<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, 1999
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 numbers 333-18455 and 333-18455-01
--------------------
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, registred 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
March 31, 1999
Table of Contents
Page No.
--------
PART I. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 1
Consolidated Condensed Statements of Income (Loss)
and Accumulated Deficit 2
Consolidated Condensed Statements of Cash Flows 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
This Quarterly Report on Form 10-Q (this "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 "may", "will", "believe,"
"anticipate," "expect", "estimate" 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 petroleum terminaling industry, added costs due to
changes in government regulations affecting the petroleum industry, the loss of
a major customer, the financial condition of the Company's customers,
interruption of our operations caused by adverse weather conditions, the
condition of the United States economy, risks associated with our efforts to
comply with the Y2K requirement, and other factors included in this Report and
the Company's Annual Report on Form 10-K. 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 SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
---------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 13,873 $ 20,472
Accounts receivable-
Trade, net 7,562 8,897
Other 2,328 1,611
Inventory, net 4,528 1,449
Prepaid expenses 172 762
---------------- -----------------
Total current assets 28,463 33,191
PROPERTY AND EQUIPMENT, net 209,970 209,202
OTHER NONCURRENT ASSETS, net 4,745 4,560
---------------- -----------------
Total assets $ 243,178 $ 246,953
================ =================
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 9,012 $ 8,100
Accrued interest payable 2,027 5,993
Other accrued expenses 8,439 8,698
----------------- -----------------
Total current liabilities 19,478 22,791
LONG-TERM DEBT 135,000 135,000
----------------- -----------------
Total liabilities 154,478 157,791
----------------- -----------------
STOCKHOLDER'S EQUITY:
Common stock 6 6
Additional paid-in capital 92,344 92,344
Accumulated deficit (3,650) (3,188)
----------------- -----------------
Total stockholder's equity 88,700 89,162
----------------- -----------------
Total liabilities and stockholder's equity $ 243,178 $ 246,953
================= =================
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
Page 1
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS) AND ACCUMULATED DEFICIT
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
(Unaudited)
-------------------------------------
1998 1999
---------------- -----------------
<S> <C> <C>
REVENUES $ 30,364 $ 37,415
COSTS OF SERVICES AND PRODUCTS SOLD 25,120 28,600
---------------- -----------------
Gross profit 5,244 8,815
ADMINISTRATIVE EXPENSES 1,816 2,125
SPECIAL COMPENSATION EXPENSE - 1,947
---------------- -----------------
Operating income 3,428 4,743
INTEREST EXPENSE 4,227 4,202
INTEREST INCOME 110 175
---------------- -----------------
Income (loss) before provision for income taxes (689) 716
PROVISION FOR INCOME TAXES 205 254
---------------- -----------------
Net income (loss) available to common stockholder (894) 462
ACCUMULATED DEFICIT, beginning of period (6,674) (3,650)
---------------- -----------------
ACCUMULATED DEFICIT, end of period $ (7,568) $ (3,188)
================ =================
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
Page 2
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1998 1999
-------------- ---------------
<S> <C> <C>
Net income (loss) available to common stockholder $ (894) $ 462
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, amortization and non-cash charges 2,907 2,956
(Increase) decrease in accounts receivable-trade 3,118 (1,335)
(Increase) decrease in other receivables (496) 717
(Increase) decrease in inventory (615) 3,079
Increase in prepaid expenses (1,788) (590)
(Increase) decrease in other non-current assets 1 (44)
Increase (decrease) in accounts payable 68 (912)
Increase in accrued expenses 4,326 4,259
-------------- ---------------
Net cash provided by operating activities 6,627 8,592
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,449) (2,008)
Proceeds from sale of property and equipment - 15
-------------- ---------------
Net cash used in investing activities (2,449) (1,993)
-------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS 4,178 6,599
CASH AND CASH EQUIVALENTS, beginning of period 6,083 13,873
-------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 10,261 $ 20,472
============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 104 $ 188
============== ===============
Cash paid for interest $ 42 $ 18
============== ===============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
Page 3
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1999
(Dollars in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated condensed financial statements of Statia
Terminals International N.V. ("Statia") and its subsidiaries (together with
Statia, 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, 1998. In the opinion of the Company's management,
the accompanying consolidated condensed financial statements contain
adjustments, consisting of normal recurring accruals, necessary to present
fairly the financial position of the Company at March 31, 1999 and the results
of operations and cash flows for the three months ended March 31, 1999 and 1998.
Statia is a wholly-owned subsidiary of Statia Terminals Group N.V. (the
"Parent"). Operating results for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. Additionally, the transactions discussed in notes 4 and 5
below will impact the Company's results of operations and financial condition.
2. RECLASSIFICATIONS AND COMPREHENSIVE INCOME
Certain amounts in the prior year consolidated condensed financial
statements have been reclassified to conform to the current year presentation.
For all periods presented herein, there were no differences between net
income and comprehensive income.
3. SEGMENT INFORMATION
The Company is organized around several different segments, the two
most significant of which are products and services, and geographic location.
The Company's primary products and services are bunker and bulk product sales,
and terminaling services (consisting of storage, throughput, dock charges,
emergency response fees and other terminal charges).
The primary measures of profit and loss utilized by the Company's
management to make decisions about resources to be allocated to each segment are
earnings before interest expense, interest income, income taxes, depreciation,
amortization and certain unallocated income and expenses ("Internal EBITDA") and
earnings before interest expense, interest income, income taxes and certain
unallocated income and expenses ("Internal EBIT").
Page 4
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1999
(Dollars in thousands)
3. SEGMENT INFORMATION--(CONTINUED)
The following information is provided for the Company's terminaling
services and bunker and bulk products sales segments:
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------------
1998 1999
-------------- ---------------
<S> <C> <C>
REVENUES:
Terminaling services $ 14,182 $ 16,628
Bunker and bulk product sales 16,182 20,787
-------------- ---------------
Total $ 30,364 $ 37,415
============== ===============
INTERNAL EBITDA:
Terminaling services $ 5,375 $ 8,178
Bunker and bulk product sales 913 1,274
-------------- ---------------
Total $ 6,288 $ 9,452
============== ===============
DEPRECIATION AND AMORTIZATION EXPENSE:
Terminaling services $ 2,781 $ 2,823
Bunker and bulk product sales 126 133
-------------- ---------------
Total $ 2,907 $ 2,956
============== ===============
INTERNAL EBIT:
Terminaling services $ 2,594 $ 5,355
Bunker and bulk product sales 787 1,141
-------------- ---------------
Total $ 3,381 $ 6,496
============== ===============
A reconciliation of Internal EBIT to the Company's income (loss) before
provision for income taxes is as follows:
<CAPTION>
For the Three Months Ended
March 31,
----------------------------------
1998 1999
-------------- ---------------
<S> <C> <C>
Internal EBIT $ 3,381 $ 6,496
Unallocated operating and administrative expenses (181) (33)
Special compensation expense - (1,947)
Interest expense excluding debt cost amortization expense (3,999) (3,975)
Interest income 110 175
-------------- ---------------
Income (loss) before provision for income taxes $ (689) $ 716
============== ===============
</TABLE>
Page 5
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1999
(Dollars in thousands)
4. REPURCHASE OF FIRST MORTGAGE NOTES
On April 28, 1999, the Parent completed its initial public equity
offering of 7.6 million common shares (the "Offering"). The Offering price was
$20 per share raising gross proceeds to the Parent of $152,000. A portion of the
Offering proceeds was used by the Parent to purchase additional capital stock of
Statia totaling $37,716. During the second quarter of 1999, the Company used the
proceeds from the sale of Statia's capital stock and existing cash to repurchase
in the open market a principal amount of $34,000 of the Company's 11 3/4% First
Mortgage Notes (the "Notes") for $39,530, including acquisition costs and
accrued interest of $3,689 and $1,841, respectively. During the second quarter
of 1999, the acquisition costs and the unamortized deferred financing costs
related to the repurchased Notes totaling $4,743 will be recorded as an
extraordinary loss net of any income taxes on the Company's statement of income
(loss) and accumulated deficit.
5. SPECIAL COMPENSATION EXPENSE
During the three months ended March 31, 1999, the Company recorded as
special compensation expense a bonus in the amount of $1,947 for particular
members of the Company's management. The purpose of the special management bonus
was to partially reimburse these individuals with respect to adverse tax
consequences that resulted from the Offering and other past compensation
arrangements.
In connection with the Offering, certain options previously granted to
some of the Company's employees to purchase the Parent's common stock became
fully vested, were exercised and became subordinated shares of the Parent. The
Parent was amortizing the difference between the estimated fair value of the
options at the date of grant and the exercise price over the vesting period of
five years and charging such amounts to the Company as compensation expense. On
April 28, 1999, the remaining unamortized compensation expense associated with
these options of $2,152 was recorded as a non-cash special compensation expense.
6. FINANCIAL STATEMENTS BY JURISDICTION
In connection with certain transactions, the Company issued the Notes
in 1996. The Notes are guaranteed on a full, unconditional, joint and several
basis by each of the indirect and direct active subsidiaries of Statia, other
than Statia Terminals Canada, Incorporated ("Statia Canada") which is a
co-obligor on the Notes. Each of the subsidiary guarantors is, directly or
indirectly, wholly-owned by Statia. The Company has an inactive,
non-guaranteeing subsidiary which is inconsequential, individually and in the
aggregate, and which has no assets, liabilities or operations, and is in the
process of being dissolved by the Company. The following combining condensed
financial data illustrates the composition of the Company's subsidiary
guarantors, combined by jurisdiction. The enforceability of the guarantees may
be affected differently under the laws of the applicable 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 6
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
COMBINING CONDENSED BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
----------------------------------------------------
Statia Terminals Netherlands
Canada, Inc. Statia Antilles
Statia Terminals (includes all Terminals other than
International N.V. Canadian N.V. Statia
ASSETS (Unconsolidated) Entities) Consolidated Terminals N.V.
------ ------------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 44 $ 4,409 $ 9,037 $ 39
Accounts receivable, net - 2,243 7,640 1
Inventory, net - 323 4,205 -
Other current assets - 54 31 -
--------- --------- --------- ---------
Total current assets 44 7,029 20,913 40
PROPERTY AND EQUIPMENT, net - 28,192 177,241 1,080
INVESTMENT IN SUBSIDIARIES 81,947 - - 82,084
OTHER NONCURRENT ASSETS, net - 979 3,597 1
--------- --------- --------- ---------
Total assets $ 81,991 $ 36,200 $ 201,751 $ 83,205
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 439 $ 4,984 $ 12,934 $ 122
Payable to (receivable from) affiliates (7,148) (2,305) 5,256 (762)
--------- --------- --------- ---------
Total current liabilities (6,709) 2,679 18,190 (640)
LONG-TERM DEBT - 28,060 106,940 -
--------- --------- --------- ---------
Total liabilities (6,709) 30,739 125,130 (640)
--------- --------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock - - - 7
Common stock 6 - 19,395 12
Additional paid-in capital 92,344 2,266 56,914 80,352
Retained earnings (deficit) (3,650) 3,195 312 3,474
--------- --------- --------- ---------
Total stockholders' equity 88,700 5,461 76,621 83,845
--------- --------- --------- ---------
Total liabilities and stockholders' equity $ 81,991 $ 36,200 $ 201,751 $ 83,205
========= ========= ========= =========
<CAPTION>
Reclassifications
United and Consolidated
ASSETS States Eliminations Total
------ ------ ----------------- -------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 344 $ - $ 13,873
Accounts receivable, net 6 - 9,890
Inventory, net - - 4,528
Other current assets 87 - 172
--------- --------- ---------
Total current assets 437 - 28,463
PROPERTY AND EQUIPMENT, net 3,457 - 209,970
INVESTMENT IN SUBSIDIARIES 318 (164,349) -
OTHER NONCURRENT ASSETS, net 168 - 4,745
--------- --------- ---------
Total assets $ 4,380 $(164,349) $ 243,178
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,274 $ (2) $ 19,751
Payable to (receivable from) affiliates 4,686 - (273)
--------- --------- ---------
Total current liabilities 5,960 (2) 19,478
LONG-TERM DEBT - - 135,000
--------- --------- ---------
Total liabilities 5,960 (2) 154,478
--------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock - (7) -
Common stock - (19,407) 6
Additional paid-in capital 300 (139,832) 92,344
Retained earnings (deficit) (1,880) (5,101) (3,650)
--------- --------- ---------
Total stockholders' equity (1,580) (164,347) 88,700
--------- --------- ---------
Total liabilities and stockholders' equity $ 4,380 $(164,349) $ 243,178
========= ========= =========
</TABLE>
Page 7
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
COMBINING CONDENSED INCOME STATEMENT
For the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
------------------------------------------------------
Statia Terminals Netherlands
Canada, Inc. Statia Antilles
Statia Terminals (includes all Terminals other than
International N.V. Canadian N.V. Statia
(Unconsolidated) entities) Consolidated Terminals N.V.
------------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
REVENUES $ - $ 4,479 $ 25,104 $ 129
COST OF SERVICES AND PRODUCTS SOLD - 2,991 21,212 135
--------- --------- --------- -------
Gross profit - 1,488 3,892 (6)
ADMINISTRATIVE EXPENSES 50 551 1,046 -
--------- --------- --------- -------
Operating income (loss) (50) 937 2,846 (6)
INTEREST EXPENSE - 880 3,346 -
INTEREST INCOME - 13 96 -
--------- --------- --------- -------
Income (loss) before provision
for income taxes (50) 70 (404) (6)
PROVISION FOR INCOME TAXES 7 18 168 10
----------- --------- --------- -------
Net income (loss) (57) 52 (572) (16)
EARNINGS (LOSS) FROM
EQUITY INVESTMENTS (837) - - (520)
--------- --------- --------- -------
Net income (loss) available to
common stockholder $ (894) $ 52 $ (572) $ (536)
========= ========= ========== ========
DEPRECIATION AND
AMORTIZATION EXPENSE $ - $ 479 $ 2,049 $ 34
========= ========= ========= =======
<CAPTION>
Reclassifications
United and Consolidated
States Eliminations Total
------ ----------------- ------------
<S> <C> <C> <C>
REVENUES $ 2,593 $ (1,941) $ 30,364
COST OF SERVICES AND PRODUCTS SOLD 1,193 (411) 25,120
-------- -------- ----------
Gross profit 1,400 (1,530) 5,244
ADMINISTRATIVE EXPENSES 1,699 (1,530) 1,816
-------- -------- ----------
Operating income (loss) (299) - 3,428
INTEREST EXPENSE 1 - 4,227
INTEREST INCOME 1 - 110
-------- -------- ----------
Income (loss) before provision
for income taxes (299) - (689)
PROVISION FOR INCOME TAXES 2 - 205
-------- -------- ----------
Net income (loss) (301) - (894)
EARNINGS (LOSS) FROM
EQUITY INVESTMENTS 2 1,355 -
-------- -------- -----------
Net income (loss) available to
common stockholder $ (299) $ 1,355 $ (894)
======== ======== ==========
DEPRECIATION AND
AMORTIZATION EXPENSE $ 345 $ - $ 2,907
======== ======== ==========
</TABLE>
Page 8
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
COMBINING CONDENSED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
-------------------------------------------------
Statia Terminals Netherlands
Canada, Inc. Statia Antilles
Statia Terminals (includes all Terminals other than
International N.V. Canadian N.V. Statia
(Unconsolidated) entities) Consolidated Terminals N.V.
------------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 2 $ 359 $ 5,288 $ 3
--------- ------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (116) (1,372) -
--------- ------- -------- -------
Net cash used in investing activities - (116) (1,372) -
--------- ------- --------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 2 243 3,916 3
CASH AND CASH EQUIVALENTS,
beginning of period 1 1,241 4,593 21
--------- ------- -------- --------
CASH AND CASH EQUIVALENTS,
end of period $ 3 $ 1,484 $ 8,509 $ 24
========= ======= ======== ========
<CAPTION>
United Consolidated
States Total
------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 975 $ 6,627
------ --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (961) (2,449)
------ ---------
Net cash used in investing activities (961) (2,449)
------ ---------
INCREASE IN CASH AND CASH EQUIVALENTS 14 4,178
CASH AND CASH EQUIVALENTS,
beginning of period 227 6,083
------- --------
CASH AND CASH EQUIVALENTS,
end of period $ 241 $ 10,261
======= ========
</TABLE>
Page 9
<PAGE>
STATIA TERMINALS INTERNATIONAL, N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
COMBINING CONDENSED BALANCE SHEET
March 31, 1999
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
-----------------------------------------------------
Statia Terminals Netherlands
Canada, Inc. Statia Antilles
Statia Terminals (includes all Terminals other than
International N.V. Canadian N.V. Statia
ASSETS (Unconsolidated) Entities) Consolidated Terminals N.V.
------ ------------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 12 $ 6,540 $ 13,410 $ 25
Accounts receivable, net 2 1,380 8,980 1
Inventory, net - 285 1,164 -
Other current assets - 56 96 -
------- -------- --------- ---------
Total current assets 14 8,261 23,650 26
PROPERTY AND EQUIPMENT, net - 28,127 176,585 1,030
INVESTMENT IN SUBSIDIARIES 82,475 - - 82,685
OTHER NONCURRENT ASSETS, net - 965 3,422 1
------- -------- --------- ---------
Total assets $82,489 $ 37,353 $ 203,657 $ 83,742
======= ======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 468 $ 4,215 $ 16,831 $ 179
Payable to (receivable from) affiliates (7,141) (460) 2,739 (883)
------- -------- --------- ---------
Total current liabilities (6,673) 3,755 19,570 (704)
LONG-TERM DEBT - 28,060 106,940 -
------- -------- --------- ---------
Total liabilities (6,673) 31,815 126,510 (704)
------- -------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock - - - 7
Common stock 6 - 19,395 12
Additional paid-in capital 92,344 2,266 56,914 80,352
Retained earnings (deficit) (3,188) 3,272 838 4,075
------- -------- --------- ---------
Total stockholders' equity 89,162 5,538 77,147 84,446
------- -------- --------- ---------
Total liabilities and stockholders' equity $82,489 $ 37,353 $ 203,657 $ 83,742
======= ======== ========= =========
<CAPTION>
Reclassifications
United and Consolidated
ASSETS States Eliminations Total
------ ------ ----------------- ------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 485 $ - $ 20,472
Accounts receivable, net 145 - 10,508
Inventory, net - - 1,449
Other current assets 610 - 762
-------- --------- ---------
Total current assets 1,240 - 33,191
PROPERTY AND EQUIPMENT, net 3,460 - 209,202
INVESTMENT IN SUBSIDIARIES 318 (165,478) -
OTHER NONCURRENT ASSETS, net 172 - 4,560
-------- --------- ---------
Total assets $ 5,190 $(165,478) $ 246,953
======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,599 $ - $ 23,292
Payable to (receivable from) affiliates 5,244 - (501)
-------- --------- ---------
Total current liabilities 6,843 - 22,791
LONG-TERM DEBT - - 135,000
-------- --------- ---------
Total liabilities 6,843 - 157,791
-------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock - (7) -
Common stock - (19,407) 6
Additional paid-in capital 300 (139,832) 92,344
Retained earnings (deficit) (1,953) (6,232) (3,188)
-------- --------- ---------
Total stockholders' equity (1,653) (165,478) 89,162
-------- --------- ---------
Total liabilities and stockholders' equity $ 5,190 $(165,478) $ 246,953
======== ========= =========
</TABLE>
Page 10
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
COMBINING CONDENSED INCOME STATEMENT
For the Three Months Ended March 31, 1999
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
------------------------------------------------
Statia Terminals Netherlands
Canada, Inc. Statia Antilles
Statia Terminals (includes all Terminals other than
International N.V. Canadian N.V. Statia
(Unconsolidated) entities) Consolidated Terminals N.V.
------------------ ---------------- ------------ -------------
<S> <C> <C> <C> <C>
REVENUES $ - $ 5,117 $ 32,137 $ 151
COST OF SERVICES AND PRODUCTS SOLD - 2,480 25,949 153
--------- --------- --------- -------
Gross profit - 2,637 6,188 (2)
ADMINISTRATIVE EXPENSES 59 920 1,193 -
SPECIAL COMPENSATION EXPENSE - 779 1,071 -
--------- --------- --------- -------
Operating income (loss) (59) 938 3,924 (2)
INTEREST EXPENSE - 875 3,327 -
INTEREST INCOME - 55 119 -
--------- --------- --------- -------
Income (loss) before provision
for income taxes (59) 118 716 (2)
PROVISION FOR INCOME TAXES 7 41 190 -
--------- --------- --------- -------
Net income (loss) (66) 77 526 (2)
EARNINGS (LOSS) FROM
EQUITY INVESTMENTS 528 - - 603
--------- --------- --------- -------
Net income (loss) available to
common stockholders $ 462 $ 77 $ 526 $ 601
========= ========= ========= =======
DEPRECIATION AND
AMORTIZATION EXPENSE $ - $ 431 $ 2,145 $ 50
========= ========= ========= =======
<CAPTION>
Reclassifications
United and Consolidated
States Eliminations Total
------ ----------------- ------------
<S> <C> <C> <C>
REVENUES $ 4,404 $ (4,394) $ 37,415
COST OF SERVICES AND PRODUCTS SOLD 449 (431) 28,600
--------- -------- ----------
Gross profit 3,955 (3,963) 8,815
ADMINISTRATIVE EXPENSES 3,916 (3,963) 2,125
SPECIAL COMPENSATION EXPENSE 97 - 1,947
--------- -------- ----------
Operating income (loss) (58) - 4,743
INTEREST EXPENSE - - 4,202
INTEREST INCOME 1 - 175
--------- -------- ----------
Income (loss) before provision
for income taxes (57) - 716
PROVISION FOR INCOME TAXES 16 - 254
--------- -------- ----------
Net income (loss) (73) - 462
EARNINGS (LOSS) FROM
EQUITY INVESTMENTS - (1,131) -
--------- -------- ----------
Net income (loss) available to
common stockholders $ (73) $ (1,131) $ 462
========= ======== ==========
DEPRECIATION AND
AMORTIZATION EXPENSE $ 330 $ - $ 2,956
========= ======== ==========
</TABLE>
Page 11
<PAGE>
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
COMBINING CONDENSED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1999
<TABLE>
<CAPTION>
Guaranteeing Subsidiaries
------------------------------------------------
Statia Terminals Netherlands
Canada, Inc. Statia Antilles
Statia Terminals (includes all Terminals other than
International N.V. Canadian N.V. Statia
(Unconsolidated) entities) Consolidated Terminals N.V.
------------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in)
operating activities $ (32) $ 2,453 $ 5,742 $ (13)
---------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment - (322) (1,369) (1)
Proceeds from sale of property and equipment - - -
---------- -------- -------- --------
Net cash used in investing activities (322) (1,369) (1)
---------- -------- -------- ---------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (32) 2,131 4,373 (14)
CASH AND CASH EQUIVALENTS,
beginning of period 44 4,409 9,037 39
--------- -------- -------- --------
CASH AND CASH EQUIVALENTS,
end of period $ 12 $ 6,540 $ 13,410 $ 25
========= ======== ======== ========
<CAPTION>
United Consolidated
States Total
-------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in)
operating activities $ 442 $ 8,592
------ --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (316) (2,008)
Proceeds from sale of property and equipment 15 15
------- --------
Net cash used in investing activities (301) (1,993)
------ ---------
INCREASE (DECREASE) IN CASH AND 141 6,599
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, 344 13,873
------ --------
beginning of period
CASH AND CASH EQUIVALENTS, $ 485 $ 20,472
====== ========
</TABLE>
Page 12
<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 Condensed Financial Statements and Notes thereto of
Statia Terminals International N.V. and Subsidiaries as of March 31, 1999 and
the three month periods ended March 31, 1999 and 1998 included herein. Reference
should also be made to the Company's Annual Report on Form 10-K that includes
the Company's Consolidated Financial Statements as of and for the year ended
December 31, 1998. You should note that we sold our Brownsville, Texas, facility
on July 29, 1998, and the figures below and our consolidated condensed financial
statements for the three months ended March 31, 1998 include the Brownsville
facility.
Results of Operations
The following table sets forth, for the periods indicated, the
percentage of revenues represented by certain items in our consolidated
condensed income statements.
Results of Operations
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
--------------------------------------------
1998 1999
--------------------- --------------------
% of % of
Dollars Revenues Dollars Revenues
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $ 14,182 46.7% $ 16,628 44.4%
Bunker and bulk product sales 16,182 53.3% 20,787 55.6%
-------- ------ -------- -------
Total revenues 30,364 100.0% 37,415 100.0%
Cost of services and products sold 25,120 82.7% 28,600 76.4%
-------- ------ -------- -------
Gross profit 5,244 17.3% 8,815 23.6%
Administrative expenses 1,816 6.0% 2,125 5.7%
Special compensation expense - - 1,947 5.2%
-------- ------ -------- -------
Operating income 3,428 11.3% 4,743 12.7%
Interest expense 4,227 13.9% 4,202 11.2%
Interest income 110 0.4% 175 0.4%
-------- ------ -------- -------
Income (loss) before provision for income taxes (689) (2.2)% 716 1.9%
Provision for income taxes 205 0.7% 254 0.7%
-------- ------ -------- -------
Net income (loss) available to common stockholders $ (894) (2.9)% $ 462 1.2%
========= ====== ======== =======
</TABLE>
Page 13
<PAGE>
The following tables set forth, for the periods indicated (a) the total
revenues and total operating income (loss), after allocation of administrative
expenses, at each of our operating locations and (b) the percentage such revenue
and operating income (loss) relate to our total revenue and operating income.
Revenues by Location
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
--------------------------------------------
1998 1999
------------------- ----------------------
% of % of
Dollars Total Dollars Total
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 25,269 83.2% $ 32,296 86.3%
Canada 4,358 14.4% 5,119 13.7%
Brownsville, Texas facility 737 2.4% -- --
--------- ------- -------- -----
Total $ 30,364 100.0% $ 37,415 100.0%
======== ======= ======== ======
Operating Income (Loss) by Location
(Dollars in thousands)
<CAPTION>
For the Three Months Ended March 31,
--------------------------------------------
1998 1999
------------------- ----------------------
% of % of
Dollars Total Dollars Total
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 2,825 82.4% $ 3,805 80.2%
Canada 888 25.9% 938 19.8%
Brownsville, Texas facility (285) (8.3)% -- --
--------- -------- --------- --------
Total $ 3,428 100.0% $ 4,743 100.0%
========= ======= ======== =======
</TABLE>
The following table sets forth for the periods indicated total
capacity, capacity leased, throughput and vessel calls for each of our operating
locations. "Total capacity" represents the average storage capacity available
for lease for a period. "Capacity leased" represents the storage capacity leased
to third parties weighted for the number of days leased in the month divided by
the capacity available for lease. "Throughput" volume is the total number of
inbound barrels discharged from a vessel, tank, rail car or tanker truck, not
including across-the-dock or tank-to-tank transfers. A "vessel call" occurs when
a vessel docks or anchors at one of our terminal locations in order to load
and/or discharge cargo and/or to take on bunker fuel. Such dockage or anchorage
is counted as one vessel call regardless of the number of activities carried on
by the vessel. A vessel call also occurs when we sell and deliver bunker fuel to
a vessel not calling at our terminals for the above purposes. Each of these
statistics is a measure of the utilization of our facilities.
Page 14
<PAGE>
Capacity, Capacity Leased, Throughput and Vessel Calls by Location
(Capacity and throughput in thousands of barrels)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1998 1999
------------------ ---------------
<S> <C> <C>
Netherlands Antilles and the
Caribbean
Total capacity 11,334 11,334
Capacity leased 85% 95%
Throughput 15,296 16,208
Vessel calls 195 262
Canada
Total capacity 7,404 7,404
Capacity leased 86% 96%
Throughput 15,585 6,924
Vessel calls 31 17
Texas (1)
Total capacity 1,649 N/A
Capacity leased 42% N/A
Throughput 863 N/A
Vessel calls 27 N/A
All locations (1)
Total capacity 20,387 18,738
Capacity leased 82% 95%
Throughput 31,744 23,132
Vessel calls 253 279
</TABLE>
(1) The Brownsville, Texas facility was sold on July 29, 1998.
The statistics above for the three months ended March 31, 1998 include
the operations of the Brownsville facility.
N/A Not applicable due to the sale of the Brownsville facility.
Comparability
On July 29, 1998, we sold Statia Terminals Southwest to an unrelated
third-party. Our consolidated condensed financial statements for the three
months ended March 31, 1998 include the operations of Statia Terminals
Southwest. The operating results of Statia Terminals Southwest for the three
months ended March 31, 1998 were not significant.
Page 15
<PAGE>
Revenues
Total revenues for the three months ended March 31, 1999 were $37.4
million compared to $30.4 million for the same period of 1998, an increase of
$7.0 million, or 23.2%.
Revenues from terminaling services, which consist of storage,
throughput, dock charges, emergency response fees and other terminal charges,
for the three months ended March 31, 1999 were $16.6 million compared to $14.2
million for the same period of 1998, an increase of $2.4 million, or 17.2%. The
improvement in terminaling services revenue for the three months ended March 31,
1999 compared to the same period in 1998 was principally due to:
o our ability to attract additional long term customers who use our
facilities as part of their strategic distribution networks; and
o additional vessel calls at St. Eustatius resulting in higher dock charges
and emergency response fees.
Revenues from terminaling services at St. Eustatius increased
approximately $2.5 million, or 27.2%, during the three months ended March 31,
1999, as compared to the same period of 1998, due to higher capacity leased,
additional throughput and more vessel calls. Total throughput increased from
15.3 million barrels during the three months ended March 31, 1998 to 16.2
million barrels during the same period of 1999 due primarily to higher
throughput of crude oil and petroleum products, and was partially offset by
reduced throughput of fuel oil. Sixty-seven more vessels called at the St.
Eustatius facility during the three months ended March 31, 1999 than during the
same period of 1998, resulting in higher revenues from dock charges and stand-by
emergency response fees. For the three months ended March 31, 1999, the overall
percentage of capacity leased at this facility was 95% compared to 85% for the
same period of 1998, reflecting increases in the percentage of capacity leased
for fuel oil tankage and petroleum products.
Revenues from terminaling services at Point Tupper increased $0.6
million, or 12.9% during the three months ended March 31, 1999 as compared to
the same period of 1998 due to higher capacity leased partially offset by
reduced throughput and vessel calls. The percentage of tank capacity leased at
Point Tupper increased from 86% for the three months ended March 31, 1998 to 96%
for the same period of 1999. This increase was primarily the result of
additional crude oil and clean petroleum products tankage leased during the
three months ended March 31, 1999 as compared to the same period of 1998. Fewer
vessel calls led to lower port charge revenues at this facility during the three
months ended March 31, 1999 as compared to the same period of 1998.
Revenues from bunker and bulk product sales were $20.8 million for the
three months ended March 31, 1999 compared to $16.2 million for the same period
in 1998, an increase of $4.6 million, or 28.5%. The increase was primarily due
to an increase in the volume of bunkers and bulk product sold. Metric tons of
bunkers and bulk product sold increased 58.1% during the three months ended
March 31, 1999 as compared to the same period of 1998. However, average selling
prices decreased 18.8% when comparing the three months ended March 31, 1999 with
the same period of 1998.
Gross Profit
Gross profit for the three months ended March 31, 1999 was $8.8 million
compared to $5.2 million for the same period of 1998, representing an increase
of $3.6 million, or 68.1%. The increase in gross profit is primarily the result
of the increased terminaling services revenue produced at a small incremental
cost. Additionally, we realized higher gross margins on bunker sales during the
three months ended March 31, 1999 as compared to the same period of 1998 due to
higher volumes of bunker fuels delivered.
Page 16
<PAGE>
Gross profits from terminaling services are generally higher than gross
profits from bunker and bulk product sales. Our operating costs for terminaling
services are relatively fixed and generally do not change significantly with
changes in capacity leased. Additions or reductions in storage, throughput and
ancillary revenues directly impact our gross profit. Costs for the procurement
of bunker fuels and bulk petroleum products are variable and linked to global
oil prices. Our bunker and bulk product costs are also impacted by market supply
conditions, types of products sold and volumes delivered.
Administrative Expenses
Administrative expenses were $2.1 million for the three months ended
March 31, 1999, as compared to $1.8 million for the same period of 1998,
representing an increase of $0.3 million, or 17.0%. The increase during the
three months ended March 31, 1999, as compared to the same period of 1998, is
primarily the result of higher personnel costs and professional fees.
Special Compensation Expense
As more fully discussed in note 5 of notes to the consolidated
condensed financial statements included in Part I, Item 1 of this Report, we
recorded a special management bonus during the three months ended March 31, 1999
of approximately $1.9 million.
Interest Expense
During the three months ended March 31, 1999 and 1998, we incurred $4.2
million of interest expense from interest accrued on our mortgage notes due in
2003, amortization expense related to deferred financing costs and certain bank
charges.
Net Income (Loss)
Net income available to common stockholders was $0.5 million for the
three months ended March 31, 1999, as compared to a net loss of $0.9 million for
the same period of 1998, an improvement of $1.4 million. The increase in net
income is attributable to the net effect of the factors discussed above.
Liquidity and Capital Resources
During the three months ended March 31, 1999, no significant changes
occurred in our debt and equity financing arrangements. No draws have occurred
on the $17.5 million revolving credit facility secured by our accounts
receivable and oil inventory. The revolving credit facility is available for
working capital needs and letter of credit financing, and it permits us to
borrow in accordance with our available borrowing base, which was estimated at
$8.1 million at March 31, 1999. The revolving credit facility bears interest at
the prime rate plus 0.50% per annum (8.25% at March 31, 1999) and will expire on
November 27, 1999.
At March 31, 1999, we had cash and cash equivalents on hand of $20.5
million compared to $13.9 million at December 31, 1998.
Page 17
<PAGE>
On April 28, 1999, the Parent completed its initial public equity
offering of 7.6 million common shares. The Offering price was $20 per share
raising gross proceeds to the Parent of $152,000. A portion of the Offering
proceeds was used by the Parent to purchase additional capital stock of Statia
totaling $37,716. During the second quarter of 1999, the Company used the
proceeds from the sale of Statia's capital stock and existing cash to repurchase
in the open market a principal amount of $34,000 of the Company's 11 3/4% First
Mortgage Notes (the "Notes") for $39,530, including premiums and related fees,
and accrued interest of $3,689 and $1,841, respectively. During the second
quarter of 1999, the premium and related fees paid, and the unamortized deferred
financing costs related to the repurchased Notes will be recorded as an
extraordinary loss net of income taxes on the Company's consolidated condensed
statement of income (loss) and accumulated deficit.
We currently believe that cash on hand, cash flow generated by
operations, and amounts available under the revolving credit facility will be
sufficient to fund working capital needs, to service debt, to make capital
expenditures and to meet other operating requirements, including any
expenditures required by applicable environmental laws and regulations. Our
operating performance and ability to service or refinance the mortgage notes and
to extend or refinance the revolving credit facility will be subject to future
economic conditions and to financial, business and other factors, many of which
are beyond our control. We can give no assurances that our future operating
performance will be sufficient to service our indebtedness or that we will be
able to repay at maturity or refinance our indebtedness in whole or in part.
Under the Parent's Articles of Incorporation, the Parent is required to
distribute all of its "available cash" (as defined therein) to its shareholders.
"Available cash" as defined includes cash from various sources after deducting
such reserves as the Parent's Board of Directors may deem necessary or
appropriate to provide for the proper conduct of its business, including future
capital expenditures and anticipated credit needs, and to comply with debt
obligations. The Parent is entirely dependent on dividends from the Company to
meet the Parent's obligations to shareholders and will require the Company to
pay dividends to it in order to meet such obligations.
Cash Flow from Operating Activities
Net cash provided by operating activities was $8.6 million and $6.6
million for the three months ended March 31, 1999 and 1998, respectively. Cash
flow from operations has been our primary source of liquidity during these
periods. Differences between net losses and positive operating cash flow have
resulted primarily from depreciation and amortization burdens and changes in
various asset and liability accounts.
Cash Flow from Investing Activities
Net cash used in investing activities was $2.0 million and $2.4 million
for the three months ended March 31, 1999 and 1998, respectively. Investing
activities during the three months ended March 31, 1999 and 1998 included
purchases of property and equipment of $2.0 million and $2.4 million,
respectively.
Page 18
<PAGE>
Capital Expenditures
Our capital expenditure budget for 1999 is $7.3 million for maintenance
capital expenditures and $1.8 million for producing incremental revenues.
Additional spending is contingent upon the addition of incremental terminaling
business.
The following table sets forth capital expenditures and separates such
expenditures into those which produce, or have the potential to produce,
incremental revenue, and those which represent maintenance capital expenditures.
Summary of Capital Expenditures by Type
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
-------------------------------------------
1998 1999
-------------------- --------------------
% of % of
Dollars Total Dollars Total
---------- ------- --------- ----------
<S> <C> <C> <C> <C>
Produce incremental revenues $ 151 6.2% $ 121 6.0%
Maintenance capital expenditures 2,298 93.8% 1,887 94.0%
--------- ------- -------- --------
Total $ 2,449 100.0% $ 2,008 100.0%
========= ======= ======== =======
</TABLE>
Information Technology and the Year 2000
Some computer software and hardware applications and embedded
microprocessor, microcontroller or other processing technology applications and
systems use only two digits to refer to a year rather than four digits. As a
result, these applications could fail or create erroneous results in dealing
with certain dates and especially if the applications recognize "00" as the year
1900 rather than the year 2000. During 1997, we developed a Year 2000 plan to
upgrade our key information systems and simultaneously address the potential
disruption to both operating and accounting systems that might be caused by the
Year 2000 problem. The Year 2000 plan also provides for the evaluations of the
systems of customers, vendors, and other third-party service providers and
evaluations of our non-information technology systems, which include embedded
technologies such as microcontrollers and is also referred to as non-traditional
information technology.
We have substantially completed the assessment phase of the Year 2000
plan as it relates to both traditional and non-traditional technology
applications and systems. We are currently in the process of testing new Year
2000 compliant terminal operations software at our facilities. We anticipate
that the Year 2000 compliant terminal operations systems will be fully
implemented in the third quarter of 1999. We recently selected a fully
integrated Year 2000 compliant finance, accounting, and human resources system
and expect to have the new system operational by the third quarter of 1999.
We have identified some components of our control systems at our two
terminals as not being Year 2000 compliant. These systems measure, regulate,
control, and maintain crude oil and petroleum product flow and fire protection
equipment at the terminals. We are currently evaluating the best means to
mitigate the possible adverse effects resulting from the potential failure of
these systems including repair or replacement and, in most cases, have already
installed and successfully tested replacements of non-compliant components.
However, we believe that in a worst case scenario, existing manual overrides
would prevent the failure of these systems from having a material adverse effect
on our operations.
Page 19
<PAGE>
In accordance with our Year 2000 plan, we have initiated a formal
communications process with other companies with which our systems interface or
rely on to determine the extent to which those companies are addressing their
Year 2000 compliance. In connection with this process, we have sent numerous
letters and questionnaires to third parties and are evaluating those responses
as they are received. Where necessary, we will be working with those companies
that are not yet Year 2000 compliant to mitigate any material adverse effect
such non-compliance may have on us. Based upon information we have received and
reviewed of our possible existing relationships with third parties, we do not
currently anticipate that any third-party non-compliance would have a material
adverse effect on our business, results of operations, or financial condition.
In 1998, we spent $1.1 million related to our Year 2000 remediation
efforts of which we have capitalized $1.0 million and expensed $0.1 million.
During the three months ended March 31, 1999 we spent $0.3 million related to
these efforts of which substantially all was capitalized. During the remainder
of 1999, we anticipate spending an additional $0.6 million to complete these
efforts of which we anticipate capitalizing $0.5 million and expensing $0.1
million. However, we cannot guarantee that these estimates will be met, and
actual expenditures could differ materially from these estimates.
Based upon information currently available to us, we believe our
efforts will succeed in preventing the Year 2000 issue from having a material
adverse effect on us. However, the pervasive nature of the Year 2000 issue may
prevent us from fully assessing and rectifying all systems that could have an
effect on our business, results of operations, or financial condition.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We periodically purchase refined petroleum products from our customers
and others for resale as bunker fuel, for small volume sales to commercial
interests and to maintain an inventory of blend stocks for our customers.
Petroleum product inventories are held for short periods, generally not
exceeding ninety days. We do not presently have any derivative positions to
hedge our inventory of petroleum products. The following table indicates the
aggregate carrying value of our petroleum products, which are sensitive to
changes in commodity prices, on hand at March 31, 1999 computed at average
costs, 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, 1999
---------------------------------
Carrying Amount Fair Value
--------------- ----------
Petroleum Inventory:
Statia Terminals N.V. $ 1,164 $ 1,410
Statia Terminals Canada 285 285
--------- --------
Total $ 1,449 $ 1,695
========= ========
Except for minor local operating expenses in Canadian dollars and
Netherlands Antilles guilders, all of our transactions are in U.S. dollars.
Therefore, we believe we are not significantly exposed to exchange rate
fluctuations. As all of our present debt obligations carry a fixed rate of
interest, except for the undrawn revolving credit facility which varies with
changes in the lender's prime lending rate, we believe our exposure to interest
rate fluctuations is minimal.
Page 20
<PAGE>
PART II.
--------
OTHER INFORMATION
-----------------
Item 1. Legal Proceedings.
Reference is made to Part I, Item 3. Legal Proceedings, in the
Company's 1998 Annual Report on Form 10-K. There have been no material
developments in the Company's legal proceedings since the Form 10-K was filed.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
4.1 Fourth Amendment of Indenture and Consent Under Securities
Pledge Agreement, dated April 26, 1999. *
10.1 Amended and restated Employment Agreement, effective April 18,
1999, between Statia Terminals Group N.V., Statia Terminals,
Inc. and James G. Cameron. (for electronic filing only)*
10.2 Amended and restated Employment Agreement, effective April 28,
1999, between Statia Terminals Group N.V., Statia Terminals,
Inc. and Thomas M. Thompson, Jr. (for electronic filing only)*
10.3 Amended and restated Employment Agreement, effective April 28,
1999, between Statia Terminals Group N.V., Statia Terminals,
Inc. and Robert R. Russo. (for electronic filing only)*
10.4 Amended and restated Employment Agreement, effective April 28,
1999, between Statia Terminals Group N.V., Statia Terminals,
Inc. and Jack R. Pine. (for electronic filing only)*
10.5 Amended and restated Employment Agreement, effective April 28,
1999, between Statia Terminals Group N.V., Statia Terminals,
Inc. and John D. Franklin. (for electronic filing only)*
10.6 Amended and restated Employment Agreement, effective April 28,
1999, between Statia Terminals Group N.V., Statia Terminals,
Inc. and James F. Brenner. (for electronic filing only)*
27.1 Financial Data Schedule for Statia Terminals International
N.V. (for electronic filing only)
27.2 Financial Data Schedule for Statia Terminals Canada,
Incorporated. (for electronic filing only)
* Incorporated by reference to the March 31, 1999 Form 10-Q of
Statia Terminals Group N.V., dated May 13, 1999.
(b) Reports on Form 8-K.
None.
Page 21
<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 17, 1999
By: /s/ James G. Cameron
-------------------------
James G. Cameron
Managing Director
(As Authorized Officer)
By: /s/ James F. Brenner
-------------------------
James F. Brenner
Vice President and Treasurer
(As Authorized Officer and
Principal Finance and
Accounting Officer)
Statia Terminals Canada, Incorporated
(Registrant)
Date: May 17, 1999
By: /s/ James F. Brenner
-------------------------
James F. Brenner
Vice President-Finance
(As Authorized Officer and
Principal Finance and
Accounting Officer)
Page S-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Statia
Terminals International N.V.'s Form 10-Q for the three months ended March 31,
1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001029101
<NAME> Statia Terminals International N.V.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 20,472
<SECURITIES> 0
<RECEIVABLES> 11,292
<ALLOWANCES> 784
<INVENTORY> 1,449
<CURRENT-ASSETS> 33,191
<PP&E> 231,747
<DEPRECIATION> 22,545
<TOTAL-ASSETS> 246,953
<CURRENT-LIABILITIES> 22,791
<BONDS> 135,000
0
0
<COMMON> 6
<OTHER-SE> 92,344
<TOTAL-LIABILITY-AND-EQUITY> 246,953
<SALES> 20,787
<TOTAL-REVENUES> 37,415
<CGS> 17,946
<TOTAL-COSTS> 28,600
<OTHER-EXPENSES> 4,072
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,202
<INCOME-PRETAX> 716
<INCOME-TAX> 254
<INCOME-CONTINUING> 462
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 462
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Statia
Terminals Canada, Incorporated's Form 10-Q for the three months ended March 31,
1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001029102
<NAME> Statia Terminals Canada Incorporated
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,540
<SECURITIES> 0
<RECEIVABLES> 1,442
<ALLOWANCES> 62
<INVENTORY> 285
<CURRENT-ASSETS> 8,261
<PP&E> 31,411
<DEPRECIATION> 3,284
<TOTAL-ASSETS> 37,353
<CURRENT-LIABILITIES> 3,755
<BONDS> 28,060
0
0
<COMMON> 0
<OTHER-SE> 2,266
<TOTAL-LIABILITY-AND-EQUITY> 37,353
<SALES> 60
<TOTAL-REVENUES> 5,117
<CGS> 51
<TOTAL-COSTS> 2,480
<OTHER-EXPENSES> 1,699
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 875
<INCOME-PRETAX> 118
<INCOME-TAX> 41
<INCOME-CONTINUING> 77
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
