<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 30, 1998
TRANSMONTAIGNE INC.
____________________________________
(Exact Name of Registrant as specified in its charter)
DELAWARE
____________________________________
(State or other jurisdiction of incorporation)
Commission File Number 001-11763
IRS Employer No. 06-1052062
370 SEVENTEENTH STREET
SUITE 2750
DENVER, CO 80202
TELEPHONE NUMBER (303) 626-8200
____________________________________
(Address, including zip code of principal executive offices)
303-626-8200
____________________________________
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Current Report on Form 8-K/A amends the Current Report on Form 8-K filed by
TransMontaigne Inc. ("TransMontaigne") on November 13, 1998 solely to add the
financial statements of the business acquired, Louis Dreyfus Energy Corp. -
Atlanta Division ("LDEC"), as required by Item 7(a), and the pro forma financial
information required by Item 7(b).
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
<TABLE>
<CAPTION>
Louis Dreyfus Energy Corp. - Atlanta Division
<S> <C>
Report of Independent Auditors...................................... 4
Balance Sheets, May 31, 1998 and 1997............................... 5
Statements of Operations and Shareholder's Net Investment,
Years Ended May 31, 1998, 1997 and 1996............................ 6
Statements of Cash Flows, Years Ended May 31, 1998, 1997 and 1996... 7
Notes to Financial Statements, May 31, 1998......................... 8
Louis Dreyfus Energy Corp. - Atlanta Division
Condensed Balance Sheets, August 31, 1998 and
May 31, 1998 (Unaudited)........................................... 19
Condensed Statements of Operations,
Three Months ended August 31, 1998 and 1997 (Unaudited)............ 20
Condensed Statements of Cash Flows,
Three Months Ended August 31, 1998 and 1997 (Unaudited)............ 21
Notes to Condensed Financial Statements (Unaudited)................. 22
(B) CONDENSED COMBINED PRO FORMA FINANCIAL INFORMATION
Introduction......................................................... 24
Condensed Combined Pro Forma Balance Sheet,
September 30, 1998 (Unaudited)...................................... 25
Condensed Combined Pro Forma Statement of Operations,
Three Months Ended September 30, 1998 (Unaudited)................... 26
Condensed Combined Pro Forma Statement of Operations,
Year Ended April 30, 1998 (Unaudited)............................... 27
Notes to Condensed Combined Pro Forma Financial
Statements (Unaudited).............................................. 28
(C) EXHIBITS
23.1 Consent of Ernst & Young LLP.................................... 30
</TABLE>
3
<PAGE>
Report of Independent Auditors
Board of Directors
Louis Dreyfus Energy Corp.
We have audited the accompanying balance sheets of Louis Dreyfus Energy
Corp.-Atlanta Division as of May 31, 1998 and 1997, and the related statements
of operations and shareholder's net investment and cash flows for each of the
three years in the period ended May 31, 1998. These financial statements are the
responsibility of the Division's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Louis Dreyfus Energy
Corp.-Atlanta Division at May 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
May 31, 1998 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Stamford, Connecticut
October 14, 1998
4
<PAGE>
Louis Dreyfus Energy Corp.-Atlanta Division
Balance Sheets
<TABLE>
<CAPTION>
MAY 31
1998 1997
-----------------------------------------------
<S> <C> <C>
(In Thousands)
Assets
Current assets:
Cash and cash equivalents $ 3,828 $ 4,085
Inventories 197,825 80,444
Trade accounts receivable 76,937 62,012
Prepaid expenses and other 2,725 273
-----------------------------------------------
Total current assets 281,315 146,814
Property, plant and equipment:
Land 2,543 2,492
Petroleum terminals and equipment 34,959 30,455
Other plant and equipment 6,680 5,343
Construction in progress 4,637 3,824
Accumulated depreciation (17,068) (13,998)
-----------------------------------------------
Property, plant and equipment - net 31,751 28,116
-----------------------------------------------
Total assets $313,066 $174,930
===============================================
</TABLE>
<TABLE>
<CAPTION>
Liabilities and shareholder's net investment
Current liabilities:
<S> <C> <C>
Trade accounts payable $ 50,915 $ 43,910
Excise taxes payable 29,309 4,949
Deferred income taxes 110 22
Other accrued liabilities 7,595 8,986
----------------------------------------------
Total current liabilities 87,929 57,867
Shareholder's net investment 225,137 117,063
----------------------------------------------
Total liabilities and shareholder's net investment $313,066 $174,930
==============================================
</TABLE>
See accompanying notes.
5
<PAGE>
Louis Dreyfus Energy Corp.-Atlanta Division
Statements of Operations and Shareholder's Net Investment
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
1998 1997 1996
---------------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)
Revenues:
Sales $2,235,897 $3,060,057 $2,935,442
Product costs and direct operating expenses 2,181,819 3,014,730 2,916,498
---------------------------------------------------------------
Operating margin 54,078 45,327 18,944
Expenses:
Administrative and general 12,996 12,398 12,733
Interest and financing costs 10,800 6,112 8,515
Depreciation and amortization 3,070 3,507 3,442
---------------------------------------------------------------
26,866 22,017 24,690
---------------------------------------------------------------
Income (loss) before income taxes 27,212 23,310 (5,746)
Income tax expense (benefit) 10,585 9,067 (2,235)
---------------------------------------------------------------
Net income (loss) $ 16,627 $ 14,243 $ (3,511)
===============================================================
Shareholder's net investment at beginning of
year (Note 1) $ 117,063 $ 85,037 $ 98,414
Net income (loss) 16,627 14,243 (3,511)
Funding from (repayments to) Parent, net 91,447 17,783 (9,866)
---------------------------------------------------------------
Shareholder's net investment at
end of year $ 225,137 $ 117,063 $ 85,037
===============================================================
</TABLE>
See accompanying notes.
6
<PAGE>
Louis Dreyfus Energy Corp.-Atlanta Division
Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
1998 1997 1996
---------------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)
OPERATING ACTIVITIES
Net income (loss) $ 16,627 $ 14,243 $ (3,511)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation 3,070 3,507 3,442
Deferred income taxes 88 2,411 (2,235)
Changes in operating assets and liabilities:
Inventories (117,381) (58,432) 32,741
Trade accounts receivable (14,925) 24,312 (19,404)
Prepaid expenses and other (2,452) (127) 312
Trade accounts payable 7,005 (15,425) 11,539
Excise taxes payable 24,360 9,827 (10,305)
Other accrued liabilities (1,391) 3,373 (248)
---------------------------------------------------------------
Net cash (used in) provided by operating
activities (84,999) (16,311) 12,331
INVESTING ACTIVITIES
Purchases of property, plant and equipment (6,705) (2,943) (3,097)
Proceeds from sale of fixed assets - 441 5,243
---------------------------------------------------------------
Net cash used in (provided by) investing
activities (6,705) (2,502) 2,146
FINANCING ACTIVITIES
Funding from (repayments to) Parent, net 91,447 17,783 (9,866)
---------------------------------------------------------------
Net cash provided by (used in) financing activities 91,447 17,783 (9,866)
Increase (decrease) in cash and cash equivalents (257) (1,030) 4,611
Cash and cash equivalents at beginning of year (Note 1) 4,085 5,115 504
---------------------------------------------------------------
Cash and cash equivalents at end of year $ 3,828 $ 4,085 $ 5,115
===============================================================
</TABLE>
See accompanying notes.
7
<PAGE>
Louis Dreyfus Energy Corp.-Atlanta Division
Notes to Financial Statements
May 31, 1998
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Atlanta division of Louis Dreyfus Energy Corporation (the "Division") is
engaged in the refined petroleum products, terminaling, storage, supply and
distribution business. The Division owns and operates 24 refined petroleum
products terminaling and storage facilities located in 9 states with combined
tank storage capacity of 4,309,000 barrels. The Division utilizes these
facilities to market and distribute refined petroleum products to producers,
refiners, distributors and end users of petroleum products. The Division also
utilizes common carrier pipelines and third party owned petroleum products
terminaling and storage facilities to distribute and market petroleum products.
CHANGE IN REPORTING ENTITY
On September 13, 1998, Louis Dreyfus Corporation ("Parent" or "LDC") signed a
definitive agreement to sell the stock of Louis Dreyfus Energy Corp. ("LDEC") to
TransMontaigne Inc. LDEC is a wholly-owned subsidiary of LDC, whose ultimate
U.S. parent is Louis Dreyfus Holding Company, Inc. ("LDHC"). LDHC is a wholly-
owned subsidiary of Societe Anonyme Louis Dreyfus & Cie., Paris. Certain assets
of LDEC will be transferred to the Parent in a spin-off prior to the closing of
the transaction. TransMontaigne Inc. will acquire only the refined petroleum
products, terminaling and supply and distribution business (referred to as the
Atlanta division) of LDEC. As a result of the spin-off, the accompanying
financial statements were restated to present the financial statements of the
Atlanta Division as a separate reporting entity.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared from the historical
accounting records of the Atlanta division of LDEC. As noted above, the Division
was not previously a separate legal entity and, accordingly, the balance sheets
and statements of operations and shareholder's net investment reflect
shareholders net investment which includes amounts owed to the Parent,
contributed capital and retained earnings.
8
<PAGE>
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories of refined petroleum products are valued at market. Undelivered
purchase and sale commitments are marked to market, and the resulting unrealized
gains or losses are recognized in income. Inventory due from third parties under
exchange agreements is included in inventory and recorded at market.
Adjustments resulting from changes in current replacement cost for refined
products due to or from third parties under exchange agreements are reflected in
cost of products sold.
<TABLE>
<CAPTION>
1998 1997
----------------------------------------
(In Thousands)
<S> <C> <C>
Refined petroleum products $143,002 $ 95,830
Refined petroleum products due from (to)
third parties under exchange agreements 9,794 (20,432)
Unrealized gain on open contracts 44,699 4,684
Other 330 362
----------------------------------------
$197,825 $ 80,444
========================================
</TABLE>
The Division's refined petroleum products inventory consists primarily of
gasoline and distillates. A portion of this inventory represents line fill and
tank bottoms which are required for operating balances in the conduct of the
Division daily supply and distribution activities and are maintained both in
tanks owned by Louis Dreyfus Energy Corp. and tanks and pipelines owned by third
parties.
FUTURES AND OPTION CONTRACTS
The Division enters into futures and option contracts to hedge inventories and
undelivered purchase and sale commitments. Futures and option contracts are
valued at market, and the resulting unrealized gains and losses are recognized
in income.
9
<PAGE>
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Division's operations are included in the Federal and certain state income
tax returns of LDHC. Income tax provisions are based on income taxes currently
payable and on income taxes deferred because of temporary differences between
the tax and financial statement bases of assets and liabilities. Income tax
provisions have been presented on a separate-company basis for the Division for
purposes of financial statement presentation.
INVENTORY MANAGEMENT
The Division manages the risk associated with fluctuations in the price of
refined petroleum products inventory and purchase and sales commitments, and
enters into futures contracts which are designated as hedges of the products
purchased or sold. The Division also engages in the trading of futures
contracts. Gains and losses from these trading activities are recognized as
incurred.
The Division's Risk and Product Management Committee reviews the total inventory
position on a weekly basis in order to ensure compliance with the Division's
inventory management policies, including all hedging and trading activities.
The Division has adopted policies which govern the extent to which its net
inventory position is subject to price risk.
In connection with its marketing and distribution activities, the Division had
outstanding contracts to sell approximately 22,419,000 barrels of product and
contracts to purchase approximately 8,153,000 barrels of product at May 31,
1998, and outstanding contracts to sell approximately 17,281,000 barrels of
product and contracts to purchase approximately 3,806,000 barrels of product at
May 31, 1997. The net unrealized gains relating to such contracts of
approximately $41,298,000 at May 31, 1998 and $5,341,000 at May 31, 1997 have
been included in operating results. Net losses on futures contracts of
approximately $3,051,000 for the year ended May 31, 1998, net gains of
approximately $31,166,000 for the year ended May 31, 1997 and net losses of
approximately $20,177,000 for the year ended May 31, 1996 have been included in
product costs in the accompanying statements of operations.
10
<PAGE>
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORY MANAGEMENT (CONTINUED)
Product futures contracts are traded on the New York Mercantile Exchange
(NYMEX). The change in market value of NYMEX-traded futures contracts requires
daily cash settlements in margin accounts. NYMEX future contracts are
guaranteed by the NYMEX and have nominal credit risk. The Division is exposed
to credit risk in the event the counterparties to other third party agreements
are not able to perform their contractual obligations.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Upon retirement or sale of
fixed assets, their net book values are removed from the accounts and any gains
or losses are recognized in income. Expenditures for maintenance and repairs
are charged to expense and renewals and improvements are capitalized.
Depreciation is calculated principally using the straight-line method over the
estimated useful lives of the assets. The useful lives used for computation of
depreciation range from 3 to 31.5 years.
CASH EQUIVALENTS
The Division considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. Actual results could
differ from those estimates.
11
<PAGE>
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES (CONTINUED)
The Division engages in price risk management activities, principally for
hedging purposes. Activities for hedging purposes are accounted for using the
mark to market method. Under this method, changes in the value of market
positions are recognized as a gain or loss in the period of change. The market
prices used to value these transactions reflect management's best estimate
considering various factors including closing exchange and over-the-counter
quotations, parity differentials and time value and volatility factors
underlying the commitments. The values are adjusted to reflect the potential
impact of liquidating the Division's position in the ordinary course of business
over a reasonable period of time under present market conditions.
ENVIRONMENTAL COSTS
Expenditures for ongoing compliance with environmental regulations that relate
to current operations are expensed or capitalized as appropriate in accordance
with generally accepted accounting principles. Expenditures that relate to an
existing condition caused by past operations, which do not contribute to current
or future revenue generation, are expensed. Liabilities are recorded when
environmental assessments indicate that remediation efforts are probable and the
costs can be reasonably estimated. Estimates of liability are based upon
current laws and regulations. The estimation process includes review of current
remediation technology and current laws and regulations. The estimation process
includes review of prior remediation costs, other companies' remediation
experience and information available from regulatory agencies. Liabilities are
subject to future revision based on actual costs, technological advances,
regulatory rulings or other new circumstances. These liabilities are recorded
at their undiscounted amounts.
12
<PAGE>
2. INCOME TAXES
The provision (benefit) for income taxes for years ended May 31 consists of (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---------------------------------------------------
<S> <C> <C> <C>
Current federal income taxes $ 8,878 $5,629 $ -
Current state income taxes 1,619 1,027 -
Deferred federal income taxes 74 2,039 (1,890)
Deferred state income taxes 14 372 (345)
---------------------------------------------------
Income tax expense (benefit) $10,585 $9,067 $(2,235)
===================================================
</TABLE>
The Division's effective tax rate differs from the statutory rate of 35% due to
state taxes.
At May 31, 1998 and 1997, temporary differences that give rise to the deferred
tax liabilities consist of accruals relating to environmental regulatory
compliance.
3. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of operations, the Division enters into various contractual
commitments involving forward settlement, including commodity swap contracts
("swaps"). Swaps are held for trading purposes and function as hedges of
commodity trading positions. These swaps are accounted for at market value and
the related unrealized gains and losses are recognized in income currently.
13
<PAGE>
3. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK (CONTINUED)
A summary of the Division's swaps follows (in thousands). Amounts have been
netted only to the extent that they could be offset under agreements with
various counterparties:
FAIR VALUE AT MAY 31
1998 1997
----------------------------------------
Assets $ 1,494 $ 703
Liabilities 2,059 1,226
NOTIONAL AMOUNT AT MAY 31
1998 1997
----------------------------------------
Commitments to Purchase $ - $12,507
Commitments to Sell 42,303 591
The aforementioned notional values do not measure the Division's risk of loss
but rather indicate the relative size of derivative financial instrument
positions and are used in the calculation of the amounts to be exchanged between
the counterparties upon settlement. The Division's credit exposure from
derivative financial instruments held for trading purposes is limited to the
current fair value of contracts with a positive fair value.
Contractual commitments are subject to various risks including market value
fluctuations and counterparty credit and liquidity risk. The Division has
established procedures to continually monitor this exposure and to minimize
credit risk, including the establishment and monitoring of credit limits, margin
requirements, master netting arrangements, letters of credit and other
guarantees.
14
<PAGE>
3. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
All financial instruments are reflected in the accompanying balance sheet at
amounts which approximate fair market value. Fair market value is determined
principally using quoted market prices.
CONCENTRATIONS OF CREDIT RISK
The Division is engaged in the business of terminaling, storing, marketing and
distributing refined petroleum products. Accordingly, a substantial portion of
the Division's trade receivables are with other petroleum products refining,
marketing and distribution companies. There is no significant concentration of
credit risk with any one counterparty. All of the Division's non-affiliate
trade receivables are with domestic companies. Margin deposits are provided by
the Parent and consist of U.S. treasury bills which are on deposit with two
brokers, one of which is an affiliate, holding such deposits in a custodial
capacity.
LIQUIDITY RISK
Liquidity risk arises in the general funding of the Division's commodity trading
activities and in the management of forward positions. It includes both the
risk of being unable to fund the Division's portfolio of assets at appropriate
maturities and rates, and the risk of being unable to liquidate a position in a
timely manner at a reasonable price.
Management of the Division's liquidity profile is designed to ensure that even
under adverse conditions, the Division has access to the funds necessary to
cover maturing liabilities. These funds are provided by the Parent and include
interest-bearing and noninterest-bearing deposits, trading account liabilities,
and borrowing arrangements with financial institutions. The liquidity of
trading asset inventories is monitored continuously.
15
<PAGE>
4. LIMITATIONS
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature, involve uncertainties and matters of
significant judgment and cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
5. COMMITMENTS AND CONTINGENCIES
At May 31, 1998, the Division had future minimum lease payments under non-
cancelable operating leases with initial or remaining terms of more than one
year as follows: 1999 - $900,000; 2000 - $800,000; 2001 - $600,000; 2002 -
$600,000; 2003 - $600,000 and thereafter - $2,800,000.
Rental expense for the years ended May 31, 1998, 1997 and 1996 was approximately
$810,000, $567,000 and $510,000, respectively.
There are various claims asserted against and by the Division which in the
opinion of house counsel, based on a review of the present stages of such claims
in the aggregate, should not have a material effect on the Company's financial
condition.
6. RELATED PARTY TRANSACTIONS
The operations of the Division are wholly financed by the Parent and all cash
flow generated by or cash requirements of the Division are remitted to (or
received from) the Parent on a daily basis. The Parent charged interest to the
Division based upon the daily net intercompany balance using interest rates of
approximately 6.8%, 6.7%, and 6.9% for the fiscal years ended May 31, 1998,
1997, and 1996, respectively.
16
<PAGE>
6. RELATED PARTY TRANSACTIONS (CONTINUED)
The Parent provides services to the Division, including treasury, tax, financial
reporting, legal, payroll and information technology. These charges are based
upon the direct cost of the transactions processed or the number of employees.
The accompanying financial statements include all charges incurred by the Parent
which the Division would incur as an unaffiliated entity.
Management believes that the basis used for allocating costs for these services
is reasonable. However, the terms of these transactions may differ from terms
negotiated with an unrelated party; and as a result, the accompanying financial
statements may not be indicative of results that would have been achieved had
the Division been operated as an unaffiliated entity.
Certain employees of the Division are eligible for employee benefits under a
deferred compensation plan, a defined benefit pension plan, and an unfunded
postretirement plan sponsored by the Parent. The postretirement plan provides
medical, dental and life insurance benefits. The Parent charges the Division
costs for these benefits based upon the Company's calculated portion of the
obligations under these plans. Expenses related to these employee benefits were
approximately $1,500,000, $890,000, and $960,000 for the years ended May 31,
1998, 1997 and 1996, respectively.
7. YEAR 2000 DISCLOSURE (UNAUDITED)
A limited number of the Division's computer programs were written using two
digits rather than four to define the applicable year. As a result, those
computer programs have time-sensitive software that recognize a date using "00"
as the year 1900 rather than the year 2000. This could cause a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
The Division is implementing an assessment and remediation program. Management
has identified the components and assessed its Year 2000 readiness programs
adequate. The total Year 2000 project cost for LDEC is estimated to be less
than $50,000 and will be expensed as incurred. As of May 31, 1998, $32,000 of
expense has been recognized.
17
<PAGE>
7. YEAR 2000 DISCLOSURE (UNAUDITED) (CONTINUED)
The project is estimated to be completed no later than December 31, 1998, which
is prior to any anticipated impact on its operating systems. The Division plans
to implement modifications to existing software, upgrades to new software
versions and planned abandonment of unneeded programs in order that the Year
2000 Issue will not pose significant operational problems for its computer
systems.
The costs of the project and the date on which the Division believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved, and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes and similar uncertainties.
The Division is currently assessing the impact of the Year 2000 Issue on its
other equipment and on its supplier relationships. This assessment is expected
to be completed by December 31, 1998, and it is anticipated that any remediation
necessary will be completed in 1999.
8. SUBSEQUENT EVENTS
On September 13, 1998, LDC signed a definitive agreement to sell the stock of
LDEC to TransMontaigne Inc., a publicly held company, for total consideration of
approximately $161 million plus working capital as of the closing date. The
consideration will consist of cash and 4.5 million shares of TransMontaigne Inc.
common stock. The transaction is expected to close on October 30, 1998. The
Division's balance sheet as of May 31, 1998, statement of operations and cash
flows for the year ended May 31, 1998 do not reflect any adjustments for this
transaction.
18
<PAGE>
LOUIS DREYFUS ENERGY CORP. - ATLANTA DIVISION
CONDENSED BALANCE SHEETS
AUGUST 31, 1998 AND MAY 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS August 31, 1998 May 31, 1998
- ------ -------------------------- ----------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,460,000 3,828,000
Trade accounts receivable 71,654,000 76,937,000
Inventories 213,638,000 197,825,000
Prepaid expenses and other 1,663,000 2,725,000
-------------------------- ----------------------
296,415,000 281,315,000
-------------------------- ----------------------
Property, plant and equipment:
Land 2,543,000 2,543,000
Plant and equipment 47,236,000 46,276,000
Accumulated depreciation (17,802,000) (17,068,000)
-------------------------- ----------------------
31,977,000 31,751,000
-------------------------- ----------------------
$ 328,392,000 313,066,000
========================== ======================
LIABILITIES AND STOCKHOLDER'S NET INVESTMENT
- --------------------------------------------
Current liabilities:
Trade accounts payable $ 46,002,000 50,915,000
Excise taxes payable 64,862,000 29,309,000
Deferred income taxes 110,000 110,000
Other accrued liabilities 2,130,000 7,595,000
-------------------------- ----------------------
113,104,000 87,929,000
Stockholder's net investment 215,288,000 225,137,000
-------------------------- ----------------------
$ 328,392,000 313,066,000
========================== ======================
</TABLE>
See accompanying notes to condensed financial statements.
19
<PAGE>
LOUIS DREYFUS ENERGY CORP. - ATLANTA DIVISION
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1998 AND AUGUST 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
August 31, 1998 August 31, 1997
------------------------- ----------------------
<S> <C> <C>
Revenues:
Sales $ 649,443,000 456,293,000
Costs and expenses:
Product costs and direct
operating expenses 638,022,000 438,987,000
General and administrative 2,234,000 2,554,000
Depreciation and amortization 739,000 812,000
------------------------- ----------------------
640,995,000 442,353,000
------------------------- ----------------------
Operating income 8,448,000 13,940,000
Interest expense 3,480,000 1,916,000
------------------------- ----------------------
Earnings before income taxes 4,968,000 12,024,000
Income tax expense 1,888,000 4,569,000
------------------------- ----------------------
Net earnings $ 3,080,000 7,455,000
========================= ======================
See accompanying notes to condensed financial statements.
</TABLE>
20
<PAGE>
LOUIS DREYFUS ENERGY CORP. - ATLANTA DIVISION
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31, 1998 AND AUGUST 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
August 31, 1998 August 31, 1997
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,080,000 7,455,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 739,000 812,000
Changes in operating assets and liabilities:
Trade accounts receivable 5,283,000 (1,044,000)
Inventories (15,813,000) (11,298,000)
Prepaid expenses and other 1,062,000 (451,000)
Trade accounts payable (4,914,000) (3,878,000)
Excise taxes payable and other
accrued liabilities 30,088,000 (1,019,000)
----------------- -----------------
Net cash provided (used) by
operating activities 19,525,000 (9,423,000)
----------------- -----------------
Cash flows from investing activities:
Purchases of property, plant and equipment (964,000) (1,862,000)
----------------- -----------------
Net cash (used) by
investing activities (964,000) (1,862,000)
----------------- -----------------
Cash flows from financing activities:
Funding from (repayments to) Parent, net (12,929,000) 9,459,000
----------------- -----------------
Net cash provided (used) by
financing activities (12,929,000) 9,459,000
----------------- -----------------
Increase (decrease) in cash and
cash equivalents 5,632,000 (1,826,000)
Cash and cash equivalents at beginning of period 3,828,000 4,085,000
----------------- -----------------
Cash and cash equivalents at end of period $ 9,460,000 2,259,000
================= =================
</TABLE>
See accompanying notes to condensed financial statements.
21
<PAGE>
Louis Dreyfus Energy Corp.-Atlanta Division
Notes to Condensed Financial Statements
August 31, 1998
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Atlanta Division of Louis Dreyfus Energy Corporation (the "Atlanta
Division") is engaged in the refined petroleum products, terminaling, storage,
supply and distribution business. The Atlanta Division owns and operates 24
refined petroleum products terminaling and storage facilities located in 9
states with combined tank storage capacity of 4,309,000 barrels. The Atlanta
Division utilizes these facilities to market and distribute refined petroleum
products to producers, refiners, distributors and end users of petroleum
products. The Atlanta Division also utilizes common carrier pipelines and third
party owned petroleum products terminaling and storage facilities to distribute
and market petroleum products.
CHANGE IN REPORTING ENTITY
On September 13, 1998, Louis Dreyfus Corporation ("LDC") signed a definitive
agreement to sell the stock of Louis Dreyfus Energy Corp. ("LDEC") to
TransMontaigne Inc. ("TransMontaigne"). LDEC is a wholly-owned subsidiary of
LDC, whose ultimate U.S. parent is Louis Dreyfus Holding Company, Inc. ("LDHC").
LDHC is a wholly-owned subsidiary of Societe Anonyme Louis Dreyfus & Cie.,
Paris. Certain assets of LDEC will be transferred to LDC in a spin-off prior to
the closing of the transaction. TransMontaigne will acquire only the refined
petroleum products, terminaling and supply and distribution business of the
Atlanta Division of LDEC. As a result of the spin-off, the accompanying
condensed financial statements are presented as the financial statements of the
Atlanta Division as a separate reporting entity.
BASIS OF PRESENTATION
The accompanying condensed financial statements have been prepared from the
historical accounting records of the Atlanta Division of LDEC. As noted above,
the Atlanta Division was not previously a separate legal entity and,
accordingly, the balance sheets and statements of operations and shareholder's
net investment reflect shareholders net investment which includes amounts owed
to LDC, contributed capital and retained earnings.
22
<PAGE>
2. SUBSEQUENT EVENTS
On September 13, 1998, LDC signed a definitive agreement to sell the stock of
LDEC to TransMontaigne, a publicly held company, for total consideration of $161
million plus working capital as of the closing date. The consideration will
consist of cash and 4.5 million shares of TransMontaigne common stock. The
transaction closed on October 30, 1998. The Atlanta Division's balance sheet as
of August 31, 1998, and statement of operations for the three months ended
August 31, 1998 do not reflect any adjustments for this transaction.
23
<PAGE>
ITEM 7(b) CONDENSED COMBINED PRO FORMA FINANICAL
INFORMATION
INTRODUCTION
On October 30, 1998, TransMontaigne, through a wholly-owned subsidiary,
acquired all of the issued and outstanding capital stock of Louis Dreyfus
Energy Corp. - Atlanta Division ("LDEC") from Louis Dreyfus Corporation
("LDC") for approximately $161,000,000, including $100,565,000 in cash and
4,500,000 shares of TransMontaigne common stock. The $13.43 price per share
of TransMontaigne common stock set forth in the Stock Purchase Agreement
dated September 13, 1998 between TransMontaigne and LDC was calculated
based upon the average of the last daily sale prices of TransMontaigne
common stock (as reported by the Wall Street Journal) for the twenty
-------------------
consecutive trading days commencing on the thirtieth trading day prior to
the closing date of the transaction. In addition, TransMontaigne paid
approximately $192,492,000 for the net working capital of LDEC as of
October 30, 1998. The acquisition included twenty-four refined petroleum
products terminals and storage facilities. The purchase price was
established in arms-length negotiation between the managements of
TransMontaigne and LDC. The cash component of the purchase price and the
payment for net working capital acquired were funded by an advance from
TransMontaigne's $500,000,000 credit facility. The acquisition has been
accounted for using the purchase method of accounting.
The accompanying unaudited condensed combined pro forma balance sheet as of
September 30, 1998 assumes that the acquisition of LDEC and related
property occurred on September 30, 1998 and reflects the historical
consolidated balance sheet of TransMontaigne at that date giving pro forma
effect to the acquisition of LDEC and related property.
The accompanying unaudited condensed combined pro forma statements of
operations for the three months ended September 30, 1998 and the year ended
April 30, 1998 assume that the acquisition of LDEC and related property
occurred as of May 1, 1997 and combines the historical results of
operations of TransMontaigne for the three months ended September 30, 1998
and the twelve months ended April 30, 1998 with the operations of LDEC for
the three months ended August 31, 1998 and the twelve months ended May 31,
1998, respectively. The operations for TransMontaigne during the
transition period from May 1, 1998 to June 30, 1998 are not included in the
accompanying pro forma information. Revenues and the net loss for such
period were $315,533,000 and $2,663,000, respectively.
The accompanying pro forma information should be read in conjunction with
the related historical financial information and is not necessarily
indicative of the results which would actually have occurred had this
transaction been consummated on the dates or for the periods indicated, or
which may occur in the future.
24
<PAGE>
TRANSMONTAIGNE INC. AND SUBSIDIARIES
CONDENSED COMBINED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Condensed
TransMontaigne LDEC Combined
historical historical Pro forma Pro Forma
Assets September 30,1998 August 31, 1998 Adjustments TransMontaigne
- ------ ------------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 68,511,000 9,460,000 303,057,000 (1) 87,152,000
(283,876,000) (2)
(10,000,000) (3)
Trade accounts receivable 41,688,000 71,654,000 - 113,342,000
Inventories 70,407,000 213,638,000 - 284,045,000
Prepaid expenses and other 2,785,000 1,663,000 - 4,448,000
------------------ --------------- ----------- ---------------
183,391,000 296,415,000 9,181,000 488,987,000
------------------ --------------- ----------- ---------------
Property, plant and equipment, net 188,460,000 31,977,000 129,023,000 (2) 349,460,000
Investments and other assets 45,032,000 - 10,000,000 (3) 55,032,000
------------------ --------------- ----------- ---------------
$ 416,883,000 328,392,000 148,204,000 893,479,000
================== =============== =========== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------
Current liabilities:
Trade accounts payable $ 33,111,000 46,002,000 - 79,113,000
Inventory due under exchange
agreements 4,765,000 - - 4,765,000
Excise taxes payable 44,439,000 64,862,000 - 109,301,000
Other accrued liabilities 6,683,000 2,240,000 - 8,923,000
------------------ --------------- ----------- ---------------
88,998,000 113,104,000 - 202,102,000
------------------ --------------- ----------- ---------------
Long-term debt 179,859,000 - 303,057,000 (1) 482,916,000
Deferred tax liabilities, net 542,000 - - 542,000
Stockholder's net investment 215,288,000 (215,288,000) (2) -
Stockholders' equity:
Common Stock 260,000 - 45,000 (2) 305,000
Capital in excess of par value 137,044,000 - 60,390,000 (2) 197,434,000
Unearned compensation (688,000) - - (688,000)
Retained earnings 10,868,000 - - 10,868,000
------------------ --------------- ----------- ---------------
147,484,000 - 60,435,000 207,919,000
------------------ --------------- ----------- ---------------
$ 416,883,000 328,392,000 (148,204,000) 893,479,000
================== =============== =========== ===============
</TABLE>
See accompanying notes to condensed combined pro forma financial statements.
25
<PAGE>
TRANSMONTAIGNE INC. AND SUBSIDIARIES
CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND AUGUST 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Pro forma adjustments
---------------------------
TransMontaigne LDEC Condensed
historical historical Combined
three months ended three months ended Pro Forma
September 30,1998 August 31, 1998 Debit Credit TransMontaigne
----------------------- ---------------------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales,
pipeline tariffs,
terminal and
storage fees and
natural gas
gathering and
processing fees $ 463,121,000 649,443,000 - - 1,112,564,000
Costs and expenses:
Product costs and
direct operating
expenses 449,989,000 638,022,000 - - 1,088,011,000
General and
administrative 4,768,000 2,234,000 - 360,000 (7) 6,642,000
Depreciation and
amortization 2,793,000 739,000 (5) 2,151,000 - 5,683,000
----------------------- ---------------------- ----------- ---------- -----------------
457,550,000 640,995,000 2,151,000 360,000 1,100,336,000
----------------------- ---------------------- ----------- ---------- -----------------
Operating income 5,571,000 8,448,000 2,151,000 360,000 12,228,000
Other income (expenses):
Interest income 377,000 - - - 377,000
Interest expense (2,475,000) (3,480,000) (4) 1,331,000 - (7,286,000)
Other financing costs (209,000) - (6) 500,000 - (709,000)
----------------------- ---------------------- ----------- ---------- -----------------
(2,307,000) (3,480,000) 1,831,000 - (7,618,000)
----------------------- ---------------------- ----------- ---------- -----------------
Earnings before
income taxes 3,264,000 4,968,000 3,982,000 360,000 4,610,000
Income tax expense 1,240,000 1,888,000 - 1,376,000 (8) 1,752,000
----------------------- ---------------------- ----------- ---------- -----------------
Net earnings $ 2,024,000 3,080,000 3,982,000 1,736,000 2,858,000
======================= ====================== =========== ========== =================
Weighted average
common shares
outstanding:
Basic 25,962,991 4,500,000 30,462,991
======================= =========== ================
Diluted 26,679,236 4,500,000 31,179,236
======================= =========== ================
Earnings per common
share:
Basic $ 0.08 0.09
======================= ================
Diluted $ 0.08 0.09
======================= =================
</TABLE>
See accompanying notes to condensed combined pro forma financial statements.
26
<PAGE>
TRANSMONTAIGNE INC. AND SUBSIDIARIES
CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998 AND MAY 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Pro forma adjustments
---------------------------
TransMontaigne LDEC Condensed
historical historical Combined
year ended year ended Pro Forma
April 30, 1998 May 31, 1998 Debit Credit TransMontaigne
------------------ ---------------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales,
pipeline tariffs,
terminal and storage
fees and natural gas
gathering and
processing fees $ 1,967,507,000 2,235,897,000 4,203,404,000
Costs and expenses:
Product costs and direct
operating expenses 1,926,256,000 2,181,819,000 4,108,075,000
General and administrative 13,541,000 12,996,000 4,200,000 (7) 22,337,000
Depreciation and
amortization 8,475,000 3,070,000 (5) 8,602,000 20,147,000
------------------ ---------------- ------------ -------------- -----------------
1,948,272,000 2,197,885,000 8,602,000 4,200,000 4,150,559,000
------------------ ---------------- ------------ -------------- -----------------
Operating income 19,235,000 38,012,000 8,602,000 4,200,000 52,845,000
Other income (expenses)
Interest income 2,059,000 - 2,059,000
Interest expense (7,591,000) (10,800,000) (4) 8,459,000 (26,850,000)
Other financing costs (572,000) - (6) 2,000,000 (2,572,000)
------------------ ---------------- ------------ -------------- -----------------
(6,104,000) (10,800,000) 10,459,000 - (27,363,000)
------------------ ---------------- ------------ -------------- -----------------
Earnings before income
taxes 13,131,000 27,212,000 19,061,000 4,200,000 25,482,000
Income tax expense (benefit) 5,493,000 10,585,000 6,395,000 (8) 9,683,000
------------------ ---------------- ------------ -------------- -----------------
Net earnings $ 7,638,000 16,627,000 19,061,000 10,595,000 15,799,000
================== ================ ============ ============== =================
Weighted average
common shares outstanding:
Basic 25,886,737 4,500,000 30,386,737
================== ============ =================
Diluted 26,679,503 4,500,000 31,179,503
================== ============ =================
Earnings per common share:
Basic $ 0.30 0.52
================== ================
Diluted $ 0.29 0.51
================== ================
</TABLE>
See accompanying notes to condensed combined pro forma financial statements.
27
<PAGE>
TRANSMONTAIGNE INC. AND SUBSIDIARIES
NOTES TO CONDENSED COMBINED PRO FORMA FINANCIAL STATEMENTS
BASIS OF PRESENTATION
On October 30, 1998, TransMontaigne, through a wholly-owned subsidiary, acquired
all of the issued and outstanding capital stock of LDEC from LDC for
approximately $161,000,000, including $100,565,000 in cash and 4,500,000 shares
of TransMontaigne common stock. The $13.43 price per share of TransMontaigne
common stock set forth in the Stock Purchase Agreement dated September 13, 1998
between TransMontaigne and LDC was calculated based upon the average of the last
daily sale prices of TransMontaigne common stock (as reported by Wall Street
-----------
Journal) for the twenty consecutive trading days commencing on the thirtieth
- -------
trading day prior to the closing date of the transaction. In addition,
TransMontaigne paid approximately $192,492,000 for the net working capital of
LDEC as of October 30, 1998. The acquisition included twenty-four refined
petroleum products terminals and storage facilities. The purchase price was
established in arms-length negotiation between the managements of TransMontaigne
and LDC. The cash component of the purchase price and the payment for net
working capital acquired were funded by an advance from TransMontaigne's
$500,000,000 credit facility. The acquisition has been accounted for using the
purchase method of accounting.
The condensed combined pro forma financial statements include preliminary
allocations of the aggregate purchase price to the assets acquired and
liabilities assumed based on estimated fair values. Purchase accounting
adjustments necessary to allocate the aggregate purchase price remain subject to
change and depreciation and amortization expense reflected in the TransMontaigne
financial statements may vary from the pro forma information.
The condensed combined pro forma balance sheet includes pro forma adjustments to
give effect to the acquisition of LDEC as of September 30, 1998. The condensed
combined pro forma statements of operations include the historical revenue and
expenses of LDEC for the respective periods presented and adjustments for the
pro forma effects of the acquisition.
PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the balance sheet of
TransMontaigne at September 30, 1998 and to the statements of operations for the
three months ended September 30, 1998 and for the year ended April 30, 1998:
1. To record the proceeds from borrowings under the TransMontaigne credit
facility.
2. To record the acquisition of the LDEC assets and liabilities by
TransMontaigne.
3. To record financing costs related to the expanded TransMontaigne credit
facility.
4. To record interest expense, at an assumed annual rate of 6.35%, on the
debt incurred to finance the LDEC acquisition.
5. To record additional depreciation expense relating to the LDEC property,
plant and equipment acquired.
6. To record amortization of financing costs related to the expanded
TransMontaigne credit facility.
7. To adjust non-recurring LDEC general and administrative expense relating to
executive incentive compensation and employee benefits plans which will be
discontinued.
8. To record the income tax effects of the pro forma adjustments at an assumed
tax rate of 38%.
28
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
TransMontaigne has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: 4 January 1999 TRANSMONTAIGNE INC.
By: /s/ Richard E. Gathright
---------------------------
Richard E. Gathright
President
29
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the TransMontaigne Inc.
Registration Statements on Form S-8 (Nos. 333-34579; 333-15055; 333-04405), and
on Form S-3 (No. 333-23691), of our report dated October 14, 1998, with respect
to the balance sheets of Louis Dreyfus Energy Corporation - Atlanta Division as
of May 31, 1998 and 1997, and the related statements of operations and
shareholder's net investment and cash flows for each of the years in the three-
year period ended May 31, 1998, included in this Current Report on Form 8-K/A
filed by TransMontaigne Inc.
Ernst & Young LLP
Stamford, Connecticut
December 21, 1998
30
