<PAGE>
UNITED STATES
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 October 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
File No. 1-11763
TRANSMONTAIGNE OIL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 06-1052062
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 SEVENTEENTH STREET, SUITE 2750
DENVER, COLORADO 80202
(Address, including zip code, of principal executive offices)
(303) 626-8200
(Telephone number, including area code)
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 report), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of December 2, 1996, there were 21,008,460 shares of the Registrant's Common
Stock outstanding.
<PAGE>
TRANSMONTAIGNE OIL COMPANY
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS PAGE NO.
Consolidated Balance Sheets
October 31, 1996 and April 30, 1996.......................... 3
Consolidated Statements of Operations
Three months ended October 31, 1996 and 1995................. 5
Consolidated Statements of Operations
Six months ended October 31, 1996 and 1995................... 6
Consolidated Statements of Stockholders' Equity
Six months ended October 31, 1996 and
Year ended April 30, 1996.................................... 7
Consolidated Statements of Cash Flows
Six months ended October 31, 1996 and 1995................... 8
Notes to Consolidated Financial Statements................... 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................ 12
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES........................................ 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................. 21
SIGNATURES................................................... 22
2
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PART I. FINANCIAL INFORMATION
- --------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1996 AND APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
__________________________________________________________________
OCTOBER 31, APRIL 30,
1996 1996
---- ----
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 33,001,504 38,403,234
Trade accounts receivable 41,250,480 20,905,812
Note receivable - current 900,000 -
Inventories 36,951,892 23,609,136
Prepaid expenses and other 1,211,958 1,475,612
----------- -----------
113,315,834 84,393,794
Property, plant and equipment:
Land 1,072,798 1,072,798
Plant and equipment 32,982,365 24,926,309
Accumulated depreciation (7,218,868) (6,461,244)
----------- -----------
26,836,295 19,537,863
----------- -----------
Investments and other assets:
Investments 16,004,257 15,830,006
Notes receivable - non-current 1,328,313 -
Other assets, net 3,567,788 1,201,313
----------- -----------
20,900,358 17,031,319
----------- -----------
$161,052,487 120,962,976
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1996 AND APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
______________________________________________________________________
OCTOBER 31, APRIL 30,
1996 1996
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Trade accounts payable $28,239,991 10,698,199
Inventory due under exchange agreements 8,063,830 8,874,645
Taxes payable 7,216,662 6,483,756
Other accrued liabilities 2,574,041 2,685,355
------------ -----------
46,094,524 28,741,955
------------ -----------
Long-term debt, less current portion 37,684,067 28,948,867
Minority interests 5,602,012 5,452,963
Stockholders' equity:
Preferred stock, par value $.01 per share,
authorized, 2,000,000 shares, none issued - -
Common stock, par value $.01 per share,
authorized 40,000,000 shares, issued and
outstanding 20,982,960 shares at October
31, 1996; par value $.10 per share,
authorized 27,000,000 shares, issued and
outstanding 19,331,171 shares at April
30, 1996 209,830 1,933,117
Capital in excess of par value 72,283,793 61,187,476
Accumulated deficit (821,739) (5,301,402)
------------ -----------
71,671,884 57,819,191
------------ -----------
$161,052,487 120,962,976
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
______________________________________________________________________________________
1996 1995
---- ----
<S> <C> <C>
Revenue:
Product sales, pipeline tariffs and terminaling fees $276,770,743 134,324,440
Costs and expenses:
Product costs and direct operating expenses 272,135,966 131,982,901
General and administrative 1,659,247 1,196,080
Depreciation and amortization 502,254 282,680
------------ ----------
274,297,467 133,461,661
------------ ----------
Operating income 2,473,276 862,779
Other income (expenses):
Interest income 430,593 137,054
Equity in earnings of affiliates 738,613 415,322
Minority interests (256,206) (143,402)
Interest expense and other financing costs (730,829) (792,737)
Other, net 227,641 -
------------ ----------
409,812 (383,763)
------------ ----------
Earnings before income taxes 2,883,088 479,016
Income taxes - current 210,000 41,502
------------ ----------
Net earnings $ 2,673,088 437,514
============ ==========
Weighted average common shares outstanding 21,624,474 14,902,347
============ ==========
Earnings per common share $0.12 $0.03
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
______________________________________________________________________________________
1996 1995
---- ----
<S> <C> <C>
Revenue:
Product sales, pipeline tariffs and terminaling fees $470,822,944 242,015,171
Costs and expenses:
Product costs and direct operating expenses 462,096,897 235,772,166
General and administrative 3,158,305 2,256,778
Depreciation and amortization 955,028 560,348
------------ ----------
466,210,230 238,589,292
------------ ----------
Operating income 4,612,714 3,425,879
Other income (expenses):
Interest income 893,051 258,693
Equity in earnings of affiliates 423,151 392,184
Minority interests (149,049) (131,100)
Interest expense and other financing costs (1,370,280) (1,403,938)
Other, net 340,076 -
------------ ----------
136,949 (884,161)
------------ ----------
Earnings before income taxes 4,749,663 2,541,718
Income taxes - current 270,000 73,002
------------ ----------
Net earnings $ 4,479,663 2,468,716
============ ==========
Weighted average common shares outstanding 21,290,302 14,902,347
============ ==========
Earnings per common share $0.21 0.17
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED OCTOBER 31, 1996 AND YEAR ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
________________________________________________________________________________________________
Capital in
Common excess of Accumulated
stock par value deficit Total
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
BALANCE AT APRIL 30, 1995 $ 1,478,071 36,912,002 (9,919,371) 28,470,702
Common stock issued for cash 455,046 24,558,462 25,013,508
Costs related to issuance of common stock -- (282,988) -- (282,988)
Net earnings -- -- 4,617,969 4,617,969
--------------------------------------------------
BALANCE AT APRIL 30, 1996 1,933,117 61,187,476 (5,301,402) 57,819,191
--------------------------------------------------
Change in the par value of common
stock from $.10 to $.01 in connection
with merger (Note 2) (1,739,805) 1,739,805 -- --
Common stock issued in merger (Note 2) 14,744 8,093,785 -- 8,108,529
Common stock issued for options exercised 774 288,727 -- 289,501
Common stock issued for minority interest
in subsidiary 1,000 974,000 -- 975,000
Net earnings -- -- 4,479,663 4,479,663
--------------------------------------------------
BALANCE AT OCTOBER 31, 1996 $ 209,830 72,283,793 (821,739) 71,671,884
==================================================
</TABLE>
See accompanying notes to consolidated financial statements.
7
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TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
__________________________________________________________________________________________________
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities: $ 4,479,663 2,468,716
Net earnings
Adjustments to reconcile net earnings to net
cash used by operating activities:
Depreciation and amortization 955,028 560,348
Equity in earnings of affiliates (423,151) (392,184)
Minority interests 149,049 131,100
Changes in operating assets and liabilities,
net of effect of acquisitions:
Trade accounts receivable (20,130,189) (7,364,424)
Inventories (13,342,756) 3,368,733
Prepaid expenses and other 444,441 75,563
Trade accounts payable 17,495,194 (7,851,238)
Inventory due under exchange agreements (810,815) (1,435,295)
Accrued liabilities 800,889 1,784,213
------------ -----------
Net cash used by operating activities (10,382,647) (8,654,468)
------------ -----------
Cash flows from investing activities:
Purchases of property, plant and equipment (5,837,277) (1,522,392)
Proceeds from sale of assets 13,523 6,625
Cash received in connection with acquisition 2,315,527 -
Costs related to acquisition (399,234) -
Merger related costs - (262,179)
Cash balance in subsidiary sold (111,341) -
Decrease (increase) in other assets (24,982) 61,176
------------ -----------
Net cash used by investing activities (4,043,784) (1,716,770)
------------ -----------
Cash flows from financing activities:
Borrowings (repayments) of long-term debt, net 8,735,200 (11,040,768)
Common stock issued for cash 289,501 -
Stock subscription received in cash - 30,000,002
------------ -----------
Net cash provided by financing activities 9,024,701 18,959,234
------------ -----------
Increase (decrease) in cash and cash equivalents (5,401,730) 8,587,996
Cash and cash equivalents at beginning of period 38,403,234 1,801,828
------------ -----------
Cash and cash equivalents at end of period $ 33,001,504 10,389,824
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
_________________________________________________________________________________
1996 1995
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
Acquisition of Sheffield Exploration Company (Note 2)
Fair value of assets acquired $8,739,247 -
Fair value of liabilities assumed 231,484 -
---------- ---------
8,507,763 -
Costs related to acquisition 399,234
---------- ---------
Fair value of stock issued $8,108,529 -
========== =========
Cash received in connection with acquisition
included in assets acquired $2,315,527 -
========== =========
Sale of Sheffield Operating Company (Note 3)
Fair value of assets sold $1,991,403 -
Fair value of liabilities assumed by purchaser 245,451 -
---------- ---------
Fair value of consideration received $2,236,854 -
========== =========
Cash distributed in connection with sale
included in assets sold $ 111,341 -
========== =========
</TABLE>
Acquisition of minority interest in Bear Paw Energy, Inc.
The Company acquired the remaining 10% interest in Bear Paw Energy, Inc. in
exchange for 100,000 shares of the Company's common stock valued at the market
value of the common stock at the date of issuance, October 31, 1996.
See accompanying notes to consolidated financial statements.
9
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
(1) BASIS OF PRESENTATION
The consolidated balance sheets at October 31, 1996 and April 30, 1996,
the consolidated statements of operations for the three months and six
months ended October 31, 1996 and 1995, the consolidated statement of
stockholders' equity for the six months ended October 31, 1996 and the
year ended April 30, 1996 and the consolidated statements of cash flows
for the six months ended October 31, 1996 and 1995 are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation
of the financial position and operating results for the interim periods
presented. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of financial condition
and results of operations, contained in the Company's Annual Report on
Form 10-K for the fiscal year ended April 30, 1996. The results of
operations for the three months and the six months ended October 31, 1996
are not necessarily indicative of the results for the entire fiscal year
ending April 30, 1997.
(2) MERGER
The Company is the surviving corporation of a merger (the "Merger")
between TransMontaigne Oil Company and Sheffield Exploration Company, Inc.
("Sheffield") effective June 4, 1996. The Merger constituted a reverse
acquisition of Sheffield, in that Sheffield survived the Merger, but is
owned approximately 93% by the former stockholders of TransMontaigne Oil
Company. The par value of the common stock of the company surviving the
Merger is $.01 per share. As a result of the Merger, (i) the name of
Sheffield was changed to TransMontaigne Oil Company; (ii) the number of
shares of authorized common stock was increased to 40,000,000; and (iii)
the stock options which Sheffield had outstanding prior to the Merger
became options to purchase 79,338 shares of the Company's common stock at
$3.65 per share. These options were exercised prior to their September 2,
1996 expiration date.
(3) SALE OF SUBSIDIARY
On October 31, 1996 the Company sold a wholly owned subsidiary for
approximately $2,237,000. The Company received as consideration a note
receivable for approximately $2,067,000 payable over five years, a
receivable for $100,000 and shares of common stock representing an
approximate 18% interest in the acquiring company's common stock. On
November 4, 1996 the Company received a $700,000 cash payment on the note
and the $100,000 receivable was collected.
10
<PAGE>
(4) SUBSEQUENT EVENT
The Company's wholly owned subsidiary, Bear Paw Energy, Inc. ("Bear Paw"),
entered into a definitive agreement on November 1, 1996 to acquire for
approximately $75,000,000 the Grasslands natural gas gathering, processing,
treating and fractionating system located in western North Dakota and
northeastern Montana. The Grasslands gas processing plant, located in
McKenzie County, North Dakota, was built in 1980. Natural gas is gathered
from over 1,200 active leases through approximately 2,500 miles of gathering
lines.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
TransMontaigne Oil Company (the "Company") is a holding company engaged
through its operating subsidiaries in the downstream sector of the petroleum
industry, providing transportation, supply, distribution, processing and
marketing services for petroleum products, natural gas and crude oil. The
services that the Company provides include the transporting, storing,
terminaling and wholesale marketing of refined petroleum products primarily in
the mid-continent region of the United States; the gathering and processing of
natural gas liquids and residue natural gas in the Rocky Mountain region; and
the gathering, transportation and storage of crude oil in east Texas.
The Company's wholly owned subsidiary, Continental Ozark, Inc. ("COZ"), is
engaged in the transporting, storing and terminaling, and the wholesale
marketing of refined petroleum products (primarily unleaded gasoline, No. 2
diesel oil and jet fuel) in the mid-continent region of the United States and in
the gathering, storing and transporting of crude oil in east Texas. COZ owns
and operates 747 miles of pipeline, (the NORCO pipeline, the Razorback pipeline,
and the CETEX pipeline), and nine terminal or storage facilities in seven
states with a combined tankage capacity of 4,819,000 barrels which facilities
serve over 500 customers.
The Company's wholly owned subsidiary, Bear Paw Energy, Inc. ("Bear Paw"),
entered into a definitive agreement on November 1, 1996 to acquire for
approximately $75,000,000, the Grasslands natural gas gathering, processing,
treating and fractionating system located in western North Dakota and
northeastern Montana. The Grasslands system is one of the largest natural gas
facilities in the Williston Basin. The Grasslands natural gas processing plant,
located in McKenzie County, North Dakota, was built in 1980 and is designed for
65.5 MMCFD raw inlet capacity. Designed product recoveries are 88% propane,
99% butane and 100% gasoline. Current throughput is approximately 45 MMCFD from
over 1,200 active leases, the natural gas from which is gathered through the
system's approximately 2,500 miles of gathering lines. The Grasslands system
currently includes 12 plant inlet compressors and 45 field compressors at 26
locations.
The following is a discussion of the Company's consolidated liquidity and
capital resources and results of operations. This discussion and analysis should
be read in conjunction with the Company's consolidated financial statements and
related notes.
LIQUIDITY AND CAPITAL RESOURCES
The net cash used by operating activities during the six months ended October
31, 1996 was $10,383,000, a $1,728,000 increase over the cash used by operating
activities during the six months ended October 31, 1995. This increase was
primarily a result of increased inventory levels required to meet seasonal
demands, partially offset by increased trade payables to suppliers of inventory,
and increased trade receivables resulting from increased product sales.
The Company made capital expenditures of $5,837,000 and $1,522,000 during the
six months ended October 31, 1996 and 1995, respectively, for additions and
improvements to the Company's terminal and pipeline facilities. The Company
anticipates approximately $103,000,000 of capital expenditures during the fiscal
year ending April 30, 1997, including the $75,000,000 Grasslands system
acquisition. Actual future capital expenditures will depend on
12
<PAGE>
numerous factors, including the availability and cost of appropriate
acquisitions; the demand for the services the Company provides; local, state and
federal governmental regulations; environmental compliance requirements; fuel
conservation efforts; and the availability of financing on acceptable terms.
During the current year six month period the Company received approximately
$2,316,000 cash in connection with its merger with Sheffield Exploration
Company, Inc.
The Company's long-term debt increased by $3,733,000 during the current year
quarter, and increased $8,735,000 during the six months ended October 31, 1996.
During the prior year quarter, the Company's long-term debt increased
approximately $5,647,000 and decreased $11,041,000 during the six months ended
October 31, 1995. Outstanding long-term debt was $37,684,000 at October 31,
1996. The increases in long-term debt provided funds to purchase additional
inventory and to finance capital expenditures.
In December 1995, the Company entered into a bank credit agreement with a
money center bank which provides for revolving credit of up to $45,000,000,
including cash advances and letters of credit. The credit agreement has a final
maturity date of November 30, 1999 and provides for interest at either the
bank's base rate or a designated premium over short-term Eurodollar rates. As
of October 31, 1996, $33,730,000 was outstanding under the credit agreement.
The Company has received a commitment (the "Commitment") from the same money
center bank to replace the existing $45,000,000 revolving credit agreement with
a $130,000,000 credit facility consisting of a five year $45,000,000 working
capital revolving credit and an $85,000,000 acquisition revolving credit (the
"New Credit Facility"). The acquisition revolving credit is expected to be
partially used to finance the approximately $75,000,000 purchase price of the
Grasslands system acquisition. On December 31, 1999, the acquisition revolving
credit will convert to a term loan and 5% of the amount outstanding on December
31, 2000 will be due each quarter beginning March 31, 2000, with the balance due
December 31, 2001. The first $45,000,000 of proceeds of any public or private
debt or equity issuance is required to be applied to the repayment of the
acquisition revolving credit. After repayment of $45,000,000 of the acquisition
revolving credit, and if the Company then has consolidated tangible net worth of
$100,000,000, the balance of the New Credit Facility will convert into a single
$85,000,000 facility due December 31, 2001 (the "Successor Facility"). The
amount available under the Successor Facility will be reduced by $3,125,000 each
quarter beginning March 31, 2000. The Commitment is subject to execution of a
definitive loan document and other conditions.
The Company had working capital of $67,221,000 at October 31, 1996.
Management believes the Company's current working capital position, future cash
provided by operating activities, borrowing capacity under its credit agreement
and its relations with institutional lenders and equity investors should enable
it to meet its future capital requirements.
The Company has approximately $20,200,000 net operating loss carryforwards
for federal income tax purposes which are available to offset taxable income for
the fiscal years 1997 to 2009. Due to changes in ownership which occurred in
April, 1996 and June 1996, the use of the net operating loss carryforwards to
offset taxable income will be limited to approximately $5,600,000 annually.
13
<PAGE>
RESULTS OF OPERATIONS
During the three months and six months ended October 31, 1996 the Company's
revenues were derived primarily from three activities: transporting refined
petroleum products and crude oil in pipelines; storing and terminaling refined
petroleum products; and refined petroleum products supply and distribution.
Pipeline revenues are based on the volume of refined petroleum products or
crude oil transported and the distance from the origin point to the delivery
point. The NORCO and Razorback pipelines transport refined petroleum products,
and their rates are regulated by the Federal Energy Regulatory Commission. The
CETEX pipeline transports crude oil and its rates are not regulated.
Terminal revenues are based on the volume of refined petroleum products
handled, generally at a standard industry fee of $.0050 per gallon. Terminal
fees are not regulated. Storage fees are generally based on a per gallon rate,
which varies with the duration of the storage arrangement, the refined petroleum
product stored and special handling requirements. The operating expenses of the
pipeline and terminal businesses include wages and employee benefits, utilities,
communications, maintenance and repairs, property taxes, rent, insurance,
vehicle expenses, environmental protection costs, materials and supplies.
The products supply and distribution business includes bulk sales of
refined petroleum products and the wholesale distribution of refined petroleum
products from terminals. Bulk purchase and sale transactions in quantities of
25,000 barrels to 50,000 barrels are common and are generally made at small
margins. Wholesale distribution of refined petroleum products from proprietary
and non-proprietary terminal truck loading rack locations are primarily
represented by truck load sales of 8,000 gallons of refined petroleum product.
These sales are generally also made at small margins.
14
<PAGE>
Three months ended October 31, 1996 compared to October 31, 1995:
Revenue and operating information for the three months ended October 31, 1996
and 1995 is summarized below.
<TABLE>
<CAPTION>
Products
Supply and
Pipeline Terminal Distribution
Operations Operations Operations Total
-------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Three months ended
October 31, 1996
- ----------------
Volumes (1) 4,761 177,000 435,000
Revenues $3,227 1,200 272,344 276,771
Net Operating Margin (2) $1,868 796 1,971 4,635
Three months ended
October 31, 1995
- ----------------
Volumes (1) 5,131 149,000 259,000
Revenues $2,349 844 131,131 134,324
Net Operating Margin (2) $1,127 620 595 2,342
</TABLE>
(1) Pipeline volumes are expressed in barrels (42 gallons per barrel), and
terminal and products supply and distribution sales volumes are expressed in
gallons.
(2) Net operating margin represents revenues less direct operating expenses for
pipeline and terminal operations, and revenues less cost of refined
petroleum products purchased for products supply and distribution
operations.
The net operating margin from pipeline operations of $1,868,000 increased
66% or $741,000 in the current year quarter. This increase resulted primarily
from a net increase in the volumes of higher tariff shipments, notwithstanding
a 7.2% decrease in total volumes shipped, together with increases in joint
tariff participation and tankage rental charges. These increases resulted
in a 37% increase in revenues of $878,000 in the current year quarter. The
increase in revenues partially was offset by an 11% increase in operating costs
of $137,000, primarily due to incremental power costs from additional long haul
shipment volumes and increased field personnel costs, repairs and maintenance
and property tax assessments.
The net operating margin from terminal operations of $796,000 increased 28%
or $176,000 in the current year quarter. This increase resulted from a 19%
increase in volumes handled, primarily at the Little Rock, Arkansas terminal,
offset in part by an increase in terminal operating costs of 80% attributable
to a new terminal lease, additional freight charges, field personnel expenses
and property tax assessments.
The net operating margin from product sales of $1,971,000 increased 231% or
$1,376,000 in the current year quarter, while net revenues increased
$141,213,000 on additional volume of 176,000,000 gallons sold. The $.0045 net
operating margin per gallon realized in the current
15
<PAGE>
year quarter increased $.0022 over the $.0023 per gallon realized during the
prior year quarter due to improved refined products market conditions and the
related positive impact on margins.
During the current year quarter, general and administrative expenses
increased approximately $463,000, a 39% increase over the prior year quarter,
primarily due to additional personnel costs and increased employee relocation,
information systems and communication expenses.
Equity in earnings of affiliates primarily represents the Company's share of
the earnings of Lion Oil Company ("Lion"). During the current year quarter the
Company's share of Lion's earnings (net of related minority interests) was
approximately $482,000 compared to $273,000 for the prior year quarter,
primarily due to Lion realizing increased refinery crack spreads.
Interest expense represents interest on the revolving bank line of credit
used to finance inventory and accounts receivable and includes interest on the
Company's senior subordinated debentures. Interest expense during the current
year quarter decreased $62,000, a 7.8% reduction from the prior year quarter.
Lower interest rates in the quarter ending October 31, 1996 offset the effect of
a $6,000,000 increase in the average loan balance outstanding. Interest expense
includes other financing costs, including fees paid for letters of credit issued
to product suppliers and loan commitment fees paid in connection with the
revolving loan facility.
Interest income during the current year quarter increased to $431,000 from
$137,000, primarily due to an approximate $14 million increase in average
interest bearing cash balances held for future investments.
Net earnings before income taxes for the current year quarter were
$2,883,000, a 502 % increase of $2,404,000 over the $479,000 for the prior year
quarter, primarily as a result of the increases in pipeline, terminal and
products supply and distribution net operating margins, together with additional
interest income and increased earnings from Lion, which increases were partially
offset by increased general and administrative expenses. The provision for
income taxes of $210,000 for the current year quarter primarily represents
estimated state income taxes. Net after tax earnings for the current year
quarter were $2,673,000, a 510% increase of $2,236,000 from the $438,000 for the
prior year quarter.
16
<PAGE>
Six months ended October 31, 1996 compared to October 31, 1995:
Revenue and operating information for the six months ended October 31, 1996 and
1995 is summarized below.
<TABLE>
<CAPTION>
Products
Supply and
Pipeline Terminal Distribution
Operations Operations Operations Total
--------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Six months ended
October 31, 1996
- ----------------
Volumes (1) 9,765 352,000 746,000
Revenues $ 6,061 2,375 462,387 470,823
Net Operating Margin (2) $ 3,380 1,748 3,598 8,726
Six months ended
October 31, 1995
- ----------------
Volumes (1) 10,044 285,000 445,000
Revenues $ 4,165 1,617 236,233 242,015
Net Operating Margin (2) $ 2,041 1,209 2,993 6,243
</TABLE>
(1) Pipeline volumes are expressed in barrels (42 gallons per barrel), and
terminal and products supply and distribution sales volumes are expressed in
gallons.
(2) Net operating margin represents revenues less direct operating expenses for
pipeline and terminal operations, and revenues less cost of refined
petroleum products purchased for products supply and distribution
operations.
The net operating margin from pipeline operations of $3,380,000 increased
66% or $1,339,000 in the current year six month period. This increase resulted
primarily from a net increase in the volumes of higher tariff shipments,
notwithstanding a 2.8% decrease in total volumes shipped, together with
increases in joint tariff participation and tankage rental charges. These
increases resulted in a 46% increase in revenues of $1,896,000 in the
current year six month period. The increase in revenues partially was offset by
a 26% increase in operating costs of $557,000, primarily due to incremental
power costs from additional long haul shipment volumes and increased field
personnel costs, repairs and maintenance and property tax assessments.
The net operating margin from terminal operations of $1,748,000 increased
45% or $539,000 in the current year six month period. This increase resulted
from a 24% increase in volumes handled, primarily at the Little Rock, Arkansas
terminal, offset in part by an increase in terminal operating costs of 54%
attributable to a new terminal lease, additional freight charges, field
personnel expenses and property tax assessments.
The net operating margin from product sales of $3,598,000 increased 20% or
$605,000 in the current year six month period, while net revenues increased
$226,154,000 on additional volume of 301,000,000 gallons sold. The $.0048 net
operating margin per gallon realized in the
17
<PAGE>
current year six month period decreased $.0019 from the $.0067 per gallon
realized during the prior year six month period, primarily due to higher than
normal product margins realized during the first half of the prior year six
month period caused by strong market conditions during that period.
During the current year six month period, general and administrative expenses
increased approximately $902,000, a 40% increase over the prior year six month
period, primarily due to additional personnel costs and increased employee
relocation, information systems and communication expenses.
Equity in earnings of affiliates primarily represents the Company's share of
the earnings of Lion. During the current year six month period the Company's
share of Lion's earnings (net of related minority interests) was approximately
$291,000 compared to $257,000 for the prior year six month period, primarily
due to Lion realizing slightly improved refinery crack spreads.
Interest expense represents interest on the revolving bank line of credit
used to finance inventory and accounts receivable and interest on the Company's
senior subordinated debentures. Interest expense during the current year six
month period decreased $34,000, a 2.4% reduction from the prior year six month
period. Lower interest rates in the current year six month period offset the
effect of a $6,000,000 increase in the average loan balance outstanding.
Interest expense includes other financing costs, including fees paid for letters
of credit issued to product suppliers and loan commitment fees paid in
connection with the revolving loan facility.
Interest income during the current year six month period increased to
$893,000 from $259,000 primarily due to an approximate $15 million increase in
average interest bearing cash balances held for future investments.
Net earnings before income taxes for the current year six month period were
$4,750,000, an 86.9% increase of $2,208,000 over the $2,542,000 for the prior
year six month period, primarily as a result of the increases in pipeline,
terminal and products supply and distribution net operating margins, together
with additional interest income and increased earnings from Lion, which
increases were partially offset by increased general and administrative
expenses. The provision for income taxes of $270,000 for the current year six
month period primarily represents estimated state income taxes. Net after tax
earnings for the current year six month period were $4,480,000, an 81% increase
of $2,011,000 from the $2,469,000 for the prior year six month period.
18
<PAGE>
RISK FACTORS AND CAUTIONARY STATEMENTS
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 such as the words or phrases
"believes," "is to be," "will depend," "will become" and "plans to" or similar
expressions. The Company wishes to advise readers that the forward-looking
statements in this report are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in or implied by
the statements including, but not limited to, the following:
. the Company's margins on high volumes of products and/or volatility in the
price of the Company's products
. the risk that, to the extent the Company attempts to selectively hedge its
inventory positions, those hedges are not effective
. the risk that the Company could be required to recognize a financial
statement loss through a lower of cost or market write-down of inventories
. compliance with current and possibly future environmental regulations
19
<PAGE>
PART II. OTHER INFORMATION
- --------------------------
ITEM 2. CHANGES IN SECURITIES
Recent Sales of Unregistered Securities
(a) Securities Sold. On October 31, 1996, 100,000 shares of the Company's
common stock were issued.
(b) Purchasers. The unregistered common stock certificates were issued to seven
officers and employees of Bear Paw Energy, Inc. ("Bear Paw").
(c) Consideration. The 100,000 shares of the Company's common stock were issued
pursuant to The Plan and Agreement of Merger dated October 31, 1996 in
which Bear Paw merged with and into Sheffield Gas Processors, Inc. ("Gas
Processors") in exchange for stock in Gas Processors' parent company,
TransMontaigne Oil Company.
(d) Exemption from registration claimed. The 100,000 shares of common stock
issued have not been registered under the Securities Act of 1933 or State
Blue Sky Laws because they are being issued in a private placement under
Section 4(2) of the Securities Act of 1933.
20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule. FILED HEREWITH
No reports on Form 8-K were filed during the quarter ended October 31, 1996.
21
<PAGE>
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.
DATED: December 13, 1996 TRANSMONTAIGNE OIL COMPANY
(Registrant)
/s/ CORTLANDT S. DIETLER
------------------------
Cortlandt S. Dietler
Chairman and Chief Executive Officer
/s/ W.A. SIKORA
---------------
W. A. Sikora
Executive Vice President
(Principal Accounting Officer)
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED OCTOBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 33,001,504
<SECURITIES> 0
<RECEIVABLES> 42,150,480
<ALLOWANCES> 0
<INVENTORY> 36,951,892
<CURRENT-ASSETS> 113,315,834
<PP&E> 34,055,163
<DEPRECIATION> (7,218,868)
<TOTAL-ASSETS> 161,052,487
<CURRENT-LIABILITIES> 46,094,524
<BONDS> 37,684,067
0
0
<COMMON> 209,830
<OTHER-SE> 71,462,054
<TOTAL-LIABILITY-AND-EQUITY> 161,052,487
<SALES> 0
<TOTAL-REVENUES> 470,822,944
<CGS> 0
<TOTAL-COSTS> 462,096,897
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,370,280
<INCOME-PRETAX> 4,749,663
<INCOME-TAX> 270,000
<INCOME-CONTINUING> 4,479,663
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,479,663
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
