<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________________ to _______________________
Commission file number
--------------------
STATIA TERMINALS INTERNATIONAL N.V.
(Exact name of registrant as specified in its charter)
Netherlands Antilles 52-2003102
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Tumbledown Dick Bay
St. Eustatius, Netherlands Antilles
(011) 5993-82300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
STATIA TERMINALS CANADA, INCORPORATED
(Exact name of registrant as specified in its charter)
Nova Scotia, Canada 98-0164788
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3817 Port Malcolm Road
Port Hawkesbury, Nova Scotia B0E 2V0
(902) 625-1711
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------
Indicate by check mark whether each of the registrants: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days Yes X No
--- ---
The equity securities of the registrants have not been, and are not
required to be, registered under either the Securities Act of 1933 or the
Securities Exchange Act of 1934.
<PAGE>
Statia Terminals International N.V.
and
Statia Terminals Canada, Incorporated
Quarterly Report on Form 10-Q
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 1
Consolidated Statements of Income 2
Consolidated Statement of Cash Flows 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
This Quarterly Report on Form 10-Q (the "Report") contains
forward-looking statements within the meaning of 27A of the Securities Act of
1933. Discussions containing such forward-looking statements may be found in
Items 1, 2 and 3 of Part I hereof, as well as within this Report generally. In
addition, when used in this Report, the words "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Actual results in the future could differ materially from those described in the
forward-looking statements as a result of fluctuations in the supply of and
demand for crude oil and other petroleum products, changes in the liquid
terminaling industry, changes in government regulations affecting the petroleum
industry, the financial condition of the Company's customers, adverse weather
conditions, the condition of the United States economy and other matters set
forth in the Report. The Company does not undertake any obligation to publicly
release the results of any revisions to these forward-looking statements that
may be made to reflect any future events or circumstances.
<PAGE>
PART I.
FINANCIAL INFORMATION
Item 1. Financial Statements
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
Unaudited
December 31, March 31,
1996 1997
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 9,264 $ 10,326
Accounts receivable -
Trade, net 12,165 7,426
Other 3,096 1,496
Inventory, net 4,969 2,959
Prepaid expenses 1,036 938
Assets held for sale 20,000 20,000
--------- ---------
Total current assets 50,530 43,145
Property and equipment, net 203,187 201,661
Other non-current assets, net 6,438 6,210
--------- ---------
$ 260,155 $ 251,016
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 9,926 $ 6,366
Accrued interest expense 1,521 5,449
Accrued expenses 15,303 8,696
--------- ---------
Total current liabilities 26,750 20,511
Long-term debt 135,000 135,000
--------- ---------
Total liabilities 161,750 155,511
--------- ---------
Equity subject to reduction 20,000 20,000
Stockholders' equity:
Common stock 6 6
Additional paid-in capital 78,494 78,494
Accumulated deficit (95) (2,995)
--------- ---------
Total stockholders' equity 78,405 75,505
--------- ---------
$ 260,155 $ 251,016
========= =========
The accompanying notes are an integral part of these financial statements.
Page 1
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Consolidated Statements of Income and Accumulated Deficit
(Dollars in thousands)
<TABLE>
<CAPTION>
Unaudited Unaudited
Quarter Ended Quarter Ended
March 31, 1996 March 31, 1997
-------- --------
<S> <C> <C>
Revenues $ 38,453 $ 32,709
Costs of services and products sold 34,302 28,600
-------- --------
Gross profit 4,151 4,109
Administrative expense 1,434 1,479
-------- --------
Income from operations 2,717 2,630
Interest expense 1,248 3,977
-------- --------
Income (loss) before income taxes 1,469 (1,347)
Provision for income taxes 99 203
-------- --------
Net income (loss) 1,370 (1,550)
Preferred dividends 281 --
-------- --------
Net income (loss) available to common shareholders 1,089 (1,550)
Retained earnings (deficit), opening balance -- (95)
Dividends paid (25,000) (1,350)
-------- --------
Accumulated deficit, closing balance $(23,911) $ (2,995)
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Consolidated Statement of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Unaudited Unaudited
Quarter ended Quarter ended
March 31, 1996 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,370 $ (1,550)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities-
Depreciation and amortization expense 2,479 2,690
Provision for bad debts 27 --
Gain on disposal of fixed assets 25 3
Decrease (increase) in accounts receivable-trade (218) 4,739
Decrease (increase) in other receivables (3,651) 1,600
Decrease (increase) in inventory, net (807) 2,010
Decrease in prepaid expenses 45 97
(Increase) decrease in other non-current assets (17) --
Increase (decrease) in accounts payable - trade 1,750 (3,562)
(Decrease) in accrued expenses (472) (2,678)
-------------- --------------
Net cash provided by operating activities 531 3,349
-------------- --------------
Cash flows from investing activities:
Purchase of property and equipment (2,435) (937)
-------------- --------------
Net cash used in investing activities (2,435) (937)
-------------- --------------
Cash flows from financing activities:
Bank loan repayments (1,200) --
Increase in advances to affiliates 27,443 --
Dividends paid (25,324) (1,350)
-------------- --------------
Net cash provided by financing activities 919 (1,350)
-------------- --------------
Increase (decrease) in cash and cash equivalents (985) 1,062
Cash and cash equivalents, beginning balance 1,469 9,264
-------------- --------------
Cash and cash equivalents, ending balance $ 484 $ 10,326
============== ==============
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 147 $ 146
Cash paid for interest $ 1,140 $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1997
(Dollars in thousands)
1. Summary of Significant Accounting Policies
The unaudited consolidated financial statements of Statia Terminals
International N.V. and its Subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all the information and footnotes required
by generally accepted accounting principles for complete financial statements.
Significant accounting policies followed by the Company were disclosed in the
Notes to the Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. In the opinion of the
Company's management, the accompanying consolidated financial statements contain
adjustments, consisting of normal recurring accruals, necessary to present
fairly the financial position of the Company at March 31, 1997 and the results
of operations and cash flows for the periods ended March 31, 1997 and 1996.
Operating results for the three months ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1997.
2. Acquisitions
Prior to January 12, 1996, the Company was a wholly owned subsidiary of
CBI Industries, Inc. On January 12, 1996, pursuant to the merger agreement dated
December 22, 1995, CBI became a wholly owned subsidiary of Praxair, Inc. The
Praxair purchase transaction was reflected in the Company's consolidated
financial statements in accordance with the purchase method of accounting
effective January 1, 1996. On November 27, 1996, the Company acquired from
Praxair, Inc. all of the outstanding common shares of Statia Terminals, Inc. and
its subsidiaries and certain affiliates (the "CHPII Acquisition"). The CHPII
Acquisition has been accounted for under the purchase method of accounting.
Accordingly, the purchase price has been allocated on a preliminary basis to the
assets and liabilities of the Company based on their respective fair values as
of the date of the CHPII Acquisition. The preliminary estimates may be revised
at a later date. The application of purchase accounting resulted in changes to
the historical cost basis of accounting for certain assets. In addition, in
conjunction with the Praxair and CHPII Acquisitions, the Company refinanced or
paid its bank debt, retired certain preferred stock, satisfied an off-balance
sheet lease obligation and issued 11-3/4% First Mortgage Notes (the "Notes").
Accordingly, the financial information provided in the consolidated statements
of income and cash flows for the periods ended March 31, 1996 and 1997 may not
be comparable. A solid black line has been inserted in the financial statements
and in Management's Discussion and Analysis of Financial Condition and Results
of Operations where financial information may not be comparable across periods.
3. Financial Statements by Jurisdiction
The Notes are guaranteed on a full, unconditional, joint and several
basis by each of the indirect and direct active subsidiaries of Statia Terminals
International N.V., other than Statia Terminals Canada, Incorporated ("Statia
Canada") which is a co-obligor on the Notes. Each of the subsidiary guarantors
are wholly-owned. The Company has several inactive non-guaranteeing subsidiaries
which are inconsequential, individually and in the aggregate, and which have no
assets, liabilities or operations, and are in process of being dissolved by the
Company. The following condensed combining financial data illustrates the
composition of the Company's subsidiary guarantors combined by jurisdiction as
the enforceability of the guarantees may be affected differently under the laws
of the foreign and domestic jurisdictions. Separate financial statements of the
subsidiaries are not presented because management of the Company has determined
that they are not material to investors.
Page 4
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Notes to the Consolidated Financial Statements - Continued
Condensed Combining Balance Sheets
As of December 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
---------------------------------------------------------------
Statia Terminals Netherlands
Statia Terminals Canada, Inc. Antilles other
International N.V. (which includes all Statia Terminals than Statia United
ASSETS (Unconsolidated) Canadian entities) N.V. Terminals N.V. States
------------------- ---------------------------------------------------------------
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 7,065 $ 854 $ 1,304 $ 41 $ -
Accounts receivable -
Trade, net - 873 10,876 (88) 504
Other 54 630 2,421 33 413
Inventory, net - 1,157 3,812 - -
Prepaid expenses - 67 26 1 942
Receivable from (payable to) affiliates (11,020) - (37) 20,557 (4,517)
Assets held for sale - - 10,000 - 10,000
------------------- ---------------------------------------------------------------
Total current assets (3,901) 3,581 28,402 20,544 7,342
Property and equipment, net - 29,036 172,316 1,410 443
Investment in subsidiaries 103,040 - - 180,424 213
Other non-current assets, net - 1,366 5,039 - 33
------------------- ---------------------------------------------------------------
$ 99,139 $ 33,983 $ 205,757 $ 202,378 $ 8,031
=================== ===============================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ - $ 688 $ 5,453 $ 43 $ 4,199
Accrued interest - 316 1,205 - -
Accrued expenses 734 4,613 8,814 (29) 1,131
------------------- ---------------------------------------------------------------
Total current liabilities 734 5,617 15,472 14 5,330
Long-term debt - 28,060 106,940 - -
Payable to (receivable from) CBI affiliates - (1,597) 6,619 - -
------------------- ---------------------------------------------------------------
Total liabilities 734 32,080 129,031 14 5,330
------------------- ---------------------------------------------------------------
Equity subject to reduction 20,000 - -
Stockholders' equity:
Common stock 6 0 19,395 159,006 3,000
Additional paid-in capital 78,494 2,266 56,847 43,207 -
Retained earnings (deficit) (95) (363) 484 151 (299)
------------------- ---------------------------------------------------------------
Total stockholders' equity 78,405 1,903 76,726 202,364 2,701
------------------- ---------------------------------------------------------------
$ 99,139 $ 33,983 $ 205,757 $ 202,378 $ 8,031
=================== ===============================================================
</TABLE>
<TABLE>
<CAPTION>
Reclassifications
and Consolidated
ASSETS Eliminations Total
----------------- --------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ - $ 9,264
Accounts receivable -
Trade, net - 12,165
Other (455) 3,096
Inventory, net - 4,969
Prepaid expenses - 1,036
Receivable from (payable to) affiliates (4,983) -
Assets held for sale - 20,000
----------------- ------------
Total current assets (5,438) 50,530
Property and equipment, net (18) 203,187
Investment in subsidiaries (283,677) -
Other non-current assets, net - 6,438
----------------- ------------
$ (289,133) $ 260,155
================= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ (457) $ 9,926
Accrued interest - 1,521
Accrued expenses 40 15,303
----------------- ------------
Total current liabilities (417) 26,750
Long-term debt - 135,000
Payable to (receivable from) CBI affiliates (5,022) -
----------------- ------------
Total liabilities (5,439) 161,750
----------------- ------------
Equity subject to reduction 20,000
Stockholders' equity:
Common stock (181,401) 6
Additional paid-in capital (102,320) 78,494
Retained earnings (deficit) 27 (95)
----------------- ------------
Total stockholders' equity (283,694) 78,405
----------------- ------------
$ (289,133) $ 260,155
================= ============
</TABLE>
Page 5
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Notes to the Consolidated Financial Statements - Continued
Condensed Combining Statements of Income
For the Three Month Period Ended March 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Reclassifications
Netherlands United and
Canada Antilles States Eliminations Total
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues $ 3,259 $ 34,688 $ 1,905 $ (1,399) $ 38,453
Costs of services and products sold 3,225 30,461 680 (64) 34,302
-------- -------- -------- -------- --------
Gross profit 34 4,227 1,225 (1,335) 4,151
Administrative expense 455 879 1,435 (1,335) 1,434
-------- -------- -------- -------- --------
Income (loss) from operations (421) 3,348 (210) -- 2,717
Interest expense 1,106 142 0 -- 1,248
-------- -------- -------- -------- --------
Income (loss) before income taxes (1,527) 3,206 (210) -- 1,469
Provision for income taxes 76 63 (40) -- 99
-------- -------- -------- -------- --------
Net income (loss) (1,603) 3,143 (170) -- 1,370
Preferred dividends 281 -- -- -- 281
-------- -------- -------- -------- --------
Net income (loss) available to common shareholders (1,884) 3,143 (170) -- 1,089
Retained earnings (deficit), opening balance -- -- -- -- --
Dividends paid (25,000) -- (25,000) -- --
-------- -------- -------- -------- --------
Accumulated deficit, closing balance $(1,884) $(21,857) $ (170) $ -- $(23,911)
======== ======== ======== ======== ========
</TABLE>
Page 6
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Notes to the Consolidated Financial Statements - Continued
Condensed Combining Statement of Cash Flows
For the Three Month Period Ended March 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Reclassifications
Netherlands and
Canada Antilles United States Eliminations Total
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ (2,749) $ 4,390 $ (1,110) $ -- $ 531
-------- -------- -------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment (155) (1,056) (1,224) -- (2,435)
-------- -------- -------- -------- --------
Net cash used in investing activities (155) (1,056) (1,224) -- (2,435)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Bank loan repayments (1,200) -- -- -- (1,200)
Increase in advances to affiliates 3,550 21,521 2,372 -- 27,443
Dividends paid (324) (25,000) -- -- (25,324)
-------- -------- -------- -------- --------
Net cash provided by (used in) financing activities 2,026 (3,479) 2,372 -- 919
-------- -------- -------- -------- --------
Increase (decrease) in cash and cash equivalents (878) (145) 38 -- (985)
Cash and cash equivalents, beginning balance 1,207 300 (38) -- 1,469
-------- -------- -------- -------- --------
Cash and cash equivalents, ending balance $ 329 $ 155 $ -- $ -- $ 484
======== ========= ======== ======== ========
</TABLE>
Page 7
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Notes to the Consolidated Financial Statements--Continued
Condensed Combining Balance Sheets
As of March 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
----------------------------------------------------------------
Statia Terminals Netherlands
Statia Terminals Canada, Inc. Antilles other
International N.V. (which includes all Statia Terminals than Statia United
(unconsolidated) Canadian entities) N.V. Terminals N.V. States
----------------- -------------------- ----------------- --------------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 271 $ 385 $ 9,283 $ 25 $ 362
Accounts receivable-
Trade, net -- 821 6,203 -- 402
Other 59 537 828 52 95
Inventory, net -- 666 2,293 -- --
Prepaid expenses -- 42 57 1 838
Receivable from (payable to) affiliates (6,365) 1,832 (9,530) 20,494 (6,431)
Assets held for sale -- -- 10,000 -- 10,000
----------------- ----------------------------------------------------------------
Total current assets (6,035) 4,283 19,134 20,572 5,266
Property and equipment, net -- 28,713 171,278 1,385 285
Investment in subsidiaries 101,453 -- -- 179,337 203
Other non-current assets, net -- 1,318 4,858 1 33
----------------- ----------------------------------------------------------------
$ 95,418 $ 34,314 $ 195,270 $ 201,295 $ 5,787
================= ================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ -- $ 407 $ 3,624 $ 13 $ 2,397
Accrued interest expense -- 1,146 4,303 -- --
Accrued expenses (87) 3,911 3,650 27 1,195
----------------- ----------------------------------------------------------------
Total current liabilities (87) 5,464 11,577 40 3,592
Long-term debt -- 28,060 106,940 -- --
----------------- ----------------------------------------------------------------
Total liabilities (87) 33,524 118,517 40 3,592
----------------- ----------------------------------------------------------------
Equity subject to reduction 20,000 -- --
Stockholders' equity:
Common stock 6 0 19,395 159,006 3,000
Additional paid-in capital 78,494 2,266 56,848 43,207
Retained earnings (deficit) (2,995) (1,476) 510 (958) (805)
----------------- ----------------------------------------------------------------
Total stockholders' equity 75,505 790 76,753 201,255 2,195
----------------- ----------------------------------------------------------------
$ 95,418 $ 34,314 $ 195,270 $ 201,295 $ 5,787
================= ================================================================
Reclassifications
and Consolidated
Eliminations Total
----------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ -- $ 10,326
Accounts receivable-
Trade, net -- 7,426
Other (75) 1,496
Inventory, net -- 2,959
Prepaid expenses -- 938
Receivable from (payable to) affiliates -- 0
Assets held for sale -- 20,000
----------------- -------------
Total current assets (75) 43,145
Property and equipment, net -- 201,661
Investment in subsidiaries (280,993) --
Other non-current assets, net -- 6,210
----------------- -------------
$ (281,068) $ 251,016
================= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ (75) $ 6,366
Accrued interest expense -- 5,449
Accrued expenses -- 8,696
----------------- -------------
Total current liabilities (75) 20,511
Long-term debt 135,000
----------------- -------------
Total liabilities (75) 155,511
----------------- -------------
Equity subject to reduction 20,000
Stockholders' equity:
Common stock (181,410) 6
Additional paid-in capital (102,321) 78,494
Retained earnings (deficit) 2,729 (2,995)
----------------- -------------
Total stockholders' equity (280,993) 75,505
----------------- -------------
$ (281,068) $ 251,016
================= =============
</TABLE>
Page 8
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Notes to the Consolidated Financial Statements - Continued
Consolidated Statements of Income
For the Three Month Period Ending March 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
----------------------------------------------------------
Statia Terminals Netherlands
Statia Terminals Canada, Inc. Antilles other
International N.V. (which includes all Statia Terminals than Statia United
(Unconsolidated) Canadian entities) N.V. Terminals N.V. States
---------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ 2,721 $ 29,300 $ 103 $ 2,105
Costs of services and products sold (54) 2,507 25,260 100 974
------- ------- -------- ------- -------
Gross profit 54 214 4,040 3 1,131
Administrative expense 16 462 813 -- 1,521
------- ------- -------- ------- -------
Income (loss) from operations 38 (248) 3,227 3 (390)
Interest expense -- 842 3,131 -- 4
------- ------- -------- ------- -------
Income (loss) before income taxes 38 (1,090) 96 3 (394)
Provision for income taxes -- 23 70 9 101
------- ------- -------- ------- -------
Net income (loss) 38 (1,113) 26 (6) (495)
Earnings (loss) from equity investments (1,588) -- -- (1,087) (10)
Preferred dividends -- -- -- -- --
------- ------- -------- ------- -------
Net income (loss) available to
common shareholders (1,550) (1,113) 26 (1,093) (505)
Retained earnings (accumulated deficit),
opening balance (95) (363) 484 135 (300)
Dividends paid (1,350) -- -- -- --
------- ------- -------- ------- -------
Retained earnings (accumulated deficit),
closing balance $(2,995) $(1,476) $ 510 $ (958) $ (805)
======= ======= ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Reclassifications
and
Eliminations
------------
<S> <C>
Revenues $(1,520)
Costs of services and products sold (187)
-------
Gross profit (1,333)
Administrative expense (1,333)
-------
Income (loss) from operations --
Interest expense --
-------
Income (loss) before income taxes --
Provision for income taxes --
-------
Net income (loss) --
Earnings (loss) from equity investments 2,685
Preferred dividends --
-------
Net income (loss) available to
common shareholders 2,685
Retained earnings (accumulated deficit),
opening balance 44
Dividends paid --
-------
Retained earnings (accumulated deficit),
closing balance $ 2,729
=======
</TABLE>
Page 9
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND ITS SUBSIDIARIES
Notes to the Consolidated Financial Statements - Continued
Condensed Combining Statement of Cash Flows
For the Three Month Period Ended March 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
------------------------------------------------------------
Statia Terminals Netherlands
Statia Terminals Canada, Inc. Antilles other
International N.V. (which includes Statia Terminals than Statia United
(Unconsolidated) Canadian entities) N.V. Terminals N.V. States
------------------ ------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $(7,030) $(355) $ 8,706 $(1,103) $ 448
------------------ ------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment -- (114) (727) -- (96)
Equity investment 1,586 -- -- 1,087 10
------------------ ------------------------------------------------------------
Net cash provided by (used in)
investing activities 1,586 (114) (727) 1,087 (86)
------------------ ------------------------------------------------------------
Cash flows from financing activities:
Dividends paid (1,350) -- -- -- --
------------------ ------------------------------------------------------------
Net cash provided by (used in)
financing activities (1,350) -- -- -- --
------------------ ------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (6,794) (469) 7,979 (16) 362
Cash and cash equivalents, beginning balance 7,065 854 1,304 41 --
------------------ ------------------------------------------------------------
Cash and cash equivalents, ending balance $ 271 $ 385 $ 9,283 $ 25 $ 362
================== ============================================================
</TABLE>
<TABLE>
<CAPTION>
Reclassifications
and Consolidated
Eliminations Total
----------------- ------------
<S> <C> <C>
Net cash provided by (used in) operating activities $ 2,683 $ 3,349
----------------- ------------
Cash flows from investing activities:
Purchase of property and equipment -- (937)
Equity investment (2,683) --
----------------- ------------
Net cash provided by (used in)
investing activities (2,683) (937)
----------------- ------------
Cash flows from financing activities:
Dividends paid -- (1,350)
----------------- ------------
Net cash provided by (used in)
financing activities -- (1,350)
----------------- ------------
Increase (decrease) in cash and cash equivalents -- 1,062
Cash and cash equivalents, beginning balance -- 9,264
----------------- ------------
Cash and cash equivalents, ending balance $ -- $ 10,326
================= ============
</TABLE>
Page 10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
For purposes of the discussion below, reference is made to the unaudited
Consolidated Financial Statements and Notes thereto of Statia Terminals
International N.V. and its Subsidiaries as of March 31, 1997 and the periods
ended March 31, 1997 and 1996 included herein. Reference should also be made to
the Company's Annual Report on Form 10-K as of and for the year ended December
31, 1996 including the consolidated financial statements of the Company, Statia
Canada and Statia Terminals N.V. ("STNV").
Results of Operations
Total revenues for the quarter ending March 31, 1997 were $32.7 million
compared to $38.5 million for the same period in 1996, a decrease of $5.7
million, or 14.9%. The revenue decrease is primarily due to a fall in product
sales (consisting of bunker and other bulk oil sales) at the Company's St.
Eustatius and Point Tupper facilities. Terminaling services revenue (consisting
of storage, throughput, docking charges, response fees and other terminal
charges) fell marginally at St. Eustatius, but showed marginal improvement at
Point Tupper and Brownsville for 1997 compared to 1996. Terminaling services
typically produce higher gross margins than product sales.
Gross profit, operating income and net income (loss) for the periods ended
March 31, 1996 and 1997 are not comparable due to the effects of purchase
accounting applied as a result of the CHPII Acquisition. See Note 2 to the
Consolidated Financial Statements of Statia Terminals International N.V. on Page
4 herein for further discussion. Depreciation, amortization and other operating
expenses, which are components of gross profit, changed because of the
revaluation of various assets to their fair values on November 27, 1996. In
addition, since the Company can no longer effectively pool costs with affiliated
companies, certain expenses related to personnel and insurance increased during
the first quarter of 1997 compared to the same quarter a year ago. Changes in
the components of the Company's debt and equity accounts resulted in changes to
cost of services and products sold, interest expense and preferred dividends.
Page 11
<PAGE>
Revenues and Operating Income (Loss) by Location
(Dollars in thousands)
<TABLE>
<CAPTION>
For the quarters ended March 31,
--------------------------------
1996 1997
-------- --------
<S> <C> <C>
Revenues
Netherlands Antilles and the Caribbean
Terminaling services $ 10,558 $ 9,748
Bunker and bulk product sales 24,130 19,599
-------- --------
34,688 29,347
-------- --------
Canada
Terminaling services 2,135 2,214
Bunker and bulk product sales 1,124 507
-------- --------
3,259 2,721
-------- --------
United States
Terminaling services 569 830
Corporate services 1,336 1,275
-------- --------
1,905 2,105
-------- --------
Eliminations (1,399) (1,464)
-------- --------
Total revenues $ 38,453 $ 32,709
======== ========
Operating Income (Loss)
Netherlands Antilles and the Caribbean $ 3,348 $ 3,268
Canada (421) (248)
United States (210) (390)
-------- --------
Total operating income $ 2,717 $ 2,630
======== ========
</TABLE>
At St. Eustatius, comparisons of the first quarters of 1996 and 1997
show revenues from terminaling services decreased 8.1%. The overall percentage
of capacity leased was 90% for 1996 versus 81% for 1997. These decreases are
primarily due to the leasing of substantially all of the facility's clean
product tankage during the first quarter of 1996 while only a small portion of
such tankage was leased during the same period in 1997. The percentage of
capacity leased and lease rates for this facility's crude and fuel oil storage
tanks were essentially unchanged when comparing first quarters. Throughput fell
from 20.1 million barrels for the first three months of 1996 to 18.1 million
barrels for the first quarter of 1997 due to reduced throughput of crude oil
partially offset by higher throughput of fuel oil.
Bunker fuel and other bulk oil sales fell 18.8% when comparing the
first quarters of 1996 and 1997. The decrease is due primarily to reduced bunker
fuel deliveries due in part to falling petroleum market prices during the first
quarter of 1997. Management believes that vessel owners and charterers opted to
defer bunker purchases during the period of falling prices. The reduction in
volume delivered was partially offset by slightly higher average selling prices.
In addition, the Company made fewer purchases and resales of bulk oil during the
first quarter of 1997.
At Point Tupper, the percentage of tank capacity leased for the first
quarter of 1997 was 55%, nearly the same capacity leased as the previous four
consecutive quarters. Due primarily to a decrease in bunker fuel sales
Page 12
<PAGE>
(due to lower quantities delivered), total revenues fell to $2.7 million for the
first quarter of 1997, or 17.2% versus the same period last year. Terminaling
services revenues rose 2.9% due primarily to increases in throughput and vessel
traffic partially offsetting the lower product sales. Despite the lower total
revenues, operating cash flow generated from this facility remained positive and
essentially unchanged from the first quarter last year.
Capacity, Capacity Leased, Throughput and Vessel Calls by Location
(Capacity and throughout in thousands of barrels)
For the quarter ended March 31,
-------------------------------------
1996 1997
--------------- --------------
Netherland Antilles and
the Caribbean
Total capacity 11,334 11,334
Capacity leased 90% 81%
Throughput 20,105 18,134
Vessel calls 250 203
Canada
Total capacity 7,404 7,404
Capacity leased 54% 55%
Throughput 4,406 6,707
Vessel calls 14 16
Texas
Total capacity 1,649 1,649
Capacity leased 29% 48%
Throughput 548 333
Vessel calls 24 26
All locations
Total capacity 20,387 20,387
Capacity leased 72% 69%
Throughput 25,059 25,174
Vessel calls 288 245
Liquidity and Capital Resources
At December 31, 1996, the Company had cash and cash equivalents of $9.3
million which grew to $10.3 million at March 31, 1997, primarily as a result of
cash generated from operations of $3.3 million reduced by capital expenditures
of $0.9 million and income tax payments of $0.1 million. During 1997, most
capital expenditures were related to sustaining the Company's existing
operations in accordance with its maintenance programs. The Company's capital
expenditure budget for 1997 is $7.5 million and a portion of planned spending is
contingent upon the disposition of certain assets held for sale and the addition
of incremental terminaling business.
During the first quarter of 1997, the Company's interest expense amounting
to $4.0 million consists of interest on the 11-3/4% First Mortgage Notes due
2003 and certain bank charges. Interest was accrued for expected payment during
the second quarter of 1997.
Page 13
<PAGE>
As of March 31, 1997, the Company had not borrowed under its $17.5 million
revolving credit facilities which bear interest at the prime rate plus 50 basis
points (9.00% at March 31, 1997). The available borrowing base under the
revolving credit facilities at quarter end was $7.1 million ($6.2 million for
STNV and $0.9 million for Statia Canada).
Capital Expenditures by Location
(Dollars in thousands)
For the quarter ended March 31,
-------------------------------
1996 1997
------ ------
Netherlands Antilles and the Caribbean $1,056 $ 727
Canada 155 114
United States 1,224 96
------ ------
$2,435 $ 937
====== ======
During the first quarter of 1996, the predecessor company had term and
revolving loans guaranteed by its former parent at the London Interbank Offer
Rate (LIBOR) plus 35 or 50 basis points. In addition, the Company leased a
portion of its facilities from a third party financier under a twenty year
operating lease arrangement. Interest expense and lease payments (consisting
primarily of interest on the underlying debt obligation) amounted to $1.2
million and $1.6 million, respectively.
During the first quarter of 1996, a portion of the Company's cash
generated by operating activities and cash provided by its former parent was
used to repair damages caused by the 1995 hurricanes (causing an increase in
other receivables pending receipt of insurance proceeds), to pay dividends to
its former parent, to reduce bank debt and to purchase property and equipment.
Assets Held for Sale
The Company's Brownsville, Texas facility and its emergency response
vessel, M/V Megan D. Gambarella, are being held for sale. The following table
sets forth, for the periods indicated, consolidated income from operations with
adjustments to reflect operating income less income (loss) from the Brownsville
terminal adjusted for certain on-going administrative expenses and expenses
related to assets to be retained.
Page 14
<PAGE>
Operating Income from On-going Operations
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Quarters Ended March 31,
---------------------------------------------------------
1996 1997
--------------------- --------------------
<S> <C> <C>
Consolidated income from operations $ 2,717 $ 2,630
Less: Operating income (loss) from Statia Delaware
Holdco II, Inc. and Statia Terminals Southwest, Inc. (160) (389)
Add: Estimated adjustment for assets to be retained
and on-going expenses (271) (291)
--------------------- --------------------
Consolidated income from on-going operations $ 2,606 $ 2,728
===================== ====================
</TABLE>
-------------------------------------------------------------
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company periodically purchases refined oil products from its customers
and others for resale as bunker fuel, for small volume sales to commercial
interests and to maintain an inventory of blend stocks for its customers.
Petroleum inventories are held for short time periods generally not exceeding
ninety days. The Company does not presently have any derivative positions to
hedge its inventory of petroleum products. The following table indicates the
Company's aggregate carrying value of its petroleum products on hand at March
31, 1997 at average cost net of any lower of cost or market valuation provisions
and the estimated fair value of such products.
On Balance Sheet Commodity Position
(Dollars in thousands)
As of March 31, 1997
------------------------
Carrying Fair
Amount Value
------ -----
Petroleum Inventory
STNV $ 2,293 $ 2,475
Statia Canada 666 894
----------- -----------
$ 2,959 $ 3,369
=========== ===========
As substantially all of the Company's transactions are in U.S. dollars, and
as all of the Company's present debt obligations carry a fixed rate of interest
(except for the undrawn revolving credit facilities which vary with changes in
the lender's prime lending rate), management believes the Company's exposures to
foreign currency exchange rate fluctuation and interest rate fluctuation are
minimal.
Page 15
<PAGE>
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Item 3. Legal Proceedings in the Company's Annual
Report on Form 10-K for complete discussion. There have been no material
developments in the Company's legal proceedings since December 31, 1996.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27.1 Financial Data Schedule for Statia Terminals
International N.V.
27.2 Financial Data Schedule for Statia Terminals
Canada, Incorporated
(b) Reports on Form 8-K.
None.
Page 16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this Report to be signed on their behalf by the
undersigned thereunto duly authorized.
Statia Terminals International N.V.
(Registrant)
Date: May 15, 1997
By: /s/ James F. Brenner
--------------------------------
James F. Brenner
Vice President - Finance
(As Authorized Officer)
Statia Terminals Canada, Incorporated
(Registrant)
Date: May 15, 1997
By: /s/ James F. Brenner
--------------------------------
James F. Brenner
Vice President and Treasurer
(As Authorized Officer)
Page S-1
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