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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, 2009ORo

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 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 30, 2009, there were 10,783,434 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, 2009 and December 31, 2008


4Consolidated statements of operations for the three and nine months ended September 30, 2009 and
2008


5Consolidated statements of partners' equity and comprehensive income for the year ended December 31,
2008 and nine months ended September 30, 2009


6Consolidated statements of cash flows for the three and nine months ended September 30, 2009 and
2008


7Notes to consolidated financial statements


8Item 2.

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


32Item 3.

Quantitative and Qualitative Disclosures about Market Risk


47Item 4.

Controls and Procedures


48Part II. Other InformationItem 1A.

Risk Factors


49Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


50Item 6.

Exhibits


50


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, 2009 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, 2008, 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 9, 2009 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,
2009:



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

3

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TransMontaigne Partners L.P. and subsidiaries        Consolidated balance sheets        (In thousands)

September 30,
2009

December 31,
2008ASSETSCurrent assets:Cash and cash equivalents

$
8,873

$
4,795Trade accounts receivable, net


5,060


6,694Due from TransMontaigne Inc.





761Due from Morgan Stanley Capital Group


3,488


5,641Other current assets


9,089


8,87026,510


26,761Property, plant and equipment, net


458,103


447,753Goodwill


24,671


24,667Other assets, net


8,373


7,858$
517,657

$
507,039LIABILITIES AND EQUITYCurrent liabilities:Trade accounts payable

$
7,955

$
7,327Due to TransMontaigne Inc.


181


Accrued liabilities


22,688


21,81430,824


29,141Other liabilities


18,067


4,819Long-term debt


165,000


165,500Total liabilities


213,891


199,460Partners' equity:Common unitholders


247,688


249,264Subordinated unitholders


2,254


4,449General partner interest


54,374


54,450Accumulated other comprehensive loss


(550
)

(584
)Total partners' equity


303,766


307,579$
517,657

$
507,039


See
accompanying notes to consolidated financial statements.

4

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TransMontaigne Partners L.P. and subsidiaries        Consolidated statements of operations        (In thousands, except per unit amounts)

Three months ended
September 30,

Nine months ended
September 30,2009

2008

2009

2008Revenue:External customers

$
12,249

$
13,089

$
38,044

$
37,860Affiliates


23,121


22,115


67,577


66,260Total revenue


35,370


35,204


105,621


104,120Costs and expenses:Direct operating costs and expenses


(16,915
)

(16,331
)

(47,889
)

(47,118
)Direct general and administrative expenses


(606
)

(705
)

(2,410
)

(3,095
)Allocated general and administrative expenses


(2,510
)

(2,508
)

(7,530
)

(7,523
)Allocated insurance expense


(725
)

(708
)

(2,175
)

(2,125
)Reimbursement of bonus awards


(309
)

(375
)

(927
)

(1,125
)Depreciation and amortization


(6,541
)

(5,794
)

(19,346
)

(17,299
)Gain on disposition of assets








1


Total costs and expenses


(27,606
)

(26,421
)

(80,276
)

(78,285
)Operating income


7,764


8,783


25,345


25,835Other income (expenses):Interest income


1


4


5


37Interest expense


(1,350
)

(1,468
)

(4,068
)

(4,583
)Foreign currency transaction gain (loss)


(13
)

(205
)

17


(47
)Unrealized loss on derivative instruments


(553
)




(819
)

Amortization of deferred financing costs


(150
)

(150
)

(450
)

(451
)Total other expenses


(2,065
)

(1,819
)

(5,315
)

(5,044
)Net earnings


5,699


6,964


20,030


20,791Lessearnings allocable to general partner interest including incentive distribution rights


(572
)

(597
)

(1,774
)

(1,674
)Net earnings allocable to limited partners

$
5,127

$
6,367

$
18,256

$
19,117Net earnings per limited partner unitbasic

$
0.41

$
0.51

$
1.47

$
1.54Net earnings per limited partner unitdiluted

$
0.41

$
0.51

$
1.47

$
1.54Weighted average limited partner units outstandingbasic


12,438


12,442


12,439


12,442Weighted average limited partner units outstandingdiluted


12,443


12,442


12,441


12,443


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        Year ended December 31,
2008  and nine months ended September 30, 2009        (In thousands)

Common
units

Subordinated
units

General
partner
interest

Accumulated
other
comprehensive
loss

TotalBalance December 31, 2007

$
250,714

$
7,841

$
54,275

$


$
312,830Distributions to unitholders


(20,636
)

(7,509
)

(2,051
)




(30,196
)Amortization of deferred equity-based compensation related to restricted phantom units


84











84Reversal of previously recognized equity-based compensation due to repurchase of unvested restricted phantom units


(49
)










(49
)Repurchase of 4,180 common units by our long-term incentive plan


(104
)










(104
)Issuance of 1,000 common units by our long-term incentive plan due to vesting of restricted phantom units














Conversion of 830,567 subordinated units into common units


1,741


(1,741
)







Net earnings for year ended December 31, 2008


17,514


5,858


2,226





25,598Foreign currency translation adjustments











(584
)

(584
)Comprehensive income














25,014Balance December 31, 2008


249,264


4,449


54,450


(584
)

307,579Distributions to unitholders


(18,123
)

(3,919
)

(1,850
)




(23,892
)Amortization of deferred equity-based compensation related to restricted phantom units


119











119Repurchase of 5,010 common units by our long-term incentive plan


(104
)










(104
)Issuance of 3,000 common units by our long-term incentive plan due to vesting of restricted phantom units














Conversion of 830,567 subordinated units into common units


1,101


(1,101
)







Net earnings for the nine months ended September 30, 2009


15,431


2,825


1,774





20,030Foreign currency translation adjustments











34


34Comprehensive income














20,064Balance September 30, 2009

$
247,688

$
2,254

$
54,374

$
(550
)
$
303,766


See
accompanying notes to consolidated financial statements.

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TransMontaigne Partners L.P. and subsidiaries        Consolidated statements of cash flows        (In thousands)

Three months ended
September 30,

Nine months ended
September 30,2009

2008

2009

2008Cash flows from operating activities:Net earnings

$
5,699

$
6,964

$
20,030

$
20,791Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization


6,541


5,794


19,346


17,299Gain on disposition of assets








(1
)

Amortization of deferred equity-based compensation


65


23


119


61Reversal of previously recognized equity-based compensation











(49
)Amortization of deferred financing costs


150


150


450


451Unrealized loss on derivative instruments


553





819


Amortization of deferred revenue


(764
)




(1,652
)

Amounts due under long-term terminaling services agreements, net


25


(140
)

(839
)

(1,197
)Changes in operating assets and liabilities:Trade accounts receivable, net


226


(82
)

1,634


(1,889
)Due from TransMontaigne Inc.


302


(187
)

929


1,529Due from Morgan Stanley Capital Group


6,421


457


16,729


(782
)Other current assets


397


66


(216
)

(95
)Trade accounts payable


(2,541
)

2,452


634


9,540Accrued liabilities


748


967


51


3,530Net cash provided by operating activities


17,822


16,464


58,033


49,189Cash flows from investing activities:Additions to property, plant and equipmentexpansion of facilities


(3,653
)

(14,354
)

(25,845
)

(35,460
)Additions to property, plant and equipmentmaintain existing facilities


(1,303
)

(1,072
)

(3,580
)

(2,834
)Proceeds from sale of assets








1


Other








(33
)

(28
)Net cash (used in) investing activities


(4,956
)

(15,426
)

(29,457
)

(38,322
)Cash flows from financing activities:Net (repayments) borrowings of debt





10,000


(500
)

16,500Distributions paid to unitholders


(7,963
)

(7,797
)

(23,892
)

(22,231
)Repurchase of common units by our long-term incentive plan


(46
)

(33
)

(104
)

(82
)Net cash provided by (used in) financing activities


(8,009
)

2,170


(24,496
)

(5,813
)Increase in cash and cash equivalents


4,857


3,208


4,080


5,054Foreign currency translation effect on cash


(2
)

(40
)

(2
)

(29
)Cash and cash equivalents at beginning of period


4,018


3,461


4,795


1,604Cash and cash equivalents at end of period

$
8,873

$
6,629

$
8,873

$
6,629Supplemental disclosures of cash flow information:Cash paid for interest

$
1,671

$
1,422

$
5,269

$
3,991


See
accompanying notes to consolidated financial statements.

7

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TransMontaigne Partners L.P. and subsidiaries        Notes to consolidated financial statements

(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
products terminaling and transportation facilities. We conduct our operations in the United States primarily 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 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, 2009, TransMontaigne Inc. and Morgan Stanley have a significant interest in our partnership through
their indirect ownership of a 25.8% 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 goodwill. 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 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

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 $2.5 million and $2.5 million for the three months ended September 30, 2009 and 2008,
respectively, and approximately $7.5 million and $7.5 million for the nine months ended September 30, 2009 and 2008, 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 $0.7 million and $0.7 million for the three months ended
September 30, 2009 and 2008, respectively, and approximately $2.2 million and $2.1 million for the nine months ended September 30, 2009 and 2008, 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 $0.4 million for the three
months ended September 30, 2009 and 2008, respectively, and approximately $0.9 million and $1.1 million for the nine months ended September 30, 2009 and 2008, respectively.

We
have evaluated all subsequent events through November 9, 2009, which represents the filing date of this Form 10-Q with the Securities and Exchange
Commission.

(c)   Accounting for terminal and pipeline operations

In connection with our terminal and pipeline operations, we utilize the accrual method of accounting for revenue and expenses. We generate revenue in our terminal
and pipeline operations from terminaling services fees, transportation fees, management fees and cost reimbursements, fees from other ancillary services and gains from the sale of refined products.
Terminaling services revenue is recognized ratably over the term of the agreement for storage fees and minimum revenue commitments 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 incurred; ancillary service revenue is recognized as the

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 8 of Notes to consolidated
financial statements). Environmental costs include initial site surveys and environmental studies of potentially contaminated sites, costs for remediation and restoration of sites determined to be
contaminated and ongoing monitoring costs, as well as fines, damages and other costs, including direct legal costs. Liabilities for environmental costs at a specific site are initially recorded, on an
undiscounted basis, when it is probable that we will be liable for such costs, and a reasonable estimate of the associated costs can be made based on available information. Such an estimate includes
our share of the liability for each specific site and the sharing of the amounts related to each site that will not be paid by other potentially responsible parties, based on enacted laws and adopted
regulations and policies. Adjustments to initial estimates are recorded, from time to time, to reflect changing circumstances and estimates based upon additional information developed in subsequent
periods. Estimates of our ultimate liabilities associated with environmental costs are difficult to make with certainty due to the number of variables involved, including the early stage of
investigation at certain sites, the lengthy time frames required to complete remediation, technology changes, alternatives available and the evolving nature of environmental laws and regulations. We
periodically file claims for insurance recoveries of certain environmental remediation costs with our insurance carriers under our comprehensive liability policies (see Note 4 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.
has 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 indemnified us through December 31, 2011 against certain potential environmental claims, losses and expenses associated
with the operation of the Brownsville

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 indemnified 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 estimates and assumptions 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 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

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 8 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 met.

At
September 30, 2009 and December 31, 2008, our derivative instruments were limited to interest rate swaps. The change in the fair value of our interest rate swaps is
included in the consolidated statements of operations in other income (expenses). The fair value of our interest rate swaps 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 swaps utilizes Level 2 inputs.

(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, Mexican federal and provincial income taxes and U.S. state income taxes are not significant.

(l)    Net earnings per limited partner unit

Emerging Issues Task Force ("EITF") Issue 07-4, "Two-Class EPS Method for 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 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

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 14 of
Notes to consolidated financial statements). Partners adopted the consensus reached on EITF Issue 07-4 effective January 1, 2009, and applied it retrospectively to all periods
presented.

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.

(m)  Reclassifications

Certain amounts in the prior periods have been reclassified to conform to the current period's presentation. Net earnings and total partners' equity have not been
affected by these reclassifications.

(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, 2009, the annual
administrative fee payable to TransMontaigne Inc. is approximately $10.0 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, 2009, the annual insurance reimbursement payable to TransMontaigne Inc. is approximately $2.9 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

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Notes to consolidated financial statements (Continued)

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

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 fund indexed to the performance of our common units. For the year ending December 31, 2009, we have agreed to reimburse TransMontaigne Inc. and its affiliates approximately
$1.2 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. agreed
to
indemnify 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 is $15.0 million. TransMontaigne Inc. has no obligation to indemnify us for losses
until such aggregate losses exceed $250,000. 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 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

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

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

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.

Terminaling Services AgreementFlorida Terminals and Razorback Pipeline System.We have a terminaling 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 $33.2 million for the contract year ending May 31, 2009 (approximately $36.3 million for the contract year ending May 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
the event of a force majeure event 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 assign the terminaling services agreement only with the consent of the conflicts committee of our general partner. 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.

Revenue Support AgreementOklahoma City Terminal.We have a 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 and transportation services agreement with
TransMontaigne Inc. that will expire on December 31, 2012. Under this

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Notes to consolidated financial statements (Continued)

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

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 $2.4 million for the contract year ending December 31, 2009.

Terminaling Services AgreementBrownsville Terminals.We have a terminaling and transportation services agreement with Morgan
Stanley
Capital Group, relating to our Brownsville, Texas terminal complex that will expire on October 31, 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. On April 1, 2008, we amended the terminaling services agreement with Morgan Stanley Capital Group to reduce
Morgan Stanley Capital Group's minimum revenue commitment to approximately $1.5 million per year in exchange for Morgan Stanley Capital Group returning approximately 200,000 barrels of storage
capacity.

Terminaling Services AgreementBrownsville LPG.We have a terminaling and transportation services agreement with
TransMontaigne Inc. relating to our Brownsville, Texas facilities that will expire on March 31, 2010. 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 $1.4 million per year. In exchange for
TransMontaigne Inc.'s minimum throughput commitment, we agreed to provide TransMontaigne Inc. approximately 15,000 barrels of storage capacity at our Brownsville facilities. During 2008,
we amended the terminaling and transportation services agreement with TransMontaigne Inc. to reduce TransMontaigne Inc.'s minimum revenue commitment to approximately $0.7 million
per year in exchange for entering into terminaling and transportation agreements to deliver natural gas liquids to Matamoros, Mexico. During October 2008, TransMontaigne Inc.'s minimum revenue
commitment increased to approximately $1.6 million per year when we increased the LPG storage capacity at our Brownsville LPG terminal to approximately 33,000 barrels.

Terminaling Services AgreementMatamoros LPG.During 2008, we entered into a terminaling and transportation services
agreement
with TransMontaigne Inc. relating to our natural gas liquids storage facility in Matamoros, Mexico that will expire on March 31, 2010. 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 and transportation 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 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.

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Notes to consolidated financial statements (Continued)

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

Terminaling Services AgreementSoutheast Terminals.We have a terminaling and transportation 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 $32.3 million for the contract year ending
December 31, 2009; 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 8.7 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 September 30, 2010. Upon completion of each of the projects,
Morgan Stanley Capital Group has agreed to pay us an ethanol blending fee. At September 30, 2009, we had received payments totaling approximately $15.5 million and we expect to receive
future payments through September 30, 2010 from Morgan Stanley Capital Group in the range of $3 million to $10 million.

In
the event of a force majeure event 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 assign the terminaling services agreement only with the consent of the conflicts committee of our general partner.

(3) CONCENTRATION OF CREDIT RISK AND TRADE ACCOUNTS RECEIVABLE

Our primary market areas are located 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 monitoring
procedures, and for certain transactions we may request letters of credit, prepayments or guarantees. We maintain allowances for potentially uncollectible accounts receivable.

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Notes to consolidated financial statements (Continued)

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

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

September 30,
2009

December 31,
2008Trade accounts receivable

$
5,454

$
7,133Less allowance for doubtful accounts


(394
)

(439
)$
5,060

$
6,694


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

Three months
ended
September 30,

Nine months
ended
September 30,2009

2008

2009

2008Morgan Stanley Capital Group


59
%

57
%

57
%

57
%TransMontaigne Inc


6
%

6
%

7
%

6
%Valero Supply and Marketing Company


8
%

10
%

9
%

10
%


(4) OTHER CURRENT ASSETS

Other current assets are as follows (in thousands):

September 30,
2009

December 31,
2008Amounts due from insurance companies

$
5,581

$
6,250Additive detergent


1,594


1,640Deposits and other assets


1,914


980$
9,089

$
8,870


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, 2009 and December 31, 2008, we have recognized amounts due from insurance companies of approximately $5.6 million and $6.3 million, respectively, representing
our best estimate of our probable insurance recoveries. During the nine months ended September 30, 2009, we received reimbursements from insurance companies of approximately
$2.9 million. During the nine months ended September 30, 2009, we increased our estimate of probable insurance recoveries approximately $2.2 million due principally to increases
in our estimate of environmental remediation obligations (see Note 8 of Notes to consolidated financial statements).

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Notes to consolidated financial statements (Continued)

(5) PROPERTY, PLANT AND EQUIPMENT, NET

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

September 30,
2009

December 31,
2008Land

$
52,356

$
52,196Terminals, pipelines and equipment


500,715


445,875Furniture, fixtures and equipment


1,366


1,349Construction in progress


8,426


33,979562,863


533,399Less accumulated depreciation


(104,760
)

(85,646
)$
458,103

$
447,753


(6) GOODWILL

Goodwill is as follows (in thousands):

September 30,
2009

December 31,
2008Brownsville terminals

$
14,770

$
14,770River terminals


8,465


8,465Mexican LPG operations (includes approximately $66 and $70, respectively, of foreign currency translation adjustments)


1,436


1,432$
24,671

$
24,667


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.

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 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 15 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 (Continued)

(6) GOODWILL (Continued)

At
December 31, 2008, the fair value of our Brownsville reporting unit exceeded its carrying amount and the fair value of our River reporting unit exceeded its carrying amount.
Therefore, we did not recognize any impairment charges during the year ended December 31, 2008. A significant decline in the price of our common units with a resulting increase in our weighted
average cost of capital, the loss of a significant customer, 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.

(7) OTHER ASSETS, NET

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

September 30,
2009

December 31,
2008Amounts due under long-term terminaling services agreements:External customers

$
977

$
902Affiliates


3,108


2,0204,085


2,922Deferred financing costs, net of accumulated amortization of $2,284 and $1,836, respectively


1,346


1,794Customer relationships, net of accumulated amortization of $950 and $719, respectively


2,749


2,980Deposits and other assets


193


162$
8,373

$
7,858


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, 2009 and December 31, 2008, 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 a receivable of approximately $4.1 million and $2.9 million, respectively.

Deferred financing costs.Deferred financing costs are amortized using the interest method over the term of the related credit facility
(see
Note 10 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 (Continued)

(8) ACCRUED LIABILITIES

Accrued liabilities are as follows (in thousands):

September 30,
2009

December 31,
2008Customer advances and deposits:External customers

$
1,127

$
1,164Morgan Stanley Capital Group


5,998


5,5817,125


6,745Accrued property taxes


2,670


480Accrued environmental obligations


6,684


7,012Interest payable


262


838Due to Rio Vista





83Obligations to repair, maintain or expand Southeast terminals


32


222Rebate due to Morgan Stanley Capital Group


89


2,204Unrealized loss on derivative instruments


2,947


2,128Accrued expenses and other


2,879


2,102$
22,688

$
21,814


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, 2009 and December 31, 2008, we have billed and collected from certain of our customers approximately $7.1 million and $6.7 million, respectively, in
advance of the terminaling services being provided.

Accrued environmental obligations.At September 30, 2009 and December 31, 2008, we have accrued environmental obligations of
approximately $6.7 million and $7.0 million, respectively, representing our best estimate of our remediation obligations. During the nine months ended September 30, 2009, we
increased our remediation obligations by approximately $2.9 million to reflect a change in our estimate of our future environmental remediation costs. During the nine months ended
September 30, 2009, we made payments of approximately $3.2 million towards our environmental remediation obligations. Changes in our estimates of our future environmental remediation
obligations may occur as a result of the passage of time and the occurrence of future events.

Due to Rio Vista.Effective December 31, 2007, we acquired from Rio Vista certain Mexican LPG operations for a cash payment
of
approximately $9.0 million. At September 30, 2009 and December 31, 2008, we have a liability of approximately $nil and $0.1 million, respectively, to Rio Vista pursuant to
the purchase price holdback provision in the acquisition agreement. Subject to certain exceptions and limitations, Rio Vista is obligated to indemnify us for claims, expenses or liabilities of the
Mexican LPG operations prior to the closing date.

Obligations to repair, maintain or expand Southeast terminals.As a condition to our acquisition of the Southeast terminals, we agreed
to assume all
responsibilities, duties and obligations to complete the construction of and place into service certain projects to repair, maintain or expand the Southeast terminals that had been commenced by
TransMontaigne Inc. but were not completed as of the date of closing. At September 30, 2009 and December 31, 2008, we have recognized a liability of approximately

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Notes to consolidated financial statements (Continued)

(8) ACCRUED LIABILITIES (Continued)

$32,000
and $0.2 million, respectively, as our estimate of the remaining costs to complete and place into service certain projects to repair, maintain or expand the Southeast terminals.

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, 2009 and
December 31, 2008, we have accrued a liability due to Morgan Stanley Capital Group of approximately $89,000 and $2.2 million, respectively. During the three months ended March 31,
2009, we paid Morgan Stanley Capital Group approximately $2.2 million for the rebate due to Morgan Stanley Capital Group for the year ended December 31, 2008.

Unrealized loss on derivative instruments.Our derivative instruments are limited to interest rate swaps. We manage a portion of our
interest rate
risk with interest rate swaps, which reduce our exposure to changes in interest rates by converting variable interest rates to fixed interest rates. At September 30, 2009, 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 difference to be paid or received under the interest rate swap agreement is settled monthly and is recognized as an
adjustment to interest expense. For the three and nine months ended September 30, 2009, we recognized net payments to the counterparty in the amount of approximately $0.7 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 10 of Notes to consolidated financial statements). At
September 30, 2009 and December 31, 2008, the fair value of the interest rate swaps was approximately $2.9 million and $2.1 million, respectively.

(9) OTHER LIABILITIES

Other liabilities are as follows (in thousands):

September 30,
2009

December 31,
2008Deferred revenueethanol blending fees and other reimbursable projects

$
16,554

$
3,630Advance payments received under long-term terminaling services agreements-Morgan Stanley Capital Group


1,513


1,189$
18,067

$
4,819


Deferred revenue-ethanol blending fees and other reimbursable 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 reimbursable 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, 2009 and
December 31, 2008, we have unamortized deferred revenue of approximately $16.6 million and $3.6 million, respectively, for completed projects. During the nine months ended
September 30, 2009, we billed Morgan Stanley Capital Group approximately $14.6 million for

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TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(9) OTHER LIABILITIES (Continued)

completed
projects. During the nine months ended September 30, 2009, we recognized revenue on a straight-line basis of approximately $1.7 million 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 minimum payments that decrease 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, 2009 and
December 31, 2008, we have received minimum payments that are due through those respective dates in excess of revenue recognized under these
long-term terminaling services agreements resulting in a liability of approximately $1.5 million and $1.2 million, respectively.

(10) LONG-TERM DEBT

Senior Secured Credit Facility.At September 30, 2009 and December 31, 2008, our outstanding borrowings under the senior
secured credit
facility were approximately $165.0 million and $165.5 million, respectively. At September 30, 2009 and December 31, 2008, our outstanding letters of credit were
approximately $nil and $42,000, respectively.

The
senior secured credit facility provides for a maximum borrowing line of credit equal to the lesser of (i) $200 million and (ii) four times Consolidated EBITDA
(as defined: $237.5 million at September 30, 2009). 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,
2009 and 2008, the weighted average interest rate on borrowings under our senior secured credit facility was approximately 3.6% and 4.5%, respectively. For the nine months ended September 30,
2009 and 2008, the weighted average interest rate on borrowings under our senior secured credit facility was approximately 3.7% and 4.9%, 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).

23

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(11) PARTNERS' EQUITY

The number of units outstanding is as follows:

Common
units

Subordinated
units

General
partner unitsUnits outstanding at December 31, 2007


9,122,300


3,322,266


253,971Conversion of subordinated units to common units


830,567


(830,567
)

Units outstanding at December 31, 2008


9,952,867


2,491,699


253,971Conversion of subordinated units to common units


830,567


(830,567
)

Units outstanding at September 30, 2009


10,783,434


1,661,132


253,971


At
September 30, 2009 and December 31, 2008, common units outstanding include approximately 7,329 and 5,319 common units, respectively, held on behalf of TransMontaigne
Services Inc.'s long-term incentive plan. During the subordination period (as defined in the partnership agreement), common units are entitled to receive distributions from
available cash 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. The subordination period will end when we have generated and distributed available cash in excess of
the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately
preceding the test date and there are not arrearages in payment of the minimum quarterly distribution on the common units. On November 13, 2008 and May 7, 2009, approximately
0.8 million and 0.8 million subordinated units, respectively, converted into an equal number of common units.

(12) 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
non-employee directors of our general partner. The long-term incentive plan currently permits the grant of awards covering an aggregate of 989,572 units, which amount will
automatically increase on an annual basis by 2% of the total outstanding common and subordinated units at the end of the preceding fiscal year. As of September 30, 2009, 765,632 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 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 repurchase of outstanding common units for purposes of making subsequent grants of restricted phantom units to non-officer directors of our general partner.
TransMontaigne GP, on behalf of the long-term incentive plan, anticipates repurchasing annually up to 10,000 common units for this purpose. As of September 30, 2009,
TransMontaigne GP, on behalf of the long-term incentive plan, has repurchased approximately 11,000 common units pursuant to the program.

24

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(12) LONG-TERM INCENTIVE PLAN (Continued)

Information about restricted phantom unit activity for the year ended December 31, 2008 and the nine months ended September 30, 2009 is as follows:

Available for
future grant

Restricted
phantom
units

Grant date
priceUnits outstanding at December 31, 2007


323,850


10,000Automatic increase in units available for future grant on January 1, 2008


248,891


Vesting on March 17, 2008





(6,000
)Grant on March 31, 2008


(6,000
)

6,000

$
28.36Vesting on March 31, 2008





(1,000
)Grant on July 18, 2008


(2,000
)

2,000

$
23.05Units 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 September 30, 2009


765,632


56,000


On
March 17, 2008, we accelerated the vesting of 6,000 restricted phantom units held by Donald H. Anderson, D. Dale Shaffer and Rex L. Utsler in exchange for their
resignation as members of the board of directors of our general partner and then repurchased those units for cash. The aggregate consideration paid to the former directors of approximately $163,000 is
included in direct general and administrative expenses for the three months ended March 31, 2008.

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. 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. On July 18, 2008, TransMontaigne Services Inc. granted 2,000 restricted phantom units to an independent director of our general partner. On March 31, 2008,
TransMontaigne Services Inc. granted 6,000 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 $1.0 million, $0.1 million, $46,000 and $0.2 million associated with the August 2009, March 2009, July 2008 and March
2008 grants, respectively. Amortization of deferred equity-based compensation of approximately $65,000 and $23,000 is included in direct general and administrative expenses for the three months ended
September 30, 2009 and 2008, respectively. Amortization of

25

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(12) LONG-TERM INCENTIVE PLAN (Continued)

deferred
equity-based compensation of approximately $119,000 and $12,000 is included in direct general and administrative expenses for the nine months ended September 30, 2009 and 2008,
respectively.

(13) COMMITMENTS AND CONTINGENCIES

Contract Commitments.At September 30, 2009, we have contractual commitments of approximately $9.0 million for the supply of
services,
labor and materials related to capital projects that currently are under development.

Operating Leases.We lease property and equipment under non-cancelable operating leases that extend through August 2027. At
September 30, 2009, future minimum lease payments under these non-cancelable operating leases are as follows (in thousands):

Years ending December 31:

Property and
equipment2009 (remainder of the year)

$
3642010


1,4992011


1,4202012


8032013


707Thereafter


6,427$
11,220


Rental
expense under operating leases was approximately $460,000 and $350,000 for the three months ended September 30, 2009 and 2008, respectively. Rental expense under operating
leases was approximately $1.1 million and $1.1 million for the nine months ended September 30, 2009 and 2008, respectively.

(14) NET EARNINGS PER LIMITED PARTNER UNIT

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

Three months
ended
September 30,

Nine months
ended
September 30,2009

2008

2009

2008Net earnings

$
5,699

$
6,964

$
20,030

$
20,791Less:Distributions payable on behalf of incentive distribution rights


(467
)

(467
)

(1,401
)

(1,284
)Distributions payable on behalf of general partner interest


(150
)

(150
)

(450
)

(442
)Distributions payable to the general partner interest in excess of earnings allocable to the general partner interest


45


20


77


52Earnings allocable to general partner interest including incentive distribution rights


(572
)

(597
)

(1,774
)

(1,674
)Net earnings allocable to limited partners

$
5,127

$
6,367

$
18,256

$
19,117


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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

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

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 capital account in the consolidated statements of partners' equity and comprehensive income reflects the earnings allocation included in the table above.

On
April 17, 2009, we declared a distribution of $0.59 per unit for the period from January 1, 2009 through March 31, 2009, payable on May 5, 2009 to
unitholders of record on April 30, 2009.

On
July 17, 2009, we declared a distribution of $0.59 per unit for the period from April 1, 2009 through June 30, 2009, payable on August 11, 2009 to
unitholders of record on July 31, 2009.

On
October 16, 2009, we declared a distribution of $0.59 per unit for the period from July 1, 2009 through September 30, 2009, payable on November 10, 2009 to
unitholders of record on October 30, 2009.

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

Three months
ended
September 30,

Nine months
ended
September 30,2009

2008

2009

2008Basic weighted average units


12,438


12,442


12,439


12,442Dilutive effect of restricted phantom units


5





2


1Diluted weighted average units


12,443


12,442


12,441


12,443


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 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
unamortized deferred compensation. For the three months ended September 30, 2009, approximately 2,000 restricted phantom units granted March 31, 2007 were excluded from the dilutive
earnings per limited partner unit computation as their inclusion would have been anti-dilutive. For the three months ended September 30, 2009, the restricted phantom units were
excluded because the unamortized deferred compensation exceeded the average closing market price of our common 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 unamortized deferred compensation. For
the nine months ended September 30, 2009, approximately 40,000, 4,500 and 2,000 restricted phantom units granted August 10, 2009, March 31, 2008, and March 31, 2007,
respectively, were excluded from the dilutive earnings per limited partner unit computation as their inclusion would have been anti-dilutive. For the nine months ended September 30,
2009, the restricted phantom units were excluded because the unamortized deferred compensation exceeded the average closing market price of our common units.

27

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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

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

For
the three and nine months ended September 30, 2008, we included the dilutive effect of 2,000 restricted phantom units granted July 18, 2008 in the computation of
diluted earnings per limited partner unit because the average closing market price of our common units exceeded the related unamortized deferred compensation. For the nine months ended
September 30, 2008, we also included the dilutive effect of 6,000 restricted phantom units granted March 31, 2008 in the computation of diluted earnings per limited partner unit because
the average closing market price of our common units exceeded the related unamortized deferred compensation. For the three and nine months ended September 30, 2008, we excluded the dilutive
effect of 3,000 restricted phantom units granted March 31, 2007 in the computation of diluted earnings per limited partner unit because the related unamortized deferred compensation exceeded
the average closing market price of our common units. For the three months ended September 30, 2008, we also excluded the dilutive effect of 6,000 restricted phantom units granted
March 31, 2008 in the computation of diluted earnings per limited partner unit because the related unamortized deferred compensation exceeded the average closing market price of our common
units.

(15) 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 (Continued)

(15) BUSINESS SEGMENTS (Continued)

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

Three months
ended
September 30,

Nine months
ended
September 30,2009

2008

2009

2008Gulf Coast Terminals:Terminaling services fees, net

$
10,990

$
10,044

$
32,156

$
29,573Other


1,813


2,130


6,231


7,604Revenue


12,803


12,174


38,387


37,177Direct operating costs and expenses


(5,281
)

(5,637
)

(15,813
)

(16,786
)Net margins


7,522


6,537


22,574


20,391Midwest Terminals and Pipeline System:Terminaling services fees, net


881


924


2,724


2,593Pipeline transportation fees


539


289


1,518


819Other


275


200


646


685Revenue


1,695


1,413


4,888


4,097Direct operating costs and expenses


(729
)

(407
)

(1,769
)

(1,180
)Net margins


966


1,006


3,119


2,917Brownsville Terminals:Terminaling services fees, net


3,838


3,160


11,134


9,435Pipeline transportation fees


380


537


1,587


2,014Other


1,155


1,012


3,633


3,434Revenue


5,373


4,709


16,354


14,883Direct operating costs and expenses


(2,662
)

(2,932
)

(8,522
)

(8,567
)Net margins


2,711


1,777


7,832


6,316River Terminals:Terminaling services fees, net


4,050


5,119


13,082


14,211Other


276


265


461


508Revenue


4,326


5,384


13,543


14,719Direct operating costs and expenses


(2,663
)

(2,468
)

(6,379
)

(5,881
)Net margins


1,663


2,916


7,164


8,838Southeast Terminals:Terminaling services fees, net


9,937


9,078


28,887


26,937Other


1,236


2,446


3,562


6,307Revenue


11,173


11,524


32,449


33,244Direct operating costs and expenses


(5,580
)

(4,887
)

(15,406
)

(14,704
)Net margins


5,593


6,637


17,043


18,540Total net margins


18,455


18,873


57,732


57,002Direct general and administrative expenses


(606
)

(705
)

(2,410
)

(3,095
)Allocated general and administrative expenses


(2,510
)

(2,508
)

(7,530
)

(7,523
)Allocated insurance expense


(725
)

(708
)

(2,175
)

(2,125
)Reimbursement of bonus awards


(309
)

(375
)

(927
)

(1,125
)Depreciation and amortization


(6,541
)

(5,794
)

(19,346
)

(17,299
)Gain on disposition of assets








1


Operating income


7,764


8,783


25,345


25,835Other income (expenses), net


(2,065
)

(1,819
)

(5,315
)

(5,044
)Net earnings

$
5,699

$
6,964

$
20,030

$
20,791


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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(15) BUSINESS SEGMENTS (Continued)

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

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




Three months ended September 30, 2008Gulf Coast
Terminals

Midwest
Terminals and
Pipeline System

Brownsville
Terminals

River
Terminals

Southeast
Terminals

TotalRevenue:External customers

$
3,207

$
529

$
3,373

$
5,119

$
861

$
13,089Morgan Stanley Capital Group


7,943


884


383


225


10,663


20,098TransMontaigne Inc.


1,024





953


40





2,017Total revenue

$
12,174

$
1,413

$
4,709

$
5,384

$
11,524

$
35,204Identifiable assets

$
131,341

$
10,602

$
72,506

$
65,981

$
175,855

$
456,285Capital expenditures

$
7,525

$
177

$
3,678

$
654

$
3,392

$
15,426




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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Table of Contents

TransMontaigne Partners L.P. and subsidiaries

Notes to consolidated financial statements (Continued)

(15) BUSINESS SEGMENTS (Continued)



Nine months ended September 30, 2008Gulf Coast
Terminals

Midwest
Terminals and
Pipeline System

Brownsville
Terminals

River
Terminals

Southeast
Terminals

TotalRevenue:External customers

$
9,290

$
1,450

$
10,187

$
14,332

$
2,601

$
37,860Morgan Stanley Capital Group


24,970


2,635


1,312


238


30,643


59,798TransMontaigne Inc.


2,917


12


3,384


149





6,462Total revenue

$
37,177

$
4,097

$
14,883

$
14,719

$
33,244

$
104,120Identifiable assets

$
131,341

$
10,602

$
72,506

$
65,981

$
175,855

$
456,285Capital expenditures

$
19,220

$
1,193

$
10,995

$
1,415

$
5,471

$
38,294


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Table of Contents

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

REGULATORY MATTERS

On September 21, 2008, Morgan Stanley obtained the approval of the Board of Governors of the Federal Reserve System (the "FRB")
to become a bank holding company upon the conversion of its wholly owned indirect subsidiary, Morgan Stanley Bank, from a Utah industrial bank to a national bank. On September 23, 2008, the
Office of the Comptroller of the Currency (the "OCC") authorized Morgan Stanley Bank to commence business as a national bank, operating as Morgan Stanley Bank, N.A. Concurrently with this conversion,
Morgan Stanley became a financial holding company under the Bank Holding Company Act, as amended (the "BHC Act"). As a
result, Morgan Stanley has become subject to the consolidated supervision and regulation of the FRB and Morgan Stanley Bank, N.A. has become subject to the supervision and regulation of the OCC.

As
a financial holding company, Morgan Stanley will be able to engage in any activity that is financial in nature, incidental to a financial activity, or complementary to a financial
activity. The BHC Act, by its terms, provides any company, such as Morgan Stanley, that becomes a financial holding company a two-year grace period to conform its existing nonfinancial
activities and investments to the requirements of the BHC Act with the possibility of three one-year extensions. The BHC Act grandfathers "activities related to the trading, sale or
investment in commodities and underlying physical properties" provided that Morgan Stanley conducted any of such type of activities as of September 30, 1997 and provided that certain other
conditions are satisfied, which conditions are reasonably within the control of Morgan Stanley. In addition, the BHC Act permits the FRB to determine by regulation or order that certain activities are
complementary to a financial activity and do not pose a risk to safety and soundness. The FRB has previously determined that a range of commodities activities are either financial in nature,
incidental to a financial activity, or complementary to a financial activity.

During
April 2009, Morgan Stanley advised us that it has conducted an internal review and has concluded that, based upon its review, all of our activities and investments are permissible
under the BHC Act.

The
FRB has not yet completed its review of these activities and investments. The FRB could conclude that certain of our activities or investments will not be deemed permissible under
the BHC Act. If so, Morgan Stanley (i) may cause us to discontinue any such activity or divest any such investment or (ii) may transfer control of our general partner to an unaffiliated
third party, prior to the end of the referenced grace period. We are unable to predict whether, if either of these actions is required, it would have a material adverse impact on our financial
condition or 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, 2008, included in our Annual Report on Form 10-K filed on March 9, 2009
(see Note 1 of Notes to consolidated financial statements). Certain of these accounting policies require the use of estimates. The following estimates, in our opinion, are subjective in nature,
require the exercise of judgment, and involve complex analysis: allowance for doubtful accounts, accrued environmental obligations and goodwill. 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.

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Table of Contents

SIGNIFICANT DEVELOPMENTS DURING THE THREE MONTHS ENDED SEPTEMBER 30, 2009

On July 17, 2009, we announced a distribution of $0.59 per unit for the period from April 1, 2009 through June 30,
2009, payable on August 11, 2009 to unitholders of record on July 31, 2009.

On
August 4, 2009, Randall J. Larson notified Partners of his intention to resign as Chief Executive Officer of our general partner and as President, Chief Executive Officer and
member of the board of directors of TransMontaigne Inc., and the other subsidiaries of Partners and TransMontaigne Inc., each to be effective August 5, 2009. Our general partner
is responsible for managing the operations and activities of Partners since the partnership does not have its own officers or employees.

The
board of directors of our general partner appointed Charles L. Dunlap to serve as Chief Executive Officer of our general partner, effective August 10, 2009. Mr. Dunlap
was also appointed to serve as the President and Chief Executive Officer of TransMontaigne Inc., effective August 10, 2009. As a result of this appointment, Mr. Dunlap ceased to
qualify as an independent director of the board of directors of our general partner and therefore tendered his resignation from the board of directors of our general partner, also effective
August 10, 2009. In his letter of resignation, Mr. Dunlap indicated that there were no disagreements between himself and Partners or the board of directors of our general partner
regarding Partners' operations, policies or practices.

Before
his earlier appointment to serve on the board of directors of our general partner in July 2008, Mr. Dunlap, age 66, served as Chief Executive Officer and President of
Pasadena Refining System, Inc., a privately held joint venture between Petrobras and Astra Holding Inc., based in Houston, Texas from January 2005 to December 2008. From May 2000 to
February 2004, Mr. Dunlap served as one of the founding partners of Strategic Advisors, LLC, a management consulting firm based in Baltimore, Maryland. Prior to that time,
Mr. Dunlap served in senior management and executive positions at various oil and gas companies. Mr. Dunlap also serves as a member of the board of directors of Opti Canada, Inc.,
a public energy company based in Calgary, Canada, a position he has held since June 2006. Mr. Dunlap is a graduate of Rockhurst University and holds a Juris Doctor degree from Saint Louis
University Law School.



On October 16, 2009, we declared a distribution of $0.59 per unit for the period from July 1, 2009 through
September 30, 2009, payable on November 10, 2009 to unitholders of record on October 30, 2009.

On
November 13, 2009, the remaining approximately 1.7 million subordinated units will convert into an equal number of common units.

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RESULTS OF OPERATIONSTHREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

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 30,2009

2008Terminaling services fees, net

$
29,696

$
28,325Pipeline transportation fees


919


826Management fees and reimbursed costs


547


478Other


4,208


5,575Revenue

$
35,370

$
35,204


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, (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 30,2009

2008Gulf Coast terminals

$
12,803

$
12,174Midwest terminals and pipeline system


1,695


1,413Brownsville terminals


5,373


4,709River terminals


4,326


5,384Southeast terminals


11,173


11,524Revenue

$
35,370

$
35,204


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

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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 30,2009

2008Gulf Coast terminals

$
10,990

$
10,044Midwest terminals and pipeline system


881


924Brownsville terminals


3,838


3,160River terminals


4,050


5,119Southeast terminals


9,937


9,078Terminaling services fees, net

$
29,696

$
28,325


Included
in terminaling services fees, net for the three months ended September 30, 2009 and 2008 are fees charged to Morgan Stanley Capital Group of approximately
$17.7 million and $16.2 million, respectively, and TransMontaigne Inc. of approximately $1.8 million and $1.5 million, respectively. The increase in terminaling
services fees, net includes an increase of approximately $0.7 million resulting from newly constructed tank capacity placed into service at certain of our Gulf Coast terminals, an increase of
approximately $0.7 million resulting from completion of ethanol blending functionality at certain of our Southeast terminals, and an increase of approximately $0.2 million resulting from
newly constructed LPG tank capacity placed into service at our Brownsville terminals.

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

Three months ended
September 30,2009

2008Firm commitments:External customers

$
8,973

$
8,975Affiliates


19,499


17,715Total


28,472


26,690Variable:External customers


1,283


1,628Affiliates


(59
)

7Total


1,224


1,635Terminaling services fees, net

$
29,696

$
28,325


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At September 30, 2009, the remaining terms on the terminaling services agreements that generated "firm commitments" for the three months ended
September 30, 2009 were as follows (in thousands):

At
September 30,
2009Remaining terms on terminaling services agreements that generated "firm commitments":Less than 1 year remaining

$
3,271More than 1 year but less than 3 years remaining


4,531More than 3 years but less than 5 years remaining


10,975More than 5 years remaining


9,695Total firm commitments for the three months ended September 30, 2009

$
28,472


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

Three months
ended
September 30,2009

2008Gulf Coast terminals

$


$
Midwest terminals and pipeline system


539


289Brownsville terminals


380


537River terminals





Southeast terminals





Pipeline transportation fees

$
919

$
826


Included
in pipeline transportation fees for the three months ended September 30, 2009 and 2008 are fees charged to Morgan Stanley Capital Group of approximately
$0.5 million and $0.3 million, respectively, and TransMontaigne Inc. of approximately $0.4 million and $0.5 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. We also manage and operate for another major oil company two terminals
that are adjacent to our Southeast facilities and

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receive
a reimbursement of their proportionate share of operating and maintenance costs. 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 30,2009

2008Gulf Coast terminals

$
21

$
44Midwest terminals and pipeline system





Brownsville terminals


435


349River terminals





Southeast terminals


91


85Management fees and reimbursed costs

$
547

$
478


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 30,2009

2008Product gains

$
2,122

$
3,097Steam heating fees


782


1,301Product transfer services


199


176Railcar storage


231


207Other


874


794Other revenue

$
4,208

$
5,575


For
the three months ended September 30, 2009 and 2008, we sold approximately 27,300 and 22,200 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 $81 and $131 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, 2009 and 2008, we have accrued (reduced) a liability due to Morgan Stanley Capital Group of approximately $85,000 and $(0.2) million,
respectively.

Other
revenue from steam heating fees decreased approximately $0.5 million due principally to a decrease in utility charges rebilled to customers for the heating of stored
products.

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Included
in other revenue for the three months ended September 30, 2009 and 2008 are amounts charged to Morgan Stanley Capital Group of approximately $2.7 million and
$3.6 million, respectively, and TransMontaigne Inc. of approximately $nil and $nil, respectively.

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

Other Revenue by Business Segment

Three months ended
September 30,2009

2008Gulf Coast terminals

$
1,792

$
2,086Midwest terminals and pipeline system


275


200Brownsville terminals


720


663River terminals


276


265Southeast terminals


1,145


2,361Other revenue

$
4,208

$
5,575


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 30,2009

2008Wages and employee benefits

$
5,415

$
5,242Utilities and communication charges


1,834


2,512Repairs and maintenance


6,710


4,963Office, rentals and property taxes


1,674


1,576Vehicles and fuel costs


267


406Environmental compliance costs


713


1,235Other


302


397Lessproperty and environmental insurance recoveries





Direct operating costs and expenses

$
16,915

$
16,331


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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 30,2009

2008Gulf Coast terminals

$
5,281

$
5,637Midwest terminals and pipeline system


729


407Brownsville terminals


2,662


2,932River terminals


2,663


2,468Southeast terminals


5,580


4,887Direct operating costs and expenses

$
16,915

$
16,331


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

Three months ended
September 30,2009

2008Accounting and tax expenses

$
223

$
165Legal expenses


85


305Independent director fees and investor relations expenses


60


61Amortization of deferred equity-based compensation


65


23Provision for potentially uncollectible accounts receivable





159Income tax expense (benefit)


114


(36
)Other


59


28Direct general and administrative expenses

$
606

$
705


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 $2.5 million and $2.5 million for the three months ended September 30, 2009 and 2008, 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
$0.7 million and $0.7 million for the three months ended September 30, 2009 and 2008, 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 $0.4 million for
the three months ended September 30, 2009 and 2008, respectively.

For
the three months ended September 30, 2009 and 2008, depreciation and amortization expense was approximately $6.5 million and $5.8 million, respectively.

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RESULTS OF OPERATIONSNINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

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

Nine months ended
September 30,2009

2008Terminaling services fees, net

$
87,983

$
82,749Pipeline transportation fees


3,105


2,833Management fees and reimbursed costs


1,524


1,430Other


13,009


17,108Revenue

$
105,621

$
104,120


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

Total Revenue by Business Segment

Nine months ended
September 30,2009

2008Gulf Coast terminals

$
38,387

$
37,177Midwest terminals and pipeline system


4,888


4,097Brownsville terminals


16,354


14,883River terminals


13,543


14,719Southeast terminals


32,449


33,244Revenue

$
105,621

$
104,120


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

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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 30,2009

2008Gulf Coast terminals

$
32,156

$
29,573Midwest terminals and pipeline system


2,724


2,593Brownsville terminals


11,134


9,435River terminals


13,082


14,211Southeast terminals


28,887


26,937Terminaling services fees, net

$
87,983

$
82,749


Included
in terminaling services fees, net for the nine months ended September 30, 2009 and 2008 are fees charged to Morgan Stanley Capital Group of approximately
$50.9 million and $47.8 million, respectively, and TransMontaigne Inc. of approximately $5.2 million and $4.4 million, respectively. The increase in terminaling
services fees, net includes an increase of approximately $1.6 million resulting from newly constructed tank capacity placed into service at certain of our Gulf Coast terminals, an increase of
approximately $1.5 million resulting from completion of ethanol blending functionality at certain of our Southeast terminals, and an increase of approximately $0.7 million resulting from
newly constructed LPG tank capacity placed into service at our Brownsville terminals.

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 30,2009

2008Firm commitments:External customers

$
28,021

$
26,630Affiliates


56,853


52,442Total


84,874


79,072Variable:External customers


3,863


3,904Affiliates


(754
)

(227
)Total


3,109


3,677Terminaling services fees, net

$
87,983

$
82,749


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At
September 30, 2009, the remaining terms on the terminaling services agreements that generated "firm commitments" for the nine months ended September 30, 2009 were as
follows (in thousands):

At
September 30,
2009Remaining terms on terminaling services agreements that generated "firm commitments":Less than 1 year remaining

$
10,391More than 1 year but less than 3 years remaining


13,560More than 3 years but less than 5 years remaining


32,496More than 5 years remaining


28,427Total firm commitments for the nine months ended September 30, 2009

$
84,874


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 30,2009

2008Gulf Coast terminals

$


$
Midwest terminals and pipeline system


1,518


819Brownsville terminals


1,587


2,014River terminals





Southeast terminals





Pipeline transportation fees

$
3,105

$
2,833


Included
in pipeline transportation fees for the nine months ended September 30, 2009 and 2008 are fees charged to Morgan Stanley Capital Group of approximately
$1.5 million and $0.8 million, respectively, and TransMontaigne Inc. of approximately $1.6 million and $2.0 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. We also manage and operate for another major oil company two terminals
that are adjacent to our Southeast facilities and

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receive
a reimbursement of their proportionate share of operating and maintenance costs. 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 30,2009

2008Gulf Coast terminals

$
45

$
118Midwest terminals and pipeline system





Brownsville terminals


1,239


1,062River terminals





Southeast terminals


240


250Management fees and reimbursed costs

$
1,524

$
1,430


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 30,2009

2008Product gains

$
6,156

$
9,835Steam heating fees


2,766


4,119Product transfer services


560


595Railcar storage


923


539Other


2,604


2,020Other revenue

$
13,009

$
17,108


For
the nine months ended September 30, 2009 and 2008, we sold approximately 92,300 and 99,800 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 $68 and $112 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, 2009 and 2008, we have accrued a liability due to Morgan Stanley Capital Group of approximately $0.1 million and $1.4 million,
respectively.

Other
revenue from steam heating fees decreased approximately $1.4 million due principally to a decrease in utility charges rebilled to customers for the heating of stored
products.

Included
in other revenue for the nine months ended September 30, 2009 and 2008 are amounts charged to Morgan Stanley Capital Group of approximately $8.3 million and
$11.2 million, respectively, and TransMontaigne Inc. of approximately $0.1 million and $nil, 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 30,2009

2008Gulf Coast terminals

$
6,186

$
7,486Midwest terminals and pipeline system


646


685Brownsville terminals


2,394


2,372River terminals


461


508Southeast terminals


3,322


6,057Other revenue

$
13,009

$
17,108


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 30,2009

2008Wages and employee benefits

$
15,832

$
15,800Utilities and communication charges


5,708


7,086Repairs and maintenance


17,176


14,917Office, rentals and property taxes


5,031


4,719Vehicles and fuel costs


748


1,193Environmental compliance costs


2,387


2,261Other


1,007


1,142Lessproperty and environmental insurance recoveries





Direct operating costs and expenses

$
47,889

$
47,118


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 30,2009

2008Gulf Coast terminals

$
15,813

$
16,786Midwest terminals and pipeline system


1,769


1,180Brownsville terminals


8,522


8,567River terminals


6,379


5,881Southeast terminals


15,406


14,704Direct operating costs and expenses

$
47,889

$
47,118


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

Nine months ended
September 30,2009

2008Accounting and tax expenses

$
1,005

$
1,240Legal expenses


570


724Independent director fees and investor relations expenses


228


382Amortization of deferred equity-based compensation


119


12Provision for potentially uncollectible accounts receivable





414Income tax expense


249


103Other


239


220Direct general and administrative expenses

$
2,410

$
3,095


The
allocated general and administrative expenses were approximately $7.5 million and $7.5 million for the nine months ended September 30, 2009 and 2008,
respectively.

The
allocated insurance expenses were approximately $2.2 million and $2.1 million for the nine months ended September 30, 2009 and 2008, respectively.

The
reimbursement of bonus awards was approximately $0.9 million and $1.1 million for the nine months ended September 30, 2009 and 2008, respectively.

For
the nine months ended September 30, 2009 and 2008, depreciation and amortization expense was approximately $19.3 million and $17.3 million, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs are to fund our working capital requirements, distributions to unitholders and capital expenditures. We
believe that we will be able to generate sufficient cash from operations in the future to meet our liquidity needs to fund our working capital requirements and to fund our distributions to
unitholders. We expect to fund our capital expenditures with additional borrowings under our senior secured credit facility.

Excluding
acquisitions, our capital expenditures for the nine months ended September 30, 2009 were approximately $29.4 million for terminal and pipeline facilities and
assets to support these facilities. Management and the board of directors of our general partner previously approved capital projects that currently are under construction with estimated completion
dates that extend through December 31, 2010. At September 30, 2009, the remaining capital expenditures to complete the approved capital projects are estimated to range from
$18 million to $25 million. We expect to fund our 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)Tampa

Improve truck rack capacity and functionality





1H 2010Port Everglades

Increase light oil and residual oil tank capacity


975,000


4th quarter 2009Improve truck rack capacity and functionality





4th quarter 2009Southeast

Renewable fuels blending functionality





2H 2010


Pursuant
to existing terminaling services agreements with Morgan Stanley Capital Group, we expect to receive payments through September 30, 2010 from Morgan Stanley Capital Group
in the

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range
of $3 million to $10 million, which are due and payable upon completion of certain of the capital projects referred to above.

At
September 30, 2009, our senior secured credit facility provides for a maximum borrowing line of credit equal to $200 million. At September 30, 2009, our
outstanding borrowings were approximately $165 million, resulting in available capacity of approximately $35 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 no less than $20 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, 2009, the senior secured credit facility provides for a maximum borrowing line of
credit
equal to the lesser of (i) $200 million and (ii) four times Consolidated EBITDA (as defined: $237.5 million at September 30, 2009). 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 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

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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 ended

Twelve
months
ended
September 30,
2009December 31,
2008

March 31,
2009

June 30,
2009

September 30,
2009Financial performance debt covenant test:Consolidated EBITDA for the total leverage ratio, as stipulated in the credit facility

$
14,546

$
14,228

$
16,241

$
14,357

$
59,372Consolidated funded indebtedness













$
165,000Total leverage ratio and senior secured leverage ratio














2.78xConsolidated EBITDA for the interest coverage ratio

$
14,546

$
14,228

$
16,241

$
14,357

$
59,372Consolidated interest expense, as stipulated in the credit facility

$
1,423

$
1,275

$
1,439

$
1,349

$
5,486Interest coverage ratio














10.82xReconciliation of consolidated EBITDA to cash flows provided by operating activities:Consolidated EBITDA

$
14,546

$
14,228

$
16,241

$
14,357

$
59,372Consolidated interest expense


(1,423
)

(1,275
)

(1,439
)

(1,349
)

(5,486
)Amortization of deferred revenue





(326
)

(562
)

(764
)

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


(228
)

(478
)

(386
)

25


(1,067
)Change in operating assets and liabilities


(1,596
)

3,191


11,017


5,553


18,165Cash flows provided by operating activities

$
11,299

$
15,340

$
24,871

$
17,822

$
69,332


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).

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, 2008, 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, 2008.

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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, 2009, we had outstanding borrowings of approximately $165 million under our senior secured credit facility.

We
manage a portion of our interest rate risk with interest rate swaps, which reduce our exposure to changes in interest rates by converting variable interest rates to fixed interest
rates. At September 30, 2009, 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, 2009, 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 $0.2 million.

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, 2009 and 2008, we sold approximately 92,300 and 99,800 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 $68 and $112 per barrel, respectively.

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, 2009, pursuant to Rule 13a-15(b) under the
Exchange Act. Based upon that evaluation, the Certifying Officers concluded that, as of September 30, 2009, 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, 2008, filed on March 9, 2009, 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, 2008, filed on
March 9, 2009.

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, 2009 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


625

$
21.31


625


6,240August


625


25.68


625


5,615September


625


27.00


625


4,9901,875

$
24.66


1,875


All
repurchases were made in the open market pursuant to a program announced on May 7, 2007 for the repurchase, 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 non-officer directors of our general partner.
Pursuant to the terms of the repurchase program, we anticipate repurchasing annually up to 10,000 common units. During the three months ended September 30, 2009, we repurchased 1,875 common
units with approximately $46,000 of aggregate market value for this purpose. There is no guarantee as to the exact number of common units that will be repurchased under the repurchase program, and the
repurchase program may be discontinued at any time. Unless we choose to terminate the repurchase program earlier, the repurchase 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.

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 9, 2009

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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