1. Basis of presentation and general information:
The accompanying unaudited condensed consolidated financial statements include the accounts of Aegean Marine Petroleum Network Inc. ("Aegean" or "AMPNI") and its subsidiaries (Aegean and its subsidiaries are hereinafter collectively referred to as the "Company") and have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") for interim financial information. Accordingly, they do not include all the information and notes required by US GAAP for complete financial statements.
These unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, considered necessary for a fair statement of the Company's financial position, results of operations and cash flows for the periods presented. Operating results for the nine months ended September 30, 2016 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2016.
These unaudited condensed consolidated financial statements presented in this report should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 20-F for the year ended December 31, 2015.
The carrying amounts of cash and cash equivalents, trade accounts receivable, and trade accounts payable reported in the condensed consolidated balance sheets approximate their respective fair values because of the short term nature of these accounts. The fair value of revolving credit facilities is estimated based on current rates offered to the Company for similar debt of the same remaining maturities. The carrying value approximates the fair market value for the floating rate loans due to their variable interest rate, being EURIBOR, LIBOR or EIBOR. LIBOR, EURIBOR and EIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence floating rate loans are considered Level 2 items in accordance with the fair value hierarchy. The estimated fair value of the Convertible Senior Notes at September 30, 2016 and December 31, 2015, is $134,550 and $116,218, respectively, compared to a carrying value net of finance charges of $122,012 and $118,031, respectively.
2. Significant accounting policies:
A discussion of the Company's significant accounting policies can be found in the Company's consolidated financial statements included in the Annual Report on Form 20-F for the year ended December 31, 2015. There have been no material changes to these policies in the nine-month period ended September 30, 2016.
Debt issuance costs
. In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," ("ASU 2015-03"), which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The amortization of such costs will continue to be reported as interest expense. Accordingly, the Company has adopted this accounting standard and reclassified the prior-period amounts to conform to the current-period presentation.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
The retrospective effect of our adoption of ASU 2015-03, which affected only the presentation of deferred debt issuance costs in our Consolidated Balance Sheets at December 31, 2015, is as follows:
|
|
Deferred charges, net
|
|
|
Long-term Debt
|
|
|
|
(In thousands)
|
|
Amount as previously presented, before adoption of ASU 2015-03
|
|
$
|
31,652
|
|
|
$
|
440,765
|
|
Deferred debt issuance costs
|
|
|
(6,645
|
)
|
|
|
(6,645
|
)
|
|
|
|
|
|
|
|
|
|
Amount as restated, after adoption of ASU 2015-03
|
|
$
|
25,007
|
|
|
$
|
434,120
|
|
|
|
|
|
|
|
|
|
|
3. Trade accounts receivables factoring agreement
In connection with the factoring agreement, renewed on November 14, 2016 and valid until November 14, 2017, the Company sold $98,922 and $91,714 of trade accounts receivable during the periods ended September 30, 2016 and 2015, respectively, net of servicing fees of $440 and $345, included in the condensed consolidated statements of income.
4. Inventories:
The amounts shown in the accompanying condensed consolidated balance sheets are analyzed as follows:
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Held for sale:
|
|
|
|
|
|
|
Marine Fuel Oil
|
|
$
|
143,205
|
|
|
$
|
82,076
|
|
Marine Gas Oil
|
|
|
35,520
|
|
|
|
30,529
|
|
|
|
|
178,725
|
|
|
|
112,605
|
|
Held for consumption:
|
|
|
|
|
|
|
|
|
Marine fuel
|
|
|
1,285
|
|
|
|
1,124
|
|
Lubricants
|
|
|
550
|
|
|
|
569
|
|
Stores
|
|
|
9
|
|
|
|
14
|
|
Victuals
|
|
|
147
|
|
|
|
219
|
|
|
|
|
1,991
|
|
|
|
1,926
|
|
Total
|
|
$
|
180,716
|
|
|
$
|
114,531
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
5. Transactions with related parties:
The transactions with related parties presented in the accompanying condensed consolidated financial statements as of September 30, 2016 and December 31, 2015 and for the periods ended September 30, 2016 and September 30, 2015 are analyzed as follows:
Nine months ended September 30, 2016
|
|
|
|
Sales of Marine Petroleum Products- related companies*
|
|
|
Voyage
Revenues*
|
|
|
Other Revenues*
|
|
|
Cost of
Marine Petroleum Products- related companies
|
|
|
Cost of voyage revenues
|
|
|
Selling and Distribution
|
|
|
General and Administrative
|
|
a) Aegean Oil S.A.
|
|
$
|
654
|
|
|
$
|
4,507
|
|
|
$
|
-
|
|
|
$
|
49,059
|
|
|
$
|
122
|
|
|
$
|
435
|
|
|
$
|
-
|
|
b) Aegean Shipping Management S.A.
|
|
|
1,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
c) Gener8 Maritime Inc.
|
|
|
4,584
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
150
|
|
d) Unique Tankers LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
e) Melco S.A.
|
|
|
22
|
|
|
|
-
|
|
|
|
-
|
|
|
|
113
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
f) Aegean V
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
g) Aegean VIII
|
|
|
-
|
|
|
|
3,959
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
h) Other
|
|
|
703
|
|
|
|
77
|
|
|
|
173
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
457
|
|
Total
|
|
$
|
7,163
|
|
|
$
|
8,543
|
|
|
$
|
173
|
|
|
$
|
49,172
|
|
|
$
|
122
|
|
|
$
|
435
|
|
|
$
|
607
|
|
Nine months ended September 30, 2015
|
|
|
|
Sales of Marine Petroleum Products- related companies*
|
|
|
Voyage
Revenues*
|
|
|
Other Revenues*
|
|
|
Cost of
Marine Petroleum Products- related companies
|
|
|
Cost of voyage revenues
|
|
|
Selling and Distribution
|
|
|
General and Administrative
|
|
a) Aegean Oil S.A.
|
|
$
|
-
|
|
|
$
|
1,675
|
|
|
$
|
-
|
|
|
$
|
115,859
|
|
|
$
|
149
|
|
|
$
|
670
|
|
|
$
|
-
|
|
b) Aegean Shipping Management S.A.
|
|
|
1,408
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
c) Gener8 Maritime Inc.
|
|
|
7,079
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
149
|
|
d) Unique Tankers LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
e) Melco S.A.
|
|
|
-
|
|
|
|
-
|
|
|
|
150
|
|
|
|
2,716
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
f) Aegean V
|
|
|
-
|
|
|
|
1,911
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
g) Aegean VIII
|
|
|
-
|
|
|
|
2,031
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
h) Other
|
|
|
861
|
|
|
|
71
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
450
|
|
Total
|
|
$
|
9,348
|
|
|
$
|
5,688
|
|
|
$
|
150
|
|
|
$
|
118,575
|
|
|
$
|
149
|
|
|
$
|
670
|
|
|
$
|
599
|
|
*Included in the revenues from related parties in the accompanying condensed consolidated statements of income.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
As of September 30, 2016
|
|
|
|
Due from related companies
|
|
|
Trade
Receivables
from related companies
|
|
|
Trade
Payables
to related companies
|
|
|
Other
Payables
to related companies
|
|
a) Aegean Oil S.A.
|
|
$
|
9,368
|
|
|
$
|
8,392
|
|
|
$
|
-
|
|
|
$
|
27
|
|
b) Aegean Shipping Management S.A.
|
|
|
28
|
|
|
|
3,342
|
|
|
|
-
|
|
|
|
-
|
|
c) Gener8 Maritime Inc.
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
d) Unique Tankers LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
e) Melco S.A.
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
5
|
|
f) Aegean V
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
g) Aegean VIII
|
|
|
763
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
h) Other
|
|
|
1,261
|
|
|
|
1,175
|
|
|
|
-
|
|
|
|
1,273
|
|
Total
|
|
$
|
11,524
|
|
|
$
|
12,909
|
|
|
$
|
2
|
|
|
$
|
1,305
|
|
As of December 31, 2015
|
|
|
|
Due from
related
companies
|
|
|
Trade
Receivables
from related companies
|
|
|
Trade
Payables
to related companies
|
|
|
Other
Payables
to related companies
|
|
a) Aegean Oil S.A.
|
|
$
|
4,524
|
|
|
$
|
14,309
|
|
|
$
|
-
|
|
|
$
|
10
|
|
b) Aegean Shipping Management S.A.
|
|
|
1,190
|
|
|
|
3,542
|
|
|
|
-
|
|
|
|
-
|
|
c) Gener8 Maritime Inc.
|
|
|
-
|
|
|
|
798
|
|
|
|
-
|
|
|
|
-
|
|
d) Unique Tankers LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
e) Melco S.A.
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
18
|
|
f) Aegean V
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
g) Aegean VIII
|
|
|
581
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
h) Other
|
|
|
492
|
|
|
|
314
|
|
|
|
-
|
|
|
|
1,158
|
|
Total
|
|
$
|
6,887
|
|
|
$
|
18,963
|
|
|
$
|
4
|
|
|
$
|
1,186
|
|
Sales of Marine Petroleum Products - related companies
Aegean Shipping Management, Gener8 Maritime, Unique Tankers LLC and certain other companies related with Mr. Dimitris Melisanidis, our Founder and Head of Corporate Development or related with Mr. Peter C. Georgiopoulos, our
Chairman of the Board are
customers of the Company. The Company's sales of marine fuel and lubricants to its customers are included under related companies' revenues in the accompanying condensed consolidated statements of income.
Trade Receivables from related companies
The amounts due from the Company's related parties for the sales of marine petroleum products are included under due Trade Receivables from related companies in the accompanying condensed consolidated balance sheets.
Voyage Revenues
The Company provides barging services to Aegean Oil S.A. through its vessels located in Piraeus. Further, the Company's vessels Amorgos, Karpathos and Naxos provide freight services Aegean VIII and also to certain other companies related with Mr. Dimitris Melisanidis, our Founder and Head of Corporate Development. The Company's revenues under these contracts are included under voyage revenues from related parties in the accompanying condensed consolidated statements of income.
Due from related companies
The amounts due from the Company's related parties for voyage revenues are included under due from related companies in the accompanying condensed consolidated balance sheets. As of September 30, 2016, the amount includes $600 owed by Ecofighter, a company owned and controlled by relatives of Mr. Dimitris Melisanidis, for the purchase of Aegean Princess (refer to Note 6)
Cost of Marine Petroleum Products - related companies
The Company has entered into a ten-year Marine Fuel Supply Service Agreement with Aegean Oil S.A., which terminates on December 31, 2016 and which provides for the purchase of a minimum quantity of marine fuel per month. In addition, the Company occasionally purchases marine petroleum products from Melco S.A. Purchases of marine petroleum products are included under related companies' cost of marine petroleum products sold in the accompanying condensed consolidated statements of income.
The Company occasionally uses vessels of Aegean Shipping Management and Gener8 Maritime Inc. for transportation of its cargo. Hire charges are included under related companies' cost of marine petroleum products sold in the accompanying condensed consolidated statements of income.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
Trade Payables to related companies
The amounts due for purchases of marine petroleum products are included under trade payables to related companies in the accompanying condensed consolidated balance sheets.
Cost of voyage revenues - Selling and Distribution
Purchases of marine petroleum products from Aegean Oil that are consumed in connection with the Company's voyage revenues are included in the cost of voyage revenues in the accompanying condensed consolidated statements of income. All other purchases of marine petroleum products from Aegean Oil are included in the selling and distribution expense in the accompanying condensed consolidated statements of income.
General and administrative expenses
Under general and administrative expenses in the accompanying condensed consolidated statements of income the Company includes office rentals paid to related companies owned by Mr. Dimitris Melisanidis and Mr. Georgiopoulos, under the head offices and USA offices rental, respectively.
Other Payables to related companies
The amounts due to the Company's related parties for hire charges, bunkers for own consumption and office rent are included under due to related companies in the accompanying consolidated balance sheets.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
6. Vessels:
During the nine months ended September 30, 2016, the movement of the account vessels was as follows:
|
|
Vessel Cost
|
|
|
Accumulated Depreciation
|
|
|
Net Book Value
|
|
Balance, December 31, 2015
|
|
$
|
480,346
|
|
|
|
(109,328
|
)
|
|
$
|
371,018
|
|
-
Vessels acquired and delivered
|
|
|
8,667
|
|
|
|
-
|
|
|
|
8,667
|
|
- Vessels sold
|
|
|
(31,612
|
)
|
|
|
18,377
|
|
|
|
(13,235
|
)
|
- Depreciation
|
|
|
-
|
|
|
|
(12,609
|
)
|
|
|
(12,609
|
)
|
Balance, September 30, 2016
|
|
$
|
457,401
|
|
|
|
(103,560
|
)
|
|
$
|
353,841
|
|
On September 9, 2016, the Company completed the sale and delivered the double hull bunkering tanker,
Aegean Princess
, to a related party purchaser for a price of $800, net of commission. The loss on the disposal of $3,922 was calculated as the net sales price less the carrying value of the asset group, comprising the net book value of the vessel and the unamortized dry-docking costs, of $4,722. This loss is included under the loss on sale of vessels in the condensed consolidated statements of income.
On July 18, 2016, the Company completed the sale and delivered the non-self-propelled bunkering barge,
PT25
, to a third-party purchaser, for a price of $169 (CAD 220,000). The gain on disposal of $47 was calculated as the net sales price less the carrying value of the vessel of $116 and is included in the loss on sale of vessels in the condensed consolidated statements of income.
On June 24, 2016, the Company completed the sale and delivered the double hull bunkering tanker,
Sara
, to an unaffiliated third-party purchaser for a price of $2,303, net of commission. The loss on the disposal of $801 was calculated as the net sales price less the carrying value of the asset group, comprising the net book value of the vessel and the unamortized dry-docking costs, of $3,104. This loss is included under the loss on sale of vessels in the condensed consolidated statements of income.
On June 7, 2016, the Company completed the sale and delivered
Supporter 2
, a bunkering barge previously employed in Ghana, to an unaffiliated third-party purchaser for a price of $110, net of commission. The loss on the disposal of $15 was calculated as the net sales price less the carrying value of the vessel of $125. This loss is included under the loss on sale of vessels in the condensed consolidated statements of income
On May 11, 2016, the Company completed the sale and delivered the double hull bunkering tanker,
Aegean Champion
, to an unaffiliated third-party purchaser for a price of $5,529, net of commission. The loss on the disposal of $1,621 was calculated as the net sales price less the carrying value of the asset group, comprising the net book value of the vessel and the unamortized dry-docking costs, of $7,150. This loss is included under the loss on sale of vessels in the condensed consolidated statements of income.
On March 23, 2016, the Company took delivery of
Umnenga
, a 66,895 dwt double hull bunkering tanker built in 1993 to deploy in its service station in South Africa. The vessel was purchased from a third-party seller with a total cost of $8,667.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
7. Other fixed assets:
The amounts in the accompanying condensed consolidated balance sheets are analyzed as follows:
|
|
Land
|
|
|
Buildings
|
|
|
Storage
Facility
|
|
|
Other
|
|
|
Total
|
|
Cost, December 31, 2015
|
|
$
|
9,036
|
|
|
$
|
3,459
|
|
|
$
|
226,910
|
|
|
$
|
21,583
|
|
|
$
|
260,988
|
|
- Additions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
165
|
|
|
|
165
|
|
- Disposals
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(160
|
)
|
|
|
(160
|
)
|
Cost, September 30, 2016
|
|
|
9,036
|
|
|
|
3,459
|
|
|
|
226,910
|
|
|
|
21,588
|
|
|
|
260,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation, December 31, 2015
|
|
|
-
|
|
|
|
(724
|
)
|
|
|
(5,591
|
)
|
|
|
(7,890
|
)
|
|
|
(14,205
|
)
|
- Depreciation expense
|
|
|
-
|
|
|
|
(94
|
)
|
|
|
(3,878
|
)
|
|
|
(2,363
|
)
|
|
|
(6,335
|
)
|
- Disposals
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
146
|
|
|
|
146
|
|
Accumulated depreciation, September 30, 2016
|
|
|
-
|
|
|
|
(818
|
)
|
|
|
(9,469
|
)
|
|
|
(10,107
|
)
|
|
|
(20,394
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value,
December 31, 2015
|
|
|
9,036
|
|
|
|
2,735
|
|
|
|
221,319
|
|
|
|
13,693
|
|
|
|
246,783
|
|
Net book value,
September 30, 2016
|
|
$
|
9,036
|
|
|
$
|
2,641
|
|
|
$
|
217,441
|
|
|
$
|
11,481
|
|
|
$
|
240,599
|
|
8. Deferred charges:
During the nine months ended September 30, 2016, the movement of the account deferred charges was as follows:
|
|
Dry-docking
|
|
|
Financing Costs
|
|
|
Total
|
|
Balance, December 31, 2015
|
|
$
|
20,551
|
|
|
$
|
4,456
|
|
|
$
|
25,007
|
|
- Additions
|
|
|
3,938
|
|
|
|
2,781
|
|
|
|
6,719
|
|
- Disposals
|
|
|
(1,982
|
)
|
|
|
-
|
|
|
|
(1,982
|
)
|
- Amortization for the period
|
|
|
(5,494
|
)
|
|
|
(2,610
|
)
|
|
|
(8,104
|
)
|
Balance, September 30, 2016
|
|
$
|
17,013
|
|
|
$
|
4,627
|
|
|
$
|
21,640
|
|
The amortization for dry-docking costs is included in cost of revenue and in selling and distribution cost in the accompanying condensed consolidated statements of income, according to their function. Deferred financing costs related to revolving credit facilities are presented within deferred charges. The amortization of financing costs is included in interest and finance costs in the accompanying consolidated statements of income.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
9. Goodwill and intangible assets:
Goodwill:
Goodwill identified represents the purchase price in excess of the fair value of the identifiable net assets of the acquired business at the date of acquisition. The Company tested its goodwill at December 31, 2015. The Company calculated the fair value of the reporting unit using the discounted cash flow method, and determined that the fair value of the reporting unit exceeded its book value including the goodwill. The discounted cash flows calculation is subject to management judgment related to revenue growth, capacity utilization, the weighted average cost of capital (WACC), of approximately 7%, and the future price of marine fuel products. No impairment loss was recorded at September 30, 2016.
Intangible assets:
The Company has identified finite-lived intangible assets associated with concession agreements acquired with the purchase of the Las Palmas and Panama subsidiaries, a non-compete covenant acquired with the Aegean NWE. The values recorded have been recognized at the date of the acquisition and are amortized on a straight line basis over their useful life.
The amounts in the accompanying condensed consolidated balance sheets are analyzed as follows:
|
|
Concession agreements
|
Non-compete covenant
|
Total
|
Cost as of
|
December 31, 2015
|
$ 12,025
|
$ 3,365
|
$ 15,390
|
September 30, 2016
|
12,025
|
3,365
|
15,390
|
Accumulated Amortization as of
|
December 31, 2015
|
(3,639)
|
(2,973)
|
(6,612)
|
September 30, 2016
|
(4,147)
|
(3,365)
|
(7,512)
|
NBV as of
|
December 31, 2015
|
8,386
|
392
|
8,778
|
September 30, 2016
|
7,878
|
-
|
7,878
|
Future Amortization Expense
|
October 1, to December 31, 2016
|
170
|
-
|
170
|
2017
|
676
|
-
|
676
|
|
2018
|
676
|
-
|
676
|
|
2019
|
676
|
-
|
676
|
|
2020
|
678
|
-
|
678
|
|
Thereafter
|
$ 5,002
|
$ -
|
$ 5,002
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
10. Total debt:
The amounts comprising total debt are presented in the accompanying condensed consolidated balance sheet as follows:
Loan Facility
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Short-term borrowings:
|
|
|
|
|
|
|
Revolving overdraft facility dated 5/6/2015
|
|
$
|
-
|
|
|
$
|
5,356
|
|
Security agreement dated 8/9/2016
|
|
|
100,000
|
|
|
|
80,000
|
|
Borrowing base facility agreement dated 9/16/2016
|
|
|
203,045
|
|
|
|
164,141
|
|
Overdraft deposit accounts
|
|
|
566
|
|
|
|
-
|
|
Total short-term borrowings
|
|
$
|
303,611
|
|
|
$
|
249,497
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
Secured syndicated term loan dated 8/30/2005
|
|
$
|
16,070
|
|
|
$
|
17,780
|
|
Secured term loan facility dated 12/19/2006
|
|
|
9,320
|
|
|
|
11,420
|
|
Secured term loan dated 10/25/2006
|
|
|
14,926
|
|
|
|
16,043
|
|
Secured term loan dated 10/27/2006
|
|
|
9,011
|
|
|
|
9,929
|
|
Secured syndicated term loan dated 10/30/2006
|
|
|
39,947
|
|
|
|
42,518
|
|
Secured term loan dated 9/12/2008
|
|
|
17,922
|
|
|
|
21,128
|
|
Secured syndicated term loan dated 4/24/2008
|
|
|
22,154
|
|
|
|
23,627
|
|
Secured syndicated term loan dated 7/8/2008
|
|
|
-
|
|
|
|
341
|
|
Secured term loan dated 4/1/2010
|
|
|
794
|
|
|
|
977
|
|
Roll over agreement dated 4/1/2010
|
|
|
4,033
|
|
|
|
4,233
|
|
Roll over agreement dated 3/21/2014
|
|
|
3,453
|
|
|
|
3,786
|
|
Senior convertible notes 2013, net of discount
|
|
|
79,928
|
|
|
|
77,911
|
|
Senior convertible notes 2015, net of discount
|
|
|
44,011
|
|
|
|
42,658
|
|
Borrowing base facility agreement dated 9/16/2016
|
|
|
75,000
|
|
|
|
75,000
|
|
Term loan facility agreement dated 10/7/2015
|
|
|
113,821
|
|
|
|
119,812
|
|
Secured term loan dated 3/22/2016
|
|
|
7,348
|
|
|
|
-
|
|
Less: Deferred financing costs
|
|
|
(5,392
|
)
|
|
|
(6,645
|
)
|
Total
|
|
|
452,346
|
|
|
|
460,518
|
|
Less: Current portion of long-term debt
|
|
|
(25,743
|
)
|
|
|
(26,398
|
)
|
Long-term debt, net of current portion and deferred financing costs
|
|
$
|
426,603
|
|
|
$
|
434,120
|
|
The deferred financing costs of long-term bank loans and Senior Notes are presented as presented as a deduction of the non-current portion of long-term debt in the condensed consolidated statement of financial position. The amortization of deferred financing costs is included in interest and finance costs in the accompanying condensed consolidated statements of income.
On September 16, 2016, Aegean Marine Petroleum S.A., Aegean Petroleum International Inc. and Aegean NWE N.V., the Company's wholly-owned subsidiaries, renewed its $1 billion Secured Multicurrency Revolving Credit Facility with a syndicate of commercial lenders for one and two year period regarding Tranche A of $155,000 and Trance B of $75,000 respectively. Interest rate margins remain the same.
On August 9, 2016, Aegean Bunkering U.S.A., the Company's subsidiary, renewed its loan agreement for an amount up to $250,000 for one year period. The renewed facility bears interest at LIBOR plus margin.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
On March 22, 2016, the Company's subsidiary, Aegean Bunkering Services Inc., entered into a secured term loan for an amount of $13,000. The loan bears interest at LIBOR plus a margin of 4.5% and is repayable in twelve quarterly instalments, plus a balloon payment of $4,286. The proceeds were used purchase
Umnenga
,
a 66,895 dwt double hull bunkering tanker (refer to Note 6) and to
repay the existing credit facility of the subsidiary.
As at September 30, 2016, the Company was in compliance with all of its financial covenants contained in its credit facilities.
The annual principal payments of long-term debt required to be made after September 30, 2016 are as follows:
|
|
Amount
|
|
October 1 to December 31, 2016
|
|
$
|
6,436
|
|
2017
|
|
|
108,538
|
|
2018
|
|
|
179,589
|
|
2019
|
|
|
78,453
|
|
2020
|
|
|
41,073
|
|
2021 and thereafter
|
|
|
54,261
|
|
Total principal payments
|
|
|
468,350
|
|
Less: Unamortized portion of notes' discount
|
|
|
(10,612
|
)
|
Less: Deferred financing costs
|
|
|
(5,392
|
)
|
Total long-term debt
|
|
$
|
452,346
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
11. Derivatives and fair value measurements:
The Company uses derivatives in accordance with its overall risk management strategy. The changes in the fair value of these derivatives are recognized immediately through earnings.
The following describes the Company's derivative classifications:
The Company enters into interest rate swap contracts to economically hedge its exposure to variability in its floating rate long-term debt. Under the terms of the interest rate swaps, the Company and the bank agreed to exchange at specified intervals the difference between paying fixed rate and floating rate interest amount calculated by reference to the agreed principal amount and maturity. Interest rate swaps allow the Company to convert long-term borrowings issued at floating rates to equivalent fixed rates.
As of September 30, 2016 and December 31, 2015, the Company was committed to the following interest rate swap arrangements:
|
As of September 30, 2016
|
|
|
Interest Rate Index
|
Principal Amount
|
|
Fair Value/
Carrying Amount
of Asset/ (Liability)
|
|
Remaining term
|
|
Fixed Interest Rate
|
|
U.S. Dollar-denominated Interest Rate Swap
|
Euribor
|
|
$
|
4,100
|
|
|
$
|
(503
|
)
|
|
|
9.50
|
|
|
|
2.35
|
%
|
U.S. Dollar-denominated Interest Rate Swap
|
Libor
|
|
|
75,000
|
|
|
|
(805
|
)
|
|
|
4.68
|
|
|
|
1.39
|
%
|
U.S. Dollar-denominated Interest Rate Swap
|
Libor
|
|
|
75,000
|
|
|
|
(736
|
)
|
|
|
4.67
|
|
|
|
1.35
|
%
|
U.S. Dollar-denominated Interest Rate Swap
|
Libor
|
|
|
75,000
|
|
|
|
517
|
|
|
|
4.77
|
|
|
|
0.95
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
|
|
|
Interest Rate Index
|
Principal Amount
|
|
Fair Value/
Carrying Amount
of Asset/ (Liability)
|
|
Weighted-average remaining term
|
|
Fixed Interest Rate
|
|
U.S. Dollar-denominated Interest Rate Swap
|
Euribor
|
|
$
|
4,233
|
|
|
$
|
(420
|
)
|
|
|
10.25
|
|
|
|
2.35
|
%
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
The Company is exposed to credit loss in the event of non-performance by the counterparties to the interest rate swap agreements. In order to minimize counterparty risk, the Company enters into derivative transactions with counterparties that are rated AAA or at least A at the time of the transactions.
The Company enters into foreign currency contracts to hedge its exposure to variability in foreign currency related to the repayment of its long-term debt in foreign currency. Under the terms of the foreign currency contracts, the Company agreed with the bank to exchange currencies at specified exchange rates for the scheduled outflows from the loan repayment. As of September 30, 2016, the Company was committed to 5 year currency arrangements to exchange currencies at agreed rates and for amounts related to the repayment of its foreign currency long-term loan.
The Company uses fuel pricing contracts to hedge exposure to changes in the net cost of marine fuel purchases. The Company has the right of offset with the counterparty of the fuel pricing contracts, and settles outstanding balances on a monthly basis. Therefore, these amounts are presented on a net basis in the condensed consolidated balance sheets (on a gross basis: an asset of $29,017 and a liability of $38,118, as of September 30, 2016 and an asset of $46,949 and a liability of $24,533 as of December 31, 2015).
The following table presents information about our derivative instruments measured at fair value and their locations on the condensed consolidated balance sheets:
|
|
|
As of
|
|
|
Balance Sheet Location
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
Fuel pricing contracts
|
|
|
|
|
|
|
|
Derivative asset, current
|
|
$
|
-
|
|
|
$
|
22,416
|
|
Fuel pricing contracts
|
Derivative liability, current
|
|
|
(9,101
|
)
|
|
|
-
|
|
Currency contracts
|
Derivative liability, current
|
|
|
(99
|
)
|
|
|
-
|
|
Currency contracts
|
Derivative liability, non-current
|
|
|
(728
|
)
|
|
|
-
|
|
Interest rate swaps
|
Derivative liability, non-current
|
|
|
(1,528
|
)
|
|
|
(420
|
)
|
Total, net
|
|
|
$
|
11,456
|
|
|
$
|
21,996 9,340
|
|
The following table presents the effect and financial statement location of our derivative instruments on our condensed consolidated statements of income for the nine months ended September 30, 2016 and 2015:
|
|
|
Nine months ended
September 30,
|
|
Income/ (Loss)
|
Statements of Income Location
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Fuel pricing contracts
|
Cost of revenue - third parties
|
|
$
|
(42,061
|
)
|
|
$
|
28,301
|
|
Currency contracts
|
Foreign exchange losses, net
|
|
|
(769
|
)
|
|
|
-
|
|
Interest rate swaps
|
Interest and finance costs
|
|
|
(1,457
|
)
|
|
|
64
|
|
Total
|
|
|
$
|
(44,287
|
)
|
|
$
|
28,365
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
The following table sets forth by level our assets/ liabilities that are measured at fair value on a recurring basis. As required by the fair value guidance, assets/ liabilities are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement.
|
|
|
|
|
Fair value measurements at
September 30, 2016
|
|
Liabilities
|
|
Total
|
|
|
Quoted prices in active markets
(Level 1)
|
|
|
Significant other observable inputs
(Level 2)
|
|
|
Significant unobservable inputs
(Level 3)
|
|
Interest rate swaps
|
|
$
|
(1,528
|
)
|
|
|
-
|
|
|
$
|
(1,528
|
)
|
|
|
-
|
|
Currency contracts
|
|
|
(827
|
)
|
|
|
|
|
|
|
(827
|
)
|
|
|
|
|
Fuel pricing contracts
|
|
|
(9,101
|
)
|
|
|
-
|
|
|
|
(9,101
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(11,456
|
)
|
|
|
-
|
|
|
$
|
(11,456
|
)
|
|
|
-
|
|
|
|
|
|
|
Fair value measurements at
December 31, 2015
|
|
Assets/ (Liabilities)
|
|
Total
|
|
|
Quoted prices in active markets
(Level 1)
|
|
|
Significant other observable inputs
(Level 2)
|
|
|
Significant unobservable inputs
(Level 3)
|
|
Interest rate swaps
|
|
$
|
(420
|
)
|
|
|
-
|
|
|
$
|
(420
|
)
|
|
|
-
|
|
Fuel pricing contracts
|
|
|
22,416
|
|
|
|
-
|
|
|
|
22,416
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,996
|
|
|
|
-
|
|
|
$
|
21,996
|
|
|
|
-
|
|
The fair value of the interest rate swaps is determined using the discounted cash flow method based on market-based EURIBOR or LIBOR rates swap yield curves, taking into account current interest rates. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs.
The fair value of the foreign currency contracts is determined based on the agreed fixed and the current exchange currency for the amount agreed to be exchanged on each contract.
The Company uses observable inputs to calculate the mark-to-market valuation of the fuel pricing derivatives. Fuel pricing contracts are valued using quoted market prices of the underlying commodity. During the periods ended September 30, 2016 and 2015, the Company entered into fuel pricing contracts for 23,246,413 metric tons and 12,893,889 metric tons, respectively.
The Company's derivatives trade in over the counter markets, and as such, model inputs are generally observable and do not require significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
12. Revenues and Cost of revenues:
The amounts in the accompanying condensed consolidated statements of income are analyzed as follows:
|
|
Nine months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Sales of marine petroleum products
|
|
$
|
2,821,064
|
|
|
$
|
3,244,375
|
|
Voyage revenues
|
|
|
20,069
|
|
|
|
22,916
|
|
Other revenues
|
|
|
38,911
|
|
|
|
37,027
|
|
Total Revenues
|
|
|
2,880,044
|
|
|
|
3,304,318
|
|
|
|
|
|
|
|
|
|
|
Cost of marine petroleum products
|
|
|
2,579,032
|
|
|
|
3,026,566
|
|
Cost of voyage revenues
|
|
|
11,134
|
|
|
|
10,903
|
|
Cost of other revenues
|
|
|
27,191
|
|
|
|
23,337
|
|
Total Cost of Revenues
|
|
$
|
2,617,357
|
|
|
$
|
3,060,806
|
|
Included in the cost of revenues is depreciation of $4,738 and $3,418 for the nine months ended September 30, 2016 and 2015, respectively.
13. Selling and distribution:
The amounts in the accompanying condensed consolidated statements of income are analyzed as follows:
|
|
Nine months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Salaries
|
|
$
|
39,684
|
|
|
$
|
38,972
|
|
Depreciation
|
|
|
10,816
|
|
|
|
11,184
|
|
Vessel hire charges
|
|
|
15,340
|
|
|
|
21,466
|
|
Amortization of dry-docking costs
|
|
|
4,657
|
|
|
|
4,119
|
|
Vessel operating expenses
|
|
|
21,762
|
|
|
|
20,828
|
|
Bunkers consumption
|
|
|
9,430
|
|
|
|
13,039
|
|
Storage costs
|
|
|
32,357
|
|
|
|
29,636
|
|
Broker commissions
|
|
|
3,732
|
|
|
|
4,197
|
|
Provision for doubtful accounts
|
|
|
1,191
|
|
|
|
1,161
|
|
Other
|
|
|
9,952
|
|
|
|
8,443
|
|
Selling and Distribution expenses
|
|
$
|
148,921
|
|
|
$
|
153,045
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
14. General and administrative:
The amounts in the accompanying condensed consolidated statements of income are analyzed as follows:
|
|
Nine months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Salaries
|
|
$
|
17,572
|
|
|
$
|
14,375
|
|
Depreciation
|
|
|
2,180
|
|
|
|
2,046
|
|
Office expenses
|
|
|
17,098
|
|
|
|
15,038
|
|
General and Administrative expenses
|
|
$
|
36,850
|
|
|
$
|
31,459
|
|
15. Commitments and contingencies:
Lease commitments:
The Company leases certain property under operating leases, which require the Company to pay maintenance, insurance and other expenses in addition to annual rentals. The minimum annual payments under all non-cancelable operating leases at September 30, 2016 are as follows:
October 1 to December 31, 2016
|
|
$
|
9,925
|
|
2017
|
|
|
28,132
|
|
2018
|
|
|
25,732
|
|
2019
|
|
|
13,772
|
|
2020
|
|
|
13,334
|
|
Thereafter
|
|
|
139,565
|
|
Total minimum annual payments under all non-cancelable operating leases
|
|
$
|
230,460
|
|
Rent expense under operating leases was $31,650 and $25,996 for the nine months period ended September 30, 2016 and 2015, respectively.
Legal Matters
:
In November 2005, an unrelated party filed a declaratory action against one of the Company's subsidiaries before the First Instance Court of Piraeus, Greece. The plaintiff asserted that he was instrumental in the negotiation of the Company's eight-year Fuel Purchase Agreement with a government refinery in Jamaica and sought a judicial affirmation of his alleged contractual right to receive a commission of $0.01 per metric ton of marine fuel over the term of the contract. In December 2008, the First Instance Court of Piraeus dismissed the plaintiff's action as vague and inadmissible, however the Company appealed that decision on the grounds that there was no contract between the Company and the plaintiff and that the court lacked jurisdiction. While the action was pending in Greece, the plaintiff commenced a new action involving the same cause of action before the Commercial Court of Paris, France, which dismissed that action in June 2009. The plaintiff's appeal of the dismissal was denied by the Paris Court of Appeal in February 2010. In January 2012, the plaintiff commenced a new action relating to the same allegations before the Commercial Court of Paris, which was dismissed on June 27, 2012 in favor of the competence and jurisdiction of the Greek courts. In July 2012, the plaintiff filed a "contredit," an appeal procedure under French law. In November 2013, the Court held that there is no matter pending in Greece that would allow the French courts to decline jurisdiction to the benefit of the Greek proceedings. As a result, the case is to return to the Commercial Court of Paris which should have to examine the admissibility of Mr. Varouxis' claim in France. The relevant pleadings were issued on December 18, 2015. According to its decision the French Court held that Varouxis is entitled to a part compensation based on a half of its claim fee of $0.01 per metric ton sold but limited to the amount of $670 with respect to the years 2005 to 2008. The Judgement is enforceable subject to the submission by Mr Varouxis to AMP of a bank guarantee as counter-security covering the reimbursement to AMP of the said sum plus interest. Until now Mr. Varouxis has been unable to submit a properly worded bank guarantee. In the meantime, both AMP and Mr. Varouxis have filed contrary appeals versus the decision issued. Both parties have now submitted their respective pleadings, but the relevant pleading has not yet been scheduled. In any event our position continues to be that this claim is unwarranted and lacking in merit and that the outcome of this lawsuit will not have a material effect on the Company.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
On December 18, 2014, the Company and Aegean Bunkering (USA) LLC, or the Aegean Parties, filed a one-count complaint for breach of contract against Hess Corporation, or Hess, in New York Supreme Court, New York County (653887/2014). In the complaint, the Aegean Parties allege that Hess breached certain express representations and warranties in representing its financial condition in an agreement pursuant to which Hess sold its bunker oil business to Aegean Bunkering (USA) LLC. The Aegean Parties claim approximately $28,000 in compensatory damages, exclusive of interest and costs. On February 9, 2015, Hess filed an answer to the complaint. During the course of discovery, through co-counsel Boies Schiller & Flexner LLP, the Aegean Parties filed a motion for leave to amend the complaint on December 15, 2015. The proposed amended complaint added a claim for fraud and fraudulent inducement in connection with the Agreement, seeking approximately $127 million in compensatory damages, exclusive of interest and costs, and punitive damages in an amount to be determined at trial. On Hess's consent, the Aegean Parties' motion to amend the complaint was granted on January 15, 2016. On February 3, 2016, Hess filed a motion to dismiss the amended complaint in part, specifically, the fraud and fraudulent inducement claim and portions of the contract claim. The Aegean Parties' responded to the motion to dismiss on March 4, 2016, and Hess submitted its reply on March 18, 2016. The parties are now awaiting a decision from the Court.
The Company has supplied bunkers through agreements with various entities of the O.W. Bunker Group, which filed for bankruptcy in November 2014. The Company issued notice to members of the O.W. Bunker Group for the request of payment for the value of the bunkers supplied. The Company's exposure for these supplies amounts to $4,951, of which $2,922 is recorded as a provision for doubtful accounts in our consolidated balance sheets. The Company believes that the respective members of the O.W. Bunker Group were never the rightful owners of the bunkers and is currently trying to work out escrow or other practical solutions with the end users. The Company expects to recover the amount of at least $2,029.
A Company's subsidiary, Aegean Oil Terminal Corporation, has provided storage facilities through agreements to Alco Shipping Services LLC and Alco Fuel Trading LLC. In breach of their obligations under their agreements the debtors failed to deliver any products to the terminal and to pay the invoices in the principal sum of $450. Following various demands for payment and in the absence of payment, the Company's subsidiary has terminated their agreement and commenced legal proceedings against the debtors in the High Court of London. After lodging with the court the relevant application, claim for and witness statements the Company's subsidiary received a sealed order from the High Court in London giving permission to service the Claim Form and Particulars of Claim out of the jurisdiction upon the debtors in UAE. The UK Foreign and Commonwealth Office have now returned the service process request with the documents unserved due to the fact that the debtors have moved offices. The debtors do not have a valid defense and once the claim form is served upon them the Company expects to proceed to obtain a summary judgment from the High Court in London. As soon as a judgment is obtained the Company expects to proceed to execute the same by way of arrest and sale of any of the nine ships the debtors own.
Aegean Oil Terminal Corporation has also provided storage facilities through agreements to House of Gas Trading DMCC. In breach of their obligations under their agreements the debtors failed to deliver any products to the terminal and to pay the invoices in the principal sum of $882. Following various demands for payment and in the absence of payment, the Company has terminated their agreement and commenced legal proceedings against the debtors in the High Court of London. After lodging with the court the relevant application, claim for and witness statements the Company's subsidiary received a sealed order from the High Court in London giving permission to service the Claim Form and Particulars of Claim out of the jurisdiction upon the debtors in UAE. The UK Foreign and Commonwealth Office have not yet returned the service process request. The debtors do not have a valid defense and once the claim form is served upon them the Company expects to proceed to obtain a summary judgment from the High Court in London. As soon as a judgment is obtained the Company expects to proceed to execute the same by way of arrest and sale of their assets. An amount of $463 related to the receivables from House of Gas Trading DMCC is recorded as a provision for doubtful accounts in our consolidated balance sheet.
Various claims, suits, and complains, including those involving government regulations and product liability, arise in the ordinary course of business. In addition, losses may arise from disputes with charterers and agents and insurance and other claims with suppliers relating to the operations of the Company's vessels. Currently, management is not aware of any such claims or contingent liabilities for which a provision should be established in the accompanying consolidated financial statements.
Environmental and other liabilities:
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the Company's exposure. Currently, management is not aware of any such claims or contingent liabilities for which a provision should be established in these condensed consolidated financial statements. The Company's Protection and Indemnity ("P&I") insurance policies cover third-party liability and other expenses related to injury or death of crew, passengers and other third parties, loss or damage of cargo, claims arising from collisions with other vessels, damage to other third-party property, and pollution arising from oil or other substances. The Company's coverage under the P&I insurance policies, except for pollution, are unlimited. Coverage for pollution is $1,000,000 per vessel per incident.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
16. Equity incentive plan:
The Company measures stock-based compensation cost at grant date, based on the estimated fair value of the award which is determined by the closing price of the Company's common stock traded on the NYSE on the grant date, and recognizes the cost as expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. The expense is recorded in the general and administrative expenses in the accompanying condensed consolidated statements of income. Aegean is incorporated in a non-taxable jurisdiction and accordingly, no deferred tax assets are recognized for these stock-based incentive awards.
All grants of nonvested stock issued under the 2015 Plan are subject to accelerated vesting upon certain circumstances set forth in the 2015 Plan.
The following table summarizes the status of the Company's non-vested shares outstanding for the nine months ended September 30, 2016:
|
|
Non-vested Stock
|
|
|
Weighted Average Grant Date Market Price
|
|
January 1, 2016
|
|
|
1,965,983
|
|
|
$
|
11.05
|
|
Granted
|
|
|
1,316,000
|
|
|
|
6.60
|
|
Vested
|
|
|
(1,469,156
|
)
|
|
|
8.84
|
|
Forfeited
|
|
|
(20,000
|
)
|
|
|
-
|
|
September 30, 2016
|
|
|
1,792,827
|
|
|
$
|
9.21
|
|
Total compensation cost of $10,226 was recognized and included in the general and administrative expenses under the accompanying condensed consolidated statements of income for the nine months ended September 30, 2016, of which $3,230 was related to the accelerated vesting of Mr. Melisanidis' repurchased and retired shares (refer to Note 18).
As of September 30, 2016, there was $9,017 of total unrecognized compensation cost related to nonvested share-based compensation awards. This unrecognized compensation at September 30, 2016, is expected to be recognized as compensation expense over a weighted average period of 1.8 years as follows:
|
|
Amount
|
|
October 1 to December 31, 2016
|
|
$
|
1,991
|
|
2017
|
|
|
4,845
|
|
2018
|
|
|
1,882
|
|
2019
|
|
|
299
|
|
|
|
$
|
9,017
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
17. Earnings per common share:
The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period using the two class method. The computation of diluted earnings per share assumes the granting of non-vested share-based compensation awards (refer to Note 16), for which the assumed proceeds upon grant are deemed to be the amount of compensation cost attributable to future services and not yet recognized using the treasury stock method, to the extent dilutive.
As of September 30, 2016 and 2015, the Company excluded 1,792,827 and
1,977,483
non-vested shares, respectively, as anti-dilutive. Non-vested share-based payment awards that contain rights to receive non forfeitable dividends or dividend equivalents (whether paid or unpaid) and participate equally in undistributed earnings are participating securities, and thus, are included in the two-class method of computing earnings per share.
The treasury stock method is used in calculating diluted earnings per share for the Notes as the Company expects to settle the principal in cash.
The components of the calculation of basic earnings per common share and diluted earnings per common share are as follows:
|
|
Nine months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Net income attributable to AMPNI shareholders
|
|
$
|
35,846
|
|
|
$
|
26,169
|
|
|
|
|
|
|
|
|
|
|
Less: Dividends declared and undistributed earnings allocated to unvested shares
|
|
|
(1,368
|
)
|
|
|
(1,019
|
)
|
Income available to AMPNI common stockholders, basic and diluted
|
|
$
|
34,478
|
|
|
$
|
25,150
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding
|
|
|
47,372,496
|
|
|
|
47,216,050
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of common shares outstanding
|
|
|
47,372,496
|
|
|
|
47,216,050
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
0.73
|
|
|
$
|
0.53
|
|
Diluted earnings per common share
|
|
$
|
0.73
|
|
|
$
|
0.53
|
|
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
18. Common Stock, Treasury Stock and Additional Paid-In Capital:
Repurchase and retirement of common stock
On August 16, 2016, the Company's Board of Directors approved the purchase 11,303,031 shares from Mr. Dimitris Melisanidis. These shares were purchased and retired on September 15, 2016, for an aggregate purchase price of $99,580, which has been recorded in the stockholder's equity in the consolidated balance sheet as of September 30, 2016.
19. Income taxes:
The Company operates through its subsidiaries, which are subject to several tax jurisdictions.
The income tax expense/ (benefit) for the periods presented and the respective effective tax rates for such periods are as follows:
|
|
Nine months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Current tax expense
|
|
$
|
2,482
|
|
|
$
|
932
|
|
Net deferred tax benefit
|
|
|
(671
|
)
|
|
|
(1,662
|
)
|
Income tax expense / (benefit)
|
|
$
|
1,811
|
|
|
$
|
(730
|
)
|
Effective tax rate reconciliation
|
|
|
1,758.25
|
%
|
|
|
22.93
|
%
|
Our provision for income taxes for each of the nine-month periods ended September 30, 2016 and 2015 was calculated for the Company's subsidiaries based in Belgium, Canada, Germany, Russia and the U.S. that are subject to federal and state income taxes.
The reconciliation between the statutory tax expense on income from continuing operations to the income tax expense/ (benefit) recorded in the financial statements is as follows:
|
|
Nine months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Income tax expense/(benefit) on profit before tax at statutory rates
|
|
$
|
102
|
)
|
|
$
|
(1,096
|
)
|
Effect of permanent differences
|
|
|
(1,913
|
)
|
|
|
366
|
|
Total tax expense / (benefit)
|
|
$
|
1,811
|
|
|
$
|
(730
|
)
|
Deferred income taxes that derive from our Belgian subsidiaries, are the result of provisions of the tax laws that either require or permit certain items of income or expense to be reported for tax purposes in different periods than they are reported for financial reporting.
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (Continued)
(Expressed in thousands of U.S. dollars –
Except for share and per share data, unless otherwise stated)
20. Business segments and geographical information:
The Company is primarily a physical supplier in the downstream marine petroleum products industry. Marine petroleum products mainly consist of different classifications of marine fuel oil, marine gas oil and lubricants.
The Company cannot and does not identify expenses, profitability or other financial performance measures by type of marine petroleum product supplied, geographical area served, nature of services performed or on anything other than on a consolidated basis (although the Company is able to segregate revenues on these various bases). As a result, management, including the chief operating decision maker, reviews operating results on a consolidated basis only. Therefore, the Company has determined that it has only one operating segment.
The Company is domiciled in the Marshall Islands but provides no services in that location. It is impracticable to disclose revenues from external customers attributable to individual foreign countries because where the customer is invoiced is not necessarily the country of domicile. In addition, due to the nature of the shipping industry, where services are provided on a worldwide basis, the country of domicile of the customer does not provide useful information regarding the risk that this disclosure is intended to address.
The Company's long-lived assets mainly consist of bunkering tankers which are positioned across the Company's existing territories and which management, including the chief operating decision maker, reviews on a periodic basis and reposition among the Company's existing or new territories to optimize the vessel per geographical territory ratio.
The Company's vessels operate within or outside the territorial waters of each geographical location and, under international law, shipping vessels usually fall under the jurisdiction of the country of the flag they sail. The Company's vessels are not permanently located within particular territorial waters and the Company is free to mobilize all its vessels worldwide at its own discretion.
21. Subsequent events:
There are no subsequent events as of the date of issuance of this report.