UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended March 31, 2001
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 April 30, 2001 there were 31,751,669 shares of the registrant's Common
Stock outstanding.
This 10-Q/A is filed to correct a printing error to the second column
heading of the Consolidated Balance Sheets to read "June 30, 2000" in lieu of
"June 31, 2000", and to correct a printing error to the second column of the
Consolidated Statements of Operations to read "Nine Months Ended March 31" in
lieu of "Three Months Ended March 31". Except as amended by these corrections,
no other corrections are presented in the Consolidated Balance Sheets, the
Consolidated Statements of Operations, or any other information presented in the
quarterly report filed on Form 10-Q on May 15, 2001 for the quarter ended March
31, 2001.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2001 and June 30, 2000 (Unaudited).............................. 4
Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 2001 and 2000 (Unaudited).... 5
Consolidated Statements of Stockholders' Equity
Year Ended June 30, 2000 and Nine Months Ended
March 31, 2001 (Unaudited)................................................ 6
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2001 and 2000 (Unaudited)..................... 7
Notes to Consolidated Financial Statements................................ 8
PART II. OTHER INFORMATION
Signatures................................................................ 16
2
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
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2001 and June 30, 2000 (Unaudited)
(In thousands)
March 31, June 30,
Assets 2001 2000
- ------ --------- ---------
Current assets:
Cash and cash equivalents $ 14,842 53,938
Trade accounts receivable, net 114,043 117,739
Inventories 185,049 240,867
Assets from price risk management activities 36,432 16,038
Prepaid expenses and other 6,597 6,074
----------- --------
356,963 434,656
----------- --------
Property, plant and equipment:
Land 15,778 15,885
Plant and equipment 351,087 345,052
Accumulated depreciation (52,423) (38,710)
----------- --------
314,442 322,227
----------- --------
Investments and other assets:
Investments in petroleum related assets 47,723 46,152
Deferred tax assets, net 17,751 19,168
Deferred debt issuance costs, net 8,132 10,274
Other assets, net 1,024 2,095
----------- --------
74,630 77,689
----------- --------
$ 746,035 834,572
=========== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Trade accounts payable $ 67,935 103,685
Inventory due under exchange agreements 72,575 125,258
Liabilities from price risk management activities 15,551 30,376
Excise taxes payable 41,517 27,582
Other accrued liabilities 10,380 8,577
Current portion of long-term debt 2,370 4,370
----------- --------
210,328 299,848
----------- --------
Long-term debt, less current portion 202,849 202,625
Stockholders' equity:
Series A Convertible Preferred stock, par value $1,000 per share,
authorized 2,000,000 shares, issued and outstanding 172,454
shares at March 31, 2001, and 170,115 shares at
June 30, 2000, liquidation preference of $172,454 172,454 170,115
Common stock, par value $.01 per share, authorized
80,000,000 shares, issued and outstanding 31,735,969 shares at
March 31, 2001 and 30,730,524 shares at June 30, 2000 317 307
Capital in excess of par value 205,014 201,076
Unearned compensation (2,877) (1,465)
Accumulated deficit (42,050) (37,934)
----------- --------
332,858 332,099
----------- --------
$ 746,035 834,572
=========== ========
See accompanying notes to consolidated financial statements.
4
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 2001 and 2000 (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- -------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues: $ 1,278,387 1,209,470 3,782,830 3,681,502
Costs and expenses:
Product costs 1,245,523 1,175,296 3,696,391 3,603,635
Direct operating expenses 9,944 8,147 26,842 33,202
Impairment of long lived assets - - - 50,136
Selling, general and administrative 9,102 8,730 24,496 28,487
Depreciation and amortization 4,927 4,730 14,595 17,371
----------- ----------- ----------- -----------
1,269,496 1,196,903 3,762,324 3,732,831
----------- ----------- ----------- -----------
Operating income (loss) 8,891 12,567 20,506 (51,329)
Other income (expenses):
Dividend income from and equity in earnings of petroleum
related investments 766 345 2,505 1,119
Interest income 262 514 1,537 1,696
Interest expense (4,376) (4,667) (13,647) (23,424)
Other financing (cost) income (175) (224) 466 (714)
Amortization of deferred debt issuance costs (1,941) (872) (3,891) (6,663)
Unrealized loss on interest rate swap (2,679) - (3,491) -
Gain (loss) on disposition of assets - (1,566) 8 15,021
----------- ----------- ----------- -----------
(8,143) (6,470) (16,513) (12,965)
----------- ----------- ----------- -----------
Earnings (loss) before income taxes 748 6,097 3,993 (64,294)
Income tax (expense) benefit (284) (2,442) (1,517) 25,718
----------- ----------- ----------- -----------
Net earnings (loss) 464 3,655 2,476 (38,576)
Preferred stock dividends (2,339) (2,126) (6,592) (6,379)
----------- ----------- ----------- -----------
Net earnings (loss) attributable to
common stockholders $ (1,875) 1,529 (4,116) (44,955)
=========== =========== =========== ===========
Weighted average common
shares outstanding - basic and diluted
Basic 31,743 30,630 31,342 30,569
=========== =========== =========== ===========
Diluted 31,743 30,947 31,342 30,569
=========== =========== =========== ===========
Earnings (loss) per common share - basic and diluted
Basic $ (0.06) 0.05 (0.13) (1.47)
=========== =========== =========== ===========
Diluted $ (0.06) 0.05 (0.13) (1.47)
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
5
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Year Ended June 30, 2000 and Nine Months Ended March 31, 2001 (Unaudited)
(In thousands)
Capital in Retained earnings
Preferred Common excess of Unearned (accumulated
stock stock par value compensation deficit) Total
----------- ------ ---------- ------------ ----------------- -------
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
of 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 and warrants exercised - 5 1,600 - - 1,605
Unearned compensation related
to restricted stock awards - 5 2,338 (2,343) - -
Amortization of unearned
compensation - - - 931 - 931
Preferred stock dividends 2,339 - - - (6,592) (4,253)
Net earnings - - - - 2,476 2,476
----------- ------ ---------- ------------ ----------------- -------
Balance at March 31, 2001 $ 172,454 317 205,014 (2,877) (42,050) 332,858
=========== ====== ========== ============ ================= =======
See accompanying notes to consolidated financial statements.
6
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2001 and 2000 (Unaudited)
(In thousands)
Nine Months Ended
March 31,
------------------------------------------
2001 2000
------------------- ------------------
Cash flows from operating activities:
Net earnings (loss) $ 2,476 (38,576)
Adjustments to reconcile net earnings (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 14,595 17,371
Deferred tax expense (benefit) 1,417 (25,718)
Gain on disposition of assets (8) (15,024)
Impairment of long lived assets - 50,136
Amortization of unearned compensation 931 239
Amortization of deferred debt issuance costs 3,891 6,663
Changes in operating assets and liabilities,
net of non-cash activities:
Trade accounts receivable 3,696 46,099
Inventories 55,818 185,312
Prepaid expenses and other (523) (1,007)
Trade accounts payable (35,750) (55,190)
Assets and liabilities from price risk
management activities (35,219) 16,678
Inventory due under exchange (52,683) 47,687
agreements
Excise taxes payable and other
accrued liabilities 15,738 1,513
------------------- ------------------
Net cash provided (used)
by operating activities (25,621) 236,183
------------------- ------------------
Cash flows from investing activities:
Purchases of property, plant and equipment (7,986) (52,894)
Proceeds from sale of assets 1,184 137,325
Decrease (increase) in investment and other assets, net (500) 574
------------------- ------------------
Net cash provided (used)
by investing activities (7,302) 85,005
------------------- ------------------
Cash flows from financing activities:
Repayments of long-term debt, net (1,776) (290,680)
Deferred debt issuance costs (1,749) (4,833)
Common stock issued for cash 1,605 92
Preferred stock dividends paid (4,253) (6,379)
------------------- ------------------
Net cash used
by financing activities (6,173) (301,800)
------------------- ------------------
Increase (decrease) in
cash and cash equivalents (39,096) 19,388
Cash and cash equivalents at beginning of period 53,938 13,927
------------------- ------------------
Cash and cash equivalents at end of period $ 14,842 33,315
=================== ==================
See accompanying notes to consolidated financial statements.
7
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
Nature of Business and Basis of Presentation
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.
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.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity
of three months or less to be cash equivalents.
8
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2001 (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. The Company's price risk management activities are energy-
trading activities as defined by Emerging Issues Task Force Consensus 98-10
(EITF 98-10), Accounting for Contracts Involved in Energy Trading and Risk
Management Activities. As such, the financial instruments utilized are
marked to market in accordance with the guidance set forth in EITF 98-10.
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
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2001 (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.
Reclassifications
Certain amounts in the accompanying consolidated financial statements for
prior periods have been reclassified to conform to the classifications used
in fiscal year 2001.
10
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2001 (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 0.5 million barrels of
tankage.
The Company accounted for this acquisition using purchase method accounting
as of the effective date of the transaction. Accordingly, the purchase
price of the transaction was allocated to the assets and liabilities
acquired based upon the estimated fair value of the assets and liabilities
as of the acquisition date. The cash used for this acquisition was funded
by advances from the Company's bank credit facility.
11
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2001 (Unaudited)
(4) Inventories
Inventories at March 31, 2001 and June 30, 2000 are as follows:
March 31, 2001 June 30, 2000
----------------------- -------------------------
(in thousands) (in thousands)
Refined petroleum products $ 112,474 115,609
Refined petroleum products due
under exchange agreements, net 72,575 125,258
----------------------- -------------------------
$ 185,049 240,867
======================= =========================
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 March 31, 2001,
this portion of the Company's inventory (the minimum inventory) was
determined to be 2.0 million barrels. 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 marked to market
and are reflected as an increase or decrease in the carrying value of the
minimum inventory, with the corresponding unrealized gain or loss in
operating income. The unrealized loss on minimum inventory was $1.9 million
for the three months ended March 31, 2001 and $8.8 million for the nine
months ended March 31, 2001 (none in 2000).
(5) Property, Plant and Equipment
Property, plant and equipment at March 31, 2001 and June 30, 2000 is as
follows:
March 31, 2001 June 30, 2000
------------------------ ------------------------
(in thousands) (in thousands)
Land $ 15,778 15,885
Pipelines, rights of way
and equipment 36,859 36,369
Terminals and equipment 297,887 291,896
Other plant and equipment 16,341 16,787
------------------------ ------------------------
366,865 360,937
Less accumulated depreciation (52,423) (38,710)
------------------------ ------------------------
$ 314,442 322,227
======================== ========================
12
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2001 (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 March 31, 2001 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 $0.7 million from Lion during the nine
months ended March 31, 2001 and none during the nine months ended March 31,
2000.
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 March 31, 2001. 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 $1.7 million during the nine months ended March 31,
2001 and $1.1 million during the nine months ended March 31, 2000.
In August 2000, the Company converted its notes receivable and accrued
interest from ST Oil Company into an equity ownership position. At March
31, 2001, the Company's investment in ST Oil Company was approximately $1.7
million, representing a 30.02% equity ownership in ST Oil Company. There
was $0.1 million in equity income recorded during the nine months ended
March 31, 2001 and none during the nine months ended March 31, 2000.
(7) Long-term Debt
Long-term debt at March 31, 2001 and June 30, 2000 is as follows:
March 31, 2001 June 30, 2000
------------------------ ------------------------
(in thousands) (in thousands)
Bank Credit Facility $ 155,219 155,000
Senior promissory notes 50,000 50,000
12 3/4% senior subordinated
debentures, net of discount - 1,995
------------------------ ------------------------
205,219 206,995
Less current maturity 2,370 4,370
------------------------ ------------------------
$ 202,849 202,625
======================== ========================
At March 31, 2001, 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, which began 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 8.4% and 9.8% at March 31,
2001 and June 30, 2000, respectively. Effective March 30, 2001, the bank
credit facility was amended to adjust certain covenants and reduce the $300
million revolving component to $240 million on July 1, 2001. As a result of
the amendment, $1.0 million of deferred debt issuance costs were expensed
in the three months ended March 31, 2001, and $0.7 million in deferred debt
issuance costs were recorded related to the amendment.
13
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2001 (Unaudited)
(7) Long-term Debt (continued)
In August 1999, the Company entered into two "periodic knock-out" swap
agreements with money center banks to offset the exposure of an increase in
interest rates. Each swap was for a notional value of $150 million and
contained an expiration date of August 2003. The swaps contained a knockout
level at 6.75%, and they had a fixed interest rate of 5.48%. Prior to June
30, 2000, proceeds from the swap agreements were recorded as a reduction in
interest expense. Effective July 1, 2000, the estimated fair value of the
remaining interest rate swap was recorded as an asset/liability with a
corresponding debit/credit to other financing (cost) income upon the
adoption of the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, as the swaps were not designated as a
hedge as of that date. In August 2000, the Company terminated one of the
swap agreements, which did not have a material impact upon the financial
statements. As of March 31, 2001, the fair value of the remaining swap
agreement is a liability of $3.0 million, which is recorded in other
liabilities on the balance sheet. For the nine months ended March 31, 2001,
the Company recorded an unrealized loss on the interest rate swap of $3.5
million.
In April 1997, the Company entered into a Master Shelf Agreement with an
institutional lender. 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. 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 March 31, 2001, the Company was in compliance
with all such tests contained in the amended agreements.
As of March 31, 2001, the Company had redeemed all of the originally issued
$4 million of 12.75% senior subordinated debentures that were guaranteed by
certain subsidiaries. This debt was redeemed through the lender's exercise
of common stock warrants and cash. The first payment was made on December
15, 1999 for $2.0 million in cash and the final $2.0 million was redeemed
on December 15, 2000 for $1.1 million in cash and $0.9 million in warrants
exercised.
Cash payments for interest were approximately $14.5 million and $22.9
million for the nine months ended March 31, 2001 and 2000, respectively.
14
TRANSMONTAIGNE INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2001 (Unaudited)
(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 dividends are payable in either cash
or additional preferred shares. If the dividends are paid-in-kind with
additional preferred shares, the number of additional preferred shares
issued in lieu of a cash payment is determined by multiplying the cash
dividend that would have been paid by 110%. These new shares are used in
calculating all future dividends. During the three month period ended March
31, 2001, the Company elected to pay-in-kind the preferred dividend,
resulting in a non-cash dividend expense of $2.3 million for the quarter.
For the nine month period ended March 31, 2001, the cash dividend payment
was $4.3 million and non-cash payment was $2.3 million. For the nine month
period ended March 31, 2000, the cash dividend payment was $6.4 million and
the non-cash payment was $0.0. 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.
(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. During the nine months ended March 31, 2001, the Company's
Board of Directors awarded 505,180 shares of restricted stock. Of the
amount issued, 261,280 shares were issued to employees in exchange for the
cancellation of 1,681,300 stock options with exercise prices ranging from
$11.00 to $17.25 per share that had been issued to the employees in prior
years. Amortization of unearned compensation of approximately $0.9 million
is included in selling, general and administrative expense for the nine
months ended March 31, 2001 and $0.2 million is included in the selling,
general and administrative expense for the nine months ended March 31,
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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 17, 2001 TRANSMONTAIGNE INC.
(Registrant)
/s/ DONALD H. ANDERSON
----------------------
Donald H. Anderson
President, Chief Executive and Chief
Operating Officer
/s/ RODNEY R. HILT
-------------------
Rodney R. Hilt
Vice President, Controller
and Chief Accounting Officer
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