Report of Independent Registered Public Accounting Fir
m
To the Board of Directors of TransMontaigne GP L.L.C. and
The Unitholders of TransMontaigne Partners L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of TransMontaigne Partners L.P. and subsidiaries (the "Partnership") as of December 31, 2017 and 2016, the related consolidated statements of income, partners' equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 15, 2018, expressed an unqualified opinion on the Partnership’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Denver, Colorado
March 15, 2018
We have served as the Partnership’s auditor since 2012.
TransMontaigne Partners L.P. and subsidiaries
Consolidated balance sheets
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
923
|
|
$
|
593
|
|
Trade accounts receivable, net
|
|
|
11,017
|
|
|
9,297
|
|
Due from affiliates
|
|
|
1,509
|
|
|
653
|
|
Other current assets
|
|
|
20,654
|
|
|
9,903
|
|
Total current assets
|
|
|
34,103
|
|
|
20,446
|
|
Property, plant and equipment, net
|
|
|
655,053
|
|
|
416,748
|
|
Goodwill
|
|
|
9,428
|
|
|
8,485
|
|
Investments in unconsolidated affiliates
|
|
|
233,181
|
|
|
241,093
|
|
Other assets, net
|
|
|
55,238
|
|
|
2,922
|
|
|
|
$
|
987,003
|
|
$
|
689,694
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
8,527
|
|
$
|
7,928
|
|
Accrued liabilities
|
|
|
17,426
|
|
|
13,998
|
|
Total current liabilities
|
|
|
25,953
|
|
|
21,926
|
|
Other liabilities
|
|
|
3,633
|
|
|
3,234
|
|
Long-term debt
|
|
|
593,200
|
|
|
291,800
|
|
Total liabilities
|
|
|
622,786
|
|
|
316,960
|
|
Commitments and contingencies (Note 16)
|
|
|
|
|
|
|
|
Partners’ equity:
|
|
|
|
|
|
|
|
Common unitholders (16,177,353 units issued and outstanding at December 31, 2017 and 16,137,650 units issued and outstanding at December 31, 2016)
|
|
|
310,769
|
|
|
320,042
|
|
General partner interest (2% interest with 330,150 equivalent units outstanding at December 31, 2017 and 329,339 equivalent units outstanding at December 31, 2016)
|
|
|
53,448
|
|
|
52,692
|
|
Total partners’ equity
|
|
|
364,217
|
|
|
372,734
|
|
|
|
$
|
987,003
|
|
$
|
689,694
|
|
See accompanying notes to consolidated financial statements.
TransMontaigne Partners L.P. and subsidiaries
Consolidated statements of
operations
(In thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
176,079
|
|
$
|
156,506
|
|
$
|
109,557
|
|
Affiliates
|
|
|
7,193
|
|
|
8,418
|
|
|
42,953
|
|
Total revenue
|
|
|
183,272
|
|
|
164,924
|
|
|
152,510
|
|
Operating costs and expenses and other:
|
|
|
|
|
|
|
|
|
|
|
Direct operating costs and expenses
|
|
|
(67,700)
|
|
|
(68,415)
|
|
|
(64,033)
|
|
General and administrative expenses
|
|
|
(19,433)
|
|
|
(14,100)
|
|
|
(14,749)
|
|
Insurance expenses
|
|
|
(4,064)
|
|
|
(4,081)
|
|
|
(3,756)
|
|
Equity-based compensation expense
|
|
|
(2,999)
|
|
|
(3,263)
|
|
|
(1,411)
|
|
Depreciation and amortization
|
|
|
(35,960)
|
|
|
(32,383)
|
|
|
(30,650)
|
|
Earnings from unconsolidated affiliates
|
|
|
7,071
|
|
|
10,029
|
|
|
11,948
|
|
Total operating costs and expenses and other
|
|
|
(123,085)
|
|
|
(112,213)
|
|
|
(102,651)
|
|
Operating income
|
|
|
60,187
|
|
|
52,711
|
|
|
49,859
|
|
Other expenses:
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(10,473)
|
|
|
(7,787)
|
|
|
(7,396)
|
|
Amortization of deferred financing costs
|
|
|
(1,221)
|
|
|
(818)
|
|
|
(774)
|
|
Total other expenses
|
|
|
(11,694)
|
|
|
(8,605)
|
|
|
(8,170)
|
|
Net earnings
|
|
|
48,493
|
|
|
44,106
|
|
|
41,689
|
|
Less—earnings allocable to general partner interest including incentive distribution rights
|
|
|
(12,705)
|
|
|
(9,340)
|
|
|
(7,506)
|
|
Net earnings allocable to limited partners
|
|
$
|
35,788
|
|
$
|
34,766
|
|
$
|
34,183
|
|
Net earnings per limited partner unit—basic
|
|
$
|
2.20
|
|
$
|
2.14
|
|
$
|
2.12
|
|
Net earnings per limited partner unit—diluted
|
|
$
|
2.20
|
|
$
|
2.14
|
|
$
|
2.12
|
|
See accompanying notes to consolidated financial statements.
TransMontaigne Partners L.P. and subsidiaries
Consolidated statements of partners’ equity
(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
|
|
|
(44,211)
|
|
|
(8,898)
|
|
|
(53,109)
|
|
Equity-based compensation
|
|
|
3,128
|
|
|
—
|
|
|
3,128
|
|
Issuance of 19,008 common units pursuant to our long-term incentive plan
|
|
|
135
|
|
|
—
|
|
|
135
|
|
Issuance of 2,094 common units pursuant to our savings and retention program
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest
|
|
|
—
|
|
|
9
|
|
|
9
|
|
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 year ended December 31, 2016
|
|
|
34,766
|
|
|
9,340
|
|
|
44,106
|
|
Balance December 31, 2016
|
|
|
320,042
|
|
|
52,692
|
|
|
372,734
|
|
Distributions to unitholders
|
|
|
(47,349)
|
|
|
(11,985)
|
|
|
(59,334)
|
|
Equity-based compensation
|
|
|
2,729
|
|
|
—
|
|
|
2,729
|
|
Issuance of 6,498 common units pursuant to our long-term incentive plan
|
|
|
270
|
|
|
—
|
|
|
270
|
|
Issuance of 33,205 common units pursuant to our savings and retention program
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Settlement of tax withholdings on equity-based compensation
|
|
|
(711)
|
|
|
—
|
|
|
(711)
|
|
Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest
|
|
|
—
|
|
|
36
|
|
|
36
|
|
Net earnings for year ended December 31, 2017
|
|
|
35,788
|
|
|
12,705
|
|
|
48,493
|
|
Balance December 31, 2017
|
|
$
|
310,769
|
|
$
|
53,448
|
|
$
|
364,217
|
|
See accompanying notes to consolidated financial statements.
TransMontaigne Partners L.P. and subsidiaries
Consolidated statements of cash flows
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2017
|
|
2016
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
48,493
|
|
$
|
44,106
|
|
$
|
41,689
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
35,960
|
|
|
32,383
|
|
|
30,650
|
Earnings from unconsolidated affiliates
|
|
|
(7,071)
|
|
|
(10,029)
|
|
|
(11,948)
|
Distributions from unconsolidated affiliates
|
|
|
17,128
|
|
|
17,861
|
|
|
19,649
|
Equity-based compensation
|
|
|
2,999
|
|
|
3,263
|
|
|
1,411
|
Amortization of deferred financing costs
|
|
|
1,221
|
|
|
818
|
|
|
774
|
Amortization of deferred revenue
|
|
|
(333)
|
|
|
(248)
|
|
|
(1,268)
|
Unrealized gain on derivative instruments
|
|
|
(232)
|
|
|
(344)
|
|
|
—
|
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
(1,593)
|
|
|
(2,987)
|
|
|
3,386
|
Due from affiliates
|
|
|
(856)
|
|
|
427
|
|
|
236
|
Other current assets
|
|
|
1,457
|
|
|
(7,082)
|
|
|
655
|
Amounts due under long-term terminaling services agreements, net
|
|
|
801
|
|
|
337
|
|
|
1,144
|
Deposits
|
|
|
—
|
|
|
(193)
|
|
|
(19)
|
Trade accounts payable
|
|
|
2,522
|
|
|
(2,092)
|
|
|
(155)
|
Accrued liabilities
|
|
|
3,208
|
|
|
2,887
|
|
|
1,276
|
Net cash provided by operating activities
|
|
|
103,704
|
|
|
79,107
|
|
|
87,480
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of terminal assets
|
|
|
(276,760)
|
|
|
(12,000)
|
|
|
—
|
Investments in unconsolidated affiliates
|
|
|
(2,145)
|
|
|
(2,225)
|
|
|
(4,726)
|
Capital expenditures
|
|
|
(58,165)
|
|
|
(54,864)
|
|
|
(29,427)
|
Net cash used in investing activities
|
|
|
(337,070)
|
|
|
(69,089)
|
|
|
(34,153)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Borrowings of debt under credit facility
|
|
|
442,100
|
|
|
199,900
|
|
|
101,900
|
Repayments of debt under credit facility
|
|
|
(140,700)
|
|
|
(156,100)
|
|
|
(105,900)
|
Deferred financing costs
|
|
|
(6,703)
|
|
|
(395)
|
|
|
(1,356)
|
Deferred issuance costs
|
|
|
(992)
|
|
|
(411)
|
|
|
—
|
Settlement of tax withholdings on equity-based compensation
|
|
|
(711)
|
|
|
—
|
|
|
—
|
Distributions paid to unitholders
|
|
|
(59,334)
|
|
|
(53,109)
|
|
|
(50,502)
|
Purchase of common units by our long-term incentive plan
|
|
|
—
|
|
|
—
|
|
|
(92)
|
Contribution of cash by TransMontaigne GP
|
|
|
36
|
|
|
9
|
|
|
—
|
Net cash provided by (used in) financing activities
|
|
|
233,696
|
|
|
(10,106)
|
|
|
(55,950)
|
Increase (decrease) in cash and cash equivalents
|
|
|
330
|
|
|
(88)
|
|
|
(2,623)
|
Cash and cash equivalents at beginning of period
|
|
|
593
|
|
|
681
|
|
|
3,304
|
Cash and cash equivalents at end of period
|
|
$
|
923
|
|
$
|
593
|
|
$
|
681
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
10,077
|
|
$
|
8,097
|
|
$
|
7,298
|
Property, plant and equipment acquired with accounts payable
|
|
$
|
3,207
|
|
$
|
5,114
|
|
$
|
5,966
|
See accompanying notes to consolidated financial statements.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements
Years ended December 31, 2017, 2016 and 2015
(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, in the Southeast and West Coast.
We are controlled by our general partner, TransMontaigne GP (“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., a Delaware limited partnership, 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. Certain reclassifications of previously reported amounts have been made to conform to the current year presentation.
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 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; pipeline 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
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
the inherent variances in measurement devices and methodology. We recognize as revenue the net proceeds from the sale of the net product gained. For the years ended December 31, 2017, 2016 and 2015, we recognized revenue of approximately $10.7 million, $6.7 million and $7.5 million, respectively, for net product gained. Within these amounts, approximately $nil, $0.3 million and $2.9 million, 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.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
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 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 asset subject to legal obligation 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.
(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 9 of Notes to consolidated financial statements). Changes in the fair value of our derivative instruments are recognized in earnings.
At December 31, 2017, 2016 and 2015, our derivative instruments were limited to interest rate swap agreements with an aggregate notional amount of $125.0 million, $125.0 million and $75 million. Our derivative instruments at December 31, 2017 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. At December 31, 2017, 2016 and 2015 the fair value of our interest rate swaps was approximately $0.6 million, $0.3 million and $nil, respectively.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
(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 tax purposes. 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 calculated under the two-class method and accordingly are net of the earnings allocable to the general partner interest and distributions payable to any restricted phantom units granted under our equity-based compensation plans that participate in our distributions. 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 the 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) Comprehensive Income
Entities that report items of other comprehensive income have the option to present the components of net income and comprehensive income in either one continuous financial statement, or two consecutive financial statements. As the Partnership has no components of comprehensive income other than net income, no statement of comprehensive income has been presented.
(n) 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. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.
We adopted the new standard, effective January 1, 2018, using the modified retrospective method described within the ASU. This approach requires us to apply the new revenue standard to (i) all new revenue contracts entered into after January 1, 2018 and (ii) all existing revenue contracts as of January 1, 2018 through a cumulative adjustment to equity. During the evaluation of the standard, we reviewed our existing revenue streams, including evaluating contracts and identification of the types of arrangements where differences may arise in the conversion to the new standard. We did not identify any material differences in our existing revenue recognition methods that require modification under the new standard, we do not expect to record a material cumulative adjustment to equity and our
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
prior period financial statements will not be restated. The standard’s most significant impact to us relates to enhanced disclosure requirements.
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.
In August 2016, the FASB issued ASU 2016-15,
Statement of Cash Flows: Classification of Certain Cash Receipt and Cash Payments,
to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.
We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.
I
n January 2017, the FASB issued ASU 2017-04,
Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,
to simplify the accounting for goodwill impairment by eliminating step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, 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.
On May 27, 2005 we entered into an omnibus agreement with TransMontaigne LLC and our general partner, which agreement has been subsequently amended from time to time. In connection with the ArcLight acquisition of our general partner, effective February 1, 2016, we entered into the second amended and restated omnibus agreement to
consent to the assignment of the omnibus agreement from TransMontaigne LLC to Gulf TLP Holdings LLC
, an ArcLight subsidiary,
to waive the automatic termination that would have occurred at such time as TransMontaigne LLC ceased to control our general partner and to remove certain legacy provisions that were no longer applicable to the Partnership.
The omnibus agreement will continue in effect until the earlier of (i) ArcLight 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 Gulf TLP Holdings, the owner of TransMontaigne GP, an administrative fee for the provision of various general and administrative services for our benefit. For the years ended December 31, 2017, 2016 and 2015, the annual administrative fee paid to the owner of TransMontaigne GP was approximately $12.8 million, $11.4 million and $11.3 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. For example, e
ffective May 3, 2017 the board of TransMontaigne GP, with the concurrence of the conflicts committee, approved a $1.8 million annual increase (or $150,000 monthly) to the administrative fee related to the construction of approximately 2.0 million barrels of new tank capacity at our Collins, Mississippi bulk storage terminal. The increase was ratably applied monthly beginning May 3, 2017 based on the percentage of the approximately 2.0 million barrels of new tank capacity placed into service.
The administrative fee is recognized as a component of general and administrative expense and encompasses 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 for insurance policies purchased on our behalf to cover our facilities and operations. For the years ended December 31, 2017, 2016 and 2015,
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
the insurance expense paid to the owner of TransMontaigne GP was approximately $nil, $3.1 million and $3.8 million, respectively. Beginning October 31, 2016, we contracted directly with insurance carriers for the majority of our insurance requirements. For the years ended December 31, 2017, 2016 and 2015, the expense associated with insurance contracted directly by us was $4.1 million, $1.0 million and $nil, respectively. We also pay 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.
Under the omnibus agreement we have agreed to reimburse the owner of TransMontaigne GP for bonus awards made to key employees under the owner of TransMontaigne GP’s savings and retention program, provided the compensation committee and the conflicts committee of our general partner approve the annual awards granted under the plan. 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 program. We have the intent and ability to settle our reimbursement for bonus awards in our common units, and accordingly, effective April 13, 2015, we began accounting for the bonus awards as an equity award. Prior to the 2015 bonus award, we reimbursed our portion of the bonus awards by making cash payments to the owner of TransMontaigne GP over the first year that each applicable award was granted. For the years ended December 31, 2017, 2016 and 2015, the expense associated with the reimbursement of bonus awards was approximately $2.7 million, $2.5 million and $1.3 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.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
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. TransMontaigne LLC’s maximum liability for this indemnification obligation is $2.5 million. TransMontaigne LLC has no obligation to indemnify us for losses until such aggregate losses exceed $200,000. 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.
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—Brownsville terminals.
In September 2016, we entered into a terminaling services agreement with Frontera relating to our Brownsville, Texas facility that will expire in June 2019, subject to a two-year automatic renewal unless terminated by either party upon 180 days’ prior notice. Under this agreement, Frontera has agreed to throughput a volume of light oil product at our terminal that, at the fee schedule contained in the agreement, will result in minimum throughput payments to us of approximately $1.3 million per year. In exchange for its minimum throughput commitment, we have agreed to provide Frontera with approximately 151,000 barrels of storage capacity.
For the years ended December 31, 2017, 2016 and 2015, we recognized approximately $1.5 million, $0.5 million and $nil, respectively, of revenue related to this agreement.
Terminaling services agreement—Brownsville terminals.
In June 2017, we entered into a terminaling services agreement with Frontera relating to our Brownsville, Texas facility that will expire in June 2020, subject to a three-year automatic renewal unless terminated by either party upon 90 days’ prior notice. Under this agreement, Frontera has agreed to throughput a volume of light oil product at our terminal that, at the fee schedule contained in the agreement, will result in minimum throughput payments to us of approximately $1.0 million per year. In exchange for its minimum throughput commitment, we have agreed to provide Frontera with approximately 150,000 barrels of storage capacity.
For the years ended December 31, 2017, 2016 and 2015, we recognized approximately $0.4 million, $nil and $nil, respectively, of revenue related to this agreement.
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. For the years ended December 31, 2017, 2016 and 2015, we recognized approximately $5.3 million, $5.0 million and $4.4 million, respectively, of revenue related to this operations and reimbursement agreement.
Terminaling services agreement—Southeast terminals.
We have a terminaling services agreement with NGL relating to our 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.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
Under this agreement, NGL was obligated to throughput a volume of refined product at our Southeast terminals that, at the fee schedule contained in the agreement, resulted in minimum throughput payments to us of approximately $27.0 million, for each of the years ended December 31, 2017, 2016 and 2015.
|
(3)
|
|
BUSINESS COMBINATION AND TERMINAL ACQUISITION
|
On December 15, 2017, we acquired the West Coast terminals from a third party for a total purchase price of $276.8 million. The West Coast Terminals represent two waterborne refined product and crude oil terminals located in the San Francisco Bay Area refining complex with a total of 64 storage tanks with approximately 5.0 million barrels of active storage capacity. The West Coast terminals have access to domestic and international crude oil and refined products markets through marine, pipeline, truck and rail logistics capabilities. The accompanying consolidated financial statements include the assets, liabilities and results of operations of the West Coast terminals from December 15, 2017.
The purchase price and estimated assessment of the fair value of the assets acquired and liabilities assumed in the business combination were as follows (in thousands):
|
|
|
|
Other current assets
|
|
$
|
1,037
|
Property, plant and equipment
|
|
|
228,000
|
Goodwill
|
|
|
943
|
Customer relationships
|
|
|
47,000
|
Total assets acquired
|
|
|
276,980
|
Environmental obligation
|
|
|
220
|
Total liabilities assumed
|
|
|
220
|
Allocated purchase price
|
|
$
|
276,760
|
Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents the premium we paid to acquire the skilled workforce.
These unaudited pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred had this acquisition been completed on January 1, 2016 or the results that will be attained in the future (in thousands):
|
|
|
|
|
|
|
|
|
ProForma year ended December 31,
|
|
|
|
2017
|
|
|
2016
|
Revenue
|
|
$
|
226,653
|
|
$
|
205,605
|
Net earnings
|
|
$
|
55,856
|
|
$
|
46,276
|
Significant pro forma adjustments include depreciation expense and interest expense on the incremental borrowings necessary to finance this acquisition as well as adjustments to remove the related party transactions included in the historical financial statements of the West Coast terminals.
On 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. 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. Accordingly, we recorded the assets at their net book value of $6.5 million with the remaining purchase price of $5.5 million recorded as a reduction to the general partner equity interest. TransMontaigne LLC controlled our general partner on the acquisition date, the difference between the consideration we
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
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, in the Midwest and in the West Coast. 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):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Trade accounts receivable
|
|
$
|
11,128
|
|
$
|
9,416
|
|
Less allowance for doubtful accounts
|
|
|
(111)
|
|
|
(119)
|
|
|
|
$
|
11,017
|
|
$
|
9,297
|
|
The following table presents a rollforward of our allowance for doubtful accounts (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
beginning
|
|
Charged to
|
|
|
|
|
end of
|
|
|
|
of period
|
|
expenses
|
|
Deductions
|
|
period
|
|
2017
|
|
$
|
119
|
|
$
|
—
|
|
$
|
(8)
|
|
$
|
111
|
|
2016
|
|
$
|
475
|
|
$
|
298
|
|
$
|
(654)
|
|
$
|
119
|
|
2015
|
|
$
|
464
|
|
$
|
11
|
|
$
|
—
|
|
$
|
475
|
|
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 income:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
NGL Energy Partners LP
|
|
|
26
|
%
|
23
|
%
|
25
|
%
|
Castleton Commodities International LLC
|
|
|
13
|
%
|
14
|
%
|
—
|
%
|
RaceTrac Petroleum Inc.
|
|
|
13
|
%
|
12
|
%
|
11
|
%
|
Morgan Stanley Capital Group
|
|
|
—
|
%
|
—
|
%
|
10
|
%
|
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 remaining terminaling services agreements with us to Castleton Commodities International LLC.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
(5) OTHER CURRENT ASSETS
Other current assets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Amounts due from insurance companies
|
|
$
|
1,981
|
|
$
|
1,810
|
|
Additive detergent
|
|
|
1,715
|
|
|
1,364
|
|
Prepaid insurance
|
|
|
4,151
|
|
|
4,684
|
|
Deposits and other assets
|
|
|
12,807
|
|
|
2,045
|
|
|
|
$
|
20,654
|
|
$
|
9,903
|
|
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 December 31, 2017 and 2016, we have recognized amounts due from insurance companies of approximately $2.0 million and $1.8 million, respectively, representing our best estimate of our probable insurance recoveries. During the year ended December 31, 2017, we received reimbursements from insurance companies of approximately $1.1 million. During the year ended December 31, 2017 we increased our estimate of probable future insurance recoveries by approximately $1.3 million.
Deposits and other assets.
Deposits and other assets at December 31, 2017 includes a deposit of approximately $10.2 million paid during the fourth quarter 2017 related to future expansion opportunities that closed in the first quarter of 2018.
(6) PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Land
|
|
$
|
83,310
|
|
$
|
53,079
|
|
Terminals, pipelines and equipment
|
|
|
885,429
|
|
|
651,783
|
|
Furniture, fixtures and equipment
|
|
|
4,430
|
|
|
4,100
|
|
Construction in progress
|
|
|
21,575
|
|
|
11,715
|
|
|
|
|
994,744
|
|
|
720,677
|
|
Less accumulated depreciation
|
|
|
(339,691)
|
|
|
(303,929)
|
|
|
|
$
|
655,053
|
|
$
|
416,748
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
(7) GOODWILL
Goodwill is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Brownsville terminals
|
|
$
|
8,485
|
|
$
|
8,485
|
|
West Coast terminals
|
|
|
943
|
|
|
—
|
|
|
|
$
|
9,428
|
|
$
|
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 December 31, 2017 our Brownsville terminals and West Coast terminals contained goodwill. At December 31, 2016, our only reporting unit that contained goodwill was our Brownsville terminals. Our estimate of the fair value of our Brownsville terminals at December 31, 2017 and 2016 substantially exceeded its carrying amount. Accordingly, we did not recognize any goodwill impairment charges during the years ended December 31, 2017 and 2016, respectively. The purchase price and estimated assessment of the fair value of the assets acquired and liabilities assumed in our acquisition of the West Coast terminals was performed as of the acquisition date, December 15, 2017, as such the estimated fair value equaled its carrying amount. Accordingly, we did not recognize any goodwill impairment charges during the year ended December 31, 2017. 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 and West Coast terminals, could result in the recognition of an impairment charge in the future.
(8) INVESTMENTS IN UNCONSOLIDATED AFFILIATES
At December 31, 2017 and 2016, 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.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
The following table summarizes our investments in unconsolidated affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
Carrying value
|
|
|
|
|
ownership
|
|
|
(in thousands)
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
BOSTCO
|
|
42.5
|
%
|
42.5
|
%
|
|
$
|
209,373
|
|
$
|
217,941
|
|
|
Frontera
|
|
50
|
%
|
50
|
%
|
|
|
23,808
|
|
|
23,152
|
|
|
Total investments in unconsolidated affiliates
|
|
|
|
|
|
|
$
|
233,181
|
|
$
|
241,093
|
|
|
At December 31, 2017 and 2016, our investment in BOSTCO includes approximately $7.0 million and $7.2 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 amortized over the useful life of the assets. Excess investment is the amount by which our investment exceeds our proportionate share of the book value of the net assets of the BOSTCO entity.
Earnings from investments in unconsolidated affiliates were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
BOSTCO
|
|
$
|
3,543
|
|
$
|
6,933
|
|
$
|
9,968
|
|
Frontera
|
|
|
3,528
|
|
|
3,096
|
|
|
1,980
|
|
Total earnings from investments in unconsolidated affiliates
|
|
$
|
7,071
|
|
$
|
10,029
|
|
$
|
11,948
|
|
Additional capital investments in unconsolidated affiliates were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
BOSTCO
|
|
$
|
145
|
|
$
|
2,125
|
|
$
|
4,226
|
|
Frontera
|
|
|
2,000
|
|
|
100
|
|
|
500
|
|
Additional capital investments in unconsolidated affiliates
|
|
$
|
2,145
|
|
$
|
2,225
|
|
$
|
4,726
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
Cash distributions received from unconsolidated affiliates were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
BOSTCO
|
|
$
|
12,256
|
|
$
|
14,331
|
|
$
|
16,900
|
|
Frontera
|
|
|
4,872
|
|
|
3,530
|
|
|
2,749
|
|
Cash distributions received from unconsolidated affiliates
|
|
$
|
17,128
|
|
$
|
17,861
|
|
$
|
19,649
|
|
The summarized financial information of our unconsolidated affiliates was as follows (in thousands):
Balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOSTCO
|
|
Frontera
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Current assets
|
|
$
|
24,976
|
|
$
|
23,237
|
|
$
|
5,649
|
|
$
|
5,779
|
|
Long-term assets
|
|
|
469,348
|
|
|
485,331
|
|
|
44,292
|
|
|
41,966
|
|
Current liabilities
|
|
|
(17,550)
|
|
|
(12,799)
|
|
|
(2,147)
|
|
|
(1,172)
|
|
Long-term liabilities
|
|
|
—
|
|
|
—
|
|
|
(178)
|
|
|
(269)
|
|
Net assets
|
|
$
|
476,774
|
|
$
|
495,769
|
|
$
|
47,616
|
|
$
|
46,304
|
|
Statements of income
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOSTCO
|
|
Frontera
|
|
|
|
|
Year ended
|
|
Year ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
Revenue
|
|
|
$
|
66,235
|
|
$
|
66,863
|
|
$
|
70,710
|
|
$
|
22,193
|
|
$
|
18,958
|
|
$
|
16,083
|
|
Expenses
|
|
|
|
(55,687)
|
|
|
(48,149)
|
|
|
(45,787)
|
|
|
(15,137)
|
|
|
(12,766)
|
|
|
(12,121)
|
|
Net earnings
|
|
|
$
|
10,548
|
|
$
|
18,714
|
|
$
|
24,923
|
|
$
|
7,056
|
|
$
|
6,192
|
|
$
|
3,962
|
|
(9) OTHER ASSETS, NET
Other assets, net are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Customer relationships, net of accumulated amortization of $2,294 and $2,092, respectively
|
|
$
|
47,136
|
|
$
|
338
|
|
Deferred financing costs, net of accumulated amortization of $5,984 and $4,763, respectively
|
|
|
6,778
|
|
|
1,298
|
|
Amounts due under long-term terminaling services agreements
|
|
|
460
|
|
|
656
|
|
Unrealized gain on derivative instruments
|
|
|
576
|
|
|
344
|
|
Deposits and other assets
|
|
|
288
|
|
|
286
|
|
|
|
$
|
55,238
|
|
$
|
2,922
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
Customer relationships.
Other assets, net primarily include certain customer relationships at our West Coast terminals. These customer relationships are being amortized on a straight‑line basis over approximately twenty years. Expected future amortization expense for the customer relationships as of December 31, 2017 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ending December 31,
|
|
|
|
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Amortization expense
|
|
$
|
2,592
|
|
$
|
2,350
|
|
$
|
2,350
|
|
$
|
2,350
|
|
$
|
2,350
|
|
$
|
35,144
|
|
Deferred financing costs.
Deferred financing costs are amortized using the effective interest method over the term of the related credit facility.
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 at stated amounts 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 terms of the respective agreements. At December 31, 2017 and 2016, we have recognized revenue in excess of the minimum payments that are due through those respective dates under the long‑term terminaling services agreements resulting in an asset of approximately $0.5 million and $0.7 million, respectively.
(10) ACCRUED LIABILITIES
Accrued liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Customer advances and deposits
|
|
$
|
10,265
|
|
$
|
8,710
|
|
Accrued property taxes
|
|
|
1,381
|
|
|
1,061
|
|
Accrued environmental obligations
|
|
|
1,855
|
|
|
2,107
|
|
Interest payable
|
|
|
982
|
|
|
232
|
|
Accrued expenses and other
|
|
|
2,943
|
|
|
1,888
|
|
|
|
$
|
17,426
|
|
$
|
13,998
|
|
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 December 31, 2017 and 2016, we have billed and collected from certain of our customers approximately $10.3 million and $8.7 million, respectively, in advance of the terminaling services being provided.
Accrued environmental obligations.
At December 31, 2017 and 2016, we have accrued environmental obligations of approximately $1.9 million and $2.1 million, respectively, representing our best estimate of our remediation obligations. 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.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
The following table presents a rollforward of our accrued environmental obligations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
Balance at
|
|
|
|
beginning
|
|
|
|
|
Increase
|
|
end of
|
|
|
|
of period
|
|
Payments
|
|
in estimate
|
|
period
|
|
2017
|
|
$
|
2,107
|
|
$
|
(1,204)
|
|
$
|
952
|
|
$
|
1,855
|
|
2016
|
|
$
|
1,047
|
|
$
|
(1,322)
|
|
$
|
2,382
|
|
$
|
2,107
|
|
2015
|
|
$
|
1,524
|
|
$
|
(513)
|
|
$
|
36
|
|
$
|
1,047
|
|
(11) OTHER LIABILITIES
Other liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Advance payments received under long-term terminaling services agreements
|
|
$
|
1,599
|
|
$
|
994
|
|
Deferred revenue—ethanol blending fees and other projects
|
|
|
2,034
|
|
|
2,240
|
|
|
|
$
|
3,633
|
|
$
|
3,234
|
|
Advance payments received under long‑term terminaling services agreements.
We have long‑term terminaling services agreements with certain of our customers that provide for advance minimum payments. We recognize the advance minimum payments as revenue either on a straight‑line basis over the term of the respective agreements or when services have been provided based on volumes of product distributed. At December 31, 2017 and 2016, we have received advance minimum payments in excess of revenue recognized under these long‑term terminaling services agreements resulting in a liability of approximately $1.6 million and $1.0 million, respectively.
Deferred revenue—ethanol blending fees and other projects.
Pursuant to historical agreements with our customers, we agreed to undertake certain capital projects that primarily pertain to providing ethanol blending functionality at certain of our Southeast terminals. Upon completion of the projects, our customers have paid us lump‑sum amounts that will be recognized as revenue on a straight‑line basis over the remaining term of the agreements. At December 31, 2017 and 2016, we have unamortized deferred revenue of approximately $2.0 million and $2.2 million, respectively, for completed projects. During the years ended December 31, 2017, 2016 and 2015, we billed our customers approximately $0.5 million, $0.5 and $nil, respectively, for completed projects. During the years ended December 31, 2017, 2016 and 2015, we recognized revenue on a straight‑line basis of approximately $0.7 million, $0.5 million and $1.3 million, respectively, for completed projects.
(12) LONG‑TERM DEBT
Our senior secured revolving credit facility, or our “revolving credit facility,” provided for a maximum borrowing line of credit equal to $850 million at December 31, 2017. The terms of our revolving credit facility include covenants that restrict our ability to make cash distributions, acquisitions and investments, including investments in joint ventures. We may make distributions of cash to the extent of our “available cash” as defined in our partnership agreement. We may make acquisitions and investments that meet the definition of “permitted acquisitions”; “other investments” which may not exceed 5% of “consolidated net tangible assets”; and additional future “permitted JV investments” up to $125 million, which may include additional investments in BOSTCO. The primary financial covenants contained in our revolving credit facility are (i) a total leverage ratio test (not to exceed 5.25 to 1.0), (ii) a senior secured leverage ratio test (not to exceed 3.75 to 1.0), and (iii) a minimum interest coverage ratio test (not less than 3.0 to 1.0; however while any Qualified Senior Notes are outstanding not less than 2.75 to 1.0). We were in
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
compliance with all financial covenants as of and during the years ended December 31, 2017 and 2016. The principal balance of loans and any accrued and unpaid interest as of December 31, 2017 are due and payable in full on March 13, 2022, the maturity date for our revolving credit facility.
As of December 31, 2017 we had the option to have loans under our revolving credit facility bear interest either (i) at a rate of LIBOR plus a margin ranging from 1.75% to 2.75% depending on the total leverage ratio then in effect, or (ii) at the base rate plus a margin ranging from 0.75% to 1.75% depending on the total leverage ratio then in effect. We also pay a commitment fee on the unused amount of commitments, ranging from 0.375% to 0.5% per annum, depending on the total leverage ratio then in effect. Our obligations under our revolving credit facility are secured by a first priority security interest in favor of the lenders in the majority of our assets, including our investments in unconsolidated affiliates. For the years ended December 31, 2017, 2016 and 2015, the weighted average interest rate on borrowings under our revolving credit facility was approximately 3.5%, 3.1% and 2.7%, respectively. At December 31, 2017 and 2016, our outstanding borrowings under our revolving credit facility were $593.2 million and $291.8 million, respectively. At both December 31, 2017 and 2016, our outstanding letters of credit were $0.4 million.
We have an effective universal shelf‑registration statement and prospectus on Form S‑3 with the SEC that expires in September 2019.
In February 2018, w
e and TLP Finance Corp., our 100% owned subsidiary, used the shelf registration statement to issue senior notes that were guaranteed on a senior unsecured basis by each of our 100% owned subsidiaries that guarantee obligations under our revolving credit facility (see Note 20 of Notes to consolidated financial statements). In the future, we and TLP Finance Corp. may issue additional debt securities pursuant to that registration statement. TransMontaigne Partners L.P. has no independent assets or operations
unrelated to its investments in its consolidated subsidiaries
. TLP Finance Corp. has no assets or operations. Our operations are conducted by subsidiaries of TransMontaigne Partners L.P. through our 100% owned operating company subsidiary, TransMontaigne Operating Company L.P. Each of TransMontaigne Operating Company L.P.s’ and our other 100% owned subsidiaries (other than TLP Finance Corp., whose sole purpose is to act as co‑issuer of any debt securities) may guarantee any future debt securities we issue. We expect that any guarantees associated with future debt securities will be full and unconditional and joint and several, subject to certain automatic customary releases, including sale, disposition, or transfer of the capital stock or substantially all of the assets of a subsidiary guarantor, exercise of legal defeasance option or covenant defeasance option, and designation of a subsidiary guarantor as unrestricted in accordance with the indenture. There are no significant restrictions on the ability of TransMontaigne Partners L.P. or any guarantor to obtain funds from its subsidiaries by dividend or loan. None of the assets of TransMontaigne Partners L.P. or a guarantor represent restricted net assets pursuant to the guidelines established by the SEC.
(13) PARTNERS’ EQUITY
The number of units outstanding is as follows:
|
|
|
|
|
|
|
|
|
|
General
|
|
|
|
Common
|
|
partner
|
|
|
|
units
|
|
equivalent units
|
|
Units outstanding at December 31, 2015
|
|
16,124,566
|
|
329,073
|
|
Issuance of common units by our long-term incentive plan
|
|
10,990
|
|
—
|
|
Issuance of common units pursuant to our savings and retention program
|
|
2,094
|
|
—
|
|
Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest
|
|
—
|
|
266
|
|
Units outstanding at December 31, 2016
|
|
16,137,650
|
|
329,339
|
|
Issuance of common units by our long-term incentive plan
|
|
6,498
|
|
—
|
|
Issuance of common units pursuant to our savings and retention program
|
|
33,205
|
|
—
|
|
Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest
|
|
—
|
|
811
|
|
Units outstanding at December 31, 2017
|
|
16,177,353
|
|
330,150
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
TransMontaigne GP had historically acquired outstanding common units on the open market under a purchase program for purposes of delivering vested units to the independent directors of our general partner on behalf of TransMontaigne Services LLC’s long‑term incentive plan. The purchase program concluded with its final purchase of 667 units on the program’s scheduled termination date of April 1, 2015. Beginning in 2016, grants of restricted phantom units under the TLP Management Services long-term incentive plan are to be settled by us through the issuance of common units pursuant to our registration statement on Form S-8.
At both December 31, 2017 and 2016, common units outstanding include nil common units, held on behalf of TransMontaigne Services LLC’s long‑term incentive plan. In connection with the ArcLight acquisition of our general partner, effective February 1, 2016, 15,750 restricted phantom units previously granted to the independent directors vested and were satisfied via the delivery of 8,018 existing common units and issuance of 7,732 new units. On October 21, 2016 we issued an additional 3,258 common units to our independent directors for a total of 19,008 common units delivered to the independent directors for the year ended December 31, 2016. On October 20, 2017 we issued 6,498 common units to our independent directors.
(14) EQUITY-BASED COMPENSATION
TransMontaigne GP is our general partner and manages our operations and activities. Prior to February 1, 2016, TransMontaigne GP was a wholly owned subsidiary of TransMontaigne LLC, which is a wholly owned subsidiary of NGL. TransMontaigne Services LLC, which is a wholly owned subsidiary of TransMontaigne LLC, had a long‑term incentive plan and a savings and retention program to compensate through incentive bonus awards certain employees and independent directors of our general partner who provided services with respect to the business of our general partner.
Long-term incentive plan.
On February 26, 2016, the board of our general partner approved, subject to the approval of our common unitholders, the TLP Management Services 2016 long-term incentive plan and the TLP Management Services savings and retention program (discussed further below) which constitutes a program under, and is subject to, the TLP Management Services long-term incentive plan, which replaced the TransMontaigne Services LLC long-term incentive plan and the TransMontaigne Services LLC savings and retention program. TLP Management Services is a wholly owned indirect subsidiary of ArcLight and employs all the officers and employees who provide services to our partnership and such entity provides payroll and maintains all employee benefits programs on behalf of our partnership. On July 12, 2016, we held a special meeting of our common unitholders at which time the TLP Management Services long-term incentive plan and savings and retention program were approved by the partnership’s unitholders.
The TLP Management Services long-term incentive plan operates in a manner similar to the TransMontaigne Services LLC long-term incentive plan used previously. The TLP Management Services long-term incentive plan reserves 750,000 common units to be granted as awards under the plan, with such amount subject to adjustment as provided for under the terms of the plan if there is a change in our common units, such as a unit split or other reorganization. The common units authorized to be granted under the TLP Management Services long-term incentive plan are registered pursuant to a registration statement on Form S-8.
The TLP Management Services long‑term incentive plan is administered by the compensation committee of the board of directors of our general partner and is used for grants of units to the independent directors of our general partner. The grants to the independent directors of our general partner under the TransMontaigne Services LLC long-term incentive plan had historically vested and were payable annually in equal tranches over a four-year period, subject to accelerated vesting upon a change in control of TransMontaigne GP. Ownership in the awards was subject to forfeiture until the vesting date, but recipients had distribution and voting rights from the date of the grant. Beginning
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
with the annual grant in 2016, the grants to the independent directors of our general partner under the TLP Management Services long-term incentive plan are immediately vested and not subject to forfeiture.
Activity under the long-term incentive plan is as follows:
|
|
|
|
|
|
|
|
|
Restricted
|
|
NYSE
|
|
|
|
phantom
|
|
closing
|
|
|
|
units
|
|
price
|
|
Restricted phantom units outstanding at January 1, 2015
|
|
9,000
|
|
|
|
|
Vesting on September 30, 2015
|
|
(2,250)
|
|
$
|
27.20
|
|
Grant on October 14, 2015
|
|
9,000
|
|
$
|
31.11
|
|
Restricted phantom units outstanding at December 31, 2015
|
|
15,750
|
|
|
|
|
Vesting on February 1, 2016
|
|
(15,750)
|
|
$
|
30.41
|
|
Grant on October 21, 2016
|
|
3,258
|
|
$
|
41.45
|
|
Vesting on October 21, 2016
|
|
(3,258)
|
|
$
|
41.45
|
|
Restricted phantom units outstanding at December 31, 2016
|
|
—
|
|
|
|
|
Grant on October 20, 2017
|
|
6,498
|
|
$
|
41.55
|
|
Vesting on October 20, 2017
|
|
(6,498)
|
|
$
|
41.55
|
|
Restricted phantom units outstanding at December 31, 2017
|
|
—
|
|
|
|
|
Generally accepted accounting principles require us to measure the cost of board member services received in exchange for an award of equity instruments based on the grant‑date fair value of the award. That cost is recognized over the vesting period on a straight line basis during which a board member is required to provide services in exchange for the award with the costs being accelerated upon the occurrence of accelerated vesting events, such as a change in control of our general partner. In connection with the ArcLight acquisition of our general partner, effective February 1, 2016, 15,750 restricted phantom units previously granted to the independent directors vested and were satisfied via the delivery of our common units. On October 21, 2016, we granted and issued an additional 3,258 common units to our independent directors under the TLP Management Services long‑term incentive plan. On October 20, 2017 we granted and issued 6,498 common units to our independent directors under the TLP Management Services long‑term incentive plan.
For awards to the independent directors of our general partner, equity‑based compensation expense of approximately $270,000, $722,000 and $108,000 is included in general and administrative expenses for the years ended December 31, 2017, 2016 and 2015, respectively.
Savings and retention program.
On February 26, 2016, the board of our general partner unanimously approved the new
TLP Management Services
savings and retention program
,
subject to the approval of our common unitholders,
for employees who provide services with respect to our business
. This plan is intended to constitute a program under, and be subject to, the
TLP Management Services
2016 long-term incentive plan described above.
The new savings and retention program was used for annual incentive bonus awards beginning in March 2016 and is intended to be used for future awards to employees of TLP Management Services who provide services to the partnership. The new savings and retention program operates in a manner substantially similar to the
TransMontaigne Services LLC savings and retention plan used previously.
The restricted phantom units awarded and accrued under the savings and retention program are subject to forfeiture until the vesting date. Recipients have distribution equivalent rights from the date of grant that accrue additional restricted phantom units equivalent to the value of quarterly distributions paid by us on each of our outstanding common units. Recipients of restricted phantom units under the savings and retention program do not have voting rights.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
The purpose of the savings and retention program is to provide for the reward and retention of participants by providing them with bonus awards that vest over future service periods. Awards under the program generally become vested as to 50% of a participant’s annual award as of the first day of the month that falls closest to the second anniversary of the grant date, and the remaining 50% as of the first day of the month that falls closest to the third anniversary of the grant date, subject to earlier vesting upon a participant’s attainment of the age and length of service thresholds, retirement, death or disability, involuntary termination without cause, or termination of a participant’s employment following a change in control of the partnership, our general partner or TLP Management Services, as specified in the program.
A person will satisfy the age and length of service thresholds of the program upon the attainment of the earliest of (a) age sixty, (b) age fifty five and ten years of service as an officer of TLP Management Services or any of its affiliates or predecessors, or (c) age fifty and twenty years of service as an employee of TLP Management Services or any of its affiliates or predecessors.
Effective April 13, 2015 and beginning with the 2015 incentive bonus award and continuing under the new savings and retention program, under the omnibus agreement we have the option to provide the reimbursement in either a cash payment or the delivery of our common units to the savings and retention program or alternatively directly to the award recipients, with the reimbursement made in accordance with the underlying vesting and payment schedule of the savings and retention program. Our reimbursement for the incentive bonus awards is reduced for forfeitures and is increased for the value of quarterly distributions accrued under the distribution equivalent rights. We have the intent and ability to settle our reimbursement for incentive bonus awards in our common units, and accordingly, effective April 13, 2015, we began accounting for the incentive bonus awards as an equity award. Prior to the 2015 incentive bonus award, we reimbursed our portion of the incentive bonus awards through monthly cash payments to the savings and retention program over the first year that each applicable award was granted.
For certain senior level employees, including the executive officers of our general partner, all prior grants under the TransMontaigne Services LLC savings and retention program vested upon the change in control of our general partner as a result of the ArcLight acquisition that occurred on February 1, 2016.
Given that we do not have any employees to provide corporate and support services and instead we contract for such services under the omnibus agreement, generally accepted accounting principles require us to classify the savings and retention program awards as a non-employee award and measure the cost of services received in exchange for an award of equity instruments based on the vesting‑date fair value of the award. That cost, or an estimate of that cost in the case of unvested restricted phantom units, is recognized over the period during which services are provided in exchange for the award. As of December 31, 2017, there was approximately $1.0 million of total unrecognized equity-based compensation expense related to unvested restricted phantom units, which is expected to be recognized over the remaining weighted average period of 1.23 years.
For the years ended December 31, 2017, 2016 and 2015, the expense associated with equity-based compensation was approximately $2.7 million, $2.5 million and $1.3 million respectively.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
Activity related to our equity-based awards granted under the savings and retention program for services performed under the omnibus agreement is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
|
|
|
average
|
|
|
|
average
|
|
|
Vested
|
|
price
|
|
Unvested
|
|
price
|
Restricted phantom units outstanding at December 31, 2016
|
|
88,118
|
|
$
|
35.82
|
|
38,438
|
|
$
|
34.90
|
Issuance of units
|
|
(33,205)
|
|
$
|
44.50
|
|
—
|
|
$
|
—
|
Units withheld for settlement of withholding taxes
|
|
(15,734)
|
|
$
|
44.12
|
|
—
|
|
$
|
—
|
Unit accrual for distributions paid
|
|
5,973
|
|
$
|
43.23
|
|
3,344
|
|
$
|
43.19
|
Vesting of units
|
|
9,413
|
|
$
|
44.35
|
|
(9,413)
|
|
$
|
44.35
|
Grant of units
|
|
37,312
|
|
$
|
45.02
|
|
21,875
|
|
$
|
45.17
|
Restricted phantom units outstanding at December 31, 2017
|
|
91,877
|
|
$
|
38.91
|
|
54,244
|
|
$
|
38.81
|
Vested and expected to vest at December 31, 2017
|
|
146,121
|
|
$
|
38.87
|
|
|
|
|
|
(15) NET EARNINGS PER LIMITED PARTNER UNIT
The following table reconciles net earnings to earnings allocable to limited partners and sets forth the computation of basic and diluted net earnings per limited partner unit (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Net earnings
|
|
$
|
48,493
|
|
$
|
44,106
|
|
$
|
41,689
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Distributions payable on behalf of incentive distribution rights
|
|
|
(11,974)
|
|
|
(8,630)
|
|
|
(6,808)
|
|
Distributions payable on behalf of general partner interest
|
|
|
(986)
|
|
|
(916)
|
|
|
(877)
|
|
Earnings allocable to general partner interest less than distributions payable to general partner interest
|
|
|
255
|
|
|
206
|
|
|
179
|
|
Earnings allocable to general partner interest including incentive distribution rights
|
|
|
(12,705)
|
|
|
(9,340)
|
|
|
(7,506)
|
|
Net earnings allocable to limited partners per the consolidated statements of operations
|
|
|
35,788
|
|
|
34,766
|
|
|
34,183
|
|
Less distributions payable for unvested long-term incentive plan grants
|
|
|
—
|
|
|
—
|
|
|
(27)
|
|
Net earnings allocable to limited partners for calculating net earnings per limited partner unit
|
|
$
|
35,788
|
|
$
|
34,766
|
|
$
|
34,156
|
|
Basic weighted average units
|
|
|
16,258
|
|
|
16,210
|
|
|
16,137
|
|
Diluted weighted average units
|
|
|
16,284
|
|
|
16,229
|
|
|
16,146
|
|
Net earnings per limited partner unit—basic
|
|
$
|
2.20
|
|
$
|
2.14
|
|
$
|
2.12
|
|
Net earnings per limited partner unit—diluted
|
|
$
|
2.20
|
|
$
|
2.14
|
|
$
|
2.12
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
Pursuant to our partnership agreement we are required to distribute available cash (as defined by our partnership agreement) as of the end of the reporting period. Such distributions are declared within 45 days after the end of each quarter. The following table sets forth the distribution declared per common unit attributable to the periods indicated:
|
|
|
|
|
|
|
Distribution
|
|
January 1, 2015 through March 31, 2015
|
|
$
|
0.665
|
|
April 1, 2015 through June 30, 2015
|
|
$
|
0.665
|
|
July 1, 2015 through September 30, 2015
|
|
$
|
0.665
|
|
October 1, 2015 through December 31, 2015
|
|
$
|
0.670
|
|
January 1, 2016 through March 31, 2016
|
|
$
|
0.680
|
|
April 1, 2016 through June 30, 2016
|
|
$
|
0.690
|
|
July 1, 2016 through September 30, 2016
|
|
$
|
0.700
|
|
October 1, 2016 through December 31, 2016
|
|
$
|
0.710
|
|
January 1, 2017 through March 31, 2017
|
|
$
|
0.725
|
|
April 1, 2017 through June 30, 2017
|
|
$
|
0.740
|
|
July 1, 2017 through September 30, 2017
|
|
$
|
0.755
|
|
October 1, 2017 through December 31, 2017
|
|
$
|
0.770
|
|
(16) COMMITMENTS AND CONTINGENCIES
Contract commitments.
At December 31, 2017, we have contractual commitments of approximately $20.8 million for the supply of services, labor and materials related to capital projects that currently are under development. We expect that these contractual commitments will be paid during the year ending December 31, 2018.
Operating leases.
We lease property and equipment under non‑cancelable operating leases that extend through August 2030. At December 31, 2017, future minimum lease payments under these non‑cancelable operating leases are as follows (in thousands):
|
|
|
|
|
Years ending December 31:
|
|
|
|
|
2018
|
|
$
|
3,160
|
|
2019
|
|
|
3,301
|
|
2020
|
|
|
1,960
|
|
2021
|
|
|
1,878
|
|
2022
|
|
|
958
|
|
Thereafter
|
|
|
4,259
|
|
|
|
$
|
15,516
|
|
Included in the above non‑cancelable operating lease commitments are amounts for property rentals that we have sublet under non‑cancelable sublease agreements or have reimbursement agreements with affiliates, for which we expect to receive minimum rentals of approximately $4.9 million in future periods.
Rental expense under operating leases was approximately $3.3 million, $3.4 million and $3.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Legal proceedings.
We are party to various legal, regulatory and other matters arising from the day-to-day operations of our business that may result in claims against us. While the ultimate impact of any proceedings cannot be predicted with certainty, our management believes that the resolution of any of our pending legal proceedings will not have a material adverse effect on our business, financial position, results of operations or cash flows.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
(17) DISCLOSURES ABOUT FAIR VALUE
“GAAP” defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. GAAP also establishes a fair value hierarchy that prioritizes the use of higher‑level inputs for valuation techniques used to measure fair value. The three levels of the fair value hierarchy are: (1) Level 1 inputs, which are quoted prices (unadjusted) in active markets for identical assets or liabilities; (2) Level 2 inputs, which are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and (3) Level 3 inputs, which are unobservable inputs for the asset or liability.
The fair values of the following financial instruments represent our best estimate of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Our fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects our judgments about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The following methods and assumptions were used to estimate the fair value of financial instruments at December 31, 2017 and 2016.
Cash and cash equivalents.
The carrying amount approximates fair value because of the short‑term maturity of these instruments. The fair value is categorized in Level 1 of the fair value hierarchy.
Derivative instruments.
The carrying amount of our interest rate swaps as of December 31, 2017 and 2016 was determined using a pricing model based on the LIBOR swap rate and other observable market data. The fair value is categorized in Level 2 of the fair value hierarchy.
Debt.
The carrying amount of our revolving credit facility debt approximates fair value since borrowings under the facility bear interest at current market interest rates. The fair value is categorized in Level 2 of the fair value hierarchy.
(18) BUSINESS SEGMENTS
We provide integrated terminaling, storage, transportation and related services to companies engaged in the trading, distribution and marketing of refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. Our chief operating decision maker is our general partner’s chief executive officer. Our general partner’s chief executive officer reviews the financial performance of our business segments using disaggregated financial information about “net margins” for purposes of making operating decisions and assessing financial performance. “Net margins” is composed of revenue less direct operating costs and expenses. Accordingly, we present “net margins” for each of our business segments: (i) Gulf Coast terminals, (ii) Midwest terminals and pipeline system, (iii) Brownsville terminals, (iv) River terminals, (v) Southeast terminals and (vi) West Coast terminals.
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
The financial performance of our business segments is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Gulf Coast Terminals:
|
|
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
$
|
50,613
|
|
$
|
45,903
|
|
$
|
42,049
|
|
Other
|
|
|
|
12,328
|
|
|
10,807
|
|
|
11,659
|
|
Revenue
|
|
|
|
62,941
|
|
|
56,710
|
|
|
53,708
|
|
Direct operating costs and expenses
|
|
|
|
(22,829)
|
|
|
(22,952)
|
|
|
(19,147)
|
|
Net margins
|
|
|
|
40,112
|
|
|
33,758
|
|
|
34,561
|
|
Midwest Terminals and Pipeline System:
|
|
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
|
8,443
|
|
|
8,590
|
|
|
8,330
|
|
Pipeline transportation fees
|
|
|
|
1,732
|
|
|
1,732
|
|
|
1,694
|
|
Other
|
|
|
|
822
|
|
|
879
|
|
|
1,398
|
|
Revenue
|
|
|
|
10,997
|
|
|
11,201
|
|
|
11,422
|
|
Direct operating costs and expenses
|
|
|
|
(2,859)
|
|
|
(3,220)
|
|
|
(3,000)
|
|
Net margins
|
|
|
|
8,138
|
|
|
7,981
|
|
|
8,422
|
|
Brownsville Terminals:
|
|
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
|
7,591
|
|
|
8,234
|
|
|
8,037
|
|
Pipeline transportation fees
|
|
|
|
3,987
|
|
|
5,057
|
|
|
4,919
|
|
Other
|
|
|
|
9,067
|
|
|
12,194
|
|
|
12,747
|
|
Revenue
|
|
|
|
20,645
|
|
|
25,485
|
|
|
25,703
|
|
Direct operating costs and expenses
|
|
|
|
(10,447)
|
|
|
(11,338)
|
|
|
(12,152)
|
|
Net margins
|
|
|
|
10,198
|
|
|
14,147
|
|
|
13,551
|
|
River Terminals:
|
|
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
|
10,174
|
|
|
9,664
|
|
|
9,316
|
|
Other
|
|
|
|
773
|
|
|
2,914
|
|
|
878
|
|
Revenue
|
|
|
|
10,947
|
|
|
12,578
|
|
|
10,194
|
|
Direct operating costs and expenses
|
|
|
|
(6,624)
|
|
|
(7,957)
|
|
|
(7,126)
|
|
Net margins
|
|
|
|
4,323
|
|
|
4,621
|
|
|
3,068
|
|
Southeast Terminals:
|
|
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
|
67,323
|
|
|
53,699
|
|
|
46,503
|
|
Other
|
|
|
|
8,681
|
|
|
5,251
|
|
|
4,980
|
|
Revenue
|
|
|
|
76,004
|
|
|
58,950
|
|
|
51,483
|
|
Direct operating costs and expenses
|
|
|
|
(24,302)
|
|
|
(22,948)
|
|
|
(22,608)
|
|
Net margins
|
|
|
|
51,702
|
|
|
36,002
|
|
|
28,875
|
|
West Coast Terminals:
|
|
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
|
1,400
|
|
|
—
|
|
|
—
|
|
Other
|
|
|
|
338
|
|
|
—
|
|
|
—
|
|
Revenue
|
|
|
|
1,738
|
|
|
—
|
|
|
—
|
|
Direct operating costs and expenses
|
|
|
|
(639)
|
|
|
—
|
|
|
—
|
|
Net margins
|
|
|
|
1,099
|
|
|
—
|
|
|
—
|
|
Total net margins
|
|
|
|
115,572
|
|
|
96,509
|
|
|
88,477
|
|
General and administrative expenses
|
|
|
|
(19,433)
|
|
|
(14,100)
|
|
|
(14,749)
|
|
Insurance expenses
|
|
|
|
(4,064)
|
|
|
(4,081)
|
|
|
(3,756)
|
|
Equity-based compensation expense
|
|
|
|
(2,999)
|
|
|
(3,263)
|
|
|
(1,411)
|
|
Depreciation and amortization
|
|
|
|
(35,960)
|
|
|
(32,383)
|
|
|
(30,650)
|
|
Earnings from unconsolidated affiliates
|
|
|
|
7,071
|
|
|
10,029
|
|
|
11,948
|
|
Operating income
|
|
|
|
60,187
|
|
|
52,711
|
|
|
49,859
|
|
Other expenses
|
|
|
|
(11,694)
|
|
|
(8,605)
|
|
|
(8,170)
|
|
Net earnings
|
|
|
$
|
48,493
|
|
$
|
44,106
|
|
$
|
41,689
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
Supplemental information about our business segments is summarized below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
Midwest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminals and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast
|
|
Pipeline
|
|
Brownsville
|
|
River
|
|
Southeast
|
|
West Coast
|
|
|
|
|
|
|
Terminals
|
|
System
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Total
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
62,941
|
|
$
|
10,997
|
|
$
|
13,452
|
|
$
|
10,947
|
|
$
|
76,004
|
|
$
|
1,738
|
|
$
|
176,079
|
|
Frontera
|
|
|
—
|
|
|
—
|
|
|
7,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,193
|
|
Revenue
|
|
$
|
62,941
|
|
$
|
10,997
|
|
$
|
20,645
|
|
$
|
10,947
|
|
$
|
76,004
|
|
$
|
1,738
|
|
$
|
183,272
|
|
Capital expenditures
|
|
$
|
6,233
|
|
$
|
174
|
|
$
|
11,678
|
|
$
|
2,075
|
|
$
|
37,957
|
|
$
|
48
|
|
$
|
58,165
|
|
Identifiable assets
|
|
$
|
123,963
|
|
$
|
20,502
|
|
$
|
52,265
|
|
$
|
49,761
|
|
$
|
215,950
|
|
$
|
276,317
|
|
$
|
738,758
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
923
|
|
Investments in unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
233,181
|
|
Deferred financing costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,778
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,363
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
987,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2016
|
|
|
|
|
|
|
Midwest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminals and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast
|
|
Pipeline
|
|
Brownsville
|
|
River
|
|
Southeast
|
|
West Coast
|
|
|
|
|
|
|
Terminals
|
|
System
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Total
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
56,586
|
|
$
|
11,201
|
|
$
|
20,028
|
|
$
|
12,578
|
|
$
|
56,113
|
|
$
|
—
|
|
$
|
156,506
|
|
NGL Energy Partners LP
|
|
|
124
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,837
|
|
|
—
|
|
|
2,961
|
|
Frontera
|
|
|
—
|
|
|
—
|
|
|
5,457
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,457
|
|
Revenue
|
|
$
|
56,710
|
|
$
|
11,201
|
|
$
|
25,485
|
|
$
|
12,578
|
|
$
|
58,950
|
|
$
|
—
|
|
$
|
164,924
|
|
Capital expenditures
|
|
$
|
7,675
|
|
$
|
871
|
|
$
|
1,428
|
|
$
|
2,788
|
|
$
|
42,102
|
|
$
|
—
|
|
$
|
54,864
|
|
Identifiable assets
|
|
$
|
126,457
|
|
$
|
21,919
|
|
$
|
43,878
|
|
$
|
53,005
|
|
$
|
195,632
|
|
$
|
—
|
|
$
|
440,891
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
593
|
|
Investments in unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
241,093
|
|
Deferred financing costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,298
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,819
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
689,694
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
Midwest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminals and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast
|
|
Pipeline
|
|
Brownsville
|
|
River
|
|
Southeast
|
|
West Coast
|
|
|
|
|
|
|
Terminals
|
|
System
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Total
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
48,430
|
|
$
|
11,422
|
|
$
|
21,277
|
|
$
|
9,765
|
|
$
|
18,663
|
|
$
|
—
|
|
$
|
109,557
|
|
NGL Energy Partners LP
|
|
|
5,278
|
|
|
—
|
|
|
10
|
|
|
429
|
|
|
32,820
|
|
|
—
|
|
|
38,537
|
|
Frontera
|
|
|
—
|
|
|
—
|
|
|
4,416
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,416
|
|
Revenue
|
|
$
|
53,708
|
|
$
|
11,422
|
|
$
|
25,703
|
|
$
|
10,194
|
|
$
|
51,483
|
|
$
|
—
|
|
$
|
152,510
|
|
Capital expenditures
|
|
$
|
9,236
|
|
$
|
1,129
|
|
$
|
3,753
|
|
$
|
4,888
|
|
$
|
10,421
|
|
$
|
—
|
|
$
|
29,427
|
|
Identifiable assets
|
|
$
|
120,590
|
|
$
|
22,990
|
|
$
|
45,287
|
|
$
|
54,213
|
|
$
|
163,987
|
|
$
|
—
|
|
$
|
407,067
|
|
(19) FINANCIAL RESULTS BY QUARTER (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
|
|
(in thousands except per unit amounts)
|
|
Revenue
|
|
$
|
44,850
|
|
$
|
45,364
|
|
$
|
45,449
|
|
$
|
47,609
|
|
$
|
183,272
|
|
Direct operating costs and expenses
|
|
|
(16,511)
|
|
|
(15,984)
|
|
|
(17,719)
|
|
|
(17,486)
|
|
|
(67,700)
|
|
General and administrative expenses
|
|
|
(3,971)
|
|
|
(4,080)
|
|
|
(5,247)
|
|
|
(6,135)
|
|
|
(19,433)
|
|
Insurance expenses
|
|
|
(1,006)
|
|
|
(1,002)
|
|
|
(999)
|
|
|
(1,057)
|
|
|
(4,064)
|
|
Equity-based compensation expense
|
|
|
(1,817)
|
|
|
(352)
|
|
|
(544)
|
|
|
(286)
|
|
|
(2,999)
|
|
Depreciation and amortization
|
|
|
(8,705)
|
|
|
(8,792)
|
|
|
(8,882)
|
|
|
(9,581)
|
|
|
(35,960)
|
|
Earnings from unconsolidated affiliates
|
|
|
2,560
|
|
|
2,120
|
|
|
1,884
|
|
|
507
|
|
|
7,071
|
|
Operating income
|
|
|
15,400
|
|
|
17,274
|
|
|
13,942
|
|
|
13,571
|
|
|
60,187
|
|
Other expenses
|
|
|
(2,446)
|
|
|
(2,796)
|
|
|
(2,976)
|
|
|
(3,476)
|
|
|
(11,694)
|
|
Net earnings
|
|
$
|
12,954
|
|
$
|
14,478
|
|
$
|
10,966
|
|
$
|
10,095
|
|
$
|
48,493
|
|
Net earnings per limited partner unit—basic and diluted
|
|
$
|
0.62
|
|
$
|
0.70
|
|
$
|
0.47
|
|
$
|
0.41
|
|
$
|
2.20
|
|
Table of Contents
TransMontaigne Partners L.P. and subsidiaries
Notes to Consolidated Financial Statements (continued)
Years ended December 31, 2017, 2016 and 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
|
|
(in thousands except per unit amounts)
|
|
Revenue
|
|
$
|
40,626
|
|
$
|
41,136
|
|
$
|
40,638
|
|
$
|
42,524
|
|
$
|
164,924
|
|
Direct operating costs and expenses
|
|
|
(15,906)
|
|
|
(17,703)
|
|
|
(17,048)
|
|
|
(17,758)
|
|
|
(68,415)
|
|
General and administrative expenses
|
|
|
(3,878)
|
|
|
(3,446)
|
|
|
(3,605)
|
|
|
(3,171)
|
|
|
(14,100)
|
|
Insurance expenses
|
|
|
(895)
|
|
|
(912)
|
|
|
(969)
|
|
|
(1,305)
|
|
|
(4,081)
|
|
Equity-based compensation expense
|
|
|
(2,155)
|
|
|
(258)
|
|
|
(251)
|
|
|
(599)
|
|
|
(3,263)
|
|
Depreciation and amortization
|
|
|
(7,935)
|
|
|
(8,064)
|
|
|
(8,169)
|
|
|
(8,215)
|
|
|
(32,383)
|
|
Earnings from unconsolidated affiliates
|
|
|
1,850
|
|
|
2,130
|
|
|
2,960
|
|
|
3,089
|
|
|
10,029
|
|
Operating income
|
|
|
11,707
|
|
|
12,883
|
|
|
13,556
|
|
|
14,565
|
|
|
52,711
|
|
Other expenses
|
|
|
(2,997)
|
|
|
(2,573)
|
|
|
(1,671)
|
|
|
(1,364)
|
|
|
(8,605)
|
|
Net earnings
|
|
$
|
8,710
|
|
$
|
10,310
|
|
$
|
11,885
|
|
$
|
13,201
|
|
$
|
44,106
|
|
Net earnings per limited partner unit—basic and diluted
|
|
$
|
0.41
|
|
$
|
0.50
|
|
$
|
0.58
|
|
$
|
0.65
|
|
$
|
2.14
|
|
(20) SUBSEQUENT EVENTS
On January 16, 2018, we announced a distribution of $0.77 per unit for the period from October 1, 2017 through December 31, 2017, and we paid the distribution on February 8, 2018 to unitholders of record on January 31, 2018.
On February 12, 2018, we and TLP Finance Corp., our wholly owned subsidiary, completed the issuance and sale of $300 million in aggregate principal amount of 6.125% senior notes, issued at par and due 2026, which we refer to as our senior notes. The net proceeds were used primarily to repay indebtedness under our revolving credit facility. Our senior notes are guaranteed on a senior unsecured basis by each of our 100% owned subsidiaries that guarantee obligations under our revolving credit facility.
These subsidiary guarantees are full and unconditional and joint and several, and the subsidiaries that did not guarantee our senior notes are minor.
TransMontaigne Partners L.P.
does not have independent assets or operations
unrelated to its investments in its consolidated subsidiaries
.
There are no significant restrictions on our ability or the ability of any subsidiary guarantor to obtain funds from its subsidiaries by such means as a dividend or loan.
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms, and that information is accumulated and communicated to the management of our general partner, including our general partner’s principal executive and principal financial officer (whom we refer to as the Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. The management of our general partner evaluated, with the participation of the Certifying Officers, the effectiveness of our disclosure controls and procedures as of December 31, 2017, pursuant to Rule 13a‑15(b) under the Exchange Act. Based upon that evaluation, the Certifying Officers concluded that, as of December 31, 2017, our disclosure controls and procedures were effective at the reasonable assurance level. In addition, our Certifying Officers concluded that there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
The management of our general partner is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
The management of our general partner has used the framework set forth in the report entitled “Internal Control—Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate the effectiveness of our internal control over financial reporting. Based on that evaluation, the management of our general partner has concluded that our internal control over financial reporting was effective as of December 31, 2017. The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears herein.
As stated in Note 3 - “Business Combination and Terminal Acquisition” to the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K, we acquired the West Coast terminals on December 15, 2017. We have excluded the West Coast terminals from our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2017. The West Coast terminals consolidated total assets represent approximately 28% of our consolidated total assets as of December 31, 2017, 1% of our revenue and 2% of our net earnings for the year ended December 31, 2017. We are in the process of integrating the West Coast terminals into our financial reporting processes. As a result of these integration activities, certain internal controls over financial reporting will be evaluated and may be changed. We believe, however that we will be able to maintain sufficient internal control over financial reporting throughout this integration process.
March 15, 2018
Report of Independent Registered Public Accounting Firm
To the Board of Directors of TransMontaigne GP L.L.C. and
To the Unitholders of TransMontaigne Partners L.P.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of TransMontaigne Partners L.P. and subsidiaries (the "Partnership") as of December 31, 2017, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control – Integrated Framework (2013)
issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017 of the Partnership and our report dated March 15, 2018, expressed an unqualified opinion on those financial statements.
As described in Management’s Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at the West Coast Terminal Facilities (“WCT”), which were acquired on December 15, 2017, and whose financial statements constitute 28% of total assets, 1% of net operating revenue, and 2% of net earnings of the consolidated financial statement amounts as of and for the year ended December 31, 2017. Accordingly, our audit did not include the internal control over financial reporting of WCT.
Basis for Opinion
The Partnership's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Denver, Colorado
March 15, 2018
ITEM 9B. OTHER INFORMATION
On March 14, 2018, upon the recommendation of the audit committee, the board of directors of our general partner adopted an updated Code of Ethics for Senior Financial Officers. A copy of the Code of Ethics for Senior Financial Officers is available on our website at
www.transmontaignepartners.com/investors/corporate-governance
and additional information relating to the
Code of Ethics for Senior Financial Officers can be found under Item 10. “Directors, Executive Officers of Our General Partner and Corporate Governance—Corporate Governance Guidelines; Code of Business Conduct and Ethics” of this Annual Report.
No information was required to be disclosed in a report on Form 8‑K, but not so reported, for the quarter ended December 31, 2017.
Part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
OF OUR GENERAL PARTNER AND CORPORATE GOVERNANCE
Management of TransMontaigne Partners
TransMontaigne GP is our general partner and manages our operations and activities. Effective as of the February 1, 2016 ArcLight acquisition, TransMontaigne GP became a wholly owned subsidiary of ArcLight. Our partnership has no officers or employees and all of our management and operational activities were provided by officers and employees of NGL Energy Operating prior to the ArcLight acquisition and thereafter for an interim period. In connection with the ArcLight acquisition, NGL and ArcLight entered into a transition services agreement whereby NGL Energy Operating served as the entity that employed the officers and employees that provided services to our partnership, and NGL Energy Operating provided payroll and benefits services related thereto until June 25, 2016. From and after June 26, 2016 all employees who provide services to the partnership became employees of TLP Management Services. TLP Management Services continues to employ all the officers and employees who provide services to our partnership and such entity provides payroll and maintains all employee benefits programs on behalf of our partnership.
Our general partner is not elected by our unitholders and is not subject to re‑election on a regular basis in the future. Unitholders are not entitled to elect directors to the board of directors of our general partner or directly or indirectly participate in our management or operation. Under the Corporate Governance Guidelines adopted by the board of directors of our general partner, the board assesses, on an annual basis, the skills and characteristics that candidates for election to the board of directors should possess, as well as the composition of the board of directors as a whole. This assessment includes the qualifications under applicable independence standards and other standards applicable to the board of directors and its committees, as well as consideration of skills and experience in the context of the needs of the board of directors as a whole. Our general partner has no formal policy regarding the diversity of board members, but seeks to ensure that its board of directors collectively have the personal qualities to be able to make an active contribution to the board of directors’ deliberations, which qualities may include relevant industry experience, financial management, reporting and control expertise and executive and operational management experience.
Board of Directors and Officers
The board of directors of our general partner oversees our operations. As part of its oversight function, the board of directors monitors how management operates the partnership, in part via its committee structure. When granting authority to management, approving strategies and receiving management reports, the board of directors considers, among other things, the risks and vulnerabilities we face. The audit committee of the board of directors considers risk associated with our overall accounting, financial reporting and disclosure process. Except for executive sessions held with unaffiliated directors, all members of the board of directors are invited to and frequently attend the meetings of the audit committee. The conflicts committee of our general partner reviews specific matters that the board believes may involve conflicts of interests.
As of the date of this report, there are
seven members of the board of directors of our general partner, three of whom, Messrs.
Blank, Welch and Wiese, are independent as defined under the independence standards established by the New York Stock Exchange (the “NYSE”). The NYSE does not require a publicly traded limited partnership listed on the exchange, like TransMontaigne Partners, to have a majority of independent directors on the board of directors of its general partner or to establish a compensation committee or a nominating or governance committee. However, the Governance Guidelines of our general partner provide that at least three directors will be independent
.
Upon the closing of the ArcLight acquisition, on February 1, 2016, Atanas H. Atanasov, Benjamin Borgen, Brian Cannon and Donald M. Jensen, each employees of NGL, resigned from the board of directors of our general partner. To fill the vacancies resulting from the resignation of the NGL directors, Daniel R. Revers, Kevin M. Crosby and Lucius H. Taylor, each employees of ArcLight, were appointed to the board of directors of our general partner effective February 1, 2016.
On February 22, 2016, Theodore D. Burke, an employee of ArcLight, was
appointed to the board of directors of our general partner
.
On July 19, 2016, Robert A. Burk and Lawrence C. Ross
notified the partnership of their intention to resign from the board of directors of our general partner and the audit, compensation and conflicts committees thereof, effective
July 21, 2016
.
On July 21, 2016, the board of directors of our general partner appointed Jay A. Wiese and Barry E. Welch to serve as independent members of the board of directors of our general partner. Mr. Wiese was elected to serve as the chairman of the compensation committee of our general partner and as a member of the audit and conflicts committees. Mr. Welch was elected to serve as the chairman of the conflicts committee of our general partner and as a member of the audit and compensation committees.
Directors and Executive Officers
The following table sets forth the names, ages and titles of the directors and executive officers of TransMontaigne GP as of March 15, 2018:
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
Frederick W. Boutin
|
|
62
|
|
Chief Executive Officer
|
James F. Dugan
|
|
60
|
|
Executive Vice President and Chief Operating Officer
|
Robert T. Fuller
|
|
48
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
Michael A. Hammell
|
|
47
|
|
Executive Vice President, General Counsel and Secretary
|
Mark S. Huff
|
|
58
|
|
President
|
Steven A. Blank
|
|
63
|
|
Independent Director, Chairman of Audit Committee
|
Theodore D. Burke
|
|
57
|
|
Director
|
Kevin M. Crosby
|
|
45
|
|
Director
|
Daniel R. Revers
|
|
56
|
|
Director
|
Lucius H. Taylor
|
|
43
|
|
Director
|
Barry E. Welch
|
|
60
|
|
Independent Director, Chairman of Conflicts Committee
|
Jay A. Wiese
|
|
61
|
|
Independent Director, Chairman of Compensation Committee
|
Frederick W. Boutin
has served as Chief Executive Officer of our general partner and its subsidiaries since November of 2014. Prior to then he served as Executive Vice President and Chief Financial Officer beginning in January 2008. Mr. Boutin also managed business development and commercial contracting activities from December 2007 to July 2010 and from August 2013 to January 2015. Prior to February 1, 2016, Mr. Boutin also served in various other capacities at our general partner and its subsidiaries, and TransMontaigne LLC and its predecessors, since 1995. Prior to his affiliation with TransMontaigne, Mr. Boutin was a Vice President at Associated Natural Gas Corporation, and its successor Duke Energy Field Services, and a certified public accountant with Peat Marwick. Mr. Boutin holds a B.S. in Electrical Engineering and an M.S. in Accounting from Colorado State University.
James F. Dugan
has served as Executive Vice President and Chief Operating Officer of our general partner and its subsidiaries since August 30, 2017. Mr. Dugan previously served as Executive Vice President, Engineering and Operations of our general partner and its subsidiaries from June 30, 2017 to August 30, 2017 and served as the Senior Vice President, Engineering and Operations of our general partner and its subsidiaries from January 2008 to June 30, 2017. Mr. Dugan joined TransMontaigne Inc. as Engineering Manager in 1998. He has over 16 years of experience in senior leadership positions overseeing domestic and international petroleum marine terminals, pipelines and engineering divisions. Mr. Dugan began his career as a Project Engineer for Gulf Interstate Energy in 1983 and in 1993 he joined Louis Dreyfus Energy as a Project Engineer. He has served on the Board of Directors for the International Liquid Terminals Association (ILTA) since 2011, and he holds certification through the American Petroleum Institute.
Robert T. Fuller
has served as Executive Vice President, Chief Financial Officer and Treasurer of our general partner and its subsidiaries since November of 2014. Prior to November of 2014, Mr. Fuller
served as Vice President and Chief Accounting Officer of our general partner and its subsidiaries since January 2011 and as its Assistant Treasurer since February 2012. Prior to his affiliation with TransMontaigne
, Mr. Fuller spent 13 years as a certified public accountant with KPMG LLP. Mr. Fuller has a B.A. in Political Science from Fort Lewis College and a M.S. in Accounting from the University of Colorado. Mr. Fuller is licensed as a certified public accountant in Colorado and New York.
Michael A. Hammell
has served as Executive Vice President, General Counsel and Secretary of our general partner and its subsidiaries since October 2012. Mr. Hammell served as the Senior Vice President, Assistant General Counsel and Secretary of each of our general partner and the TransMontaigne LLC entities from July 2011 to October 2012; as Vice President, Assistant General Counsel and Secretary from January 2011 to July 2011; as Vice President, Assistant General Counsel and Assistant Secretary from November 2007 until January 2011 and as Assistant General Counsel from April 2007 to November 2007. Prior to joining TransMontaigne, Mr. Hammell practiced at the law firm of Hogan & Hartson LLP (now Hogan Lovells). Mr. Hammell received a B.S. in Business Administration from the University of Colorado at Boulder and a J.D. from Northwestern University School of Law.
Mark S. Huff
has served as President of our general partner and its subsidiaries since August 2017. Mr. Huff served as Executive Vice President, Commercial Operations of our general partner and its subsidiaries from September 2016 to August 2017 and prior thereto as Senior Vice President, Commercial Operations since returning to the partnership in January 2015. Prior thereto he served as Director of Business Development with Colonial Pipeline from November 2012 to January 2015 and as Managing Director of Vecenergy from 2008 to 2012. Mr. Huff was previously employed with a former affiliate of the partnership from 1996 to 2007 where he was responsible at various times for the business development and product marketing activities of TransMontaigne Partners and its affiliates. Mr. Huff holds a B.S. in Nautical Science from the United States Merchant Marine Academy at Kings Point, NY.
Steven A. Blank
was elected as a director of our general partner on
September 24,
2014. Mr.
Blank was asked to join the board of directors, in part, based on his executive management experience
in the energy industry, his financial and accounting knowledge and because he qualified as an independent director. Mr.
Blank served as Executive Vice President, Chief Financial Officer and Treasurer of NuStar GP, LLC and NuStar GP Holdings from February 2012 until December 2013. Mr. Blank served as Senior Vice President and Chief Financial Officer of NuStar GP, LLC from January 2002 until February 2012. Mr. Blank also served as NuStar GP, LLC’s Treasurer from July 2005 until February 2012. Mr. Blank has also served as Senior Vice President, Chief Financial Officer and Treasurer of NuStar GP Holdings from March 2006 until December 2013. From December 1999 until January 2002, Mr. Blank was Chief Accounting and Financial Officer and a director of NuStar GP, LLC. Mr. Blank served as Vice President and Treasurer of Ultramar Diamond Shamrock Corporation from December 1996 until January 2002. From February 2015 until November 2016 Mr. Blank served on the board of directors of Dakota Plains Holdings, Inc. an integrated midstream energy company that operated the Pioneer Terminal in Mountrail County, North Dakota with services that included outbound crude storage, logistics and rail transportation and inbound frac sand logistics. Mr. Blank holds a B.A. in History from the State University of New York and a Master of International Affairs, Specialization in Business from Columbia University
. Mr. Blank serves as the chair of the audit
committee of our general partner
and as a member of the compensation and conflicts committees of our general partner.
Theodore D. Burke
was elected as a director of our general partner on February 22, 2016.
Mr. Burke was appointed to the board of directors of our general partner by ArcLight, in part, based on his position with ArcLight and his legal and executive management experience in the energy industry.
Mr. Burke serves as a Partner and the General Counsel of ArcLight. He joined ArcLight in 2014 and has over 30 years of legal, energy finance, and private equity experience. Prior to joining ArcLight, Mr. Burke was the Chief Executive and Global Managing Partner of Freshfields, Bruckhaus Deringer LLP. Before Freshfields, he was a Partner with Milbank Tweed Hadley and McCloy. Mr. Burke earned a Bachelor of Arts in Economics from the University of Vermont and a Juris Doctor from Georgetown University.
Kevin M. Crosby
was elected as a director of our general partner on February 1, 2016. Mr. Crosby
was appointed to the board of directors of our general partner by ArcLight, in part, based on his position with ArcLight and his energy finance and industry experience.
Mr. Crosby serves as a Partner of Arclight. He joined ArcLight in 2001 and has 21 years of energy finance and private equity experience. Prior to joining ArcLight, Mr. Crosby was an Associate in the Corporate Finance Group at John Hancock where he focused on analyzing, structuring, and closing private debt and equity investments in the energy industry. Mr. Crosby also focused on industrial sectors such as chemicals, metals, consumer products, and healthcare while at John Hancock. Mr. Crosby began his career in 1995 at John Hancock Funds, where he held various financial positions. Mr. Crosby earned a Bachelor of Science in Finance from the University of Maine.
Daniel R. Revers
was elected as a director of our general partner on February 1, 2016. Mr. Revers
was appointed to the board of directors of our general partner by ArcLight, in part, based on his position with ArcLight and his energy finance and industry experience.
Mr. Revers is a co-founder and the Managing Partner of ArcLight and has 27 years of energy finance and private equity experience. Mr. Revers is responsible for overall investment, asset management, strategic planning, and operations of ArcLight and its funds. Prior to forming ArcLight in 2000, Mr. Revers was a Managing Director in the Corporate Finance Group at John Hancock Financial Services, where he was responsible for the origination, execution, and management of a $6 billion portfolio consisting of debt, equity, and mezzanine investments in the energy industry. Prior to joining John Hancock in 1995, Mr. Revers held various financial positions at Wheelabrator Technologies, where he specialized in the development, acquisition, and financing of domestic and international power and energy projects. Mr. Revers serves as a director of the general partner of American Midstream Partners, LP and served as a director of the general partner of JP Energy Partners LP prior to American Midstream Partners, LP’s
acquisition of JP Energy Partners LP in March 2017. Mr. Revers earned a Bachelor of Arts in Economics from Lafayette College and a Master of Business Administration from the Amos Tuck School of Business Administration at Dartmouth College.
Lucius H. Taylor
was elected as a director of our general partner on February 1, 2016. Mr. Taylor
was appointed to the board of directors of our general partner by ArcLight, in part, based on his position with ArcLight and his energy finance and industry experience.
Mr. Taylor serves as a Principal of Arclight. He joined ArcLight in 2007 and has 17 years of experience in energy and natural resource finance and engineering. Prior to joining ArcLight, Mr. Taylor was a Vice President in the Energy and Natural Resource Group at FBR Capital Markets, where he focused on raising public and private capital for companies in the power and energy sectors. Mr. Taylor began his career as a geologist and project manager at CH2M HILL and is a licensed professional geologist. Mr. Taylor serves as a director of the general partner of American Midstream Partners, LP. Mr. Taylor earned a Bachelor of Arts in Geology from Colorado College, a Master of Science in Hydrogeology from the University of Nevada, and a Master of Business Administration from the Wharton School of Business at the University of Pennsylvania.
Barry E. Welch
was elected as a director of our general partner on July 21, 2016.
Mr. Welch was asked to join the board of directors, in part, based on his corporate finance and public company executive management and board experience, and because he qualifies as an independent director.
Since January 2015, Mr. Welch has been an independent energy consultant, including a senior advisor role to Southwest Generation, a US independent power company. In June 2016, Mr. Welch joined the board of directors of Novatus Energy, LLC, a renewable energy independent power company.
From 2004 to September 2014, Mr. Welch served as the Chief Executive Officer of Atlantic Power and also served on the board of directors of Atlantic Power from 2006 to 2014. From 2001 to 2004, Mr. Welch served as the Senior Vice President, Head of the Bond and Corporate Finance Group at John Hancock Financial Services, and from 1989 to 2001 he served in various other roles at John Hancock, including Senior Vice President, Team leader: Utilities, Infrastructure Project Finance, Oil & Gas from 1998 to 2001, Senior Managing Director, Team Leader: Utilities and Infrastructure Project Finance from 1995 to 1998, Senior Investment Officer – Project Finance 1992 to 1995 and Investment Officer – Project Finance 1989 to 1992. Mr. Welch holds a Bachelor of Science in Engineering from Princeton University and a Masters of Business Administration from Boston College.
Jay A. Wiese
was elected as a director of our general partner on July 21, 2016.
Mr. Wiese was asked to join the Board, in part, based on his executive management experience in the energy industry, experience as a former member of the Board and because he qualifies as an independent director. Mr. Wiese previously served as a director of our general partner and as a member of the audit, conflicts and compensation committees of our general partner from October 2010 until August 2014. From December 2006 to the present, Mr. Wiese has served as the Managing Member of Liberated Partners LLC, a global energy consulting business with a focus on client strategy, acquisitions, logistics, business development and operational analysis. From 1982 to October 2006, Mr. Wiese served in various senior management positions, including most recently Vice President, with Magellan Midstream Partners, L.P., where he had responsibility over Magellan Terminal Holdings in the areas of commercial and business development, acquisitions and operations. From March 2012 until October 2016, Mr. Wiese served on the board of directors of Associated Asphalt, Inc., a private company engaged in the storage and supply of liquid asphalt to the paving industry, where Mr. Wiese was a member of the Audit and Compensation Committees. Mr. Wiese holds a Bachelor of Science in Business from Oklahoma State University where Mr. Wiese is a member of the Foundation's Board of Trustees and Chair of its Investment Committee.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the executive officers and directors of our general partner, and persons who own more than ten percent of a registered class of our equity securities (collectively, “Reporting Persons”) to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of our common units and our other equity securities. Specific due dates for those reports have been
established, and we are required to report herein any failure to file reports by those due dates. Reporting Persons are also required by SEC regulations to furnish TransMontaigne Partners with copies of all Section 16(a) reports they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required during the year ended December 31,
2017, all Section 16(a) filing requirements applicable to such Reporting Persons were satisfied.
Committees of the Board of Directors
The board of directors of our general partner has three standing committees: an audit committee, a conflicts committee and a compensation committee. The composition, duties and responsibilities of these committees are set forth below.
Audit Committee
The audit committee currently has three members,
Steven A.
Blank, Barry E.
Welch and Jay A. Wiese, each of whom is able to understand fundamental financial statements and at least one of whom has past experience in accounting or related financial management. The board has determined that each member of the audit committee is independent under Section 303A.02 of the NYSE listing standards and Section 10A(m)(3) of the Exchange Act. In making the independence determination, the board considered the requirements of the NYSE and the Corporate Governance Guidelines of our general partner. Among other factors, the board considered current or previous employment with the partnership, its auditors or their affiliates by the director or his immediate family members, ownership of our voting securities, and other material relationships with the partnership.
Based upon his education and employment experience as more fully detailed in Mr.
Blank’s biography set forth above, Mr.
Blank has been designated by the board as the audit committee’s financial expert meeting the requirements promulgated by the SEC and set forth in Item 407(d)(5)(ii) of Regulation S‑K of the Exchange Act.
The audit committee has the authority and responsibility to review our external financial reporting, review our procedures for internal auditing and the adequacy of our internal accounting controls, consider the qualifications and independence of our independent auditor, engage and direct our independent auditor and to engage the services of any other advisors and accountants as the audit committee deems advisable. The audit committee reviews and discusses our audited financial statements with management, discusses with our independent auditor matters required to be discussed by auditing standards and makes recommendations to the board of directors of our general partner relating to our audited financial statements. The audit committee also periodically reviews the audit committee charter and recommends to the board of directors of our general partner any changes that the audit committee believes are required or desirable.
On March 12, 2018, upon the recommendation of the audit committee, the board of directors of our general partner adopted our current audit committee charter.
Conflicts Committee
Messrs.
Blank, Welch and Wiese currently serve on the conflicts committee of the board of directors of our general partner. The conflicts committee reviews specific matters that the board of directors of our general partner believe may involve conflicts of interest. The conflicts committee determines if the resolution of the conflict of interest is fair and reasonable to the partnership. The members of the conflicts committee may not be officers or employees of our general partner or directors, officers or employees of its affiliates, and must meet the independence standards established by the NYSE and the Exchange Act to serve on an audit committee of a board of directors and certain other requirements. Pursuant to our partnership agreement, any matter approved by the conflicts committee will be conclusively deemed to be fair and reasonable to us, to be approved by all of our partners and not deemed a breach by our general partner of any duties it may owe us or our unitholders.
Compensation Committee
Although not required by the NYSE listing requirements, the board of directors of our general partner has a standing compensation committee, which (1) has overall responsibility for evaluating and recommending to the board of our general partner the director compensation plans, policies and programs, and (2) with the concurrence of the conflicts committee, reviews on an annual basis, the awards granted by TLP Management Services under the TLP Management Services long-term incentive plan, and shall approve the aggregate amount of reimbursement, if any, for such awards to be paid by the partnership to TLP Management Services, or directly to the program participants. The forgoing reimbursement may be satisfied by the partnership in either a cash payment to TLP Management Services or the delivery of our common units to the savings and retention program or alternatively directly to the award recipients, with the reimbursement made in accordance with the underlying vesting and payment schedule of the savings and retention program.
Corporate Governance Guidelines; Code of Business Conduct and Ethics
The board of directors of our general partner has adopted Corporate Governance Guidelines that outline the important policies and practices regarding our governance. The board of directors has no policy requiring that we have a chairman of the board or that the positions of the chairman of the board and the chief executive officer of our general partner be separate or that they be occupied by the same individual. The board of directors believes that this issue is properly addressed as part of the succession planning process and that a determination on this subject should be made if at some future period it elects a new chief executive officer or at such other times as when consideration of the matter is warranted by circumstances.
On March 14, 2018, upon the recommendation of the audit committee, the board of directors of our general partner adopted an updated Code of Ethics for Senior Financial Officers. The Code of Ethics for Senior Financial Officers applies to the senior financial officers of our general partner, including the chief executive officer, the chief financial officer, the chief accounting officer, the chief operating officer and the president or persons performing similar functions. In addition, we have a separate Code of Business Conduct and Ethics, which applies to all employees acting on behalf of our general partner and to the officers and directors of our general partner.
Copies of our Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, Corporate Governance Guidelines, Audit Committee Charter and Compensation Committee Charter are available on our website at
www.transmontaignepartners.com/investors/corporate-governance
.
We intend to satisfy the disclosure requirements regarding certain amendments to, or waivers from, provisions of the
Code of Business Conduct and Ethics and Code of Ethics for Senior Financial Officers
by posting such information
to our website
.
Communications by Unitholders
Pursuant to our Corporate Governance Guidelines, the board of directors of our general partner meets at the conclusion of regularly‑scheduled board meetings without the presence of executive officers of or employees who provide services on behalf of our general partner, which meetings are presided over by
Barry E. Welch as presiding director. In addition, the independent members of the board of directors of our general partner meet in executive sessions at the conclusion of regularly‑scheduled board meetings, pursuant to which, the board has chosen Mr.
Welch to preside as
chair of these executive session meetings.
Unitholders and other interested parties may communicate with (1) Barry E. Welch, in his capacity as
chairman of the executive session meetings of the board of directors of our general partner, (2) the independent members of the board of directors of our general partner as a group, or (3) any and all members of the board of directors of our general partner by transmitting correspondence by mail or facsimile addressed to one or more directors by name or to the independent directors (or to the presiding director or any standing committee of the board) at the following address and fax number:
Name of the Director(s)
c/o Secretary
TransMontaigne Partners L.P.
1670 Broadway, Suite 3100
Denver, Colorado 80202
(303) 626‑8228
The Secretary of our general partner will collect and organize all such communications in accordance with procedures approved by the board of directors. The Secretary will forward all communications to the presiding director or to the identified director(s) as soon as practicable. However, we may handle differently communications that are abusive, offensive or that
present safety or security concerns. If we receive multiple communications on a similar topic, our secretary may, in his or her discretion, forward only representative correspondence.
The presiding director will determine whether any communication addressed to the entire board should be properly addressed by the entire board or a committee thereof if a communication is sent to the board or a committee, the presiding director or the chairman of that committee, as the case may be, will determine whether the communication warrants a response. If a response to the communication is warranted, the content and method of the response will be coordinated with our general partner’s internal or external counsel.
ITEM 11. EXECUTIVE COMPENSATIO
N
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
We do not directly employ any of the persons responsible for managing our business. We are managed by our general partner, TransMontaigne GP. Pursuant to our omnibus agreement with ArcLight, all of the officers of our general partner and employees who provide services to the Partnership are employed by TLP Management Services, a wholly owned subsidiary of ArcLight. TLP Management Services provides payroll and maintains all employee benefits programs on behalf of our general partner and the Partnership.
We do not incur any direct compensation charge for the executive officers of our general partner. Instead, pursuant to our omnibus agreement with ArcLight, we pay ArcLight an annual administrative fee that is intended to compensate ArcLight for providing, through TLP Management Services, certain corporate staff and support services to us, including services provided to us by the executive officers of our general partner. During the year ended December 31, 2017, we paid ArcLight an administrative fee of approximately $12.8 million. The administrative fee is a lump‑sum payment and does not reflect specific amounts attributable to the compensation of the executive officers of our general partner while acting on our behalf.
In addition, under the omnibus agreement, and prior to ArcLight acquiring our general partner on February 1, 2016, we agreed to reimburse TransMontaigne LLC for a portion of the incentive bonus awards made to key employees under the TransMontaigne Services LLC savings and retention plan, provided that 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 to TransMontaigne LLC (or ArcLight from and after February 1, 2016) or the delivery of our common units to TransMontaigne LLC (or ArcLight from and after February 1, 2016) or 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 TransMontaigne LLC over the first year that each applicable award was granted. For the 2017 incentive bonus awards, the expense associated with the reimbursement was approximately $2.7 million.
The board of directors and the compensation committee of our general partner perform only a limited advisory role in setting the compensation of the executive officers of our general partner, which for 2017 was determined by the compensation committee of TLP Management Services. The compensation committee of our general partner, however, determines the amount, timing and terms of all equity awards granted to our independent directors. For 2015 and prior years, such awards were granted under TransMontaigne Services LLC’s long‑term incentive plan.
The primary elements of
the executive compensation program for 2017 were a combination of annual cash and long‑term equity‑based compensation. During
2017, elements of compensation for our executive officers consisted of the following:
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·
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Discretionary annual cash awards;
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·
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Long‑term equity‑based compensation; and
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·
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Other compensation, including very limited perquisites.
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The elements of TLP Management Services’ compensation program for 2017, along with TransMontaigne
LLC’s other rewards (for example, benefits, work environment, career development), were intended to provide a total rewards package designed to support the business strategies of TransMontaigne
LLC and our partnership. During
2017, TransMontaigne
LLC did not use any elements of compensation based on specific performance‑based criteria and did not have any other specific performance‑based objectives. Although the board of directors and the compensation committee of our general partner perform only a limited advisory role in setting the compensation of the executive officers of our general partner, we are not aware of any compensation elements of TransMontaigne
LLC’s compensation program which are reasonably likely to have a material adverse effect on us.
TLP Management Services long‑term incentive plan and the savings and retention program was intended to align the long‑term interests of the executive officers of our general partner with those of our unitholders to the extent a portion of the bonus awards under the savings and retention program is deemed invested in our common units.
Employment and Other Agreements
We have not entered into any employment agreements with any officers of our general partner.
Compensation Committee Report
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the compensation committee recommended to the board of directors of our general partner that the Compensation Discussion and Analysis be included in our Annual Report on Form 10‑K for filing with the Securities and Exchange Commission.
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COMPENSATION COMMITTEE
Jay A. Wiese, Chair
Steven A.
Blank
Barry E. Welch
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COMPENSATION OF DIRECTORS
Employees of our general partner or its affiliates (including employees of ArcLight and its affiliates) who also serve as directors of our general partner do not receive additional compensation. Pursuant to our independent director annual compensation program, the independent directors receive annual compensation consisting of: (i) $60,000 annual cash retainer; paid quarterly in arrears, and (ii) common units valued at $90,000 and issued pursuant to the TLP Management Services long-term incentive plan, which common units are immediately vested and are not subject to forfeiture. For each annual award of common units issued to the independent directors under the TLP Management Services long-term incentive plan, the awards will be made on the third Friday of October (or the next trading day if the NYSE is closed), based on the closing sales price during normal trading hours of the common units on the NYSE. In addition, each director is reimbursed for out‑of‑pocket expenses in connection with attending meetings of the board of directors or committees. No additional consideration is paid to the independent directors for service on any committee of the board of directors of our general partner or for service as a committee chairperson unless approved by the board in advance for a specific engagement or transaction.
Each director will be fully indemnified by us for actions associated with being a director to the extent permitted under Delaware law. The following table provides information concerning the compensation of our general partner’s directors for
2017.
Director Compensation Table for 2017
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Fees earned or
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Stock
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All other
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paid in cash ($)
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awards ($)
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compensation ($)
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Total ($)
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Name (a)
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(b)
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(c)
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(g)
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(h)
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Theodore D. Burke(1)
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—
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—
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—
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—
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Kevin M. Crosby(1)
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—
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—
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—
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—
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Daniel R. Revers(1)
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—
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—
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—
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—
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Lucius H. Taylor(1)
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—
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—
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—
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—
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Steven A. Blank
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$
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60,000
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$
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90,000
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—
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$
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150,000
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Barry E. Welch
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$
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60,000
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$
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90,000
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—
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$
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150,000
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Jay A. Wiese
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$
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60,000
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$
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90,000
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—
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$
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150,000
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(1)
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Because Messrs.
Burke, Crosby, Revers and Taylor are employees of an affiliate of our general partner, none of them received compensation for service as a director of our general partner. At December 31,
2017, none of Messrs. Burke, Crosby, Revers and Taylor held any restricted phantom or other limited partner interests in the Partnership (except as to those securities over which Mr. Revers may be deemed to have beneficial ownership as described under Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters).
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31,
2017, Messrs.
Blank, Welch and Wiese each served on the compensation committee of our general partner. During
2017, none of the members of the compensation committee was an officer or employee of our general partner or any of our subsidiaries or served as an officer of any company with respect to which any of the executive officers of our general partner served on such company’s board of directors.
LONG‑TERM INCENTIVE PLAN
On February 26, 2016, the board of our general partner approved, subject to the approval of our unitholders, the TLP Management Services 2016 long-term incentive plan, or otherwise referred to as TLP Management Services long-term incentive plan and the TLP Management Services savings and retention program (discussed further below) which constitutes a program under, and is subject to, the TLP Management Services long-term incentive plan. On July 12, 2016, we held a special meeting of common unitholders at which time the TLP Management Services long-term incentive plan was approved by the partnership’s common unitholders.
The TLP Management Services long-term incentive plan reserves 750,000 common units to be granted as awards under the plan, with such amount subject to adjustment as provided for under the terms of the plan if there is a change in our common units, such as a unit split or other reorganization. The common units authorized to be granted under the TLP Management Services long-term incentive plan are registered pursuant to a registration statement on Form S-8.
The TLP Management Services long‑term incentive plan is administered by the compensation committee of the board of directors of our general partner and is used for grants of restricted phantom units to the independent directors of our general partner. Up to and including the 2015 award grants, all annual award grants to the independent directors of our general partner vested and were payable annually in equal tranches over a four-year period, subject to accelerated vesting upon a change in control of TransMontaigne GP. Ownership in the awards was subject to forfeiture until the vesting date, but recipients had distribution and voting rights from the date of the grant.
Effective as of October 18, 2016, the board of directors of our general partner, with the concurrence of the compensation committee, adopted a revised independent director annual compensation program, which program includes the award of our common units valued at $90,000 and issued pursuant to the TLP Management Services long-term incentive plan, as described in more detail under Item 11. Executive Compensation – Compensation of Directors above.
SAVINGS AND RETENTION PROGRAM
On February 26, 2016, the board of directors approved the savings and retention program, which constitutes a “program” under, and be subject to, the TLP Management Services long-term incentive plan described above, for employees who provide services with respect to our business. The purpose of the plan was to provide for the reward and retention of
certain key employees of TLP Management Services or its affiliates by providing them with bonus awards that vest over future service periods. Awards under the plan generally vested as to 50% of a participant’s annual award on the first day of the month containing the second anniversary of the grant date and the remaining 50% on the first day of the month containing the third anniversary of the grant date, subject to earlier vesting upon a participant’s attainment of certain age or length of service thresholds as specified in the plan. Awards are payable as to 50% of a participant’s annual award in the month containing the second anniversary of the grant date, and the remaining 50% in the month containing the third anniversary of the grant date, subject to earlier payment upon the participant’s retirement after achieving the age or service thresholds, death or disability, involuntary termination without cause or termination of a participant’s employment following a change in control, each as specified in the plan.
Pursuant to the provisions of the plan, once participating employees of TLP Management Services reach the age and length of service thresholds set forth below, awards are immediately vested and become payable as set forth above, and such vested awards remain subject to forfeiture as specified in the plan. A person will satisfy the age and length of service thresholds of the plan upon the attainment of the earliest of (a) age sixty, (b) age fifty-five and ten years of service as an officer of TLP Management Services or its affiliates, or (c) age fifty and twenty years of service as an employee of TLP Management Services or its affiliates. E
ach of Messrs. Boutin, Huff and Dugan have satisfied
the age and length of service thresholds of the plan. Generally, only senior level management of TLP Management Services receive awards under the
savings and retention program.
Although no assets are segregated or otherwise set aside with respect to a participant’s account, the amount ultimately payable to a participant shall be the amount credited to such participant’s account as if such account had been invested in some or all of the investment funds selected by the plan administrator.
Under the second amended and restated omnibus agreement entered into on March 1, 2016, we have agreed to satisfy the incentive bonus awards made to key employees under the savings and retention program in either cash or in common units; provided the compensation committee and conflicts committee of our general partner approves the annual awards granted under the plan.
The plan administrator allocated 100% of all 2016, 2017 and 2018 awards to the partnership’s common units fund. For the 2017 incentive bonus awards, the expense associated with the reimbursement was approximately $2.7 million.
ITEM 12.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS
The following table sets forth certain information regarding the beneficial ownership of our common units as of March 9, 2018 by each director of our general partner, by each individual serving as an executive officer of our general partner as of March 9, 2018, by each person known by us to own more than 5% of the outstanding common units, and by all directors, director nominees and the named executive officers as of March 9, 2018 as a group. The information set forth below is based solely upon information furnished by such individuals or contained in filings made by such beneficial owners with the SEC.
The calculation of the percentage of beneficial ownership is based on an aggregate of 16,200,485 common units outstanding as of March 9, 2018. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to the common units. To our knowledge, except under applicable community property laws or as otherwise indicated, the persons named in the table have sole voting and sole investment power with respect to all common units beneficially owned. Common units underlying outstanding phantom units, warrants or options that are currently exercisable or exercisable within 60 days of March 9, 2018 are deemed outstanding for the purpose of computing the percentage of beneficial ownership of the person holding those options or warrants, but are not deemed outstanding for computing the percentage of beneficial ownership of any other person. The address for each named executive officer, director and director nominee is care of TransMontaigne Partners L.P., 1670 Broadway, Suite 3100, Denver, Colorado 80202.
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Common units
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Percentage of
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beneficially
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common units
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Name of beneficial owner
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owned
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beneficially owned
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TLP Equity Holdings, LLC(1)
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2,366,704
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14.6
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%
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Gulf TLP Holdings, LLC(1)
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800,000
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4.9
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%
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Oppenheimer Funds, Inc.(2)
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2,282,721
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14.1
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%
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Named Executive Officers
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Frederick W. Boutin(3)(4)
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78,347
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*
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Robert T. Fuller(5)(6)
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6,997
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*
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Michael A. Hammell(7)(6)
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5,627
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*
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Mark Huff(8)(4)
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36,720
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*
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James F. Dugan(9)(4)
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26,607
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*
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Directors
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Steven A. Blank(10)
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11,338
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*
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Theodore D. Burke
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—
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*
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Kevin M. Crosby
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—
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*
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Daniel R. Revers(1)
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3,166,704
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19.5
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%
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Lucius H. Taylor
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—
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*
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Jay A. Wiese(10)
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2,709
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*
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Barry E. Welch(10)
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2,709
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*
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All directors, director nominees and executive officers as a group (12 persons)
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3,337,758
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20.6
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%
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*
Less than 1%.
(1)
Based on the Schedule 13D filed with the Securities and Exchange Commission on April 11, 2016 by each of Daniel R. Revers,
TLP Equity Holdings, LLC, a Delaware limited liability company (“TLPEH”); and Gulf TLP Holdings, LLC, a Delaware limited liability company (“Gulf”). TLPEH is indirectly owned by ArcLight Energy Partners Fund VI, L.P., which is indirectly owned by ArcLight Capital Holdings, LLC. Gulf is indirectly owned by ArcLight Energy Partners Fund VI, L.P., which is indirectly owned by ArcLight Capital Holdings, LLC. Mr. Revers is the manager of the general partner of the limited partnership that manages ArcLight Capital Holdings, LLC. Mr. Revers reports shared voting and shared dispositive power over the 3,166,704 common units reported above. TLPEH reports shared voting and shared dispositive power over the 2,366,704 common units reported above. Gulf reports shared voting and shared dispositive power over the 800,000 common units reported above. The principal business address of each reporting person/entity is c/o ArcLight Capital Holdings, LLC, 200 Clarendon Street, 55th Floor, Boston, Massachusetts 02117.
(2)
Based on the Schedule 13G (Amendment No. 7) filed with the Securities and Exchange Commission on February 5, 2018 by OppenheimerFunds, Inc. The address of OppenheimerFunds, Inc. is Two World Financial Center, 225 Liberty Street, New York, New York 10281.
(3)
Includes 5,843 phantom units awarded to Mr. Boutin in March 2016, 13,283 phantom units awarded to Mr. Boutin in February 2017 and 17,542 phantom units awarded to Mr. Boutin in February 2018 pursuant to the TLP Management Services savings and retention program, as well as the additional phantom units Mr. Boutin has received from quarterly in-kind distributions
in respect of Mr. Boutin’s phantom units
.
(4)
Each of Messrs. Boutin, Huff and Dugan have satisfied the age and length of service thresholds under the prior and the current savings and retention plans, therefore, the common units beneficially owned and reported in the table above include phantom units that were immediately vested upon grant and will become payable as to 50% of a participant’s award in the month containing the second anniversary of the grant date, and the remaining 50% in the month containing the third
anniversary of the grant date. The phantom units are subject to earlier payment as described under “—Savings and Retention Program” above. At the time of payment, phantom units will be paid out, in the sole discretion of the plan administrator, in cash, in common units or a combination thereof.
(5)
Includes
1,826 phantom units that will vest
within 60 days of March 9, 2018
, which represents the first 50% of the
phantom units awarded to Mr. Fuller in March 2016, as well as the additional phantom units Mr. Fuller has received from quarterly in-kind distributions
in respect to such 1,826 phantom units. Excludes
the remaining 50% of the phantom units awarded to Mr. Fuller in March 2016, 5,535 phantom units awarded to Mr. Fuller in February 2017 and 7,309 phantom units awarded to Mr. Fuller in February 2018 under the TLP Management Services savings and retention program, as well as the additional phantom units Mr. Fuller has received from quarterly in-kind distributions
in respect of Mr. Fuller’s phantom units
.
(6)
The phantom units vest 50% in the month containing the second anniversary of the grant date, and the remaining 50% in the month containing the third anniversary of the grant date. Phantom units are subject to earlier vesting as described under “—Savings and Retention Program” above. At the time of payment, phantom units will be paid out, in the sole discretion of the plan administrator, in cash, in common units or a combination thereof.
(7) Includes
2,191 phantom units that will vest
within 60 days of March 9, 2018
, which represents the first 50% of the
phantom units awarded to Mr. Hammell in March 2016, as well as the additional phantom units Mr. Hammell has received from quarterly in-kind distributions
in respect to such 2,191 phantom units. Excludes
the remaining 50% of the phantom units awarded to Mr. Hammell in March 2016, 3,874 phantom units awarded to Mr. Hammell in February 2017 and 5,677 phantom units awarded to Mr. Hammell in February 2018 under the TLP Management Services savings and retention program, as well as the additional phantom units Mr. Hammell has received from quarterly in-kind distributions
in respect of Mr. Hammell’s phantom units
.
(8)
Includes 7,974 phantom units awarded to Mr. Huff in March 2016, 7,416 phantom units awarded to Mr. Huff in February 2017 and 12,347 phantom units awarded to Mr. Huff in February 2018 pursuant to the TLP Management Services savings and retention program, as well as the additional phantom units Mr. Huff has received from quarterly in-kind distributions
in respect of Mr. Huff’s phantom units
.
(9)
Includes 5,112 phantom units awarded to Mr. Dugan in March 2016, 4,428 phantom units awarded to Mr. Dugan in February 2017 and 7,096 phantom units awarded to Mr. Dugan in February 2018 pursuant to the TLP Management Services savings and retention program, as well as the additional phantom units Mr. Dugan has received from quarterly in-kind distributions
in respect of Mr. Dugan’s phantom units
.
(10)
Includes the October 2017 award of common units under the TLP Management Services long-term incentive plan, pursuant to which the independent directors receive common units valued at $90,000 (prorated based on length of service on the board of our general partner) that are immediately vested.
.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information about our equity compensation plans as of December 31, 2017.
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Number of securities
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|
|
|
|
|
|
remaining available for
|
|
|
|
|
|
|
|
future issuance under
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Number of securities to be
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Weighted average
|
|
equity compensation
|
|
|
|
issued upon exercise of
|
|
exercise price of
|
|
plans (excluding
|
|
|
|
outstanding options,
|
|
outstanding options,
|
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securities reflected
|
|
|
|
warrants and rights(1)
|
|
warrants and rights
|
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in column (a))(1)
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|
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(a)
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(b)
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(c)
|
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Equity compensation plans approved by security holders
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146,121
|
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—
|
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603,879
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Equity compensation plans not approved by security holders
|
|
—
|
|
—
|
|
—
|
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Total
|
|
146,121
|
|
—
|
|
603,879
|
|
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(1)
|
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Includes: (i) a total of 31,113 phantom unit awards outstanding that were granted in 2015 under the TransMontaigne Services LLC savings and retention plan, which awards were later assumed under the current savings and retention
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program, which constitutes a “program” under, and is subject to, the TLP Management Services long-term incentive plan (ii) a total of 59,825 phantom unit awards outstanding that were granted in 2016 under the savings and retention program, which constitutes a “program” under, and is subject to, the TLP Management Services long-term incentive plan; and (iii) a total of 55,183 phantom unit awards outstanding that were granted in 2017 under the savings and retention program.
The TLP Management Services long-term incentive plan reserves 750,000 common units to be granted as awards under the plan, including the savings and retention program, with such amount subject to adjustment as provided for under the terms of the plan.
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ITEM 13.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
Our general partner’s conflicts committee reviews specific matters that the board of directors of our general partner believes may involve conflicts of interest and other transactions with related persons in accordance with the procedures set forth in our amended and restated limited partnership agreement. Due to the conflicts of interest inherent in our operating structure, our general partner may, but is not required to, seek the approval of any conflict of interest transaction from the conflicts committee. Generally, such approval is requested for material transactions, including the purchase of a material amount of assets from TransMontaigne
LLC or NGL prior to the ArcLight acquisition, and from ArcLight and its affiliates thereafter, or the modification of a material agreement with the foregoing parties. Under our partnership agreement, any matter approved by the conflicts committee will be conclusively deemed fair and reasonable to the partnership, to be approved by all of our partners, and not to be a breach by our general partner of its fiduciary duties. The conflicts committee may consider any factors it determines in good faith to consider when resolving a conflict, including taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us. In addition, the conflicts committee has been granted authority to engage outside advisors to assist it in making its determinations.
RELATIONSHIP AND AGREEMENTS WITH OUR AFFILIATES
As a result of the
ArcLight acquisition
, ArcLight acquired an ownership interest in, and control of, our general partner. Consequently, the transaction resulted in a change in control of TLP. The
ArcLight acquisition
did not involve any of the limited partnership units in TLP held by the public, and our limited partnership units continue to trade on the NYSE.
In addition, on April 1, 2016, affiliates of ArcLight acquired approximately 3.2 million of our common limited partnership units from NGL. With the purchase of the common units, ArcLight has a significant interest in our partnership through their ownership of the general partner interest, the incentive distribution rights and approximately 19.2% of the limited partner interests.
The following table summarizes the distributions and payments to be made by us to
our general partner and its other affiliates in connection with our ongoing operations.
Operational stage
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|
Distributions of available cash to our general partner and its affiliates
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We will generally make cash distributions 98% to the unitholders and 2% to our general partner. In addition, if distributions exceed the minimum quarterly distribution and other higher target levels, our general partner will be entitled to increasing percentages of the distributions, up to 50% of the distributions above the highest target level.
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During the year ended December 31,
2017, we distributed approximately $
22.4 million to our general partner and its affiliates. Assuming we have sufficient available cash to pay the minimum quarterly distribution on all of our outstanding units for four quarters, our general partner and its affiliates would receive an annual distribution of approximately $0.5 million on the 2% general partner interest and approximately $
5.1 million on their common units.
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Payments to our general partner and its affiliates
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For the year ended December 31,
2017, we paid
our general partner and its affiliates an administrative fee of approximately $
12.8 million for the provision of various general and administrative services for our benefit.
We also agreed to reimburse
our general partner
for a portion of the incentive bonus awards made to key employees under the TLP Management Services savings and retention program (and the predecessor TransMontaigne Services LLC savings and retention plan) and beginning with the 2015 incentive bonus award, we have the option to provide the reimbursement in either a cash payment to TLP Management Services or the delivery of our common units to TLP Management Services or to the award recipients, with the reimbursement made in accordance with the underlying vesting and payment schedule of the savings and retention program.
For further information regarding these fees, please see “Omnibus Agreement” below.
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Omnibus agreement
On May 27, 2005 we entered into an omnibus agreement with TransMontaigne LLC and our general partner, which agreement has been subsequently amended from time to time. In connection with the ArcLight acquisition of our general partner, effective February 1, 2016, we entered into the second amended and restated omnibus agreement to
consent to the assignment of the omnibus agreement from TransMontaigne LLC to
an ArcLight subsidiary,
to waive the automatic termination that would have occurred at such time as TransMontaigne LLC ceased to control our general partner and to remove certain legacy provisions that were no longer applicable to the partnership.
The omnibus agreement will continue in effect until the earlier to occur of (i) ArcLight 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. Any or all of the provisions of the omnibus agreement, are terminable by ArcLight at its option if our general partner is removed without cause and units held by our general partner and its affiliates are not voted in favor of that removal.
Under the omnibus agreement we pay ArcLight, the owner of TransMontaigne GP, an administrative fee for the provision of various general and administrative services for our benefit. For the years ended December 31, 2017, 2016 and 2015, the annual administrative fee paid to the owner of our general partner was approximately $12.8 million, $11.4 million and $11.3 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. For example, e
ffective May 3, 2017 the board of TransMontaigne GP, with the concurrence of the conflicts committee, approved a $1.8 million annual increase (or $150,000 monthly) to the administrative fee related to the construction of approximately 2.0 million barrels of new tank capacity at our Collins, Mississippi bulk storage terminal. The increase was ratably applied monthly beginning May 3, 2017 based on the percentage of the approximately 2.0 million barrels of new tank capacity placed into service.
The administrative fee encompasses 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 the years ended December 31, 2017, 2016 and 2015, the insurance reimbursement paid was approximately $nil, $3.1 million and $3.8 million, respectively. On October 31, 2016, we contracted directly with insurance carriers for the majority of the partnership’s insurance requirements. For the years ended December 31, 2017, 2016 and 2015, the expense associated with insurance contracted directly by us was $4.1 million, $1.0 million and $nil, 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.
Prior to March 1, 2016, under the omnibus agreement we 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 determined that an adequate portion of the incentive bonus awards were 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 could 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 program. 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.
Under the second amended and restated omnibus agreement entered into on March 1, 2016, we agreed to satisfy the incentive bonus awards made to key employees under the savings and retention program, including awards granted in 2015 and 2016, in either cash or in common units; provided the compensation committee and conflicts committee of our general partner approves the annual awards granted under the plan. For the years ended December 31, 2017, 2016 and 2015, the expense associated with the reimbursement of incentive bonus awards was approximately $2.7 million, $2.5 million and $1.3 million, respectively.
Indemnification
We have entered into various indemnification agreements with TransMontaigne
LLC, which are discussed under Item 1. “Business and Properties—Environmental Matters—Site Remediation” of this Annual Report. These indemnification obligations of TransMontaigne LLC to us remain in place and were not affected by the ArcLight acquisition.
DIRECTOR INDEPENDENCE
A description of the independence of the board of directors of our general partner may be found under Item 10. “Directors, Executive Officers of our General Partner and Corporate Governance” of this Annual Report.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Deloitte & Touche LLP is our independent auditor. Deloitte & Touche LLP’s accounting fees and services were as follows:
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Audit fees(1)
|
|
$
|
688,000
|
|
$
|
673,000
|
|
Comfort letter and consents
|
|
|
150,000
|
|
|
148,000
|
|
Audit-related fees
|
|
|
—
|
|
|
—
|
|
Tax fees
|
|
|
—
|
|
|
—
|
|
All other fees
|
|
|
—
|
|
|
—
|
|
Total accounting fees and services
|
|
$
|
838,000
|
|
$
|
821,000
|
|
|
(1)
|
|
Represents an estimate of fees for professional services provided in connection with the annual audit of our financial statements and internal control over financial reporting, including Sarbanes‑Oxley 404 attestation, the reviews of our quarterly financial statements, and other services provided by the auditor in connection with statutory and regulatory filings.
|
The audit committee of our general partner’s board of directors has adopted an audit committee charter, which is available on our website at
www.transmontaignepartners.com
. The charter requires the audit committee to approve in advance all audit and non‑audit services to be provided by our independent registered public accounting firm. All services reported in the audit, comfort letter and consents, audit‑related, tax and all other fees categories above were approved by the audit committee in advance.
Part IV
ITEM 15. EXHIBIT
S, FINANCIAL STATEMENT SCHEDULES
|
(A)
|
|
1—The following documents are filed as a part of this Annual Report.
|
|
1.
|
|
Consolidated Financial Statements and Schedules.
See the index to the consolidated financial statements of TransMontaigne Partners L.P. and its subsidiaries that appears under Item 8. “Financial Statements and Supplementary Data” of this Annual Report.
|
|
2.
|
|
Financial Statement Schedules.
Financial statement schedules included in this Item 15 are the financial statements of Battleground Oil Specialty Terminal Company LLC. Other schedules are omitted because they are not required, are inapplicable or the required information is included in the financial statements or notes thereto.
|
|
3.
|
|
Exhibits.
A list of exhibits required by Item 601 of Regulation S‑K to be filed as part of this Annual Report.
|
|
(A)
|
|
2— Battleground Oil Specialty Terminal Company LLC Financial Statements, with a Report of Independent Auditors, as of December 31, 2017 and 2016 and for the Years Ended December 31, 2017, 2016 and 2015.
|
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Battleground Oil Specialty Terminal Company LLC:
We have audited the accompanying financial statements of Battleground Oil Specialty Terminal Company LLC, which comprise the balance sheets
as of December 31, 2017 and 2016, and the related statements of income, of members’ equity, and of cash flows for each of the three years in the period ended December 31, 2017.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Battleground Oil Specialty Terminal Company LLC as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 4 to the financial statements, the Company has extensive operations and relationships with its member, Kinder Morgan Battleground Oil, LLC and other affiliated companies.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 26, 2018
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
STATEMENTS OF INCOME
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
Revenues
|
$
|
66,235
|
|
|
$
|
66,863
|
|
|
$
|
70,710
|
|
|
|
|
|
|
|
Operating Costs and Expenses
|
|
|
|
|
|
Operations and maintenance
|
28,052
|
|
|
20,105
|
|
|
18,898
|
|
Depreciation and amortization
|
18,543
|
|
|
18,401
|
|
|
18,092
|
|
General and administrative
|
3,134
|
|
|
3,694
|
|
|
2,673
|
|
Taxes other than income taxes
|
5,622
|
|
|
5,776
|
|
|
5,947
|
|
Total Operating Costs and Expenses
|
55,351
|
|
|
47,976
|
|
|
45,610
|
|
|
|
|
|
|
|
Operating Income
|
10,884
|
|
|
18,887
|
|
|
25,100
|
|
|
|
|
|
|
|
Other Income
|
—
|
|
|
1
|
|
|
—
|
|
|
|
|
|
|
|
Income Before Taxes
|
10,884
|
|
|
18,888
|
|
|
25,100
|
|
|
|
|
|
|
|
Income Tax Expense
|
336
|
|
|
174
|
|
|
177
|
|
|
|
|
|
|
|
Net Income
|
$
|
10,548
|
|
|
$
|
18,714
|
|
|
$
|
24,923
|
|
The accompanying notes are an integral part of these financial statements.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
BALANCE SHEETS
(In Thousands)
|
|
|
|
|
|
|
|
|
December 31,
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
$
|
18,716
|
|
|
$
|
21,068
|
|
Accounts receivable, net
|
672
|
|
|
1,240
|
|
Inventories
|
1,663
|
|
|
677
|
|
Other current assets
|
3,925
|
|
|
252
|
|
Total current assets
|
24,976
|
|
|
23,237
|
|
|
|
|
|
Property, plant and equipment, net
|
468,727
|
|
|
484,677
|
|
Deferred charges and other assets
|
621
|
|
|
654
|
|
Total Assets
|
$
|
494,324
|
|
|
$
|
508,568
|
|
|
|
|
|
LIABILITIES AND MEMBERS' EQUITY
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable
|
$
|
6,871
|
|
|
$
|
4,589
|
|
Accrued taxes, other than income taxes
|
5,669
|
|
|
5,818
|
|
Other current liabilities
|
5,010
|
|
|
2,392
|
|
Total current liabilities
|
17,550
|
|
|
12,799
|
|
|
|
|
|
Commitments and contingencies (Notes 2 and 5)
|
|
|
|
Members' Equity
|
476,774
|
|
|
495,769
|
|
Total Liabilities and Members' Equity
|
$
|
494,324
|
|
|
$
|
508,568
|
|
The accompanying notes are an integral part of these financial statements.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
STATEMENTS OF CASH FLOWS
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
Cash Flows From Operating Activities
|
|
|
|
|
|
Net income
|
$
|
10,548
|
|
|
$
|
18,714
|
|
|
$
|
24,923
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
18,543
|
|
|
18,401
|
|
|
18,092
|
|
Other non-cash items
|
190
|
|
|
50
|
|
|
391
|
|
Changes in components of working capital:
|
|
|
|
|
|
Accounts receivable
|
322
|
|
|
138
|
|
|
678
|
|
Inventories
|
(986
|
)
|
|
23
|
|
|
115
|
|
Accounts payables
|
2,522
|
|
|
(430
|
)
|
|
1,656
|
|
Other current assets and liabilities
|
(1,105
|
)
|
|
(242
|
)
|
|
1,479
|
|
Other long-term assets and liabilities
|
(65
|
)
|
|
197
|
|
|
(345
|
)
|
Net Cash Provided by Operating Activities
|
29,969
|
|
|
36,851
|
|
|
46,989
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
Capital expenditures
|
(3,028
|
)
|
|
(4,633
|
)
|
|
(13,362
|
)
|
Other
|
250
|
|
|
—
|
|
|
90
|
|
Net Cash Used in Investing Activities
|
(2,778
|
)
|
|
(4,633
|
)
|
|
(13,272
|
)
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
Contributions from Members
|
342
|
|
|
5,000
|
|
|
9,943
|
|
Distributions to Members
|
(29,885
|
)
|
|
(34,942
|
)
|
|
(41,207
|
)
|
Net Cash Used in Financing Activities
|
(29,543
|
)
|
|
(29,942
|
)
|
|
(31,264
|
)
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash and Cash Equivalents
|
(2,352
|
)
|
|
2,276
|
|
|
2,453
|
|
Cash and Cash Equivalents, beginning of period
|
21,068
|
|
|
18,792
|
|
|
16,339
|
|
Cash and Cash Equivalents, end of period
|
$
|
18,716
|
|
|
$
|
21,068
|
|
|
$
|
18,792
|
|
The accompanying notes are an integral part of these financial statements.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
STATEMENTS OF MEMBERS' EQUITY
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
unitholders
|
|
Class B
unitholders
|
|
Total
unitholders
|
Balance at December 31, 2014
|
$
|
513,338
|
|
|
$
|
—
|
|
|
$
|
513,338
|
|
Net income
|
23,481
|
|
|
1,442
|
|
|
24,923
|
|
Contributions
|
9,943
|
|
|
—
|
|
|
9,943
|
|
Distributions
|
(39,765
|
)
|
|
(1,442
|
)
|
|
(41,207
|
)
|
Balance at December 31, 2015
|
506,997
|
|
|
—
|
|
|
506,997
|
|
Net income
|
17,491
|
|
|
1,223
|
|
|
18,714
|
|
Contributions
|
5,000
|
|
|
—
|
|
|
5,000
|
|
Distributions
|
(33,719
|
)
|
|
(1,223
|
)
|
|
(34,942
|
)
|
Balance at December 31, 2016
|
495,769
|
|
|
—
|
|
|
495,769
|
|
Net income
|
9,502
|
|
|
1,046
|
|
|
10,548
|
|
Contributions
|
342
|
|
|
—
|
|
|
342
|
|
Distributions
|
(28,839
|
)
|
|
(1,046
|
)
|
|
(29,885
|
)
|
Balance at December 31, 2017
|
$
|
476,774
|
|
|
$
|
—
|
|
|
$
|
476,774
|
|
The accompanying notes are an integral part of these financial statements.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
1. General
We are a Delaware limited liability company, formed on May 26, 2011. When we refer to “us,” “we,” “our,” “ours,” “the Company”, or “BOSTCO,” we are describing Battleground Oil Specialty Terminal Company LLC.
The member interests in us (collectively referred to as the Class A Members) are as follows:
|
∠
|
|
55.0% - Kinder Morgan Battleground Oil, LLC (KM Battleground Oil), a subsidiary of Kinder Morgan, Inc. (KMI);
|
|
∠
|
|
42.5% - TransMontaigne Operating Company L.P. (TransMontaigne), a wholly owned subsidiary of TransMontaigne Partners L.P.; and
|
|
∠
|
|
2.5% - Tauber Terminals, L.P. (Tauber), a Texas limited partnership.
|
In addition, we have Class B member interests further described in Note 4.
We own and operate a terminal facility that has 7.1 million barrels of distillate, residual fuel and other black oil product storage at a Houston Ship Channel site. The facility also has deep draft docks and high speed pumps.
2. Summary of Significant Accounting Policies
Basis of Presentation
We have prepared our accompanying financial statements in accordance with the accounting principles contained in the Financial Accounting Standards Board's (FASB) Accounting Standards Codification, the single source of United States Generally Accepted Accounting Principles (GAAP) and referred to in this report as the Codification.
Management has evaluated subsequent events through February 26, 2018, the date the financial statements were available to be issued.
Out of Period of Adjustment
A $1,435,000 out of period correction was recorded in 2016 resulting in a decrease in operations and maintenance expense and increase in net income. This adjustment relates to the over accrual of certain dredging service costs in 2014 and 2015. Management evaluated this error taking into account both qualitative and quantitative factors and considered the impact in relation to each period in which they originated. The impact of recognizing this adjustment in prior years was not significant to any individual period. Management believes this adjustment is immaterial to the financial statements presented herein and the previously issued financial statements.
Use of Estimates
Certain amounts included in or affecting our financial statements and related disclosures must be estimated, requiring us to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time our financial statements are prepared. These estimates and assumptions affect the amounts we report for assets and liabilities, our revenues and expenses during the reporting period, and our disclosures, including as it relates to contingent assets and liabilities at the date of our financial statements. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Nevertheless, actual results may differ
significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.
In addition, we believe that certain accounting policies are of more significance in our financial statement preparation process than others, and set out below are the principal accounting policies we apply in the preparation of our financial statements.
Cash Equivalents
We define cash equivalents as all highly liquid short-term investments with original maturities of three months or less.
Accounts Receivable, net
We establish provisions for losses on accounts receivable due from customers if we determine that we will not collect all or part of the outstanding balance. We regularly review collectability and establish or adjust our allowance as necessary using the specific identification method. As of December 31, 2017, our allowance for doubtful accounts was $246,000. We had no allowance for doubtful accounts as of December 31, 2016.
Inventories
Our inventories, which consist of consumable spare parts used in the operations of the facilities, are valued at weighted-average cost, and we periodically review for physical deterioration and obsolescence.
Property, Plant and Equipment, net
Our property, plant and equipment is recorded at its original cost of construction or, upon acquisition, at the fair value of the assets acquired. For constructed assets, we capitalize all construction-related direct labor and material costs, as well as indirect construction costs. The indirect capitalized labor and related costs are based upon estimates of time spent supporting construction projects.
We use the straight-line method to depreciate property, plant and equipment over the estimated useful life for each asset. The cost of property, plant and equipment sold or retired and the related depreciation are removed from the balance sheet in the period of sale or disposition. Gains or losses resulting from property sales or dispositions are recognized in the period incurred. We generally include gains or losses in “Operations and maintenance” on our accompanying Statements of Income.
Asset Retirement Obligations (ARO)
We record liabilities for obligations related to the retirement and removal of long-lived assets used in our businesses. We record, as liabilities, the fair value of ARO on a discounted basis when they are incurred and can be reasonably estimated, which is typically at the time the assets are installed or acquired. Amounts recorded for the related assets are increased by the amount of these obligations. Over time, the liabilities increase due to the change in their present value, and the initial capitalized costs are depreciated over the useful lives of the related assets. The liabilities are eventually extinguished when the asset is taken out of service.
We are required to operate and maintain our assets, and intend to do so as long as supply and demand for such services exists, which we expect for the foreseeable future. Therefore, we believe that we cannot reasonably estimate the ARO for the substantial majority of assets because these assets have indeterminate lives. We continue to evaluate our ARO and future developments could impact the amounts we record. We had no recorded ARO as of December 31, 2017 and 2016.
Asset Impairments
We evaluate our assets for impairment when events or circumstances indicate that their carrying values may not be recovered. These events include changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset and adverse changes in market conditions or in the legal or business environment such as adverse actions by regulators. If an event occurs, which is a determination that involves judgment, we evaluate the recoverability of the carrying value of our long-lived asset based on the long-lived asset's ability to generate future cash flows on an undiscounted basis. If an impairment is indicated, or if we decide to sell a long-lived asset or group of assets, we adjust the carrying value of the asset downward, if necessary, to its estimated fair value.
Our fair value estimates are generally based on assumptions market participants would use, including market data obtained through the sales process or an analysis of expected discounted future cash flows. There were no impairments for the years ended December 31, 2017, 2016 and 2015.
Revenue Recognition
Our revenue is generated from storage services under long-term storage contracts. We recognize storage revenues on firm contracted capacity ratably over the contract period regardless of the volume of petroleum products stored. We may also generate revenues from throughput movements and ancillary services. We record revenues for these additional services when performed and earned, subject to possible contractual minimums and maximums.
For the year ended December 31, 2017, revenues from our five largest non-affiliate customers were approximately $11,671,000, $11,230,000, $9,648,000, $8,886,000 and $6,994,000, respectively, each of which exceeded 10% of our operating revenues. For the year ended December 31, 2016, revenues from our three largest non-affiliate customers were approximately $12,519,000, $11,003,000 and $9,380,000, respectively, each of which exceeded 10% of our operating revenues. For the year ended December 31, 2015, revenues from our three largest non-affiliate customers were approximately $12,424,000, $10,739,000 and $8,702,000, respectively, and revenues from our largest affiliate customer was approximately $7,480,000, each of which exceeded 10% of our operating revenues.
During 2015, we recognized $8,219,000 of revenue associated with amounts collected on the early termination of a storage contract.
Operations and Maintenance
Operations and maintenance includes $3,787,000, $(370,000) and $862,000 of dredging service costs for the years ended December 31, 2017, 2016 and 2015, respectively, see “Out of period adjustment” above. Actual dredging services costs are capitalized and included in “Other current assets” and “Deferred charges and other assets” on our accompanying Balance Sheets. The capitalized dredging costs are amortized until the next dredging operation (an approximate 12 to 24 month period). We use the straight-line method to amortize dredging service costs.
Environmental Matters
We capitalize or expense, as appropriate, environmental expenditures. We capitalize certain environmental expenditures required in obtaining rights-of-way, regulatory approvals or permitting as part of the construction. We accrue and expense environmental costs that relate to an existing condition caused by past operations, which do not contribute to current or future revenue generation. We generally do not discount environmental liabilities to a net present value, and we record environmental liabilities when environmental assessments and/or remedial efforts are probable and we can reasonably estimate the costs. Generally, our recording of these accruals coincides with our completion of a feasibility study or our commitment to a formal plan of action. We recognize receivables for anticipated associated insurance recoveries when such recoveries are deemed to be probable.
We routinely conduct reviews of potential environmental issues and claims that could impact our assets or operations. These reviews assist us in identifying environmental issues and estimating the costs and timing of remediation efforts. We also routinely adjust our environmental liabilities to reflect changes in previous estimates. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us, and potential third-party liability claims. Often, as the remediation evaluation and effort progresses, additional information is obtained, requiring revisions to estimated costs. These revisions are reflected in our income in the period in which they are reasonably determinable.
We are subject to environmental cleanup and enforcement actions from time to time. In particular, Comprehensive Environmental Response, Compensation and Liability Act generally imposes joint and several liability for cleanup and enforcement costs on current and predecessor owners and operators of a site, among others, without regard to fault or the legality of the original conduct, subject to the right of a liable party to establish a “reasonable basis” for apportionment of costs. Our operations are also subject to federal, state and local laws and regulations relating to protection of the environment. Although we believe our operations are in substantial compliance with applicable environmental law and regulations, risks of additional costs and liabilities are inherent in our operations, and there can be no assurance that we will not incur significant costs and liabilities. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies under the terms of authority of those laws, and claims for damages to property or persons resulting from our operations, could result in substantial costs and liabilities to us.
Although it is not possible to predict the ultimate outcomes, we believe that the resolution of the environmental matters, and other matters to which we are a party, will not have a material adverse effect on our business, financial position, results of operations or cash flows. We had no accruals for any outstanding environmental matters as of December 31, 2017 and 2016.
Legal Proceedings
We are party to various legal, regulatory and other matters arising from the day-to-day operations of our business that may result in claims against the Company. Although no assurance can be given, we believe, based on our experiences to date and taking into account established reserves, that the ultimate resolution of such items will not have a material adverse impact on our business, financial position, results of operations or cash flows. We believe we have meritorious defenses to the matters to which we are a party and intend to vigorously defend the Company. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed.
As of December 31, 2017 and 2016, we had $1,642,000 accrued for a dispute with a customer related to the commencement of our operations. The dispute was settled in January 2018 and the parties entered into a services agreement with a five-year term over which period we intend to amortize the accrued amount. The settlement and resulting amortization will not have a material
adverse effect on our financial position or results of operations.
Other Contingencies
We recognize liabilities for other contingencies when we have an exposure that indicates it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Where the most likely outcome of a contingency can be reasonably estimated, we accrue an undiscounted liability for that amount. Where the most likely outcome cannot be estimated, a range of potential losses is established and if no one amount in that range is more likely than any other, the low end of the range is accrued.
Income Taxes
We are a limited liability company that is treated as a partnership for income tax purposes and are not subject to federal or state income taxes. Accordingly, no provision for federal or state income taxes has been recorded in our financial statements. The tax effects of our activities accrue to our Members who report on their individual federal income tax returns their share of revenues and expenses. However, we are subject to Texas margin tax (a revenue based calculation), which is presented as “Income Tax Expense” on our accompanying Statements of Income.
3. Property, Plant and Equipment, net
Our property, plant and equipment, net consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Useful Life in Years
|
|
2017
|
|
2016
|
Terminal and storage facilities
|
10 - 40
|
|
$
|
437,977
|
|
|
$
|
435,730
|
|
Buildings
|
5 - 30
|
|
12,955
|
|
|
12,955
|
|
Other support equipment
|
5 - 30
|
|
76,846
|
|
|
76,606
|
|
Accumulated depreciation and amortization
|
|
|
(73,395
|
)
|
|
(54,868
|
)
|
|
|
|
454,383
|
|
|
470,423
|
|
Land
|
|
|
13,168
|
|
|
13,168
|
|
Construction work in process
|
|
|
1,176
|
|
|
1,086
|
|
Property, plant and equipment, net
|
|
|
$
|
468,727
|
|
|
$
|
484,677
|
|
4. Related Party Transactions
Limited Liability Company Agreement (LLC Agreement)
Our profits and losses, and cash distributions are allocated, and made within 45 days after the end of each quarter, on a pro-rata basis to our Members in accordance with their equity percentage interests and profit interests, subject to other conditions as defined in the LLC Agreement. The Class A and Class B Members share in our profits and losses on a 96.5% and 3.5% pro-rata basis, respectively. Class B Member interests are not required to make capital contributions in order to maintain their profit interests. Class A units outstanding as of December 31, 2017 and 2016 were 14,914,900. Class B units outstanding as of December 31, 2017 and 2016 were 700.
Changes and amendments to the terms of the LLC Agreement, including its provisions regarding the approval of additional capital contributions, require both KM Battleground Oil and TransMontaigne approvals pursuant to the LLC Agreement. Class A and Class B Members have other rights, preferences, restrictions, obligations, and limitations, including limitations as to the transfer of ownership interests.
Affiliate Agreement
Pursuant to the operations and reimbursement agreement, KM Battleground Oil operates our terminal facility and we pay them a service fee. The service fee for the years ended December 31, 2017, 2016 and 2015 was approximately $1,609,000, $1,574,000 and $1,544,000, respectively, and is reflected in “Operations and maintenance” on our accompanying Statements of Income.
Other Affiliate Balances and Activities
We enter into transactions with our affiliates within the ordinary course of business and the services are based on the same terms as non-affiliates.
We do not have employees. Employees of KMI provide services to us. In accordance with our governance documents,we reimburse KMI at cost.
The following table summarizes our balance sheet affiliate balances (in thousands):
|
|
|
|
|
|
|
|
|
December 31,
|
|
2017
|
|
2016
|
Accounts receivable, net
|
$
|
443
|
|
|
$
|
182
|
|
Prepayments(a)
|
102
|
|
|
239
|
|
Accounts payable
|
1,830
|
|
|
1,452
|
|
____________
|
(a)
|
|
Included in “Other current assets” and “Deferred charges and other assets” on our accompanying Balance Sheets.
|
The following table shows revenues and costs from our affiliates (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
Revenues
|
$
|
665
|
|
|
$
|
4,751
|
|
|
$
|
7,480
|
|
Operations and maintenance
|
10,645
|
|
|
9,774
|
|
|
9,486
|
|
General and administrative
|
3,134
|
|
|
2,963
|
|
|
2,673
|
|
Subsequent Event
In February 2018, we made cash distributions to our Class A and B Members totaling $5,106,000.
5. Commitments
We lease property and equipment under various operating leases. Future minimum annual rental commitments under our
operating leases as of December 31, 2017, are as follows (in thousands):
Year
|
|
Total
|
2018
|
|
$
|
419
|
|
2019
|
|
422
|
|
2020
|
|
378
|
|
2021
|
|
389
|
|
2022
|
|
400
|
|
Thereafter
|
|
7,046
|
|
Total
|
|
$
|
9,054
|
|
Rent expense on our lease obligations for the years ended December 31, 2017, 2016 and 2015 was approximately $429,000, $464,000 and $471,000, respectively, and is reflected in “Operations and maintenance” on our accompanying Statements of Income.
6. Recent Accounting Pronouncements
Accounting Standards Updates
Topic 606
On May 28, 2014, the FASB issued ASU No. 2014-09, “
Revenue from Contracts with Customers
” followed by a series of related accounting standard updates (collectively referred to as “Topic 606”). Topic 606 is designed to create greater revenue recognition and disclosure comparability in financial statements. The provisions of Topic 606 include a five-step process by which an entity will determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which an entity expects to be entitled in exchange for those goods or services. Topic 606 requires certain disclosures about contracts with customers and provides more comprehensive guidance for transactions such as service revenue, contract modifications, and multiple-element arrangements.
Topic 606 will require that our revenue recognition policy disclosure include further detail regarding our performance obligations as to the nature, amount, timing, and estimates of revenue and cash flows generated from our contracts with customers. Topic 606 will also require disclosure of significant changes in contract asset and contract liability balances period to period and the amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period, as applicable. We utilized the modified retrospective method to adopt the provisions of this standard effective January 1, 2018, which required us to apply the new revenue standard to (i) all new revenue contracts entered into after January 1, 2018 and (ii) all existing revenue contracts as of January 1, 2018 through a cumulative adjustment to equity. In accordance with this approach, our consolidated revenues for periods prior to January 1, 2018 will not be revised. The cumulative effect of the adoption of this standard as of January 1, 2018 was not material.
ASU No. 2016-02
On February 25, 2016, the FASB issued ASU No. 2016-02, “
Leases (Topic 842)
.” This ASU requires that lessees recognize assets and liabilities on the balance sheet for the present value of the rights and obligations created by all leases with terms of more than 12 months. The ASU also will require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 will be effective for us as of January 1, 2019. We are currently reviewing the effect of ASU No. 2016-02.
ASU No. 2018-01
On January 25, 2018, the FASB issued ASU No. 2018-01,
“Land Easement Practical Expedient for Transition to Topic 842.”
This ASU provides an optional transition practical expedient that, if elected, would not require companies to reconsider its accounting for existing or expired land easements before the adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. ASU No. 2018-01 will be effective for us as of January 1, 2019, and earlier adoption is permitted. We are currently reviewing the effect of this ASU to our financial statements.
|
|
|
|
Exhibit
Number
|
|
Description
|
|
2.1
|
|
Facilities Sale Agreement, dated as of December 29, 2006, by and between TransMontaigne Product Services LLC (formerly known as TransMontaigne Product Services Inc.) and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on January 5, 2007).
|
|
2.2
|
|
Facilities Sale Agreement, dated as of December 28, 2007, by and between TransMontaigne Product Services LLC and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on January 3, 2008).
|
|
3.1
|
|
Certificate of Limited Partnership of TransMontaigne Partners L.P., dated February 23, 2005 (incorporated by reference to Exhibit 3.1 of TransMontaigne Partners L.P.’s Registration Statement on Form S‑1 (Registration No. 333‑123219) filed on March 9, 2005).
|
|
3.2
|
|
First Amended and Restated Agreement of Limited Partnership of TransMontaigne Partners L.P., dated May 27, 2005 (incorporated by reference to Exhibit 3.1 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on September 13, 2005).
|
|
3.3
|
|
First Amendment to the First Amended and Restated Agreement of Limited Partnership of TransMontaigne Partners L.P. dated January 23, 2006 (incorporated by reference to Exhibit 3.3 of TransMontaigne Partners L.P.’s Annual Report on Form 10‑K filed by TransMontaigne Partners with the SEC on March 8, 2010).
|
|
3.4
|
|
Second Amendment to the First Amended and Restated Agreement of Limited Partnership of TransMontaigne Partners L.P. (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on April 8, 2008).
|
|
3.5
|
|
Third Amendment to the First Amended and Restated Agreement of Limited Partnership of TransMontaigne Partners L.P. dated May 5, 2015 (incorporated by reference to Exhibit 3.1 of the Quarterly Report on Form 10-Q filed by TransMontaigne Partners L.P. with the SEC on May 7, 2015).
|
|
4.1
|
|
Indenture, dated February 12, 2018, among TransMontaigne Partners L.P., TLP Finance Corp.
and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by TransMontaigne Partners L.P. with the SEC on February 12, 2018).
|
|
4.2
|
|
First Supplemental Indenture, dated as of February 12, 2018, among TransMontaigne Partners L.P., TLP Finance Corp., the guarantors named therein and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by TransMontaigne Partners L.P. with the SEC on February 12, 2018).
|
|
10.1
|
|
Third Amended and Restated Senior Secured Credit Facility, dated March 13, 2017, among TransMontaigne Operating Company L.P., as borrower, Wells Fargo Bank, National Association, as Administrative Agent, US Bank, National Association, as Syndication Agent, Joint Lead Arranger and Joint Book Runner, Bank of America, N.A., Citibank, N.A., MUFG Union Bank N.A. and Royal Bank of Canada, each as Documentation Agents, Wells Fargo Securities, LLC, as Joint Lead Arranger and Joint Lead Book Runner, and the other financial institutions a party thereto (incorporated by reference to Exhibit 10.1 of the Annual Report on Form 10-K filed by TransMontaigne Partners L.P. with the SEC on March 14, 2017).
|
|
10.2
|
|
Contribution, Conveyance and Assumption Agreement, dated May 27, 2005, by and among TransMontaigne LLC, TransMontaigne Partners L.P., TransMontaigne GP L.L.C., TransMontaigne Operating GP L.L.C., TransMontaigne Operating Company L.P., TransMontaigne Product Services LLC and Coastal Fuels Marketing, Inc., Coastal Terminals L.L.C., Razorback L.L.C., TPSI Terminals L.L.C. and TransMontaigne Services LLC. (incorporated by reference to Exhibit 10.2 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on September 13, 2005).
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
10.3
|
|
Second Amended and Restated Omnibus Agreement, dated March 1, 2016, by and among Gulf TLP Holdings, LLC, TLP Management Services LLC, TransMontaigne Partners L.P., TransMontaigne GP L.L.C., TransMontaigne Operating GP L.L.C. and TransMontaigne Operating Company L.P. (incorporated by reference to Exhibit 10.2 of the Quarterly Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on March 3, 2016).
|
|
10.4+
|
|
2016 Long‑Term Incentive Plan (incorporated by reference to Exhibit 10.3 of the Quarterly Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on March 3, 2016).
|
|
10.5+
|
|
Form of 2016 Long‑Term Incentive Plan Non‑Employee Director Award Agreement (incorporated by reference to Exhibit 10.12 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 10, 2016).
|
|
10.6+
|
|
TLP Management Services LLC Savings and Retention Program (incorporated by reference to Exhibit 10.4 of the Quarterly Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on March 3, 2016).
|
|
10.7
|
|
Registration Rights Agreement, dated May 27, 2005, by and between TransMontaigne Partners L.P. and MSDW Morgan Stanley Strategic Investments, Inc. (formerly MSDW Bondbook Ventures Inc.) (incorporated by reference to Exhibit 10.7 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on September 13, 2005).
|
|
10.8
|
|
Terminaling Services Agreement—Southeast and Collins/Purvis, dated January 1, 2008, between TransMontaigne Partners L.P. and Morgan Stanley Capital Group Inc., as amended (assigned in part to NGL Energy Partners LP on July 1, 2014) (incorporated by reference to Exhibit 10.16 of the Annual Report on Form 10 K filed by TransMontaigne Partners L.P. with the SEC on March 10, 2008). Certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b 2 as promulgated under the Securities Exchange Act of 1934.
|
|
10.9
|
|
Sixth Amendment to Terminaling Services Agreement—Southeast and Collins/Purvis, dated July 16, 2013, between TransMontaigne Partners L.P. and Morgan Stanley Capital Group Inc. (assigned in part to NGL Energy Partners LP on July 1, 2014) (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8 K filed by TransMontaigne Partners L.P. with the SEC on July 17, 2013).
|
|
10.10
|
|
Seventh Amendment to Terminaling Services Agreement—Southeast and Collins/Purvis, dated December 20, 2013, between TransMontaigne Partners L.P. and Morgan Stanley Capital Group Inc. (assigned in part to NGL Energy Partners LP on July 1, 2014) (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8 K filed by TransMontaigne Partners L.P. with the SEC on December 23, 2013).
|
|
10.11
|
|
Eighth Amendment to Terminaling Services Agreement—Southeast and Collins/Purvis, dated November 4, 2014, between TransMontaigne Partners L.P. and NGL Energy Partners LP. (incorporated by reference to Exhibit 10.19 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 10, 2016).
|
|
10.12
|
|
Amendment No. 9 to Terminaling Services Agreement—Southeast and Collins/Purvis, dated March 1, 2016, between TransMontaigne Partners L.P. and NGL Energy Partners LP (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on March 3, 2016).
|
10.13
|
|
Indemnification Agreement, dated December 31, 2007, among TransMontaigne LLC, TransMontaigne Partners L.P., TransMontaigne GP L.L.C., TransMontaigne Operating GP L.L.C. and TransMontaigne Operating Company L.P. (incorporated by reference to Exhibit 10.17 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 10, 2008).
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
10.14
|
|
Amended and Restated Limited Liability Company Agreement of Battleground Oil Specialty Terminal Company LLC Company, dated October 18, 2011, by and among TransMontaigne Operating Company L.P., Kinder Morgan Battleground Oil LLC and Tauber Terminals, LP (incorporated by reference to Exhibit 10.16 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 12, 2013). Certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b‑2 as promulgated under the Securities Exchange Act of 1934.
|
10.15
|
|
First Amendment to the Amended and Restated Limited Liability Company Agreement of Battleground Oil Specialty Terminal Company LLC, dated December 20, 2012, by and among TransMontaigne Operating Company L.P., Kinder Morgan Battleground Oil LLC and Tauber Terminals, LP (incorporated by reference to Exhibit 10.17 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 12, 2013). Certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b‑2 as promulgated under the Securities Exchange Act of 1934
|
|
10.16
|
|
Purchase Agreement, dated December 20, 2012, by and among TransMontaigne Operating Company L.P., and Kinder Morgan Battleground Oil LLC (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on December 20, 2012).
|
|
10.17
|
|
Asset Purchase Agreement, dated November 2, 2017, by and between Plains Products Terminals LLC and TransMontaigne Operating Company L.P. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on November 8, 2017)
|
|
10.17
|
|
First Amendment to Third Amended and Restated Senior Secured Credit Facility, dated as of December 14, 2017, by and among TransMontaigne Operating Company L.P., as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8 K filed by TransMontaigne Partners L.P. with the SEC on December 18, 2017).
|
|
10.18
|
|
Right of First Offer Agreement dated as of September 12, 2017, by and between Pike West Coast Holdings, LLC and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on September 15, 2017).
|
|
10.19
|
|
Right of First Offer Agreement dated as of August 4, 2017, by and between Pike West Coast Holdings, LLC and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on August 9, 2017)
|
|
12.1*
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
21.1*
|
|
List of Subsidiaries of TransMontaigne Partners L.P.
|
|
23.1*
|
|
Consent of Independent Registered Public Accounting Firm—consent of Deloitte & Touche LLP on the consolidated financial statements of TransMontaigne Partners, L.P. and the effectiveness of TransMontaigne Partners, L.P.’s internal control over financial reporting.
|
|
23.2*
|
|
Consent of Independent Registered Public Accounting Firm—consent of PricewaterhouseCoopers LLP on the financial statements of Battleground Oil Specialty Terminal Company LLC.
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
|
|
32.1*
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
|
|
*
Filed with this Annual Report.
+
Identifies each management compensation plan or arrangement.
ITEM 16. FORM 10-K SUMMARY
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
|
|
|
TransMontaigne Partners L.P.
|
|
|
|
By:
|
TransMontaigne GP L.L.C., its General Partner
|
|
|
|
By:
|
/s/ Frederick W. Boutin
|
|
|
Frederick W. Boutin
Chief Executive Officer
|
Date: March 15, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities with TransMontaigne GP L.L.C., the general partner of the registrant, on the date indicated.
Name and Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Frederick W. Boutin
|
|
Chief Executive Officer
|
|
March 15, 2018
|
Frederick W. Boutin
|
|
|
|
|
|
|
|
/s/ Robert T. Fuller
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
March 15, 2018
|
Robert T. Fuller
|
|
|
|
|
|
|
|
/s/ Lisa M. Kearney
|
|
Vice President, Chief Accounting Officer
|
|
March 15, 2018
|
Lisa M. Kearney
|
|
|
|
|
|
|
|
/s/ Steven A. Blank
|
|
Director
|
|
March 15, 2018
|
Steven A. Blank
|
|
|
|
|
|
|
|
/s/ Theodore D. Burke
|
|
Director
|
|
March 15, 2018
|
Theodore D. Burke
|
|
|
|
|
|
|
|
/s/ Kevin M. Crosby
|
|
Director
|
|
March 15, 2018
|
Kevin M. Crosby
|
|
|
|
|
|
|
|
/s/ Daniel R. Revers
|
|
Director
|
|
March 15, 2018
|
Daniel R. Revers
|
|
|
|
|
|
|
|
/s/ Lucius H. Taylor
|
|
Director
|
|
March 15, 2018
|
Lucius H. Taylor
|
|
|
|
|
|
|
|
/s/ Barry E. Welch
|
|
Director
|
|
March 15, 2018
|
Barry E. Welch
|
|
|
|
|
|
|
|
/s/ Jay A. Wiese
|
|
Director
|
|
March 15, 2018
|
Jay A. Wiese
|
|
|
Transmontaigne Partners L.P. Transmontaigne Partners L.P. Common Units Representing Limited Partner Interests (NYSE:TLP)
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