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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-Q

(Mark One)ý

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the quarterly period ended September 30, 2010ORo

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


Commission File Number: 001-32505

TRANSMONTAIGNE PARTNERS L.P.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

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


1670 Broadway
Suite 3100
Denver, Colorado 80202(Address, including zip code, of principal executive offices)

(303) 626-8200(Telephone number, including area code)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

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

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

Large accelerated filer o

Accelerated filer ý

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

Smaller reporting company o


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

As of October 29, 2010, there were 14,457,066 units of the registrant's Common Limited Partner Units outstanding.



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TABLE OF CONTENTS



Page No.Part I. Financial InformationItem 1.

Unaudited Consolidated Financial Statements


3Consolidated balance sheets as of September 30, 2010 and December 31, 2009


4Consolidated statements of operations for the three and nine months ended September 30, 2010 and 2009


5Consolidated statements of partners' equity and comprehensive income for the year ended December 31, 2009 and nine
months ended September 30, 2010


6Consolidated statements of cash flows for the three and nine months ended September 30, 2010 and
2009


7Notes to consolidated financial statements


8Item 2.

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


34Item 3.

Quantitative and Qualitative Disclosures about Market Risk


50Item 4.

Controls and Procedures


51Part II. Other InformationItem 1A.

Risk Factors


52Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


53Item 6.

Exhibits


54


2

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the following:



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

Part I. Financial Information

ITEM 1.    UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The interim unaudited consolidated financial statements of TransMontaigne Partners L.P. as of and for the three and nine months
ended September 30, 2010 are included herein beginning on the following page. The accompanying unaudited interim consolidated financial statements should be read in conjunction with our
consolidated financial statements and related notes for the year ended December 31, 2009, together with our discussion and analysis of financial condition and results of operations, included in
our Annual Report on Form 10-K filed on March 8, 2010 with the Securities and Exchange Commission (File No. 001-32505).

TransMontaigne
Partners L.P. is a holding company with the following active wholly-owned subsidiaries during the three and nine months ended September 30,
2010:



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

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TransMontaigne Partners L.P. and subsidiaries

Consolidated balance sheets (unaudited)

(In thousands)

September 30,
2010

December 31,
2009ASSETSCurrent assets:Cash and cash equivalents

$
2,844

$
6,568Trade accounts receivable, net


7,045


6,317Due from Morgan Stanley Capital Group


3,379


2,148Other current assets


6,804


7,706Total current assets


20,072


22,739Property, plant and equipment, net


457,268


459,598Goodwill


24,695


24,682Other assets, net


8,844


8,516$
510,879

$
515,535LIABILITIES AND EQUITYCurrent liabilities:Trade accounts payable

$
7,151

$
11,007Due to TransMontaigne Inc.


226


168Accrued liabilities


21,023


19,235Total current liabilities


28,400


30,410Other liabilities


17,450


17,000Long-term debt


108,000


165,000Total liabilities


153,850


212,410Partners' equity:Common unitholders


301,760


249,160General partner interest


55,638


54,434Accumulated other comprehensive loss


(369
)

(469
)Total partners' equity


357,029


303,125$
510,879

$
515,535


See
accompanying notes to consolidated financial statements.

4

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TransMontaigne Partners L.P. and subsidiaries

Consolidated statements of operations (unaudited)

(In thousands, except per unit amounts)

Three months ended
September 30,

Nine months ended
September 30,2010

2009

2010

2009Revenue:External customers

$
12,293

$
12,249

$
35,739

$
38,044Affiliates


25,206


23,121


75,696


67,577Total revenue


37,499


35,370


111,435


105,621Costs and expenses:Direct operating costs and expenses


(14,838
)

(16,915
)

(43,935
)

(47,889
)Direct general and administrative expenses


(622
)

(606
)

(2,196
)

(2,410
)Allocated general and administrative expenses


(2,578
)

(2,510
)

(7,734
)

(7,530
)Allocated insurance expense


(796
)

(725
)

(2,388
)

(2,175
)Reimbursement of bonus awards


(313
)

(309
)

(939
)

(927
)Depreciation and amortization


(7,006
)

(6,541
)

(20,832
)

(19,346
)Gain on disposition of assets











1Total costs and expenses


(26,153
)

(27,606
)

(78,024
)

(80,276
)Operating income


11,346


7,764


33,411


25,345Other income (expenses):Interest income


1


1


7


5Interest expense


(1,189
)

(1,350
)

(3,699
)

(4,068
)Foreign currency transaction gain (loss)


20


(13
)

31


17Unrealized gain (loss) on derivative instruments


341


(553
)

727


(819
)Amortization of deferred financing costs


(150
)

(150
)

(450
)

(450
)Total other expenses


(977
)

(2,065
)

(3,384
)

(5,315
)Net earnings


10,369


5,699


30,027


20,030Lessearnings allocable to general partner interest including incentive distribution rights


(784
)

(572
)

(2,357
)

(1,774
)Net earnings allocable to limited partners

$
9,585

$
5,127

$
27,670

$
18,256Net earnings per limited partner unitbasic

$
0.66

$
0.41

$
1.93

$
1.47Net earnings per limited partner unitdiluted

$
0.66

$
0.41

$
1.93

$
1.47Weighted average limited partner units outstandingbasic


14,446


12,438


14,344


12,439Weighted average limited partner units outstandingdiluted


14,461


12,443


14,355


12,441


See
accompanying notes to consolidated financial statements.

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TransMontaigne Partners L.P. and subsidiaries

Consolidated statements of partners' equity and comprehensive income (unaudited)

Year ended December 31, 2009
and nine months ended September 30, 2010

(In thousands)

Common
units

Subordinated
units

General
partner
interest

Accumulated
other
comprehensive
loss

TotalBalance December 31, 2008

$
249,264

$
4,449

$
54,450

$
(584
)
$
307,579Distributions to unitholders


(24,514
)

(4,900
)

(2,467
)




(31,881
)Deferred equity-based compensation related to restricted phantom units


213











213Purchase of 6,885 common units by our long-term incentive plan


(153
)










(153
)Issuance of 3,000 common units by our long-term incentive plan due to vesting of restricted phantom units














Conversion of 2,491,699 subordinated units into common units


2,719


(2,719
)







Net earnings for year ended December 31, 2009


21,631


3,170


2,451





27,252Foreign currency translation adjustments











115


115Comprehensive income














27,367Balance December 31, 2009


249,160





54,434


(469
)

303,125Proceeds from offering of 2,012,500 common units, net of underwriters' discounts and offering expenses of $2,562


50,971











50,971Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest








1,093





1,093Distributions to unitholders


(25,873
)




(2,246
)




(28,119
)Deferred equity-based compensation related to restricted phantom units


287











287Purchase of 16,915 common units by our long-term incentive plan and from affiliate


(455
)










(455
)Issuance of 14,000 common units by our long-term incentive plan due to vesting of restricted phantom units














Net earnings for nine months ended September 30, 2010


27,670





2,357





30,027Foreign currency translation adjustments











100


100Comprehensive income














30,127Balance September 30, 2010

$
301,760

$


$
55,638

$
(369
)
$
357,029


See
accompanying notes to consolidated financial statements.

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TransMontaigne Partners L.P. and subsidiaries

Consolidated statements of cash flows (unaudited)

(In thousands)

Three months ended
September 30,

Nine months ended
September 30,2010

2009

2010

2009Cash flows from operating activities:Net earnings

$
10,369

$
5,699

$
30,027

$
20,030Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization


7,006


6,541


20,832


19,346Gain on disposition of assets











(1
)Deferred equity-based compensation


98


65


287


119Amortization of deferred financing costs


150


150


450


450Unrealized (gain) loss on derivative instruments


(341
)

553


(727
)

819Amortization of deferred revenue


(986
)

(764
)

(2,778
)

(1,652
)Amounts due under long-term terminaling services agreements, net


292


25


(421
)

(839
)Changes in operating assets and liabilities, net of effects from acquisitions:Trade accounts receivable, net


(2,034
)

226


(728
)

1,634Due to/from TransMontaigne Inc.


146


302


32


929Due from Morgan Stanley Capital Group


826


6,421


2,118


16,729Other current assets


(576
)

397


945


(216
)Trade accounts payable


(1,120
)

(2,541
)

(3,472
)

634Accrued liabilities


1,887


748


1,981


51Net cash provided by operating activities


15,717


17,822


48,546


58,033Cash flows from investing activities:Acquisition of terminal facilities








(1,633
)

Additions to property, plant and equipmentexpansion of facilities


(3,197
)

(3,653
)

(12,437
)

(25,845
)Additions to property, plant and equipmentmaintain existing facilities


(1,841
)

(1,303
)

(3,992
)

(3,580
)Proceeds from sale of assets











1Other


(716
)




(710
)

(33
)Net cash used in investing activities


(5,754
)

(4,956
)

(18,772
)

(29,457
)Cash flows from financing activities:Net proceeds from issuance of common units








50,971


Contribution of cash by TransMontaigne GP








1,093


Net repayments of debt


(2,000
)




(57,000
)

(500
)Distributions paid to unitholders


(9,382
)

(7,963
)

(28,119
)

(23,892
)Purchase of common units by our long-term incentive plan and from affiliate


(331
)

(46
)

(455
)

(104
)Net cash used in financing activities


(11,713
)

(8,009
)

(33,510
)

(24,496
)Increase (decrease) in cash and cash equivalents


(1,750
)

4,857


(3,736
)

4,080Foreign currency translation effect on cash


13


(2
)

12


(2
)Cash and cash equivalents at beginning of period


4,581


4,018


6,568


4,795Cash and cash equivalents at end of period

$
2,844

$
8,873

$
2,844

$
8,873Supplemental disclosures of cash flow information:Cash paid for interest

$
1,288

$
1,671

$
3,964

$
5,269


See accompanying notes to consolidated financial statements.

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)   Nature of business

TransMontaigne Partners L.P. ("Partners") was formed in February 2005 as a Delaware master limited partnership initially to own and operate refined
petroleum products terminaling and transportation facilities. We conduct our operations primarily in the United States along the Gulf Coast, in the Southeast, in Brownsville, Texas, along the
Mississippi and Ohio rivers, and in the Midwest. We provide integrated terminaling, storage, transportation and related services for companies engaged in the distribution and marketing of refined
petroleum products, crude oil, chemicals, fertilizers and other liquid products, including TransMontaigne Inc. and Morgan Stanley Capital Group Inc.

We
are controlled by our general partner, TransMontaigne GP L.L.C. ("TransMontaigne GP"), which is a wholly-owned subsidiary of TransMontaigne Inc. Effective
September 1, 2006, Morgan Stanley Capital Group Inc. ("Morgan Stanley Capital Group"), a wholly-owned subsidiary of Morgan Stanley, purchased all of the issued and outstanding capital
stock of TransMontaigne Inc. Morgan Stanley Capital Group is the principal commodities trading arm of Morgan Stanley. As a result of Morgan Stanley's acquisition of TransMontaigne Inc.,
Morgan Stanley became the indirect owner of our general partner. At September 30, 2010, TransMontaigne Inc. and Morgan Stanley have a significant interest in our partnership through
their indirect ownership of a 21.7% limited partner interest, a 2% general partner interest and the incentive distribution rights.

(b)   Basis of presentation and use of estimates

Our accounting and financial reporting policies conform to accounting principles and practices generally accepted in the United States of America. The
accompanying consolidated financial statements include the accounts of TransMontaigne Partners L.P., a Delaware limited partnership, and its controlled subsidiaries. All significant
inter-company accounts and transactions have been eliminated in the preparation of the accompanying consolidated financial statements.

The
preparation of financial statements in conformity with generally accepted accounting principles 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 involve complex analyses: allowance for doubtful accounts, accrued environmental
obligations and determining the fair value of our reporting units when performing our annual goodwill impairment analysis. 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.

The
accompanying consolidated financial statements include the assets, liabilities and results of operations of certain terminal and pipeline operations prior to their acquisition by us
from TransMontaigne Inc. The acquired assets and liabilities have been recorded at TransMontaigne Inc.'s carryover basis. At the closing of our initial public offering on May 27,
2005, we acquired from TransMontaigne Inc. seven Florida terminals, including terminals located in Tampa, Port Manatee, Fisher Island, Port Everglades (North), Port Everglades (South), Cape
Canaveral, and Jacksonville; and the Razorback pipeline system, including the terminals located at Mt. Vernon, Missouri and Rogers, Arkansas in exchange for 120,000 common units, 2,872,266
subordinated units, a 2% general partner interest, and a cash payment of approximately $111.5 million. On January 1, 2006, we acquired from

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

TransMontaigne Inc.
the Mobile, Alabama terminal in exchange for a cash payment of approximately $17.9 million. On December 29, 2006, we acquired from TransMontaigne Inc.
the Brownsville, Texas terminal, 12 terminals along the Mississippi and Ohio rivers ("River terminals"), and the Baton Rouge, Louisiana dock facility in exchange for a cash payment of approximately
$135.0 million. On December 31, 2007, we acquired from TransMontaigne Inc. twenty-two terminals along the Colonial and Plantation pipelines ("Southeast terminals") in
exchange for a cash payment of approximately $118.6 million. The acquisitions of terminal and pipeline operations from TransMontaigne Inc. have been accounted for as transactions among
entities under common control and, accordingly, prior periods include the activity of the acquired terminal and pipeline operations since the date they were purchased by TransMontaigne Inc. for
acquisitions made by us prior to September 1, 2006, and since September 1, 2006 (the date of Morgan Stanley Capital Group's acquisition of TransMontaigne Inc.) for acquisitions
made by us on or after September 1, 2006.

The
accompanying consolidated financial statements include allocated general and administrative charges from TransMontaigne Inc. for indirect corporate overhead to cover costs of
functions such as legal, accounting, treasury, engineering, environmental safety, information technology, and other corporate services (see Note 2 of Notes to consolidated financial
statements). The allocated general and administrative expenses were approximately $2.6 million and $2.5 million for the three months ended September 30, 2010 and 2009,
respectively. The allocated general and administrative expenses were approximately $7.7 million and $7.5 million for the nine months ended September 30, 2010 and 2009,
respectively. The accompanying consolidated financial statements also include allocated insurance charges from TransMontaigne Inc. for insurance premiums to cover costs of insuring activities
such as property, casualty, pollution, automobile, directors' and officers' liability, and other insurable risks. The allocated insurance charges were approximately $0.8 million and
$0.7 million for the three months ended September 30, 2010 and 2009, respectively. The allocated insurance charges were approximately $2.4 million and $2.2 million for the
nine months ended September 30, 2010 and 2009, respectively. Management believes that the allocated general and administrative charges and insurance charges are representative of the costs and
expenses incurred by TransMontaigne Inc. for managing Partners' operations. The accompanying consolidated financial statements also include reimbursement of bonus awards paid to TransMontaigne
Services Inc. towards bonus awards granted by TransMontaigne Services Inc. to certain key officers and employees that vest over future periods. The reimbursement of bonus awards was
approximately $0.3 million and $0.3 million for the three months ended September 30, 2010 and 2009, respectively. The reimbursement of bonus awards was approximately
$0.9 million and $0.9 million for the nine months ended September 30, 2010 and 2009, respectively.

(c)   Accounting for terminal and pipeline operations

In connection with our terminal and pipeline operations, we utilize the accrual method of accounting for revenue and expenses. We generate revenue in our terminal
and pipeline operations from terminaling services fees, transportation fees, management fees and cost reimbursements, fees from other ancillary services and gains from the sale of refined products.
Terminaling services revenue is recognized ratably over the term of the agreement for any up-front fees, 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 throughput; transportation revenue is recognized when the product has been delivered to the customer at the
specified delivery location; management fee revenue and cost reimbursements are recognized as the services are performed or as the costs are

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

(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 plant, which includes buildings, storage
tanks, and pipelines, and 3 to 25 years for 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 may not be recoverable based on expected
undiscounted cash flows attributable to that asset. If an asset is impaired, the impairment loss to be recognized is the excess of the carrying amount of the asset over its estimated fair value.

(f)    Environmental obligations

We accrue for environmental costs that relate to existing conditions caused by past operations when estimable (see Note 9 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, contracts
between us and other potentially responsible parties and adopted regulations and policies. Adjustments to initial estimates are recorded, from time to time, to reflect changing circumstances and
estimates based upon additional information developed in subsequent periods. Estimates of our ultimate liabilities associated with environmental costs are difficult to make with certainty due to the
number of variables involved, including the early stage of investigation at certain sites, the lengthy time frames required to complete remediation, technology changes, alternatives available and the
evolving nature of environmental laws and regulations. We periodically file claims for insurance recoveries of certain environmental remediation costs with our insurance carriers under our
comprehensive liability policies (see Note 5 of Notes to consolidated financial statements). We 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).

TransMontaigne Inc.
indemnified us through May 27, 2010 against certain potential environmental claims, losses and expenses associated with the operation of the Florida and
Midwest terminal facilities and occurring before May 27, 2005, up to a maximum liability not to exceed $15.0 million for this indemnification obligation (see Note 2 of Notes to
consolidated financial statements). TransMontaigne Inc. has agreed to indemnify us through December 31, 2011 against certain potential

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

environmental
claims, losses and expenses associated with the operation of the Brownsville and River terminals and occurring before December 31, 2006, up to a maximum liability not to exceed
$15.0 million for this indemnification obligation (see Note 2 of Notes to consolidated financial statements). TransMontaigne Inc. has agreed to indemnify us through
December 31, 2012 against certain potential environmental claims, losses and expenses associated with the operation of the Southeast terminals and occurring before December 31, 2007, up
to a maximum liability not to exceed $15.0 million for this indemnification obligation (see Note 2 of Notes to consolidated financial statements).

(g)   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. Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" or FASB Accounting Standards Codification ("ASC") 410,
"Asset Retirement and Environmental Obligations," requires 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's fair value. 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 our long-lived assets will become completely obsolete and require dismantlement.
Accordingly, we have not recorded an asset retirement obligation, or corresponding asset, because the future dismantlement and removal dates of our long-lived assets, and the amount of any
associated costs, are indeterminable. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events.

(h)   Equity-based compensation plan

We account for our equity-based compensation awards pursuant to the provisions of Statement of Financial Accounting Standards No. 123 (R), "Share-Based
Payment" or FASB ASC 718, "CompensationStock Compensation." This Statement requires us to measure the cost of services received in exchange for an award of equity instruments based on the
grant-date fair value of the award. That cost will be recognized over the period during which a board member or employee is required to provide service in exchange for the award. We are
required to estimate the number of equity instruments that are expected to vest in measuring the total compensation cost to be recognized over the related service period. Compensation cost is
recognized over the service period on a straight-line basis.

(i)    Foreign currency translation and transactions

The functional currency of Partners and its U.S.-based subsidiaries is the U.S. Dollar. The functional currency of our foreign subsidiaries, including Penn Octane
de Mexico, S. de R.L. de C.V., Termatsal, S. de R.L. de C.V., and Tergas, S. de R.L. de C.V., is the Mexican Peso. The assets and liabilities of our foreign subsidiaries are translated at
period-end rates of exchange, and revenue and

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

expenses
are translated at average exchange rates prevailing for the period. The resulting translation adjustments, net of related income taxes, are recorded as a component of other comprehensive
income
(loss) in partners' equity. Gains and losses from the remeasurement of foreign currency transactions (transactions denominated in a currency other than the entity's functional currency) are included
in the consolidated statements of operations in other income (expenses).

(j)    Accounting for derivative instruments

We account for our derivative instruments pursuant to the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" or FASB ASC 815, "Derivatives and Hedging." This Statement requires us to recognize all derivative instruments at fair value in the consolidated balance sheet 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 unless specific hedge
accounting criteria are elected and met.

At
September 30, 2010 and December 31, 2009, our derivative instruments were limited to an interest rate swap. We have not designated this interest rate swap as a hedge and
therefore the change in the fair value of our interest rate swap is included in the consolidated statements of operations in other income (expenses). The fair value of our interest rate swap is
determined using a pricing model based on the LIBOR swap rate and other observable market data. The fair value was determined after considering the potential impact of collateralization, adjusted to
reflect nonperformance risk of both Wachovia Bank N.A., the counterparty, and us. Our fair value measurement of our interest rate swap utilizes Level 2 inputs as defined by the FASB.

(k)   Income taxes

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

Partners
is a taxable entity under certain U.S. state jurisdictions. We are subject to income taxes in the state of Texas. Certain of our Mexican subsidiaries are corporations for
Mexican tax purposes and, therefore, are subject to Mexican federal and provincial income taxes.

Partners
accounts for U.S. state income taxes and Mexican federal and provincial income taxes under the asset and liability method pursuant to Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" or FASB ASC 740, "Income Taxes." Currently, U.S. state income taxes and Mexican federal and provincial income taxes are not significant.

(l)    Net earnings per limited partner unit

Emerging Issues Task Force ("EITF") Issue 07-4, "Application of the Two-Class Method Under FASB Statement No. 128 to Master Limited
Partnerships" or FASB ASC 260, "Earnings Per Share," addresses the computation of earnings per limited partnership unit for master limited partnerships that consist of publicly traded common units
held by limited partners, a general partner interest, and incentive distribution rights that are accounted for as equity interests. Partners' incentive distribution rights are owned by our general
partner. Distributions are declared from available cash (as defined by

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

our
partnership agreement) and the incentive distribution rights are not entitled to distributions other than from available cash. The consensus states that any excess of distributions over earnings
shall be allocated to the limited partners and general partner interest based on their respective sharing of losses specified in the partnership agreement. Partners has allocated the excess of
distributions over earnings to the limited partners and general partner interest based on their ownership percentages of 98% and 2%, respectively. Incentive distribution rights do not share in losses
under our partnership agreement. The earnings allocable to the general partner interest, including the incentive distribution rights, for the period represents distributions declared after period end
on behalf of the general partner interest and incentive distribution rights less the allocated excess of distributions over earnings for the period (see Note 15 of Notes to consolidated
financial statements).

Basic
earnings per limited partner unit are computed by dividing net earnings allocable to limited partners by the weighted average number of limited partnership units outstanding during
the period, excluding restricted phantom units. Diluted earnings per limited partner unit are computed by dividing net earnings allocable to limited partners by the weighted average number of limited
partnership units outstanding during the period and, when dilutive, restricted phantom units. Net earnings allocable to limited partners are net of the earnings allocable to the general partner
interest including incentive distribution rights.

(2) TRANSACTIONS WITH TRANSMONTAIGNE INC. AND MORGAN STANLEY CAPITAL GROUP

Omnibus Agreement.We have an omnibus agreement with TransMontaigne Inc. that will expire in December 2014, unless extended. Under
the omnibus
agreement we pay TransMontaigne Inc. an administrative fee for the provision of various general and administrative services for our benefit. Effective January 1, 2010, the annual
administrative fee payable to TransMontaigne Inc. is approximately $10.3 million. If we acquire or construct additional facilities, TransMontaigne Inc. will propose a revised
administrative fee covering the provision of services for such additional facilities. If the conflicts committee of our general partner agrees to the revised administrative fee,
TransMontaigne Inc. will provide services for the additional facilities pursuant to the agreement. The administrative fee includes expenses incurred by TransMontaigne Inc. 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 and engineering and other corporate services, to the extent such services are not outsourced by TransMontaigne Inc.

The
omnibus agreement further provides that we pay TransMontaigne Inc. an insurance reimbursement for premiums on insurance policies covering our facilities and operations.
Effective January 1, 2010, the annual insurance reimbursement payable to TransMontaigne Inc. is approximately $3.2 million. We also reimburse TransMontaigne Inc. for direct
operating costs and expenses that TransMontaigne Inc. incurs on our behalf, 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.

We
also agreed to reimburse TransMontaigne Inc. and its affiliates for a portion of the incentive payment grants to key employees of TransMontaigne Inc. and its affiliates
under the TransMontaigne Services Inc. savings and retention plan, provided the compensation committee of our general partner determines that an adequate portion of the incentive payment grants
are allocated to an investment

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Notes to consolidated financial statements (unaudited) (Continued)

(2) TRANSACTIONS WITH TRANSMONTAIGNE INC. AND MORGAN STANLEY CAPITAL GROUP (Continued)

fund
indexed to the performance of our common units. For the year ending December 31, 2010, we have agreed to reimburse TransMontaigne Inc. and its affiliates approximately
$1.3 million.

The
omnibus agreement provides us with a right of first offer to purchase all of TransMontaigne Inc.'s and its subsidiaries' right, title and interest in the Pensacola, Florida
refined petroleum products terminal and any assets acquired in an asset exchange transaction that replace the Pensacola assets. This right of first offer is exercisable through December 2010.

The
omnibus agreement also provides TransMontaigne Inc. a right of first refusal to purchase our assets, provided that TransMontaigne Inc. agrees to pay no less than 105%
of the purchase price offered by the third party bidder. Before we enter into any contract to sell such terminal or pipeline facilities, we must give written notice of all material terms of such
proposed sale to TransMontaigne Inc. TransMontaigne Inc. will then have the sole and exclusive option, for a period of 45 days following receipt of the notice, to purchase the
subject facilities for no less than 105% of the purchase price on the terms specified in the notice.

TransMontaigne Inc.
also has a right of first refusal to contract for the use of any petroleum product storage capacity that (i) is put into commercial service after
January 1, 2008, or (ii) was subject to a terminaling services agreement that expires or is terminated (excluding a contract renewable solely at the option of our customer), provided
that TransMontaigne Inc. agrees to pay 105% of the fees offered by the third party customer.

Environmental Indemnification.In connection with our acquisition of the Florida and Midwest terminals, TransMontaigne Inc.
indemnified us
through May 27, 2010, against certain potential environmental liabilities associated with the operation of the Florida and Midwest terminals that occurred on or prior to May 27, 2005.
TransMontaigne Inc.'s maximum liability for this indemnification obligation was $15.0 million. TransMontaigne Inc. had no obligation to indemnify us for losses until such
aggregate losses exceeded $250,000. TransMontaigne Inc. had 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 and River terminals, TransMontaigne Inc. agreed to indemnify us through December 31, 2011, against certain potential
environmental liabilities associated
with the operation of the Brownsville and River terminals that occurred on or prior to December 31, 2006. Our environmental losses must first exceed $250,000 and TransMontaigne Inc.'s
indemnification obligations are capped at $15.0 million. The cap amount does not apply to any environmental liabilities known to exist as of December 31, 2006. TransMontaigne Inc.
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, TransMontaigne Inc. agreed to indemnify us through December 31, 2012, against certain potential environmental
liabilities associated with the operation of the Southeast terminals that occurred on or prior to December 31, 2007. Our environmental losses must first exceed $250,000 and
TransMontaigne Inc.'s indemnification obligations are capped at $15.0 million. The cap amount does not apply to any environmental liabilities known to exist as of December 31,
2007. TransMontaigne Inc. 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.

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(2) TRANSACTIONS WITH TRANSMONTAIGNE INC. AND MORGAN STANLEY CAPITAL GROUP (Continued)

Terminaling Services AgreementFlorida Terminals and Razorback Pipeline System.We have
a terminaling and transportation services agreement with Morgan Stanley Capital Group relating to our Florida, Mt. Vernon, Missouri and Rogers, Arkansas terminals. Effective June 1, 2008, we
amended the terminaling services agreement to include renewable fuels blending functionality at the Florida Terminals. The initial term expires on May 31, 2014 for the Florida terminals and on
May 31, 2012 for the Razorback pipeline system. After the initial term, the terminaling services agreement will automatically renew for subsequent one-year periods, subject to
either party's right to terminate with six months' notice prior to the end of the initial term or the then current renewal term. Under this agreement, Morgan Stanley Capital Group agreed to throughput
a volume of refined product that will, at the fee and tariff schedule contained in the agreement, result in minimum throughput payments to us of approximately $36.3 million for the contract
year ending May 31, 2010 (approximately $36.6 million for the contract year ending May 31, 2011); with stipulated annual increases in throughput payments each contract year
thereafter. Morgan Stanley Capital Group's minimum annual throughput payment is reduced proportionately for any decrease in storage capacity due to out-of-service tank
capacity.

If
a force majeure event occurs that renders performance impossible with respect to an asset for at least 30 consecutive days, Morgan Stanley Capital Group's obligations would be
temporarily suspended with respect to that asset. If a force majeure event continues for 30 consecutive days or more and results in a diminution in the storage capacity we make available to Morgan
Stanley Capital Group, Morgan Stanley Capital Group's minimum revenue commitment would be reduced proportionately for the duration of the force majeure event.

Morgan
Stanley Capital Group may not assign the terminaling services agreement without our consent. Upon termination of the agreement, Morgan Stanley Capital Group has a right of first
refusal to enter into a new terminaling services agreement with us, provided they pay no less than 105% of the fees offered by any third party.

Terminal Revenue Support AgreementOklahoma City Terminal.We have a terminal revenue support agreement with
TransMontaigne Inc.
that provides that in the event any current third-party terminaling agreement should expire, TransMontaigne Inc. agrees to enter into a terminaling services agreement that will expire no
earlier than November 1, 2012. The terminaling services agreement will provide that TransMontaigne Inc. agrees to throughput such volume of refined product as may be required to
guarantee minimum revenue of approximately $0.8 million per year. If TransMontaigne Inc. fails to meet its minimum revenue commitment in any year, it must pay us the amount of any
shortfall within 15 business days following receipt of an invoice from us. In exchange for TransMontaigne Inc.'s minimum revenue commitment, we will agree to provide TransMontaigne Inc.
approximately 153,000 barrels of light oil storage capacity at our Oklahoma City terminal. TransMontaigne Inc.'s minimum revenue commitment currently is not in effect because a major oil
company is under contract through March 31, 2011, for the utilization of the light oil storage capacity at the terminal.

Terminaling Services AgreementMobile Terminal.We have a terminaling services
agreement with TransMontaigne Inc. that will expire on December 31, 2012. Under this agreement, TransMontaigne Inc. agreed to throughput at our Mobile terminal a volume of refined
products that will, at the fee schedule contained in the agreement, result in minimum revenue to us of approximately $2.5 million for the contract year ending December 31, 2010.

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Notes to consolidated financial statements (unaudited) (Continued)

(2) TRANSACTIONS WITH TRANSMONTAIGNE INC. AND MORGAN STANLEY CAPITAL GROUP (Continued)

Terminaling Services AgreementBrownsville Terminals.We had a terminaling services agreement with Morgan Stanley Capital Group,
relating
to our Brownsville, Texas terminal complex that was terminated effective May 1, 2010. Under this agreement, Morgan Stanley Capital Group agreed to store a specified minimum amount of fuel oils
at our terminals that will result in minimum revenue to us of approximately $2.2 million per year. In exchange for its minimum revenue commitment, we agreed to provide Morgan Stanley Capital
Group a minimum amount of storage capacity for such fuel oils. Effective November 1, 2009, we amended the terminaling services agreement with Morgan Stanley Capital Group to reduce Morgan
Stanley Capital Group's minimum revenue commitment to approximately $1.3 million per year in exchange for Morgan Stanley Capital Group returning approximately 200,000 barrels of storage
capacity. The storage capacity under this agreement is now under contract with third parties.

Terminaling Services AgreementBrownsville LPG.We have a terminaling services agreement with TransMontaigne Inc.
relating
to our Brownsville, Texas facilities that expires on March 31, 2011. In the event that TransMontaigne Inc.'s underlying customer terminates its agreement with TransMontaigne Inc.
prior to March 31, 2011, TransMontaigne Inc. has the right to terminate the terminaling services agreement prior to the end of the initial term by providing us at least 180 days'
prior written notice, provided TransMontaigne Inc. shall pay us an early termination payment based on the remaining term of the agreement, not to exceed $0.2 million. Either party may
terminate the agreement at the end of the initial term without an early termination payment by providing at least 30 days' prior written notice to the other party. After the initial term, the
terminaling services agreement will automatically renew for subsequent one-month periods, subject to either party's right to terminate with thirty days' notice prior to the end of the then
current renewal term. Under this agreement, TransMontaigne Inc. agreed to throughput at our Brownsville facilities certain minimum volumes of natural gas liquids that will result in minimum
revenue to us of approximately $1.3 million per year. In exchange for TransMontaigne Inc.'s minimum throughput commitment, we agreed to provide TransMontaigne Inc. approximately
33,000 barrels of storage capacity at our Brownsville facilities.

Terminaling Services AgreementMatamoros LPG.We have a terminaling services
agreement with TransMontaigne Inc. relating to our natural gas liquids storage facility in Matamoros, Mexico that expires on March 31, 2011. In the event that the Brownsville LPG
agreement between us and TransMontaigne Inc. terminates, this terminaling services agreement will also terminate. Under this agreement, TransMontaigne Inc. agreed to throughput a volume
of natural gas liquids that will, at the fee schedule contained in the agreement, result in minimum throughput payments to us of approximately $0.6 million per year. In exchange for
TransMontaigne Inc.'s minimum throughput payments, we agreed to provide TransMontaigne Inc. approximately 7,000 barrels of natural gas liquids storage capacity.

Terminaling Services AgreementBrownsville and River Terminals.We have a terminaling services agreement with
TransMontaigne Inc.
relating to certain renewable fuels capacity at our Brownsville and River terminals that will expire on May 31, 2012. Under this agreement, TransMontaigne Inc. agreed to throughput at
these terminals certain minimum volumes of renewable fuels that will, at the fee schedule contained in the agreement, result in minimum revenue to us of approximately $0.6 million

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Notes to consolidated financial statements (unaudited) (Continued)

(2) TRANSACTIONS WITH TRANSMONTAIGNE INC. AND MORGAN STANLEY CAPITAL GROUP (Continued)

per
year. In exchange for TransMontaigne Inc.'s minimum throughput commitment, we agreed to provide TransMontaigne Inc. approximately 116,000 barrels of storage capacity at these
terminals.

Terminaling Services AgreementSoutheast Terminals.We have a terminaling services agreement with Morgan Stanley Capital Group
relating
to our Southeast terminals. The terminaling services agreement commenced on January 1, 2008 and has a seven-year term expiring on December 31, 2014, subject to a
seven-year renewal option at the election of Morgan Stanley Capital Group. Under this agreement, Morgan Stanley Capital Group agreed to throughput a volume of refined product at our
Southeast terminals that will, at the fee schedule contained in the agreement, result in minimum throughput payments to us of approximately $33.7 million for the contract year ending
December 31, 2010; with stipulated annual increases in throughput payments each contract year thereafter. Morgan Stanley Capital Group's minimum annual throughput payment is reduced
proportionately for any decrease in storage capacity due to out-of-service tank capacity. In exchange for its minimum throughput commitment, we agreed to provide Morgan Stanley
Capital Group approximately 8.8 million barrels of light oil storage capacity at our Southeast terminals. Under this agreement, we also agreed to undertake certain capital projects to provide
renewable fuels blending functionality at certain of our Southeast terminals with estimated completion dates that extend through June 30, 2011. Upon completion of each of the projects, Morgan
Stanley Capital Group has agreed to pay us an ethanol blending fee. Through September 30, 2010, we had received payments totaling approximately $20.3 million and we expect to receive
future payments through June 30, 2011 from Morgan Stanley Capital Group in the range of $1 million to $4 million.

If
a force majeure event occurs that renders performance impossible with respect to an asset for at least 30 consecutive days, Morgan Stanley Capital Group's obligations would be
temporarily suspended with respect to that asset. If a force majeure event continues for 30 consecutive days or more and results in a diminution in the storage capacity we make available to Morgan
Stanley Capital Group, Morgan Stanley Capital Group's minimum revenue commitment would be reduced proportionately for the duration of the force majeure event.

Morgan
Stanley Capital Group may not assign the terminaling services agreement without our consent.

Terminaling Services AgreementCollins Terminal.In January 2010, we entered into a terminaling services agreement with Morgan
Stanley
Capital Group relating to our Collins, Mississippi facility that will expire seven years following the in-service date of certain tank capacity and other improvements to be constructed by
us, subject to one-year automatic renewals unless terminated by either party upon 180 days notice prior to the end of the then-current renewal term. Under this
agreement, Morgan Stanley Capital Group agreed to throughput a volume of light oil products at our terminal that will, at the fee schedule contained in the agreement, result in minimum throughput
payments to us of approximately $4.1 million for the one-year period following the in-service date and for each contract year thereafter. In exchange for its minimum
revenue commitment, we agreed to undertake certain capital projects to provide an additional 700,000 barrels of light oil capacity and other improvements at the Collins terminal, with estimated
completion to occur on or before August 1, 2011.

If
a force majeure event occurs that renders performance impossible with respect to an asset for at least 30 consecutive days, Morgan Stanley Capital Group's obligations would be
temporarily suspended

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Notes to consolidated financial statements (unaudited) (Continued)

(2) TRANSACTIONS WITH TRANSMONTAIGNE INC. AND MORGAN STANLEY CAPITAL GROUP (Continued)

with
respect to that asset. If a force majeure event continues for 30 consecutive days or more and results in a diminution in the storage capacity we make available to Morgan Stanley Capital Group,
Morgan Stanley Capital Group's minimum revenue commitment would be reduced proportionately for the duration of the force majeure event.

Neither
party may transfer or assign this agreement without the consent of the other party unless such assignment is to an affiliate or, in the case of Partners, a successor in interest
to us or to the Collins terminal.

(3) ACQUISITIONS

Collins and Bainbridge Terminals.On April 27, 2010, we purchased from BP Products North America Inc. ("BP"), two refined
product
terminals with approximately 60,000 barrels and 110,000 barrels of aggregate active storage capacity in Collins, Mississippi and Bainbridge, Georgia, respectively, for cash consideration of
approximately $1.6 million. We previously managed and operated these two refined product terminals that are adjacent to our Southeast facilities and received a reimbursement of their
proportionate share of operating and maintenance costs. These two refined product terminals currently provide integrated terminaling services to Morgan Stanley Capital Group. The accompanying
consolidated financial statements include the assets, liabilities and results of operations of these assets from April 27, 2010.

The
purchase price was allocated to the assets and liabilities acquired based upon the estimated fair value of the assets and liabilities as of the acquisition date. The purchase price
was allocated as follows (in thousands):

Collins and
Bainbridge
TerminalsOther current assets

$
33Property, plant and equipment


2,125Other accrued liabilities


(525
)Cash paid

$
1,633


Other
accrued liabilities include assumed environmental obligations of approximately $0.5 million.

(4) CONCENTRATION OF CREDIT RISK AND TRADE ACCOUNTS RECEIVABLE

Our primary market areas are located in the United States along the Gulf Coast, in the Southeast, in Brownsville, Texas, along the Mississippi and Ohio Rivers, and in the Midwest. We
have a concentration of trade receivable balances due from companies engaged in the trading, distribution and marketing of refined products, crude oil, chemicals, fertilizers and other liquid
products, and the United States government. 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

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Notes to consolidated financial statements (unaudited) (Continued)

(4) CONCENTRATION OF CREDIT RISK AND TRADE ACCOUNTS RECEIVABLE (Continued)

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):

September 30,
2010

December 31,
2009Trade accounts receivable

$
7,355

$
6,711Less allowance for doubtful accounts


(310
)

(394
)$
7,045

$
6,317


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

Three months
ended
September 30,

Nine months
ended
September 30,2010

2009

2010

2009Morgan Stanley Capital Group


61
%

59
%

61
%

57
%TransMontaigne Inc


6
%

6
%

7
%

7
%


(5) OTHER CURRENT ASSETS

Other current assets are as follows (in thousands):

September 30,
2010

December 31,
2009Amounts due from insurance companies

$
3,940

$
4,375Additive detergent


1,880


1,743Deposits and other assets


984


1,588$
6,804

$
7,706


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
September 30, 2010 and December 31, 2009, we have recognized amounts due from insurance companies of approximately $3.9 million and $4.4 million, respectively, representing
our best estimate of our probable insurance recoveries. During the three and nine months ended September 30, 2010, we received reimbursements from insurance companies of approximately
$0.3 million and $2.5 million, respectively. During the three and nine months ended September 30, 2010, we increased our estimate of insurance recoveries approximately
$0.5 million and $2.0 million, respectively, as we assessed the likelihood of recovery was probable related to certain increases in our estimate of environmental remediation obligations
(see Note 9 of Notes to consolidated financial statements).

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Notes to consolidated financial statements (unaudited) (Continued)

(6) PROPERTY, PLANT AND EQUIPMENT, NET

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

September 30,
2010

December 31,
2009Land

$
52,551

$
52,360Terminals, pipelines and equipment


521,378


505,055Furniture, fixtures and equipment


1,305


1,556Construction in progress


11,660


12,278586,894


571,249Less accumulated depreciation


(129,626
)

(111,651
)$
457,268

$
459,598


(7) GOODWILL

Goodwill is as follows (in thousands):

September 30,
2010

December 31,
2009Brownsville terminals (includes approximately $42 and $55, respectively, of foreign currency translation adjustments)

$
16,230

$
16,217River terminals


8,465


8,465$
24,695

$
24,682


The
acquisition of the Brownsville and River terminals from TransMontaigne Inc. has been recorded at TransMontaigne Inc.'s carryover basis in a manner similar to a
reorganization of entities under common control. TransMontaigne Inc.'s carryover basis in the Brownsville and River terminals is derived from the application of pushdown accounting associated
with Morgan Stanley Capital Group's acquisition of TransMontaigne Inc. on September 1, 2006. Goodwill represents the excess of Morgan Stanley Capital Group's aggregate purchase price
over the fair value of the identifiable assets acquired attributable to the Brownsville and River terminals.

Included
in the Brownsville terminals' operating segment is the results of the Mexican LPG operations. The adjusted purchase price for the acquisition of the Mexican LPG
operations from Rio Vista Energy Partners L.P. was allocated to the identifiable assets and liabilities acquired based upon the estimated fair value of the assets and liabilities as of the
acquisition date. Goodwill of approximately $1.5 million was recorded and represents the excess of our adjusted purchase price over the fair value of the identifiable assets acquired
attributable to the Mexican LPG operations.

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 17 of Notes to consolidated financial statements). If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be
impaired. Management exercises judgment in determining the estimated fair values of Partners' reporting units.

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Notes to consolidated financial statements (unaudited) (Continued)

(7) GOODWILL (Continued)

At
December 31, 2009, the fair value of our reporting units with goodwill exceeded their carrying amount. Accordingly, we did not recognize any goodwill impairment charges during
the year ended December 31, 2009. A significant decline in the price of our common units with a resulting increase in our weighted average cost of capital, a loss of a significant customer, an
inability to subscribe available capacity, or an unforeseen increase in the costs to operate and maintain our terminals and pipelines, may result in the recognition of an impairment charge in the
future. Certain of our River terminals have available capacity, which has resulted in a decline in revenue and net margins. While we continue to market available capacity at certain of our River
terminals, if we are unable to subscribe the available capacity in the future, we may conclude the River terminals' goodwill is impaired and recognize an impairment charge up to approximately
$8.5 million.

(8) OTHER ASSETS, NET

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

September 30,
2010

December 31,
2009Amounts due under long-term terminaling services agreements:External customers

$
813

$
1,021Affiliates


3,939


3,4334,752


4,454Deferred financing costs, net of accumulated amortization of $2,883 and $2,434, respectively


747


1,196Customer relationships, net of accumulated amortization of $1,259 and $1,028, respectively


2,440


2,671Deposits and other assets


905


195$
8,844

$
8,516


Amounts due under long-term terminaling services agreements.We have long-term terminaling services agreements with certain
of our customers that provide for minimum payments that increase over the terms of the respective agreements. We recognize as revenue the minimum payments under the long-term terminaling
services agreements on a straight-line basis over the term of the respective agreements. At September 30, 2010 and December 31, 2009, 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 $4.8 million and $4.5 million, respectively.

Deferred financing costs.Deferred financing costs are amortized using the effective interest method over the term of the related
credit facility
(see Note 11 of Notes to consolidated financial statements).

Customer relationships.Our acquisitions from TransMontaigne Inc. have been recorded at TransMontaigne Inc.'s carryover basis
in a
manner similar to a reorganization of entities under common control. Other assets, net include the carryover basis of certain customer relationships at our Brownsville and River terminals. The
carryover basis of the customer relationships is being amortized on a straight-line basis over twelve years.

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Notes to consolidated financial statements (unaudited) (Continued)

(9) ACCRUED LIABILITIES

Accrued liabilities are as follows (in thousands):

September 30,
2010

December 31,
2009Customer advances and deposits:External customers

$
970

$
942Morgan Stanley Capital Group


5,951


5,9246,921


6,866Accrued property taxes


3,169


539Accrued environmental obligations


5,164


5,582Interest payable


185


254Rebate due to Morgan Stanley Capital Group


1,728


465Unrealized loss on derivative instrument


1,963


2,690Accrued expenses and other


1,893


2,839$
21,023

$
19,235


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 September 30, 2010 and December 31, 2009, we have billed and collected from certain of our customers approximately $6.9 million and $6.9 million, respectively, in
advance of the terminaling services being provided.

Accrued environmental obligations.At September 30, 2010 and December 31, 2009, we have accrued environmental obligations of
approximately $5.2 million and $5.6 million, respectively, representing our best estimate of our remediation obligations. During the three and nine months ended September 30,
2010, we made payments of approximately $0.7 million and $3.3 million, respectively, towards our environmental remediation obligations. During the three and nine months ended
September 30, 2010, we increased our remediation obligations by approximately $0.6 million and $2.9 million, respectively, to reflect a change in our estimate of our future
environmental remediation costs. 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.

Rebate due to Morgan Stanley Capital Group.Pursuant to our terminaling services agreement related to the Southeast terminals, we
agreed to rebate to
Morgan Stanley Capital Group 50% of the proceeds we receive annually in excess of $4.2 million from the sale of product gains at our Southeast terminals. At September 30, 2010 and
December 31, 2009, we have accrued a liability due to Morgan Stanley Capital Group of approximately $1.7 million and $0.5 million, respectively. During the three months ended
March 31, 2010, we paid Morgan Stanley Capital Group approximately $0.5 million for the rebate due to Morgan Stanley Capital Group for the year ended December 31, 2009.

Unrealized loss on derivative instrument.Our derivative instrument is limited to an interest rate swap. We manage our interest rate
risk with an
interest rate swap, which reduces our cash exposure to changes in interest rates by converting variable interest rates to fixed interest rates. At September 30, 2010, we have an interest rate
swap agreement with a notional amount of $150.0 million that expires June 2011. Pursuant to the terms of the interest rate swap agreement, we pay a fixed rate of approximately 2.2% and receive
an interest payment based on the one-month LIBOR. The net

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(9) ACCRUED LIABILITIES (Continued)

difference
to be paid or received under the interest rate swap agreement is settled monthly and is recognized as an adjustment to interest expense. During the three months ended September 30,
2010 and 2009, we recognized net payments to the counterparty in the amount of approximately $0.7 million and $0.7 million, respectively, as an adjustment to interest expense. During the
nine months ended September 30, 2010 and 2009, we recognized net payments to the counterparty in the amount of approximately $2.1 million and $1.9 million, respectively, as an
adjustment to interest expense. Our obligations under the interest rate swap agreement are secured by a first priority security interest in our assets, including cash, accounts receivable, inventory,
general intangibles, investment property, contract rights and real property (see Note 11 of Notes to consolidated financial statements). At September 30, 2010 and December 31,
2009, the fair value of the interest rate swap was approximately $2.0 million and $2.7 million, respectively.

(10) OTHER LIABILITIES

Other liabilities are as follows (in thousands):

September 30, 2010

December 31, 2009Deferred revenueethanol blending fees and other projects

$
16,318

$
15,745Advance payments received under long-term terminaling services agreementsMorgan Stanley Capital Group


1,132


1,255$
17,450

$
17,000


Deferred revenueethanol blending fees and other projects.Pursuant to agreements with Morgan Stanley Capital Group, we agreed to
undertake certain capital projects to provide renewable fuels blending functionality at certain of our Southeast terminals and other projects. Upon completion of the projects, Morgan Stanley Capital
Group has agreed to pay us amounts that will be recognized as revenue on a straight-line basis over the remaining term of the agreements. At September 30, 2010 and
December 31, 2009, we have unamortized deferred revenue of approximately $16.3 million and $15.7 million, respectively, for completed projects. During the three and nine months
ended September 30, 2010, we billed Morgan Stanley Capital Group approximately $nil and $3.4 million, respectively, for completed projects. During the three months ended
September 30, 2010 and 2009, we recognized revenue on a straight-line basis of approximately $1.0 million and $0.8 million, respectively, for completed projects.
During the nine months ended September 30, 2010 and 2009, we recognized revenue on a straight-line basis of approximately $2.8 million and $1.7 million, respectively,
for completed projects.

Advance payments received under long-term terminaling services agreementsMorgan Stanley Capital Group.We have
long-term terminaling services agreements with Morgan Stanley Capital Group that provide for advance minimum payments. We recognize the advance minimum payments as revenue on a
straight-line basis over the term of the respective agreements. At September 30, 2010 and December 31, 2009, we have received advance minimum payments in excess of revenue
recognized under these long-term terminaling services agreements resulting in a liability of approximately $1.1 million and $1.3 million, respectively.

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(11) LONG-TERM DEBT

Senior Secured Credit Facility.At September 30, 2010 and December 31, 2009, our outstanding borrowings under the senior
secured credit
facility were approximately $108.0 million and $165.0 million, respectively. At September 30, 2010 and December 31, 2009, our outstanding letters of credit were
approximately $nil at both dates.

The
senior secured credit facility provides for a maximum borrowing line of credit equal to the lesser of (i) $200 million or (ii) four times Consolidated EBITDA (as
defined: $280.6 million at September 30, 2010). In addition, at our request, the revolving loan commitment can be increased up to an additional $100 million, in the aggregate,
without the approval of the lenders, but subject to the approval of the administrative agent and the receipt of additional commitments from one or more lenders. We may elect to have loans under the
senior secured credit facility bear interest either (i) at a rate of LIBOR plus a margin ranging from 1.5% to 2.5% depending on the total leverage ratio then in effect, or (ii) at a base
rate (the greater of (a) the federal funds rate plus 0.5% or (b) the prime rate) plus a margin ranging from 0.5% to 1.5% depending on the total leverage ratio then in effect. We also pay
a commitment fee ranging from 0.3% to 0.5% per annum, depending on the total leverage ratio then in effect, on the total amount of unused commitments. For the three months ended September 30,
2010 and 2009, the weighted average interest rate on borrowings under our senior secured credit facility was approximately 4.3% and 3.6%, respectively. For the nine months ended September 30,
2010 and 2009, the weighted average interest rate on borrowings under our senior secured credit facility was approximately 4.2% and 3.7%, respectively. Our obligations under the senior secured credit
facility are secured by a first priority security interest in favor of the lenders in our assets, including cash, accounts receivable, inventory, general intangibles, investment property, contract
rights and real property. The
terms of the senior secured credit facility include covenants that restrict our ability to make cash distributions and acquisitions. The principal balance of loans and any accrued and unpaid interest
will be due and payable in full on the maturity date, December 22, 2011.

The
senior secured credit facility also contains customary representations and warranties (including those relating to organization and authorization, compliance with laws, absence of
defaults, material agreements and litigation) and customary events of default (including those relating to monetary defaults, covenant defaults, cross defaults and bankruptcy events). The primary
financial covenants contained in the senior secured credit facility are (i) a total leverage ratio test (not to exceed 4.5 times), (ii) a senior secured leverage ratio test (not to
exceed 4.0 times), and (iii) a minimum interest coverage ratio test (not less than 2.75 times). We were in compliance with all of the covenants under our senior secured credit facility as of
September 30, 2010.

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(12) PARTNERS' EQUITY

The number of units outstanding is as follows:

Common
units

Subordinated
units

General
partner unitsUnits outstanding at December 31, 2008


9,952,867


2,491,699


253,971Conversion of subordinated units to common units


2,491,699


(2,491,699
)

Units outstanding at December 31, 2009


12,444,566





253,971Public offering of common units


2,012,500





TransMontaigne GP to maintain its 2% general partner interest








41,071Units outstanding at September 30, 2010


14,457,066





295,042


At
September 30, 2010 and December 31, 2009, common units outstanding include approximately 12,100 and 9,200 common units, respectively, held on behalf of TransMontaigne
Services Inc.'s long-term incentive plan.

Prior
to the expiration of the subordination period or the earlier conversion of the subordinated units following satisfaction of the financial tests set forth in the partnership
agreement, the common units were entitled to receive distributions from operating surplus of $0.40 per unit per quarter, which we refer to as the minimum quarterly distribution, or $1.60 per unit per
year, plus any arrearages in the payment of the minimum quarterly distribution from prior quarters, before any such distributions are paid on our subordinated units. On November 13, 2008,
May 7, 2009 and November 13, 2009, approximately 0.8 million, 0.8 million and 1.7 million subordinated units, respectively, converted into an equal number of common
units.

On
January 15, 2010, we issued, pursuant to an underwritten public offering, 1,750,000 common units representing limited partner interests at a public offering price of $26.60 per
common unit. On January 15, 2010, the underwriters of our secondary offering exercised in full their over-allotment option to purchase an additional 262,500 common units
representing limited partnership interests at a price of $26.60 per common unit. The net proceeds from the offering were approximately $51.0 million, after deducting underwriting discounts,
commissions, and offering expenses of approximately $0.3 million. Additionally, TransMontaigne GP made a cash contribution of approximately $1.1 million to us to maintain its 2%
general partner interest.

(13) LONG-TERM INCENTIVE PLAN

TransMontaigne GP is our general partner and manages our operations and activities. TransMontaigne GP is an indirect wholly owned subsidiary of TransMontaigne Inc.
TransMontaigne Services Inc. is an indirect wholly owned subsidiary of TransMontaigne Inc. TransMontaigne Services Inc. employs the personnel who provide support to
TransMontaigne Inc.'s operations, as well as our operations. TransMontaigne Services Inc. adopted a long-term incentive plan for its employees and consultants and the
independent directors of our general partner. The long-term incentive plan currently permits the grant of awards covering an aggregate of 1,238,463 units, which amount will automatically
increase on an annual basis by 2% of the total outstanding common and subordinated units, if any, at the end of the preceding fiscal year. At September 30, 2010, 1,008,523 units are available
for future grant under the long-term incentive plan. Ownership in the awards is subject to forfeiture until the vesting date, but recipients have distribution and voting rights from the
date of

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(13) LONG-TERM INCENTIVE PLAN (Continued)

grant.
Pursuant to the terms of the long-term incentive plan, all restricted phantom units and restricted common units vest upon a change in control of TransMontaigne Inc. The
long-term incentive plan is administered by the compensation committee of the board of directors of our general partner. On May 7, 2007, we announced a program for the purchase of
outstanding common units on the open market for purposes of making subsequent grants of restricted phantom units to independent directors of our general partner. TransMontaigne GP, on behalf of
the long-term incentive plan, anticipates purchasing annually up to 10,000 common units for this purpose. TransMontaigne GP, on behalf of the long-term incentive plan,
has purchased 6,915 and 5,010 common units pursuant to the program during the nine months ended September 30, 2010 and 2009, respectively. In addition to the foregoing purchases, on
August 10, 2010, we purchased 10,000 common units from TransMontaigne Services Inc. for the purpose of delivering these units to Charles L. Dunlap, the CEO of our general partner, upon
the vesting of an equivalent number of restricted phantom units, which were granted to Mr. Dunlap on August 10, 2009 under the Long-Term Incentive Plan.

Information
about restricted phantom unit activity for the year ended December 31, 2009 and the nine months ended September 30, 2010 is as follows:

Available for
future grant

Restricted
phantom
units

Grant date
priceUnits outstanding at December 31, 2008


564,741


11,000Automatic increase in units available for future grant on January 1, 2009


248,891


Grant on March 31, 2009


(8,000
)

8,000

$
16.77Vesting on March 31, 2009





(3,000
)Grant on August 10, 2009


(40,000
)

40,000

$
24.90Units outstanding at December 31, 2009


765,632


56,000Automatic increase in units available for future grant on January 1, 2010


248,891


Vesting on January 7, 2010





(3,500
)Grant on March 31, 2010


(6,000
)

6,000

$
27.24Vesting on March 31, 2010





(4,000
)Vesting on August 10, 2010





(10,000
)Units outstanding at September 30, 2010


1,008,523


44,500


On
January 7, 2010, we accelerated the vesting of 3,500 restricted phantom units held by Duke R. Ligon as a result of his resignation as a member of the board of directors of our
general partner and then repurchased those units for cash. The aggregate consideration paid to the former director of approximately $98,000 is included in direct general and administrative expenses
for the three months ended March 31, 2010.

On
March 31, 2010, TransMontaigne Services Inc. granted 6,000 restricted phantom units to the independent directors of our general partner. Effective August 10,
2009, Charles L. Dunlap was appointed to serve as Chief Executive Officer ("CEO") of our general partner and President and CEO of TransMontaigne Inc. In connection with his appointments, on
August 10, 2009, TransMontaigne Services Inc. granted Mr. Dunlap 40,000 restricted phantom units under the long-term incentive plan.

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(13) LONG-TERM INCENTIVE PLAN (Continued)

In
accordance with the long-term incentive plan, because Mr. Dunlap continues to provide services to our general partner as an employee, the restricted phantom units previously
granted to Mr. Dunlap for his services as an independent member of the board of directors of our general partner remain in effect and continue to vest in accordance with the
four-year vesting schedule for our independent directors. On March 31, 2009, TransMontaigne Services Inc. granted 8,000 restricted phantom units to the independent directors
of our general partner. Over their respective four-year vesting periods, we will amortize deferred equity-based compensation of approximately $0.2 million, $1.0 million and
$0.1 million, associated with the March 2010, August 2009 and March 2009 grants, respectively.

Deferred
equity-based compensation of approximately $98,000 and $65,000 is included in direct general and administrative expenses for the three months ended September 30, 2010 and
2009, respectively. Deferred equity-based compensation of approximately $287,000 and $119,000 is included in direct general and administrative expenses for the nine months ended September 30,
2010 and 2009, respectively.

(14) COMMITMENTS AND CONTINGENCIES

Contract Commitments.At September 30, 2010, we have contractual commitments of approximately
$15.3 million for the purchase of services, labor and materials related to capital projects that currently are under development. We expect that these contractual commitments will be paid
within one year.

Operating Leases.We lease property and equipment under non-cancelable operating leases that extend through August 2030. At
September 30, 2010, future minimum lease payments under these non-cancelable operating leases are as follows (in thousands):

Years ending December 31:

Property and equipment2010 (remainder of the year)

$
3842011


1,5122012


8522013


7482014


633Thereafter


5,926$
10,055


Rental
expense under operating leases was approximately $450,000 and $460,000 for the three months ended September 30, 2010 and 2009, respectively. Rental expense under operating
leases was approximately $1.2 million and $1.1 million for the nine months ended September 30, 2010 and 2009, respectively.

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(15) NET EARNINGS PER LIMITED PARTNER UNIT

The following table reconciles net earnings to net earnings allocable to limited partners (in thousands):

Three months
ended
September 30,

Nine months
ended
September 30,2010

2009

2010

2009Net earnings

$
10,369

$
5,699

$
30,027

$
20,030Less:Distributions payable on behalf of incentive distribution rights


(588
)

(467
)

(1,764
)

(1,401
)Distributions payable on behalf of general partner interest


(177
)

(150
)

(531
)

(450
)Distributions payable to the general partner interest (less than) in excess of earnings allocable to the general partner interest


(19
)

45


(62
)

77Earnings allocable to general partner interest including incentive distribution rights


(784
)

(572
)

(2,357
)

(1,774
)Net earnings allocable to limited partners

$
9,585

$
5,127

$
27,670

$
18,256


Earnings
allocated to the general partner interest include amounts attributable to the incentive distribution rights. 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 period end. The net earnings allocated to
the general partner interest in the consolidated statements of partners' equity and comprehensive income reflects the earnings allocation included in the table above.

The
following table sets forth the distribution declared per common unit attributable to the periods indicated:

DistributionJanuary 1, 2009 through March 31, 2009

$
0.59April 1, 2009 through June 30, 2009

$
0.59July 1, 2009 through September 30, 2009

$
0.59October 1, 2009 through December 31, 2009

$
0.59January 1, 2010 through March 31, 2010

$
0.60April 1, 2010 through June 30, 2010

$
0.60July 1, 2010 through September 30, 2010

$
0.60


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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(15) NET EARNINGS PER LIMITED PARTNER UNIT (Continued)

The following table reconciles the computation of basic and diluted weighted average units (in thousands):

Three months
ended
September 30,

Nine months
ended
September 30,2010

2009

2010

2009Basic weighted average units


14,446


12,438


14,344


12,439Dilutive effect of restricted phantom units


15


5


11


2Diluted weighted average units


14,461


12,443


14,355


12,441


For
the three and nine months ended September 30, 2010, we included the dilutive effect of approximately 6,000, 30,000, 4,500, 1,000, 2,000 and 1,000 restricted phantom units
granted March 31, 2010, August 10, 2009, March 31, 2009, July 18, 2008, March 31, 2008 and March 31, 2007, respectively, in the computation of diluted
earnings per limited partner unit because the average closing market price of our common units exceeded the related remaining deferred compensation per unvested restricted phantom units. For the three
months ended September 30, 2009, we included the dilutive effect of 40,000, 8,000, 1,500 and 4,500 restricted phantom units granted August 10, 2009, March 31, 2009,
July 18,
2008 and March 31, 2008, respectively, in the computation of diluted earnings per limited partner unit because the average closing market price of our common units exceeded the related
remaining deferred compensation per unvested restricted phantom units. For the nine months ended September 30, 2009, we included the dilutive effect of 8,000 and 1,500 restricted phantom units
granted March 31, 2009 and July 18, 2008, respectively, in the computation of diluted earnings per limited partner unit because the average closing market price of our common units
exceeded the related remaining deferred compensation per unvested restricted phantom units.

We
exclude potentially dilutive securities from our computation of diluted earnings per limited partner unit when their effect would be anti-dilutive. For the three months
ended September 30, 2009, we excluded the dilutive effect of approximately 2,000 restricted phantom units granted March 31, 2007 in the computation of diluted earnings per limited
partner unit because the related remaining deferred compensation per unvested restricted phantom units exceeded the average closing market price of our common units for the period. For the nine months
ended September 30, 2009, we excluded the dilutive effect of approximately 40,000, 4,500 and 2,000 restricted phantom units granted August 10, 2009, March 31, 2008 and
March 31, 2007, respectively, in the computation of diluted earnings per limited partner unit because the related remaining deferred compensation per unvested restricted phantom units exceeded
the average closing market price of our common units for the period.

(16) DISCLOSURES ABOUT FAIR VALUE

Statement of Financial Accounting Standards No. 157, "Fair Value Measurements," or FASB ASC 820, "Fair Value Measurements and Disclosures," defines fair value, establishes
a framework for measuring fair value and expands disclosures about fair value measurements. This statement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value. The three levels of the fair value hierarchy are: (1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
(2) Level 2 inputs are inputs other than quoted prices

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(16) DISCLOSURES ABOUT FAIR VALUE (Continued)

included
within Level 1 that are observable for the asset or liability, either directly or indirectly; and (3) Level 3 inputs 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 September 30, 2010
and December 31, 2009.

Cash and Cash Equivalents, Trade Receivables and Trade Accounts Payable.The carrying amount approximates fair value because of the
short-term maturity of these instruments.

Derivative instrument.The fair value of our interest rate swap is determined using a pricing model based on the LIBOR swap rate and
other observable
market data. The fair value was determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both Wachovia Bank N.A., the counterparty, and us.
Our fair value measurement of our interest rate swap utilizes Level 2 inputs.

Debt.The carrying amount of the senior secured credit facility approximates fair value since borrowings under the senior secured credit
facility
bear interest at current market interest rates.

(17) 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 CEO. Our general partner's CEO 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 and (v) Southeast terminals.

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(17) BUSINESS SEGMENTS (Continued)

The
financial performance of our business segments is as follows (in thousands):

Three months
ended
September 30,

Nine months
ended
September 30,2010

2009

2010

2009Gulf Coast Terminals:Terminaling services fees, net

$
11,624

$
10,990

$
35,006

$
32,156Other


1,482


1,813


5,566


6,231Revenue


13,106


12,803


40,572


38,387Direct operating costs and expenses


(4,871
)

(5,281
)

(14,810
)

(15,813
)Net margins


8,235


7,522


25,762


22,574Midwest Terminals and Pipeline System:Terminaling services fees, net


941


881


2,802


2,724Pipeline transportation fees


533


539


1,570


1,518Other


522


275


1,426


646Revenue


1,996


1,695


5,798


4,888Direct operating costs and expenses


(503
)

(729
)

(1,196
)

(1,769
)Net margins


1,493


966


4,602


3,119Brownsville Terminals:Terminaling services fees, net


4,128


3,838


11,235


11,134Pipeline transportation fees


641


380


1,982


1,587Other


1,415


1,155


4,116


3,633Revenue


6,184


5,373


17,333


16,354Direct operating costs and expenses


(3,123
)

(2,662
)

(9,256
)

(8,522
)Net margins


3,061


2,711


8,077


7,832River Terminals:Terminaling services fees, net


3,725


4,050


11,123


13,082Other


99


276


265


461Revenue


3,824


4,326


11,388


13,543Direct operating costs and expenses


(1,969
)

(2,663
)

(5,502
)

(6,379
)Net margins


1,855


1,663


5,886


7,164Southeast Terminals:Terminaling services fees, net


10,601


9,937


31,292


28,887Other


1,788


1,236


5,052


3,562Revenue


12,389


11,173


36,344


32,449Direct operating costs and expenses


(4,372
)

(5,580
)

(13,171
)

(15,406
)Net margins


8,017


5,593


23,173


17,043Total net margins


22,661


18,455


67,500


57,732Direct general and administrative expenses


(622
)

(606
)

(2,196
)

(2,410
)Allocated general and administrative expenses


(2,578
)

(2,510
)

(7,734
)

(7,530
)Allocated insurance expense


(796
)

(725
)

(2,388
)

(2,175
)Reimbursement of bonus awards


(313
)

(309
)

(939
)

(927
)Depreciation and amortization


(7,006
)

(6,541
)

(20,832
)

(19,346
)Gain on disposition of assets











1Operating income


11,346


7,764


33,411


25,345Other income (expenses), net


(977
)

(2,065
)

(3,384
)

(5,315
)Net earnings

$
10,369

$
5,699

$
30,027

$
20,030


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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(17) BUSINESS SEGMENTS (Continued)

Supplemental information about our business segments is summarized below (in thousands):

Three months ended September 30, 2010Gulf Coast
Terminals

Midwest
Terminals and
Pipeline System

Brownsville
Terminals

River
Terminals

Southeast
Terminals

TotalRevenue:External customers

$
2,792

$
426

$
5,040

$
3,247

$
788

$
12,293Morgan Stanley Capital Group


9,264


1,570





507


11,601


22,942TransMontaigne Inc.


1,050





1,144


70





2,264Total revenue

$
13,106

$
1,996

$
6,184

$
3,824

$
12,389

$
37,499Identifiable assets

$
144,181

$
11,331

$
80,225

$
61,545

$
184,861

$
482,143Capital expenditures

$
1,364

$
61

$
1,212

$
88

$
2,313

$
5,038




Three months ended September 30, 2009Gulf Coast
Terminals

Midwest
Terminals and
Pipeline System

Brownsville
Terminals

River
Terminals

Southeast
Terminals

TotalRevenue:External customers

$
2,748

$
366

$
4,289

$
3,961

$
885

$
12,249Morgan Stanley Capital Group


8,908


1,329


85


301


10,288


20,911TransMontaigne Inc.


1,147





999


64





2,210Total revenue

$
12,803

$
1,695

$
5,373

$
4,326

$
11,173

$
35,370Identifiable assets

$
144,611

$
11,913

$
77,314

$
67,210

$
182,080

$
483,128Capital expenditures

$
2,635

$
36

$
388

$
215

$
1,682

$
4,956




Nine months ended September 30, 2010Gulf Coast
Terminals

Midwest
Terminals and
Pipeline System

Brownsville
Terminal

River
Terminals

Southeast
Terminals

TotalRevenue:External customers

$
8,549

$
1,404

$
13,555

$
9,730

$
2,501

$
35,739Morgan Stanley Capital Group


28,695


4,394


31


1,460


33,843


68,423TransMontaigne Inc.


3,328





3,747


198





7,273Total revenue

$
40,572

$
5,798

$
17,333

$
11,388

$
36,344

$
111,435Identifiable assets

$
144,181

$
11,331

$
80,225

$
61,545

$
184,861

$
482,143Capital expenditures

$
4,111

$
61

$
5,208

$
47

$
9,127

$
18,554


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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (unaudited) (Continued)

(17) BUSINESS SEGMENTS (Continued)



Nine months ended September 30, 2009Gulf Coast
Terminals

Midwest
Terminals and
Pipeline System

Brownsville
Terminals

River
Terminals

Southeast
Terminals

TotalRevenue:External customers

$
8,553

$
1,158

$
12,738

$
12,958

$
2,637

$
38,044Morgan Stanley Capital Group


26,620


3,730


148


367


29,812


60,677TransMontaigne Inc.


3,214





3,468


218





6,900Total revenue

$
38,387

$
4,888

$
16,354

$
13,543

$
32,449

$
105,621Identifiable assets

$
144,611

$
11,913

$
77,314

$
67,210

$
182,080

$
483,128Capital expenditures

$
14,873

$
181

$
5,129

$
487

$
8,755

$
29,425


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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary of the significant accounting policies that we have adopted and followed in the preparation of our consolidated financial
statements is detailed in our consolidated financial statements for the year ended December 31, 2009, included in our Annual Report on Form 10-K filed on March 8, 2010
(see Note 1 of Notes to consolidated financial statements). Certain of these accounting policies require the use of estimates. The following estimates, in management's opinion, are subjective
in nature, require the exercise of judgment, and involve complex analyses: allowance for doubtful accounts, accrued environmental obligations and determining
the fair value of our reporting units when performing our annual goodwill impairment analysis. These estimates are based on our knowledge and understanding of current conditions and actions we may
take in the future. Changes in these estimates will occur as a result of the passage of time and the occurrence of future events. Subsequent changes in these estimates may have a significant impact on
our financial condition and results of operations.

REGULATORY MATTERS

Our general partner is an indirect wholly-owned subsidiary of Morgan Stanley Capital Group Inc., which, in turn, is a
wholly-owned subsidiary of Morgan Stanley. Morgan Stanley is a "bank holding company," subject to consolidated supervision and regulation by the Board of Governors of the Federal Reserve System under
the Bank Holding Company Act, as amended. Morgan Stanley qualifies as a bank holding company that is a "financial holding company."

On
July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama. The Dodd-Frank Act contains various
provisions that affect financial firms, including financial holding companies, and amend various existing laws, including the Bank Holding Company Act. The Dodd-Frank Act and the Bank
Holding Company Act, among other laws, contain restrictions and prohibitions on the activities and investments of financial holding companies. Various regulatory agencies, including the Federal
Reserve Board, are required to issue regulations that carry out the intent of the Dodd-Frank Act's provisions. The Dodd-Frank Act is a part of a trend to increase regulatory
supervision of the financial industry.

As
a result of this trend for increased regulatory supervision, it is possible that legislative or regulatory changes may be made that would adversely affect Morgan Stanley's ability or
business strategy to own and operate our general partner and to operate Partners. In addition, the Federal Reserve Board could conclude in the future that certain activities or investments will not be
deemed permissible under the Bank Holding Company Act for any specific institution that is deemed to be systemically important, or for financial holding companies generally.

We
cannot predict whether any such future legislation or regulation would adversely affect Morgan Stanley's ability to continue its physical energy trading activities or business
strategy to continue to maintain its ownership of our general partner, or if such activities will otherwise be grandfathered under the Bank Holding Company Act. In addition, we are currently unable to
predict whether any future changes in the statutes and regulations governing the activities of financial holding companies would have a material adverse impact on our financial condition or results of
operations.

SIGNIFICANT DEVELOPMENTS DURING THE THREE MONTHS ENDED SEPTEMBER 30, 2010

On July 16, 2010, we announced a distribution of $0.60 per unit for the period from April 1, 2010 through June 30,
2010, payable on August 10, 2010 to unitholders of record on July 30, 2010.

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SUBSEQUENT EVENTS

On October 15, 2010, we announced a distribution of $0.60 per unit for the period from July 1, 2010 through
September 30, 2010, payable on November 9, 2010 to unitholders of record on October 29, 2010.

On
October 26, 2010, Jay A. Wiese was appointed to serve as a director of our general partner. The board of directors of our general partner has determined that Mr. Wiese
qualifies as an independent director under the applicable listing standards of the New York Stock Exchange. Mr. Wiese will also serve as a member of the Conflicts Committee of the general
partner. 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.
Mr. Wiese holds a Bachelor of Science degree in Business from Oklahoma State University where Mr. Wiese is on the Foundation's Board of Governors and a member of the Investment
Committee.

RESULTS OF OPERATIONSTHREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

The following discussion and analysis of the results of operations and financial condition should be read in conjunction with the
accompanying unaudited consolidated financial statements.

ANALYSIS OF REVENUE

Total Revenue.We derive revenue from our terminal and pipeline transportation operations by charging fees for providing
integrated terminaling,
transportation and related services. Our total revenue by category was as follows (in thousands):

Total Revenue by Category

Three months ended
September 30,2010

2009Terminaling services fees, net

$
31,019

$
29,696Pipeline transportation fees


1,174


919Management fees and reimbursed costs


527


547Other


4,779


4,208Revenue

$
37,499

$
35,370


See
discussion below for a detailed analysis of terminaling services fees, net, pipeline transportation fees, management fees and reimbursed costs, and other revenue included in the
table above.

We
operate our business and report our results of operations in five principal business segments: (i) Gulf Coast terminals, (ii) Midwest terminals and pipeline system,
(iii) Brownsville terminals,

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(iv) River
terminals and (v) Southeast terminals. The aggregate revenue of each of our business segments was as follows (in thousands):

Total Revenue by Business Segment

Three months ended
September 30,2010

2009Gulf Coast terminals

$
13,106

$
12,803Midwest terminals and pipeline system


1,996


1,695Brownsville terminals


6,184


5,373River terminals


3,824


4,326Southeast terminals


12,389


11,173Revenue

$
37,499

$
35,370


Total
revenue by business segment is presented and further analyzed below by category of revenue.

Terminaling Services Fees, Net.Pursuant to terminaling services agreements with our customers, which range from one month to
ten years in duration,
we generate fees by distributing and storing products for our customers. Terminaling services fees, net include throughput fees based on the volume of product distributed from the facility, injection
fees based on the volume of product injected with additive compounds and storage fees based on a rate per barrel of storage capacity per month. The terminaling services fees, net by business segments
were as follows (in thousands):

Terminaling Services Fees, Net, by Business Segment

Three months ended
September 30,2010

2009Gulf Coast terminals

$
11,624

$
10,990Midwest terminals and pipeline system


941


881Brownsville terminals


4,128


3,838River terminals


3,725


4,050Southeast terminals


10,601


9,937Terminaling services fees, net

$
31,019

$
29,696


The
increase in terminaling services fees, net includes an increase of approximately $0.6 million resulting from newly constructed tank capacity placed into service at certain of
our Gulf Coast terminals, an increase of approximately $0.2 million resulting from completion of ethanol blending functionality at certain of our Southeast terminals, and an increase of
approximately $0.2 million resulting from our April 27, 2010 purchase of two refined product terminals that are adjacent to our Collins, Mississippi and Bainbridge, Georgia terminals in
the Southeast. These increases have been partially offset by a decline in terminaling services fees, net at certain of our River terminals due to unsubscribed capacity.

Included
in terminaling services fees, net for the three months ended September 30, 2010 and 2009 are fees recognized from agreements with Morgan Stanley Capital Group of
approximately $19.3 million
and $17.7 million, respectively, and TransMontaigne Inc. of approximately $1.5 million and $1.8 million, respectively.

Our
terminaling services agreements are structured as either throughput agreements or storage agreements. Certain throughput agreements contain provisions that require our customers to

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throughput
a minimum volume of product at our facilities over a stipulated period of time, which results in a fixed amount of revenue to be recognized by us. Our storage agreements require our
customers to make minimum payments based on the volume of storage capacity available to the customer under the agreement, which results in a fixed amount of revenue to be recognized by us. We refer to
the fixed amount of revenue recognized pursuant to our terminaling services agreements as being "firm commitments." Revenue recognized in excess of firm commitments and revenue recognized based solely
on the volume of product distributed or injected are referred to as "variable." The "firm commitments" and "variable" revenue included in terminaling services fees, net were as follows (in thousands):

Firm Commitments and Variable Revenue

Three months ended
September 30,2010

2009Firm commitments:External customers

$
9,155

$
8,973Affiliates


20,694


19,499Total


29,849


28,472Variable:External customers


1,075


1,283Affiliates


95


(59
)Total


1,170


1,224Terminaling services fees, net

$
31,019

$
29,696


At
September 30, 2010, the remaining terms on the terminaling services agreements that generated "firm commitments" for the three months ended September 30, 2010 were as
follows (in thousands):

At
September 30,
2010Remaining terms on terminaling services agreements that generated "firm commitments":Less than 1 year remaining

$
4,725More than 1 year but less than 3 years remaining


5,643More than 3 years but less than 5 years remaining


19,079More than 5 years remaining


402Total firm commitments for the three months ended September 30, 2010

$
29,849


Pipeline Transportation Fees.We earn pipeline transportation fees at our Razorback pipeline and Diamondback pipeline based on
the volume of product
transported and the distance from the origin point to the delivery point. The Federal Energy Regulatory Commission regulates the tariff on the

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Razorback
pipeline and the Diamondback pipeline. The pipeline transportation fees by business segments were as follows (in thousands):

Pipeline Transportation Fees by Business Segment

Three months
ended
September 30,2010

2009Gulf Coast terminals

$


$
Midwest terminals and pipeline system


533


539Brownsville terminals


641


380River terminals





Southeast terminals





Pipeline transportation fees

$
1,174

$
919


Included
in pipeline transportation fees for the three months ended September 30, 2010 and 2009 are fees charged to Morgan Stanley Capital Group of approximately
$0.5 million and $0.5 million, respectively, and TransMontaigne Inc. of approximately $0.7 million and $0.4 million, respectively.

Management Fees and Reimbursed Costs.We manage and operate for a major oil company certain tank capacity at our Port Everglades
(South) terminal and
receive reimbursement of their proportionate share of operating and maintenance costs. We manage and operate for an affiliate of Mexico's state-owned petroleum company a bi-directional
products pipeline connected to our Brownsville, Texas terminal facility and receive a management fee and reimbursement of costs. Prior to
April 27, 2010, we also managed and operated for another major oil company two terminals that are adjacent to our Southeast facilities and received a reimbursement of their proportionate share
of operating and maintenance costs. On April 27, 2010, we purchased the two terminals that were adjacent to our Southeast facilities. The management fees and reimbursed costs by business
segments were as follows (in thousands):

Management Fees and Reimbursed Costs by Business Segment

Three months
ended
September 30,2010

2009Gulf Coast terminals

$
34

$
21Midwest terminals and pipeline system





Brownsville terminals


492


435River terminals





Southeast terminals


1


91Management fees and reimbursed costs

$
527

$
547


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Other Revenue.We provide ancillary services including heating and mixing of stored products, product transfer services, railcar
handling, wharfage
fees and vapor recovery fees. Pursuant to terminaling services agreements with our throughput customers, we are entitled to the volume of product gained resulting from differences in the measurement
of product volumes received and distributed at our terminaling facilities. Consistent with recognized industry practices, measurement differentials occur as the result of the inherent variances in
measurement devices and methodology. We recognize as revenue the net proceeds from the sale of the product gained. Other revenue is composed of the following (in thousands):

Principal Components of Other Revenue

Three months
ended
September 30,2010

2009Product gains, net

$
2,902

$
2,122Steam heating fees


851


782Product transfer services


360


199Railcar handling


138


231Other


528


874Other revenue

$
4,779

$
4,208


For
the three months ended September 30, 2010 and 2009, we sold approximately 42,000 and 27,300 barrels, respectively, of product gained resulting from differences in the
measurement of product volumes received and distributed at our terminaling facilities at average prices of $86 and $81 per barrel, respectively. Pursuant to our terminaling services agreement related
to the Southeast terminals, we agreed to rebate to Morgan Stanley Capital Group 50% of the proceeds we receive annually in excess of $4.2 million from the sale of product gains at our Southeast
terminals. For the three months ended September 30, 2010 and 2009, we have accrued a liability due to Morgan Stanley Capital Group of approximately $0.7 million and $0.1 million,
respectively.

Included
in other revenue for the three months ended September 30, 2010 and 2009 are amounts charged to Morgan Stanley Capital Group of approximately $3.1 million and
$2.7 million, respectively, and TransMontaigne Inc. of approximately $0.1 million and $nil, respectively.

The
other revenue by business segments were as follows (in thousands):

Other Revenue by Business Segment

Three months
ended
September 30,2010

2009Gulf Coast terminals

$
1,448

$
1,792Midwest terminals and pipeline system


522


275Brownsville terminals


923


720River terminals


99


276Southeast terminals


1,787


1,145Other revenue

$
4,779

$
4,208


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ANALYSIS OF COSTS AND EXPENSES

Costs and Expenses.The direct operating costs and expenses of our operations include the directly related wages and employee
benefits, utilities,
communications, maintenance and repairs, property taxes, rent, vehicle expenses, environmental compliance costs, materials and supplies. The direct operating costs and expenses of our operations were
as follows (in thousands):

Direct Operating Costs and Expenses

Three months
ended
September 30,2010

2009Wages and employee benefits

$
5,507

$
5,415Utilities and communication charges


1,845


1,834Repairs and maintenance


4,188


6,710Office, rentals and property taxes


1,775


1,674Vehicles and fuel costs


272


267Environmental compliance costs


785


713Other


466


302Direct operating costs and expenses

$
14,838

$
16,915


The
direct operating costs and expenses of our business segments were as follows (in thousands):

Direct Operating Costs and Expenses by Business Segment

Three months
ended
September 30,2010

2009Gulf Coast terminals

$
4,871

$
5,281Midwest terminals and pipeline system


503


729Brownsville terminals


3,123


2,662River terminals


1,969


2,663Southeast terminals


4,372


5,580Direct operating costs and expenses

$
14,838

$
16,915


The
direct general and administrative expenses of our operations include accounting and legal costs associated with annual and quarterly reports and tax return and
Schedule K-1 preparation and

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distribution,
independent director fees and deferred equity-based compensation. Direct general and administrative expenses were as follows (in thousands):

Direct General and Administrative Expenses

Three months
ended
September 30,2010

2009Accounting and tax expenses

$
198

$
223Legal expenses


147


85Independent director fees and investor relations expenses


52


60Deferred equity-based compensation


98


65Income tax expense


70


114Other


57


59Direct general and administrative expenses

$
622

$
606


The
accompanying consolidated financial statements include allocated general and administrative charges from TransMontaigne Inc. for allocations of indirect
corporate overhead to cover costs of 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 allocated general and administrative expenses were approximately $2.6 million and
$2.5 million for the three months ended September 30, 2010 and 2009, respectively.

The
accompanying consolidated financial statements also include allocated insurance charges from TransMontaigne Inc. for allocations of insurance premiums to cover costs of
insuring activities such as property, casualty, pollution, automobile, directors' and officers' liability, and other insurable risks. The allocated insurance expenses were approximately
$0.8 million and $0.7 million for the three months ended September 30, 2010 and 2009, respectively.

The
accompanying consolidated financial statements also include amounts paid to TransMontaigne Services Inc. as a partial reimbursement of bonus awards granted by TransMontaigne
Services Inc. to certain key officers and employees that vest over future service periods. The reimbursement of bonus awards was approximately $0.3 million and $0.3 million for
the three months ended September 30, 2010 and 2009, respectively.

For
the three months ended September 30, 2010 and 2009, depreciation and amortization expense was approximately $7.0 million and $6.5 million, respectively.

RESULTS OF OPERATIONSNINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

The following discussion and analysis of the results of operations and financial condition should be read in conjunction with the
accompanying unaudited consolidated financial statements.

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ANALYSIS OF REVENUE

Total Revenue.We derive revenue from our terminal and pipeline transportation operations by charging fees for providing
integrated terminaling,
transportation and related services. Our total revenue by category was as follows (in thousands):

Total Revenue by Category

Nine months
ended
September 30,2010

2009Terminaling services fees, net

$
91,458

$
87,983Pipeline transportation fees


3,552


3,105Management fees and reimbursed costs


1,581


1,524Other


14,844


13,009Revenue

$
111,435

$
105,621


The
aggregate revenue of each of our business segments was as follows (in thousands):

Total Revenue by Business Segment

Nine months
ended
September 30,2010

2009Gulf Coast terminals

$
40,572

$
38,387Midwest terminals and pipeline system


5,798


4,888Brownsville terminals


17,333


16,354River terminals


11,388


13,543Southeast terminals


36,344


32,449Revenue

$
111,435

$
105,621


Terminaling Services Fees, Net.Pursuant to terminaling services agreements with our customers, which range from one month to
ten years in duration,
we generate fees by distributing and storing products for our customers. Terminaling services fees, net include throughput fees based on the volume of product distributed from the facility, injection
fees based on the volume of product injected with additive compounds and storage fees based on a rate per barrel of storage capacity per month. The terminaling services fees, net by business segments
were as follows (in thousands):

Terminaling Services Fees, Net, by Business Segment

Nine months
ended
September 30,2010

2009Gulf Coast terminals

$
35,006

$
32,156Midwest terminals and pipeline system


2,802


2,724Brownsville terminals


11,235


11,134River terminals


11,123


13,082Southeast terminals


31,292


28,887Terminaling services fees, net

$
91,458

$
87,983


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The
increase in terminaling services fees, net includes an increase of approximately $2.6 million resulting from newly constructed tank capacity placed into service at certain of
our Gulf Coast terminals, an increase of approximately $1.1 million resulting from completion of ethanol blending functionality at certain of our Southeast terminals, and an increase of
approximately $0.3 million resulting from our April 27, 2010 purchase of two refined product terminals that are adjacent to our Collins, Mississippi
and Bainbridge, Georgia terminals in the Southeast. These increases have been partially offset by a decline in terminaling services fees, net at certain of our River terminals due to unsubscribed
capacity.

Included
in terminaling services fees, net for the nine months ended September 30, 2010 and 2009 are fees recognized from agreements with Morgan Stanley Capital Group of
approximately $57.3 million and $50.9 million, respectively, and TransMontaigne Inc. of approximately $4.9 million and $5.2 million, respectively.

Our
terminaling services agreements are structured as either throughput agreements or storage agreements. Certain throughput agreements contain provisions that require our customers to
throughput a minimum volume of product at our facilities over a stipulated period of time, which results in a fixed amount of revenue to be recognized by us. Our storage agreements require our
customers to make minimum payments based on the volume of storage capacity available to the customer under the agreement, which results in a fixed amount of revenue to be recognized by us. We refer to
the fixed amount of revenue recognized pursuant to our terminaling services agreements as being "firm commitments." Revenue recognized in excess of firm commitments and revenue recognized based solely
on the volume of product distributed or injected are referred to as "variable." The "firm commitments" and "variable" revenue included in terminaling services fees, net were as follows (in thousands):

Firm Commitments and Variable Revenue

Nine months
ended
September 30,2010

2009Firm commitments:External customers

$
26,492

$
28,021Affiliates


62,312


56,853Total


88,804


84,874Variable:External customers


2,736


3,863Affiliates


(82
)

(754
)Total


2,654


3,109Terminaling services fees, net

$
91,458

$
87,983


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At September 30, 2010, the remaining terms on the terminaling services agreements that generated "firm commitments" for the nine months ended
September 30, 2010 were as follows (in thousands):

At
September 30,
2010Remaining terms on terminaling services agreements that generated "firm commitments":Less than 1 year remaining

$
14,601More than 1 year but less than 3 years remaining


16,682More than 3 years but less than 5 years remaining


56,330More than 5 years remaining


1,191Total firm commitments for the nine months ended September 30, 2010

$
88,804


Pipeline Transportation Fees.We earn pipeline transportation fees at our Razorback pipeline and Diamondback pipeline based on
the volume of product
transported and the distance from the origin point to the delivery point. The Federal Energy Regulatory Commission regulates the tariff on the Razorback pipeline and the Diamondback pipeline. The
pipeline transportation fees by business segments were as follows (in thousands):

Pipeline Transportation Fees by Business Segment

Nine months
ended
September 30,2010

2009Gulf Coast terminals

$


$
Midwest terminals and pipeline system


1,570


1,518Brownsville terminals


1,982


1,587River terminals





Southeast terminals





Pipeline transportation fees

$
3,552

$
3,105


Included
in pipeline transportation fees for the nine months ended September 30, 2010 and 2009 are fees charged to Morgan Stanley Capital Group of approximately
$1.6 million and $1.5 million, respectively, and TransMontaigne Inc. of approximately $2.0 million and $1.6 million, respectively.

Management Fees and Reimbursed Costs.We manage and operate for a major oil company certain tank capacity at our Port Everglades
(South) terminal and
receive reimbursement of their proportionate share of operating and maintenance costs. We manage and operate for an affiliate of Mexico's state-owned petroleum company a bi-directional
products pipeline connected to our Brownsville, Texas terminal facility and receive a management fee and reimbursement of costs. Prior to April 27, 2010, we also managed and operated for
another major oil company two terminals that are adjacent to our Southeast facilities and received a reimbursement of their proportionate share of operating and maintenance costs. On April 27,
2010, we purchased the two terminals that were adjacent to our

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Southeast
facilities. The management fees and reimbursed costs by business segments were as follows (in thousands):

Management Fees and Reimbursed Costs by Business Segment

Nine months
ended
September 30,2010

2009Gulf Coast terminals

$
74

$
45Midwest terminals and pipeline system





Brownsville terminals


1,388


1,239River terminals





Southeast terminals


119


240Management fees and reimbursed costs

$
1,581

$
1,524


Other Revenue.We provide ancillary services including heating and mixing of stored products, product transfer services, railcar
handling, wharfage
fees and vapor recovery fees. Pursuant to terminaling services agreements with our throughput customers, we are entitled to the volume of product gained resulting from differences in the measurement
of product volumes received and distributed at our terminaling facilities. Consistent with recognized industry practices, measurement differentials occur as the result of the inherent variances in
measurement devices and methodology. We recognize as revenue the net proceeds from the sale of the product gained. Other revenue is composed of the following (in thousands):

Principal Components of Other Revenue

Nine months
ended
September 30,2010

2009Product gains, net

$
8,558

$
6,156Steam heating fees


3,263


2,766Product transfer services


929


560Railcar handling


443


923Other


1,651


2,604Other revenue

$
14,844

$
13,009


For
the nine months ended September 30, 2010 and 2009, we sold approximately 114,300 and 92,300 barrels, respectively, of product gained resulting from differences in the
measurement of product volumes received and distributed at our terminaling facilities at average prices of $90 and $68 per barrel, respectively. Pursuant to our terminaling services agreement related
to the Southeast terminals, we agreed to rebate to Morgan Stanley Capital Group 50% of the proceeds we receive annually in excess of $4.2 million from the sale of product gains at our Southeast
terminals. For the nine months ended September 30, 2010 and 2009, we have accrued a liability due to Morgan Stanley Capital Group of approximately $1.7 million and $0.1 million,
respectively.

Included
in other revenue for the nine months ended September 30, 2010 and 2009 are amounts charged to Morgan Stanley Capital Group of approximately $9.5 million and
$8.3 million, respectively, and TransMontaigne Inc. of approximately $0.4 million and $0.1 million, respectively.

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The
other revenue by business segments were as follows (in thousands):

Other Revenue by Business Segment

Nine months ended
September 30,2010

2009Gulf Coast terminals

$
5,492

$
6,186Midwest terminals and pipeline system


1,426


646Brownsville terminals


2,728


2,394River terminals


265


461Southeast terminals


4,933


3,322Other revenue

$
14,844

$
13,009


ANALYSIS OF COSTS AND EXPENSES

Costs and Expenses.The direct operating costs and expenses of our operations were as follows (in thousands):

Direct Operating Costs and Expenses

Nine months ended
September 30,2010

2009Wages and employee benefits

$
16,912

$
15,832Utilities and communication charges


6,119


5,708Repairs and maintenance


10,627


17,176Office, rentals and property taxes


5,379


5,031Vehicles and fuel costs


992


748Environmental compliance costs


2,627


2,387Other


1,279


1,007Direct operating costs and expenses

$
43,935

$
47,889


The
direct operating costs and expenses of our business segments were as follows (in thousands):

Direct Operating Costs and Expenses by Business Segment

Nine months ended
September 30,2010

2009Gulf Coast terminals

$
14,810

$
15,813Midwest terminals and pipeline system


1,196


1,769Brownsville terminals


9,256


8,522River terminals


5,502


6,379Southeast terminals


13,171


15,406Direct operating costs and expenses

$
43,935

$
47,889


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Direct
general and administrative expenses were as follows (in thousands):

Direct General and Administrative Expenses

Nine months
ended
September 30,2010

2009Accounting and tax expenses

$
912

$
1,005Legal expenses


382


570Independent director fees and investor relations expenses


303


228Deferred equity-based compensation


287


119Income tax expense


140


249Other


172


239Direct general and administrative expenses

$
2,196

$
2,410


The
allocated general and administrative expenses were approximately $7.7 million and $7.5 million for the nine months ended September 30, 2010 and 2009,
respectively.

The
allocated insurance expenses were approximately $2.4 million and $2.2 million for the nine months ended September 30, 2010 and 2009, respectively.

The
reimbursement of bonus awards was approximately $0.9 million and $0.9 million for the nine months ended September 30, 2010 and 2009, respectively.

For
the nine months ended September 30, 2010 and 2009, depreciation and amortization expense was approximately $20.8 million and $19.3 million, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs are to fund our working capital requirements, distributions to unitholders and capital expenditures. We
anticipate an increase in our working capital requirements during the fourth quarter of 2010 in order to fund scheduled repairs and maintenance projects across our terminaling and transportation
facilities. We believe that we will be able to generate sufficient cash from annual operations to fund our future working capital requirements and our distributions to unitholders. We expect to fund
our capital expenditures with additional borrowings under our senior secured credit facility.

On
January 15, 2010, we issued, pursuant to an underwritten public offering, 1,750,000 common units representing limited partner interests at a public offering price of $26.60 per
common unit. On January 15, 2010, the underwriters of our secondary offering exercised in full their over-allotment option to purchase an additional 262,500 common units
representing limited partnership interests at a price of $26.60 per common unit. The net proceeds from the offering were approximately $51.0 million, after deducting underwriting discounts,
commissions, and offering expenses of approximately $0.3 million. Additionally, TransMontaigne GP made a cash contribution of approximately $1.1 million to us to maintain its 2%
general partner interest. The net proceeds from the offering and cash contribution were used to repay outstanding borrowings under our senior secured credit facility.

Excluding
acquisitions, our capital expenditures for the nine months ended September 30, 2010 were approximately $16.4 million for terminal and pipeline facilities and
assets to support these facilities. Management and the board of directors of our general partner approved capital projects that currently are or will be under construction with estimated completion
dates that extend through August 1, 2011. At September 30, 2010, the remaining expansion capital expenditures to complete the approved capital projects are estimated to range from
$16 million to $19 million. We expect to fund

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our
expansion capital expenditures with additional borrowings under our senior secured credit facility. The budgeted capital projects include the following:

Terminal

Description of project

Incremental
storage
capacity

Expected
completion(in Bbls)Southeast

Renewable fuels blending functionality




1st half 2011Brownsville

Build truck rack




In-serviceCollins/Purvis

Increase light oil tank capacity


700,000

2nd half 2011


Pursuant
to existing terminaling services agreements with Morgan Stanley Capital Group, we expect to receive payments through June 30, 2011 from Morgan Stanley Capital Group in
the range of $1 million to $4 million, which are due and payable upon completion of certain of the capital projects referred to above.

At
September 30, 2010, our senior secured credit facility provides for a maximum borrowing line of credit equal to $200 million. At September 30, 2010, our
outstanding borrowings were approximately $108.0 million, resulting in available capacity of approximately $92.0 million. Upon payment of the remaining capital expenditures to complete
the approved capital projects and receipt of payments from Morgan Stanley Capital Group upon completion of certain of the capital projects, we currently expect to have approximately $70 million
in available capacity under our senior secured credit facility. In addition, at our request, the revolving loan commitment can be increased up to an additional $100 million, in the aggregate,
without the approval of the lenders, but subject to the approval of the
administrative agent and the receipt of additional commitments from one or more lenders. The terms of the senior secured credit facility also permit us to borrow up to approximately $25 million
from other lenders, including our general partner and its affiliates. Future capital expenditures will depend on numerous factors, including the availability, economics and cost of appropriate
acquisitions which we identify and evaluate; the economics, cost and required regulatory approvals with respect to the expansion and enhancement of existing systems and facilities; customer demand for
the services we provide; local, state and federal governmental regulations; environmental compliance requirements; and the availability of debt financing and equity capital on acceptable terms.

Senior Secured Credit Facility.At September 30, 2010, the senior secured credit facility provides for a maximum borrowing line of
credit
equal to the lesser of (i) $200 million or (ii) four times Consolidated EBITDA (as defined: $280.6 million at September 30, 2010). We may elect to have loans under
the senior secured credit facility bear interest either (i) at a rate of LIBOR plus a margin ranging from 1.5% to 2.5% depending on the total leverage ratio then in effect, or (ii) at a
base rate (the greater of (a) the federal funds rate plus 0.5% or (b) the prime rate) plus a margin ranging from 0.5% to 1.5% depending on the total leverage ratio then in effect. We
also pay a commitment fee ranging from 0.3% to 0.5% per annum, depending on the total leverage ratio then in effect, on the total amount of unused commitments. Our obligations under the senior secured
credit facility are secured by a first priority security interest in favor of the lenders in our assets, including cash, accounts receivable, inventory, general intangibles, investment property,
contract rights and real property.

The
terms of the senior secured credit facility include covenants that restrict our ability to make cash distributions and acquisitions. We may make distributions of cash to the extent
of our "available cash" as defined in our partnership agreement. We may make acquisitions meeting the definition of "permitted acquisitions" which include: acquisitions in which the consideration paid
for such acquisition, together with the consideration paid for other acquisitions in the same fiscal year, does not exceed $25 million; acquisitions that arise from the exercise of options
under the omnibus agreement with TransMontaigne Inc.; and acquisitions in which we have (1) provided the agent prior written documentation in form and substance reasonably satisfactory
to the agent demonstrating our pro forma compliance with all financial and other covenants contained in the senior secured credit facility after

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giving
effect to such acquisition and (2) satisfied all other conditions precedent to such acquisition which the agent may reasonably require in connection therewith. The principal balance of
loans and any accrued and unpaid interest are due and payable in full on the maturity date, December 22, 2011.

The
senior secured credit facility also contains customary representations and warranties (including those relating to organization and authorization, compliance with laws, absence of
defaults, material agreements and litigation) and customary events of default (including those relating to monetary defaults, covenant defaults, cross defaults and bankruptcy events). The primary
financial covenants contained in the senior secured credit facility are (i) a total leverage ratio test (not to exceed 4.5 times), (ii) a senior secured leverage ratio test (not to
exceed 4.0 times), and (iii) a minimum interest coverage ratio test (not less than 2.75 times). These financial covenants are based on a defined financial
performance measure within the senior secured credit facility known as "Consolidated EBITDA." The calculation of the "total leverage ratio," "senior secured leverage ratio" and "interest coverage
ratio" contained in the senior secured credit facility is as follows (in thousands, except ratios):

Three months endedTwelve months
ended
September 30,
2010December 31,
2009

March 31,
2010

June 30,
2010

September 30,
2010Financial performance debt covenant test:Consolidated EBITDA for the total leverage ratio, as stipulated in the credit facility

$
15,583

$
17,995

$
18,096

$
18,470

$
70,144Consolidated funded indebtedness













$
108,000Total leverage ratio and senior secured leverage ratio














1.54xConsolidated EBITDA for the interest coverage ratio

$
15,583

$
17,995

$
18,096

$
18,470

$
70,144Consolidated interest expense, as stipulated in the credit facility

$
1,416

$
1,275

$
1,229

$
1,188

$
5,108Interest coverage ratio














13.73xReconciliation of consolidated EBITDA to cash flows provided by operating activities:Consolidated EBITDA

$
15,583

$
17,995

$
18,096

$
18,470

$
70,144Consolidated interest expense


(1,416
)

(1,275
)

(1,229
)

(1,188
)

(5,108
)Amortization of deferred revenue


(809
)

(837
)

(955
)

(986
)

(3,587
)Amounts due under long-term terminaling services agreements, net


(627
)

(357
)

(356
)

292


(1,048
)Change in operating assets and liabilities


1,281


(4,378
)

4,776


(871
)

808Cash flows provided by operating activities

$
14,012

$
11,148

$
20,332

$
15,717

$
61,209


If
we were to fail either financial performance covenant, or any other covenant contained in the senior secured credit facility, we would seek a waiver from our lenders under such
facility. If we were unable to obtain a waiver from our lenders and the default remained uncured after any applicable grace period, we would be in breach of the senior secured credit facility, and the
lenders would be entitled to declare all outstanding borrowings immediately due and payable.

We
believe that our future cash expected to be provided by operating activities, available borrowing capacity under our credit facility, and our relationship with institutional lenders
and equity investors should enable us to meet our planned capital and liquidity requirements through at least the maturity date of our senior secured credit facility (December 2011).

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information contained in this Item 3 updates, and should be read in conjunction with, information set forth in
Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2009, in addition to the interim unaudited consolidated financial statements,
accompanying notes and Management's Discussion and Analysis of
Financial Condition and Results of Operations presented in Part 1, Items 1 and 2 of this Quarterly Report on Form 10-Q. There are no material changes in the market
risks faced by us from those reported in our Annual Report on Form 10-K for the year ended December 31, 2009.

Market
risk is the risk of loss arising from adverse changes in market rates and prices. The principal market risk to which we are exposed is interest rate risk associated with
borrowings under our senior secured credit facility. Borrowings under our senior secured credit facility bear interest at a variable rate based on LIBOR or the lender's base rate. At
September 30, 2010, we had outstanding borrowings of approximately $108.0 million under our senior secured credit facility.

We
manage a portion of our interest rate risk with an interest rate swap, which reduces our exposure to changes in interest rates by converting variable interest rates to fixed interest
rates. At September 30, 2010, we are party to an interest rate swap agreement with Wachovia Bank, N.A with a notional amount of $150.0 million that expires June 2011. Pursuant to the
terms of the interest rate swap agreement, we pay a fixed rate of approximately 2.2% and receive an interest payment based on the one-month LIBOR. The net difference to be paid or received
under the interest rate swap agreement is settled monthly and is recognized as an adjustment to interest expense.

Based
on the outstanding balance of our variable-interest-rate debt at September 30, 2010, the terms of our interest rate swap agreement with a notional amount of
$150.0 million, and assuming market interest rates increase or decrease by 100 basis points, the potential annual increase or decrease in interest expense is approximately $nil.

We
do not purchase or market products that we handle or transport and, therefore, we do not have material direct exposure to changes in commodity prices, except for the value of product
gains arising from certain of our terminaling services agreements with our customers. Pursuant to our terminaling services agreement related to the Southeast terminals, we agreed to rebate to Morgan
Stanley Capital Group 50% of the proceeds we receive annually in excess of $4.2 million from the sale of product gains at our Southeast terminals. We do not use derivative commodity instruments
to manage the commodity risk associated with the product we may own at any given time. Generally, to the extent we are entitled to retain product pursuant to terminaling services agreements with our
customers, we sell the product to Morgan Stanley Capital Group and other marketing and distribution companies on a monthly basis; the sales price is based on industry indices.

For
the nine months ended September 30, 2010 and 2009, we sold approximately 114,300 and 92,300 barrels, respectively, of product gained resulting from differences in the
measurement of product volumes received and distributed at our terminaling facilities at average prices of $90 and $68 per barrel, respectively.

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ITEM 4.    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 September 30, 2010, pursuant to Rule 13a-15(b) under the
Exchange Act. Based upon that evaluation, the Certifying Officers concluded that, as of September 30, 2010, our disclosure controls and procedures were effective. There were no changes in our
internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

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Part II. Other Information

ITEM 1A.    RISK FACTORS

The following risk factors, discussed in more detail in "Item 1A. Risk Factors," in our Annual Report on
Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 8, 2010, and the additional risk factor set forth in
"Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010, filed on August 9, 2010, which risk factors are
expressly incorporated into this report by reference, are important factors that could cause actual results to differ materially from our expectations and may adversely affect our business and results
of operations, include, but are not limited to:



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There
have been no material changes from risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009, filed with
the Securities and Exchange Commission on March 8, 2010, and the Form 10-Q for the quarterly period ended June 30, 2010, filed on August 9, 2010.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Securities.The following table covers the purchases of our common units by, or on behalf of, Partners during the
three months ended
September 30, 2010 covered by this report.

Period

Total
number of
common units
purchased

Average price
paid per
common unit

Total number of
common units
purchased as part of
publicly announced
plans or programs

Maximum number of
common units that
may yet be purchased
under the plans or
programsJuly


840

$
29.34


840


4,765August


10,840

$
25.56


840


3,925September


840

$
35.05


840


3,08512,520

$
26.45


2,520


During
the three months ended September 30, 2010, we purchased 2,520 common units (840 common units per month), with approximately $81,000 of aggregate market value, in the open
market pursuant to a purchase program announced on May 7, 2007. The purchase program establishes the purchase, from time to time, of our outstanding common units for purposes of making
subsequent grants of restricted phantom units under the TransMontaigne Services Inc. Long-Term Incentive Plan to independent directors of our general partner. Pursuant to the terms
of the purchase program, we anticipate purchasing annually up to 10,000 common units. There is no guarantee as to the exact number of common units that will be purchased under the purchase program,
and the purchase program may be discontinued at any time. Unless we choose to terminate the purchase program earlier, the purchase program terminates on the earlier to occur of May 31, 2012;
our liquidation, dissolution, bankruptcy or insolvency; the public announcement of a tender or exchange offer for the common units; or a merger, acquisition, recapitalization, business combination or
other occurrence of a "Change of Control" under the TransMontaigne Services Inc. Long-Term Incentive Plan. In addition to the foregoing purchases, on August 10, 2010, we
purchased 10,000 common units from TransMontaigne Services Inc. for approximately $250,000 for the purpose of delivering these units to Charles L. Dunlap,

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the
CEO of our general partner, upon the vesting of an equivalent number of restricted phantom units, which were granted to Mr. Dunlap on August 10, 2009 under the Long-Term
Incentive Plan.

ITEM 6.    EXHIBITS

Exhibits:

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 2002.32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

Dated: November 8, 2010

TRANSMONTAIGNE PARTNERS L.P.(Registrant)TransMontaigne GP L.L.C., its General PartnerBy:

/s/ CHARLES L. DUNLAP Charles L. Dunlap Chief Executive OfficerBy:

/s/ FREDERICK W. BOUTIN Frederick W. Boutin Chief Financial Officer


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EXHIBIT INDEX

Exhibit
number

Description of exhibits31.1

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 2002.32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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