<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 July 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 900
DENVER, COLORADO 80202
(Address, including zip code, of principal executive offices)
(303) 605-1798
(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 August 30, 1996 there were 20,882,977 shares of the Registrant's Common
Stock outstanding.
<PAGE>
TRANSMONTAIGNE OIL COMPANY
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<C> <S> <C>
PAGE NO.
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets
July 31, 1996 and April 30, 1996................... 3
Consolidated Statements of Operations
Three months ended July 31, 1996 and 1995.......... 5
Consolidated Statements of Cash Flows
Three months ended July 31, 1996 and 1995.......... 6
Notes to Consolidated Financial Statements......... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...... 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.........................................13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................14
SIGNATURES........................................15
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
- ------- ---------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1996 AND APRIL 30, 1996
(UNAUDITED)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1996 1996
------------ -----------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 34,210,175 38,403,234
Trade accounts receivable 24,713,349 20,905 812
Inventories 32,258,160 23,609,136
Prepaid expenses and other 1,241,355 1,475,612
------------ -----------
92,423,039 84,393,794
------------ -----------
Property, plant and equipment:
Land 1,072,798 1,072,798
Plant and equipment 28,078,049 24,926,309
Accumulated depreciation (6,807,470) (6,461,244)
------------ -----------
22,343,377 19,537,863
------------ -----------
Investments and other assets:
Investments 15,195,644 15,830,006
Other assets, net 4,975,289 1,201,313
------------ -----------
20,170,933 17,031,319
------------ -----------
$134,937,349 120,962,976
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
JULY 31, 1996 AND APRIL 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1996 1996
------------ -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
- -------------------------------------
Current liabilities:
Trade accounts payable $ 16,435,507 10,698,199
Current portion of long-term debt
and notes payable 32,725 -
Inventory due under exchange
agreements 4,814,086 8,874,645
Excise taxes payable 4,496,268 6,483,756
Other accrued liabilities 2,127,145 2,685,355
------------ -----------
27,905,731 28,741,955
------------ -----------
Long-term debt, less current portion 33,951,517 28,948,867
Minority interests 5,345,806 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 20,805,615
shares at July 31, 1996; par
value $.10 per share, authorized
27,000,000 shares, issued and
outstanding 19,331,171 shares at
April 30, 1996 208,056 1,933,117
Capital in excess of par value 71,021,066 61,187,476
Accumulated deficit (3,494,827) (5,301,402)
------------ -----------
67,734,295 57,819,191
------------ -----------
$134,937,349 120,962,976
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 1996 AND 1995 (UNAUDITED)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
------------- ------------
<S> <C> <C>
Revenue:
Product sales, pipeline tariffs and
terminaling fees $194,052,201 107,690,977
Costs and expenses:
Product costs and direct operating
expenses 189,969,949 103,789,265
General and administrative 1,490,039 1,060,698
Depreciation and amortization 355,828 277,668
------------- ------------
191,815,816 105,127,631
------------- ------------
Operating income 2,236,385 2,563,346
Other income (expenses):
Interest income 454,177 121,393
Equity in losses of affiliates (315,432) (23,138)
Minority interests 107,157 12,302
Interest expense and other financing
costs (655,837) (611,201)
Other miscellaneous, net 40,125 -
------------- ------------
(369,810) (500,644)
------------- ------------
Earnings before income taxes 1,866,575 2,062,702
Income taxes - current 60,000 31,500
------------- ------------
Net earnings $ 1,806,575 2,031,202
============= ============
Weighted average common shares
outstanding 20,956,139 14,902,347
============= ============
Earnings per common share $0.09 0.14
============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JULY 31, 1996 AND 1995 (UNAUDITED)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,806,575 $ 2,031,202
Adjustments to reconcile net
earnings to net cash used by
operating activities:
Depreciation and amortization 451,095 277,668
Equity in losses of
affiliates 315,432 23,138
Minority interests (107,157) (12,302)
Changes in operating assets
and liabilities,
net of effect of
acquisitions:
Trade accounts
receivable (3,370,369) 3,927,874
Inventories (8,649,024) (3,556,679)
Prepaid expenses and
other 316,569 216,339
Trade accounts payable 5,557,407 (3,871,801)
Inventory due under
exchange agreements (4,060,559) (3,047,131)
Accrued liabilities (2,627,625) 498,902
------------ ------------
Net cash used by
operating
activities (10,367,656) (3,512,790)
------------ ------------
Cash flows from investing activities:
Purchases of property, plant and
equipment (926,848) (943,383)
Proceeds from sale of assets 8,103 4,500
Decrease (increase) in other assets (44,218) 11,040
------------ ------------
Net cash used by
investing activities (962,963) (927,843)
------------ ------------
Cash flows from financing activities:
Borrowings (repayments) of long-term
debt, net 4,995,942 (16,683,326)
Cash received in connection with
merger 2,315,527 -
Merger related costs (173,909) (15,157)
Stock subscription received in cash - 30,000,002
------------ ------------
Net cash provided
by financing
activities 7,137,560 13,301,519
------------ ------------
Increase (decrease)
in cash and cash
equivalents (4,193,059) 8,860,886
------------ ------------
Cash and cash equivalents at beginning
of quarter 38,403,234 1,801,828
------------ ------------
Cash and cash equivalents at end of
quarter $ 34,210,175 10,662,714
============ ============
</TABLE>
6
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
THREE MONTHS ENDED JULY 31, 1996 AND 1995 (UNAUDITED)
- -----------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow
information:
Acquisition of Sheffield (Note 2)
Fair value of assets acquired $8,739,247 -
Fair value of liabilities assumed 231,484 -
---------- ----
8,507,763 -
Merger related costs 399,234
---------- ----
Fair value of stock issued $8,108,529 -
========== ====
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
TRANSMONTAIGNE OIL COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
- ------------------------------------------------------------------------------
(1) BASIS OF PRESENTATION
The consolidated financial statements for the three month periods ended July
31, 1996 and July 31, 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 period. The 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 ended July 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"). 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. 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, (iii) the par value of the common stock was set at $.01 per
share, and (iv) 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.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
TransMontaigne Oil Company (the "Company") pursues business opportunities in
the downstream sector of the petroleum industry. The Company's principal
operating 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 741 miles of
pipeline (the NORCO pipeline, the Razorback pipeline, and the CETEX pipeline),
and ten terminal facilities in seven states.
The Company's subsidiary, Bear Paw Energy, Inc., is constructing a gas
gathering system in North Dakota and is currently managing 15 small gathering
systems for a major interstate pipeline company.
RESULTS OF OPERATIONS
The following is a discussion of the Company's consolidated results of
operations and capital resources. This discussion and analysis should be read
in conjunction with the Company's consolidated financial statements and related
notes included elsewhere in this filing.
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 costs of the
pipeline and terminal business 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 very 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.
9
<PAGE>
Three months ended July 31, 1996 compared to July 31, 1995:
Revenue and operating information for the three month periods ended July 31,
1996 and July 31, 1995 is summarized below.
<TABLE>
<CAPTION>
Products
Supply and
Pipeline Terminal Distribution
Operations Operations Operations Total
-----------------------------------------------
<S> <C> <C> <C> <C>
(in thousands)
July 31, 1996
- -------------
Volumes (1) 5,004 175,000 311,000
Revenues $2,865 1,176 190,011 194,052
Net Operating Margin (2) 1,512 951 1,619 4,082
July 31, 1995
- -------------
Volumes (1) 4,914 136,000 186,000
Revenues $1,844 773 105,074 107,691
Net Operating Margin (2) 915 593 2,394 3,902
</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 increased 65% or $597,000,
to $1,512,000, as compared to $915,000 for the prior year quarter. This
increase primarily was due to a 2% total increase in volumes shipped, including
a net increase in the volumes of higher tariff shipments, together with an
increase in joint tariff participation, which in the aggregate resulted in a 55%
increase in revenues of $1,021,000 during the period. The increase in revenues
partially was offset by a 46% increase in operating costs of $424,000, primarily
due to incremental power costs from additional volumes and increased field
personnel costs, repairs and maintenance, and increased property tax
assessments.
The net operating margin from terminal operations increased 60%,
approximately $358,000 to $951,000 in 1996. The 1996 increase resulted from a
29% increase in volumes, primarily from the Little Rock, Arkansas terminal,
offset in part by an increase in terminal operating costs of 25%.
The net operating margin from product sales decreased 32%, approximately
$775,000 during the current quarter, compared to the 1995 quarter, while net
revenues increased $84,937,000 on additional volume of 125,000,000 gallons sold.
The $.005 net operating margin per gallon realized by the Company in the current
quarter is more in line with the Company's historical performance than the $.013
per gallon realized during the 1995 quarter.
10
<PAGE>
During the 1996 quarter, general and administrative expenses increased
approximately 40% over the prior year quarter, primarily due to additional
personnel costs.
Equity in earnings of affiliates primarily represents the Company's share of
the earnings of Lion Oil Company ("Lion"). The Company's 65% owned subsidiary,
Continental Ozark Holdings, Inc. ("COH"), owns a 27.75% interest in Lion.
Minority interest represents the other COH shareholders' interest in the
earnings of Lion. During the current quarter, the Company's share of losses of
Lion (net of the related minority interests) was approximately $191,000 compared
to $11,000 for the 1995 quarter, primarily due to an unanticipated turnaround of
certain refinery processing assets and to reduced crack spreads at Lion.
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 increased $44,636 or 7.3%,
primarily as a result of increased average balances outstanding under the line
of credit. 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 quarter increased to $454,177 from
$121,393 for the 1995 quarter, primarily due to the $23.5 million increase in
cash held for future investments invested in interest-bearing securities during
the period.
Net earnings for the three months ended July 31, 1996 decreased $224,000 to
$1,807,000 from $2,031,000 for the three months ended July 31, 1995 primarily as
a result of the increases in pipeline and terminal net operating margins and
interest income, which were more than offset by decreased products supply and
distribution net operating margins, increased general and administrative and
interest expense, and an increase in the loss attributed to the Company's
investment in Lion discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The net cash used by operating activities was $10 million, a $7 million
increase over the cash used by operating activities in the 1995 quarter. The
increase in net cash used by operating activities was primarily a result of
increased inventory levels required to meet seasonal demands.
The Company made capital expenditures of $927,000 and $943,000 for the 1996
and 1995 quarters, respectively, consisting of additions and improvements to the
Company's terminal and pipeline facilities. The Company has budgeted
approximately $19,000,000 of capital expenditures for the fiscal year ending
April 30, 1997. Actual future capital expenditures will depend on numerous
factors, including the availability of appropriate acquisitions; the demand for
pipeline, terminaling and storage services; local, state and federal
governmental regulations; environmental compliance requirements; fuel
conservation efforts; and the availability of financing on acceptable terms.
The Company increased its long term bank debt by $5 million during the
current quarter. During the same quarter in 1995 the Company repaid
approximately $17 million of the long term bank debt using part of $30 million
collected on stock subscriptions receivable at April 30, 1995.
The Company received approximately $2,316,000 cash in connection with the
Merger between TransMontaigne and Sheffield.
In December 1995, the Company entered into a new bank credit agreement with a
money center bank which provides for revolving credit of up to $45 million,
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 July 31, 1996, $30,000,000 was outstanding under the credit agreement.
11
<PAGE>
The Company had working capital of $64,517,308 at July 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.
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 thin margins on high volumes of products
. 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
. potential changes in the rates which applicable federal and state
agencies allow the Company to charge for the use of its facilities
12
<PAGE>
PART II. OTHER INFORMATION
- ----------------------------
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has described matters submitted to a vote of security holders during
the quarter ending July 31, 1996 in its Annual Report or Form 10-K for the
fiscal year ended April 30, 1996.
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
27 Financial Data Schedule. FILED HEREWITH
</TABLE>
(b) Reports on Form 8-K
A Form 8-K dated June 4, 1996 was filed on June 6, 1996 reporting a change
of control and completion of the Merger under Items 1 and 2, respectively,
and a change in Registrant's fiscal year end to April 30 under Item 8.
A Form 8-K dated July 16, 1996 was filed on July 23, 1996 reporting a
change in Registrant's Certifying Accountant under Item 4.
14
<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: SEPTEMBER 13, 1996 TRANSMONTAIGNE OIL COMPANY
(Registrant)
/s/ CORTLANDT S. DIETLER
----------------------------
Cortlandt S. Dietler
Chairman, President and
Chief Executive Officer
/s/ FREDERICK W. BOUTIN
-----------------------------
Frederick W. Boutin
Senior Vice President
(Principal Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED JULY 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 34,210,175
<SECURITIES> 0
<RECEIVABLES> 24,713,349
<ALLOWANCES> 0
<INVENTORY> 32,258,160
<CURRENT-ASSETS> 92,423,039
<PP&E> 28,078,049
<DEPRECIATION> (6,807,470)
<TOTAL-ASSETS> 134,937,349
<CURRENT-LIABILITIES> 27,905,731
<BONDS> 0
0
0
<COMMON> 208,056
<OTHER-SE> 67,526,239
<TOTAL-LIABILITY-AND-EQUITY> 134,937,349
<SALES> 0
<TOTAL-REVENUES> 194,052,201
<CGS> 0
<TOTAL-COSTS> 191,815,816
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 655,837
<INCOME-PRETAX> 1,866,575
<INCOME-TAX> 60,000
<INCOME-CONTINUING> 1,806,575
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,806,575
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
