$
29,775

 
$

 
$
41,994

 
$
2,120

 
$
(44,114
)
 
$
29,775



21

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2013
 
 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics
$

 
$

 
$
938,083

 
$
38,945

 
$
(32,483
)
 
$
944,545

Refinery services

 

 
47,767

 
5,563

 
(3,846
)
 
49,484

Pipeline transportation services

 

 
14,126

 
6,653

 

 
20,779

Total revenues

 

 
999,976

 
51,161

 
(36,329
)
 
1,014,808

COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics costs

 

 
916,808

 
34,291

 
(32,483
)
 
918,616

Refinery services operating costs

 

 
31,167

 
5,282

 
(4,006
)
 
32,443

Pipeline transportation operating costs

 

 
6,754

 
330

 

 
7,084

General and administrative

 

 
11,578

 
33

 

 
11,611

Depreciation and amortization

 

 
14,147

 
902

 

 
15,049

Total costs and expenses

 

 
980,454

 
40,838

 
(36,489
)
 
984,803

OPERATING INCOME

 

 
19,522

 
10,323

 
160

 
30,005

Equity in earnings of subsidiaries
34,252

 

 
6,238

 

 
(40,490
)
 

Equity in earnings of equity investees

 

 
3,936

 

 

 
3,936

Interest (expense) income, net
(11,406
)
 

 
4,047

 
(4,082
)
 

 
(11,441
)
Income before income taxes
22,846

 

 
33,743

 
6,241

 
(40,330
)
 
22,500

Income tax benefit (expense)

 

 
257

 
(54
)
 

 
203

Income from continuing operations
22,846

 

 
34,000

 
6,187

 
(40,330
)
 
22,703

Income from discontinued operations

 

 
143

 

 

 
143

NET INCOME
$
22,846

 
$

 
$
34,143

 
$
6,187

 
$
(40,330
)
 
$
22,846




22

Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2014
 
 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
Net cash (used in) provided by operating activities
$
(27,470
)
 
$

 
$
162,508

 
$
2,522

 
$
(31,472
)
 
$
106,088

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
 
Payments to acquire fixed and intangible assets

 

 
(104,130
)
 
(124
)
 

 
(104,254
)
Cash distributions received from equity investees - return of investment
17,222

 

 
2,636

 

 
(17,222
)
 
2,636

Investments in equity investees


 

 
(10,709
)
 

 

 
(10,709
)
Repayments on loan to non-guarantor subsidiary

 

 
1,201

 

 
(1,201
)
 

Proceeds from asset sales

 

 
72

 

 

 
72

Other, net

 

 
(1,270
)
 

 

 
(1,270
)
Net cash provided by (used) in investing activities
17,222