GEL 3.31.2015 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, 2015
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 99,589,221 Class A Common Units and 39,997 Class B Common Units outstanding as of April 28, 2015.



Table of Contents

GENESIS ENERGY, L.P.
TABLE OF CONTENTS
 

 
 
Page
 
 
Item 1.
 
 
 
 
 
 
 
 
 3. 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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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except units)
 
 
March 31, 2015
 
December 31, 2014
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
11,138

 
$
9,462

Accounts receivable - trade, net
202,632

 
271,529

Inventories
63,802

 
46,829

Other
30,368

 
27,546

Total current assets
307,940

 
355,366

FIXED ASSETS, at cost
2,017,239

 
1,899,058

Less: Accumulated depreciation
(287,077
)
 
(268,057
)
Net fixed assets
1,730,162

 
1,631,001

NET INVESTMENT IN DIRECT FINANCING LEASES, net of unearned income
144,458

 
145,959

EQUITY INVESTEES
620,147

 
628,780

INTANGIBLE ASSETS, net of amortization
79,918

 
82,931

GOODWILL
325,046

 
325,046

OTHER ASSETS, net of amortization
64,469

 
61,291

TOTAL ASSETS
$
3,272,140

 
$
3,230,374

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable - trade
$
203,298

 
$
245,405

Accrued liabilities
139,273

 
117,740

Total current liabilities
342,571

 
363,145

SENIOR SECURED CREDIT FACILITY
648,400

 
550,400

SENIOR UNSECURED NOTES
1,050,604

 
1,050,639

DEFERRED TAX LIABILITIES
19,363

 
18,754

OTHER LONG-TERM LIABILITIES
18,326

 
18,233

COMMITMENTS AND CONTINGENCIES (Note 15)

 

PARTNERS’ CAPITAL:
 
 
 
Common unitholders, 95,029,218 units issued and outstanding at
March 31, 2015 and December 31, 2014, respectively
1,192,876

 
1,229,203

TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$
3,272,140

 
$
3,230,374

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,
 
2015
 
2014
REVENUES:
 
 
 
Pipeline transportation services
19,858

 
20,920

Refinery services
46,124

 
54,193

Marine transportation
57,371

 
56,293

Supply and logistics
403,504

 
888,313

Total revenues
526,857

 
1,019,719

COSTS AND EXPENSES:
 
 
 
Supply and logistics product costs
370,918

 
849,262

Supply and logistics operating costs
25,239

 
27,318

Marine transportation operating costs
31,594

 
35,774

Refinery services operating costs
27,027

 
33,195

Pipeline transportation operating costs
6,914

 
7,478

General and administrative
13,221

 
12,010

Depreciation and amortization
27,125

 
19,280

Total costs and expenses
502,038

 
984,317

OPERATING INCOME
24,819

 
35,402

Equity in earnings of equity investees
15,519

 
7,818

Interest expense
(19,215
)
 
(12,804
)
Income before income taxes
21,123

 
30,416

Income tax expense
(908
)
 
(641
)
NET INCOME
$
20,215

 
$
29,775

NET INCOME PER COMMON UNIT:
 
 
 
Basic and Diluted
$
0.21

 
$
0.34

WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:
 
 
 
Basic and Diluted
95,029

 
88,691

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
 
2015
 
2014
 
2015
 
2014
Partners’ capital, January 1
95,029

 
88,691

 
$
1,229,203

 
$
1,097,737

Net income

 

 
20,215

 
29,775

Cash distributions

 

 
(56,542
)
 
(47,453
)
Partners' capital, March 31
95,029

 
88,691

 
$
1,192,876

 
$
1,080,059

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,
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
20,215

 
$
29,775

Adjustments to reconcile net income to net cash provided by operating activities -
 
 
 
Depreciation and amortization
27,125

 
19,280

Amortization of debt issuance costs and premium
1,247

 
1,104

Amortization of unearned income and initial direct costs on direct financing leases
(3,805
)
 
(3,977
)
Payments received under direct financing leases
5,167

 
5,315

Equity in earnings of investments in equity investees
(15,519
)
 
(7,818
)
Cash distributions of earnings of equity investees
18,075

 
9,944

Non-cash effect of equity-based compensation plans
3,161

 
2,886

Deferred and other tax liabilities (benefits)
608

 
341

Unrealized loss (gain) on derivative transactions
1,534

 
(3,911
)
Other, net
(1,279
)
 
231

Net changes in components of operating assets and liabilities (Note 12)
5,936

 
52,918

Net cash provided by operating activities
62,465

 
106,088

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Payments to acquire fixed and intangible assets
(111,504
)
 
(104,254
)
Cash distributions received from equity investees - return of investment
7,827

 
2,636

Investments in equity investees
(1,750
)
 
(10,709
)
Proceeds from asset sales
1,768

 
72

Other, net
29

 
(1,270
)
Net cash used in investing activities
(103,630
)
 
(113,525
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Borrowings on senior secured credit facility
226,200

 
249,900

Repayments on senior secured credit facility
(128,200
)
 
(192,200
)
Distributions to common unitholders
(56,542
)
 
(47,453
)
Other, net
1,383

 

Net cash provided by financing activities
42,841

 
10,247

Net increase in cash and cash equivalents
1,676

 
2,810

Cash and cash equivalents at beginning of period
9,462

 
8,866

Cash and cash equivalents at end of period
$
11,138

 
$
11,676

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 growth-oriented master limited partnership formed in Delaware in 1996 and 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 five divisions that constitute our reportable segments:
Onshore pipeline transportation of crude oil and, to a lesser extent, carbon dioxide (or "CO2");
Offshore pipeline transportation of crude oil in the Gulf of Mexico;
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");
Marine transportation to provide waterborne transportation of petroleum products and crude oil throughout North America; 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, 2014.
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. Recent Accounting Developments
Recently Issued
In April 2015, the Financial Accounting Standards Board ("FASB") issued guidance that will require the presentation of debt issuance costs in financial statements as a direct reduction of related debt liabilities with amortization of debt issuance costs reported as interest expense. Under current U.S. GAAP standards, debt issuance costs are reported as deferred charges (i.e., as an asset). This guidance is effective for annual periods, and interim periods within those fiscal years, beginning after December 15, 2015 and is to be applied retrospectively upon adoption. Early adoption is permitted, including adoption in an interim period for financial statements that have not been previously issued. We are currently evaluating this guidance.
In May 2014, the FASB issued revised guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard provides a five-step analysis for transactions to determine when and how revenue is recognized. The guidance permits the use of either a full retrospective or a modified retrospective approach.

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In April 2015, the FASB proposed deferring the effective date of this standard by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also proposed permitting early adoption of the standard, but not before the original effective date of December 15, 2016. We are evaluating the transition methods and the impact of the amended guidance on our financial position, results of operations and related disclosures.
3. Acquisition and Divestiture
Acquisition
M/T American Phoenix
On November 13, 2014, we acquired the M/T American Phoenix from Mid Ocean Tanker Company for $157 million. The M/T American Phoenix is a modern double-hulled, Jones Act qualified tanker with 330,000 barrels of cargo capacity that was placed into service during 2012.
The purchase price of $157 million was paid to Mid Ocean Tanker Company in cash, as funded with proceeds from available and committed liquidity under our $1 billion revolving credit facility. We have reflected the financial results of the acquired business in our marine transportation segment from the date of acquisition. We have recorded the assets acquired in the Consolidated Financial Statements at their fair values. Those fair values were developed by management.
The allocation of the purchase price, as presented on our Consolidated Balance Sheet, is summarized as follows:
Property and equipment
$
125,000

Intangible assets
32,000

Total purchase price
$
157,000

Our Consolidated Financial Statements include the results of our acquired offshore marine transportation business since November 13, 2014, the effective closing date of the acquisition. The following table presents selected financial information included in our Consolidated Financial Statements for the periods presented:
 
Three Months Ended
March 31,
 
2015
Revenues
$
5,580

Net income
$
1,397

The table below presents selected unaudited pro forma financial information incorporating the historical results of our M/T American Phoenix. The pro forma financial information below has been prepared as if the acquisition had been completed on January 1, 2014 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 30 years.
 
Three Months Ended
March 31,
 
2014
Pro forma consolidated financial operating results:
 
Revenues
$
1,024,570

Net Income
$
31,073


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


4. Inventories
The major components of inventories were as follows:
 
March 31,
2015
 
December 31,
2014
Petroleum products
$
26,791

 
$
30,108

Crude oil
30,043

 
7,266

Caustic soda
2,392

 
2,850

NaHS
4,573

 
6,603

Other
3

 
2

Total
$
63,802

 
$
46,829

Inventories are valued at the lower of cost or market. The market value of inventories was below recorded costs by approximately $0.2 million and $6.6 million at March 31, 2015 and December 31, 2014, respectively; therefore we reduced the value of inventory in our Unaudited Condensed Consolidated Financial Statements for this difference.
5. Fixed Assets
Fixed Assets
Fixed assets consisted of the following:
 
 
March 31,
2015
 
December 31,
2014
Pipelines and related assets
$
473,854

 
$
466,613

Machinery and equipment
382,046

 
376,672

Transportation equipment
17,983

 
18,479

Marine vessels
736,638

 
731,016

Land, buildings and improvements
38,244

 
38,037

Office equipment, furniture and fixtures
6,866

 
6,696

Construction in progress
318,890

 
222,233

Other
42,718

 
39,312

Fixed assets, at cost
2,017,239

 
1,899,058

Less: Accumulated depreciation
(287,077
)
 
(268,057
)
Net fixed assets
$
1,730,162

 
$
1,631,001

Our depreciation expense for the periods presented was as follows:
 
Three Months Ended
March 31,
 
2015
 
2014
Depreciation expense
$
22,037

 
$
15,277

6. 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, 2015 and December 31, 2014, the unamortized excess cost amounts totaled $212.8 million and $215.4 million, respectively. We amortize the excess cost as a reduction in equity earnings in a manner similar to depreciation.

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



The following table presents information included in our Unaudited Condensed Consolidated Financial Statements related to our equity investees.
 
Three Months Ended
March 31,
 
2015
 
2014
Genesis’ share of operating earnings
$
18,260

 
$
10,401

Amortization of excess purchase price
(2,741
)
 
(2,583
)
Net equity in earnings
$
15,519

 
$
7,818

Distributions received
$
25,902

 
$
12,580

The following tables present the combined unaudited balance sheet and income statement information (on a 100% basis) of our equity investees:
 
March 31,
2015
 
December 31,
2014
BALANCE SHEET DATA:
 
 
 
Assets
 
 
 
Current assets
$
44,834

 
$
42,135

Fixed assets, net
1,003,359

 
1,015,305

Other assets
3,181

 
4,369

Total assets
$
1,051,374

 
$
1,061,809

Liabilities and equity
 
 
 
Current liabilities
$
29,232

 
$
25,369

Other liabilities
202,623

 
202,613

Equity
819,519

 
833,827

Total liabilities and equity
$
1,051,374

 
$
1,061,809

 
 
Three Months Ended
March 31,
 
2015
 
2014
INCOME STATEMENT DATA:
 
 
 
Revenues
$
72,090

 
$
49,824

Operating income
$
48,113

 
$
30,475

Net income
$
46,917

 
$
29,706


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


7. Intangible Assets
The following table summarizes the components of our intangible assets at the dates indicated:
 
 
March 31, 2015
 
December 31, 2014
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
Refinery Services:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
94,654

 
$
82,981

 
$
11,673

 
$
94,654

 
$
81,880

 
$
12,774

Licensing agreements
38,678

 
29,661

 
9,017

 
38,678

 
28,983

 
9,695

Segment total
133,332

 
112,642

 
20,690

 
133,332

 
110,863

 
22,469

Supply & Logistics:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
35,430

 
30,601

 
4,829

 
35,430

 
30,228

 
5,202

Intangibles associated with lease
13,260

 
3,631

 
9,629

 
13,260

 
3,512

 
9,748

Segment total
48,690

 
34,232

 
14,458

 
48,690

 
33,740

 
14,950

Marine contract intangibles
32,000

 
2,083

 
29,917

 
32,000

 
833

 
31,167

Other
23,821

 
8,968

 
14,853

 
22,797

 
8,452

 
14,345

Total
$
237,843

 
$
157,925

 
$
79,918

 
$
236,819

 
$
153,888

 
$
82,931

Our amortization of intangible assets for the periods presented was as follows:
 
Three Months Ended
March 31,
 
2015
 
2014
Amortization of intangible assets
$
4,037

 
$
3,145

We estimate that our amortization expense for the next five years will be as follows:
Remainder of
2015
$
13,922

 
2016
$
15,613

 
2017
$
14,450

 
2018
$
12,334

 
2019
$
8,021

8. Debt
Our obligations under debt arrangements consisted of the following:
 
March 31,
2015
 
December 31,
2014
Senior secured credit facility
$
648,400

 
$
550,400

7.875% senior unsecured notes (including unamortized premium of $604 and $639 in 2015 and 2014, respectively)
350,604

 
350,639

5.750% senior unsecured notes
350,000

 
350,000

5.625% senior unsecured notes
350,000

 
350,000

Total long-term debt
$
1,699,004

 
$
1,601,039

As of March 31, 2015, we were in compliance with the financial covenants contained in our credit agreement and senior unsecured notes indentures.

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


Senior Secured Credit Facility
The key terms for rates under our $1 billion senior secured credit facility, which are dependent on our leverage ratio (as defined in the credit agreement), are as follows:
The applicable margin varies from 1.50% to 2.50% on Eurodollar borrowings and from 0.50% to 1.50% on alternate base rate borrowings.
Letter of credit fees range from 1.50% to 2.50%
The commitment fee on the unused committed amount will range from 0.250% to 0.375%.
The accordion feature was increased from $300 million to $500 million, giving us the ability to expand the size of the facility up to $1.5 billion for acquisitions or growth projects, subject to lender consent.
At March 31, 2015, we had $648.4 million borrowed under our $1 billion credit facility, with $48.3 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 $11.2 million was outstanding at March 31, 2015. 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, 2015 was $340.4 million.
9. Partners’ Capital and Distributions
At March 31, 2015, our outstanding common units consisted of 94,989,221 Class A units and 39,997 Class B units.
On April 10, 2015, we issued 4,600,000 Class A common units in a public offering at a price of $44.42 per unit, which included the exercise by the underwriters of an option to purchase up to 600,000 additional common units from us. We received proceeds, net of underwriting discounts and offering costs, of approximately $198 million from that offering. We intend to use the net proceeds for general partnership purposes, including funding acquisitions (including organic growth projects) or repaying a portion of the borrowings outstanding under our revolving credit facility.
Distributions
We paid or will pay the following distributions in 2014 and 2015:
Distribution For
 
Date Paid
 
Per Unit
Amount
 
Total
Amount
 
2014
 
 
 
 
 
 
 
1st Quarter
 
May 15, 2014
 
$
0.5500

 
$
48,783

 
2nd Quarter
 
August 14, 2014
 
$
0.5650

 
$
50,114

 
3rd Quarter
 
November 14, 2014
 
$
0.5800

 
$
54,112

 
4th Quarter
 
February 13, 2015
 
$
0.5950

 
$
56,542

 
2015
 
 
 
 
 
 
 
1st Quarter
 
May 15, 2015
(1) 
$
0.6100

 
$
60,774

(2) 
(1) This distribution will be paid to unitholders of record as of May 1, 2015.
(2) Includes holders of units issued on April 10, 2015.
10. Business Segment Information
In the fourth quarter of 2014, we reorganized our operating segments as a result of a change in the way our Chief Executive Officer, who is our chief operating decision maker, evaluates the performance of operations, develops strategy and allocates resources. The results of our marine transportation activities, formerly reported in the Supply and Logistics Segment, are now reported in our Marine Transportation Segment. In addition, the results of our offshore and onshore pipeline transportation activities, formerly reported in the Pipeline Transportation Segment, are now reported separately in our Onshore Pipeline Transportation Segment and Offshore Pipeline Transportation Segments. Our disclosures related to prior periods have been recast to reflect our reorganized segments.    

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


As a result of the above changes, we currently manage our businesses through five divisions that constitute our reportable segments:
Onshore Pipeline Transportation – transportation of crude oil, and to a lesser extent, CO2;
Offshore Pipeline Transportation – offshore transportation of crude oil in the Gulf of Mexico;
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;
Marine Transportation – marine transportation to provide waterborne transportation of petroleum products and crude oil throughout North America; 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. 
Segment information for the periods presented below was as follows:
 
Onshore Pipeline
Transportation
 
Offshore Pipeline Transportation
 
Refinery
Services
 
Marine Transportation
 
Supply &
Logistics
 
Total
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Segment Margin (a)
$
14,323

 
$
25,198

 
$
19,160

 
$
25,693

 
$
9,747

 
$
94,121

Capital expenditures (b)
$
68,591

 
$
2,053

 
$
1,212

 
$
16,576

 
$
36,776

 
$
125,208

Revenues:
 
 
 
 
 
 
 
 
 
 
 
External customers
$
15,831

 
$
790

 
$
48,435

 
$
54,640

 
$
407,161

 
$
526,857

Intersegment (c)
3,237

 

 
(2,311
)
 
2,731

 
(3,657
)
 

Total revenues of reportable segments
$
19,068

 
$
790

 
$
46,124

 
$
57,371

 
$
403,504

 
$
526,857

Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
Segment Margin (a)
$
14,689

 
$
13,403

 
$
20,872

 
$
20,457

 
$
7,930

 
$
77,351

Capital expenditures (b)
$
23,896

 
$
10,384

 
$
302

 
$
10,959

 
$
57,237

 
$
102,778

Revenues:
 
 
 
 
 
 
 
 
 
 
 
External customers
$
15,503

 
$
947

 
$
57,107

 
$
51,090

 
$
895,072

 
$
1,019,719

Intersegment (c)
4,470

 

 
(2,914
)
 
5,203

 
(6,759
)
 

Total revenues of reportable segments
$
19,973

 
$
947

 
$
54,193

 
$
56,293

 
$
888,313

 
$
1,019,719

Total assets by reportable segment were as follows:
 
March 31,
2015
 
December 31,
2014
Onshore pipeline transportation
$
491,072

 
$
460,012

Offshore pipeline transportation
637,412

 
645,668

Refinery services
401,164

 
403,703

Marine transportation
744,797

 
745,128

Supply and logistics
934,699

 
907,189

Other assets
62,996

 
68,674

Total consolidated assets
3,272,140

 
3,230,374

 
(a)
A reconciliation of Segment Margin to net income for the periods is presented below.

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


(b)
Capital expenditures include maintenance and growth capital expenditures, such as fixed asset additions (including enhancements to existing facilities and construction of growth projects) as well as acquisitions of businesses and interests in equity investees. In addition to construction of growth projects, capital spending in our pipeline transportation segment included $1.8 million during the three months ended March 31, 2015 and $10.4 million during the three months ended March 31, 2014 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.
Reconciliation of Segment Margin to net income:
 
Three Months Ended
March 31,
 
2015
 
2014
Segment Margin
$
94,121

 
$
77,351

Corporate general and administrative expenses
(12,299
)
 
(11,061
)
Depreciation and amortization
(27,125
)
 
(19,280
)
Interest expense
(19,215
)
 
(12,804
)
Adjustment to exclude distributable cash generated by equity investees not included in income and include equity in investees net income (1)
(10,383
)
 
(5,777
)
Non-cash items not included in Segment Margin
(2,614
)
 
3,325

Cash payments from direct financing leases in excess of earnings
(1,362
)
 
(1,338
)
Income tax expense
(908
)
 
(641
)
Net income
20,215

 
29,775

(1)
Includes distributions attributable to the quarter and received during or promptly following such quarter.
11. 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,
 
2015
 
2014
Revenues:
 
 
 
Sales of CO2 to Sandhill Group, LLC (1)
$
699

 
$
655

Costs and expenses:
 
 
 
Amounts paid to our CEO in connection with the use of his aircraft
$
195

 
$
150

 
(1)
We own a 50% interest in Sandhill Group, LLC.
Amount due from Related Party
At March 31, 2015 and December 31, 2014 Sandhill Group, LLC owed us $0.2 million and $0.3 million, respectively, for purchases of CO2.

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


12. 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,
 
2015
 
2014
(Increase) decrease in:
 
 
 
Accounts receivable
$
70,903

 
$
60,046

Inventories
(16,973
)
 
(11,700
)
Deferred charges
(3,103
)
 

Other current assets
(4,722
)
 
41,623

Increase (decrease) in:
 
 
 
Accounts payable
(37,826
)
 
(1,867
)
Accrued liabilities
(2,343
)
 
(35,184
)
Net changes in components of operating assets and liabilities
5,936

 
52,918

Payments of interest and commitment fees, net of amounts capitalized, were $14.2 million and $14.0 million for the three months ended March 31, 2015 and March 31, 2014, respectively. We capitalized interest of $3.0 million and $4.1 million during the three months ended March 31, 2015 and March 31, 2014.
At March 31, 2015 and March 31, 2014, we had incurred liabilities for fixed and intangible asset additions totaling $73.7 million and $41.6 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, 2015 we had incurred liabilities for other asset additions totaling $12.0 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.
13. 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 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.
We have designated certain crude oil futures contracts as hedges of crude oil inventory due to our expectation that these contracts will be highly effective in hedging our exposure to fluctuations in crude oil prices during the period that we expect to hold that inventory. We account for these derivative instruments as fair value hedges under the accounting guidance. Changes in the fair value of these derivative instruments designated as fair value hedges are used to offset related changes in the fair value of the hedged crude oil inventory. Any hedge ineffectiveness in these fair value hedges and any amounts excluded from effectiveness testing are recorded as a gain or loss in the consolidates statements of operations.
In accordance with NYMEX requirements, we fund the margin associated with our loss positions on commodity derivative contracts traded on the NYMEX. The amount of the margin is adjusted daily based on the fair value of the commodity contracts. The margin requirements are intended to mitigate a party's exposure to market volatility and the

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


associated contracting party risk. We offset fair value amounts recorded for our NYMEX derivative contracts against margin funding as required by the NYMEX in Current Assets - Other in our Consolidated Balance Sheets.
At March 31, 2015, we had the following outstanding derivative commodity contracts that were entered into to economically hedge inventory or fixed price purchase commitments.
 
 
Sell (Short)
Contracts
 
Buy (Long)
Contracts
Designated as hedges under accounting rules:
 
 
 
 
Crude oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
520

 

Weighted average contract price per bbl
 
$
47.47

 
$

 
 
 
 
 
Not qualifying or not designated as hedges under accounting rules:
 
 
 
 
Crude oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
353

 
276

Weighted average contract price per bbl
 
$
52.02

 
$
54.27

Crude oil swaps:
 
 
 
 
Contract volumes (1,000 bbls)
 
670

 

Weighted average contract price per bbl
 
$
2.89

 
$

#6 Fuel oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
340

 
95

Weighted average contract price per bbl
 
$
45.46

 
$
44.95

Crude oil options:
 
 
 
 
Contract volumes (1,000 bbls)
 
85

 
40

Weighted average premium received
 
$
2.36

 
$
0.17

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, 2015 and December 31, 2014:
Fair Value of Derivative Assets and Liabilities
 
 
Unaudited Condensed Consolidated Balance Sheets Location
 
Fair Value
 
March 31,
2015
 
December 31,
2014
Asset Derivatives:
 
 
 
 
 
Commodity derivatives - futures and call options (undesignated hedges):
 
 
 
 
 
Gross amount of recognized assets
Current Assets - Other
 
$
839

 
$
16,383

Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other
 
(839
)
 
(2,310
)
Net amount of assets presented in the Unaudited Condensed Consolidated Balance Sheets
 
 
$

 
$
14,073

Commodity derivatives - futures and call options (designated hedges):
 
 
 
 
 
Gross amount of recognized assets
Current Assets - Other
 
$
61

 
$

Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other
 
(61
)
 

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)
 
$
(2,067
)
 
$
(2,310
)
Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other (1)
 
2,067

 
2,310

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

 
$

Commodity derivatives - futures and call options (designated hedges):
 
 
 
 
 
Gross amount of recognized liabilities
Current Assets - Other (1)
 
$
(797
)
 
$

Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other (1)
 
797

 

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, 2015, we had a net broker receivable of approximately $6.2 million (consisting of initial margin of $5.3 million increased by $0.9 million of variation margin).  As of December 31, 2014, we had a net broker receivable of approximately $2.8 million (consisting of initial margin of $2.4 million increased by $0.3 million of variation margin).  At March 31, 2015 and December 31, 2014, 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. 

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


Effect on Operating Results 
 
 
 
Amount of Gain (Loss) Recognized in Income
 
Unaudited Condensed Consolidated Statements of Operations Location
 
Three Months Ended
March 31,
 
 
2015
 
2014
Commodity derivatives - futures and call options:
 
 
 
 
 
Contracts designated as hedges under accounting guidance
Supply and logistics product costs
 
$
2,186

 
$

Contracts not considered hedges under accounting guidance
Supply and logistics product costs
 
(805
)
 
2,769

Total commodity derivatives
 
 
$
1,381

 
$
2,769

14. 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 for identical assets and liabilities 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, 2015 and December 31, 2014. 
 
 
Fair Value at
 
Fair Value at
 
 
March 31, 2015
 
December 31, 2014
Recurring Fair Value Measures
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Commodity derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
$
900

 
$

 
$

 
$
16,383

 
$

 
$

Liabilities
 
$
(2,864
)
 
$

 
$

 
$
(2,310
)
 
$

 
$

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 13 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 of interest for similar instruments with comparable maturities. At both March 31, 2015 and December 31, 2014, our senior unsecured notes had a carrying value of $1.1 billion and a fair value of $1.0 billion. 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.
15. 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.

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


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.
16. Condensed Consolidating Financial Information
Our $1.05 billion 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 8 for additional information regarding our consolidated debt obligations.
The following is condensed consolidating financial information for Genesis Energy, L.P., the guarantor subsidiaries and the non-guarantor subsidiaries.



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


Unaudited Condensed Consolidating Balance Sheet
March 31, 2015

 
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
$
9

 
$

 
$
8,789

 
$
2,340

 
$

 
$
11,138

Other current assets
1,465,246

 

 
284,622

 
48,182

 
(1,501,248
)
 
296,802

Total current assets
1,465,255

 

 
293,411

 
50,522

 
(1,501,248
)
 
307,940

Fixed assets, at cost

 

 
1,899,218

 
118,021

 

 
2,017,239

Less: Accumulated depreciation

 

 
(263,259
)
 
(23,818
)
 

 
(287,077
)
Net fixed assets

 

 
1,635,959

 
94,203

 

 
1,730,162

Goodwill

 

 
325,046

 

 

 
325,046

Other assets, net
27,140

 

 
269,385

 
145,184

 
(152,864
)
 
288,845

Equity investees

 

 
620,147

 

 

 
620,147

Investments in subsidiaries
1,417,120

 

 
126,985

 

 
(1,544,105
)
 

Total assets
$
2,909,515

 
$

 
$
3,270,933

 
$
289,909

 
$
(3,198,217
)
 
$
3,272,140

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
17,635

 
$

 
$
1,818,022

 
$
8,327

 
$
(1,501,413
)
 
$
342,571

Senior secured credit facility
648,400

 

 

 

 

 
648,400

Senior unsecured notes
1,050,604

 

 

 

 

 
1,050,604

Deferred tax liabilities

 

 
19,363

 

 

 
19,363

Other liabilities

 

 
15,130

 
155,891

 
(152,695
)
 
18,326

Total liabilities
1,716,639

 

 
1,852,515

 
164,218

 
(1,654,108
)
 
2,079,264

Partners’ capital
1,192,876

 

 
1,418,418

 
125,691

 
(1,544,109
)
 
1,192,876

Total liabilities and partners’ capital
$
2,909,515

 
$

 
$
3,270,933

 
$
289,909

 
$
(3,198,217
)
 
$
3,272,140



20

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



Unaudited Condensed Consolidating Balance Sheet
December 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
$
9

 
$

 
$
8,352

 
$
1,101

 
$

 
$
9,462

Other current assets
1,378,573

 

 
327,819

 
51,781

 
(1,412,269
)
 
345,904

Total current assets
1,378,582

 

 
336,171

 
52,882

 
(1,412,269
)
 
355,366

Fixed assets, at cost

 

 
1,781,158

 
117,900

 

 
1,899,058

Less: Accumulated depreciation

 

 
(245,548
)
 
(22,509
)
 

 
(268,057
)
Net fixed assets

 

 
1,535,610

 
95,391

 

 
1,631,001

Goodwill

 

 
325,046

 

 

 
325,046

Other assets, net
28,421

 

 
269,252

 
146,700

 
(154,192
)
 
290,181

Equity investees

 

 
628,780

 

 

 
628,780

Investments in subsidiaries
1,434,255

 

 
126,035

 

 
(1,560,290
)
 

Total assets
$
2,841,258

 
$

 
$
3,220,894

 
$
294,973

 
$
(3,126,751
)
 
$
3,230,374

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
11,016

 
$

 
$
1,751,548

 
$
13,013

 
$
(1,412,432
)
 
$
363,145

Senior secured credit facility
550,400

 

 

 

 

 
550,400

Senior unsecured notes
1,050,639

 

 

 

 

 
1,050,639

Deferred tax liabilities

 

 
18,754

 

 

 
18,754

Other liabilities

 

 
15,082

 
157,172

 
(154,021
)
 
18,233

Total liabilities
1,612,055

 

 
1,785,384

 
170,185

 
(1,566,453
)
 
2,001,171

Partners’ capital
1,229,203

 

 
1,435,510

 
124,788

 
(1,560,298
)
 
1,229,203

Total liabilities and partners’ capital
$
2,841,258

 
$

 
$
3,220,894

 
$
294,973

 
$
(3,126,751
)
 
$
3,230,374




























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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, 2015
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
Pipeline transportation services
$

 
$

 
$
13,414

 
$
6,444

 
$

 
$
19,858

Refinery services

 

 
45,319

 
2,112

 
(1,307
)
 
46,124

Marine transportation

 

 
57,371

 

 

 
57,371

Supply and logistics

 

 
401,649

 
3,966

 
(2,111
)
 
403,504

Total revenues

 

 
517,753

 
12,522

 
(3,418
)
 
526,857

COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics costs

 

 
394,834

 
3,433

 
(2,110
)
 
396,157

Marine transportation costs

 

 
31,594

 

 

 
31,594

Refinery services operating costs

 

 
26,219

 
2,119

 
(1,311
)
 
27,027

Pipeline transportation operating costs

 

 
6,481

 
433

 

 
6,914

General and administrative

 

 
13,192

 
29

 

 
13,221

Depreciation and amortization

 

 
25,796

 
1,329

 

 
27,125

Total costs and expenses

 

 
498,116

 
7,343

 
(3,421
)
 
502,038

OPERATING INCOME

 

 
19,637

 
5,179

 
3

 
24,819

Equity in earnings of subsidiaries
39,407

 

 
1,387

 

 
(40,794
)
 

Equity in earnings of equity investees

 

 
15,519

 

 

 
15,519

Interest (expense) income, net
(19,192
)
 

 
3,814

 
(3,837
)
 

 
(19,215
)
Income before income taxes
20,215

 

 
40,357

 
1,342

 
(40,791
)
 
21,123

Income tax expense

 

 
(911
)
 
3

 

 
(908
)
NET INCOME
$
20,215

 
$

 
$
39,446

 
$
1,345

 
$
(40,791
)
 
$
20,215



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Table of Contents
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:
 
 
 
 
 
 
 
 
 
 
 
Pipeline transportation services
$

 
$

 
$
14,607

 
$
6,313

 
$

 
$
20,920

Refinery services

 

 
51,730

 
6,074

 
(3,611
)
 
54,193

Marine transportation

 

 
56,293

 

 

 
56,293

Supply and logistics

 

 
885,744

 
32,211

 
(29,642
)
 
888,313

Total revenues

 

 
1,008,374

 
44,598

 
(33,253
)
 
1,019,719

COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics costs

 

 
875,346

 
30,874

 
(29,640
)
 
876,580

Marine transportation costs

 

 
35,774

 

 

 
35,774

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 benefit (expense)

 

 
(587
)
 
(54
)
 

 
(641
)
NET INCOME
$
29,775

 
$

 
$
41,994

 
$
2,120

 
$
(44,114
)
 
$
29,775