<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 JUNE 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
0-25821
STATIA TERMINALS GROUP N.V.
(Exact name of registrant as specified in its charter)
NETHERLANDS ANTILLES 52-2003016
(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)
Indicate by check mark whether the registrant: (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 [ ]
As of August 10, 2000, 6,716,753 class A common shares of the
registrant were outstanding.
<PAGE> 2
STATIA TERMINALS GROUP N.V.
QUARTERLY REPORT ON FORM 10-Q/A
JUNE 30, 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 9
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/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 GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,658 $ 5,806
Accounts receivable-
Trade, net 12,957 9,885
Other 3,704 726
Inventory, net 3,239 4,910
Prepaid expenses 1,723 2,313
--------- ---------
Total current assets 27,281 23,640
PROPERTY AND EQUIPMENT, net 206,031 203,584
OTHER NONCURRENT ASSETS, net 2,985 2,570
--------- ---------
Total assets $ 236,297 $ 229,794
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,086 $ 11,875
Accrued interest payable 1,516 1,516
Other accrued expenses 7,084 8,041
--------- ---------
Total current liabilities 22,686 21,432
DISTRIBUTIONS PAYABLE 2,913 2,913
LONG TERM DEBT - 11-3/4% FIRST MORTGAGE NOTES 101,000 101,000
--------- ---------
Total liabilities 126,599 125,345
--------- ---------
SHAREHOLDERS' EQUITY:
Class A common shares 76 76
Class B subordinated shares 38 38
Class C incentive shares -- --
Additional paid-in capital 129,834 129,834
Notes receivable from shareholders (1,474) (1,474)
Accumulated deficit (16,522) (18,854)
Class A common shares in treasury (2,254) (5,171)
--------- ---------
Total shareholders' equity 109,698 104,449
--------- ---------
Total liabilities and shareholders' equity $ 236,297 $ 229,794
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
Page 1
<PAGE> 4
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- -----------------------
1999 2000 1999 2000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Terminaling services $ 17,408 $ 14,311 $ 34,036 $ 26,741
Product sales 24,859 39,916 45,646 69,791
-------- -------- -------- --------
Total revenues 42,267 54,227 79,682 96,532
-------- -------- -------- --------
COSTS OF REVENUES:
Terminaling services 10,699 10,080 20,320 20,195
Product sales 23,100 38,057 42,079 66,174
-------- -------- -------- --------
Total costs of revenues 33,799 48,137 62,399 86,369
-------- -------- -------- --------
Gross profit 8,468 6,090 17,283 10,163
ADMINISTRATIVE EXPENSES 1,947 2,430 4,482 4,690
SPECIAL COMPENSATION EXPENSE 2,152 -- 4,099 --
-------- -------- -------- --------
Operating income 4,369 3,660 8,702 5,473
INTEREST EXPENSE 3,735 3,192 7,937 6,360
INTEREST INCOME 378 72 567 153
-------- -------- -------- --------
Income (loss) before provision for income taxes,
preferred stock dividends and extraordinary charge 1,012 540 1,332 (734)
PROVISION FOR INCOME TAXES 239 257 493 521
-------- -------- -------- --------
Income (loss) before preferred stock dividends and
extraordinary charge 773 283 839 (1,255)
PREFERRED STOCK DIVIDENDS 536 -- 2,257 --
-------- -------- -------- --------
Income (loss) before extraordinary charge 237 283 (1,418) (1,255)
EXTRAORDINARY CHARGE RELATED TO EARLY
EXTINGUISHMENT OF DEBT 4,743 -- 4,743 --
-------- -------- -------- --------
Net income (loss) available to common stockholders $ (4,506) $ 283 $ (6,161) $ (1,255)
======== ======== ======== ========
BASIC EARNINGS PER COMMON SHARE:
Income (loss) before extraordinary charge $ 0.45 $ 0.04 $ 0.89 $ (0.18)
Extraordinary charge (0.89) -- (1.76) --
-------- -------- -------- --------
Net income (loss) available to common stockholders $ (0.44) $ 0.04 $ (0.87) $ (0.18)
======== ======== ======== ========
DILUTED EARNINGS PER COMMON SHARE:
Income (loss) before extraordinary charge $ 0.30 $ 0.03 $ 0.59 $ (0.18)
Extraordinary charge (0.59) -- (1.18) --
-------- -------- -------- --------
Net income (loss) available to common stockholders $ (0.29) $ 0.03 $ (0.59) $ (0.18)
======== ======== ======== ========
BASIC AND DILUTED EARNINGS PER SUBORDINATED
SHARE:
Loss before extraordinary charge $ (0.59) $ -- $ (1.09) $ --
Extraordinary charge -- -- -- --
-------- -------- -------- --------
Net loss to common stockholders $ (0.59) $ -- $ (1.09) $ --
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
Page 2
<PAGE> 5
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-----------------------------
1999 2000
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss to common stockholders $ (6,161) $ (1,255)
Adjustments to reconcile net loss to common stockholders
to net cash provided by operating activities:
Extraordinary charge related to early extinguishment of debt 4,743 --
Non-cash special compensation expense 2,152 --
Depreciation, amortization and non-cash charges 6,101 6,930
Preferred stock dividends accrued 2,257 --
Decrease in accounts receivable-trade 144 3,072
(Increase) decrease in accounts receivable-other (395) 2,978
(Increase) decrease in inventory 2,646 (1,671)
Increase in prepaid expenses (420) (590)
(Increase) decrease in other noncurrent assets (34) 74
Increase (decrease) in accounts payable 1,190 (2,211)
Increase in accrued expenses 662 837
--------- ---------
Net cash provided by operating activities 12,885 8,164
--------- ---------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment (4,057) (4,142)
Proceeds from sale of property and equipment 15 --
--------- ---------
Net cash used in investing activities (4,042) (4,142)
--------- ---------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from initial public offering of class A common shares 136,757 --
Redemption of preferred stock (94,824) --
Repurchase of First Mortgage Notes (37,681) --
Payment of preferred stock dividends (9,697) --
Issuance of additional class B subordinated shares and class C incentive
shares 34 --
Purchase of class A common shares as treasury stock -- (2,797)
Payment of class A common share distribution -- (1,077)
--------- ---------
Net cash used in financing activities (5,411) (3,874)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 3,432 148
CASH AND CASH EQUIVALENTS, beginning of period 14,061 5,658
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 17,493 $ 5,806
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 359 $ 199
========= =========
Cash paid for interest $ 8,030 $ 6,019
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
Page 3
<PAGE> 6
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated condensed financial statements of Statia
Terminals Group N.V. ("Group") and Subsidiaries (together with Group, 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 June 30, 2000, and the results of its operations and cash
flows for the six months ended June 30, 1999 and 2000. Operating results for the
six months ended June 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 Company's initial public offering of equity, which closed on April 28, 1999,
impacted the Company's results of operations and financial condition and affects
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 GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
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 Six Months Ended
June 30, June 30,
----------------------------- ------------------------------
1999 2000 1999 2000
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Terminaling services $17,408 $14,311 $34,036 $26,741
Product sales 24,859 39,916 45,646 69,791
------- ------- ------- -------
Total $42,267 $54,227 $79,682 $96,532
======= ======= ======= =======
ADJUSTED EBITDA:
Terminaling services $ 7,695 $ 4,986 $15,450 $ 8,626
Product sales 1,912 1,698 3,355 3,486
------- ------- ------- -------
Total $ 9,607 $ 6,684 $18,805 $12,112
======= ======= ======= =======
DEPRECIATION AND AMORTIZATION
EXPENSE:
Terminaling services $ 2,777 $ 3,029 $ 5,675 $ 6,474
Product sales 129 94 188 353
------- ------- ------- -------
Total $ 2,906 $ 3,123 $ 5,863 $ 6,827
======= ======= ======= =======
ADJUSTED EBIT:
Terminaling services $ 4,918 $ 1,957 $ 9,775 $ 2,152
Product sales 1,783 1,604 3,167 3,133
------- ------- ------- -------
Total $ 6,701 $ 3,561 $12,942 $ 5,285
======= ======= ======= =======
</TABLE>
A reconciliation of Adjusted EBIT to the Company's income (loss) before
provision for income taxes, preferred stock dividends and extraordinary charge
is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------- ---------------------------
1999 2000 1999 2000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Adjusted EBIT $ 6,701 $ 3,561 $ 12,942 $ 5,285
Special compensation expense (2,152) -- (4,099) --
Interest expense excluding debt
amortization expense (3,537) (3,021) (7,511) (6,019)
-------- -------- -------- --------
Income (loss) before provision for income
taxes, preferred stock dividends and
extraordinary charge $ 1,012 $ 540 $ 1,332 $ (734)
======== ======== ======== ========
</TABLE>
Page 5
<PAGE> 8
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
3. EARNINGS PER SHARE
In connection with its initial public offering of equity discussed
below, the Company adopted Statement of Financial Accounting Standards No. 128
"Earnings per Share" ("SFAS No. 128"). Earnings per share are computed based
upon the "Participating Securities and Two-Class Common Stock" methodology as
required by SFAS No. 128. Earnings and losses have been allocated to each class
of shares based upon changes in the historical basis liquidation values of the
classes of shares during the periods presented as determined in accordance with
the Company's articles of incorporation. Under this methodology, all of the
earnings and losses prior to the closing of the Company's initial public
offering of equity on April 28, 1999, have been allocated to the class B
subordinated shares. All of the earnings and losses subsequent to April 28,
1999, have been allocated to the class A common shares.
Basic earnings (loss) per share is computed by dividing the earnings
and losses allocated to each class of equity by the weighted average number of
shares outstanding for each class during the period. Diluted earnings (loss) per
share is computed the same as basic earnings (loss) per share except the
denominator is adjusted for the effect of class A common share and class B
subordinated share equivalents outstanding. For periods prior to April 28, 1999,
class B subordinated share equivalents include, where appropriate, the assumed
exercise of previously outstanding stock options and the conversion of the
Company's previously outstanding Series B preferred stock.
Diluted earnings per common share include the dilutive effect of the
subordinated shares and, for the three months ended June 30, 2000, outstanding
stock options granted in May 2000. The Company's previously outstanding
preferred stock with conversion features was antidilutive for all 1999 periods
presented. All 1999 earnings per share amounts presented have been adjusted to
give retroactive effect, as of the beginning of 1999, to the reclassification
and issuance of additional class B subordinated shares and class C incentive
shares that occurred in connection with the initial public offering of equity.
The following additional information is presented with respect to the
Company's earnings per share amounts:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
1999 2000 1999 2000
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE
Earnings and losses allocated to common shares:
Income (loss) before extraordinary charge $ 2,385 $ 283 $ 2,385 $ (1,255)
Extraordinary charge (4,743) -- (4,743) --
----------- ----------- ----------- -----------
Net income (loss) available to common
stockholders $ (2,358) $ 283 $ (2,358) $ (1,255)
=========== =========== =========== ===========
Weighted average common shares outstanding 5,345,055 6,870,064 2,687,293 6,989,282
Dilutive effect of weighted average subordinated
shares outstanding 2,672,527 3,800,000 1,343,646 --
Dilutive effect of stock options outstanding -- 13,179 -- --
----------- ----------- ----------- -----------
Diluted common shares outstanding 8,017,582 10,683,243 4,030,939 6,989,282
=========== =========== =========== ===========
EARNINGS PER SUBORDINATED SHARE
Earnings and losses allocated to subordinated shares:
Loss before extraordinary charge $ (2,148) $ -- $ (3,803) $ --
Extraordinary charge -- -- -- --
----------- ----------- ----------- -----------
Net loss to common stockholders $ (2,148) $ -- $ (3,803) $ --
=========== =========== =========== ===========
Weighted average subordinated shares outstanding 3,652,961 3,800,000 3,479,656 3,800,000
=========== =========== =========== ===========
</TABLE>
Page 6
<PAGE> 9
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
4. INITIAL PUBLIC OFFERING OF EQUITY AND RELATED TRANSACTIONS
As more fully discussed in the Form 10-K/A, on April 28, 1999, Group
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. The gross proceeds of the offering were used primarily to redeem all
of the Company's outstanding Series A, B, C, D and E preferred stock and pay
accrued dividends, pay underwriters' discounts and fees, and pay certain other
costs directly associated with the offering. The remaining proceeds were
invested and used during May 1999, 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 six months ended June 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 initial public offering of equity, certain
previously granted stock options became fully vested, were exercised and became
class B subordinated shares. 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 credited to additional paid-in capital.
In conjunction with the transactions surrounding the initial public
offering of equity, the Company authorized (i) 20,000,000 class A common shares
of which 7,600,000 shares are issued and 6,773,453 shares are outstanding as of
June 30, 2000; (ii) 7,800,000 class B subordinated shares of which 3,800,000
shares are currently issued and outstanding; and (iii) 2,200,000 class C
incentive shares of which 38,000 shares are currently issued and outstanding.
Page 7
<PAGE> 10
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
4. INITIAL PUBLIC OFFERING OF EQUITY AND RELATED TRANSACTIONS- (CONTINUED)
The following unaudited pro forma consolidated results of operations
for the three and six month periods ended June 30, 1999, were prepared to
illustrate the estimated effects of:
o the elimination of the Castle Harlan management fee, and
o the use of the net proceeds from the initial public offering of equity
and the restructuring as described in the Registration Statement
(collectively, the "pro forma transactions") as if the pro forma transactions
had occurred at the beginning of each 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 Company's Registration
Statement on Form S-1 (File No. 333-72317), and its 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 Six
Months Ended Months Ended
June 30, 1999 June 30, 1999
---------------- ---------------
<S> <C> <C>
REVENUES $ 42,267 $ 79,682
OPERATING INCOME 6,626 13,244
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 3,441 6,848
DILUTED EARNINGS PER COMMON SHARE 0.30 0.60
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: 7,600,000 7,600,000
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: 11,400,000 11,400,000
</TABLE>
5. REPLACEMENT OF SINGLE POINT MOORING SYSTEM HOSES
During the six months ended June 30, 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.
Page 8
<PAGE> 11
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 Group N.V. and Subsidiaries (the "Company") as of June 30,
2000, and the three and six month periods ended June 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 June 30,
--------------------------------------------------------
1999 2000
------------------------- ------------------------
% of % of
Dollars Revenues Dollars Revenues
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $ 17,408 41.2% $ 14,311 26.4%
Product sales 24,859 58.8% 39,916 73.6%
-------- ------- -------- -------
Total revenues 42,267 100.0% 54,227 100.0%
-------- ------- -------- -------
Costs of revenues:
Terminaling services 10,699 25.3% 10,080 18.6%
Product sales 23,100 54.7% 38,057 70.2%
-------- ------- -------- -------
Total costs of revenues 33,799 80.0% 48,137 88.8%
-------- ------- -------- -------
Gross profit 8,468 20.0% 6,090 11.2%
Administrative expenses 1,947 4.6% 2,430 4.5%
Special compensation expense 2,152 5.1% -- --
-------- ------- -------- -------
Operating income 4,369 10.3% 3,660 6.7%
Interest expense 3,735 8.8% 3,192 5.9%
Interest income 378 0.9% 72 0.1%
-------- ------- -------- -------
Income before provision for income taxes, preferred stock
dividends and extraordinary charge 1,012 2.4% 540 0.9%
Provision for income taxes 239 0.6% 257 0.4%
Preferred stock dividends 536 1.3% -- --
Extraordinary charge related to early extinguishment of debt 4,743 11.2% -- --
-------- ------- -------- -------
Net income (loss) available to common stockholders $ (4,506) (10.7)% $ 283 0.5%
-------- ------- -------- -------
</TABLE>
Page 9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
------------------------------------------------
1999 2000
---------------------- ----------------------
% of % of
Dollars Revenues Dollars Revenues
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $ 34,036 42.7% $ 26,741 27.7%
Product sales 45,646 57.3% 69,791 72.3%
-------- -------- -------- --------
Total revenues 79,682 100.0% 96,532 100.0%
-------- -------- -------- --------
Costs of revenues:
Terminaling services 20,320 25.5% 20,195 20.9%
Product sales 42,079 52.8% 66,174 68.6%
-------- -------- -------- --------
Total costs of revenues 62,399 78.3% 86,369 89.5%
-------- -------- -------- --------
Gross profit 17,283 21.7% 10,163 10.5%
Administrative expenses 4,482 5.6% 4,690 4.9%
Special compensation expense 4,099 5.2% -- --
-------- -------- -------- --------
Operating income 8,702 10.9% 5,473 5.6%
Interest expense 7,937 10.0% 6,360 6.6%
Interest income 567 0.7% 153 0.2%
-------- -------- -------- --------
Income (loss) before provision for income taxes, preferred
stock dividends and extraordinary charge 1,332 1.6% (734) (0.8)%
Provision for income taxes 493 0.6% 521 0.5%
Preferred stock dividends 2,257 2.8% -- --
Extraordinary charge related to early extinguishment of debt 4,743 6.0% -- --
-------- -------- -------- --------
Net loss to common stockholders $ (6,161) (7.8)% $ (1,255) (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.
We have orally agreed to the terms of a 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. Although not yet signed by the supplier, the contract expires 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 10
<PAGE> 13
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 June 30,
--------------------------------------------
1999 2000
-------------------- --------------------
% OF % OF
Dollars Total Dollars Total
-------- ------ --------- ------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 36,186 85.6% $ 49,856 91.9%
Canada 6,081 14.4% 4,371 8.1%
-------- ------ --------- ------
Total $ 42,267 100.0% $ 54,227 100.0%
======== ====== ========= ======
</TABLE>
<TABLE>
<CAPTION>
For the Six Three Months Ended June 30,
--------------------------------------------
1999 2000
-------------------- --------------------
% of % of
Dollars Total Dollars Total
-------- ------ --------- ------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 68,482 85.9% $ 88,731 91.9%
Canada 11,200 14.1% 7,801 8.1%
-------- ------ --------- ------
Total $ 79,682 100.0% $ 96,532 100.0%
======== ====== ========= ======
</TABLE>
OPERATING INCOME BY LOCATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
----------------------------------------------
1999 2000
-------------------- --------------------
% of % of
Dollars Total Dollars Total
--------- ------- -------- -------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 3,016 69.0% $ 3,004 82.1%
Canada 1,353 31.0% 656 17.9%
--------- ------- -------- -------
Total $ 4,369 100.0% $ 3,660 100.0%
========= ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
For the Six Three Months Ended June 30,
----------------------------------------------
1999 2000
-------------------- --------------------
% of % of
Dollars Total Dollars Total
--------- ------- -------- -------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 6,575 75.6% $ 4,636 84.7%
Canada 2,127 24.4% 837 15.3%
--------- ------- -------- -------
Total $ 8,702 100.0% $ 5,473 100.0%
========= ======= ======== =======
</TABLE>
Page 11
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
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.
CAPACITY, CAPACITY LEASED, THROUGHPUT AND VESSEL CALLS BY LOCATION
(CAPACITY AND THROUGHPUT IN THOUSANDS OF BARRELS)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- ------------------------
1999 2000 1999 2000
------ ------ ------ ------
<S> <C> <C> <C> <C>
Netherlands Antilles and
the Caribbean:
Total capacity 11,334 11,334 11,334 11,334
Capacity leased 91% 87% 93% 82%
Throughput 17,468 18,680 33,676 30,960
Vessel calls 258 225 520 441
Canada:
Total capacity 7,404 7,479 7,404 7,479
Capacity leased 94% 65% 95% 62%
Throughput 15,410 15,275 22,334 24,212
Vessel calls 42 36 59 57
All locations:
Total capacity 18,738 18,813 18,738 18,813
Capacity leased 92% 78% 94% 74%
Throughput 32,878 33,955 56,010 55,172
Vessel calls 300 261 579 498
</TABLE>
SELECTED RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2000, VERSUS
THE THREE MONTHS ENDED MARCH 31, 2000
Total revenues for the three months ended June 30, 2000, were $54.2
million, compared to $42.3 million for the three months ended March 31, 2000,
representing an increase of $11.9 million, or 28.2%. This increase is due to
increased revenues from both our terminaling services and product sales
segments. The improvement over the first quarter 2000 in terminaling services
revenues is due primarily to additional short-term storage and throughput
contracts, while the increase in product sales revenues is due primarily to an
increase in the volume of products sold.
Page 12
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Operating income for the three months ended June 30, 2000, was $3.7
million compared to first quarter 2000 operating income of $1.8 million. First
quarter 2000 operating income included a non-cash charge of $0.8 million to
depreciation expense resulting from a change in the estimated useful lives of
certain large hoses attached to our single point mooring system at St.
Eustatius. For the three months ended June 30, 2000, net income available to
common stockholders was $0.3 million, or $0.04 basic earnings per common share
and $0.03 diluted earnings per common share. For the three months ended March
31, 2000, we incurred a net loss to common stockholders of $1.5 million, or a
loss of $0.22 per common share.
THREE AND SIX MONTHS ENDED JUNE 30, 2000, VERSUS THE SAME PERIODS OF 1999
COMPARABILITY
Our initial public offering of equity, which closed on April 28, 1999,
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 six months ended June 30, 2000, were
$54.2 million and $96.5 million, compared to $42.3 million and $79.7 million for
the same periods of 1999, representing increases of $11.9 million, or 28.3% and
$16.8 million, or 21.1%, respectively.
Revenues from terminaling services (resulting from revenues from
storage, throughput, dock usage, emergency response, and other terminal
services) for the three and six months ended June 30, 2000, were $14.3 million
and $26.7 million, compared to $17.4 million and $34.0 million for the same
periods of 1999, representing decreases of $3.1 million, or 17.8% and $7.3
million, or 21.4%, respectively. We believe the decreases in terminaling
services revenues for the three and six months ended June 30, 2000, compared to
the same periods in 1999, were 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 1,
1999, through late March 2000, which 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
recently announced increases in crude oil production, crude oil and certain
petroleum products markets remain in backwardation.
For the six months ended June 30, 2000, approximately 78.3% of our tank
capacity was leased pursuant to long term contracts at our St. Eustatius and
Point Tupper locations together. Approximately 72.8% 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 $1.0 million or 8.5% and $3.6 million or 15.5% during the three
and six months ended June 30, 2000, respectively, as compared to the same
periods of 1999, due to fewer vessel calls and a lower percentage capacity
leased. For the three and six months ended June 30, 2000, the overall percentage
of capacity leased at St. Eustatius was 87% and 82% as compared to 91% and 93%
for the same periods of 1999, reflecting a decrease in the percentage of
capacity leased for fuel oil tankage. The percentage of capacity leased for fuel
oil tankage decreased during the three and six months ended June 30, 2000, as
compared to the same periods 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. Twenty-three and 55 fewer cargo vessels
called at the St. Eustatius facility during the three and six months ended June
30, 2000, than during the same periods of 1999, resulting in lower revenues from
port charges, which consist of dock charges, emergency response fees, and other
terminal charges.
Page 13
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Revenues from terminaling services at Point Tupper decreased
approximately $1.7 million or 28.0% and $3.3 million or 29.7% during the three
and six months ended June 30, 2000, as compared to the same periods of 1999. The
decreases were due primarily to a lower percentage of tank capacity leased
during the three and six months ended June 30, 2000, resulting in lower storage
revenues. The percentage of tank capacity leased at Point Tupper decreased from
94% and 95% for the three and six months ended June 30, 1999, to 65% and 62% for
the same periods of 2000. These decreases were primarily the result of 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. Partially offsetting reduced storage revenues were revenues from a higher
number of barrels throughput by this facility's primary crude oil customer for
the six months ended June 30, 2000. Six and two fewer cargo vessels called
during the three and six months ended June 30, 2000, as compared to the same
periods of 1999, which led to lower revenues from port charges at this facility.
Revenues from product sales were $39.9 million and $69.8 million for
the three and six months ended June 30, 2000, compared to $24.9 million and
$45.6 million for the same periods of 1999, an increase of $15.1 million or
60.6% and $24.1 million or 52.9%, respectively. These increases were due to
increases in average selling prices partially offset by lower volumes delivered.
Average selling prices increased 66.1% and 88.9% when comparing the three and
six months ended June 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 3.3% and 19.1% during the three and
six months ended June 30, 2000, as compared to the same periods of 1999.
GROSS PROFIT
Gross profit for the three and six months ended June 30, 2000, was $6.1
million and $10.2 million compared to $8.5 million and $17.3 million for the
same periods of 1999, representing decreases of $2.4 million or 28.1% and $7.1
million or 41.2%. The decreases in gross profit were 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 six months ended June 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 during the first quarter of 2000
to depreciation expense which is included in Costs of Revenues.
ADMINISTRATIVE EXPENSES
Administrative expenses were $2.4 million and $4.7 million for the
three and six months ended June 30, 2000, as compared to $1.9 million and $4.5
million for the same periods of 1999, representing increases of $0.5 million or
24.8% and $0.2 million or 4.6%, respectively. The increases during the three and
six months ended June 30, 2000, as compared to the same periods of 1999, were
primarily the result of higher depreciation and personnel costs partially offset
by the termination of the Castle Harlan management fee effective as of our
initial public offering of equity.
SPECIAL COMPENSATION EXPENSE
As more fully discussed in note 4 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 and six months ended June
30, 1999, of $2.2 million and $4.1 million, respectively.
Page 14
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
INTEREST EXPENSE
During the three and six months ended June 30, 2000, we incurred $3.2
million and $6.4 million of interest expense compared to $3.7 million and $7.9
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 were $0.3 million and $0.2 million for the
three months ended June 30, 2000 and 1999, respectively, and $0.5 million for
the six months ended June 30, 2000 and 1999.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends were $0.5 million and $2.3 million for the
three and six months ended June 30, 1999. There were no preferred stock
dividends for the three and six months ended June 30, 2000, as a result of the
redemption of all outstanding preferred stock in connection with our initial
public offering of equity.
EXTRAORDINARY CHARGE RELATED TO EARLY EXTINGUISHMENT OF DEBT
As more fully discussed in note 4 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 six months ended
June 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 stockholders of
$0.3 million and incurred a net loss to common stockholders of $1.3 million for
the three and six months ended June 30, 2000, as compared to a net loss to
common stockholders of $4.5 million and $6.2 million for the same periods of
1999, respectively, representing an improvement of $4.8 million and $4.9
million. This improvement was 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 $8.2 million and $12.9
million for the six months ended June 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.
At June 30, 2000, we had cash and cash equivalents on hand of $5.8
million compared to $5.7 million at December 31, 1999. Accounts receivable and
accounts payable, primarily related to the purchases and sales of petroleum
products, were $10.6 million and $11.9 million, respectively, at June 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.
Page 15
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
CASH FLOW FROM INVESTING ACTIVITIES
Net cash used in investing activities consisting primarily of purchases
of property and equipment was $4.1 million and $4.0 million for the six months
ended June 30, 2000 and 1999, respectively. See the Summary of Capital
Expenditures by Type table which follows.
CASH FLOW FROM FINANCING ACTIVITIES
In July 2000, our board of directors approved an increase in the number
of shares authorized under the previously announced stock purchase program to
2,000,000 of our class A common shares. As of June 30, 2000, and August 10,
2000, we had acquired 826,547 and 883,247 class A common shares, respectively,
at an aggregate cost of $5.2 million and $5.6 million, respectively. As
conditions warrant, we intend to continue periodic open market purchases of our
class A common shares under the stock purchase program.
As more fully discussed in the Registration Statement and Form 10-K/A,
under our articles of incorporation we are required to distribute to our
shareholders all of our "available cash" (as defined therein) generated from
operations. "Available cash" as defined generally includes cash from various
sources after deducting such reserves as our board of directors may deem
necessary or appropriate to provide for the proper conduct of our business,
including future capital expenditures, anticipated operational needs, and to
comply with debt obligations.
On February 14, 2000, we paid $1.1 million to holders of our class A
common shares representing $0.15 per share. The $0.30 per share difference
between the declared distribution and the target quarterly distribution of $0.45
per share represents an arrearage which must be paid from future available cash.
On July 19, 2000, our board of directors declared a distribution of
$0.15 per share on our class A common shares payable August 14, 2000, to
shareholders of record on July 31, 2000. The $0.30 per share difference between
the declared distribution and the target quarterly distribution of $0.45 per
share represents an arrearage that must be paid from future available cash. The
aggregate arrearage per class A common share is now $1.05.
On May 2, 2000, we granted to certain of our employees and directors
options to purchase 228,000 of our class A common shares at an exercise price of
$5.59 per share representing the fair value on the date of grant. These options
were granted pursuant to our 1999 share option plan and vest in proportion to
the conversion of our class B subordinated shares to class A common shares over
the subordination period, as defined in our articles of incorporation.
As more fully discussed in note 4 of the notes to consolidated
condensed financial statements included in Part I, Item 1, of this Report, our
initial public offering of equity closed on April 28, 1999. The net proceeds of
the offering were used primarily to redeem all of our outstanding preferred
stock and pay accrued dividends and repurchase in the open market a principal
amount of $34.0 million of our mortgage notes, leaving $101.0 million of our
mortgage notes outstanding. The repurchase of the mortgage notes will result in
annual reductions in interest payments of approximately $4.0 million.
As of August 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 June 30, 2000. Statia
Terminals International N.V., a wholly-owned subsidiary of Statia Terminals
Group N.V., is not restricted by this provision of the indenture from borrowing
on the revolving credit facility discussed below. Additionally, at June 30,
2000, the sum of Statia Terminals International's dividends, restricted
payments, aggregate consolidated net income (deficit), and capital stock
proceeds was approximately $13.3 million. Such sum must be positive in order for
Statia Terminals International to make certain restricted payments, including
dividends to Statia Terminals Group N.V.
Page 16
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
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 $9.1 million at June 30, 2000. The revolving credit
facility bears interest at the prime rate plus 0.50% per annum (10.0% at August
14, 2000) and will expire on November 27, 2000. From time to time during the six
months ended June 30, 2000, we borrowed against the revolving credit facility,
and all of such borrowings were repaid by June 30, 2000.
In March, 2000, the ownership of the M/V STATIA RESPONDER, an emergency
response and maintenance vessel, was transferred from one of our existing
subsidiaries to a newly created subsidiary. We are currently in discussions with
a lender to provide asset-based financing utilizing the vessel as collateral.
The proceeds from any such financing are expected to be used for general
business purposes.
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.
It is anticipated that any common share arrearages will not adversely
impact our ability to repay or refinance the mortgage notes since the mortgage
notes are obligations of two of our subsidiaries, not of Statia Terminals Group.
Depending on the terms and conditions of any refinancing of the mortgage notes,
our ability to pay the target quarterly distributions and common share
arrearages may be impacted.
Page 17
<PAGE> 20
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 June 30,
-----------------------------------------
1999 2000
------------------- -------------------
% of % of
Dollars Total Dollars Total
------- ------- ------- -------
<S> <C> <C> <C> <C>
Produce incremental revenues $ 175 8.5% $ 62 4.5%
Operations sustaining capital expenditures 1,874 91.5% 1,321 95.5%
------- ------- ------- -------
Total $ 2,049 100.0% $ 1,383 100.0%
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
-----------------------------------------
1999 2000
------------------ ------------------
% of % of
Dollars Total Dollars Total
------- ----- -------- -----
<S> <C> <C> <C> <C>
Produce incremental revenues $ 296 7.3% $ 146 3.5%
Operations sustaining capital expenditures 3,761 92.7% 3,996 96.5%
------- ------- ------- -------
Total $ 4,057 100.0% $ 4,142 100.0%
======= ======= ======= =======
</TABLE>
Page 18
<PAGE> 21
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 June 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 June 30, 2000
---------------------------------
Carrying Value Fair Value
-------------- ----------
<S> <C> <C>
Petroleum Inventory:
Statia Terminals N.V. $ 4,840 $ 5,210
Statia Terminals Canada, Inc. 70 195
--------- --------
Total $ 4,910 $ 5,405
========= ========
</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.
The Annual General Meeting of Shareholders of the Company was held on April 18,
2000. The following items were approved by the Company's shareholders at the
meeting:
Item 1. Determination, setting and adoption of the Company's balance sheet
and profit and loss accounts for the fiscal year ended December 31,
1999.
Item 2. Approval, ratification and adoption of the distributions in the
amount of US$0.7665 per class A common share for the fiscal year ended
December 31, 1999.
Item 3. Approval, ratification and adoption of the declaration of the
distributions in the amount of US$0.7665 per class B subordinated share
for the fiscal year ended December 31, 1999.
Item 4. Approval of the appointment of Arthur Andersen LLP as the Company's
independent accountants to audit the Company's financial statements and
perform other tasks consistent with such appointment until the next
Annual General Meeting of Shareholders.
Following are the results for each item voted upon given in number of
shares:
For Against Abstain
--- ------- -------
Item 1. 4,930,605 41,250 19,390
Item 2. 4,934,616 40,189 16,440
Item 3. 4,902,266 66,889 22,090
Item 4. 4,932,710 42,500 16,035
There were no broker non-votes associated with any of the items voted upon at
the Annual General Meeting of Shareholders.
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 Group N.V.
(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 GROUP 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)
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