<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q/A
(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, 2000
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
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.)
C/O COVENANT MANAGERS
L.B. SMITHPLEIN 3
CURACAO, NETHERLANDS ANTILLES
(011) (599-9) 4623700
(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> 2
STATIA TERMINALS INTERNATIONAL N.V.
AND
STATIA TERMINALS CANADA, INCORPORATED
QUARTERLY REPORT ON FORM 10-Q/A
MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 1
Consolidated Condensed Statements of Income (Loss) 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 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
THIS QUARTERLY REPORT ON FORM 10-Q/A (THIS "REPORT") CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF 27A OF THE SECURITIES ACT OF
1933, AS AMENDED. 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 OR CUSTOMERS, THE FINANCIAL CONDITION OF OUR CUSTOMERS,
INTERRUPTION OF OUR OPERATIONS CAUSED BY ADVERSE WEATHER CONDITIONS, THE
CONDITION OF THE U.S. AND CERTAIN FOREIGN ECONOMIES, AND OTHER MATTERS INCLUDED
IN THIS REPORT AND THE COMPANY'S ANNUAL REPORT ON FORM 10-K/A. WE DO 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> 3
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,
1999 2000
------------ ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,632 $ 2,695
Accounts receivable-
Trade, net 12,957 13,232
Other 3,704 4,105
Inventory, net 3,239 2,823
Prepaid expenses 1,723 1,046
--------- ---------
Total current assets 25,255 23,901
PROPERTY AND EQUIPMENT, net 206,031 200,549
OTHER NONCURRENT ASSETS, net 2,985 2,778
--------- ---------
Total assets $ 234,271 $ 227,228
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,098 $ 14,424
Dividend payable to Parent 3,750 --
Accrued interest payable 1,516 4,483
Other accrued expenses 6,219 5,839
--------- ---------
Total current liabilities 25,583 24,746
LONG-TERM DEBT- 11-3/4% FIRST MORTGAGE NOTES 101,000 101,000
--------- ---------
Total liabilities 126,583 125,746
STOCKHOLDER'S EQUITY:
Common stock 6 6
Additional paid-in capital 126,090 126,090
Accumulated deficit (18,408) (24,614)
--------- ---------
Total stockholder's equity 107,688 101,482
--------- ---------
Total liabilities and stockholder's equity $ 234,271 $ 227,228
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
Page 1
<PAGE> 4
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
(Unaudited)
--------------------------
1999 2000
-------- --------
<S> <C> <C>
REVENUES:
Terminaling services $ 16,628 $ 12,430
Product sales 20,787 29,875
-------- --------
Total revenues 37,415 42,305
-------- --------
COSTS OF REVENUES:
Terminaling services 9,621 10,115
Product sales 18,979 28,117
-------- --------
Total costs of revenues 28,600 38,232
-------- --------
Gross profit 8,815 4,073
ADMINISTRATIVE EXPENSES 2,125 2,161
SPECIAL COMPENSATION EXPENSE 1,947 --
-------- --------
Operating income 4,743 1,912
INTEREST EXPENSE 4,202 3,168
INTEREST INCOME 175 21
-------- --------
Income (loss) before provision for income taxes 716 (1,235)
PROVISION FOR INCOME TAXES 254 264
-------- --------
Net income (loss) available to common stockholder $ 462 $ (1,499)
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
Page 2
<PAGE> 5
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,
---------------------------
1999 2000
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) available to common stockholder $ 462 $ (1,499)
Adjustments to reconcile net income (loss) available to common stockholder
to net cash provided by operating activities:
Depreciation, amortization and non-cash charges 2,956 3,704
Increase in accounts receivable-trade (1,335) (275)
(Increase) decrease in other receivables 717 (401)
Decrease in inventory 3,079 416
(Increase) decrease in prepaid expenses (590) 677
(Increase) decrease in other non-current assets (44) 37
Increase (decrease) in accounts payable (912) 326
Increase in accrued expenses 4,259 2,587
-------- --------
Net cash provided by operating activities 8,592 5,572
-------- --------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment (2,008) (2,759)
Proceeds from sale of property and equipment 15 --
-------- --------
Net cash used in investing activities (1,993) (2,759)
-------- --------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Dividends paid to Parent -- (3,750)
-------- --------
Net cash used in financing activities -- (3,750)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,599 (937)
CASH AND CASH EQUIVALENTS, beginning of period 13,873 3,632
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 20,472 $ 2,695
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 188 $ 94
======== ========
Cash paid for interest $ 18 $ 31
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
Page 3
<PAGE> 6
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated condensed financial statements of Statia
Terminals International N.V. ("Statia") and 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 Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K/A for
the year ended December 31, 1999 (the "Form 10-K/A"). In the opinion of the
Company's management, the accompanying consolidated condensed financial
statements contain all adjustments and accruals necessary to present fairly the
financial position of the Company at March 31, 2000, and the results of its
operations and cash flows for the three months ended March 31, 1999, and 2000.
Operating results for the three months ended March 31, 2000, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000.
Certain reclassifications were made to the 1999 financial statements
and notes thereto in order to conform to the 2000 presentation. Additionally,
the transactions discussed in note 3 below impacted the Company's results of
operations and financial condition, and affect comparability across periods.
These financial statements should be read in conjunction with the Form 10-K/A.
For all periods presented herein, there were no significant differences
between net income and comprehensive income.
2. SEGMENT INFORMATION
The Company is organized around several different factors, the two most
significant of which are services and products and geographic location. The
Company's primary services and products are terminaling services (resulting in
revenue from storage, throughput, dock usage, emergency response and other
terminal services) and product sales (such as sales of bunker fuels to ships and
other bulk petroleum product sales).
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 non-recurring income and expenses ("Adjusted EBITDA")
and earnings before interest expense, interest income, income taxes, and certain
non-recurring income and expenses ("Adjusted EBIT").
Page 4
<PAGE> 7
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
2. SEGMENT INFORMATION- (CONTINUED)
The following information is provided for the Company's terminaling
services and product sales segments:
For the Three Months Ended
March 31,
--------------------------
1999 2000
------- -------
REVENUES:
Terminaling services $16,628 $12,430
Product sales 20,787 29,875
------- -------
Total $37,415 $42,305
======= =======
ADJUSTED EBITDA:
Terminaling services $ 8,152 $ 3,679
Product sales 1,443 1,788
------- -------
Total $ 9,595 $ 5,467
======= =======
DEPRECIATION AND AMORTIZATION
EXPENSE:
Terminaling services $ 2,897 $ 3,445
Product sales 59 259
------- -------
Total $ 2,956 $ 3,704
======= =======
ADJUSTED EBIT:
Terminaling services $ 5,255 $ 234
Product sales 1,384 1,529
------- -------
Total $ 6,639 $ 1,763
======= =======
A reconciliation of Adjusted EBIT to the Company's income (loss) before
provision for income taxes is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1999 2000
------- -------
<S> <C> <C>
Adjusted EBIT $ 6,639 $ 1,763
Special compensation expense (1,947) --
Interest expense excluding debt
amortization expense (3,976) (2,998)
------- -------
Income (loss) before provision for income
taxes $ 716 $(1,235)
======= =======
</TABLE>
Page 5
<PAGE> 8
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
3. SALE OF COMMON STOCK TO PARENT AND RELATED TRANSACTIONS
As more fully discussed in the Form 10-K/A, on April 28, 1999, Statia's
parent, Statia Terminals Group N.V. (the "Parent"), completed its initial public
equity offering of 7.6 million Class A common shares. 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 this 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.
The following unaudited pro forma consolidated results of operations
for the three-month period ended March 31, 1999, were prepared to illustrate the
estimated effects of the use of the net proceeds from the Parent's initial
public offering of equity and the restructuring as described in the Parent's
Registration Statement on Form S-1 (collectively, the "pro forma transactions")
as if the pro forma transactions had occurred at the beginning of this period.
The unaudited pro forma consolidated condensed results of operations should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company's financial statements and the
notes thereto, and the other financial information included in the Parent's
Registration Statement on Form S-1 (File No. 333-72317) and the Company's Form
10-K/A for the year ended December 31, 1999. This pro forma financial
information is provided for informational purposes only and does not purport to
be indicative of the results of operations which would have been obtained had
the pro forma transactions been completed on the dates indicated or results of
operations for any future date or period.
Unaudited Selected Pro forma Consolidated Results
For the Three Months Ended March 31, 1999
REVENUES $37,415
OPERATING INCOME 6,690
NET INCOME AVAILABLE TO COMMON STOCKHOLDER 3,465
4. REPLACEMENT OF SINGLE POINT MOORING SYSTEM HOSES
During the three months ended March 31, 2000, the Company replaced
certain large hoses attached to its single point mooring system (the "SPM"). In
connection with this hose change-out, the Company adopted the component
depreciation method for the SPM and its hoses as of January 1, 2000, which
resulted in a change in the estimated useful lives for depreciation purposes for
these hoses. As a result, the Company incurred a non-cash charge of $832 to
depreciation expense which is included in Costs of Revenues.
Page 6
<PAGE> 9
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
5. DIVIDEND OF M/V STATIA RESPONDER TO PARENT
In March, 2000, the ownership of the M/V STATIA RESPONDER, an emergency
response and maintenance vessel, was transferred to the Parent as a dividend in
the amount of $4,707 representing the net book value of the vessel.
6. STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY
The 11-3/4% First Mortgage Notes (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
which is a co-obligor on the Notes. The enforceability of the guarantees may be
affected differently under the laws of the applicable jurisdictions. Each of the
subsidiary guarantors is, directly or indirectly, wholly-owned by Statia. The
following consolidated condensed financial data are presented for Statia
Terminals Canada, Incorporated and Subsidiary.
Page 7
<PAGE> 10
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
6. STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY - (CONTINUED)
STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
----------- -------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 209 $ 879
Accounts receivable-
Trade, net 1,496 875
Other 1,960 831
Inventory, net 81 67
Prepaid expenses 255 330
Receivable from affiliates 2,986 4,144
------- -------
Total current assets 6,987 7,126
PROPERTY AND EQUIPMENT, net 28,705 28,524
OTHER NONCURRENT ASSETS, net 817 735
------- -------
Total assets $36,509 $36,385
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES $ 3,164 $ 3,595
LONG-TERM DEBT- 11-3/4% FIRST MORTGAGE NOTES 28,060 28,060
------- -------
Total liabilities 31,224 31,655
STOCKHOLDER'S EQUITY:
Common stock and additional paid-in capital 2,266 2,266
Retained earnings 3,019 2,464
------- -------
Total stockholder's equity 5,285 4,730
------- -------
Total liabilities and stockholder's equity $36,509 $36,385
======= =======
</TABLE>
Page 8
<PAGE> 11
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
6. STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY - (CONTINUED)
STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1999 2000
------- -------
<S> <C> <C>
REVENUES $ 5,117 $ 3,443
COSTS OF REVENUES 2,480 2,347
------- -------
Gross profit 2,637 1,096
ADMINISTRATIVE EXPENSES 1,699 740
------- -------
Operating income 938 356
INTEREST EXPENSE 875 876
INTEREST INCOME 55 10
------- -------
Income (loss) before provision for income taxes 118 (510)
PROVISION FOR INCOME TAXES 41 45
------- -------
Net income (loss) available to common
stockholder $ 77 $ (555)
======= =======
</TABLE>
STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------------------------
1999 2000
------- -------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,453 $ 864
------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment (322) (194)
------- -------
Net cash used in investing activities (322) (194)
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 2,131 670
CASH AND CASH EQUIVALENTS, beginning of period 4,409 209
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 6,540 $ 879
======= =======
</TABLE>
Page 9
<PAGE> 12
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 (the "Company") as of March
31, 2000, and the three month periods ended March 31, 1999, and 2000 included
herein. Reference should also be made to the Company's Annual Report on Form
10-K/A that includes the Company's Consolidated Financial Statements as of and
for the year ended December 31, 1999.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentage of revenues represented by some items in our consolidated condensed
income statements.
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
----------------------------------------------------------------
1999 2000
---------------------------- -----------------------------
% of % of
Dollars Revenues Dollars Revenues
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $ 16,628 44.4% $ 12,430 29.4%
Product sales 20,787 55.6% 29,875 70.6%
-------- ----- -------- -----
Total revenues 37,415 100.0% 42,305 100.0%
-------- ----- -------- -----
Costs of revenues:
Terminaling services 9,621 25.7% 10,115 23.9%
Product sales 18,979 50.7% 28,117 66.5%
-------- ----- -------- -----
Total costs of revenues 28,600 76.4% 38,232 90.4%
-------- ----- -------- -----
Gross profit 8,815 23.6% 4,073 9.6%
Administrative expenses 2,125 5.7% 2,161 5.1%
Special compensation expense 1,947 5.2% -- --
-------- ----- -------- -----
Operating income 4,743 12.7% 1,912 4.5%
Interest expense 4,202 11.2% 3,168 7.5%
Interest income 175 0.4% 21 0.1%
-------- ----- -------- -----
Income (loss) before provision for income taxes 716 1.9% (1,235) (2.9)%
Provision for income taxes 254 0.7% 264 0.6%
-------- ----- -------- -----
Net income (loss) available to common stockholder $ 462 1.2% $ (1,499) (3.5)%
======== ===== ======== =====
</TABLE>
Page 10
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
The following tables set forth, for the periods indicated, (a) the
total revenues and total operating income, after allocation of administrative
expenses and elimination of certain intercompany transactions, at each of our
operating locations and (b) the percentage of such revenues and operating income
relative to our total revenues and operating income.
REVENUES BY LOCATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
---------------------------------------------------------
1999 2000
------------------------ ------------------------
% of % of
Dollars Total Dollars Total
------- ----- ------- -----
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $32,298 86.3% $38,876 91.9%
Canada 5,117 13.7% 3,429 8.1%
------- ----- ------- -----
Total $37,415 100.0% $42,305 100.0%
======= ===== ======= =====
</TABLE>
OPERATING INCOME BY LOCATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
---------------------------------------------------------
1999 2000
------------------------ ------------------------
% of % of
Dollars Total Dollars Total
------- ----- ------- -----
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $3,805 80.2% $1,691 88.5%
Canada 938 19.8% 221 11.5%
------ ----- ------ -----
Total $4,743 100.0% $1,912 100.0%
====== ===== ====== =====
</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 and equipment.
Page 11
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
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,
--------------------------
1999 2000
------ ------
<S> <C> <C>
Netherlands Antilles and the Caribbean:
Total capacity 11,334 11,334
Capacity leased 95% 76%
Throughput 16,208 12,280
Vessel calls 262 216
Canada:
Total capacity 7,404 7,404
Capacity leased 96% 59%
Throughput 6,924 8,937
Vessel calls 17 21
All locations:
Total capacity 18,738 18,738
Capacity leased 95% 69%
Throughput 23,132 21,217
Vessel calls 279 237
</TABLE>
COMPARABILITY
Our Parent's initial public offering of equity, which closed on April
28, 1999, and the Parent's resultant equity contribution to the Company impacted
our results of operations and financial condition. Therefore, our results of
operations and financial condition may not be comparable across periods
presented herein.
REVENUES
Total revenues for the three months ended March 31, 2000, were $42.3
million, compared to $37.4 million for the same period of 1999, representing an
increase of $4.9 million, or 13.1%.
Revenues from terminaling services (resulting from revenue from
storage, throughput, dock usage, emergency response and other terminal services)
for the three months ended March 31, 2000, were $12.4 million, compared to $16.6
million for the same period of 1999, representing a decrease of $4.2 million, or
25.2%. The decrease in terminaling services revenue for the three months ended
March 31, 2000, compared to the same period in 1999, we believe, was principally
due to the adverse effects of the accord established between many of the oil
exporting nations, some of whom are our customers, to raise crude oil prices by
reducing supply. Members of the accord significantly reduced their production of
crude oil during the period from April 1, 1999, through late March 2000 which,
in turn, has reduced the worldwide quantity of crude oil and petroleum products
in storage. The accord has primarily impacted our terminaling services revenues
beginning with the second half of 1999. Despite recent announced increases in
crude oil production, substantially all segments of the crude oil and petroleum
products markets remain in backwardation.
Page 12
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
For the three months ended March 31, 2000, approximately 83.2% of our
tank capacity was leased pursuant to long-term contracts at our St. Eustatius
and Point Tupper locations together. Approximately 79.2% of our storage and
throughput revenues, excluding related ancillary services, were derived from
long-term contracts during the same period.
Revenues from terminaling services at St. Eustatius decreased
approximately $2.6 million, or 22.4%, during the three months ended March 31,
2000, as compared to the first quarter of 1999, due to decreased throughput and
a lower percentage capacity leased. Total throughput decreased from 16.2 million
barrels during the three months ended March 31, 1999, to 12.3 million barrels
during the same period of 2000 due primarily to decreased throughput of crude
and fuel oil. Total throughput of crude oil decreased, in part, due to the
replacement of large hoses connected to our single point mooring system, a
maintenance job which took three weeks to complete.
For the three months ended March 31, 1999, and 2000, the overall
percentage of capacity leased at St. Eustatius was 95% and 76%, respectively.
This facility primarily experienced decreases in the percentage of capacity
leased for fuel oil tankage. The percentage of capacity leased for fuel oil
tankage decreased during the three months ended March 31, 2000, as compared to
the same period of 1999 primarily as a result of the effects of the accord,
backwardation in this market, and the relative lower pricing of products which
compete with fuel oil. Thirty-two fewer cargo vessels called at the St.
Eustatius facility during the three months ended March 31, 2000, than during the
same period of 1999, resulting in lower revenues from port charges, which
consist of dock charges, emergency response fees, and other terminal charges.
Revenues from terminaling services at Point Tupper decreased
approximately $1.6 million, or 31.9%, during the three months ended March 31,
2000, as compared to the same periods of 1999. The decrease is due primarily to
a lower percentage capacity leased during the three months ended March 31, 2000,
resulting in lower storage revenues. The percentage of tank capacity leased at
Point Tupper decreased from 96% for the three months ended March 31, 1999, to
59% for the same period of 2000. These decreases are primarily the result of the
decision by a customer of this facility, which is a participant in the accord,
not to renew its crude oil storage contract at the end of the second quarter of
1999. Partially offsetting reduced storage revenues were revenues from a higher
number of barrels throughput by this facility's primary crude oil customer. Four
additional cargo vessels called during the three months ended March 31, 2000, as
compared to the same period of 1999, which led to a higher number of barrels
throughput and revenues from port charges at this facility.
Revenues from product sales were $29.9 million for the three months
ended March 31, 2000, compared to $20.8 million for the same period of 1999, an
increase of $9.1 million, or 43.7%. These increases were due to increases in
average selling prices partially offset by lower volumes delivered. Average
selling prices increased 117.1% when comparing the three months ended March 31,
2000, with the same period of 1999. These changes in average selling prices were
primarily the result of changes in the world oil markets which have been
significantly influenced by the accord. Metric tons of bunkers and bulk product
delivered decreased 33.8% during the three months ended March 31, 2000, as
compared to the same period of 1999.
Page 13
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
GROSS PROFIT
Gross profit for the three months ended March 31, 2000, was $4.1
million compared to $8.8 million for the same period of 1999, representing a
decrease of $4.7 million, or 53.8%. The decrease in gross profit is primarily
the result of lower gross profits realized on terminaling services, which were
partially offset by higher dollar gross margins realized on product sales. Gross
profit from terminaling services decreased primarily as a result of certain
customers choosing not to renew their storage and throughput contracts due, in
part, to reduced supply resulting from the accord established among many of the
oil exporting nations. Additionally, during the three months ended March 31,
2000, we replaced certain hoses attached to our single point mooring system. As
a result, we incurred a non-cash charge of $0.8 million to depreciation expense
which is included in Costs of Revenues.
Gross profit from terminaling services is generally higher than gross
profit from 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 product costs are also impacted by market supply conditions, types of
products sold and volumes delivered.
At St. Eustatius, we are currently purchasing a majority of the fuel
oil necessary to support our bunker sales requirements pursuant to a contract
with a major state-owned oil company. This contract became effective in 1993. We
are currently operating under a short-term extension to the contract pending
completion of discussions with the oil company. The extension expires on June
30, 2000. We anticipate renewal of the supply contract in the near future under
terms and conditions comparable to the prior agreement. We believe that suitable
alternate sources of supply are available from which we can procure fuel oil
should our current contract be interrupted or not be renewed.
ADMINISTRATIVE EXPENSES
Administrative expenses were $2.2 million for the three months ended
March 31, 2000, as compared to $2.1 million for the same period of 1999,
representing an increase of $0.1 million or 1.7%.
SPECIAL COMPENSATION EXPENSE
As more fully discussed in note 3 of the notes to consolidated
condensed financial statements included in Part I, Item 1 of this Report, we
recorded special compensation expense during the three months ended March 31,
1999, of $1.9 million.
INTEREST EXPENSE
During the three months ended March 31, 2000, we incurred $3.2 million
of interest expense compared to $4.2 million for the same period of 1999.
Interest expense includes interest accrued on our mortgage notes due in 2003,
amortization expense related to deferred financing costs, other interest
expense, and bank charges. In May 1999, we repurchased $34.0 million of the
mortgage notes which resulted in lower interest expense on this debt.
Page 14
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
PROVISION FOR INCOME TAXES
Provision for income taxes was $0.3 million for the three months ended
March 31, 2000, and 1999.
NET INCOME (LOSS)
Net loss to common stockholder was $1.5 million for the three months
ended March 31, 2000, as compared to net income available to common stockholder
of $0.5 million for the same period of 1999. The changes in net income and net
loss are attributable to the net effect of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATING ACTIVITIES
Net cash provided by operating activities was $5.6 million and $8.6
million for the three months ended March 31, 2000, and 1999, 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, non-cash charges,
and changes in various asset and liability accounts.
At March 31, 2000, we had cash and cash equivalents on hand of $2.7
million compared to $3.6 million at December 31, 1999. Accounts receivable and
accounts payable, primarily related to the purchases and sales of petroleum
products, were $17.3 million and $14.4 million, respectively, at March 31, 2000,
as compared to $16.7 million and $14.1 million, respectively, at December 31,
1999.
CASH FLOW FROM INVESTING ACTIVITIES
Net cash used in investing activities consisting primarily of purchases
of property and equipment was $2.8 million and $2.0 million for the three months
ended March 31, 2000, and 1999, respectively.
CASH FLOW FROM FINANCING ACTIVITIES
During the three months ended March 31, 2000, we paid $3.8 million to
the Parent representing the remaining portion of a dividend declared in December
1999.
During the three months ended March 31, 2000, the ownership of the M/V
STATIA RESPONDER, an emergency response and maintenance vessel, was transferred
to the Parent as a dividend in the amount of $4.7 million representing the net
book value of the vessel. The Company anticipates that it will enter into a
charter agreement with a subsidiary of the Parent for use of the vessel.
On April 28, 1999, the Parent completed its initial public equity
offering of 7.6 million shares. The offering price was $20 per share raising
gross proceeds to the Parent of $152 million. A portion of the offering proceeds
was used by the Parent to purchase additional capital stock of Statia Terminals
International amounting to $33.7 million, net of certain expenses of the
offering allocated to us. During May 1999, we used the proceeds from the sale of
Statia Terminals International's capital stock, along with existing cash, to
repurchase in the open market a principal amount of $34 million of the 11-3/4%
First Mortgage Notes for $39.5 million, including acquisition costs of $3.7
million.
Page 15
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
As of May 11, 2000, no event of default under the indenture to the
mortgage notes existed and was continuing. The fixed charge coverage ratio as
defined in the indenture was less than 2.0 to 1 at March 31, 2000. As a result,
we are prevented from making certain restricted payments and incurring certain
indebtedness, among other things, until such ratio is at least 2.0 to 1. We are
not restricted by this provision of the indenture from borrowing on the
revolving credit facility discussed below. Additionally, at March 31, 2000, the
sum of our dividends, restricted payments, aggregate consolidated net income
(deficit), and capital stock proceeds was approximately $13.4 million. Such sum
must be positive in order for us to make certain restricted payments, including
dividends to our Parent.
We have a $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 a defined available borrowing base,
which was approximately $11.8 million at March 31, 2000. The revolving credit
facility bears interest at the prime rate plus 0.50% per annum (9.5% at May 11,
2000) and will expire on November 27, 2000. From time to time during the three
months ended March 31, 2000, we borrowed against the revolving credit facility,
and all of such borrowings were repaid by March 31, 2000.
We believe that cash flow generated by operations and amounts available
under the revolving credit facility will be sufficient, until the maturity of
the mortgage notes, to fund working capital needs, capital expenditures and
other operating requirements, including any expenditures required by applicable
environmental laws and regulations, and to service debt. It is unlikely that we
will be able to repay the mortgage notes at maturity through projected operating
cash flow, and it will be necessary to refinance all or a portion of the
mortgage notes, or redeem the mortgage notes from additional equity funds, on or
after November 15, 2000, and before their maturity on November 15, 2003. We
continuously monitor financial market conditions and our financial position to
determine when and whether we will refinance or redeem, all or a portion of the
mortgage notes prior to their maturity. Although we intend to refinance and
believe that we will be able to refinance the mortgage notes during the November
15, 2000, to November 15, 2003, time period, 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 commercial, financial, and other factors, many of which are beyond our
control. There can be no assurances that we will be able to repay at maturity or
refinance our indebtedness in whole or in part, or at all, on terms acceptable
to us. If we are unable to repay or refinance the mortgage notes at or prior to
maturity, we will be forced to adopt alternative strategies that may include
seeking additional equity capital.
Page 16
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
CAPITAL EXPENDITURES
Our projected capital spending for 2000 is $7.7 million for operations
sustaining capital expenditures and $0.3 million to produce 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 revenues and those which sustain our operations.
SUMMARY OF CAPITAL EXPENDITURES BY TYPE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
---------------------------------------------------------
1999 2000
------------------------ ------------------------
% of % of
Dollars Total Dollars Total
------- ----- ------- -----
<S> <C> <C> <C> <C>
Produce incremental revenues $ 121 6.0% $ 84 3.0%
Operations sustaining capital expenditures 1,887 94.0% 2,675 97.0%
------ ----- ------ -----
Total $2,008 100.0% $2,759 100.0%
====== ===== ====== =====
</TABLE>
ENVIRONMENTAL MATTERS
As more fully discussed in the Form 10-K/A, the Castle Harlan
acquisition agreement includes a covenant whereby Praxair shall assume financial
responsibility for some environmental investigation, remediation, and upgrade
costs at Point Tupper. Praxair has recently indicated that they are interested
in reaching a monetary settlement of their remaining obligations under the
covenant. Negotiations concerning such matters are in their preliminary stages.
Page 17
<PAGE> 20
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 90 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 on hand at March 31, 2000, 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)
<TABLE>
<CAPTION>
As of March 31, 2000
---------------------------------
Carrying Value Fair Value
-------------- -----------
<S> <C> <C>
Petroleum Inventory:
Statia Terminals N.V. $ 2,756 $ 2,887
Statia Terminals Canada, Inc. 67 173
--------- --------
Total $ 2,823 $ 3,060
========= ========
</TABLE>
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 revolving credit facility which varies with changes in
the lender's prime lending rate, we believe our exposure to interest rate
fluctuations is minimal.
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<PAGE> 21
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Reference is made to Item 3. Legal Proceedings included in the
Company's 1999 Annual Report on Form 10-K/A. There have been no material
developments in the Company's legal proceedings since the Form 10-K/A was filed.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
The Company's web site is located at
http://www.statiaterm.com.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
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)
(b) Reports on Form 8-K.
None.
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<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
STATIA TERMINALS INTERNATIONAL N.V.
(Registrant)
Date: November 14, 2000
By: /s/ James G. Cameron
---------------------------------
James G. Cameron
Director
(As Authorized Officer)
By: /s/ James F. Brenner
---------------------------------
James F. Brenner
Vice President and Treasurer
(As Authorized Officer and
Principal Financial Officer)
STATIA TERMINALS CANADA, INCORPORATED
(Registrant)
Date: November 14, 2000
By: /s/ James F. Brenner
-------------------------------
James F. Brenner
Vice President-Finance
(As Authorized Officer and
Principal Financial Officer)
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