<PAGE> 1
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 SEPTEMBER 30, 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
SEPTEMBER 30, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <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 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
This Quarterly Report on Form 10-Q (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, SEPTEMBER 30,
1999 2000
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,632 $ 7,919
Accounts receivable-
Trade, net 12,957 15,499
Other 3,704 979
Inventory, net 3,239 1,925
Prepaid expenses 1,723 2,883
---------- ----------
Total current assets 25,255 29,205
PROPERTY AND EQUIPMENT, net 206,031 198,947
OTHER NONCURRENT ASSETS, net 2,985 2,399
---------- ----------
Total assets $ 234,271 $ 230,551
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,098 $ 13,742
Dividend payable to Parent 3,750 --
Accrued interest payable 1,516 4,483
Other accrued expenses 6,219 7,404
---------- ----------
Total current liabilities 25,583 25,629
LONG TERM DEBT - 11-3/4% FIRST MORTGAGE NOTES 101,000 101,000
---------- ----------
Total liabilities 126,583 126,629
STOCKHOLDER'S EQUITY:
Common stock 6 6
Additional paid-in capital 126,090 126,090
Accumulated deficit (18,408) (22,174)
---------- ----------
Total stockholder's equity 107,688 103,922
---------- ----------
Total liabilities and stockholder's equity $ 234,271 $ 230,551
========== ==========
</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 FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ---------------------------
1999 2000 1999 2000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Terminaling services $ 14,292 $ 17,929 $ 48,328 $ 44,670
Product sales 29,018 39,613 74,664 109,404
--------- --------- --------- ---------
Total revenues 43,310 57,542 122,992 154,074
--------- --------- --------- ---------
COSTS OF REVENUES:
Terminaling services 9,437 10,458 29,757 30,876
Product sales 27,491 38,136 69,570 104,310
--------- --------- --------- ---------
Total costs of revenues 36,928 48,594 99,327 135,186
--------- --------- --------- ---------
Gross profit 6,382 8,948 23,665 18,888
ADMINISTRATIVE EXPENSES 2,172 2,184 5,957 6,783
SPECIAL COMPENSATION EXPENSE -- -- 4,099 --
--------- --------- --------- ---------
Operating income 4,210 6,764 13,609 12,105
INTEREST EXPENSE 3,176 3,191 11,113 9,551
INTEREST INCOME 105 64 627 118
--------- --------- --------- ---------
Income before provision for income
taxes and extraordinary charge 1,139 3,637 3,123 2,672
PROVISION FOR INCOME TAXES 55 195 548 716
--------- --------- --------- ---------
Income before extraordinary charge 1,084 3,442 2,575 1,956
EXTRAORDINARY CHARGE RELATED TO
EARLY EXTINGUISHMENT OF DEBT -- -- 4,743 --
--------- --------- --------- ---------
Net income (loss) available to common stockholder $ 1,084 $ 3,442 $ (2,168) $ 1,956
========= ========= ========= =========
</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 NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------
1999 2000
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) available to common stockholder $ (2,168) $ 1,956
Adjustments to reconcile net income (loss) available to common stockholder
to net cash provided by operating activities:
Depreciation, amortization and non-cash charges 8,795 9,688
Extraordinary charge related to early extinguishment of debt 4,743 --
Non-cash special compensation expense 2,152 --
Provision for bad debts 19 555
Increase in accounts receivable-trade (5,774) (3,097)
(Increase) decrease in accounts receivable-other (1,903) 2,725
Decrease in inventory 2,564 1,314
Increase in prepaid expenses (1,097) (1,160)
(Increase) decrease in other noncurrent assets (34) 76
Increase (decrease) in accounts payable 4,730 (356)
Increase in accrued interest payable and other accrued expenses 1,414 4,152
---------- ----------
Net cash provided by operating activities 13,441 15,853
---------- ----------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment (6,331) (6,801)
Proceeds from sale of property and equipment 15 --
---------- ----------
Net cash used in investing activities (6,316) (6,801)
---------- ----------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from issuance of common stock to Parent 33,746 --
Repurchase of First Mortgage Notes (37,681) --
Dividends paid (3,678) (4,765)
---------- ----------
Net cash used in financing activities (7,613) (4,765)
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (488) 4,287
CASH AND CASH EQUIVALENTS, beginning of period 13,873 3,632
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 13,385 $ 7,919
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 521 $ 300
========== ==========
Cash paid for interest $ 8,665 $ 6,073
========== ==========
</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
SEPTEMBER 30, 2000
(UNAUDITED)
(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 September 30, 2000, and the results of its
operations and cash flows for the nine months ended September 30, 1999 and 2000.
Operating results for the nine months ended September 30, 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
revenues 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, income taxes, and depreciation and
amortization adjusted for non-recurring transactions ("Adjusted EBITDA") and
earnings before interest expense and income taxes adjusted for non-recurring
transactions ("Adjusted EBIT").
Page 4
<PAGE> 7
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
(DOLLARS IN THOUSANDS)
2. SEGMENT INFORMATION- (CONTINUED)
The following information is provided for the Company's terminaling
services and product sales segments:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------------------
1999 2000 1999 2000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ADJUSTED EBITDA:
Terminaling services $ 5,431 $ 8,758 $ 21,533 $ 16,957
Product sales 1,471 856 4,826 4,342
-------- -------- -------- --------
Total $ 6,902 $ 9,614 $ 26,359 $ 21,299
======== ======== ======== ========
DEPRECIATION AND AMORTIZATION
EXPENSE:
Terminaling services $ 2,671 $ 2,800 $ 8,346 $ 9,078
Product sales 86 156 274 509
-------- -------- -------- --------
Total $ 2,757 $ 2,956 $ 8,620 $ 9,587
======== ======== ======== ========
ADJUSTED EBIT:
Terminaling services $ 2,760 $ 5,958 $ 13,187 $ 7,879
Product sales 1,385 700 4,552 3,833
-------- -------- -------- --------
Total $ 4,145 $ 6,658 $ 17,739 $ 11,712
======== ======== ======== ========
</TABLE>
A reconciliation of Adjusted EBIT to the Company's income before
provision for income taxes and extraordinary charge is as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1999 2000 1999 2000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Adjusted EBIT $ 4,145 $ 6,658 $ 17,739 $ 11,712
Special compensation expense -- -- (4,099) --
Interest expense excluding debt
amortization expense (3,006) (3,021) (10,517) (9,040)
--------- --------- --------- ---------
Income before provision for income
taxes and extraordinary charge $ 1,139 $ 3,637 $ 3,123 $ 2,672
========= ========= ========= =========
</TABLE>
Page 5
<PAGE> 8
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
(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. The offering price was $20
per share raising gross proceeds of $152,000. A portion of the proceeds was used
by the Parent to purchase additional capital stock of Statia amounting to
$33,746, net of expenses. During May 1999, the Company used the proceeds from
the sale of Statia's capital stock, along with existing cash, to repurchase in
the open market a principal amount of $34,000 of the 11-3/4% First Mortgage
Notes (the "Notes") for $39,522, including acquisition costs and accrued
interest of $3,681 and $1,841, respectively. During the second quarter of 1999,
the acquisition costs and the unamortized deferred financing costs related to
the repurchased Notes ($1,062) were recorded as an extraordinary charge. There
was no income tax effect associated with this extraordinary charge.
During the nine months ended September 30, 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.
In connection with the Parent's initial public offering of equity,
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.
The following unaudited pro forma consolidated results of operations
for the three and nine month periods ended September 30, 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
these respective periods. 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, 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.
<TABLE>
<CAPTION>
UNAUDITED SELECTED PRO FORMA
CONSOLIDATED RESULTS
------------------------------------------
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
------------------- -------------------
<S> <C> <C>
REVENUES $ 43,310 $122,992
OPERATING INCOME 4,210 17,708
NET INCOME AVAILABLE TO COMMON STOCKHOLDER 1,084 8,141
</TABLE>
Page 6
<PAGE> 9
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
(DOLLARS IN THOUSANDS)
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, in addition to recurring depreciation charges, the
Company incurred a non-cash charge to depreciation expense of $832 during the
first quarter of 2000 which is included in Costs of Revenues.
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 a subsidiary of the Parent
as the result of a dividend in the amount of $4,707, representing the net book
value of the vessel. On April 1, 2000, the Company entered into a three month
bareboat agreement with monthly renewals to charter the vessel from a subsidiary
of the Parent for $150 per month.
6. STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY
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
SEPTEMBER 30, 2000
(UNAUDITED)
(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, SEPTEMBER 30,
1999 2000
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 209 $ 5,085
Accounts receivable-
Trade, net 1,496 789
Other 1,960 633
Inventory, net 81 70
Prepaid expenses 255 298
Receivable from affiliates 2,986 1,920
-------- --------
Total current assets 6,987 8,795
PROPERTY AND EQUIPMENT, net 28,705 27,910
OTHER NONCURRENT ASSETS, net 817 608
-------- --------
Total assets $ 36,509 $ 37,313
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES $ 3,164 $ 4,059
LONG TERM DEBT- 11-3/4% FIRST MORTGAGE NOTES 28,060 28,060
-------- --------
Total liabilities 31,224 32,119
STOCKHOLDER'S EQUITY:
Common stock and additional paid-in capital 2,266 2,266
Retained earnings 3,019 2,928
-------- --------
Total stockholder's equity 5,285 5,194
-------- --------
Total liabilities and stockholder's equity $ 36,509 $ 37,313
======== ========
</TABLE>
Page 8
<PAGE> 11
STATIA TERMINALS INTERNATIONAL N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
(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 FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1999 2000 1999 2000
------- ------ ------- --------
<S> <C> <C> <C> <C>
REVENUES $ 3,675 $5,610 $14,908 $ 13,437
COSTS OF REVENUES 2,647 3,461 8,107 8,530
------- ------ ------- --------
Gross profit 1,028 2,149 6,801 4,907
ADMINISTRATIVE EXPENSES 827 745 2,650 2,313
SPECIAL COMPENSATION EXPENSE -- -- 1,515 --
------- ------ ------- --------
Operating income 201 1,404 2,636 2,594
INTEREST EXPENSE 884 882 2,656 2,642
INTEREST INCOME 10 39 146 58
------- ------ ------- --------
Income (loss) before provision for
income taxes (673) 561 126 10
PROVISION (BENEFIT) FOR INCOME TAXES (24) 11 57 101
------- ------ ------- --------
Net income (loss) available to common
stockholder $ (649) $ 550 $ 69 $ (91)
======= ====== ======= ========
</TABLE>
STATIA TERMINALS CANADA, INCORPORATED AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1999 2000
------- -------
<S> <C> <C>
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $(2,591) $ 5,285
------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment (1,372) (409)
------- -------
Net cash used in investing activities (1,372) (409)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,963) 4,876
CASH AND CASH EQUIVALENTS, beginning of period 4,409 209
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 446 $ 5,085
======= =======
</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
September 30, 2000, and for the three and nine month periods ended September 30,
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 SEPTEMBER 30,
-----------------------------------------------------------------
1999 2000
-----------------------------------------------------------------
% OF % OF
DOLLARS REVENUES DOLLARS REVENUES
------- -------- ------- --------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $14,292 33.0% $17,929 31.2%
Product sales 29,018 67.0% 39,613 68.8%
------- ---- ------- ----
Total revenues 43,310 100.0% 57,542 100.0%
------- ---- ------- ----
Costs of revenues:
Terminaling services 9,437 21.8% 10,458 18.2%
Product sales 27,491 63.5% 38,136 66.3%
------- ---- ------- ----
Total costs of revenues 36,928 85.3% 48,594 84.5%
------- ---- ------- ----
Gross profit 6,382 14.7% 8,948 15.5%
Administrative expenses 2,172 5.0% 2,184 3.8%
------- ---- ------- ----
Operating income 4,210 9.7% 6,764 11.8%
Interest expense 3,176 7.3% 3,191 5.5%
Interest income 105 0.2% 64 0.1%
------- ---- ------- ----
Income before provision for income taxes 1,139 2.6% 3,637 6.3%
Provision for income taxes 55 0.1% 195 0.3%
------- ---- ------- ----
Net income available to common stockholder $ 1,084 2.5% $ 3,442 6.0%
======= ==== ======= ====
</TABLE>
Page 10
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------------
1999 2000
-------------------------------------------------------------
% OF % OF
DOLLARS REVENUES DOLLARS REVENUES
--------- -------- ------- --------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $ 48,328 39.3% $ 44,670 29.0%
Product sales 74,664 60.7% 109,404 71.0%
--------- ----- -------- -----
Total revenues 122,992 100.0% 154,074 100.0%
--------- ----- -------- -----
Costs of revenues:
Terminaling services 29,757 24.2% 30,876 20.0%
Product sales 69,570 56.6% 104,310 67.7%
--------- ----- -------- -----
Total costs of revenues 99,327 80.8% 135,186 87.7%
--------- ----- -------- -----
Gross profit 23,665 19.2% 18,888 12.3%
Administrative expenses 5,957 4.8% 6,783 4.4%
Special compensation expense 4,099 3.3% -- --
--------- ----- -------- -----
Operating income 13,609 11.1% 12,105 7.9%
Interest expense 11,113 9.0% 9,551 6.2%
Interest income 627 0.5% 118 0.1%
--------- ----- -------- -----
Income before provision for income taxes and
extraordinary charge 3,123 2.6% 2,672 1.8%
Provision for income taxes 548 0.4% 716 0.5%
Extraordinary charge related to early extinguishment of debt 4,743 3.9% -- --
--------- ----- -------- -----
Net income (loss) available to common stockholder $ (2,168) (1.7)% $ 1,956 1.3%
========= ===== ======== =====
</TABLE>
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.
On October 10, 2000, we executed an amendment to our contract with a
major state-owned oil company under which we are currently purchasing a majority
of the fuel oil necessary to support our bunker sales requirements at St.
Eustatius. The amendment extends the expiration of the contract to June 30,
2001, and contains terms and conditions which are comparable to prior agreements
with the supplier. 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.
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.
Page 11
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
REVENUES BY LOCATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------
1999 2000
------------------------------------------------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 39,647 91.5% $ 51,945 90.3%
Canada 3,663 8.5% 5,597 9.7%
--------- --------- --------- ---------
Total $ 43,310 100.0% $ 57,542 100.0%
========= ========= ========= =========
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------
1999 2000
------------------------------------------------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 108,129 87.9% $ 140,676 91.3%
Canada 14,863 12.1% 13,398 8.7%
--------- --------- --------- ---------
Total $ 122,992 100.0% $ 154,074 100.0%
========= ========= ========= =========
</TABLE>
OPERATING INCOME BY LOCATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------
1999 2000
------------------------------------------------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 3,950 93.8% $ 5,554 82.1%
Canada 260 6.2% 1,210 17.9%
--------- --------- --------- ---------
Total $ 4,210 100.0% $ 6,764 100.0%
========= ========= ========= =========
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------
1999 2000
------------------------------------------------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 10,943 80.4% $ 10,022 82.8%
Canada 2,666 19.6% 2,083 17.2%
--------- --------- --------- ---------
Total $ 13,609 100.0% $ 12,105 100.0%
========= ========= ========= =========
</TABLE>
Page 12
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
The following table sets forth, for the periods indicated, capacity
leased, throughput, and vessel calls for each of our operating locations.
"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.
CAPACITY LEASED, THROUGHPUT AND VESSEL CALLS BY LOCATION
(THROUGHPUT IN THOUSANDS OF BARRELS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- ---------------------------------
1999 2000 1999 2000
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean:
Capacity leased 89% 94% 91% 86%
Throughput 15,011 27,276 48,687 58,236
Vessel calls 219 213 739 654
Canada:
Capacity leased 65% 76% 85% 67%
Throughput 8,880 16,535 31,214 40,747
Vessel calls 19 44 78 101
All locations:
Capacity leased 79% 87% 89% 78%
Throughput 23,891 43,811 79,901 98,983
Vessel calls 238 257 817 755
</TABLE>
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000, VERSUS THE SAME PERIODS OF 1999
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 and nine months ended September 30, 2000,
were $57.5 million and $154.1 million, compared to $43.3 million and $123.0
million for the same periods of 1999, representing increases of $14.2 million or
32.9% and $31.1 million or 25.3%, respectively. The increases in total revenues
are primarily due to increases in average selling prices in our product sales
segment. See further discussion below.
Page 13
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Revenues from terminaling services (revenues from storage, throughput,
dock usage, emergency response, and other terminal services) for the three and
nine months ended September 30, 2000, were $17.9 million and $44.7 million,
compared to $14.3 million and $48.3 million for the same periods of 1999,
representing an increase of $3.6 million, or 25.4%, and a decrease of $3.7
million, or 7.6%, respectively. The increase in terminaling services revenues
for the three months ended September 30, 2000, compared to the same period in
1999, was primarily the result of increased throughput of crude oil and new
short-term product storage contracts. We believe the decrease in terminaling
services revenues for the nine months ended September 30, 2000, compared to the
same period in 1999, 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
reduced their production of crude oil during the period from April 1999, through
late March 2000, which reduced the worldwide quantity of crude oil and petroleum
products in storage. The accord primarily impacted our terminaling services
revenues beginning with the second half of 1999.
For the nine months ended September 30, 2000, approximately 74.3% of
our tank capacity was leased pursuant to long term contracts at our St.
Eustatius and Point Tupper locations together. Approximately 67.3% 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 increased
approximately $1.7 million or 16.7% during the three months ended September 30,
2000 as compared to the same period of 1999. The increase in revenues from
terminaling services was due primarily to increased cargo vessel calls and a
higher percentage capacity leased. Nine additional cargo vessels called at the
St. Eustatius facility during the three months ended September 30, 2000, than
during the same period of 1999, resulting in higher revenues from port charges,
which consist of dock charges, emergency response fees, and other terminal
charges. For the three months ended September 30, 2000, the overall percentage
of capacity leased at St. Eustatius was 94% as compared to 89% for the same
period of 1999, reflecting increases in the percentage of capacity leased for
fuel oil tankage. The increase in the percentage of capacity leased for fuel oil
tankage was primarily the result of new short-term product storage contracts.
Certain short-term product storage contracts did not renew for the fourth
quarter of 2000.
Revenues from terminaling services at St. Eustatius decreased
approximately $2.3 million or 6.9% during the nine months ended September 30,
2000 as compared to the same period of 1999. The decrease in revenues from
terminaling services was due primarily to a lower percentage capacity leased.
Although thirty fewer cargo vessels called at the St. Eustatius facility during
the nine months ended September 30, 2000, than during the same period of 1999,
revenues from port charges were higher primarily due to increases in the size of
cargo vessels calling at this facility. For the nine months ended September 30,
2000, the overall percentage of capacity leased at St. Eustatius was 86% as
compared to 91% for the same period of 1999, reflecting decreases in the
percentage of capacity leased for fuel oil tankage. The decrease in the
percentage of capacity leased for fuel oil tankage was primarily the result of
the effects of the accord, backwardation in this market, and the relative lower
pricing, during certain months, of products which compete with fuel oil.
Revenues from terminaling services at Point Tupper increased
approximately $1.9 million or 52.7% during the three months ended September 30,
2000 as compared to the same period of 1999. The increase in revenues from
terminaling services was due primarily to a higher percentage of tank capacity
leased resulting from new short-term storage contracts and from increased
throughput of crude oil. Twenty-five additional cargo vessels called during the
three months ended September 30, 2000, as compared to the same period of 1999,
which led to higher revenues from port charges at this facility. The percentage
of tank capacity leased at Point Tupper was 76% for the three months ended
September 30, 2000 as compared to 65% for the same period of 1999. Certain
short-term storage contracts at Point Tupper did not renew for the fourth
quarter of 2000.
Page 14
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Revenues from terminaling services at Point Tupper decreased
approximately $1.4 million or 9.5% during the nine months ended September 30,
2000, as compared to the same period of 1999. The decrease was due primarily to
a lower percentage of tank capacity leased primarily resulting from the decision
by a customer of this facility, who is a participant in the accord, not to renew
its crude oil storage contract at the end of the second quarter of 1999. The
percentage of tank capacity leased at Point Tupper was 67% for the nine months
ended September 30, 2000, as compared to 85% for the same period of 2000.
Partially offsetting reduced storage revenues were revenues from a higher number
of barrels throughput by this facility's primary crude oil customer for the nine
months ended September 30, 2000. Twenty-three additional cargo vessels called
during the nine months ended September 30, 2000, as compared to the same period
of 1999, which led to higher revenues from port charges at this facility.
Revenues from product sales were $39.6 million and $109.4 million for
the three and nine months ended September 30, 2000, compared to $29.0 million
and $74.7 million for the same periods of 1999, an increase of $10.6 million or
36.5% and $34.7 million or 46.5%, respectively. These increases were due to
increases in average selling prices partially offset by lower volumes delivered.
Average selling prices increased 39.0% and 69.9% when comparing the three and
nine months ended September 30, 2000, with the same periods 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 1.8% and 13.7% during the
three and nine months ended September 30, 2000, respectively, as compared to the
same periods of 1999.
Gross Profit
Gross profit for the three months ended September 30, 2000 and 1999,
was $8.9 million and $6.4 million, representing an increase of $2.6 million or
40.2%. Gross profit for the nine months ended September 30, 2000 and 1999, was
$18.9 million and $23.7 million, representing a decrease of $4.8 million or
20.2%. The increase in gross profit for the three months ended September 30,
2000, is primarily the result of increased throughput of crude oil and new
short-term product storage contracts. The decrease in gross profit for the nine
months ended September 30, 2000 is the result of lower gross profit realized on
terminaling services. 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
nine months ended September 30, 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 during the first quarter of 2000 which is
included in Costs of Revenues.
Administrative Expenses
Administrative expenses were $2.2 million and $6.8 million for the
three and nine months ended September 30, 2000, as compared to $2.2 million and
$6.0 million for the same periods of 1999, representing virtually no change for
the three month periods and an increase of $0.8 million or 13.9% million for the
nine month periods. The increase during the nine months ended September 30,
2000, as compared to the same period of 1999, was primarily the result of higher
depreciation and personnel costs.
Page 15
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
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 nine months ended September 30,
1999, of $4.1 million.
Interest Expense
During the three and nine months ended September 30, 2000, we incurred
$3.2 million and $9.6 million of interest expense compared to $3.2 million and
$11.1 million for the same periods 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.
Provision for Income Taxes
Provision for income taxes was $0.2 million and $0.7 million for the
three and nine months ended September 30, 2000, and $0.1 million and $0.5
million for the three and nine months ended September 30, 1999.
Extraordinary Charge Related to Early Extinguishment of Debt
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
recognized an extraordinary charge of $4.7 million during the nine months ended
September 30, 1999, in connection with the repurchase of $34.0 million of our
mortgage notes. There was no income tax effect associated with this
extraordinary charge.
Net Income (Loss)
The Company produced net income available to common stockholder of $3.4
million and $2.0 million for the three and nine months ended September 30, 2000,
as compared to net income available to common stockholder of $1.1 million and a
net loss to common stockholder of $2.2 million for the same periods of 1999,
respectively, representing an improvement of $2.4 million and $4.1 million.
These improvements were primarily attributable to reduced debt service costs and
the net effect of other factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow from Operating Activities
Net cash provided by operating activities was $15.9 million and $13.4
million for the nine months ended September 30, 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.
Page 16
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
At September 30, 2000, we had cash and cash equivalents on hand of $7.9
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 $16.5 million and $13.7 million, respectively, at September 30,
2000, as compared to $16.7 million and $14.1 million, respectively, at December
31, 1999. The aggregate net changes of the accounts receivable and accounts
payable balances are included in net cash provided by operating activities.
Cash Flow from Investing Activities
Net cash used in investing activities consisting primarily of purchases
of property and equipment was $6.8 million and $6.3 million for the nine months
ended September 30, 2000 and 1999, respectively. See the Summary of Capital
Expenditures by Type table which follows.
Cash Flow from Financing Activities
During the nine months ended September 30, 2000, we paid dividends of
$4.8 million to the Parent. During the nine months ended September 30, 1999, we
paid a dividend of $3.7 million to the Parent.
During the nine months ended September 30, 2000, the ownership of the
M/V Statia Responder, an emergency response and maintenance vessel, was
transferred to a subsidiary of the Parent as the result of a dividend to the
Parent in the amount of $4.7 million representing the net book value of the
vessel. The Company has entered into a charter agreement with the 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 $152.0 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 expenses. 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 $34.0 million of the mortgage notes for $39.5 million,
including acquisition costs and accrued interest of $3.7 million and $1.8
million, respectively.
As of November 14, 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 at least 2.0 to 1 at September 30, 2000. We are not
restricted by this provision of the indenture from borrowing on the revolving
credit facility discussed below. Additionally, at September 30, 2000, the sum of
our dividends, restricted payments, aggregate consolidated net income (deficit),
and capital stock proceeds was approximately $15.7 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, which renews annually under the original
terms of the agreement unless otherwise canceled by either party. 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 $13.1 million at September 30, 2000. The
revolving credit facility bears interest at the prime rate plus 0.50% per annum
(10.0% at November 14, 2000). The revolving credit facility was extended during
the three months ended September 30, 2000, and will expire on November 27, 2001.
During the first and second quarters of 2000, we borrowed against the revolving
credit facility, and all of such borrowings were repaid by May 2000. There was
no outstanding balance at September 30, 2000.
Page 17
<PAGE> 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
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 this 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.
CAPITAL EXPENDITURES
Our projected capital spending for 2000 is $8.2 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 SEPTEMBER 30,
---------------------------------------------------------------
1999 2000
---------------------------------------------------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Produce incremental revenues $ 355 15.6% $ 50 1.9%
Operations sustaining capital expenditures 1,919 84.4% 2,609 98.1%
--------- --------- --------- ---------
Total $ 2,274 100.0% $ 2,659 100.0%
========= ========= ========= =========
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------
1999 2000
---------------------------------------------------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Produce incremental revenues $ 651 10.3% $ 196 2.9%
Operations sustaining capital expenditures 5,680 89.7% 6,605 97.1%
--------- --------- --------- ---------
Total $ 6,331 100.0% $ 6,801 100.0%
========= ========= ========= =========
</TABLE>
Page 18
<PAGE> 21
ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133-"Accounting for
Derivative Instruments and Hedging Activities" which establishes standards of
accounting for derivative instruments including specific hedge accounting
criteria. SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal
years beginning after June 15, 2000 although earlier adoption is allowed. We
have not yet quantified the impacts of adopting SFAS No. 133.
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 hedge our inventory of petroleum
products. The following table indicates the aggregate carrying value of our
petroleum products on hand at September 30, 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 September 30, 2000
-----------------------------
Carrying Value Fair Value
-------------- ----------
<S> <C> <C>
Petroleum Inventory:
Statia Terminals N.V $1,855 $1,827
Statia Terminals Canada, Inc. 70 211
------ ------
Total $1,925 $2,038
====== ======
</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.
Page 19
<PAGE> 22
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 or
http://www.statia.cc.
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.
Page 20
<PAGE> 23
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)
PAge S-1
