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EX-31.1 - EX-31.1 - TransMontaigne Partners LLCtlp-20160630ex3114cf231.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10‑Q

 

 

(Mark One)

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2016

OR

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission File Number: 001‑32505

TRANSMONTAIGNE PARTNERS L.P.

(Exact name of registrant as specified in its charter)

 

 

Delaware
(State or other jurisdiction of
incorporation or organization)

34‑2037221
(I.R.S. Employer
Identification No.)

 

1670 Broadway

Suite 3100

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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act.

 

 

 

 

Large accelerated filer 

Accelerated filer 

Non‑accelerated filer 
(Do not check if a
smaller reporting company)

Smaller reporting company 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes   No 

As of July 29, 2016, there were 16,132,298 units of the registrant’s Common Limited Partner Units outstanding.

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

    

Page No.

 

Part I. Financial Information

 

Item 1. 

 

Unaudited Consolidated Financial Statements

 

3 

 

 

 

Consolidated balance sheets as of June 30, 2016 and December 31, 2015

 

4 

 

 

 

Consolidated statements of operations for the three months and six months ended June 30, 2016 and 2015

 

5 

 

 

 

Consolidated statements of partners’ equity for the year ended December 31, 2015 and six months ended June 30, 2016

 

6 

 

 

 

Consolidated statements of cash flows for the three and six months ended June 30, 2016 and 2015

 

7 

 

 

 

Notes to consolidated financial statements

 

8 

 

Item 2. 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29 

 

Item 3. 

 

Quantitative and Qualitative Disclosures about Market Risk

 

44 

 

Item 4. 

 

Controls and Procedures

 

45 

 

Part II. Other Information

 

Item 1. 

 

Legal Proceedings

 

45 

 

Item 1A. 

 

Risk Factors

 

45 

 

Item 6. 

 

Exhibits

 

48 

 

 

 

2


 

CAUTIONARY STATEMENT REGARDING FORWARD‑LOOKING STATEMENTS

This Quarterly Report contains 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, including the following:

·

certain statements, including possible or assumed future results of operations, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”

·

any statements contained herein regarding the prospects for our business or any of our services or our ability to pay distributions;

·

any statements preceded by, followed by or that include the words “may,” “seeks,” “believes,” “expects,” “anticipates,” “intends,” “continues,” “estimates,” “plans,” “targets,” “predicts,” “attempts,” “is scheduled,” or similar expressions; and

·

other statements contained herein regarding matters that are not historical facts.

Our business and results of operations are subject to risks and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward‑looking statements, and investors are cautioned not to place undue reliance on such statements, which speak only as of the date thereof. Important factors that could cause actual results to differ materially from our expectations and may adversely affect our business and results of operations, include, but are not limited to those risk factors set forth in this report in Part II. Other Information under the heading “Item 1A. Risk Factors.”

Part I. Financial Information

ITEM 1.  UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The interim unaudited consolidated financial statements of TransMontaigne Partners L.P. as of and for the three and six months ended June 30, 2016 are included herein beginning on the following page. The accompanying unaudited interim consolidated financial statements should be read in conjunction with our consolidated financial statements and related notes for the year ended December 31, 2015, together with our discussion and analysis of financial condition and results of operations, included in our Annual Report on Form 10‑K, filed on March 10, 2016 with the Securities and Exchange Commission (File No. 001‑32505).

TransMontaigne Partners L.P. is a holding company with the following 100% owned operating subsidiaries during the three and six months ended June 30, 2016:

·

TransMontaigne Operating GP L.L.C.

·

TransMontaigne Operating Company L.P.

·

TransMontaigne Terminals L.L.C.

·

Razorback L.L.C. (d/b/a Diamondback Pipeline L.L.C.)

·

TPSI Terminals L.L.C.

·

TLP Finance Corp.

·

TLP Operating Finance Corp.

·

TPME L.L.C.

We do not have off‑balance‑sheet arrangements (other than operating leases) or special‑purpose entities.

 

3


 

TransMontaigne Partners L.P. and subsidiaries

Consolidated balance sheets (unaudited)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

28

 

$

681

 

Trade accounts receivable, net

 

 

6,972

 

 

5,973

 

Due from affiliates

 

 

516

 

 

1,080

 

Other current assets

 

 

2,415

 

 

2,410

 

Total current assets

 

 

9,931

 

 

10,144

 

Property, plant and equipment, net

 

 

399,676

 

 

388,423

 

Goodwill

 

 

8,485

 

 

8,485

 

Investments in unconsolidated affiliates

 

 

244,699

 

 

246,700

 

Other assets, net

 

 

2,913

 

 

2,935

 

 

 

$

665,704

 

$

656,687

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Trade accounts payable

 

$

5,729

 

$

10,874

 

Due to affiliates

 

 

107

 

 

 —

 

Accrued liabilities

 

 

14,361

 

 

11,111

 

Total current liabilities

 

 

20,197

 

 

21,985

 

Other liabilities

 

 

3,511

 

 

2,731

 

Long-term debt

 

 

268,000

 

 

248,000

 

Total liabilities

 

 

291,708

 

 

272,716

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

Partners’ equity:

 

 

 

 

 

 

 

Common unitholders (16,132,298 units issued and outstanding at June 30, 2016 and 16,124,566 units issued and outstanding at December 31, 2015)

 

 

321,576

 

 

326,224

 

General partner interest (2% interest with 329,231 equivalent units outstanding at June 30, 2016 and 329,073 equivalent units outstanding at December 31, 2015)

 

 

52,420

 

 

57,747

 

Total partners’ equity

 

 

373,996

 

 

383,971

 

 

 

$

665,704

 

$

656,687

 

 

See accompanying notes to consolidated financial statements.

4


 

 

TransMontaigne Partners L.P. and subsidiaries

Consolidated statements of operations (unaudited)

(In thousands, except per unit amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

Six months ended 

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

External customers

 

$

39,970

 

$

26,754

 

$

76,242

 

$

52,053

 

Affiliates

 

 

1,166

 

 

10,280

 

 

5,520

 

 

22,878

 

Total revenue

 

 

41,136

 

 

37,034

 

 

81,762

 

 

74,931

 

Operating costs and expenses and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating costs and expenses

 

 

(17,703)

 

 

(15,872)

 

 

(33,609)

 

 

(30,826)

 

Direct general and administrative expenses

 

 

(604)

 

 

(672)

 

 

(2,161)

 

 

(1,693)

 

Allocated general and administrative expenses

 

 

(2,842)

 

 

(2,802)

 

 

(5,683)

 

 

(5,605)

 

Allocated insurance expense

 

 

(912)

 

 

(934)

 

 

(1,807)

 

 

(1,868)

 

Reimbursement of bonus awards expense

 

 

(258)

 

 

(539)

 

 

(1,893)

 

 

(1,064)

 

Depreciation and amortization

 

 

(8,064)

 

 

(7,476)

 

 

(15,999)

 

 

(14,813)

 

Earnings from unconsolidated affiliates

 

 

2,130

 

 

5,517

 

 

3,980

 

 

7,573

 

Total operating costs and expenses and other

 

 

(28,253)

 

 

(22,778)

 

 

(57,172)

 

 

(48,296)

 

Operating income

 

 

12,883

 

 

14,256

 

 

24,590

 

 

26,635

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,368)

 

 

(1,943)

 

 

(5,160)

 

 

(3,885)

 

Amortization of deferred financing costs

 

 

(205)

 

 

(125)

 

 

(410)

 

 

(440)

 

Total other expenses

 

 

(2,573)

 

 

(2,068)

 

 

(5,570)

 

 

(4,325)

 

Net earnings

 

 

10,310

 

 

12,188

 

 

19,020

 

 

22,310

 

Less—earnings allocable to general partner interest including incentive distribution rights

 

 

(2,242)

 

 

(1,893)

 

 

(4,298)

 

 

(3,743)

 

Net earnings allocable to limited partners

 

$

8,068

 

$

10,295

 

$

14,722

 

$

18,567

 

Net earnings per limited partner unit—basic

 

$

0.50

 

$

0.64

 

$

0.91

 

$

1.15

 

Net earnings per limited partner unit—diluted

 

$

0.50

 

$

0.64

 

$

0.91

 

$

1.15

 

 

See accompanying notes to consolidated financial statements.

5


 

TransMontaigne Partners L.P. and subsidiaries

Consolidated statements of partners’ equity (unaudited)

Year ended December 31, 2015 and six months ended June 30, 2016

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

    

    

 

    

    

 

    

    

 

 

 

 

 

 

 

General

 

 

 

 

 

 

Common

 

partner

 

 

 

 

 

 

units

 

interest

 

Total

 

Balance December 31, 2014

 

$

333,619

 

$

57,846

 

$

391,465

 

Distributions to unitholders

 

 

(42,897)

 

 

(7,605)

 

 

(50,502)

 

Equity-based compensation

 

 

1,411

 

 

 

 

1,411

 

Purchase of 2,668 common units by our long-term incentive plan

 

 

(92)

 

 

 

 

(92)

 

Net earnings for year ended December 31, 2015

 

 

34,183

 

 

7,506

 

 

41,689

 

Balance December 31, 2015

 

 

326,224

 

 

57,747

 

 

383,971

 

Distributions to unitholders

 

 

(21,783)

 

 

(4,124)

 

 

(25,907)

 

Equity-based compensation

 

 

2,413

 

 

 

 

2,413

 

Issuance of 15,750 common units by our long-term incentive plan due to vesting of restricted phantom units

 

 

 —

 

 

 —

 

 

 —

 

Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest

 

 

 —

 

 

5

 

 

5

 

Excess of $12.0 million purchase price of hydrant system from TransMontaigne LLC over the carryover basis of the net assets

 

 

 —

 

 

(5,506)

 

 

(5,506)

 

Net earnings for six months ended June 30, 2016

 

 

14,722

 

 

4,298

 

 

19,020

 

Balance June 30, 2016

 

$

321,576

 

$

52,420

 

$

373,996

 

 

See accompanying notes to consolidated financial statements.

6


 

TransMontaigne Partners L.P. and subsidiaries

Consolidated statements of cash flows (unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Six months ended 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

2016

 

2015

 

2016

 

2015

 

 

Cash flows from operating activities:

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Net earnings

 

$

10,310

 

$

12,188

 

$

19,020

 

$

22,310

 

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

8,064

 

 

7,476

 

 

15,999

 

 

14,813

 

 

Earnings from unconsolidated affiliates

 

 

(2,130)

 

 

(5,517)

 

 

(3,980)

 

 

(7,573)

 

 

Distributions from unconsolidated affiliates

 

 

4,071

 

 

4,310

 

 

8,206

 

 

7,952

 

 

Equity-based compensation

 

 

258

 

 

1,087

 

 

2,413

 

 

1,110

 

 

Amortization of deferred financing costs

 

 

205

 

 

125

 

 

410

 

 

440

 

 

Amortization of deferred revenue

 

 

(122)

 

 

(258)

 

 

(320)

 

 

(567)

 

 

Unrealized loss (gain) on derivative instruments

 

 

341

 

 

(59)

 

 

1,135

 

 

90

 

 

Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable, net

 

 

236

 

 

(1,286)

 

 

(999)

 

 

(688)

 

 

Due from affiliates

 

 

164

 

 

342

 

 

564

 

 

464

 

 

Other current assets

 

 

(18)

 

 

393

 

 

(5)

 

 

686

 

 

Amounts due under long-term terminaling services agreements, net

 

 

(25)

 

 

298

 

 

(72)

 

 

339

 

 

Trade accounts payable

 

 

(862)

 

 

(588)

 

 

(1,836)

 

 

(1,991)

 

 

Due to affiliates

 

 

107

 

 

115

 

 

107

 

 

115

 

 

Accrued liabilities

 

 

3,050

 

 

521

 

 

3,250

 

 

1,696

 

 

Net cash provided by operating activities

 

 

23,649

 

 

19,147

 

 

43,892

 

 

39,196

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Acquisition of terminal assets

 

 

 —

 

 

 —

 

 

(12,000)

 

 

 —

 

 

Investments in unconsolidated affiliates

 

 

 —

 

 

 —

 

 

(2,225)

 

 

 —

 

 

Capital expenditures

 

 

(14,483)

 

 

(9,010)

 

 

(23,966)

 

 

(15,754)

 

 

Net cash used in investing activities

 

 

(14,483)

 

 

(9,010)

 

 

(38,191)

 

 

(15,754)

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings of debt under credit facility

 

 

46,400

 

 

17,200

 

 

104,800

 

 

38,000

 

 

Repayments of debt under credit facility

 

 

(42,500)

 

 

(10,200)

 

 

(84,800)

 

 

(33,000)

 

 

Deferred issuance costs

 

 

(57)

 

 

(364)

 

 

(452)

 

 

(1,361)

 

 

Distributions paid to unitholders

 

 

(13,115)

 

 

(12,623)

 

 

(25,907)

 

 

(25,247)

 

 

Purchase of common units by our long-term incentive plan

 

 

 —

 

 

(22)

 

 

 —

 

 

(92)

 

 

Contribution of cash by TransMontaigne GP

 

 

 —

 

 

 —

 

 

5

 

 

 —

 

 

Net cash used in financing activities

 

 

(9,272)

 

 

(6,009)

 

 

(6,354)

 

 

(21,700)

 

 

Increase (decrease) in cash and cash equivalents

 

 

(106)

 

 

4,128

 

 

(653)

 

 

1,742

 

 

Cash and cash equivalents at beginning of period

 

 

134

 

 

918

 

 

681

 

 

3,304

 

 

Cash and cash equivalents at end of period

 

$

28

 

$

5,046

 

$

28

 

$

5,046

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,872

 

$

1,910

 

$

3,999

 

$

3,525

 

 

Property, plant and equipment acquired with accounts payable

 

$

2,657

 

$

1,669

 

$

2,657

 

$

1,669

 

 

 

See accompanying notes to consolidated financial statements.

 

 

7


 

Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Nature of business

TransMontaigne Partners L.P. (“we,” “us,” “our,” “the Partnership”) was formed in February 2005 as a Delaware limited partnership. We provide integrated terminaling, storage, transportation and related services for companies engaged in the trading, distribution and marketing of light refined petroleum products, heavy refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. We conduct our operations in the United States along the Gulf Coast, in the Midwest, in Houston and Brownsville, Texas, along the Mississippi and Ohio rivers, and in the Southeast.

We are controlled by our general partner, TransMontaigne GP L.L.C. (“TransMontaigne GP”), which as of February 1, 2016 is a wholly‑owned indirect subsidiary of ArcLight Energy Partners Fund VI, L.P. (“ArcLight”). Prior to February 1, 2016, TransMontaigne LLC, a wholly-owned subsidiary of NGL Energy Partners LP (“NGL”), owned all the issued and outstanding ownership interests of TransMontaigne GP.

(b)Basis of presentation and use of estimates

Our accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of TransMontaigne Partners L.P. and its controlled subsidiaries. Investments where we do not have the ability to exercise control, but do have the ability to exercise significant influence, are accounted for using the equity method of accounting. All inter‑company accounts and transactions have been eliminated in the preparation of the accompanying consolidated financial statements. The accompanying consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly our financial position as of June 30, 2016 and December 31, 2015 and our results of operations for the three and six months ended June 30, 2016 and 2015.

The preparation of financial statements in conformity with “GAAP” requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. The following estimates, in management’s opinion, are subjective in nature, require the exercise of judgment, and/or involve complex analyses: useful lives of our plant and equipment and accrued environmental obligations. Changes in these estimates and assumptions will occur as a result of the passage of time and the occurrence of future events. Actual results could differ from these estimates.

(c)Accounting for terminal and pipeline operations

In connection with our terminal and pipeline operations, we utilize the accrual method of accounting for revenue and expenses. We generate revenue in our terminal and pipeline operations from terminaling services fees, transportation fees, management fees and cost reimbursements, fees from other ancillary services and gains from the sale of refined products. Terminaling services revenue is recognized ratably over the term of the agreement for storage fees and minimum revenue commitments that are fixed at the inception of the agreement and when product is delivered to the customer for fees based on a rate per barrel of throughput; transportation revenue is recognized when the product has been delivered to the customer at the specified delivery location; management fee revenue and cost reimbursements are recognized as the services are performed or as the costs are incurred; ancillary service revenue is recognized as the services are performed; and gains from the sale of refined products are recognized when the title to the product is transferred.

Pursuant to terminaling services agreements with certain of our throughput customers, we are entitled to the volume of product gained resulting from differences in the measurement of product volumes received and distributed at our terminaling facilities. Consistent with recognized industry practices, measurement differentials occur as the result of the inherent variances in measurement devices and methodology. We recognize as revenue the net proceeds from the sale of the product gained. For the three months ended June 30, 2016 and 2015, we recognized revenue of approximately

8


 

Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

$1.2 million and $2.2 million, respectively, for net product gained. Within these amounts, approximately $nil and $0.7 million for the three months ended June 30, 2016 and 2015, respectively, were pursuant to terminaling services agreements with affiliate customers. For the six months ended June 30, 2016 and 2015, we recognized revenue of approximately $2.6 million and $4.0 million, respectively, for net product gained. Within these amounts, approximately $0.3 million and $1.6 million for the six months ended June 30, 2016 and 2015, respectively, were pursuant to terminaling services agreements with affiliate customers.    

(d)Cash and cash equivalents

We consider all short‑term investments with a remaining maturity of three months or less at the date of purchase to be cash equivalents.

(e)Property, plant and equipment

Depreciation is computed using the straight‑line method. Estimated useful lives are 15 to 25 years for terminals and pipelines and 3 to 25 years for furniture, fixtures and equipment. All items of property, plant and equipment are carried at cost. Expenditures that increase capacity or extend useful lives are capitalized. Repairs and maintenance are expensed as incurred.

We evaluate long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable based on expected undiscounted future cash flows attributable to that asset group. If an asset group is impaired, the impairment loss to be recognized is the excess of the carrying amount of the asset group over its estimated fair value.

(f)Investments in unconsolidated affiliates

We account for our investments in unconsolidated affiliates, which we do not control but do have the ability to exercise significant influence over, using the equity method of accounting. Under this method, the investment is recorded at acquisition cost, increased by our proportionate share of any earnings and additional capital contributions and decreased by our proportionate share of any losses, distributions received and amortization of any excess investment. Excess investment is the amount by which our total investment exceeds our proportionate share of the book value of the net assets of the investment entity. We evaluate our investments in unconsolidated affiliates for impairment whenever events or circumstances indicate there is a loss in value of the investment that is other than temporary. In the event of impairment, we would record a charge to earnings to adjust the carrying amount to fair value.

(g)Environmental obligations

We accrue for environmental costs that relate to existing conditions caused by past operations when probable and reasonably estimable (see Note 10 of Notes to consolidated financial statements). Environmental costs include initial site surveys and environmental studies of potentially contaminated sites, costs for remediation and restoration of sites determined to be contaminated and ongoing monitoring costs, as well as fines, damages and other costs, including direct legal costs. Liabilities for environmental costs at a specific site are initially recorded, on an undiscounted basis, when it is probable that we will be liable for such costs, and a reasonable estimate of the associated costs can be made based on available information. Such an estimate includes our share of the liability for each specific site and the sharing of the amounts related to each site that will not be paid by other potentially responsible parties, based on enacted laws and adopted regulations and policies. Adjustments to initial estimates are recorded, from time to time, to reflect changing circumstances and estimates based upon additional information developed in subsequent periods. Estimates of our ultimate liabilities associated with environmental costs are difficult to make with certainty due to the number of variables involved, including the early stage of investigation at certain sites, the lengthy time frames required to complete remediation, technology changes, alternatives available and the evolving nature of environmental laws and regulations. We periodically file claims for insurance recoveries of certain environmental remediation costs with our insurance carriers under our comprehensive liability policies (see Note 5 of Notes to consolidated financial statements). We

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

recognize our insurance recoveries as a credit to income in the period that we assess the likelihood of recovery as being probable (i.e., likely to occur).

In connection with our previous acquisitions of certain terminals from TransMontaigne LLC, TransMontaigne LLC has agreed to indemnify us against certain potential environmental claims, losses and expenses at those terminals (see Note 2 of Notes to consolidated financial statements).

(h)Asset retirement obligations

Asset retirement obligations are legal obligations associated with the retirement of long‑lived assets that result from the acquisition, construction, development or normal use of the asset. Generally accepted accounting principles require that the fair value of a liability related to the retirement of long‑lived assets be recorded at the time a legal obligation is incurred. Once an asset retirement obligation is identified and a liability is recorded, a corresponding asset is recorded, which is depreciated over the remaining useful life of the asset. After the initial measurement, the liability is adjusted to reflect changes in the asset retirement obligation. If and when it is determined that a legal obligation has been incurred, the fair value of any liability is determined based on estimates and assumptions related to retirement costs, future inflation rates and interest rates. Our long‑lived assets consist of above‑ground storage facilities and underground pipelines. We are unable to predict if and when these long‑lived assets will become completely obsolete and require dismantlement. We have not recorded an asset retirement obligation, or corresponding asset, because the future dismantlement and removal dates of our long‑lived assets is indeterminable and the amount of any associated costs are believed to be insignificant. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events.

(i)Equity based compensation

Generally accepted accounting principles require us to measure the cost of services received in exchange for an award of equity instruments based on the measurement‑date fair value of the award. That cost is recognized during the period services are provided in exchange for the award (see Note 14 of Notes to consolidated financial statements).

(j)Accounting for derivative instruments

Generally accepted accounting principles require us to recognize all derivative instruments at fair value in the consolidated balance sheets as assets or liabilities (see Note 11 of Notes to consolidated financial statements). Changes in the fair value of our derivative instruments are recognized in earnings.

At June 30, 2016 and December 31, 2015, our derivative instruments were limited to interest rate swap agreements with an aggregate notional amount of $125.0 million and $75.0 million, respectively. Our derivative instruments at June 30, 2016 expire between March 25, 2018 and March 11, 2019. Pursuant to the terms of the interest rate swap agreements, we pay a blended fixed rate of approximately 1.01% and receive interest payments based on the one-month LIBOR. The net difference to be paid or received under the interest rate swap agreements is settled monthly and is recognized as an adjustment to interest expense. The fair value of our interest rate swap agreements are determined using a pricing model based on the LIBOR swap rate and other observable market data.

(k)Income taxes

No provision for U.S. federal income taxes has been reflected in the accompanying consolidated financial statements because we are treated as a partnership for federal income taxes. As a partnership, all income, gains, losses, expenses, deductions and tax credits generated by us flow through to our unitholders.

(l)Net earnings per limited partner unit

Net earnings allocable to the limited partners, for purposes of calculating net earnings per limited partner unit, are net of the earnings allocable to the general partner interest and distributions payable to any restricted phantom units

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

granted under our equity based compensation plans that participate in our distributions (see Note 15 of Notes to consolidated financial statements). The earnings allocable to the general partner interest include the distributions of available cash (as defined by our partnership agreement) attributable to the period to the general partner interest, net of adjustments for the general partner’s share of undistributed earnings, and the incentive distribution rights. Undistributed earnings are the difference between the earnings and the distributions attributable to the period. Undistributed earnings are allocated to the limited partners and general partner interest based on their respective sharing of earnings or losses specified in the partnership agreement, which is based on their ownership percentages of 98% and 2%, respectively. The incentive distribution rights are not allocated a portion of the undistributed earnings given they are not entitled to distributions other than from available cash. Further, the incentive distribution rights do not share in losses under our partnership agreement. Basic net earnings per limited partner unit is computed by dividing net earnings allocable to limited partners by the weighted average number of limited partner units outstanding during the period. Diluted net earnings per limited partner unit is computed by dividing net earnings allocable to the limited partners by the weighted average number of limited partner units outstanding during the period and any potential dilutive securities outstanding during the period.

(m)Recent accounting pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The objective of this update is to clarify the principles for recognizing revenue and to develop a common revenue standard. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are currently evaluating the potential impact that the adoption will have on our disclosures and financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases. The objective of this update is to improve financial reporting about leasing transactions. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. We are currently evaluating the potential impact that the adoption will have on our disclosures and financial statements.

 

(2) TRANSACTIONS WITH AFFILIATES

Omnibus agreement.  We have an omnibus agreement with the owner of TransMontaigne GP that will continue in effect until the earlier to occur of (i) the owner ceasing to control our general partner or (ii) the election of either us or the owner, following at least 24 months’ prior written notice to the other parties.

Under the omnibus agreement we pay the owner of TransMontaigne GP an administrative fee for the provision of various general and administrative services for our benefit. The administrative fee paid for both the three months ended June 30, 2016 and 2015 was approximately $2.8 million. For the six months ended June 30, 2016 and 2015, the administrative fee paid was approximately $5.7 million and $5.6 million, respectively. If we acquire or construct additional facilities, the owner of TransMontaigne GP may propose a revised administrative fee covering the provision of services for such additional facilities, subject to approval by the conflicts committee of our general partner. The administrative fee encompasses the reimbursement of services to perform centralized corporate functions, such as legal, accounting, treasury, insurance administration and claims processing, health, safety and environmental, information technology, human resources, credit, payroll, taxes, engineering and other corporate services.

The omnibus agreement further provides that we pay the owner of TransMontaigne GP an insurance reimbursement for insurance policies purchased on our behalf to cover our facilities and operations. For both the three months ended June 30, 2016 and 2015, the insurance reimbursement paid was approximately $0.9 million. For the six months ended June 30, 2016 and 2015, the insurance reimbursement paid was approximately $1.8 million and $1.9 million, respectively. We also reimburse the owner of TransMontaigne GP for direct operating costs and expenses, such as salaries of operational personnel performing services on‑site at our terminals and pipelines and the cost of their employee benefits, including 401(k) and health insurance benefits.

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

Under the omnibus agreement we have agreed to reimburse the owner of TransMontaigne GP for a portion of the incentive bonus awards made to key employees under the owner’s savings and retention plan, provided the compensation committee of our general partner determines that an adequate portion of the incentive bonus awards are indexed to the performance of our common units in the form of restricted phantom units. The value of our incentive bonus award reimbursement for a single grant year may be no less than $1.5 million. Effective April 13, 2015 and beginning with the 2015 incentive bonus award, we have the option to provide the reimbursement in either a cash payment or the delivery of our common units to the owner of TransMontaigne GP or directly to the award recipients, with the reimbursement made in accordance with the underlying vesting and payment schedule of the savings and retention plan. Prior to the 2015 incentive bonus award, we reimbursed our portion of the incentive bonus awards by making cash payments to the owner of TransMontaigne GP over the first year that each applicable award was granted. For the three months ended June 30, 2016 and 2015, the expense associated with the reimbursement of incentive bonus awards was approximately $0.3 million and $0.5 million, respectively. For the six months ended June 30, 2016 and 2015, the expense associated with the reimbursement of incentive bonus awards was approximately $1.9 million and $1.1 million, respectively.

Environmental indemnification.  In connection with our acquisition of the Florida and Midwest terminals on May 27, 2005, TransMontaigne LLC agreed to indemnify us against certain potential environmental claims, losses and expenses that were identified on or before May 27, 2010, and that were associated with the ownership or operation of the Florida and Midwest terminals prior to May 27, 2005. TransMontaigne LLC’s maximum liability for this indemnification obligation is $15.0 million. TransMontaigne LLC has no obligation to indemnify us for losses until such aggregate losses exceed $250,000. TransMontaigne LLC has no indemnification obligations with respect to environmental claims made as a result of additions to or modifications of environmental laws promulgated after May 27, 2005.

In connection with our acquisition of the Brownsville, Texas and River terminals on December 31, 2006, TransMontaigne LLC agreed to indemnify us against potential environmental claims, losses and expenses that were identified on or before December 31, 2011, and that were associated with the ownership or operation of the Brownsville and River facilities prior to December 31, 2006. TransMontaigne LLC’s maximum liability for this indemnification obligation is $15.0 million. TransMontaigne LLC has no obligation to indemnify us for losses until such aggregate losses exceed $250,000. The deductible amount, cap amount and limitation of time for indemnification do not apply to any environmental liabilities known to exist as of December 31, 2006. TransMontaigne LLC has no indemnification obligations with respect to environmental claims made as a result of additions to or modifications of environmental laws promulgated after December 31, 2006.

In connection with our acquisition of the Southeast terminals on December 31, 2007, TransMontaigne LLC agreed to indemnify us against potential environmental claims, losses and expenses that were identified on or before December 31, 2012, and that were associated with the ownership or operation of the Southeast terminals prior to December 31, 2007. TransMontaigne LLC’s maximum liability for this indemnification obligation is $15.0 million. TransMontaigne LLC has no obligation to indemnify us for losses until such aggregate losses exceed $250,000. The deductible amount, cap amount and limitation of time for indemnification do not apply to any environmental liabilities known to exist as of December 31, 2007. TransMontaigne LLC has no indemnification obligations with respect to environmental claims made as a result of additions to or modifications of environmental laws promulgated after December 31, 2007.

In connection with our acquisition of the Pensacola terminal on March 1, 2011, TransMontaigne LLC agreed to indemnify us against potential environmental claims, losses and expenses that were identified on or before March 1, 2016, and that were associated with the ownership or operation of the Pensacola terminal prior to March 1, 2011. Our environmental losses must first exceed $200,000 and TransMontaigne LLC’s indemnification obligations are capped at $2.5 million. The deductible amount, cap amount and limitation of time for indemnification do not apply to any environmental liabilities known to exist as of March 1, 2011. TransMontaigne LLC has no indemnification obligations with respect to environmental claims made as a result of additions to or modifications of environmental laws promulgated after March 1, 2011.

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

The forgoing environmental indemnification obligations of TransMontaigne LLC to us remain in place and were not affected by ArcLight’s acquisition of our general partner.

Terminaling services agreement—Southeast terminals.  In connection with the ArcLight acquisition of our general partner, our Southeast terminaling services agreement with NGL was amended to extend the term of the agreement through July 31, 2040 at the prevailing contract rate terms contained within the agreement. Subsequent to January 31, 2023, NGL has the ability to terminate the agreement at any time upon at least 24 months’ prior notice of its intent to terminate the agreement. Subsequent to the ArcLight acquisition, effective February 1, 2016, revenue associated with the Southeast terminaling services agreement is recorded as revenue from external customers as opposed to revenue from affiliates.

Under this agreement, NGL was obligated to throughput a volume of refined product that, at the fee schedule contained in the agreement, resulted in minimum throughput payments to us of approximately $6.7 million for each of the three months ended June 30, 2016 and 2015 and $13.4 million for each of the six months ended June 30, 2016 and 2015. The agreement contains stipulated annual increases in throughput payments based on increases in the United States Consumer Price Index. The minimum annual throughput payment is reduced proportionately for any decrease in storage capacity due to out‑of‑service tank capacity. 

Under this agreement, we agreed to rebate NGL 50% of the proceeds we receive annually in excess of $4.2 million from the sale of product gains at our Southeast terminals. The proceeds from the sale of product gains at our Southeast terminals did not exceed $4.2 million for the year ended December 31, 2015, nor are they expected to exceed this amount for the year ending December 31, 2016. Accordingly, we have not accrued a liability for a rebate at June 30, 2016 or December 31, 2015.

If a force majeure event occurs that renders us unable to perform our obligations with respect to an asset, the obligations would be temporarily suspended with respect to that asset. If a force majeure event continues for 30 consecutive days or more and results in a diminution in the storage capacity we make available, the counterparty may terminate its obligations with respect to the asset affected by the force majeure event and their minimum revenue commitment would be reduced proportionately for the duration of the agreement.

Terminaling services agreement—Florida terminals. On October 31, 2014, NGL provided us the required 18 months’ prior notice that it would terminate its remaining obligations under the Florida terminaling services agreement effective April 30, 2016, which constitutes NGL’s light oil terminaling capacity for approximately 1.1 million barrels at our Port Everglades North, Florida terminal. On April 30, 2016, NGL amended the agreement to retain approximately 0.1 million barrels of this capacity. As of July 15, 2016 we have re-contracted the remaining capacity to third party customers at similar rates charged to NGL.

Under this agreement, NGL was obligated to throughput a volume that, at the fee and tariff schedule contained in the agreement, resulted in minimum throughput payments to us of approximately $0.2 million and $1.0 million for the three months ended June 30, 2016 and 2015, respectively, and $0.5 million and $3.7 million for the six months ended June 30, 2016 and 2015, respectively.

Operations and reimbursement agreement—Frontera.  We have a 50% ownership interest in Frontera Brownsville LLC joint venture, or “Frontera”. We have agreed to operate Frontera, in accordance with an operations and reimbursement agreement executed between us and Frontera, for a management fee that is based on our costs incurred. Our agreement with Frontera stipulates that we may resign as the operator at any time with the prior written consent of Frontera, or that we may be removed as the operator for good cause, which includes material noncompliance with laws and material failure to adhere to good industry practice regarding health, safety or environmental matters. We recognized revenue related to this operations and reimbursement agreement of approximately $1.2 million and $1.0 million for the three months ended June 30, 2016 and 2015, respectively, and $2.6 million and $2.2 million for the six months ended June 30, 2016 and 2015, respectively.

 

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

(3) ACQUISITION OF TERMINAL ASSETS

Effective January 28, 2016, we acquired from TransMontaigne LLC its Port Everglades, Florida hydrant system for a cash payment of $12.0 million. The hydrant system encompasses a system for fueling cruise ships and is currently under contract with one of our existing terminal customers for approximately three more years. The acquisition of the hydrant system from TransMontaigne LLC has been recorded at the carryover basis in a manner similar to a reorganization of entities under common control. As TransMontaigne LLC controlled our general partner on the acquisition date, the difference between the consideration we paid to TransMontaigne LLC and the carryover basis of the net assets purchased has been reflected in the accompanying consolidated balance sheets and statement of partners’ equity as a decrease to the general partner’s interest. The accompanying consolidated financial statements include the assets, liabilities and results of operations of the hydrant system from January 28, 2016. As this transaction is not considered material to our consolidated financial statements we did not recast prior period consolidated financial statements.

(4) CONCENTRATION OF CREDIT RISK AND TRADE ACCOUNTS RECEIVABLE

Our primary market areas are located in the United States along the Gulf Coast, in the Southeast, in Brownsville, Texas, along the Mississippi and Ohio Rivers, and in the Midwest. We have a concentration of trade receivable balances due from companies engaged in the trading, distribution and marketing of refined products and crude oil. These concentrations of customers may affect our overall credit risk in that the customers may be similarly affected by changes in economic, regulatory or other factors. Our customers’ historical financial and operating information is analyzed prior to extending credit. We manage our exposure to credit risk through credit analysis, credit approvals, credit limits and monitoring procedures, and for certain transactions we may request letters of credit, prepayments or guarantees. We maintain allowances for potentially uncollectible accounts receivable.

Trade accounts receivable, net consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

Trade accounts receivable

 

$

7,191

 

$

6,448

 

Less allowance for doubtful accounts

 

 

(219)

 

 

(475)

 

 

 

$

6,972

 

$

5,973

 

 

The following customers accounted for at least 10% of our consolidated revenue in at least one of the periods presented in the accompanying consolidated statements of operations:

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

June 30,

 

 

 

2016

 

2015

 

NGL Energy Partners LP

 

21

%  

25

%

Castleton Commodities International LLC

 

14

%  

 —

%

RaceTrac Petroleum Inc.

 

12

%  

11

%

Morgan Stanley Capital Group

 

 —

%  

12

 

 

On October 27, 2015, upon the sale of Morgan Stanley’s global physical oil merchanting business to Castleton Commodities International LLC, Morgan Stanley Capital Group, with our consent, assigned all its terminaling services agreements with us to Castleton Commodities International LLC.

 

 

 

 

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Notes to consolidated financial statements (unaudited) (continued)

(5) OTHER CURRENT ASSETS

Other current assets are as follows (in thousands):

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

Amounts due from insurance companies

 

$

849

 

$

774

 

Additive detergent

 

 

1,221

 

 

1,411

 

Deposits and other assets

 

 

345

 

 

225

 

 

 

$

2,415

 

$

2,410

 

 

Amounts due from insurance companies.  We periodically file claims for recovery of environmental remediation costs with our insurance carriers under our comprehensive liability policies. We recognize our insurance recoveries in the period that we assess the likelihood of recovery as being probable (i.e., likely to occur). At both June 30, 2016 and December 31, 2015, we have recognized amounts due from insurance companies of approximately $0.8 million, representing our best estimate of our probable insurance recoveries. During the six months ended June 30, 2016, we received reimbursements from insurance companies of approximately $0.3 million. During the six months ended June 30, 2016, we increased our estimate of probable future insurance recoveries by approximately $0.4 million.

(6) PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

Land

 

$

53,079

 

$

53,079

 

Terminals, pipelines and equipment

 

 

609,129

 

 

595,883

 

Furniture, fixtures and equipment

 

 

4,040

 

 

2,665

 

Construction in progress

 

 

21,675

 

 

8,704

 

 

 

 

687,923

 

 

660,331

 

Less accumulated depreciation

 

 

(288,247)

 

 

(271,908)

 

 

 

$

399,676

 

$

388,423

 

 

 

 

 

(7) GOODWILL

Goodwill is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

Brownsville terminals

 

$

8,485

 

$

8,485

 

 

Goodwill is required to be tested for impairment annually unless events or changes in circumstances indicate it is more likely than not that an impairment loss has been incurred at an interim date. Our annual test for the impairment of goodwill is performed as of December 31. The impairment test is performed at the reporting unit level. Our reporting units are our operating segments (see Note 18 of Notes to consolidated financial statements). The fair value of each reporting unit is determined on a stand‑alone basis from the perspective of a market participant and represents an estimate of the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired.

At June 30, 2016 and December 31, 2015, our only reporting unit that contained goodwill was our Brownsville terminals. We did not recognize any goodwill impairment charges during the six months ended June 30, 2016 or during

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Notes to consolidated financial statements (unaudited) (continued)

the year ended December 31, 2015 for this reporting unit. However, a significant decline in the price of our common units with a resulting increase in the assumed market participants’ weighted average cost of capital, the loss of a significant customer, the disposition of significant assets, or an unforeseen increase in the costs to operate and maintain the Brownsville terminals, could result in the recognition of an impairment charge in the future.

(8) INVESTMENTS IN UNCONSOLIDATED AFFILIATES

At June 30, 2016 and December 31, 2015, our investments in unconsolidated affiliates include a 42.5% Class A ownership interest in Battleground Oil Specialty Terminal Company LLC (“BOSTCO”) and a 50% ownership interest in Frontera Brownsville LLC (“Frontera”). BOSTCO is a terminal facility located on the Houston Ship Channel that encompasses approximately 7.1 million barrels of distillate, residual and other black oil product storage. Class A and Class B ownership interests share in cash distributions on a 96.5% and 3.5% basis, respectively. Class B ownership interests do not have voting rights and are not required to make capital investments. Frontera is a terminal facility located in Brownsville, Texas that encompasses approximately 1.5 million barrels of light petroleum product storage, as well as related ancillary facilities.

The following table summarizes our investments in unconsolidated affiliates:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

Carrying value

 

 

 

ownership

 

 

(in thousands)

 

 

 

June 30,

 

December 31,

 

 

June 30,

 

December 31,

 

 

    

2016

    

2015

    

    

2016

    

2015

 

BOSTCO

    

42.5

%  

42.5

%  

 

$

221,307

 

$

223,214

 

Frontera

 

50

%  

50

%  

 

 

23,392

 

 

23,486

 

Total investments in unconsolidated affiliates

 

 

 

 

 

 

$

244,699

 

$

246,700

 

 

At June 30, 2016 and December 31, 2015, our investment in BOSTCO includes approximately $7.3 million and $7.4 million, respectively, of excess investment related to a one time buy-in fee to acquire our 42.5% interest and capitalization of interest on our investment during the construction of BOSTCO. Excess investment is the amount by which our investment exceeds our proportionate share of the book value of the net assets of BOSTCO.

Earnings from investments in unconsolidated affiliates were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Six months ended 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

2016

 

2015

 

2016

 

2015

 

 

BOSTCO

 

$

1,517

 

$

4,793

 

$

2,909

 

$

6,574

 

 

Frontera

    

 

613

    

 

724

    

 

1,071

    

 

999

 

 

Total earnings from investments in unconsolidated affiliates

 

$

2,130

 

$

5,517

 

$

3,980

 

$

7,573

 

 

 

Additional capital investments in unconsolidated affiliates were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Six months ended 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

2016

    

2015

 

2016

    

2015

 

 

BOSTCO

 

$

 —

 

$

 —

 

$

2,125

 

$

 —

 

 

Frontera

 

 

 —

 

 

 —

 

 

100

 

 

 —

 

 

Additional capital investments in unconsolidated affiliates

 

$

 —

 

$

 —

 

$

2,225

 

$

 —

 

 

 

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Notes to consolidated financial statements (unaudited) (continued)

Cash distributions received from unconsolidated affiliates were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

    

Six months ended 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

2016

 

2015

 

2016

 

2015

 

 

BOSTCO

 

$

3,307

 

$

3,674

 

$

6,941

 

$

6,808

 

 

Frontera

    

 

764

    

 

636

    

 

1,265

    

 

1,144

 

 

Cash distributions received from unconsolidated affiliates

 

$

4,071

 

$

4,310

 

$

8,206

 

$

7,952

 

 

 

The summarized financial information of our unconsolidated affiliates was as follows (in thousands):

Balance sheets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BOSTCO

 

Frontera

 

 

 

June 30,

 

December 31,

 

June 30,

 

December 31,

 

 

    

2016

    

2015

    

2016

    

2015

 

Current assets

    

$

18,822

 

$

21,079

 

$

4,975

 

$

4,156

 

Long-term assets

 

 

492,583

 

 

500,982

 

 

43,064

 

 

44,194

 

Current liabilities

 

 

(7,947)

 

 

(15,064)

 

 

(1,255)

 

 

(1,376)

 

Net assets

 

$

503,458

 

$

506,997

 

$

46,784

 

$

46,974

 

 

Statements of operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BOSTCO

 

Frontera

 

 

 

Three months ended 

 

Three months ended 

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Revenue

    

$

16,192

    

$

22,967

    

$

4,233

    

$

4,251

 

Expenses

 

 

(12,240)

 

 

(11,157)

 

 

(3,007)

 

 

(2,803)

 

Net earnings

 

$

3,952

 

$

11,810

 

$

1,226

 

$

1,448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BOSTCO

 

Frontera

 

 

 

Six months ended 

 

Six months ended 

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Revenue

    

$

32,874

    

$

38,854

    

$

8,376

    

$

7,891

 

Expenses

 

 

(24,490)

 

 

(22,624)

 

 

(6,234)

 

 

(5,893)

 

Net earnings

 

$

8,384

 

$

16,230

 

$

2,142

 

$

1,998

 

 

 

 

 

 

 

 

 

17


 

Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

(9) OTHER ASSETS, NET

Other assets, net are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

Amounts due under long-term terminaling services agreements:

 

 

 

 

 

 

 

External customers

 

$

616

 

$

12

 

Affiliates

 

 

 —

 

 

567

 

 

 

 

616

 

 

579

 

Deferred financing costs, net of accumulated amortization of $4,462 and $4,052, respectively

 

 

1,705

 

 

1,721

 

Customer relationships, net of accumulated amortization of $1,991 and $1,890, respectively

 

 

439

 

 

540

 

Deposits and other assets

 

 

153

 

 

95

 

 

 

$

2,913

 

$

2,935

 

 

Amounts due under long‑term terminaling services agreements.  We have long‑term terminaling services agreements with certain of our customers that provide for minimum payments that increase over the terms of the respective agreements. We recognize as revenue the minimum payments under the long‑term terminaling services agreements on a straight‑line basis over the term of the respective agreements. At both June 30, 2016 and December 31, 2015, we have recognized revenue in excess of the minimum payments that was due through those respective dates under the long‑term terminaling services agreements resulting in an asset of approximately $0.6 million.

Deferred financing costs.  Deferred financing costs are amortized using the effective interest method over the term of the related credit facility (see Note 12 of Notes to consolidated financial statements).

Customer relationships.  Other assets, net include certain customer relationships at our River terminals. These customer relationships are being amortized on a straight‑line basis over twelve years.

(10) ACCRUED LIABILITIES

Accrued liabilities are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

Customer advances and deposits:

 

 

 

 

 

 

 

External customers

 

$

8,148

 

$

4,925

 

Affiliates

 

 

 —

 

 

2,352

 

 

 

 

8,148

 

 

7,277

 

Accrued property taxes

 

 

2,582

 

 

1,019

 

Accrued environmental obligations

 

 

1,137

 

 

1,047

 

Interest payable

 

 

184

 

 

141

 

Accrued expenses and other

 

 

2,310

 

 

1,627

 

 

 

$

14,361

 

$

11,111

 

 

Customer advances and deposits.  We bill certain of our customers one month in advance for terminaling services to be provided in the following month. At June 30, 2016 and December 31, 2015, we have billed and collected from certain of our customers approximately $8.1 million and $7.3 million, respectively, in advance of the terminaling services being provided.

18


 

Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (continued)

Accrued environmental obligations.  At June 30, 2016 and December 31, 2015, we have accrued environmental obligations of approximately $1.1 million and $1.0 million, respectively, representing our best estimate of our remediation obligations. During the six months ended June 30, 2016, we made payments of approximately $0.3 million towards our environmental remediation obligations. During the six months ended June 30, 2016, we increased   our estimate of our future environmental remediation costs by approximately $0.4 million. Changes in our estimates of our future environmental remediation obligations may occur as a result of the passage of time and the occurrence of future events.

(11) OTHER LIABILITIES

Other liabilities are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2016

 

2015

 

Advance payments received under long-term terminaling services agreements

 

$