UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13A-16 OR 15D-16 UNDER THE SECURITIES
EXCHANGE ACT OF 1934

For the month of November 2016

Commission File Number:  001-33179

AEGEAN MARINE PETROLEUM NETWORK INC.
(Translation of registrant's name into English)

10, Akti Kondili
185 45, Piraeus
Greece
(Address of principal executive offices)

 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ X ]     Form 40-F [   ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ________.

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ________.

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached as Exhibit 1 to this Report on Form 6-K is a copy of the press release of Aegean Marine Petroleum Network Inc. (the "Company"), dated November 16, 2016, announcing the Company's financial and operating results for the third quarter ended September 30, 2016.

Attached as Exhibit 2 is a copy of the Company's consolidated financial statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
AEGEAN MARINE PETROLEUM NETWORK INC.
(registrant)
   
Dated:  November 16, 2016
By:
/s/ E. Nikolas Tavlarios
   
Name:
/s/ E. Nikolas Tavlarios
   
Title:
President



Exhibit 1
Aegean Marine Petroleum Network Inc.
Announces Third Quarter 2016 Financial Results

New York, NY, November 16, 2016 – Aegean Marine Petroleum Network Inc. (NYSE: ANW) ("Aegean" or the "Company") today announced financial and operating results for the third quarter ended September 30, 2016.

Third Quarter Financial Highlights

Compared to prior year period:
·
Increased sales volumes to 4,258,954 metric tons.
·
Reported gross profit of $88.4 million.
·
Reported operating income of $22.5 million.
o
Increased operating income adjusted for a loss on sale of non-core vessels and the accelerated vesting of the shares of Aegean's founder ("Accelerated Shares") was $29.6 million.
·
Recorded GAAP net income attributable to Aegean shareholders of $10.6 million or $0.22 basic and diluted earnings per share.
o
Net income adjusted for a loss on sale of non-core vessels and the Accelerated Shares was $17.7 million or $0.36 basic and diluted earnings per share. Pro-forma adjusted EPS, assuming the repurchase of shares occurred at the beginning of the period, was $0.45.
·
Generated adjusted EBITDA of $37.7 million.
·
Sold two non-core vessels, which is expected to result in operating cost reductions of more than $3.0 million on an annual basis.

Third Quarter Operational Highlights

·
Further optimized operations through the sale of two non-core vessels.
·
Strategically relocated certain vessels from lower-activity markets to higher-growth regions.

E. Nikolas Tavlarios, Aegean's President, commented, "We delivered another quarter of solid results against a backdrop of slowness in the container segment and volatile commodity markets. Despite these headwinds, we continue to achieve profitability and strong volumes with our fourth consecutive quarter of selling more than 4 million metric tons of bunker fuel. Our diversified platform, recent expansion in new attractive markets and our back-to-back trading businesses contributed to our growth during the quarter."

Mr. Tavlarios concluded, "Aegean has transformed into a diversified business with operations around the world and we look forward to additional opportunities ahead. We are proud of what we have created and our ability to serve more customers across our global footprint as a leader in the physical supply and marketing of marine fuel. We remain committed to executing our strategic initiatives and leveraging our scale to drive growth and shareholder value."
 

 
1


Generating Solid Financial Results

·
Revenue – The Company reported total revenue of $1.1 billion for the third quarter of 2016, an increase of 5.4% compared to the same period in 2015, primarily due to the moderate increase in oil prices. Voyage and other revenues were, $21.2 million, consistent with the same period in 2015.

·
Gross Profit – Gross Profit, which equals total revenue less directly attributable cost of revenue increased by 4.7% to $88.4 million in the third quarter of 2016 compared to $84.4 million in the same period in 2015.

·
Operating Expense – The Company reported operating expense of $65.9 million for the third quarter of 2016, a decrease of $0.8 million or 1.2% compared to the same period in prior year.  Adjusting for the sale of non-core assets and the Accelerated Shares, operating expense was $58.8 million, a decrease of 2.6% compared to the same period in the prior year.

·
Operating Income – Operating income for the third quarter of 2016 adjusted for the sale of non-core assets and the Accelerated Shares was $29.6 million, an increase of 28.7% compared to the same period in the prior year.

·
Net Income – Net income attributable to Aegean shareholders adjusted for the sale of non-core vessels and the Accelerated Shares was $17.7 million, or $0.36 per basic and diluted share, an increase of $5.6 million or 46.3% compared to the same period in 2015. Adjusted pro-forma EPS using the reduced quarter end share count as opposed to a weighted average, was $0.45.

Operational Metrics

·
Sales Volume – For the three months ended September 30, 2016, the Company reported marine fuel sales volumes of 4,258,954 metric tons, an increase of 25.8% compared to the same period in 2015.

·
Adjusted EBITDA Per Metric Ton of Marine Fuel Sold – For the three months ended September 30, 2016, the Company reported adjusted EBITDA per metric ton of marine fuel sold of $8.84. Adjusted EBITDA per metric ton of marine fuel sold in the prior year period was $9.29 per metric ton.

·
Gross Spread Per Metric Ton of Marine Fuel Sold – For the three months ended September 30, 2016, the Company reported gross spread per metric ton of marine fuel sold on an aggregate basis of $18.6. Gross spread per metric ton of marine fuel sold in the prior year period was $21.6.
 
Liquidity and Capital Resources

·
Net cash provided by operating activities was $34.7 million for the three months ended September 30, 2016. Net income as adjusted for non-cash items (as defined in Note 9 below) was $31.2 million for the same period.

·
Net cash provided by investing activities was $1.1 million for the three months ended September 30, 2016, primarily due to the sale of two non-core vessels.

·
Net cash used in financing activities was $105.8 million for the three months ended September 30, 2016, primarily due to the repurchase of our common stock.
 
·
The weighted average basic and diluted shares outstanding for the three months ended September 30, 2016, was 46,464,248. The weighted average basic and diluted shares outstanding for the three months ended September 30, 2015 was 47,434,953. 

Spyros Gianniotis, Aegean's Chief Financial Officer, stated, "In addition to our strong operational performance, we are taking action to enhance efficiency through the sale of 5 non-core vessels year to date, including two in the third quarter, which will reduce operating costs by $9.5 million annually. We will continue to evaluate our markets and redeploy capital to opportunities we believe will generate the best return.  During the quarter we strengthened our financial flexibility with the renewal of our $1 billion credit facility on improved terms."

 



2

Summary Consolidated Financial and Other Data (Unaudited)
   
For the Three Months Ended
September 30,
   
For the Nine Months Ended
September 30,
 
   
2015
   
2016
   
2015
   
2016
 
   
(in thousands of U.S. dollars, unless otherwise stated)
 
Income Statement Data:
                       
Revenues - third parties 
 
$
1,075,076
   
$
1,133,312
   
$
3,289,132
   
$
2,864,165
 
Revenues - related companies 
   
6,432
     
6,244
     
15,186
     
15,879
 
Total revenues 
   
1,081,508
     
1,139,556
     
3,304,318
     
2,880,044
 
Cost of revenues  - third parties 
   
971,698
     
1,029,942
     
2,942,082
     
2,568,063
 
Cost of revenuesrelated companies 
   
25,401
     
21,174
     
118,724
     
49,294
 
Total cost of revenues 
   
997,099
     
1,051,116
     
3,060,806
     
2,617,357
 
Gross profit 
   
84,409
     
88,440
     
243,512
     
262,687
 
Operating expenses: 
                               
Selling and distribution 
   
50,484
     
48,206
     
153,045
     
148,921
 
General and administrative 
   
10,551
     
13,531
     
31,459
     
36,850
 
Amortization of intangible assets 
   
374
     
303
     
1,123
     
900
 
Loss on sale of vessels 
   
-
     
3,875
     
130
     
6,312
 
Impairment Charge……………………………………………………………
   
5,308
     
-
     
5,308
     
-
 
Operating income 
   
17.692
     
22,525
     
52,447
     
69,704
 
Net financing cost 
   
(9,468
)
   
(8,319
)
   
(27,607
)
   
(30,157
)
Foreign exchange (losses) /  gains, net 
   
(93
)
   
(121
)
   
599
     
(1,804
)
Income tax (expense) / benefit 
   
(1,334
)
   
(3,456
)
   
730
     
(1,811
)
Net income 
   
6,797
     
10,629
     
26,169
     
35,932
 
Less income attributable to non-controlling interest
   
-
     
78
     
-
     
86
 
Net income attributable to AMPNI shareholders 
 
$
6,797
   
$
10,551
   
$
26,169
   
$
35,846
 
Basic earnings per share (U.S. dollars) 
 
$
0.14
   
$
0.22
   
$
0.53
   
$
0.73
 
Diluted earnings per share (U.S. dollars)
 
$
0.14
   
$
0.22
   
$
0.53
   
$
0.73
 
                                 
EBITDA(1)
 
$
26,150
   
$
30,546
   
$
78,009
   
$
93,152
 
                                 
Other Financial Data:
                               
Gross spread on marine petroleum products(2) 
 
$
74,426
   
$
80,460
   
$
217,809
   
$
242,032
 
Gross spread on lubricants(2) 
   
1,246
     
1,114
     
3,434
     
2,879
 
Gross spread on marine fuel(2) 
   
73,180
     
79,346
     
214,375
     
239,153
 
Gross spread per metric ton of marine
fuel sold (U.S. dollars) (2) 
   
21.6
     
18.6
     
22.7
     
19.0
 
Net cash provided by/(used) in operating activities
 
$
127,506
   
$
34,699
   
$
44,454
   
$
(14,798
)
Net cash (used in) / provided by investing activities
   
(544
)
   
1,076
     
(8,172
)
   
199
 
Net cash used in financing activities 
   
(54,168
)
   
(105,819
)
   
(47,497
)
   
(67,328
)
                                 
Sales Volume Data (Metric Tons): (3)
                               
Total sales volumes 
   
3,386,511
     
4,258,954
     
9,452,911
     
12,564,379
 
                                 
Other Operating Data:
                               
Number of owned bunkering tankers, end of period(4)
   
49.0
     
45.0
     
49.0
     
45.0
 
Average number of owned bunkering tankers(4)(5)
   
49.0
     
46.0
     
48.7
     
47.8
 
Special Purpose Vessels, end of period(6) 
   
1.0
     
1.0
     
1.0
     
1.0
 
Number of operating storage facilities, end of period(7)
   
14.0
     
14.0
     
14.0
     
14.0
 
 

 
3


Summary Consolidated Financial and Other Data (Unaudited)
 

   
As of
December 31,
2015
   
As of
September 30,
2016
 
             
   
(in thousands of U.S. dollars, unless otherwise stated)
 
Balance Sheet Data:
     
Cash and cash equivalents 
   
139,314
     
57,973
 
Gross trade receivables 
   
317,152
     
429,661
 
Allowance for doubtful accounts 
   
(7,278
)
   
7,911
 
Inventories 
   
114,531
     
180,716
 
Current assets 
   
730,950
     
781,410
 
Total assets 
   
1,450,011
     
1,472,552
 
Trade payables 
   
72,417
     
99,512
 
Current liabilities (including current portion of long-term debt)
   
389,109
     
473,093
 
Total debt 
   
710,015
     
755,957
 
Total liabilities 
   
828,485
     
907,451
 
Total stockholder's equity 
   
621,526
     
565,101
 
                 
Working Capital Data:
               
Working capital(8) 
   
341,841
     
308,317
 
Working capital excluding cash and debt(8) 
   
477,594
     
576,516
 
                 



4


Notes:
1.
EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that recorded by other companies. Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, vessel and investment impairments, gains/losses on vessel disposals and other non-recurring exceptional items. EBITDA and adjusted EBITDA are included herein because they are a basis upon which the Company assesses its operating performance.
 
Adjusted EBITDA per metric ton of marine fuel sold represents the net income before interest, taxes, depreciation and amortization, vessel and investment impairments, gains/losses on vessel disposals and other non-recurring exceptional items the Company generates per metric ton of marine fuel sold. The Company calculates adjusted EBITDA per metric ton of marine fuel sold by dividing the EBITDA by the sales volume of marine fuel. Marine fuel sales do not include sales of lubricants.
 
The following table reconciles net income attributable to AMPNI to EBITDA, adjusted EBITDA and adjusted EBITDA per metric ton of marine fuel sold for the periods presented:
 
   
For the Three Months Ended
September 30,
   
For the Nine Months Ended
September 30,
 
   
2015
   
2016
   
2015
   
2016
 
   
(in thousands of U.S. dollars, unless otherwise stated)
 
Net income to AMPNI shareholders 
   
6,797
     
10,551
     
26,169
     
35,846
 
                                 
Add: Net financing cost including amortization of financing costs
   
9,468
     
8,319
     
27,607
     
30,157
 
  Add: Income tax (benefit) / expense 
   
1,334
     
3,456
     
(730
)
   
1,811
 
  Add: Depreciation and amortization excluding amortization of financing costs
   
8,551
     
8,220
     
24,963
     
25,338
 
                                 
EBITDA 
   
26,150
     
30,546
     
78,009
     
93,152
 
                                 
Add: Loss on sale of vessels 
           
3,875
     
130
     
6,312
 
Add: Impairment charge
   
5,308
     
-
     
5,308
     
-
 
Add: Accelerated vesting of Dimitris Melissandis' shares
   
-
     
3,230
     
-
     
3,230
 
Adjusted EBITDA 
   
31,458
     
37,651
     
83,447
     
102,694
 
                                 
Sales volume of marine fuel (metric tons) 
   
3,386,511
     
4,258,954
     
9,452,911
     
12,564,379
 
Adjusted EBITDA per metric ton of marine
fuel sold (U.S. dollars) 
   
9.29
     
8.84
     
8.83
     
8.17
 
 
2.
Gross spread on marine petroleum products represents the margin the Company generates on sales of marine fuel and lubricants. Gross spread on marine fuel represents the margin that the Company generates on sales of various classifications of marine fuel oil ("MFO") or marine gas oil ("MGO"). Gross spread on lubricants represents the margin that the Company generates on sales of lubricants. Gross spread on marine petroleum products, gross spread of MFO and gross spread on lubricants are not items recognized by U.S. GAAP and should not be considered as an alternative to gross profit or any other indicator of a Company's operating performance required by U.S. GAAP. The Company's definition of gross spread may not be the same as that used by other companies in the same or other industries. The Company calculates the above-mentioned gross spreads by subtracting from the sales of the respective marine petroleum product the cost of the respective marine petroleum product sold and cargo transportation costs. For arrangements in which the Company physically supplies the respective marine petroleum product using its bunkering tankers, costs of the respective marine petroleum products sold represents amounts paid by the Company for the respective marine petroleum product sold in the relevant reporting period. For arrangements in which the respective marine petroleum product is purchased from the Company's related company, Aegean Oil S.A., or Aegean Oil, cost of the respective marine petroleum products sold represents the total amount paid by the Company to the physical supplier for the respective marine petroleum product and its delivery to the custom arrangements, in which the Company purchases cargos of marine fuel for its floating storage facilities. Transportation costs may be included in the purchase price of marine fuels from the supplier or may be incurred separately from a transportation provider. Gross spread per metric ton of marine fuel sold represents the margin the Company generates per metric ton of marine fuel sold. The Company calculates gross spread per metric ton of marine fuel sold by dividing the gross spread on marine fuel by the sales volume of marine fuel. Marine fuel sales do not include sales of lubricants. The following table reflects the calculation of gross spread per metric ton of marine fuel sold for the periods presented:
 
 
   
For the Three Months Ended
September 30,
   
For the Nine Months Ended
September 30,
 
   
2015
   
2016
   
2015
   
2016
 
   
(in thousands of U.S. dollars,
unless otherwise stated)
 
Sales of marine petroleum products 
   
1,060,342
     
1,118,441
     
3,244,375
     
2,821,064
 
Less: Cost of marine petroleum products sold 
   
(985,916
)
   
(1,037,981
)
   
(3,026,566
)
   
(2,579,032
)
Gross spread on marine petroleum products 
   
74,426
     
80,460
     
217,809
     
242,032
 
Less: Gross spread on lubricants 
   
(1,246
)
   
(1,114
)
   
(3,434
)
   
(2,879
)
Gross spread on marine fuel 
   
73,180
     
79,346
     
214,375
     
239,153
 
                                 
Sales volume of marine fuel (metric tons) 
   
3,386,511
     
4,258,954
     
9,452,911
     
12,564,379
 
                                 
Gross spread per metric ton of marine
fuel sold (U.S. dollars) 
   
21.6
     
18.6
     
22.7
     
19.0
 

 
5

 
3.
Sales volume of marine fuel is the volume of sales of various classifications of MFO and MGO for the relevant period and is denominated in metric tons. The Company does not include the sales volume of lubricants in the calculation of gross spread per metric ton of marine fuel sold.
 
4.
Bunkering fleet comprises both bunkering vessels and barges.
 
5.
Figure represents average bunkering fleet number for the relevant period, as measured by the sum of the number of days each bunkering tanker or barge was used as part of the fleet during the period divided by the cumulative number of calendar days in the period multiplied by the number of bunkering tankers at the end of the period. This figure does not take into account non-operating days due to either scheduled or unscheduled maintenance.
 
6.
Special Purpose Vessels consists of the Orion, a 550 dwt tanker which is based in our Greek market.
 
7.
The Company owns two barges, the Mediterranean and Umnenga, as floating storage facilities in Greece and South Africa. The Company also operates on-land storage facilities in Las Palmas, Fujairah, Tangiers, Panama, the U.S.A., Hamburg and Barcelona.
 
The ownership of storage facilities allows the Company to mitigate its risk of supply shortages. Generally, storage costs are included in the price of refined marine fuel quoted by local suppliers. The Company expects that the ownership of storage facilities will allow it to convert the variable costs of this storage fee mark-up per metric ton quoted by suppliers into fixed costs of operating its owned storage facilities, thus enabling the Company to spread larger sales volumes over a fixed cost base and to decrease its refined fuel costs.
 
8.
Working capital is defined as current assets minus current liabilities. Working capital excluding cash and debt is defined as current assets minus cash and cash equivalents minus restricted cash minus current liabilities plus short-term borrowings plus current portion of long-term debt.
 
9.
Net income as adjusted for non-cash items, such as depreciation, provision for doubtful accounts, restricted stock, amortization, deferred income taxes, gain/loss on sale of vessels, impairment losses, unrealized loss/(gain) on derivatives and unrealized foreign exchange loss/(gain), net, is used to assist in evaluating our ability to make quarterly cash distributions. Net income as adjusted for non-cash items is not recognized by accounting principles generally accepted in the United States and should not be considered as an alternative to net income or any other indicator of the Company's performance required by accounting principles generally accepted in the United States. The following table reflects the calculation of net income as adjusted for non-cash items for the periods presented:
 
   
For the Three Months Ended
September 30,
   
For the Nine Months Ended
September 30,
 
   
2015
   
2016
   
2015
   
2016
 
   
(in thousands of U.S. dollars, unless otherwise stated)
 
Net income 
   
6,797
     
10,629
     
26,169
     
35,932
 
Add: Depreciation 
   
6,464
     
6,152
     
19,100
     
18,944
 
Add: (Release of)/Provision for doubtful accounts
   
(248
)
   
(230
)
   
1,161
     
1,191
 
Add: Share based compensation 
   
2,477
     
5,651
     
7,442
     
10,239
 
Add: Amortization 
   
4,772
     
4,535
     
13,786
     
13,686
 
Add: Net deferred tax expense / (benefit) 
   
886
     
1,288
     
(1,662
)
   
(671
)
Add: Unrealized (gain) / loss on derivatives 
   
(6,728
)
   
(742
)
   
10,511
     
33,452
 
Add: Loss on sale of vessels 
   
-
     
3,875
     
130
     
6,312
 
Add: Impairment charge
   
5,308
     
-
     
5,308
     
-
 
Add: Unrealized foreign exchange loss / (gain) 
   
89
     
42
     
(450
)
   
131
 
Net income as adjusted for non-cash items
   
19,817
     
31,200
     
81,495
     
119,216
 
 


6


Third Quarter 2016 Dividend Announcement
On November 16, 2016, the Company's Board of Directors declared a third quarter 2016 dividend of $0.02 per share payable on or about December 14, 2016 to shareholders of record as of November 30, 2016. The dividend amount was determined in accordance with the Company's dividend policy of paying cash dividends on a quarterly basis subject to factors including the requirements of Marshall Islands law, future earnings, capital requirements, financial condition, future prospects and such other factors as are determined by the Company's Board of Directors. The Company anticipates retaining most of its future earnings, if any, for use in operations and business expansion.

 
Conference Call and Webcast Information
Aegean Marine Petroleum Network Inc. will conduct a conference call and simultaneous Internet webcast on Thursday, November 17, 2016 at 8:30 A.M. Eastern Time, to discuss its third quarter results. Investors may access the webcast and related slide presentation, by visiting the Company's website at www.ampni.com, and clicking on the webcast link. The conference call also may be accessed via telephone by dialing (888) 455-2260 (for U.S.-based callers) or 719-325-2144 (for international callers) and enter the passcode: 1842325.

If you are unable to participate at this time, a replay of the call will be available for two weeks at 888-203-1112 or 719-457-0820. Enter the code 1842325 to access the audio replay. The webcast will also be archived on the Company's website:  http://www.ampni.com.


About Aegean Marine Petroleum Network Inc.
Aegean Marine Petroleum Network Inc. is an international marine fuel logistics company that markets and physically supplies refined marine fuel and lubricants to ships in port and at sea. The Company procures product from various sources (such as refineries, oil producers, and traders) and resells it to a diverse group of customers across all major commercial shipping sectors and leading cruise lines. Currently, Aegean has a global presence in over 30 markets and a team of professionals ready to serve our customers wherever they are around the globe. For additional information please visit: www.ampni.com


Cautionary Statement Regarding Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "intend," "anticipate," "estimate," "project," "forecast," "plan," "potential," "may," "should," "expect" and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include our ability to manage growth, our ability to maintain our business in light of our proposed business and location expansion, our ability to obtain double hull secondhand bunkering tankers, the outcome of legal, tax or regulatory proceedings to which we may become a party, adverse conditions in the shipping or the marine fuel supply industries, our ability to retain our key suppliers and key customers, material disruptions in the availability or supply of crude oil or refined petroleum products, changes in the market price of petroleum, including the volatility of spot pricing, increased levels of competition, compliance or lack of compliance with various environmental and other applicable laws and regulations, our ability to collect accounts receivable, changes in the political, economic or regulatory conditions in the markets in which we operate, and the world in general, our failure to hedge certain financial risks associated with our business, our ability to maintain our current tax treatments and our failure to comply with restrictions in our credit agreements and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

CONTACTS:
Aegean Marine Petroleum Network Inc.
(212) 430-1098
 


7

Exhibit 2
AEGEAN MARINE PETROLEUM NETWORK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2016 AND DECEMBER 31, 2015
(UNAUDITED)
(Expressed in thousands of U.S. dollars – except for share and per share data)
 
   
September 30,
2016
   
December 31,
2015
 
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
57,973
   
$
139,314
 
Trade receivables, net of allowance for doubtful accounts of $7,911 and $7,278, as of September 30, 2016 and December 31, 2015, respectively
   
421,750
     
309,874
 
Trade receivables from related parties
   
12,909
     
18,963
 
Due from related companies
   
11,524
     
6,887
 
Derivative asset
   
-
     
22,416
 
Inventories
   
180,716
     
114,531
 
Prepayments and other current assets, net of allowances for doubtful accounts of $1,028 and $565 as of September 30, 2016 and December 31, 2015, respectively
   
91,560
     
116,004
 
Deferred tax asset
   
1,796
     
2,133
 
Restricted cash
   
3,182
     
828
 
Total current assets
   
781,410
     
730,950
 
                 
FIXED ASSETS:
               
Advances for other fixed assets under construction
   
398
     
398
 
Vessels, cost
   
457,401
     
480,346
 
Vessels, accumulated depreciation
   
(103,560
)
   
(109,328
)
Vessels' net book value
   
353,841
     
371,018
 
Other fixed assets, net
   
240,599
     
246,783
 
Total fixed assets
   
594,838
     
618,199
 
                 
OTHER NON-CURRENT ASSETS:
               
Deferred charges, net
   
21,640
     
25,007
 
Intangible assets
   
7,878
     
8,778
 
Goodwill
   
66,031
     
66,031
 
Other non-current assets
   
755
     
1,046
 
Total non-current assets
   
96,304
     
100,862
 
Total assets
   
1,472,552
     
1,450,011
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
CURRENT LIABILITIES:
               
Short-term borrowings
   
303,611
     
249,497
 
Current portion of long-term debt
   
25,743
     
26,398
 
Trade payables to third parties
   
99,510
     
72,413
 
Trade payables to related companies
   
2
     
4
 
Other payables to related companies
   
1,305
     
1,186
 
Deferred tax liability
   
-
     
990
 
Derivative liability
   
9,200
     
-
 
Accrued and other current liabilities
   
33,722
     
38,621
 
Total current liabilities
   
473,093
     
389,109
 
                 
NON-CURRENT LIABILITIES:
               
Long-term debt, net of current portion and deferred financing costs
   
426,603
     
434,120
 
Deferred tax liability
   
2,545
     
2,563
 
Derivative liability
   
2,256
     
420
 
Other non-current liabilities
   
2,954
     
2,273
 
Total non-current liabilities
   
434,358
     
439,376
 
                 
COMMITMENTS AND CONTINGENCIES
               
                 
STOCKHOLDERS' EQUITY:
               
Preferred stock, $0.01 par value; 25,000,000 shares authorized, none issued
   
-
     
-
 
Common stock, $0.01 par value; 100,000,000 shares authorized at  September 30, 2016 and December 31, 2015; 41,375,461 and 51,382,492 shares issued and 39,403,822 and 49,410,853 shares outstanding at  September 30, 2016 and December 31, 2015, respectively
   
414
     
514
 
Treasury stock $0.01 par value; 1,971,639 shares repurchased at  September 30, 2016 and December 31, 2015
   
(29,327
)
   
(29,327
)
Additional paid-in capital
   
404,294
     
394,068
 
Retained earnings
   
189,634
     
256,271
 
Total  AMPNI stockholders' equity
   
565,015
     
621,526
 
        Non-controlling interest
   
86
     
-
 
Total  equity
   
565,101
     
621,526
 
Total liabilities and equity
 
$
1,472,552
   
$
1,450,011
 

 
The accompanying notes are an integral part of these condensed consolidated financial statements
1

AEGEAN MARINE PETROLEUM NETWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(UNAUDITED)
(Expressed in thousands of U.S. dollars – except for share and per share data)
 

 
   
Nine months Ended
September 30,
 
   
2016
   
2015
 
Revenues
           
Revenues – third parties
 
$
2,864,165
   
$
3,289,132
 
Revenues – related companies
   
15,879
     
15,186
 
Total Revenues
   
2,880,044
     
3,304,318
 
                 
Cost of  Revenues
               
Cost of revenues– third parties
   
2,568,063
     
2,942,082
 
Cost of revenues – related companies
   
49,294
     
118,724
 
Total Cost of Revenues
   
2,617,357
     
3,060,806
 
                 
Gross Profit
   
262,687
     
243,512
 
                 
OPERATING EXPENSES:
               
Selling and distribution
   
148,921
     
153,045
 
General and administrative
   
36,850
     
31,459
 
Amortization of intangible assets
   
900
     
1,123
 
Loss on sale of vessels, net
   
6,312
     
130
 
Impairment charge
   
-
     
5,308
 
Total operating expenses
   
192,983
     
191,065
 
                 
Operating income
   
69,704
     
52,447
 
                 
OTHER INCOME / (EXPENSE):
               
Interest and finance costs
   
(30,302
)
   
(27,653
)
Interest income
   
145
     
46
 
Foreign exchange (losses) / gains, net
   
(1,804
)
   
599
 
Total other expense, net
   
(31,961
)
   
(27,008
)
                 
Income before income taxes
   
37,743
     
25,439
 
                 
Income taxes
   
(1,811
)
   
730
 
                 
Net  income
   
35,932
     
26,169
 
Net income attributable to non-controlling interest
   
86
     
-
 
Net  income attributable to AMPNI shareholders
 
$
35,846
     
26,169
 
                 
Basic earnings per common share
 
$
0.73
   
$
0.53
 
Diluted earnings per common share
 
$
0.73
   
$
0.53
 
                 
Weighted average number of shares, basic
   
47,372,496
     
47,216,050
 
Weighted average number of shares, diluted
   
47,372,496
     
47,216,050
 


The accompanying notes are an integral part of these condensed consolidated financial statements
2

AEGEAN MARINE PETROLEUM NETWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(UNAUDITED)
(Expressed in thousands of U.S. dollars – except for share and per share data)
 
 
 
   
Common Stock
   
Treasury Stock
   
Additional Paid-in Capital
   
Retained Earnings
   
Non-Controlling Interest
   
Total
 
   
Number of Shares
   
Par Value
   
Number of Shares
   
Value
                         
                                                 
BALANCE, December 31, 2014
   
50,242,992
     
502
     
(1,971,639
)
   
(29,327
)
   
371,924
     
224,317
     
-
   
$
567,416
 
                                                                 
- Net income
   
-
     
-
     
-
     
-
     
-
     
26,169
             
26,169
 
- Dividends declared and paid ($0.04 per share)
   
-
     
-
     
-
     
-
     
-
     
(2,938
)
   
-
     
(2,938
)
Equity component of convertible notes
   
-
     
-
     
-
     
-
     
12,114
     
-
     
-
     
12,114
 
- Share-based compensation
   
1,141,000
     
11
     
-
     
-
     
7,431
     
-
     
-
     
7,442
 
BALANCE, September 30, 2015
   
51,383,992
     
513
     
(1,971,639
)
   
(29,327
)
   
391,469
     
247,548
     
-
   
$
610,203
 
                                                                 

 

   
Common Stock
   
Treasury Stock
   
Additional Paid-in Capital
   
Retained Earnings
   
Non-Controlling Interest
   
Total
 
   
Number of Shares
   
Par Value
   
Number of Shares
   
Value
                         
                                                 
BALANCE, December 31, 2015
   
51,382,492
     
514
     
(1,971,639
)
   
(29,327
)
   
394,068
     
256,271
     
-
   
$
621,526
 
                                                                 
- Net income
   
-
     
-
     
-
     
-
     
-
     
35,846
     
86
     
35,932
 
- Dividends declared and paid ($0.04 per share)
   
-
     
-
     
-
     
-
     
-
     
(3,016
)
   
-
     
(3,016
)
- Repurchase and retirement of common stock
   
(11,303,031
)
   
(113
)
   
-
     
-
     
-
     
(99,467
)
   
-
     
(99,580
)
- Share-based compensation
   
1,296,000
     
13
     
-
     
-
     
10,226
     
-
     
-
     
10,239
 
                                                                 
BALANCE, September 30, 2016
   
41,375,461
     
414
     
(1,971,639
)
   
(29,327
)
   
404,294
     
189,634
     
86
   
$
565,101
 


The accompanying notes are an integral part of these condensed consolidated financial statements
3

AEGEAN MARINE PETROLEUM NETWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(UNAUDITED)
(Expressed in thousands of U.S. dollars)

   
Nine Months Ended September 30,
 
   
2016
   
2015
 
Cash flows from operating activities:
           
Net income
 
$
35,932
   
$
26,169
 
Adjustments to reconcile net income to net cash used in operating activities:
               
Depreciation
   
18,944
     
19,100
 
Provision of doubtful accounts
   
1,191
     
1,161
 
Share-based compensation
   
10,239
     
7,442
 
Amortization
   
13,686
     
13,786
 
Net deferred tax benefit
   
(671
)
   
(1,662
)
Unrealized loss on derivatives
   
33,452
     
10,511
 
Loss on sale of vessels, net
   
6,312
     
130
 
Impairment charge
   
-
     
5,308
 
Unrealized foreign exchange loss / (gain)
   
131
     
(450
)
 Decrease / (Increase) in:
               
Trade receivables
   
(107,136
)
   
1,601
 
Due from related companies
   
(4,037
)
   
(13,133
)
Inventories
   
(66,185
)
   
(6,832
)
Prepayments and other current assets
   
23,981
     
18,666
 
Increase/ (Decrease) in:
               
Trade payables
   
27,095
     
(8,480
)
Other payables to related companies
   
119
     
474
 
Accrued and other current liabilities
   
(4,609
)
   
(21,886
)
Decrease / (increase) in other non-current assets
   
291
     
(74
)
Increase in other non-current liabilities
   
681
     
417
 
Payments for dry-docking
   
(4,214
)
   
(7,794
)
Net cash (used in) / generated by operating activities
   
(14,798
)
   
44,454
 
                 
Cash flows from investing activities:
               
Advances for vessels under construction
   
-
     
(2,979
)
Vessel acquisitions
   
(8,667
)
   
-
 
Advances for other fixed assets under construction
   
-
     
(5,366
)
Net proceeds from sale of vessels
   
8,105
     
49
 
Net proceeds from sale of vessel to a related party
   
200
     
-
 
Purchase of other fixed assets
   
(165
)
   
(604
)
Decrease in restricted cash
   
726
     
728
 
Net cash generated by / (used in) investing activities
   
199
     
(8,172
)
                 
Cash flows from financing activities:
               
Proceeds from long-term debt
   
13,000
     
53,613
 
Repayment of long-term debt
   
(25,925
)
   
(28,894
)
Net change in short-term borrowings
   
54,114
     
(64,214
)
Repurchases of common stock
   
(99,580
)
   
-
 
Increase in restricted cash
   
(3,080
)
   
-
 
Financing costs paid
   
(2,841
)
   
(5,064
)
Dividends paid
   
(3,016
)
   
(2,938
)
Net cash provided by financing activities
   
(67,328
)
   
(47,497
)
                 
Effect of exchange rate changes on cash and cash equivalents
   
586
     
(2,939
)
                 
Net (decrease) in cash and cash equivalents
   
(81,341
)
   
(14,154
)
Cash and cash equivalents at beginning of period
   
139,314
     
129,551
 
Cash and cash equivalents at end of period
 
$
57,973
   
$
115,397
 
                 

The accompanying notes are an integral part of these condensed consolidated financial statements
 
 
4

 
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)
 
 
 
 
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.
5

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
 

 
 
6

 
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.
7

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.

 
8

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.
 
 
9

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.

 
10

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.


 
11

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


 
12

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.

13

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
 


 
14

 
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
%
 
 
 
 
15

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
 

16

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.


 
17

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
 

 
18

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.
 
 
19

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.
 
 
 
20

 
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
 
 
21

 
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
 

 
22

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.


 
23

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.
24