GEL 9.30.2013 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 September 30, 2013
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12295
 
 
 
 
 
GENESIS ENERGY, L.P.
(Exact name of registrant as specified in its charter)
 
 
 
 
 

Delaware
76-0513049
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
919 Milam, Suite 2100,
Houston, TX
77002
(Address of principal executive offices)
(Zip code)
Registrant’s telephone number, including area code: (713) 860-2500
 
 
 
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2) of the Exchange Act).    Yes  ¨    No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 88,650,988 Class A Common Units and 39,997 Class B Common Units outstanding as of October 31, 2013.


Table of Contents

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

2
Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except units)
 
 
September 30, 2013
 
December 31, 2012
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
16,859

 
$
11,282

Accounts receivable - trade, net
364,080

 
270,925

Inventories
119,122

 
87,050

Other
24,008

 
34,777

Total current assets
524,069

 
404,034

FIXED ASSETS, at cost
1,155,977

 
723,225

Less: Accumulated depreciation
(186,640
)
 
(157,944
)
Net fixed assets
969,337

 
565,281

NET INVESTMENT IN DIRECT FINANCING LEASES, net of unearned income
153,300

 
157,385

EQUITY INVESTEES
605,067

 
549,235

INTANGIBLE ASSETS, net of amortization
65,753

 
75,065

GOODWILL
325,046

 
325,046

OTHER ASSETS, net of amortization
36,998

 
33,618

TOTAL ASSETS
$
2,679,570

 
$
2,109,664

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable - trade
$
340,531

 
$
258,053

Accrued liabilities
69,674

 
54,598

Total current liabilities
410,205

 
312,651

SENIOR SECURED CREDIT FACILITY
411,300

 
500,000

SENIOR UNSECURED NOTES
700,804

 
350,895

DEFERRED TAX LIABILITIES
13,625

 
13,810

OTHER LONG-TERM LIABILITIES
17,419

 
15,813

COMMITMENTS AND CONTINGENCIES (Note 14)

 

PARTNERS’ CAPITAL:
 
 
 
Common unitholders, 88,690,985 and 81,202,752 units issued and outstanding at September 30, 2013 and December 31, 2012
1,126,217

 
916,495

TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$
2,679,570

 
$
2,109,664

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


3
Table of Contents


GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
REVENUES:
 
 
 
 
 
 
 
Supply and logistics
$
1,184,191

 
$
974,696

 
$
3,400,786

 
$
2,815,849

Refinery services
52,410

 
47,977

 
153,370

 
144,342

Pipeline transportation services
23,217

 
19,164

 
66,533

 
55,794

Total revenues
1,259,818

 
1,041,837

 
3,620,689

 
3,015,985

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Supply and logistics product costs
1,116,871

 
911,399

 
3,185,302

 
2,630,444

Supply and logistics operating costs
50,870

 
40,953

 
146,235

 
119,576

Refinery services operating costs
33,040

 
29,243

 
98,304

 
91,072

Pipeline transportation operating costs
6,278

 
5,911

 
20,507

 
15,995

General and administrative
12,095

 
10,375

 
35,156

 
29,934

Depreciation and amortization
16,066

 
14,838

 
46,789

 
45,447

Total costs and expenses
1,235,220

 
1,012,719

 
3,532,293

 
2,932,468

OPERATING INCOME
24,598

 
29,118

 
88,396

 
83,517

Equity in earnings of equity investees
7,059

 
3,432

 
16,618

 
7,971

Interest expense
(12,587
)
 
(9,873
)
 
(36,282
)
 
(30,697
)
Income before income taxes
19,070

 
22,677

 
68,732

 
60,791

Income tax (expense) benefit
(596
)
 
8,517

 
(510
)
 
8,591

NET INCOME
$
18,474

 
$
31,194

 
$
68,222

 
$
69,382

NET INCOME PER COMMON UNIT:
 
 
 
 
 
 
 
Basic and Diluted
$
0.22

 
$
0.39

 
$
0.83

 
$
0.90

WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:
 
 
 
 
 
 
 
Basic and Diluted
83,878

 
79,901

 
82,361

 
77,410

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


4
Table of Contents


GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(In thousands)
 
 
Number of
Common Units
 
Partners’ Capital
 
2013
 
2012
 
2013
 
2012
Partners’ capital, January 1
81,203

 
71,965

 
$
916,495

 
$
792,638

Net income
—

 
—

 
68,222

 
69,382

Cash distributions
—

 
—

 
(122,097
)
 
(104,008
)
Issuance of common units for cash, net
5,750

 
5,750

 
263,597

 
169,421

Conversion of waiver units
1,738

 
3,476

 
—

 
—

Other
—

 
12

 
—

 
500

Partners' capital, September 30
88,691

 
81,203

 
$
1,126,217

 
$
927,933

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


5
Table of Contents


GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
Nine Months Ended
September 30,
 
2013
 
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
68,222

 
$
69,382

Adjustments to reconcile net income to net cash provided by operating activities -
 
 
 
Depreciation and amortization
46,789

 
45,447

Amortization of debt issuance costs and premium
3,234

 
2,655

Amortization of unearned income and initial direct costs on direct financing leases
(12,160
)
 
(12,641
)
Payments received under direct financing leases
15,946

 
16,389

Equity in earnings of investments in equity investees
(16,618
)
 
(7,971
)
Cash distributions of earnings of equity investees
24,352

 
16,151

Non-cash effect of equity-based compensation plans
10,579

 
4,617

Deferred and other tax liabilities
(186
)
 
(9,156
)
Unrealized gains on derivative transactions
(2,802
)
 
(1,251
)
Other, net
336

 
438

Net changes in components of operating assets and liabilities (Note 11)
(28,354
)
 
18,878

Net cash provided by operating activities
109,338

 
142,938

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Payments to acquire fixed and intangible assets
(199,634
)
 
(116,702
)
Cash distributions received from equity investees - return of investment
8,272

 
10,918

Investments in equity investees
(71,443
)
 
(57,072
)
Acquisitions
(230,921
)
 
(205,576
)
Proceeds from asset sales
810

 
667

Other, net
(1,004
)
 
(1,012
)
Net cash used in investing activities
(493,920
)
 
(368,777
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Borrowings on senior secured credit facility
1,234,500

 
1,407,000

Repayments on senior secured credit facility
(1,323,200
)
 
(1,333,300
)
Proceeds from issuance of senior unsecured notes, including premium
350,000

 
101,000

Debt issuance costs
(8,157
)
 
(7,109
)
Issuance of common units for cash, net
263,597

 
169,421

Distributions to common unitholders
(122,097
)
 
(104,008
)
Other, net
(4,484
)
 
(2,521
)
Net cash provided by financing activities
390,159

 
230,483

Net increase in cash and cash equivalents
5,577

 
4,644

Cash and cash equivalents at beginning of period
11,282

 
10,817

Cash and cash equivalents at end of period
$
16,859

 
$
15,461

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


6
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1. Organization and Basis of Presentation and Consolidation
Organization
We are a limited partnership focused on the midstream segment of the oil and gas industry in the Gulf Coast region of the United States, primarily Texas, Louisiana, Arkansas, Mississippi, Alabama, Florida and in the Gulf of Mexico. We have a diverse portfolio of assets, including pipelines, refinery-related plants, storage tanks and terminals, railcars, rail loading and unloading facilities, barges and trucks. We were formed in 1996 and are owned 100% by our limited partners. Genesis Energy, LLC, our general partner, is a wholly-owned subsidiary. Our general partner has sole responsibility for conducting our business and managing our operations. We conduct our operations and own our operating assets through our subsidiaries and joint ventures. We manage our businesses through the following three divisions that constitute our reportable segments:
•
Pipeline transportation of interstate, intrastate and offshore crude oil, and, to a lesser extent, carbon dioxide (or "CO2");
•
Refinery services involving processing of high sulfur (or “sour”) gas streams for refineries to remove the sulfur, and selling the related by-product, sodium hydrosulfide (or “NaHS”, commonly pronounced "nash"); and
•
Supply and logistics services, which include terminaling, blending, storing, marketing, and transporting crude oil and petroleum products and, on a smaller scale, CO2.
Basis of Presentation and Consolidation
The accompanying Unaudited Condensed Consolidated Financial Statements include Genesis Energy, L.P. and its subsidiaries, including Genesis Energy, LLC, our general partner.
Our results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. The Condensed Consolidated Financial Statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they reflect all adjustments (which consist solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial results for interim periods. Certain information and notes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with the information contained in the periodic reports we file with the SEC pursuant to the Securities Exchange Act of 1934, including the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012.
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.
Immaterial Restatement
Revenues and cost of sales for 2012 include corrections to previously reported quarterly and annual amounts for the three and nine months ended September 30, 2012. These corrections were made to present certain sales transactions on a gross basis that previously had been recorded on a net basis. The corrections had no effect on previously reported operating income, net income or Segment Margin.

2. Acquisition

Offshore Marine Transportation Business

In August 2013, we completed the acquisition of substantially all of the assets of the downstream transportation business of Hornbeck Offshore Services, Inc. for $230.9 million, which we refer to as our offshore marine transportation business and assets. The total acquisition cost has been allocated to fixed assets based on estimated preliminary fair values. Such preliminary fair values were developed by management. We do not expect any material adjustments to these preliminary purchase price allocations as a result of the final valuation. The acquired business was primarily comprised of nine barges and nine tug boats which transport crude oil and refined petroleum products, principally serving refineries and storage terminals along the Gulf Coast, Eastern Seaboard, Great Lakes and Caribbean. That acquisition complements and further integrates our existing operations, including our Genesis Marine inland barge business (comprised of 50 barges and 23 push/tow boats), our

7
Table of Contents

crude oil and heavy refined products storage and blending terminals as well as our crude oil pipeline systems. That acquisition was funded with proceeds from our $1 billion revolving credit facility. We have reflected the financial results of the acquired business in our supply and logistics segment from the date of the acquisition.

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

 
Three Months Ended September 30, 2013
 
Nine Months Ended September 30, 2013
 
 
 
 
Revenues
$
8,651

 
$
8,651

Net Income
$
2,520

 
$
2,520


The table below presents selected unaudited pro forma financial information incorporating the historical results of our offshore marine transportation business. The pro forma financial information below has been prepared as if the acquisition had been completed on January 1, 2012 and is based upon assumptions deemed appropriate by us and may not be indicative of actual results. Depreciation expense for the fixed assets acquired is calculated on a straight-line basis over an estimated useful life of approximately 25 years.

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Pro forma earnings data:
 
 
 
 
 
 
 
Revenues
$
1,271,201

 
$
1,054,689

 
$
3,663,574

 
$
3,050,864

Net Income
$
23,119

 
$
32,812

 
$
81,067

 
$
69,272



3. Inventories
The major components of inventories were as follows:
 
September 30,
2013
 
December 31,
2012
Petroleum products
$
85,121

 
$
58,943

Crude oil
26,767

 
15,885

Caustic soda
2,028

 
5,636

NaHS
5,181

 
6,573

Other
25

 
13

Total
$
119,122

 
$
87,050

Inventories are valued at the lower of cost or market. The market value of inventories was below recorded costs by approximately $0.8 million at September 30, 2013, therefore we reduced the value of inventory in our Unaudited Condensed Consolidated Financial Statements for this difference. At December 31, 2012, market values of our inventories exceeded recorded costs.

8
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


4. Fixed Assets
Fixed Assets
Fixed assets consisted of the following:
 
 
September 30,
2013
 
December 31,
2012
Pipelines and related assets
$
268,650

 
$
226,831

Machinery and equipment
110,710

 
87,502

Transportation equipment
19,751

 
21,170

Marine vessels
529,891

 
298,054

Land, buildings and improvements
20,002

 
15,606

Office equipment, furniture and fixtures
5,436

 
4,964

Construction in progress
180,892

 
52,541

Other
20,645

 
16,557

Fixed assets, at cost
1,155,977

 
723,225

Less: Accumulated depreciation
(186,640
)
 
(157,944
)
Net fixed assets
$
969,337

 
$
565,281

Our depreciation expense for the periods presented was as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Depreciation expense
$
11,365

 
$
9,202

 
$
32,930

 
$
27,246


5. Equity Investees
We account for our ownership in our joint ventures under the equity method of accounting. The price we pay to acquire an ownership interest in a company may exceed the underlying book value of the capital accounts we acquire. Such excess cost amounts are included within the carrying values of our equity investees. At September 30, 2013 and December 31, 2012, the unamortized excess cost amounts totaled $226.5 million and $234 million, respectively. We amortize the excess cost as a reduction in equity earnings in a manner similar to depreciation.

The following table presents information included in our Unaudited Condensed Consolidated Financial Statements related to our equity investees.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Genesis’ share of operating earnings
$
9,641

 
$
5,978

 
$
24,512

 
$
15,611

Amortization of excess purchase price
(2,582
)
 
(2,546
)
 
(7,894
)
 
(7,640
)
Net equity in earnings
$
7,059

 
$
3,432

 
$
16,618

 
$
7,971

Distributions received
$
11,610

 
$
9,045

 
$
32,624

 
$
27,069


9
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following tables present the combined unaudited balance sheet and income statement information (on a 100% basis) of our equity investees:
 
September 30,
2013
 
December 31,
2012
BALANCE SHEET DATA:
 
 
 
Assets
 
 
 
Current assets
$
83,886

 
$
74,906

Fixed assets, net
1,021,106

 
832,525

Other assets
7,727

 
10,202

Total assets
$
1,112,719

 
$
917,633

Liabilities and equity
 
 
 
Current liabilities
$
78,979

 
$
112,321

Other liabilities
182,210

 
134,731

Equity
851,530

 
670,581

Total liabilities and equity
$
1,112,719

 
$
917,633

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
INCOME STATEMENT DATA:
 
 
 
 
 
 
 
Revenues
$
49,239

 
$
39,799

 
$
135,507

 
$
113,769

Operating income
$
28,419

 
$
19,810

 
$
75,946

 
$
53,597

Net income
$
27,725

 
$
19,196

 
$
73,928

 
$
51,553


6. Intangible Assets
The following table summarizes the components of our intangible assets at the dates indicated:
 
 
September 30, 2013
 
December 31, 2012
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
Refinery Services:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
94,654

 
$
74,504

 
$
20,150

 
$
94,654

 
$
69,167

 
$
25,487

Licensing agreements
38,678

 
25,264

 
13,414

 
38,678

 
22,892

 
15,786

Supplier relationships
—

 
—

 
—

 
36,469

 
36,469

 
—

Segment total
133,332

 
99,768

 
33,564

 
169,801

 
128,528

 
41,273

Supply & Logistics:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
35,430

 
28,027

 
7,403

 
35,430

 
26,403

 
9,027

Intangibles associated with lease
13,260

 
2,920

 
10,340

 
13,260

 
2,565

 
10,695

Trade names
—

 
—

 
—

 
18,888

 
18,888

 
—

Segment total
48,690

 
30,947

 
17,743

 
67,578

 
47,856

 
19,722

Other
20,512

 
6,066

 
14,446

 
18,932

 
4,862

 
14,070

Total
$
202,534

 
$
136,781

 
$
65,753

 
$
256,311

 
$
181,246

 
$
75,065

Our amortization expense for the periods presented was as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Amortization expense
$
3,656

 
$
4,520

 
$
10,892

 
$
15,390


10
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


We estimate that our amortization expense for the next five years will be as follows:
Remainder of
2013
$
3,655

 
2014
$
12,500

 
2015
$
10,692

 
2016
$
9,230

 
2017
$
8,067


7. Debt
Our obligations under debt arrangements consisted of the following:
 
September 30,
2013
 
December 31,
2012
Senior secured credit facility
$
411,300

 
$
500,000

7.875% senior unsecured notes (including unamortized premium of $804 and $895 in 2013 and 2012, respectively)
350,804

 
350,895

5.750% senior unsecured notes
350,000

 
—

Total long-term debt
$
1,112,104

 
$
850,895

As of September 30, 2013, we were in compliance with the financial covenants contained in our credit agreement and senior unsecured notes indenture.
Senior Secured Credit Facility
At September 30, 2013, we had $411.3 million borrowed under our $1 billion credit facility, with $97.1 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 $15.3 million was outstanding at September 30, 2013. 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 September 30, 2013 was $573.4 million.
Senior Unsecured Notes
In November 2010, we issued $250 million in aggregate principal amount of 7.875% senior unsecured notes due December 15, 2018 (the "2018 Notes"). The 2018 Notes were sold at face value. Interest payments are due on June 15 and December 15 of each year. In February 2012, we issued an additional $100 million of aggregate principal amount of the 2018 Notes. The additional 2018 Notes were issued at 101% of face value at an effective interest rate of 7.682%. The notes have the same terms and conditions as the notes previously issued under the indenture. The issuance increased the total aggregate principal amount of the 2018 Notes under the indenture to $350 million.
On February 8, 2013, we issued $350 million of aggregate principal amount of 5.75% senior unsecured notes (the "2021 Notes"). The 2021 Notes were sold at face value. Interest payments are due on February 15 and August 15 of each year, beginning August 15, 2013. The 2021 Notes mature on February 15, 2021. The net proceeds were used to repay borrowings under our credit facility and for general partnership purposes.
The 2018 and the 2021 Notes were co-issued by Genesis Energy Finance Corporation (which has no independent assets or operations) and are each fully and unconditionally guaranteed, jointly and severally, by certain of our wholly-owned subsidiaries. We have the right to redeem the 2018 Notes at any time after December 15, 2014 at a premium to the face amount of the notes that varies based on the time remaining to maturity of the 2018 Notes. Prior to December 15, 2013, we may also redeem up to 35% of the principal amount of the 2018 Notes for 107.875% of the face amount with the proceeds from an equity offering of our common units. We have the right to redeem the 2021 Notes at any time after February 15, 2017, at a premium to the face amount of the 2021 Notes that varies based on the time remaining to maturity on the 2021 Notes. Prior to February 15, 2016, we may also redeem up to 35% of the principal amount of the 2021 Notes for 105.75% of the face amount with the proceeds from an equity offering of our common units.


11
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


8. Partners’ Capital and Distributions
Common Units
In September 2013, we issued 5,750,000 Class A common units in a public offering at a price of $47.51 per unit. We received proceeds, net of underwriting discounts and offering costs, of approximately $263.6 million from that offering. We used the net proceeds for general partnership purposes, including the repayment of outstanding borrowings under our revolving credit facility. At September 30, 2013, our outstanding common units consisted of 88,650,988 Class A units and 39,997 Class B units.
Waiver Units
Our waiver units are non-voting securities entitled to a minimal preferential quarterly distribution. At issuance, our waiver units were comprised of four classes (designated Class 1, Class 2, Class 3 and Class 4) of 1,738,000 units each. The waiver units in each class were/are convertible into Class A common units at a 1:1 conversion rate in the calendar quarter during which each of our common units receives a specified minimum quarterly distribution and our distribution coverage ratio (after giving effect to the then convertible waiver units) would be at least 1.1 times. The minimum distribution per common unit required for conversion was $0.49 for our Class 3 waiver units and is $0.52 for our Class 4 waiver units.
Our Class 1 and Class 2 waiver units converted into common units in 2012.
On May 15, 2013, our Class 3 waiver units became convertible as we paid a distribution of $0.4975 per common unit and satisfied the conversion coverage ratio requirement. All Class 3 waiver units were converted into common units by June 30, 2013.
At September 30, 2013, we had 1,738,233 waiver units outstanding comprised of the Class 4 waiver units. The Class 4 waiver units will covert into common units when we satisfy the conversion ratio requirement and pay a minimum distribution of $0.52 per common unit.
Distributions
We paid or will pay the following distributions in 2012 and 2013:
Distribution For
 
Date Paid
 
Per Unit
Amount
 
Total
Amount
2012
 
 
 
 
 
 
1st Quarter
 
May 15, 2012
 
$
0.4500

 
$
35,768

2nd Quarter
 
August 14, 2012
 
$
0.4600

 
$
36,563

3rd Quarter
 
November 14, 2012
 
$
0.4725

 
$
38,375

4th Quarter
 
February 14, 2013
 
$
0.4850

 
$
39,390

2013
 
 
 
 
 
 
1st Quarter
 
May 15, 2013
 
$
0.4975

 
$
40,405

2nd Quarter
 
August 14, 2013
 
$
0.5100

 
$
42,302

3rd Quarter
 
November 14, 2013
(1) 
$
0.5225

 
$
46,344

 
(1) This distribution will be paid to unitholders of record as of November 1, 2013.
9. Business Segment Information
Our operations consist of three operating segments:
•
Pipeline Transportation – interstate, intrastate and offshore crude oil, and to a lesser extent, CO2;
•
Refinery Services – processing high sulfur (or “sour”) gas streams as part of refining operations to remove the sulfur and selling the related by-product, NaHS and;
•
Supply and Logistics – terminaling, blending, storing, marketing, and transporting crude oil and petroleum products (primarily fuel oil, asphalt, and other heavy refined products) and, on a smaller scale, CO2.
Substantially all of our revenues are derived from, and substantially all of our assets are located in, the United States.
We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash charges, such as depreciation and amortization), and segment general and administrative expenses, plus our equity in distributable cash

12
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


generated by our equity investees. In addition, our Segment Margin definition excludes the non-cash effects of our 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:
 
Pipeline
Transportation
 
Refinery
Services
 
Supply &
Logistics
 
Total
Three Months Ended September 30, 2013
 
 
 
 
 
 
 
Segment margin (a)
$
29,860

 
$
19,163

 
$
15,801

 
$
64,824

Capital expenditures (b)
$
38,514

 
$
632

 
$
290,942

 
$
330,088

Revenues:
 
 
 
 
 
 
 
External customers
$
16,636

 
$
55,025

 
$
1,188,157

 
$
1,259,818

Intersegment (c)
6,581

 
(2,615
)
 
(3,966
)
 
—

Total revenues of reportable segments
$
23,217

 
$
52,410

 
$
1,184,191

 
$
1,259,818

Three Months Ended September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
23,295

 
$
18,983

 
$
23,651

 
$
65,929

Capital expenditures (b)
$
21,764

 
$
1,025

 
$
14,410

 
$
37,199

Revenues:
 
 
 
 
 
 
 
External customers
$
16,190

 
$
50,378

 
$
975,269

 
$
1,041,837

Intersegment (c)
2,974

 
(2,401
)
 
(573
)
 
—

Total revenues of reportable segments
$
19,164

 
$
47,977

 
$
974,696

 
$
1,041,837

Nine Months Ended September 30, 2013
 
 
 
 
 
 
 
Segment margin (a)
$
81,512

 
$
55,824

 
$
69,995

 
$
207,331

Capital expenditures (b)
$
159,922

 
$
2,296

 
$
347,001

 
$
509,219

Revenues:
 
 
 
 
 
 
 
External customers
$
53,121

 
$
161,492

 
$
3,406,076

 
$
3,620,689

Intersegment (c)
13,412

 
(8,122
)
 
(5,290
)
 
—

Total revenues of reportable segments
$
66,533

 
$
153,370

 
$
3,400,786

 
$
3,620,689

Nine Months Ended September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
69,427

 
$
53,510

 
$
66,075

 
$
189,012

Capital expenditures (b)
$
300,093

 
$
2,295

 
$
77,414

 
$
379,802

Revenues:
 
 
 
 
 
 
 
External customers
$
44,564

 
$
151,326

 
$
2,820,095

 
$
3,015,985

Intersegment (c)
11,230

 
(6,984
)
 
(4,246
)
 
—

Total revenues of reportable segments
$
55,794

 
$
144,342

 
$
2,815,849

 
$
3,015,985

Total assets by reportable segment were as follows:
 
September 30,
2013
 
December 31,
2012
Pipeline transportation
$
1,024,367

 
$
890,652

Refinery services
414,102

 
414,170

Supply and logistics
1,179,791

 
750,347

Other assets
61,310

 
54,495

Total consolidated assets
$
2,679,570

 
$
2,109,664

 

13
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(a)
A reconciliation of Segment Margin to income before income taxes for the periods presented is as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Segment Margin
$
64,824

 
$
65,929

 
$
207,331

 
$
189,012

Corporate general and administrative expenses
(11,113
)
 
(9,428
)
 
(32,255
)
 
(26,756
)
Depreciation and amortization
(16,066
)
 
(14,838
)
 
(46,789
)
 
(45,447
)
Interest expense
(12,587
)
 
(9,873
)
 
(36,282
)
 
(30,697
)
Distributable cash from equity investees in excess of equity in earnings
(5,204
)
 
(5,613
)
 
(16,659
)
 
(19,098
)
Non-cash items not included in segment margin
507

 
(2,222
)
 
(2,828
)
 
(2,475
)
Cash payments from direct financing leases in excess of earnings
(1,291
)
 
(1,278
)
 
(3,786
)
 
(3,748
)
Income before income taxes
$
19,070

 
$
22,677

 
$
68,732

 
$
60,791

 
(b)
Capital expenditures include maintenance and growth capital expenditures, such as fixed asset additions (including enhancements to existing facilities and construction of internal growth projects) as well as acquisitions of businesses and interests in equity investees. In addition to construction of internal growth projects, capital spending in our pipeline transportation segment included $5.2 million and $71.4 million during the three and nine months ended September 30, 2013 and $5.7 million and $57.1 million during the three and nine months ended September 30, 2012 representing capital contributions to our SEKCO equity investee to fund our share of the construction costs for its pipeline. For the three and nine months ended September 30, 2013, capital spending in our supply and logistics segment also included $230.9 million for the acquisition of our offshore marine transportation assets. For the nine months ended September 30, 2012, capital spending in our pipeline transportation segment also included $205.6 million for the acquisition of interests in several Gulf of Mexico pipelines.
(c)
Intersegment sales were conducted under terms that we believe were no more or less favorable than then-existing market conditions.

10. Transactions with Related Parties
Sales, purchases and other transactions with affiliated companies, in the opinion of management, are conducted under terms no more or less favorable than then-existing market conditions. The transactions with related parties were as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Sales of CO2 to Sandhill Group, LLC (1)
$
863

 
$
838

 
$
2,344

 
$
2,111

Petroleum products sales to Davison family businesses
399

 
326

 
1,043

 
1,012

Petroleum products sales to an affiliate of the Quintana Group (2)
—

 
6,376

 
—

 
21,142

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

 
$
150

 
$
450

 
$
450

Marine operating fuel and expenses provided by an affiliate of the Quintana Group (2)
—

 
1,980

 
—

 
6,181

 
(1)
We own a 50% interest in Sandhill Group, LLC.
(2)
The Quintana Group monetized all of its remaining investment in our common units on October 5, 2012. Transactions with the Quintana Group are included in the above table as related party transactions through October 5, 2012.
Amount due from Related Party
At both September 30, 2013 and December 31, 2012 Sandhill Group, LLC owed us $0.3 million for purchases of CO2.

14
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


11. Supplemental Cash Flow Information
The following table provides information regarding the net changes in components of operating assets and liabilities.
 
 
Nine Months Ended
September 30,
 
2013
 
2012
(Increase) decrease in:
 
 
 
Accounts receivable
$
(92,906
)
 
$
(80,789
)
Inventories
(32,073
)
 
33,826

Other current assets
13,897

 
1,846

Increase (decrease) in:
 
 
 
Accounts payable
75,506

 
57,851

Accrued liabilities
7,222

 
6,144

Net changes in components of operating assets and liabilities
$
(28,354
)
 
$
18,878

Payments of interest and commitment fees were $32.5 million and $24.4 million for the nine months ended September 30, 2013 and September 30, 2012, respectively.
At September 30, 2013 and September 30, 2012, we had incurred liabilities for fixed and intangible asset additions totaling $22.9 million and $4.8 million, respectively, that had not been paid at the end of the third 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.
12. Derivatives
Commodity Derivatives
We have exposure to commodity price changes related to our inventory and purchase commitments. We utilize derivative instruments (primarily futures and options contracts traded on the NYMEX) to hedge our exposure to commodity prices, primarily of crude oil, fuel oil and petroleum products. Our decision as to whether to designate derivative instruments as 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.

15
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


At September 30, 2013, we had the following outstanding derivative commodity contracts that were entered into to economically hedge inventory or fixed price purchase commitments. We had no outstanding derivative contracts that were designated as hedges under accounting rules.
 
 
Sell (Short)
Contracts
 
Buy (Long)
Contracts
Not qualifying or not designated as hedges under accounting rules:
 
 
 
 
Crude oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
335

 
75

Weighted average contract price per bbl
 
$
103.01

 
$
103.47

Crude oil LLS/WTI swaps:
 
 
 
 
Contract volumes (1,000 bbls)
 
110

 
60

Weighted average contract price per bbl
 
$
0.09

 
$
25.25

Diesel futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
39

 
22

Weighted average contract price per gal
 
$
3.02

 
$
2.97

#6 Fuel oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
898

 
—

Weighted average contract price per bbl
 
$
92.81

 
$
—

Crude oil options:
 
 
 
 
Contract volumes (1,000 bbls)
 
315

 
95

Weighted average premium received
 
$
1.47

 
$
0.29

Diesel options:
 
 
 
 
Contract volumes (1,000 bbls)
 
30

 
—

Weighted average premium received
 
$
2.50

 
$
—

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.

16
Table of Contents
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 September 30, 2013 and December 31, 2012:
Fair Value of Derivative Assets and Liabilities
 
 
Unaudited Condensed Consolidated Balance Sheets Location
 
Fair Value
 
September 30,
2013
 
December 31,
2012
Asset Derivatives:
 
 
 
 
 
Commodity derivatives - futures and call options (undesignated hedges):
 
 
 
 
 
Gross amount of recognized assets
Current Assets - Other
 
$
1,053

 
$
758

Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other
 
(851
)
 
(758
)
Net amount of assets presented in the Unaudited Condensed Consolidated Balance Sheets
 
 
$
202

 
$
—

Liability Derivatives:
 
 
 
 
 
Commodity derivatives - futures and call options (undesignated hedges):
 
 
 
 
 
Gross amount of recognized liabilities
Current Assets - Other (1)
 
$
(851
)
 
$
(3,357
)
Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets
Current Assets - Other (1)
 
851

 
3,357

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 September 30, 2013, we had a net broker receivable of approximately $4.9 million (consisting of initial margin of $4.6 million increased by $0.3 million of variation margin).  As of December 31, 2012, we had a net broker receivable of approximately $3.6 million (consisting of initial margin of $4.1 million reduced by $0.5 million of variation margin that had been returned to us).  At September 30, 2013 and December 31, 2012, none of our outstanding derivatives contained credit-risk related contingent features that would result in a material adverse impact to us upon any change in our credit ratings. 

Effect on Operating Results 
 
 
 
Amount of Gain (Loss) Recognized in Income
 
Unaudited Condensed Consolidated Statements of Operations Location
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2013
 
2012
 
2013
 
2012
Commodity derivatives - futures and call options:
 
 
 
 
 
 
 
 
 
Contracts not considered hedges under accounting guidance
Supply and logistics product costs
 
$
(4,522
)
 
$
(5,817
)
 
$
(2,877
)
 
$
(2,959
)
Total commodity derivatives
 
 
$
(4,522
)
 
$
(5,817
)
 
$
(2,877
)
 
$
(2,959
)

17
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


13. Fair-Value Measurements
We classify financial assets and liabilities into the following three levels based on the inputs used to measure fair value:
(1)
Level 1 fair values are based on observable inputs such as quoted prices in active markets for identical assets and liabilities;
(2)
Level 2 fair values are based on pricing inputs other than quoted prices in active markets and are either directly or indirectly observable as of the measurement date; and
(3)
Level 3 fair values are based on unobservable inputs in which little or no market data exists.
As required by fair value accounting guidance, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Our assessment of the significance of a particular input to the fair value requires judgment and may affect the placement of assets and liabilities within the fair value hierarchy levels.
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at the dates indicated. 
 
 
Fair Value at
 
Fair Value at
 
 
September 30, 2013
 
December 31, 2012
Recurring Fair Value Measures
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Commodity derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
$
1,053

 
$
—

 
$
—

 
$
758

 
$
—

 
$
—

Liabilities
 
$
(851
)
 
$
—

 
$
—

 
$
(3,357
)
 
$
—

 
$
—

Our commodity derivatives include exchange-traded futures and exchange-traded options contracts. The fair value of these exchange-traded derivative contracts is based on unadjusted quoted prices in active markets and is, therefore, included in Level 1 of the fair value hierarchy.
See Note 12 for additional information on our derivative instruments.
Other Fair Value Measurements
We believe the debt outstanding under our credit facility approximates fair value as the stated rate of interest approximates current market rates for similar instruments with comparable maturities. At September 30, 2013, our senior unsecured notes had a carrying value of $700.8 million and a fair value of $717.5 million, compared to $350.9 million and $373.2 million, respectively, at December 31, 2012. The fair value of the senior unsecured notes is determined based on trade information in the financial markets of our public debt and is considered a Level 2 fair value measurement.
14. Contingencies
We are subject to various environmental laws and regulations. Policies and procedures are in place to monitor compliance and to detect and address any releases of crude oil from our pipelines or other facilities; however, no assurance can be made that such environmental releases may not substantially affect our business.

We are subject to lawsuits in the normal course of business and examination by tax and other regulatory authorities. We do not expect such matters presently pending to have a material effect on our financial position, results of operations, or cash flows.

15. Income Taxes

In the third quarter of 2012, we reversed $8.2 million of uncertain tax positions and recognized an income tax benefit in the Unaudited Condensed Consolidated Statements of Operations as a result of tax audit settlements and the expiration of statutes of limitations. These uncertain tax positions were included in Other Long-Term Liabilities in our Unaudited Condensed Consolidated Balance Sheets.

18
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


16. Condensed Consolidating Financial Information
Our $700 million aggregate principal amount of senior unsecured notes co-issued by Genesis Energy, L.P. and Genesis Energy Finance Corporation are fully and unconditionally guaranteed jointly and severally by all of Genesis Energy, L.P.’s 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 and accordingly has no ability to service obligations on the 2018 and 2021 Notes. Each subsidiary guarantor and the subsidiary co-issuer are 100% owned, directly or indirectly, by Genesis Energy, L.P. See Note 7 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.



19
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Unaudited Condensed Consolidating Balance Sheet
September 30, 2013

 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
20

 
$
—

 
$
15,862

 
$
977

 
$
—

 
$
16,859

Other current assets
975,220

 
—

 
483,258

 
47,888

 
(999,156
)
 
507,210

Total current assets
975,240

 
—

 
499,120

 
48,865

 
(999,156
)
 
524,069

Fixed assets, at cost
—

 
—

 
1,039,675

 
116,302

 
—

 
1,155,977

Less: Accumulated depreciation
—

 
—

 
(170,629
)
 
(16,011
)
 
—

 
(186,640
)
Net fixed assets
—

 
—

 
869,046

 
100,291

 
—

 
969,337

Goodwill
—

 
—

 
325,046

 
—

 
—

 
325,046

Other assets, net
22,568

 
—

 
240,081

 
153,758

 
(160,356
)
 
256,051

Equity investees
—

 
—

 
605,067

 
—

 
—

 
605,067

Investments in subsidiaries
1,252,345

 
—

 
107,042

 
—

 
(1,359,387
)
 
—

Total assets
$
2,250,153

 
$
—

 
$
2,645,402

 
$
302,914

 
$
(2,518,899
)
 
$
2,679,570

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
11,832

 
$
—

 
$
1,364,742

 
$
32,820

 
$
(999,189
)
 
$
410,205

Senior secured credit facility
411,300

 
—

 
—

 
—

 
—

 
411,300

Senior unsecured notes
700,804

 
—

 
—

 
—

 
—

 
700,804

Deferred tax liabilities
—

 
—

 
13,625

 
—

 
—

 
13,625

Other liabilities
—

 
—

 
13,658

 
163,938

 
(160,177
)
 
17,419

Total liabilities
1,123,936

 
—

 
1,392,025

 
196,758

 
(1,159,366
)
 
1,553,353

Partners’ capital
1,126,217

 
—

 
1,253,377

 
106,156

 
(1,359,533
)
 
1,126,217

Total liabilities and partners’ capital
$
2,250,153

 
$
—

 
$
2,645,402

 
$
302,914

 
$
(2,518,899
)
 
$
2,679,570



20
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Balance Sheet
December 31, 2012
 
 
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
$
10

 
$
—

 
$
11,214

 
$
58

 
$
—

 
$
11,282

Other current assets
745,589

 
—

 
367,837

 
41,533

 
(762,207
)
 
392,752

Total current assets
745,599

 
—

 
379,051

 
41,591

 
(762,207
)
 
404,034

Fixed assets, at cost
—

 
—

 
617,519

 
105,706

 
—

 
723,225

Less: Accumulated depreciation
—

 
—

 
(144,882
)
 
(13,062
)
 
—

 
(157,944
)
Net fixed assets
—

 
—

 
472,637

 
92,644

 
—

 
565,281

Goodwill
—

 
—

 
325,046

 
—

 
—

 
325,046

Other assets, net
17,737

 
—

 
254,423

 
157,604

 
(163,696
)
 
266,068

Equity investees
—

 
—

 
549,235

 
—

 
—

 
549,235

Investments in subsidiaries
1,006,415

 
—

 
102,707

 
—

 
(1,109,122
)
 
—

Total assets
$
1,769,751

 
$
—

 
$
2,083,099

 
$
291,839

 
$
(2,035,025
)
 
$
2,109,664

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
2,361

 
$
—

 
$
1,048,937

 
$
23,567

 
$
(762,214
)
 
$
312,651

Senior secured credit facility
500,000

 
—

 
—

 
—

 
—

 
500,000

Senior unsecured notes
350,895

 
—

 
—

 
—

 
—

 
350,895

Deferred tax liabilities
—

 
—

 
13,810

 
—

 
—

 
13,810

Other liabilities
—

 
—

 
13,044

 
166,282

 
(163,513
)
 
15,813

Total liabilities
853,256

 
—

 
1,075,791

 
189,849

 
(925,727
)
 
1,193,169

Partners’ capital
916,495

 
—

 
1,007,308

 
101,990

 
(1,109,298
)
 
916,495

Total liabilities and partners’ capital
$
1,769,751

 
$
—

 
$
2,083,099

 
$
291,839

 
$
(2,035,025
)
 
$
2,109,664




























21
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2013

 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics
$
—

 
$
—

 
$
1,182,561

 
$
38,908

 
$
(37,278
)
 
$
1,184,191

Refinery services
—

 
—

 
50,609

 
4,199

 
(2,398
)
 
52,410

Pipeline transportation services
—

 
—

 
16,604

 
6,613

 
—

 
23,217

Total revenues
—

 
—

 
1,249,774

 
49,720

 
(39,676
)
 
1,259,818

COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics costs
—

 
—

 
1,165,818

 
39,201

 
(37,278
)
 
1,167,741

Refinery services operating costs
—

 
—

 
31,840

 
3,862

 
(2,662
)
 
33,040

Pipeline transportation operating costs
—

 
—

 
6,075

 
203

 
—

 
6,278

General and administrative
—

 
—

 
12,063

 
32

 
—

 
12,095

Depreciation and amortization
—

 
—

 
14,789

 
1,277

 
—

 
16,066

Total costs and expenses
—

 
—

 
1,230,585

 
44,575

 
(39,940
)
 
1,235,220

OPERATING INCOME
—

 
—

 
19,189

 
5,145

 
264

 
24,598

Equity in earnings of subsidiaries
31,046

 
—

 
1,078

 
—

 
(32,124
)
 
—

Equity in earnings of equity investees
—

 
—