<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2000
OR
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 001-11763
TRANSMONTAIGNE INC.
Delaware 06-1052062
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2750 Republic Plaza, 370 Seventeenth Street
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 October 31, 2000 there were 31,506,204 shares of the registrant's Common
Stock outstanding.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
Item 1. Financial Statements
<S> <C> <C>
Consolidated Balance Sheets
September 30, 2000 and June 30, 2000 (Unaudited)................................ 4
Consolidated Statements of Operations
Three Months Ended September 30, 2000 and 1999 (Unaudited)...................... 5
Consolidated Statements of Stockholders' Equity
Year Ended June 30, 2000 and
Three Months Ended September 30, 2000 (Unaudited)............................... 6
Consolidated Statements of Cash Flows
Three Months Ended September 30, 2000 and 1999 (Unaudited)...................... 7
Notes to Consolidated Financial Statements...................................... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................... 17
Item 3. Quantitative and Qualitative Disclosures about Market Risk...................... 25
</TABLE>
<TABLE>
<CAPTION>
PART II. OTHER INFORMATION
<S> <C>
Item 6. Exhibits and Reports on Form 8-K................................................ 26
Signatures...................................................................... 27
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
The consolidated financial statements of TransMontaigne Inc. ("the
Company") are included herein beginning on the following page.
3
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2000 and June 30, 2000 (Unaudited)
(In thousands)
<TABLE>
Assets September 30, June 30,
------ 2000 2000
--------------- ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 36,186 53,938
Trade accounts receivable, net 94,173 117,739
Inventories 212,524 240,867
Assets from price risk management activities 31,600 16,038
Prepaid expenses and other 5,092 6,074
--------------- ---------------
379,575 434,656
--------------- ---------------
Property, plant and equipment:
Land 15,885 15,885
Plant and equipment 348,877 345,052
Accumulated depreciation (43,541) (38,710)
--------------- ---------------
321,221 322,227
--------------- ---------------
Investments and other assets:
Investments in petroleum related assets 47,650 46,152
Deferred tax assets, net 19,050 19,168
Deferred debt issuance costs, net 9,678 10,274
Other assets, net 969 2,095
--------------- ---------------
77,347 77,689
--------------- ---------------
$ 778,143 834,572
=============== ===============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Trade accounts payable $ 79,475 106,677
Inventory due under exchange agreements 104,239 125,258
Liabilities from price risk management activities 37,394 30,376
Excise taxes payable 7,419 27,582
Other accrued liabilities 5,828 5,585
Current portion of long-term debt 4,370 4,370
--------------- ---------------
238,725 299,848
--------------- ---------------
Long-term debt 208,309 202,625
Stockholders' equity:
Preferred stock, par value $.01 per share, authorized
2,000,000 shares, issued and outstanding 170,115
shares Series A Convertible at September 30, 2000 and
June 30, 2000, liquidation preference of $170,115,000 170,115 170,115
Common stock, par value $.01 per share,
authorized 80,000,000 shares at September 30, 2000 and
June 30, 2000, issued and outstanding 30,982,524 shares at
September 30, 2000 and 30,730,524 shares at June 30, 2000 310 307
Capital in excess of par value 201,753 201,076
Unearned compensation (1,278) (1,465)
Accumulated deficit (39,791) (37,934)
--------------- ---------------
331,109 332,099
--------------- ---------------
$ 778,143 834,572
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended September 30, 2000 and 1999 (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
(Unaudited)
-----------------------------------------------
2000 1999
---------------------- --------------------
<S> <C> <C>
Revenues: $ 1,214,091 1,148,867
Costs and expenses:
Product costs 1,189,555 1,119,814
Direct operating expenses 8,402 12,050
General and administrative 7,237 10,050
Depreciation and amortization 4,847 6,246
---------------------- --------------------
1,210,041 1,148,160
---------------------- --------------------
Operating income 4,050 707
Other income (expenses):
Dividend income from petroleum related assets 919 491
Interest income 798 887
Interest expense (4,120) (9,488)
Amortization of deferred financing costs (974) (851)
Other financing costs (239) (206)
---------------------- --------------------
(3,616) (9,167)
---------------------- --------------------
Earnings (loss) before income taxes 434 (8,460)
Income tax (expense) benefit (165) 3,384
---------------------- --------------------
Net earnings (loss) 269 (5,076)
Preferred stock dividends (2,126) (2,126)
---------------------- --------------------
Net loss attributable to
common stockholders $ (1,857) (7,202)
====================== ====================
Weighted average common
shares outstanding - basic and diluted 30,826 30,485
====================== ====================
Loss per common share - basic and diluted $ (0.06) (0.24)
====================== ====================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Year Ended June 30, 2000 and Three Months Ended September 30, 2000 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Capital in Retained earnings
Preferred Common excess of Unearned (accumulated
stock stock par value compensation deficit) Total
----------- ----------- ------------- -------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1999 $ 170,115 305 197,123 - 8,509 376,052
Common stock issued for
options exercised - - 136 - - 136
Tax expense from vesting of
restricted stock - - (68) - - (68)
Unearned compensation related
to restricted stock awards - 2 1,863 (1,865) - -
Amortization of unearned
compensation - - - 400 - 400
Compensation expense related to
extension of exercise period
on options - - 2,022 - - 2,022
Preferred stock dividends - - - - (8,506) (8,506)
Net loss - - - - (37,937) (37,937)
----------- ----------- ------------- -------------- ----------------- -----------
Balance at June 30, 2000 $ 170,115 307 201,076 (1,465) (37,934) 332,099
----------- ----------- ------------- -------------- ----------------- -----------
Common stock issued for
options exercised - 3 677 - - 680
Amortization of unearned
compensation - - - 187 - 187
Preferred stock dividends - - - - (2,126) (2,126)
Net earnings - - - - 269 269
----------- ----------- ------------- -------------- ----------------- -----------
Balance at September 30, 2000 $ 170,115 310 201,753 (1,278) (39,791) 331,109
=========== =========== ============= ============== ================= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended September 30, 2000 and 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
(Unaudited)
------------------------------------------
2000 1999
------------------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 269 (5,076)
Adjustments to reconcile net earnings (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 4,847 6,246
Deferred tax expense (benefit) 118 (3,384)
Amortization of unearned compensation 187 -
Amortization of deferred debt issuance costs 974 851
Other - (1)
Changes in operating assets and liabilities,
net of non-cash activities:
Trade accounts receivable 23,566 17,432
Inventories 28,343 92,626
Prepaid expenses and other 982 526
Trade accounts payable (27,202) (50,226)
Assets and liabilities from price risk
management activities (8,544) 1,021
Inventory due under exchange
agreements (21,019) 6,573
Excise taxes payable and other
accrued liabilities (19,920) 9,023
------------------- ------------------
Net cash provided (used)
by operating activities (17,399) 75,611
------------------- ------------------
Cash flows from investing activities:
Purchases of property, plant and equipment (3,844) (16,431)
Proceeds from sale of assets 3 2
Decrease (increase) in investment and other assets, net (372) 776
------------------- ------------------
Net cash used
by investing activities (4,213) (15,653)
------------------- ------------------
Cash flows from financing activities:
Borrowings (repayments) of long-term debt, net 5,684 (68,183)
Deferred debt issuance costs (378) (113)
Common stock issued for cash 680 60
Preferred stock dividends paid (2,126) (2,126)
------------------- ------------------
Net cash provided (used)
by financing activities 3,860 (70,362)
------------------- ------------------
Decrease in
cash and cash equivalents (17,752) (10,404)
Cash and cash equivalents at beginning of period 53,938 13,927
------------------- ------------------
Cash and cash equivalents at end of period $ 36,186 3,523
=================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 20, 2000 (Unaudited)
--------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
Nature of Business and Basis of Presentation
TransMontaigne Inc. ("the Company") provides a broad range of integrated
supply, distribution, marketing, terminaling, storage, transportation,
gathering, and processing services to producers, refiners, distributors,
marketers and industrial end-users of petroleum products, chemicals,
natural gas, crude oil and other bulk liquids in the midstream sector of
the petroleum and chemical industries. The Company is a holding company
that conducts its operations through wholly owned subsidiaries primarily in
the Mid-Continent, Gulf Coast, Southeast, Mid-Atlantic, Northeast and Rocky
Mountain regions of the United States. The Company's commercial operations
are divided into products supply, distribution and marketing; terminals,
which includes terminaling and storage services; pipelines; and natural gas
services, which was divested December 31, 1999.
Principles of Consolidation and Use of Estimates
The consolidated financial statements included in this Form 10-Q have been
prepared by the Company without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, these statements
reflect adjustments (consisting only of normal recurring entries) which
are, in the opinion of the Company's management, necessary for a fair
statement of the financial results for the interim periods. Certain
information and notes normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These consolidated financial statements should be
read in conjunction with the financial statements and related notes,
together with management's discussion and analysis of financial condition
and results of operations included in the Company's Annual Report on Form
10-K for the year ended June 30, 2000.
The accounting and financial reporting policies of the Company and its
subsidiaries conform to generally accepted accounting principles and
prevailing industry practices. The consolidated financial statements
include all the majority owned subsidiaries of the Company. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Changes in
these estimates and assumptions will occur as a result of the passage of
time and the occurrence of future events, and actual results will differ
from the estimates.
"TransMontaigne" and "the Company" are used as collective references to
TransMontaigne Inc. and its subsidiaries and affiliates. The businesses of
the Company are conducted by the subsidiaries and affiliates whose
operations are managed by their respective officers.
Cash and Cash Equivalents
The Company considers all short-term investments with a maturity of three
months or less to be cash equivalents.
8
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
Inventories
Inventories consist primarily of refined products stated at market.
Refined products due from third parties under exchange agreements are
included in inventory and recorded at current replacement cost. Refined
products due to third parties under exchange agreements are recorded at
current replacement cost. Adjustments resulting from changes in current
replacement cost for refined products due to or from third parties under
exchange agreements are reflected in product costs. The exchange agreements
are typically for a term of 30 days and are generally settled by delivering
product to or receiving product from the party to the exchange.
The Company's Risk Management Committee reviews the total inventory and
risk position on a regular basis in order to ensure compliance with the
Company's inventory management policies, including hedging and trading
activities. The Company has adopted policies under which changes to its net
inventory position subject to price risk requires the prior approval of the
Audit Committee.
Accounting for Price Risk Management
In connection with its products supply, distribution and marketing
commercial operations, the Company engages in price risk management
activities. Financial instruments utilized in connection with trading
activities are accounted for using the mark-to-market method. Under the
mark-to-market method of accounting, forwards, swaps, options and other
financial instruments with third parties are reflected at market value, net
of future physical delivery related costs, and are shown as "Assets and
Liabilities from Price Risk Management Activities" in the Consolidated
Balance Sheet. Unrealized gains and losses from newly originated contracts,
contract restructurings and the impact of price movements are included in
operating income. Changes in the assets and liabilities from price risk
management activities result primarily from changes in the valuation of the
portfolio of contracts, newly initiated transactions and the timing of
settlement relative to the receipt of cash for certain contracts. The
market prices used to value these transactions reflect management's best
estimate considering various factors including closing exchange and over-
the-counter quotations, time value and volatility factors underlying the
commitments. The values are adjusted to reflect the potential impact of
liquidating the Company's position in an orderly manner over a reasonable
period of time under present market conditions.
Contractual commitments are subject to risks including market value
fluctuations as well as counter party credit and liquidity risk. The
Company has established procedures to continually monitor these contracts
in order to minimize credit risk, including the establishment and review of
credit limits, margin requirements, master netting arrangements, letters of
credit and other guarantees.
The cash flow impact of financial instruments and these risk management
activities are reflected in cash flows from operating activities in the
Consolidated Statement of Cash Flows.
9
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
Property, Plant and Equipment
Depreciation is computed using the straight-line and double-declining
balance methods. Estimated useful lives are 20 to 25 years for plant, which
includes buildings, storage tanks, and pipelines and 3 to 20 years for
equipment. All items of property, plant and equipment are carried at cost.
Expenditures that increase values, change capacities, or extend useful
lives are capitalized. Routine repairs and maintenance are expensed.
Computer software costs are capitalized and amortized over their useful
lives, generally not to exceed 5 years. The costs of installing certain
enterprise wide information systems are amortized over periods not
exceeding 10 years. The Company capitalizes interest on major projects
during construction.
Deferred Debt Issuance Costs
Deferred debt issuance costs related to the long-term credit agreements and
senior subordinated debentures are amortized on the interest method over
the term of the underlying debt instrument.
Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply in the
years in which these temporary differences are expected to be recovered or
settled. Changes in tax rates are recognized in income in the period that
includes the enactment date.
Environmental Expenditures
Expenditures that relate to an existing condition caused by past
operations, and which do not contribute to current or future revenue
generation are expensed. Expenditures relating to current or future
revenues are expensed or capitalized as appropriate. Liabilities are
recorded when environmental assessment and/or clean-ups are probable and
the costs can be reasonably estimated.
Earnings Per Common Share
Basic earnings per common share has been calculated based on the weighted
average number of common shares outstanding during the period. Diluted
earnings per share assumes conversion of dilutive convertible preferred
stocks and exercise of all stock options and warrants having exercise
prices less than the average market price of the common stock, using the
treasury stock method.
10
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies (continued)
Recently Issued Accounting Pronouncement
In 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded on
the balance sheet as either an asset or liability measured at its fair
value. The statement requires that changes in the derivative's fair value
be recognized currently in earnings unless specific hedge accounting
criteria are met. Certain provisions of SFAS 133 were amended by SFAS 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities- an amendment of Statement 133".
The Company adopted SFAS 133 effctive July 1, 2000. Based upon the
Company's application of SFAS 133, its adoption had no material effect on
the Company's consolidated financial statements.
In March 2000, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25 (FIN 44). This
opinion provides guidance on the accounting for certain stock option
transactions and subsequent amendments to stock option transactions. The
Company adopted FIN 44 effective July 1, 2000. Based upon the Company's
application of FIN 44, its adoption had no effect on the Company's
consolidated financial statements.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No 101, Revenue Recognition (SAB 101), which provides
guidance on the recognition, presentation and disclosure of revenue in
financial statements filed with the SEC. Subsequently, the SEC released SAB
101B, which delayed the implementation date of SAB 101 for registrants with
fiscal years beginning between December 16, 1999 and March 15, 2000. The
Company adopted SAB 101 on July 1, 2000. Based upon the Company's
application of SAB 101, its adoption had no effect on the Company's
consolidated financial statements.
Reclassifications
Certain amounts in the accompanying consolidated financial statements for
prior periods have been reclassified to conform to the classifications used
in 2000.
11
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(2) Disposition
Effective December 31, 1999, the Company sold its natural gas gathering
subsidiary, Bear Paw Energy Inc., ("BPEI") for cash consideration of $107.5
million, plus $23.7 million of retroactive reimbursement for all of the
capital expenditures made by the Company on BPEI's newly constructed Powder
River coal seam gathering system from July 1, 1999 to December 31, 1999.
This disposition generated an approximate $16.6 million net gain to the
Company. The $131.2 million total sale proceeds were used to reduce long-
term debt and for general corporate purposes.
(3) Acquisitions
On May 31, 2000, the Company acquired from Chevron U.S.A. Inc. two
petroleum products terminals located in Richmond and Montvale, Virginia for
approximately $3.2 million cash. These facilities are interconnected to the
Colonial pipeline system and include approximately 500 thousand barrels of
tankage.
On June 30, 1999, the Company acquired from Amerada Hess Corporation the
Hess Southeastern Pipeline Network ("Hess Terminals") of refined petroleum
product facilities for approximately $66.2 million cash, and related
refined products inventory for $32.5 million cash. The Hess Terminals,
which are interconnected to the Colonial and Plantation pipeline systems,
include approximately 5.3 million barrels of tankage at 11 storage and
terminal facilities and 36 miles of proprietary pipelines.
The Company accounted for these acquisitions using purchase method
accounting as of the effective date of each transaction. Accordingly, the
purchase price of each transaction was allocated to the assets and
liabilities acquired based upon the estimated fair value of those assets
and liabilities as of the acquisition date. The cash used to purchase the
above acquisitions was funded by advances from the Company's bank credit
facility.
12
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(4) Inventories
Inventories at September 30, 2000 and June 30, 2000 are as follows:
September 30, 2000 June 30, 2000
------------------ -------------
(in thousands) (in thousands)
Refined petroleum products $ 108,285 115,609
Refined petroleum products due
under exchange agreements, net 104,239 125,258
------------------ -------------
$ 212,524 240,867
================== =============
The Company manages inventory to maximize value and minimize risk by
utilizing risk and portfolio management disciplines including certain
hedging strategies, forward purchases and sales, swaps and other financial
instruments to manage market exposure. In managing inventory balances and
related financial instruments, management evaluates the market exposure
from an overall portfolio basis that considers both continuous movement of
inventory balances and related open positions in commodity trading
instruments.
The Company's refined petroleum products inventory consists primarily of
gasoline and distillates, the majority of which is held for sale or
exchange in the ordinary course of business. A portion of this inventory,
including line fill and tank bottoms, is required to be held for
operating balances in the conduct of the Company's daily supply,
distribution and marketing activities; and is maintained both in tanks and
pipelines owned by the Company and pipelines owned by third parties. As of
September 30, 2000, this portion of the Company's inventory (the minimum
inventory) was determined to be 2.0 million barrels. Currently, it is the
Company's policy not to hedge the price risk associated with its minimum
inventory. As a result, changes in the market value of the minimum
inventory are reflected as an increase or decrease in the carrying value of
the minimum inventory, with a corresponding gain or loss recognized in
operating income. The unrealized loss on minimum inventory was $4.5 million
for the three months ended September 30, 2000 (none in 1999).
(5) Property, Plant and Equipment
Property, plant and equipment at September 30, 2000 and June 30, 2000 is as
follows:
September 30, 2000 June 30, 2000
------------------ --------------
(in thousands) (in thousands)
Land $ 15,885 15,885
Pipelines, rights of way
and equipment 36,701 36,369
Terminals and equipment 295,224 291,896
Other plant and equipment 16,952 16,787
------------------ --------------
364,762 360,937
Less accumulated depreciation (43,541) (38,710)
------------------ --------------
$ 321,221 322,227
================== ==============
13
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(6) Investments in Petroleum related Assets
The Company, through its 65% ownership of TransMontaigne Holding Inc.,
effectively owns 18.04% of the common stock of Lion Oil Company ("Lion").
At September 30, 2000 and June 30, 2000, the Company's investment in Lion,
carried at cost, was approximately $10.1 million. The Company recorded
dividend income of approximately $0.4 million from Lion during the three
months ended September 30, 2000 and none during the three months ended
September 30, 1999.
The Company, through its wholly owned subsidiary, TransMontaigne Pipeline
Inc., owns 20.38% of the common stock of West Shore Pipeline Company ("West
Shore") at September 30, 2000. Although the Company owns 20.38%, it does
not maintain effective management control and therefore carries its $35.9
million investment at cost. The Company recorded dividend income from West
Shore of approximately $0.5 million for each of the three months ended
September 30, 2000 and 1999.
In August 2000, the Company converted its Notes Receivable from ST Oil
Company into an equity ownership position. At September 30, 2000, the
Company's investment in ST Oil Company was approximately $1.6 million.
(7) Long-term Debt
Long-term debt at September 30, 2000 and June 30, 2000 is as follows:
September 30, 2000 June 30, 2000
------------------ -------------
(in thousands) (in thousands)
Bank Credit Facility $ 160,681 155,000
Senior promissory notes 50,000 50,000
12 3/4% senior subordinated debentures,
net of discount 1,998 1,995
------------------ -------------
212,679 206,995
Less current maturity 4,370 4,370
------------------ -------------
$ 208,309 202,625
================== =============
At September 30, 2000, the Company's bank credit facility consisted of a
$395 million credit facility that included a $300 million revolving
component due December 31, 2003 and a $95 million term component due June
30, 2006. The term component has quarterly principal payments required
beginning in September 2000. Borrowings under this credit facility bear
interest at an annual rate equal to the lender's Alternate Base Rate plus
margins, subject to a Eurodollar Rate pricing option at the Company's
election. The average interest rate under the bank credit facility was
10.0% and 9.8% at September 30, 2000 and June 30, 2000, respectively.
In August 1999, the Company entered into two swap agreements with money
center banks to offset the exposure of an increase in interest rates. Prior
to June 30, 2000, proceeds from the swap agreements were recorded as a
reduction in interest expense. In August 2000, the Company terminated one
of the swap agreements, which did not have a material impact upon the
financial statements. Effective July 1, 2000, the estimated fair value of
the remaining interest rate swap was recorded as an asset with a
corresponding credit to other income upon the adoption of FAS 133, as the
swap was not designated as a hedge as of that date.
14
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(7) Long-term Debt (continued)
In April 1997, the Company entered into a Master Shelf Agreement with an
institutional lender which provides that the lender will agree to quote,
from time to time, an interest rate at which the lender would be willing to
purchase, on an uncommitted basis, up to $100 million of the Company's
senior promissory notes which will mature in no more than 12 years, with an
average life not in excess of 10 years. On April 17, 1997 and December 16,
1997, the Company sold $50 million of 7.85% and $25 million of 7.22% Senior
Notes due April 17, 2003 and October 17, 2004, respectively. Under an
amended Master Shelf Agreement, the commitment was reduced to $75 million.
On January 20, 2000, the Company paid down $25 million of the $50 million
of 7.85% senior notes with a portion of the proceeds from the sale of BPEI.
Each of the bank credit facility and Master Shelf Agreement is secured by
certain current assets and fixed assets, and each also includes financial
tests relating to fixed charge coverage, current ratio, maximum leverage
ratio, consolidated tangible net worth, cash distributions and open
inventory positions. As of September 30, 2000, the Company was in
compliance with all such tests contained in the amended agreements.
At September 30, 2000, the Company had an outstanding balance of $2 million
of the originally issued $4 million of 12.75% senior subordinated
debentures that are guaranteed by certain subsidiaries. The outstanding
debentures are subject to a required redemption on December 15, 2000. The
debentures may be prepaid prior to maturity at a premium, under certain
circumstances. In conjunction with the issuance of these debentures, the
Company issued warrants to purchase 248,686 shares of its common stock at
$3.60 per share, which expire on December 15, 2000.
Cash payments for interest were approximately $4.1 million and $8.0 million
for the three months ended September 30, 2000 and 1999, respectively.
(8) Stockholders' Equity
On March 25, 1999 and March 30, 1999, the Company closed a private
placement of $170.1 million of $1,000 Series A Convertible Preferred Stock
Units (the "Units"). Each Unit consists of one share of 5% convertible
preferred stock (the "Preferred Stock"), convertible into common stock at
$15 per share, and 66.67 warrants, each warrant exercisable to purchase
six-tenths of a share of common stock at $14 per share. Dividends are
cumulative and payable quarterly. The Company may redeem all, but not less
than all, of the then outstanding shares of the Preferred Stock on December
31, 2003 at the liquidation value of $1,000 per share plus any accrued but
unpaid dividends thereon through the redemption date (the "Mandatory
Redemption Price"). The Mandatory Redemption Price shall be paid, at the
Company's election, in cash or shares of common stock, or any combination
thereof, subject to limitations on the total number of common shares
permitted to be used in the exchange, and issued to any shareholder. For
purposes of calculating the number of shares of common stock to be
received, each such share of common stock shall be valued at 90 percent of
the average market price for the common stock for the 20 consecutive
business days prior to the redemption date. If the Preferred Stock remains
outstanding after December 31, 2003, the dividend rate will increase to an
annual rate of 16%. The Preferred Stock is convertible any time and may be
called for redemption by the Company after the second year if the market
price of the common stock is greater than 175% of the conversion price at
the date of the call. Proceeds were used to reduce bank debt incurred in
connection with acquisitions and for general corporate purposes.
15
<PAGE>
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(9) Restricted Stock
The Company has a restricted stock plan that provides for awards of common
stock to certain key employees, subject to forfeiture if employment
terminates prior to the vesting dates. The market value of shares awarded
under the plan is recorded in stockholders' equity as unearned
compensation. Amortization of unearned compensation of approximately
$186,500 is included in general and administrative expense for the three
months ended September 30, 2000.
(10) Litigation
The Company is a party to various claims and litigation in its normal
course of business. Although no assurances can be given, the Company's
management believes that the ultimate resolution of such claims and
litigation, individually or in the aggregate, will not have a material
adverse impact on the Company's financial position, results of operations,
or liquidity.
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
TransMontaigne Inc., a Delaware corporation, ("the Company") provides a
broad range of integrated supply, distribution, marketing, terminaling, storage
and transportation services to producers, refiners, distributors, marketers and
industrial end-users of petroleum products, chemicals, crude oil and other bulk
liquids in the midstream sector of the petroleum and chemical industries. The
Company is a holding company that conducts the majority of its operations
through wholly owned subsidiaries primarily in the Mid-Continent, Gulf Coast,
Southeast, Mid-Atlantic and Northeast regions of the United States.
The Company's commercial operations are divided into supply, distribution
and marketing of refined petroleum products; terminals, which includes
terminaling and storage services; and pipelines. The Company, through a wholly
owned subsidiary, historically provided selected natural gas services including
the gathering, processing, fractionating and marketing of natural gas liquids
("NGL") and natural gas. This subsidiary was divested as of December 31, 1999.
Commercial Operations
Product Supply, Distribution and Marketing
Through its wholly owned subsidiary, TransMontaigne Product Services Inc.
("TPSI"), the Company provides product services, consisting of the bulk purchase
and sale of refined petroleum products, the wholesale marketing of products at
terminal truck loading rack locations, the restructuring of existing long-term
contracts and the management of the Company's commodity portfolio. In addition,
TPSI provides risk management products and services to gasoline and distillate
customers that minimize the risk associated with movements in prices and
location-based price differentials. TPSI's risk management products and
services are designed to provide stability to customers in markets impacted by
commodity price volatility. TPSI provides these services to customers for
periods as short as one month to terms that will span several years. The type
and length of contracts provided by TPSI will vary based upon market conditions,
customer desires and the risk profile desired by the individual customer. As a
result of these variables, the initiation and restructuring of these types of
contracts is not predictable and can cause earnings to fluctuate from one period
to the next.
TPSI's products supply, distribution and marketing services revenues and
fees are generated from bulk sales and exchanges of refined petroleum products
to major and large independent energy companies; wholesale distribution and
sales of refined petroleum products to jobbers and retailers; regional and
national industrial end-user and commercial wholesale storage and forward sales
marketing contracts of refined petroleum products; and tailored short and long-
term fuel and risk management logistical services arrangements to wholesale,
retail and industrial end-users. Refined petroleum products storage and forward
sales transactions enable TPSI to purchase refined petroleum products inventory;
utilize proprietary and leased tankage as well as line space controlled by TPSI
in major common carrier pipelines; arbitrage location product prices
differentials and transportation costs; store inventory; and, depending upon
market conditions, lock-in margins through sales in the futures cash market or
NYMEX contracts. Wholesale distribution of refined petroleum products is
conducted from proprietary and non-proprietary truck loading terminal, storage
and delivery locations. Fuel and risk management logistical services provide
both TPSI's large and small volume customers an assured, ratable and cost
effective delivered source of refined petroleum product supply through
proprietary pipelines and terminals as well as non-proprietary pipeline,
terminal, truck, rail and barge distribution channels.
TPSI enjoys incremental margin opportunities by utilizing its storage
capacity and inventory position when the market environment is in contango or a
carry position (where nearby futures prices are lower than succeeding periods).
17
<PAGE>
Terminals
Through its wholly owned subsidiary, TransMontaigne Terminaling Inc.
("TTI"), the Company owns and operates an extensive terminal infrastructure that
handles petroleum products, chemicals and other bulk liquids with transportation
connections via pipeline, barges, rail cars and trucks to TTI facilities or to
third party facilities with an emphasis on transportation connections primarily
through the Colonial, Plantation and Texas Eastern pipeline systems.
Products terminal revenues are based on volumes handled, generally at a
standard industry fee. Terminal fees are not regulated. The terminals receive
petroleum products in bulk quantities from connecting pipeline systems and barge
dock facilities. Products are stored in bulk at the terminals and made
available to wholesale, shipment and exchange customers who transport the
products by truck to commercial and retail destinations and then to the end-
user. TPSI markets refined petroleum products over truck loading racks at TTI
owned terminals, as well as through exchanges with numerous companies at other
non-owned terminals located throughout the Company's distribution area.
Chemicals and other bulk liquids terminal revenues are based upon the type
and volume of the liquids handled, including any special temperature
maintenance, labor-intensive loading/off-loading requirements or other handling
services. These terminal fees are not regulated; are generally negotiated on an
individual contract basis with a term of one year or less; and typically are at
rates which exceed those for handling petroleum products due to the particular
nature of the products handled.
Storage of refined petroleum products, chemicals and other bulk liquids at
TTI-owned facilities pending delivery is an integral service function. Storage
fees are generally based on a per barrel rate or on tankage capacity committed
and will vary with the duration of the storage arrangement, the product stored
and special handling requirements. Storage fees are not regulated.
Ancillary services, including injection of shipper-furnished or TTI-
furnished additives, are also available for a fee at TTI terminals.
Pipelines
Through its wholly owned subsidiary, TransMontaigne Pipeline Inc. ("TPI"),
the Company owns and operates an approximate 480-mile refined petroleum products
pipeline from Ft. Madison, Iowa through Chicago, Illinois to Toledo, Ohio (the
"NORCO Pipeline") with TTI owning the associated storage facilities located at
Hartsdale and East Chicago, Indiana and Toledo, Ohio and related product
distribution facilities located at South Bend, Indiana; Peoria, Illinois; and
Bryan, Ohio. The NORCO Pipeline has delivery facilities located at Elkhart,
Indiana and Chillicothe and Galesburg, Illinois. The NORCO Pipeline system is
interconnected to all major mid-continent common carriers. TPI also owns a 60%
interest in a 67-mile refined petroleum products pipeline operating from Mt.
Vernon, Missouri to Rogers, Arkansas (the "Razorback Pipeline") together with
associated product distribution facilities at Mt. Vernon and Rogers. The
Razorback Pipeline is the only refined petroleum products pipeline providing
transportation services to northwest Arkansas. TPI also owns and operates an
approximate 220-mile crude oil gathering pipeline system, with approximately
627,500 barrels of tank storage capacity, located in east Texas (the "CETEX
pipeline").
TPI owns a 20.38% common stock interest in West Shore Pipe Line Company
which owns an approximate 600-mile common carrier petroleum products pipeline
system which operates between the Chicago refining corridor locations of East
Chicago, Indiana; Blue Island, Joliet and Lemont, Illinois; north through
metropolitan Chicago, Illinois; along the western edge of Lake Michigan to
Milwaukee and Green Bay, Wisconsin; and west to Rockford and Peru, Illinois, and
Madison, Wisconsin. The pipeline serves approximately 55 locations, including 4
refineries, the Chicago-O'Hare and Milwaukee airports, and 49 refined petroleum
products terminals in the Chicago, Illinois area and the upper Mid-West region
of the United States.
In general, a shipper owns the refined petroleum products or crude oil and
transfers custody of the products to the NORCO or Razorback pipelines, or the
crude oil to the CETEX pipeline, for shipment to a delivery location at which
point custody again transfers. Tariffs for the transportation service are
regulated and are charged by TPI to shippers based upon the origination point on
the pipelines to the point of product delivery. These tariffs do not include
fees for the storage of products at the NORCO and Razorback pipeline storage
facilities or crude oil at the CETEX pipeline storage facilities. Fees for the
terminaling and storage of products at TTI terminals are separately charged when
those facilities are utilized.
18
<PAGE>
Pipelines (continued)
TPI's pipeline business depends in large part on the level of demand for
refined petroleum products in the markets served by the pipelines, together with
the ability and willingness of refiners and marketers having access to the
pipelines to supply that demand by shipments through these pipelines.
Competition is based primarily on pipeline operational dependability, quality of
customer service provided and proximity to end-users, although product pricing
at either the origin or terminal destination on a pipeline may outweigh
transportation cost considerations. The Company believes that high capital
costs, tariff regulation, environmental considerations, problems in acquiring
rights-of-way and TPI's existing available capacity make it unlikely that
additional competing pipeline systems comparable in size to the NORCO and
Razorback pipelines will be built in the near term.
Natural Gas Services
The Company divested its wholly owned subsidiary, Bear Paw Energy Inc.,
effective December 31, 1999.
19
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1999
The Company reported net earnings of $0.3 million for the three months
ended September 30, 2000, compared to a net loss of $5.1 million for the three
months ended September 30, 1999. After preferred stock dividends, the net loss
attributable to common stockholders was $1.9 million and $7.2 million for the
three months ended September 30, 2000 and 1999, respectively. Loss per common
share for the three months ended September 30, 2000 was $.06 basic and diluted
based on 30.8 million weighted average basic and average diluted shares
outstanding compared to $.24 basic and diluted for the three months ended
September 30, 1999.
Selected financial data for the Company's operations are summarized below:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
----------------------------------------------
2000 1999
--------------------- -------------------
(in thousands) (in thousands)
<S> <C> <C>
Net operating margins (1):
Product Supply, Distribution and Marketing:
Sales, exchanges and product arbitrage $ 8,310 6,257
Realized losses related to minimum inventory - (5,113)
Unrealized losses relating to mark to market
accounting for the minimum inventory (4,528) -
--------------------- -------------------
3,782 1,144
Terminals 10,704 8,477
Pipelines 1,648 2,349
Natural Gas Services (2) - 5,033
--------------------- -------------------
Total net operating margins 16,134 17,003
General and administrative expenses (7,237) (10,050)
Depreciation and amortization expenses (4,847) (6,246)
--------------------- -------------------
Operating income 4,050 707
Dividend income from petroleum investments 919 491
Interest expense and related financing costs (5,333) (10,545)
Interest income 798 887
--------------------- -------------------
Net earnings (loss) before income taxes $ 434 (8,460)
===================== ===================
</TABLE>
(1) Net operating margins represent revenues less product costs and direct
operating expenses.
(2) The Company's natural gas services operations were divested as of December
31, 1999.
20
<PAGE>
Product Supply, Distribution and Marketing
TPSI's Product Supply, Distribution and Marketing margins are classified
into two main components: (a) Sales, exchanges and arbitrage and (b) minimum
inventory management.
Sales, exchanges and arbitrage: The net operating margin from sales,
exchanges and arbitrage increased by $2.1 million in the first quarter 2001 as
compared to the same period in 2000. The net $2.1 million improvement consisted
of a $7.8 million increase in margin from the initiation and restructuring of
risk management products combined with a reduction of approximately $5.7 million
in TPSI's wholesale and retail product marketing margins due to reduced
arbitrage opportunities within the marketplace.
Minimum inventory management: During the fourth fiscal quarter of 2000, the
Company embarked upon a thorough review of its inventory management strategies.
As a result, the Company lowered its required minimum inventory level from over
3.8 million barrels to the current level of 2.0 million barrels. The Company
also changed its strategy regarding the risk management associated with this
minimum inventory. Prior to the fourth quarter of fiscal 2000, the Company was
hedging the minimum inventory in the futures market and then rolling the hedging
contracts from month to month. In connection with its new risk management
strategy, the Company removed the hedging contracts on its minimum inventory,
thereby eliminating any future cash costs associated with rolling forward the
hedging contracts from month to month. As a result of removing the hedging
contracts, the valuation of the minimum inventories started floating with the
market and any increase or decrease in valuation was marked to market on a daily
basis with the resulting unrealized gains and losses recognized in operating
income. For the current quarter, the $4.5 million unrealized loss on inventory
was a non-cash charge that was due to a reduction in the commodity value of the
Company's minimum inventory.
Terminals
The net operating margin from terminal operations for the three months
ended September 30, 2000 was $10.7 million compared to $8.5 million for the
three months ended September 30, 1999, an increase of $2.2 million. The
increase in net operating margin resulted from an approximately $1.4 million
increase in revenues and a decrease of approximately $0.8 million in operating
costs. Approximately 50% of the revenue increase was attributable to the
Company's new Baton Rouge dock facility which was placed in service in May 2000
with the remaining increase coming from new tank rental agreements at several of
the Company's terminals. The reduction in operating costs was attributable to a
reduction of repair and maintenance expenses on the Company's terminal
facilities.
Pipelines
The net operating margin from pipeline operations for the three months
ended September 30, 2000 was $1.6 million compared to $2.3 million for the three
months ended September 30, 1999, a decrease of $0.7 million. The decrease in
net operating margin resulted from an approximately $0.3 million reduction in
pipeline revenues and an increase of approximately $0.4 million in operating
costs. The majority of the revenue reduction was attributable to lower volumes
being shipped through the Company's Norco pipeline system during the first
quarter of 2001 that was partially attributable to supply disruptions
experienced in the national transportation grid during the summer of 2000. The
increase in operating costs is primarily attributable to the Company receiving
an insurance settlement during the quarter ended September 30, 1999, which
resulted in lower environmental costs during that period last year. Excluding
this settlement, the operating costs are consistent between the two periods.
Natural Gas Services
The Company's natural gas services operation was divested effective
December 31, 1999.
Corporate and Other
General and administrative expenses for the three months ended September
30, 2000 were $7.2 million compared to $10.0 million for the three months ended
September 30, 1999. Compensation expense decreased by $1.5 million during the
current quarter reflecting the elimination of $0.75 million in corporate staff
positions in the current period and the effect of $0.75 million of bonuses
accrued in the prior period. In addition, the Company significantly lowered its
travel costs during the current quarter by approximately $0.8 million and had
reductions in professional services, communications, and other corporate items,
which resulted in additional expense reductions, of approximately $0.5 million
for the quarter.
21
<PAGE>
Corporate and Other (continued)
Depreciation and amortization expense for the three months ended September
30, 2000 was $4.8 million compared to $6.2 million for the three months ended
September 30, 1999. The decrease was due primarily to the disposition of the
natural gas services assets of BPEI.
Dividend income for the three months ended September 30, 2000 was $0.9
million compared to $0.5 million for the three months ended September 30, 1999,
an increase of $0.4 million. This increase is due to a dividend that was
received from Lion Oil Company during the three months ended September 30, 2000
that was not received during the 1999 comparable period. Interest income for
the three months ended September 30, 2000 was $0.8 million compared to $0.9
million for the three months ended September 30, 1999, a decrease of $0.1
million, reflecting reduced invested cash balances.
Interest expense and other financing costs during the three months ended
September 30, 2000 were $5.3 million compared to $10.5 million during the three
months ended September 30, 1999, a decrease of $5.2 million, which was primarily
due to a reduction in long term debt, using proceeds from the sale of BPEI and
the sale of excess inventory. The Company revised its inventory strategy during
the fourth quarter of 2000 and was able to reduce its inventory.
Income tax expense was $0.2 million for the three months ended September
30, 2000, which represents an effective combined federal and state income tax
rate of 38%. Income tax benefit was $3.4 million for the three months ended
September 30, 1999, which represents an effective combined federal and state
income tax rate of 40%.
Preferred stock dividends on the Series A Convertible Preferred Stock were
$2.1 million and $2.1 million for the three months ended September 30, 2000 and
1999, respectively.
22
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that its current working capital position; future cash
provided by operating activities; proceeds from the private placement or public
offering of debt and common stock; available borrowing capacity under the bank
credit facility and the Master Shelf Agreement; additional borrowing allowed
under those agreements; and its relationship with institutional lenders and
equity investors should enable the Company to meet its current capital
requirements.
The following summary reflects the Company's comparative EBITDA and net
cash flows for the three months ended September 30, 2000 and 1999 (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------------------------------
2000 1999
---------------------- -------------------
<S> <C> <C>
EBITDA (1) $ 14,344 7,444
Net cash provided (used) by operating activities $ (17,399) 75,611
Net cash used by investing activities $ (4,213) (15,653)
Net cash provided (used) by financing activities $ 3,860 (70,362)
</TABLE>
(1) Company EBITDA is operating income excluding the unrealized gains or
losses related to mark to market accounting for the minimum inventory
plus depreciation and amortization expenses and dividend income from
petroleum investments. The Company believes that, in addition to cash
flow from operations and net earnings (loss), EBITDA is a useful
financial performance measurement for assessing operating performance
since it provides an additional basis to evaluate the ability of the
Company to incur and service debt and to fund capital expenditures.
In evaluating EBITDA, the Company believes that consideration should
be given, among other things, to the amount by which EBITDA exceeds
interest costs for the period; how EBITDA compares to principal
repayments on debt for the period; and how EBITDA compares to capital
expenditures for the period. To evaluate EBITDA, the components of
EBITDA such as revenue and direct operating expenses and the
variability of such components over time, should also be considered.
EBITDA should not be construed, however, as an alternative to
operating income (loss) (as determined in accordance with generally
accepted accounting principles ("GAAP")) as an indicator of the
Company's operating performance or to cash flows from operating
activities (as determined in accordance with GAAP) as a measure of
liquidity. The Company's method of calculating EBITDA may differ from
methods used by other companies, and as a result, EBITDA measures
disclosed herein might not be comparable to other similarly titled
measures used by other companies.
The improvement in EBITDA for the quarter ended September 30, 2000 as
compared to the 1999 quarter is primarily due to a $2.6 million increase in
operating margin in the Company's product supply group, a $1.5 million increase
in operating performance in the terminaling/pipeline operations, and a $2.8
million reduction in general and administrative expenses as a result of the
Company's restructuring program.
Net cash used by operating activities of $17.4 million for the three months
ended September 30, 2000 was attributable primarily to decreases in: trade
accounts payable, inventory due under exchanges, and excise taxes payable offset
by decreases in trade accounts receivable and inventory. The net cash provided
by operating activities of $75.6 million for the three months ended September
30,1999 was attributable primarily to decreases in: trade accounts receivable,
inventory, which were partially offset by decreases in trade accounts payable.
Net cash used by investing activities was $4.2 million during the
three months ended September 30, 2000 as compared to $15.7 million during the
three months ended September 30, 1999 as the Company continued its growth
through construction of new facilities and improvements to existing operating
facilities.
23
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (continued)
Net cash provided by financing activities for the three months ended
September 30, 2000 of $3.9 million included $5.7 million from bank borrowings.
Net cash used by financing activities for the three months ended September 30,
1999 of $70.4 million included repayment of long-term debt totaling $68.2
million.
In February 2000, the Company amended its bank credit facility led by Fleet
National Bank (formerly BankBoston, N.A). The amended bank credit facility
includes a $300 million revolving component due December 31, 2003 and a $95
million term component due June 30, 2006. The term component has quarterly
principal payments beginning in September 2000. Borrowings under the bank
credit facility bear interest at an annual rate equal to the lender's Alternate
Base Rate plus margins subject to a Eurodollar Rate pricing option. The bank
credit facility includes a $20 million same day revolving swing line under which
advances may be drawn at an interest rate comparable to the Eurodollar Rate.
At September 30, 2000, the Company had advances of $160.7 million
outstanding under the bank credit facility utilizing the Eurodollar Rate loan
pricing option. The average interest rate at September 30, 2000 was 10.0%.
At September 30, 2000, the Company had outstanding under the Master Shelf
Agreement, $25 million of 7.85% Senior Notes due April 17, 2003 and $25 million
of 7.22% Senior Notes due October 17, 2004. The Master Shelf Agreement was
amended as of December 31, 1999 in connection with the amendment of the bank
credit facility.
Each of the bank credit facility and Master Shelf Agreement is secured by
certain current assets and fixed assets, and each also includes financial tests
relating to fixed charge coverage, current ratio, maximum leverage ratio,
consolidated tangible net worth, cash distributions and open inventory
positions. As of September 30, 2000, the Company was in compliance with all
such tests.
At September 30, 2000, the Company had working capital of $140.9 million;
availability under its bank credit facility of approximately $60 million for
cash advances and letters of credit, plus an additional $41 million for letters
of credit.
Capital expenditures anticipated for the year ending June 30, 2001 are
estimated to be $15 million for terminal and pipeline facilities, and assets to
support these facilities, and could exceed that amount if additional facilities
enhancement projects and possible acquisitions being considered by the Company
materialize. Future capital expenditures will depend on numerous factors,
including the availability, economics and cost of appropriate acquisitions which
the Company identifies and evaluates; the economics, cost and required
regulatory approvals with respect to the expansion and enhancement of existing
systems and facilities; the customer demand for the services the Company
provides; local, state and federal governmental regulations; environmental
compliance requirements; and the availability of debt financing and equity
capital on acceptable terms.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Although the Company believes that its
expectations are based on reasonable assumptions, it can give no assurance that
its goals will be achieved. Important factors which could cause actual results
to differ materially from those in the forward-looking statements include:
. that the Company will expand its business
. that the Company will generate net operating margins from high sales
volumes
. that the Company will generate net operating margins affected by price
volatility of products purchased and sold
. that the Company will enter into transactions with counter parties
having the ability to meet their financial commitments to the Company
. that the Company will incur unanticipated costs in complying with
current and future environmental regulations
. that the Company will capitalize on the trend by other companies in the
oil and gas industry to divest assets and outsource certain services
. that the Company will acquire strategically located operating facilities
from third parties
. that the Company will generate working capital internally, or have the
ability to access debt and equity resources, to meet its capital
requirements.
24
<PAGE>
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The information contained in Item 3 updates, and should be read in
conjunction with information set forth in Part II, Item 7A in the Company's
Annual Report on Form 10-K for the year ended June 30, 2000, in addition to the
interim consolidated financial statements and accompanying notes presented in
Items 1 and 2 of this Form 10-Q.
There are no material changes in market risks faced by the Company from
those reported in its Annual Report on Form 10-K for the year ended June 30,
2000.
25
<PAGE>
PART II. OTHER INFORMATION
----------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule. FILED HEREWITH.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended
September 30, 2000.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRANSMONTAIGNE INC.
Date: November 14, 2000
By /s/ CORTLANDT S. DIETLER
------------------------
Cortlandt S. Dietler
Chairman
/s/ RODNEY R. HILT
------------------
Rodney R. Hilt
Vice President, Controller
and Chief Accounting Officer
27
